What’s working — and not working — in casual dining these days

Americans see steak — in the right setting — as an affordable indulgence. But fewer diners are enjoying it with an alcoholic drink.

The flair-laden restaurant chain TGI Friday’s plans to list on the London Stock Exchange, via a merger with its U.K. franchisee.

It’s an interesting time for the strip mall staple to test the public markets. Earlier this year, Friday’s said it would be closing 36 underperforming U.S. restaurants. It’s all part of the highly competitive casual dining market.

You know what people are still willing to spend their inflation-strapped budget on? Steak. Specifically, steak accompanied by a vaguely Texan ambience.

“Texas Roadhouse would be the one that seems to be outperforming, no matter what the economic backdrop looks like,” said Eric Gonzalez, who analyzes the casual dining industry for KeyBanc Capital Markets. 

Texas Roadhouse has become a consumer treat — something families are willing to indulge in, especially since cooking steak at home isn’t so cheap.

While bone-in ribeyes are very attractive menu items, casual restaurant diners are spending less on alcohol than they used to, noted Citi analyst Jon Tower.

“What the industry is trying to grapple with is whether or not this is something that is a sustained trend or just going back to normalized levels, so pre-COVID levels,” he said.

That could be bad news for TGI Friday’s — home of those gigantic mudslide cocktails.