While restaurants struggle, steakhouses are thriving — here's why

A dish from Morton's Steakhouse
Source: Morton's Steakhouse

While restaurants have struggled in the last year to keep sales positive, one sector is thriving: steakhouses.

Across the board in 2016, restaurants have seen a slowdown in traffic due to a combination of economic uncertainty, market saturation and a decline in at-home food costs. These factors are straining sales, which are expected to grow only 1 percent year over year in 2017.

"Steakhouses outperform other full-service chains," Darren Tristano, president of food consulting firm Technomic, told CNBC. He said these restaurants are more insulated against headwinds that typically affect fast food chains, like higher gas prices and unemployment.

There are four key reasons steakhouses are poised for success:

1. Affluent customers and quality beef

Steakhouses often attract a more affluent consumer base and offer food that is considered a premium meal.

While a steak at Outback Steakhouse will cost you $15 to $35 depending on the size of the cut of meat, a steak at an upscale steakhouse like Morton's starts at $45 and can run higher than $125. And that's just for one diner.

"People don't mind paying a little bit more for a good high quality meal," BTIG restaurant analyst Peter Salah told CNBC. "[In addition,] steakhouses have been seeing more benefit on the bottom line because steak prices have been coming down, so their margins have been improving."

Not only is steak a high-priced item, but the majority of steakhouses also offer seafood, which boosts check prices.

Aaron Allen, founder and CEO of global restaurant consulting firm Aaron Allen and Associates, said full-service casual restaurants have been on a steady decline. "For years now, the worse place to be in the restaurant business is a full-service restaurant with a check average of less than $20," he said.

2. Business-friendly seating

In addition to catering to affluent customers, many steakhouses have incorporated business-friendly rooms for corporations to host events or meetings, Tristano said.

Morton's, Ruth's Chris, The Capital Grille and Fleming's are among steakhouse chains that offer private dining with customized menus and audiovisual technology for presentations.

"Our private meeting rooms accommodate groups large and small and are ideal for seminars, presentations, conferences, client dinners and other corporate events," Morton's touts on its website.

These private rooms are appealing to those hoping to close a deal, impress a new client or host a corporate dinner.

3. Special occasions

Of course, you don't need a six-figure salary to go to a steakhouse. Many people see these restaurants as places to celebrate special occasions.

"Even in somewhat uncertain economic environments, we've found guests will seek out great experiences for occasion-based dining like birthdays, anniversaries or any kind of celebratory event," Larry Johnson, CEO of Fogo de Chao, told CNBC.

4. Alcohol sales

In addition to steak and seafood sales, steakhouses are also making money off of alcoholic beverages.

Tristano estimated that about 30 percent of sales for these types of chains come from beer, wine and cocktails.

"Some of these steakhouses that are doing really well have reconfigured to allocate more space towards the bar area than the dining room," Allen said, noting that there is now less stigma attached to solo diners, and those consumers gravitate toward the bar area to eat and drink.