The Steakhouse Index

September 6, 2013, 1:00 PM UTC

FORTUNE — To gauge the striking revival in the Big Apple’s economy, you could pick from a wide variety of statistics or symbols, from the ascending graph of Manhattan coop prices to the throngs of foreign tourists packing the 7 subway line to the U.S. Open. We modestly suggest a more telling barometer: what we’ll call “The Steakhouse Index.” That’s our take on how those great, extremely pricey, expense-account-sensitive purveyors of prime aged beef and creamed spinach are faring a half-decade after the onset of the financial crisis.

This writer’s survey is more atmospheric than scientific, as it consists of witnessing the traffic and ambience while dining in late August at three renowned Midtown steakhouses and interviewing their owners and maître d’s. The institutions, ranking among the top-grossing restaurants in America, are Del Frisco’s (DFRG) Double Eagle Steak House, the ultimate hangout for financial power-players across from Rockefeller Center; Porter House New York, a virtual neighborhood canteen for the corporate elite in the Time Warner Center at Columbus Circle; and Smith & Wollensky, a bastion of tradition in a turn-of-the-last-century, white-and-green lattice home at the nexus of the ad industry on Third Avenue.

The managers and owners of all three steakhouses agree that business still hasn’t returned to the heady levels of the mid-2000s and perhaps never will. “We’ve just seen too many controls on spending by companies to get back to the heyday,” says Scott Gould, regional manager for Del Frisco’s Restaurant Group. Still, the spending at these culinary landmarks has rebounded strongly since the financial crisis — retracing at least half the distance from the bottom — and they’re thriving even though Midtown now supports several more steakhouses than during the boom times.

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The sizzle is back for two reasons. First, big banks, ad agencies, and law firms are finally, though judiciously, re-loosening their wallets for entertaining. Second, hordes of affluent foreign tourists, lured by the weak dollar, are filling tables on weekends and late at night following an evening at a Broadway show.

Among Manhattan business folk, the steak dinner is as much a staple for entertaining clients as the power breakfast. And tourists have long prized a visit to the Palm or Smith & Wollensky as a must-dine experience. But in the bubble years, the extravagance buried all tradition. “Groups of four investment bankers would order five bottles of sparkling water, and six appetizers, along with $250 bottles of Bordeaux,” recalls Gould. Servings of Del Frisco’s Royal Ossetra caviar flew off the menu. “It was a time for huge shellfish bouquets, colossal stone crab claws, and oversized steaks,” marvels Michael Stillman, president of Fourth Wall Restaurants, manager of Smith & Wollensky.

In late 2008, the unbridled revelry stopped. “It happened really quickly, over a couple of months, and business dropped around 20%,” says Stillman. At Del Frisco’s, it wasn’t that the number of customers dropped, it was what they spent. “The difference was in the drop in orders for high-end luxury items,” recalls Gould. “Diners would get glasses of water instead of bottles, and three appetizers instead of five.” It was clear that companies were getting frugal, imposing tight limits on what they’d pay for each person for an expense-account dinner. For Del Frisco’s, the problems plaguing the banks weren’t entirely bad for business, since the law firms handling their new regulatory problems started spending more freely than ever on its prime strip steaks and crispy Shanghai calamari.

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Porter House opened at the height of the party, in late 2006. “Diners would be looking out through our big windows at 15 Central Park West, one of the world’s most expensive residences, being built. The new owners would come in to celebrate the closings,” says Michael Lomonaco, the restaurant’s executive chef and managing partner. Then, the world changed, and so did the menu. Steakhouses sell lots of expensive red wines. In the downturn, says Lomonaco, “we dug deep to find more value in wines.” He introduced an array of Argentinian, Spanish, and Italian offerings at far lower prices than the traditional Bordeaux. “Malbec became the grape of the day,” he says. Porter House even appealed to newly budget-conscious patrons by adding tasty-but-plebian hanger steak and skirt steak to the menu.

At Smith & Wollensky, Stillman’s biggest worry was that the whole celebratory appeal of the steakhouse experience had disappeared. “We’re not a health food restaurant,” he says, “people come in for small celebrations, like closing deals.” He refers to the steakhouse élan with the Italian term “abbondanza,” for abundance or extravagance. “Part of steakhouse lore took a hit,” Stillman continues. “People felt uncomfortable indulging, they had a new sense of propriety because of troubles in the economy. It’s a meal to let loose, and letting loose felt uncomfortable. That takes the edge off the classic steakhouse devil-may-care atmosphere.”

Today, the élan is back. At 6:30 on a recent Tuesday evening at Del Frisco’s, the place was packed, with most diners in suits and ties, and surely on expense accounts. Gould notes that though business clients still aren’t spending as much per person as at the peak, the tourists from nearby hotels fill the tables on weekends and after Broadway performances.

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At Porter House, the clientele is less business folk entertaining clients and more the affluent who live nearby. On an evening there late last year, this writer spotted Goldman Sachs (GS) chief Lloyd Blankfein, former Citigroup (C) chairman Dick Parsons, ex-Barclays (BCS) CEO Bob Diamond, and political pundit Dick Morris circulating among fellow luminaries. “Business really picked up in the fourth quarter of 2012,” says Lomonaco. “It was a double-digit improvement over the bottom.” Foreign visitors who shop their way to the Time Warner Center’s fourth floor discover the Porter House and walk in sans reservations. “I’ve never seen this level of foreign diners, especially steak lovers from Brazil and Argentina,” says Director of Operations Anthony Mardach. Lomonaco has even dropped the bargain hanger steak and added a $53 boneless strip.

Stillman says Smith & Wollensky is holding more corporate parties for the thirtysomething set who work for private equity firms and tech companies that recently arrived in Midtown. And individual diners are spending a lot more than three years ago — a tribute to the durability of steakhouse allure. “They’re more sophisticated diners,” he says. “They want to know about how long the steaks have been aged. They want to know about high-end Spanish wines, and wines from Oregon. They’re a lot more savvy about how they spend their money. They want to know whether we’re using local ingredients.” It wasn’t the same sense of whirlwind, shared experience when folks were settling for a small Caesar salad, he says.

That old steakhouse spirit, and most of the spending, is back. The steakhouse splurge means New York is back. And if the Big Apple is back, well, that’s got to be good for the whole steak-and-potatoes country.