Bearish on Steakhouses - Barron's

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Steakhouse Shares by Kopin Tan

Summary: Even record Wall Street profits aren't helping steakhouse shares. A housing slump, tighter lending and lower spending, curb meat consumption. Ethanol-driven corn feed prices, and gas/transport costs make meat more expensive to produce. NY steakhouses and cultural digests offer abstinence or alternatives, while Rare Hospitality (RARE), Morton's Restaurants (MRT) and Ruth's Chris Steak House (RUTH) shares have fallen 13%,19% and 16% respectively, since Jan-Feb. Until production costs settle down and cattle futures show it, and until consumer spending from a housing bottom indicate retail gains, steakhouses must raise prices or choke back higher costs and lower profits while wishing for a Smith & Wollensky (SWRG) - OSI Restaurant (OSI) - type buyout. For investors, it's a raw deal.

Steakhouse shares chart:

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