Dining out has become more than just a meal – it’s an experience that customers seek. Restaurants need to deliver delicious food, exceptional service, and a warm, inviting atmosphere to attract patrons and keep them coming back for more.
Texas Roadhouse is creating this experience with its renowned chain of full-service, casual dining restaurants specializing in mouth-watering steaks, ribs, and other American favorites served with a side of Southern hospitality. Providing a lively atmosphere and a commitment to quality, the chain has carved out a niche in the competitive restaurant landscape.
Catering to a diverse clientele ranging from families and friends to professionals and tourists, Texas Roadhouse has established a strong presence across the United States, which also includes its Bubba’s 33 and Jaggers brands. The company has even expanded internationally to several countries across Asia and the Middle East. By offering a versatile menu with generous portions at affordable prices, the eatery continues to attract a loyal and ever-growing customer base.
Actively focused on expanding its footprint by opening new locations and exploring untapped markets, the company is investing in targeted marketing efforts, enhancing its digital presence, and continuously improving the quality and variety of its menu offerings.
In addition to the physical expansion, it is also leveraging technology to streamline its operations and offer customers greater convenience. By adopting advanced solutions for online ordering, reservation management, and customer feedback, the company is aiming to not only ensure a seamless experience for its patrons, but stay ahead of its competition.
Texas Roadhouse’s journey began in 1993, when founder and former CEO, Kent Taylor, driven by his passion for steaks and ribs, opened the first restaurant in Clarksville, Indiana. With a focus on providing guests with a unique dining experience that combined great food, exceptional service, and a lively atmosphere, Taylor laid the foundation for what has become a major player in the casual dining sector.
The early years of Texas Roadhouse were marked by steady growth, as the company opened more locations and gained a loyal following. After two decades, Texas Roadhouse went public, raising over $100 million in its initial IPO, fueling further expansion, which saw the chain reach over 300 restaurants by 2010.
As the brand continued to evolve, Texas Roadhouse expanded its menu offerings to cater to a wider audience. While remaining true to its core focus on steaks and ribs, it began to offer a broader range of complementary items, while consistently updating its menu to reflect seasonal flavors and trends.
In the years that followed, the company embarked on an international expansion, opening its first international location in Dubai in 2011, before adding more locations in countries such as Saudi Arabia, Taiwan, and the Philippines, among others. At the end of January this year, the chain celebrated the opening of its 700th restaurant worldwide, as its plans for growth and expansion continue.
At the helm of Texas Roadhouse is Jerry Morgan, who serves as the president and chief executive officer. Morgan, who succeeded Kent Taylor following his passing in 2021, has been with the company for over two decades. Starting as a managing partner of the very first Texas Roadhouse restaurant, he has held various leadership roles within the organization.
Under Morgan’s leadership, Texas Roadhouse has continued to expand its footprint and enhance its customer experience, while maintaining the company’s core values. With more than 35 years of restaurant industry experience within Texas Roadhouse, Bennigan’s, and Burger King, his deep understanding of the brand and extensive operational experience have been instrumental in continuing to drive the company’s success and growth.
While Texas Roadhouse’s offering revolves around providing customers with a unique dining experience, the company’s core focus is on hand-cut steaks and fall-off-the-bone ribs, which are complemented by an extensive menu that caters to a wide range of tastes and preferences. Feature dishes include USDA Choice steaks, all hand-cut daily by in-house meat cutters, along with their famous ribs, slow-cooked and basted with a signature barbecue sauce, delivering a mouth-watering, tender result.
The restaurant also offers a variety of other American favorites, including chicken dishes, seafood, burgers, and sandwiches. While for those seeking lighter options, an assortment of salads and appetizers, as well as desserts, round out the menu. These include everything from classic baked potatoes to seasoned rice, Big Ol’ Brownies, and complimentary freshly baked rolls, served with a famous cinnamon honey butter.
The customers who frequent Texas Roadhouse are as diverse as their menu offerings. The restaurant caters to families, friends, professionals, and tourists alike, with its versatile menu and affordable pricing making it an appealing choice for a wide range of diners. The warm and inviting atmosphere, complete with country music and line dancing, makes it an ideal destination for celebratory occasions or simply a night out with family.
Beyond serving dine-in customers, Texas Roadhouse has also embraced the growing demand for take-out and delivery services. The company has implemented online ordering and reservation systems, ensuring that customers can conveniently place orders for pickup or secure a table at their preferred location. While its online Butcher Shop, allows its USDA steaks to be delivered right to a customer’s door.
