Annotated article summary from this weekend's Barron's. Receive all our Barron's summaries by signing up here:
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-OLD), Morton's Restaurants (NYSE:MRT-OLD) and Ruth's Chris Steak House (NASDAQ: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.
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