Texas Roadhouse is the most consistent casual dining restaurant chain in the U.S., certainly coming out of the pandemic. Since the fourth quarter of 2020, when the chain reported its last negative quarterly same-store sales figure, the lowest reported number has been 7.3%.
Since 2022, which eliminates the post-quarantine comparison quarters, it has averaged just under 10% same-store sales. That’s 300 basis points more than LongHorn Steakhouse and 800 basis points more than Outback Steakhouse.
That outperformance relative to its competitors was at its strongest in the second quarter, when Texas Roadhouse same-store sales rose 9.3%, compared with 3.7% at LongHorn and a 0.1% decline at Outback.
All of which is to say the brand is outperforming its main competitors and the broader casual dining sector. That’s hard to do, given that inflation concerns have hammered full-service chain traffic this year.
And Texas Roadhouse is doing this the right way. “We’re a people-first company that just happens to serve steaks,” CEO Jerry Morgan said at the CREATE Conference this week. The event, put on by Restaurant Business sister company Nation’s Restaurant News, featured the Louisville, Kentucky-based chain as its annual “Brand Icon.”
Kent Taylor founded Texas Roadhouse in 1993 and built the chain using an operating partner model, so the people who run the restaurant have to buy into it. “You write a check, you become an owner-operator, you become a partner,” said Morgan, who borrowed money from his parents to buy his way into the position 27 years ago.
“There’s a true partnership in them running the business,” he said. “We have a clearly defined mission. We’ve got our values and purpose. It’s why we do that craziness every day.”
Taylor was famous for insisting the chain do things a certain way. Texas Roadhouse refused to focus even on takeout going into the pandemic, believing that the best way to enjoy the chain is by eating inside. It would acquiesce to takeout during the pandemic, in part out of necessity and also because its customers demanded it. But it has yet to do third-party delivery.
Under Morgan, the company does use technology, but it’s all for a purpose. The company builds its own software, for instance, to ensure that it can customize the programs to fit its needs.
“We like customization,” he said. “We have a certain way of doing business. We like how we do business. We need flexibility in technology to improve and enhance the experience. We’re in the human interaction business.”
That interaction is meant to be fun, which is a nice reminder that people dine out at full-service restaurants because they want to enjoy themselves. Texas Roadhouse has created an atmosphere in which its servers line dance and enjoy themselves, which is a big reason customers keep coming back.
“We’re a little rowdy,” Morgan said. “We’re an enthusiastic, energized company that loves to do business.”
Taylor himself lived it. “If you know Kent, there is Kent Taylor, and there is Bubba,” said Morgan, referring to Taylor’s nickname. “Bubba is a lot of fun.”
“He was a hell of a partner. He’s missed.”
Taylor died in 2021, a victim of COVID. It thrust Morgan into the top job almost overnight.
“As a leader, you have to be able to make decisions,” Morgan said. “As I was healing from losing my friend and my partner, I still had this job to do.”
“He would not let any of us quit because he was gone,” Morgan added.
Morgan, however, maintains the company’s values, and then some. Texas Roadhouse doesn’t do any limited-time offers, focusing on its existing menu while giving customers the things they want, such as peanuts and rolls with cinnamon butter.
“The expectation is a protein with two side items, peanuts and bread and butter,” Morgan said. “We’re a steakhouse. Most people talk about the peanuts and bread and butter before they talk about the steaks. Peanuts are a huge part of what we do.”
It also does not do any national advertising. In an age in which some chains have abandoned local advertising to focus on national accounts, Texas Roadhouse focuses on its local markets and doesn’t do anything nationally. “Being locally owned and operated, partnering with our communities, that’s how we win,” Morgan said.
That’s the way it should be. Having someone in the stores with skin in the game, who interacts with customers and runs stores the right way while carrying the company culture, is a winning formula. Chains with such models, or something similar, have been thriving of late.
Just ask Texas Roadhouse.