In addition to the Texas Roadhouse brand, Bubba’s 33 is a family-friendly restaurant concept operating at 40 locations. The rock ‘n’ roll-themed venues feature a menu of burgers, pizza, and wings as well as a wide variety of appetizers, sandwiches and dinner entrées, and signature drinks. While five Jaggers locations offer a fast-casual restaurant concept with burgers, hand-breaded chicken tenders, chicken sandwiches, and salads served with scratch-made sauces and dressings.
Over the last few years, Texas Roadhouse has demonstrated impressive growth despite the challenges brought on by the covid pandemic. The company’s efforts in opening new stores, coupled with several technical innovations, and an expanded range of retail products have seen it emerge stronger and more efficient than ever before.
In 2017, Texas Roadhouse generated $2.2 billion in revenue from 549 stores. In just five years, this surged to over $4 billion with just under 700 stores. With the relatively modest, albeit significant expansion of its footprint in the United States and abroad, the implementation of technical innovations such as Digital Kitchens and the Roadhouse Pay initiative have been key in the company’s recovery, resilience, and adaptability.
The rollout of Digital Kitchens has streamlined the ordering process and enhanced the overall customer experience. By integrating digital platforms into their kitchens, the restaurant more efficiently manages orders, and reduces wait times, while maintaining a high level of food quality. While the launch of a new merchandise shop makes it possible for fans to enjoy and share the brand with products including everything from honey cinnamon butter candles to peanut brittle and socks.
Recognizing the need for contactless payment options amid the pandemic, the company’s Roadhouse Pay initiative allows customers to make transactions using their smartphones, providing a seamless, safe, and convenient payment experience. This initiative not only improved customer satisfaction, but also helped the company attract a wider audience that values technology-driven solutions.
For perspective, Texas Roadhouse restaurants were generating $118k in average weekly sales in the lead-up to the covid pandemic disruption. By March 24, 2020, sales had plunged 73% to under $30k. However, the chain has since opened 2023 averaging weekly sales north of $146k, with restaurants averaging more guests than in any period in its history.
Looking ahead, Texas Roadhouse is showing no signs of slowing its momentum expanding its venues in both existing and new markets, and further capitalizing on the strong foundation it has built during the pandemic. Management is currently forecasting to open an additional 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants in 2023. While the continued rollout of its valuable tech initiatives to more locations is expected to further drive the impressive growth to date.
With the exception of 2020, Texas Roadhouse has delivered consistent double-digit revenue growth for more than a decade. That run continued in 2022 as total revenue hit a record $4 billion, increasing almost 16% compared to 2021, primarily due to both an increase in store weeks and an increase in comparable restaurant sales.
The increase in store weeks was due to new store openings and the acquisition of franchise restaurants, while the increase in comparable restaurant sales was due to higher average checks per customer and an increase in guest traffic. In 2022, the company opened 18 Texas Roadhouse, four Bubba’s 33, and one Jaggers restaurant, as well as also completing the acquisition of eight franchise restaurants.
Although gross margins tempered due to commodity prices and wage and labor inflation, the higher sales ultimately saw gross profits increase over 8% to $678.6 million. Likewise, despite being partially offset by higher general and administrative expenses and higher depreciation and amortization expense, net income also increased 10% to $269.8 million in 2022 compared to the prior year.
Looking ahead, consensus estimates have Texas Roadhouse continuing its double-digit growth in 2023 with expected sales of $4.51 billion for year-over-year growth of over 12%. While full-year earnings per share are also forecasted to continue a strong positive trend, growing 18% to $4.68 in 2023, up from $3.97 in 2022.
With a suite of well-established casual dining chains such as Outback Steakhouse, LongHorn Steakhouse, Chili’s, Applebee’s, and Buffalo Wild Wings, among many others, fighting for a share of the highly fragmented and dynamic casual dining market, competition for Texas Roadhouse is fierce. Furthermore, changing consumer preferences, technological advancements, and fluctuating economic conditions, also influence the competitive landscape.
Competing on everything from food quality, menu variety, price, customer service, restaurant ambiance, and promotional activities, Texas Roadhouse differentiates itself by focusing on made-from-scratch dishes using fresh ingredients, as opposed to pre-packaged or frozen products. By hand-cutting steaks in-house, it ensures consistent quality and portion sizes, while also reducing costs associated with purchasing pre-cut steaks from suppliers.
Texas Roadhouse currently has a forward price-to-earnings ratio that is pricing in continued growth. The current macro environment that is characterized by escalating inflation and growing wage expenses could potentially affect the company’s profit margins if they are unable to sustain its present growth trajectory.
Texas Roadhouse has demonstrated remarkable success and resilience in recent years, even amidst the challenges of the pandemic. With its ongoing commitment to expansion, technological innovation, and customer experience, the company is well-positioned for continued growth and success in the dynamic casual dining market.