Texas Roadhouse has been on a roll for the past several years now, churning out record sales and average unit volumes and managing astonishingly high demand as it enters its 12th consecutive year of traffic gains.
Such momentum hasn’t necessarily been the case for many of its casual dining peers in a challenging post-pandemic environment. Many have experienced declining traffic patterns and, in some cases, unit count retrenchment. This divergence pushed Texas Roadhouse past one of its biggest segment competitors in 2023, as the Louisville, Ky.-based chain generated higher sales than Applebee’s for the first time, according to new data from Technomic Ignite.
Texas Roadhouse finished the year with $4.78 billion in sales – a 13.8% jump from 2022, when the chain finished with $4.2 billion. Comparatively, Applebee’s finished 2023 with $4.35 billion, a 0.1% decrease from 2022’s $4.36 billion.
Texas Roadhouse also snuck up on casual dining leader Olive Garden, though it’s worth mentioning that Olive Garden’s 2023 was certainly remarkable in its own right. The Darden Restaurants’ brand finished 2023 with $5.11 billion in sales, an 8.8% increase over 2022’s $4.69 billion.
Notably, Texas Roadhouse’s categorical momentum has come despite its smaller footprint – the company ended 2023 with just under 640 units, a 3.9% jump from 2022. Applebee’s, meanwhile, finished 2023 with 1,536 restaurants, a 2.1% decrease from 2022, while Olive Garden had 908 units at the end of 2023, a 2.4% year-over-year increase.
That’s a lot of numbers to digest, to be sure, but the takeaway here is that Texas Roadhouse is running laps around its segment peers, even those running at a swift pace themselves. In fact, Texas Roadhouse’s volumes have been so high, the company is building its new restaurants about 10% bigger than its standard prototype to serve more guests “more efficiently,” according to executives.
Texas Roadhouse’s differentiators
Perhaps therein lies Texas Roadhouse’s biggest differentiator – efficiency. The company doesn’t serve lunch, nor does it offer delivery. It’s not running limited-time offers every other month or so. It simply sticks to its “legendary food, legendary service” principles put into place when the late Kent Taylor founded the company in 1993. The company’s focus on value has also served it well in this type of macroenvironment; each entrée comes with complimentary sides and bread, for instance, while the chain has also become known for its free in-house peanuts provided before meals.
As for that “legendary service” piece, Texas Roadhouse has been a perennial favorite on the annual American Consumer Satisfaction Index Restaurant Study for the past decade or so. It was also named a top five brand in Piper Sandler’s 47th semi-annual Taking Stock with Teens survey, released Tuesday.
The chain’s presence in these surveys has come despite not having a heavy technology presence preferred by younger consumers, though it is slowly adopting features like Roadhouse Pay (at the table) and digital kitchen display systems. Although there is no targeted timeline, the intention is to get the entire system eventually outfitted with this technology, which executives said lead to faster, more consistent service and happier employees.
What’s next?
Aside from a slow-and-steady tech rollout, Texas Roadhouse’s plan is to stay the course. The company is targeting about two dozen or so new restaurants this year – similar to last year – despite record high average unit volumes of $7.6 million.
By comparison, Olive Garden will be part of Darden’s broader 45 to 50 new restaurant openings this year spanning nine brands. Meanwhile, Applebee’s expects to close between 25 to 35 net restaurants this year. Those closures are focused on underperforming restaurants and are part of the chain’s long-term plan to get back to net new unit growth.
In other words, this conversation around Texas Roadhouse's momentum could very well continue next year and beyond. Indeed in 2022, Texas Roadhouse’s annual revenues surpassed $4 billion for the first time in its 30-year history, just five years after exceeding $2 billion, and executives have said they see the potential to double its revenue again over the next decade.
“We feel like we’re well positioned if we continue to deliver on our food promise, our service and hospitality,” CEO Jerry Morgan told analysts in October. “The consumer is telling us to keep doing what we’re doing.”
Contact Alicia Kelso at [email protected]
