(Bloomberg) -- Last November, when Tao Group began offering unlimited ribeye steak with french fries and salad for $45 at Legasea Bar & Grill in Herald Square, the response was initially tepid. But then a popular influencer’s Instagram video touted it as the “best all-you-can-eat steak deal in New York City.” Almost overnight, the seven-year-old restaurant doubled its nightly bookings and became one of the hottest dinner destinations in town.
The company expected business to slow down after the holidays; instead, because of the ribeye promotion, sales climbed. According to Matt Strauss, who oversees Tao Group’s New York hotel food and beverage operations, the restaurant increased its monthly covers 55% year-over-year in February, with revenue rising by 178%. “We were busy before the viral video,” says Strauss, “but after it came out, our sales went parabolic.”
As the cost of dining out in New York becomes increasingly prohibitive and restaurant sales show signs of softening, city residents are finding value in an unexpected place: steak restaurants. The city’s clubby chophouses, such as the Major Food Group’s The Grill and 4 Charles Prime Rib, are still routinely packed with customers looking for trophy cuts and three-figure côtes de boeuf. But with a wave of recent openings, including the new Washington, DC, import Medium Rare, affordable steak deals are more and more common.
But even while customers are still clamoring for the $154 Chateaubriand steak for two at Keens Steakhouse, enterprising operators see the appeal of a steak dinner that’s more approachable, and affordable, for everyday dining. Medium Rare, which opened over Labor Day weekend in Manhattan’s Kips Bay, is the latest to offer what seems like an impossible steak deal. For $35 per person, the restaurant serves a 6-ounce serving of sliced Culotte steak (top sirloin cap) followed by an offer for seconds, with a “secret sauce” (a creamy accompaniment reminiscent of au poivre), a simple green salad and unlimited french fries. According to Mark Bucher, who co-founded the restaurant’s original DC location in 2011, the New York restaurant doubled the company’s initial sales projections in its first three weeks. (He declined to cite actual figures.)
It's hardly surprising that New Yorkers are excited about the recent steak deflation trend. For about the same price as one 32-ounce tomahawk steak at Del Frisco’s ($135 without sides or salads) in Midtown Manhattan, four people can enjoy a meal at Medium Rare. Affordably priced set menus, says Bucher, also attract more repeat customers, who are looking for a streamline dining experience that simplifies the decision-making process. According to Bucher, 86% of Medium Rare customers in Washington dine there at least once a week.
But the value proposition is increasingly challenging to sustain with US beef prices rising by more than 40% since the pandemic began. At Skirt Steak, which opened near Penn Station in Chelsea in 2021, chef Laurent Tourondel offers a $45 set menu that includes an 8-ounce prime skirt steak with peppercorn bearnaise sauce, market salad and fresh-cut fries. Three years in, business is still booming but controlling prices hasn’t been easy. “It’s been challenging from Day 1,” says Tourondel. “We’ve had to raise the price three times since we opened, but I refuse to sacrifice quality.” (The menu was originally priced at $27.)
Bucher says his company controls costs by locking in annual contracts with vendors when beef prices are traditionally lowest, such as around Easter, when meats like lamb are more popular. “Because we buy one cut of steak and do massive volume, our raw material prices go down every time we open a new unit,” he says.
Managing a menu with limited choices brings other built-in operational advantages. At Medium Rare, less than 10% of the restaurant is dedicated to kitchen space, which allows Bucher to allocate more square footage to customer seating. Skirt Steak has been able to boost check averages with upsells, such as offering to upgrade the steak to wagyu beef ($25), a la carte side dishes such as stuffed mushrooms ($12) and a roving, glass-enclosed dessert cart that tempts guests with an array of desserts ($12) including a homemade peach and raspberry tart and New York-style cheesecake.
Meanwhile, local stalwarts such as Le Relais de Venise, the Parisian import that opened in Midtown in 2009, survive by hewing closely to tradition. After shuttering its original location on Lexington Avenue during the pandemic, the restaurant reopened this past winter in a new space on East 54th Street and was immediately greeted with lines out the door for its $38 prix fixe—a thinly sliced 6-ounce sirloin bathed in its signature butter sauce (allegedly laced with chicken livers), a mustardy green salad with walnuts, and french fries. “We don’t want to be trendy,” says Darin Nathan, one of the partners in the New York restaurant. “We cater to the masses, not the classes.” Even though the new location has 48 fewer seats, Nathan says sales haven’t suffered.
In early July, Legasea scaled back the unlimited ribeye deal to offer it exclusively on Sundays and Mondays. “Guests were exceeding our projections on how much they could eat,” says Tao Group’s Strauss. “Revenues were up, but our food and labor costs were higher than any venue in our company.” To account for higher costs, the restaurant raised the price of the all-you-can-eat offer to $49 and added a more affordable 14-ounce ribeye with fries to its a la carte menu for $39. “The venue has remained popular, but of course Sundays and Mondays are now our most popular nights of the week,” Strauss says.
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