Beef Sector Rustles Up a Bigger Stake : Food: As high-end steakhouse niche grows, two restaurant chains plan to enter Orange County market.
Huntington Beach businessman Mike Gilles doesn’t bother hiding his lifelong love affair with what he calls “good old, bad old beef.”
“I grew up eating beef,” said Gilles, a food industry consultant whose family butchered their own meat for their restaurant in Clear Lake, Iowa. “I keep hearing how much healthier Americans are eating these days, but the last time I checked, the burger was still the No. 1 sandwich and steak was still the No. 1 dinner entree.”
Beef’s popularity is rising, according to the National Cattlemen’s Assn. in Denver, which earlier this month reported that per capita consumption of beef in 1994 rose by an estimated 1.3 pounds--the first increase in nearly a decade.
Falling prices spurred the increased consumption, according to an association survey that said the average retail price of beef fell by six cents per pound last year to $3.10. Prices should remain low through 1997 because “there’s a mountain of beef out there,” said Cattlemen’s Assn. spokesman David Mehlhaff.
Beef sales also are sizzling at premium steakhouses, where price isn’t as much of a concern for affluent diners. Tougher IRS rules for business meal deductions and growing demand for better consumer value pushed traffic down by 1% at most high-end restaurants in 1993, according to NPD Crest, a Chicago-based market-research firm, but customer traffic at top-of-the-line steakhouses jumped by 6%.
Steakhouse operators say their costly restaurants are succeeding because they serve large quantities of high-quality food. And, two of the nation’s most popular--and fastest-growing--premium steakhouse chains are set to open Orange County locations this year.
Morton’s of Chicago, which opened its first California restaurant in Beverly Hills in 1992, will add its 30th location in February at South Coast Plaza Village in Costa Mesa. New Orleans-based Ruth’s Chris Steak House, which opened its 46th restaurant this past week in Denver and recently opened in downtown San Diego, plans to add an Irvine eatery in November.
These high-end steakhouses, which feature flame-broiled beef, giant baked potatoes slathered in sour cream and a wide selection of fine wines and traditional cocktails, “will be horrendously successful,” Gilles predicts, “even in Orange County, where people proudly wear their healthiness on their sleeves.”
Growth in the high-end steakhouse niche is a throwback to the days when a great meal meant healthy cuts of red meat, potatoes, vegetables and a cocktail.
These restaurants each have a distinctive persona, but there’s a common denominator: “We serve big steaks, big potatoes, big vegetables,” quipped Klaus Mager, manager of Granville’s, one of the Disneyland Hotel’s upscale restaurants. About six years ago, Granville’s switched to steaks from California cuisine--an eclectic blend of ingredients and techniques that produced everything from sesame chicken salad on baby greens with sake to pork tenderloins served with smoked Maui onion and goat cheese dumplings.
Granville’s made its transition at a time when national beef consumption was in the midst of a decade-long slide that began in the early 1980s. The health warnings about fat and cholesterol levels had merit because, during the 1970s, restaurants were cooking steaks in pure butter and loading them up with rich sauces.
The sauces and butter quickly disappeared as restaurants catered to increasingly health-conscious diners. And, eventually, beef entrees began to shrink in size as the supply of beef shrunk and beef prices rose.
Yet, even as more adventuresome food began to dominate trendier restaurants, consumers continued their love affair with beef. People were eating less red meat at home, but when they went out to dinner, it was “almost like an indulgence,” said Morton’s of Chicago President Mike Archer. “When they eat out, they want the best beef there is.”
Beef emporiums also benefited from conflicting messages from health and diet experts. “First it was eat margarine, then butter,” said Rhode Island restaurateur Edward N. Grace III, who has opened a half-dozen steakhouses in the East. “Then it was don’t eat apples because of pesticides, and seafood because the ocean’s polluted.
“People are realizing that beef and other foods are fine in moderation,” said Grace, who was part owner of the San Juan Capistrano-based Rusty Pelican seafood chain during the 1980s.
Steak’s sizzle also is being enhanced by a popular demand for more familiar foods.
"(Dining) got pretty complicated in the 1980s,” Mager said. “We were serving California cuisine, here, which was upscale, colorful and adventurous. But, gradually, the guests didn’t want it anymore. . . . They were yelling: ‘Where’s the beef?’ ”
That back-to-basics approach is evident at upscale restaurants, where food is less adventuresome, Mager said, as well as at lower-priced eateries, including Boston Chicken, which offers mashed potatoes, potato salad and the like with its chicken dinners.
The 1980s “was the era of the celebrity chiefs,” Archer said. “It was wonderful food and great presentation. But it wasn’t like steak and potatoes--it’s really easy to understand a 24-ounce porterhouse steak.”
