Consumers can’t get enough Texas Roadhouse.
Same-store sales at the casual-dining steakhouse chain increased 9.3% year over year in the second quarter on 4.5% traffic growth and a 4.8% increase in average check. Menu mix improved to flat after several quarters of negativity and included growth in entrees, add-ons and soft drinks. The strong performance continued into the first four weeks of the current quarter, when same-store sales rose 8%.
As traffic falls industrywide and many chains roll out meal deals to appeal to price-sensitive guests, the 760-unit Texas Roadhouse has seemed to float above the fray.
“Through the first half of the year, we have not seen a measurable impact on our overall business from these issues,” said CEO Jerry Morgan during a call with analysts Thursday. “Our guests continue to recognize the quality and value we offer and do not appear to be changing their dining habits.”
While other brands have responded to rising inflation by raising prices, cutting costs and, more recently, running discounts, Texas Roadhouse has been more careful with price hikes and has invested heavily in staffing. That, plus its reputation for quality steaks and generous portions, has made the brand a hit with consumers, who have become more deliberate about their dining choices.
“We have people trading up to us, trading down to us, trading across to us,” said Michael Bailen, the chain’s director of financial analysis. “We're very pleased with the guests' decision to visit with us.”
In addition to its traffic hot streak, Roadhouse has also begun to make significant progress on the bottom line. In the second quarter, restaurant margins were 18.2%, up from 15.7% a year ago. Executives attributed the improvement to higher traffic combined with more experienced employees, who have become better equipped to handle the demand.
“With our elevated sales and people getting comfortable in doing their jobs and getting the reps in, I think it's all flowing through,” Morgan said.
Employee turnover, Bailen noted, is now at or above pre-pandemic levels.
Executives also touted a pair of investments that seem geared toward making the chain an attractive place to work. In more than 100 kitchens, it has replaced ticket printers with digital order screens, which have created a calmer and more organized environment. It expects to have those in place chainwide by the end of next year.
“That bump screen really allows them to focus on the checks in front of them … so they don't stress out as much,” Morgan said. “When you have a rail of 50 checks hanging in front of you it can be very intimidating at times.”
It also finished rolling out its Roadie First platform, which allows workers to access employment information on their phones. Executives provided few details about the program but said that it’s intended to make Texas Roadhouse an “employer of choice.”
“It's just one last reason that they would have to pick someone else, over us,” Bailen said.
On the development front, Texas Roadhouse opened six company-owned restaurants and three franchised stores in the quarter, including its first restaurant in Puerto Rico.
It is on track to open 30 company-owned restaurants this year and 13 franchised ones across its Texas Roadhouse, Bubba’s 33 and Jaggers brands.
Executives said both of those smaller brands are showing promise. At 48-unit Bubba’s, a full-service burger and beer concept, same-store sales increased 5.5% in the quarter. The company did not break out sales for Jaggers, a quick-service burger brand with eight units.
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