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4 ways Texas Roadhouse intends to keep outpacing other brands

With same-store sales up 8.5% for the first month of Q2, how does the casual operator plan to keep outpacing the pack? Here’s what management has revealed.

Coming off a 4.9% same-store sales rise at company restaurants in the first quarter, Texas Roadhouse is already crowing about a booming start to Q2: an 8.5% comp rise, albeit against what the casual-dining operator described as a soft year-ago stretch (a 2.6% increase for corporate stores).

How does the casual pacesetter intend to keep outrunning the pack? Here are four ways it revealed to investors Monday.

1. Out-staffing the competition

Like every other operator, Roadhouse is seeing labor costs climb, a surge accentuated by the need to handle more traffic per restaurant (same-store traffic rose 4% at company units in Q1, according to management). But instead of looking for ways to economize, the casual leader intends to maintain its historic staff-to-business ratio, if it not tip it in favor of service, said CEO Kent Taylor. “We believe that investing in staffing and in our people will take us to the next level,” he told financial analysts.

“We’ve been really working with [unit] operators on making sure they feel comfortable with the number of servers they have on their bench and in their lineup,” explained Tonya Robinson, VP of finance and investor relations. “So in doing that, they’re training more people. They’re hiring a few more people to kind of get up to those levels of what that next sales goal is.” 

It’s staffing high by design, suggested President Scott Colosi.

“Some of our people find we’re just a hard place to work at because we’re so busy,” he said. “So there is why we’re hiring so many people: Some will work out, some won’t.”

Roadhouse’s traditional staffing level calls for one server waiting on no more than three tables, and sometimes only two, according to Taylor.

2. ‘No’ to some technology

Don’t expect to see Roadhouse follow the casual herd in embracing certain technologies, executives said. For instance, it’s looked at kitchen display systems, an innovation widely embraced by full-service peers to speed service. “Our folks at Roadhouse almost overwhelmingly, when we ask them about that, would rather stay with our existing ticket system,” said Colosi, “and many of them have come from environments where there were kitchen display systems.”

Similarly, “I don’t necessarily see us doing tablets on tables,” he said. Roadhouse is interested in developing a viable pay-at-the-table capability, but the likely option is some sort of device a server brings to the table upon request, he suggested.

3. A full development pipeline

At a time when many casual chains are easing off development to focus on bolstering traffic at existing branches, Roadhouse isn’t letting up.

“I’ve actually already approved 27 sites for next year, of which nine are already in permitting, which is pretty early,” said Taylor. “So we feel very good about hitting around 30 again.”

Eleven stores have opened thus far in 2018, and 10 more are under construction.

4. Attention to takeout

Taylor has declared that Roadhouse will never follow the pack into delivery, but the executive team showed during yesterday’s conference call with analysts that they’re not opposed to takeout. The chain has rolled out new to-go packaging, and is building a separate to-go room near the host station in some stores. About 7% of sales currently come from takeout customers, up from 6.2% a year ago, according to Taylor.

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