Outback Steakhouse, a Tampa restaurant company synonymous with beef, is living in interesting times.
The rise of the Atkins diet and other low-carb, high-protein regimens would seem tailor-made for Outback, which has 829 flagship steakhouse locations worldwide, 22 Fleming's Prime Steakhouse and Wine Bar restaurants and a growing Cheeseburger in Paradise concept, among its portfolio of chains.
Outback's stock has risen 47 percent over the past 12 months, at least partly, it would seem, from investor enthusiasm over the latest diet craze. It closed Friday at $45.52, up 6 cents.
"It's more than a fad," CEO Chris Sullivan said during a conference call Thursday with Wall Street analysts. "I think it's a consumption trend."
Carrabba's Italian Grill, a more carbohydrate-oriented Outback chain, was hurt by Atkins initially, Sullivan said, but its top brass rallied by adding more high-protein dishes to the menu.
One event that could have had the opposite impact on Outback's beef sales and stock price was the discovery in December of a Washington state Holstein with mad-cow disease.
Fortunately for Outback, the incident caused little pain. The fact that the cow was found to be of Canadian origin and, so far at least, an isolated case, may have helped.
But less rational factors also may have been at play. On the very night the Washington scare was revealed, gift certificate sales at Outback rose 10 percent.
"We figured that people either were not worried about the beef scare," chief financial officer Bob Merritt said, "or they were trying to deliver a message to some their friends."
Or perhaps their enemies.
Just the same, Merritt would rather get off the "ridiculous roller coaster" of beef prices by signing 3- to 5-year contracts with slaughterhouses, rather than 1-year deals. But because the futures market for beef tops out at 12 months, he said, beef purveyors won't bite.
