Morton’s bullish on business spending
The recovery in business travel and expense account dining continues to align with Morton’s The Steakhouse’s positioning, company officials said in a conference call discussing third-quarter earnings.
The Morton’s Restaurant Group brand saw its seventh consecutive quarter of same-store sales growth in the third quarter.
Since Morton’s core customer dines on an expense account, its clientele has enough spending flexibility to accommodate the chain’s planned menu price increases in 2012, which aim to offset expected inflation in the cost of beef, chief financial officer Ron DiNella said.
Morton’s raised prices 2.2 percent in the summer of 2010, 2.7 percent in December 2010, and 1 percent in January 2011. The brand also raised prices 1 percent in October 2011. Same-store sales this month are 5 percent higher than the previous year.
“We have not contracted anything for next year, but when we have done it in the past, we typically do it very late in the year, beginning of November and ending up right before the end of the year,” DiNella said. “The beef guys are bullish on their pricing power, so we’re thinking [it will be] a 5-percent to 10-percent increase [in beef costs] next year.”
Beef comprises 80 percent of all food sold in Morton’s dining rooms and private-dining boardrooms.
While most of Morton’s customers likely would not defect over menu price increases, the chain still will emphasize its Bar 12-21 concept, where a small-plates menu and wines by the glass allow for a more casual experience with a much lower average check than the steakhouse, said chief executive Chris Artinian.