TXRH Vs. Trends

Texas Roadhouse was arguably the least trendy full-service restaurant chain in the 2010s, staying on the sidelines as its competitors repositioned their concepts to appeal to new customers at new dayparts for new occasions. All the while, Texas Roadhouse focused on what the concept was built to do since 1993 - offer steaks for dinner, primarily inside its dining rooms as opposed to the off-premise channels that were booming in the 2010s. 

 

However, Texas Roadhouse’s approach worked - the brand was among the best-performing full-service restaurant chains in the 2010s. At a time when the casual-dining industry was largely struggling, Texas Roadhouse repeatedly grew same-store sales, added new units and batted away suggestions that the brand should accommodate trends around lunch, delivery and more. 

Here, we take a closer look at the brand’s historic decade. 

Behind the Numbers

 

Year; Same-store sales growth; Units

2019; 4.6%; 484

2018; 5.4%; 464

2017; 4.5%; 440

2016; 3.6%; 413

2015; 7.2%; 392

2014; 4.7%; 368

2013; 3.4%; 345

2012; 4.7%; 318

2011; 4.8%; 291

2010; 2.4%; 271

Source: Texas Roadhouse Annual Reports

Lunch? No thanks. 

The 2010s saw a slew of lunch initiatives at leading full-service restaurant brands, driven in part by the growing potential seen in the daypart increasingly dominated by fast-casual chains. In 2014, Romano’s Macaroni Grill launched Romano’s Kitchen Counter, a concept-within-a-concept that was geared toward the lunch daypart. The next year, Texas Roadhouse’s primary competitor, Outback Steakhouse, rolled out lunch nationwide with special value offerings, and Buffalo Wild Wings debuted a Fast Break menu targeting the lunch occasion by promising quick service. 

Each initiative highlighted the challenges brands face when expanding into new dayparts: they typically need a value proposition specific to that daypart. Specifically, needs for convenience and affordability are heightened at lunch relative to dinner, and whatever is driving success at dinner, therefore, may not do the same at lunch. So, Texas Roadhouse didn’t offer lunch, holding on to the belief that the steakhouse was not geared toward the needs of lunch customers but was instead a prime choice at dinner. 

This commitment to dinner aligns with what Outback Steakhouse co-founder Bob Basham described as a founding principle of his chain - quality. In our episode Innovation Leads To Imitation, Basham notes that he and his co-founders believed that if Outback was solely focused on dinner, execution would be better. And this appeared to be the case at Texas Roadhouse; in 2017, Technomic awarded Texas Roadhouse with a Consumer’s Choice Award for food taste and flavor, an accolade that was based on guest feedback. 

We should note, though, that Texas Roadhouse’s emerging sister concept, Bubba’s 33, did add lunch service in the 2010s. But while the rollout of lunch at Bubba 33’s contributed to same-store sales growth, Kent Taylor, who founded both chains, continued to emphasize that lunch was simply not a fit for Texas Roadhouse.

 

Delivery? Order from somewhere else - please.

Texas Roadhouse wasn’t just keeping their doors closed at lunch, they were also keeping third-party delivery drivers locked out. Perhaps no trend was more disruptive to the restaurant industry in the 2010s than delivery as third-party delivery providers like DoorDash and Uber Eats quickly emerged, setting the expectation that delivery should be available from all sorts of restaurants. But an important facet of this trend is that such services grew by gaining popularity among consumers more so than operators, who struggled with the high fees and questionable execution that came with third-party delivery partnerships. 

 

Kent Taylor was one of the most vocal critics of delivery. But while he rejected the idea of Texas Roadhouse offering delivery, he did wish that his competitors would, “do as much delivery as they can so they can deliver lukewarm food to the people who order it.” Taylor was all about quality, and he was certain that delivered food would not be nearly as good as meals served fresh at Texas Roadhouse.  

 

Fast-casual spin-offs? Not quite. 

B-Dubs Express; Red Robin Burger Works; Beef’s Express; Hoots; The Den by Denny’s; Aussie Grill by Outback; Flip’d by IHOP. The 2010s were chock-full of not just new fast-casual brands, but fast-casual brands that touted direct connections to well-known full-service restaurant chains.

Unlike with lunch and delivery, Texas Roadhouse didn’t avoid this trend altogether, though the brand did go about launching a fast-casual concept, Jaggers, in a unique way. First, Jaggers boasted virtually no connection to Texas Roadhouse from a branding perspective. Second, the company was overly cautious in expanding the concept, which was founded in 2014 but had only a handful of locations by the end of the decade. The time spent fine-tuning the concept was allowable as Texas Roadhouse, unlike some other full-service restaurant companies, wasn’t in need of another growth engine. 

Cutting labor costs? No way. 

We’ve learned through our research of the industry’s history that labor costs are continually a challenge for operators across generations. So, perhaps it pays to remember how two full-service chains handled this issue differently in 2018. 

Near the beginning of the year, Red Robin announced that it would be cutting an hourly busser position in response to rising labor costs, hoping the move would improve profit margins. 

Later on in the year, Texas Roadhouse told Wall Street that they would be increasing prices to protect their margins amid a challenging labor environment. The company was not comfortable making any labor cuts that might negatively impact the guest experience. 

Red Robin was able to protect its margins. But alas, restaurants bank dollars, not margins, and the brand’s same-store sales dropped significantly in the wake of this decision. Such was certainly not the case at Texas Roadhouse. 

 

The Pandemic

Texas Roadhouse’s long-term streak of positive same-store sales growth came to a screeching halt in early 2020 as the covid-19 pandemic led to dining room shutdowns across the country. However, Texas Roadhouse’s positioning as one the better performing public FSR brands and its tendency to outperform competitors by going against the grain remained firmly intact. 

While the brand’s sales were certainly down, the company quickly put in place a strong takeout program that allowed its sales to more quickly recover than many other leading full-service chains. Notably, the brand continued to avoid delivery, despite more competitors pushing the service and developing delivery concepts called virtual brands. In fact, nearly every other public full-service restaurant company quickly had some sort of virtual brand strategy during this time, including Bloomin’ Brands, Brinker International, BJs Restaurant, Red Robin, Cracker Barrel, Denny’s and more. Consider it another trend Kent Taylor would avoid. 

But that’s just what Texas Roadhouse was all about - being a company that proudly did its own thing, unbothered by whatever would be seen as standard practices. The brand resembled the proverbial entrepreneur who wears a cowboy hat rather than a suit and tie, unwilling to change who they are for the sake of convention. 

 

Actually, that’s not a proverb - that was founder Kent Taylor when meeting with investors for Texas Roadhouse’s IPO. 

On March 18th, 2021, Kent Taylor passed away. He is remembered by much of the industry for his unbridled entrepreneurship, his unique approach to the business, his memorable lines to Wall Street analysts, and his devotion to his employees, best represented by his decision to redirect his compensation package to front-line workers during the pandemic.