“Steak is popular for the same reason that all those Italian restaurants are opening in L.A.: It’s understandable,” said Paul Fleming, a Phoenix-based restaurateur who owns the Ruth’s Chris restaurants in Beverly Hills, Palm Desert and San Diego, and is building the Irvine eatery.
Grace acknowledged that premium steakhouses seem to be out of sync with Southern California, home to a growing number of top-flight restaurants featuring cuisine from around the world. And beef still seems at odds with Southern California’s image as a land of salad bars and sushi.
But even in this health-conscious region, Mager said, “There’s always going to be a niche here for steak. And what we’ve got is a quality of meat that (consumers) can’t get anywhere else.”
Steakhouse operators say they have a lock on their market because they’re willing to pay extra for exquisitely marbled, properly aged cuts with that oh-so-perfect texture. “The key to good meat is marbling, youth, texture and aging,” said Bob Facciola, president of Facciola Meat Packing Co., a Palo Alto company that supplies premium beef to restaurants in California, Nevada and Oregon.
“Most cattle reach a high degree of marbling in about 42 months,” Facciola said. “But the super-duper quality (comes from specially fed cattle) at about 24 months.” Meat is then aged for several weeks to generate the best possible texture.
All of that special care costs money. That’s why the melt-in-your-mouth New York strip steak served at expensive restaurants costs at least $2 more per pound than a similar cut sold at most grocery stores, Facciola said.
Most grocers eschew very expensive cuts of meat because they don’t match the pocketbooks of value-conscious consumers. That’s not the case, though, at high-end restaurants where taste and texture are key and the price is secondary.
Granville’s average check is in the $40 range, as is the typical price of a meal at a Ruth’s Chris Steak House. When Morton’s of Chicago opens next month in Orange County, it’s average average check will likely be $60 per person.
Each restaurant includes seafood and poultry on their bill of fare, but steak reigns supreme. The menus are top-heavy with beef--double filet mignon, porterhouse, New York strip, rib-eye and tenderloin brochette.
Their chefs also cater to diners who believe bigger is better: Granville’s reports strong interest in its new, 20-ounce cowboy steak, while the menu at Morton’s includes a budget-busting 48-ounce porterhouse that weighs in at $59.50.
Steak is undoubtedly the star attraction at these upper-end restaurants but wine and cocktails play an important supporting role. “People aren’t drinking as much. but they are demanding better” brands of liquor, beer and wine, Mager said.
Morton’s serves a steady flow of martinis, manhattans and Old-Fashioneds at its restaurants. Granville’s is noticing a sales uptick in single-malt whiskeys and robust specialty beers, as well as hearty Burgundies.
Beverages round out the dining experience but they also play a key role in the bottom line. The average restaurant’s food costs account for about a third of overall costs, but at premium steakhouses, food costs edge up to more than 40% of total costs. Restaurants can’t turn a profit without healthy beverage sales or hefty price increases.
Steak’s resurgence doesn’t surprise Mager, who was trained in Germany and became a chef in the mid-1960s.
“Steak has staying power,” Mager said. “During the 1980s, we wanted to radically depart from the past and do things completely differently. It’s no different from the foods that come from any classical kitchen. It’s got staying power.”
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What’s for Dinner
Nationwide, beef is the most heavily consumed meat, but the amount has been dropping. Still, beef dominates restaurants menus and hamburgers are the most popular beef dish.
Burgers are King
In family and casual restaurants, beef is the entree ordered most often, and hamburgers dominate the kind of beef ordered:
Beef: 49% Fish: 7% Other: 14%
Hamburgers/Cheeseburgers: 75% Steak/roast beef sandwiches: 10% Steak: 5% Other beef: 10%
Bill of Fare
Beef is offered more than any other kind of meat by commercial food servers. Menu penetration:
Men and women order differently when eating out, aside from choosing dishes they would not serve or prepare at home. How they decide:
Men * Like meat, poultry and seafood with strong flavors and sauces * Prefer burgers, prime rib, steak * Want traditional, juicy flavor
Women * Often decide according to menu description * Like lighter items, such as stir-fry and pasta, and sophisticated plate presentations * Prefer menu variety offered by specials
Meat That We Eat
Annual per capita consumption of various kinds of meat, in pounds:
Beef: 61.4 (1993)
Pork: 48.8 (1993)
Chicken: 47.0 (1993)
Fish: 14.9 (1993)
Turkey: 14.1 (1993)
Sources: NPD/Crest1993, an independent consulting firm; the U.S. Department of Agriculture, and the Beef Industry Council
Researched by VALERIE WILLIAMS-SANCHEZ / Los Angeles Times