The advent of GLP-1 weight-loss treatments has inadvertently underscored the importance of protein in mitigating muscle loss. While taking GLP-1 meds may be out of reach of many consumers due to exorbitant out-of-pocket costs and limited health insurance coverage, the popularity of high protein diets like keto or carnivore continues to gain popularity as a natural method to lose weight. Adding beef can reap rewards to a diet, but it's also proven to reap financial rewards for retail/wholesale sector restaurants, as evidenced by soaring comparable sales figures. Here are 3 restaurant stocks that are boosting their bottom lines with beef.
1) Sweetgreen
Sweetgreen Inc. (NYSE: SG) started as a fast-casual restaurant offering healthy, build-it-yourself salads and bowl options. The 50 or so organic ingredients offered at Sweetgreen are locally sourced, underscored by sustainability. The appeal catered to socially conscious millennials but isolated the hearty meat and potatoes diners. This all changed when they experimented with adding beef to their menu after a successful test in Boston.
Caramelized Garlic Steak Was a Game-Changer
Sweetgreen added grass-fed Caramelized Garlic Steak as an option to their menu in Q1 2024, and it was a game changer. Within a short period, 1 in 5 dinner orders included steak. The addition of steak not only took over during dining time, but it also expanded its customer base as meat-eaters looking for healthy options added to the foot traffic. While its Q1 2024 comp sales rose 5% YoY, beating the 3% consensus estimates, its Q2 2024 comp sales, which included a full quarter of Caramelized Garlic Steak offerings, shot up to 9% YoY. Restaurant-level margins surged to 22.5%.
2) CAVA Group
CAVA Group Inc. (NYSE: CAVA) made headlines with its stunning YoY comp sales growth of 14.4% reported in its second quarter. Its Mediterranean spin on the Chipotle Inc. (NYSE: CMG) style build-your-bowl format is proving to be a winning and healthier formula. The company produced blowout results in Q2 2024, which also included a 35.2% jump in YoY revenue growth and the addition of 78 new restaurants. Guest traffic surged 9.5%, while same-store transactions surged 8.7% YoY.
However, CAVA noted that the steak rollout has been two years in the making. It was tested in Boston, like Sweetgreen, in December 2023 and received strong positive responses. Like Sweetgreen, it hoped to boost dinner sales. The grilled steak was added to its core menu on June 3, 2024, near the end of Q2 2024. The grilled steak offering received a stronger-than-expected response. The full impact should be revealed in its Q3 2024 earnings.
3) Texas Roadhouse
Texas Roadhouse Inc. (NASDAQ: TXRH) operates over 700 steakhouse-style restaurants throughout the country. Beef is their core offering, as customers can even select their hand-cut steaks from a display as they enter the restaurant. Their sides and dressing are made from scratch daily, and their iconic honey butter muffin is baked every 5 minutes.
Their Q2 2024 earnings report revealed 9.3% YoY comp sales growth, which handily beat competitors ranging from Darden Restaurants Inc. (NYSE: DRI) owned Longhorn Steakhouse’s 4% comp growth to Bloomin’ Brands Inc. (NASDAQ: BLMN) Outback Steak houses with negative comp growth.
4) Chili’s Grill and Bar
Brinker International Inc. (NYSE: EAT) owned Chili’s Bar and Grill posted YoY comp sales growth of 14.8% in its second-quarter 2024 earnings report. Much of this has been attributed to the viral social media boom of its Big Smasher burger. The Big Smasher is normally priced around $14 but can be included in the $10.99 3 For Me deal. The Big Smasher is a half-pound smash burger, often compared to a Big Mac, which can come with fries and a soft drink in its 3 For Me deal.
A Direct Challenge to McDonald’s
It was a direct attack on fast food restaurants like McDonald’s Inc. (NYSE: MCD) with its Better Value than Fast Food campaign. The 3 For Me deal includes a starter/appetizer, entrée and drink. Social media platforms like TikTok and Alphabet Inc. (NASDAQ: GOOGL) owned YouTube have helped spread the popularity of the Big Smasher.
Chili’s CEO Kevin Hochman made the point, “With the launch of our Big Smasher and our Triple Dipper going viral on TikTok, we experienced a step change in our business, delivering 14.8% sales growth and 5.9% traffic growth versus a year ago. To put it in context, this was 15.6 points better than the industry on sales and 9.4 points better than the industry on traffic.”
