Maybe you're in it for the free peanuts. Or, maybe you're in it for the cactus blossom. Either way, if you're sitting down for dinner at Texas Roadhouse, we have some unappetizing news.
Providing a high-quality dine-in experience at a value-oriented price is the backbone of the Texas Roadhouse zeitgeist. It's largely to what the chain owes its consistently strong operational performance in 2022, even as other chains suffered. But, for the second time in six months, menu prices just went up. Back in April, prices rose by 2.2%. Now, inflation-weary customers should gear up to tack on an additional 2.7%.
During an earnings call on Thursday, CEO Jerry Morgan cited rising beef prices and state-mandated minimum wage increases as primary motivators for the price hike. Morgan expressed that he is acutely aware that the small window between these increases threatens to harm Texas Roadhouse's reputation as an affordable sit-down chain.
The past few years have been tough on the restaurant industry, and Texas Roadhouse is far from the only company to increase menu prices as a tactic for offsetting higher operating costs, inflation, the price of beef, and the labor shortage. For instance, Chipotle recently announced plans to hike prices for a fourth time in half as many years. Still, while these motivators are very real, it doesn't seem like Texas Roadhouse is suffering financially. The chain has already reported revenue of over $3.4 billion in 2023 alone, 15% better than last year.
The Company Might Be As Hungry As Its Customers
Historically, Texas Roadhouse's guests have remained resilient to price increases. In Q1 2022, the chain hiked menu prices by 3.2%, but consumers didn't seem to be affected. Fiscal Q1 actually saw revenue increase to $987.5 million from $800.6 million during the same period one year prior, and same-store sales went up by 16% at company restaurants and 20.4% at domestic franchise restaurants. The beef-centric chain silently raised prices earlier this month and has yet to announce how this most recent October increase has affected traffic.
This time last year, Texas Roadhouse announced its goal of achieving 900 U.S. restaurants. In late October 2022, the chain was set to surpass competitors Olive Garden and Applebee's and become the largest-scale fast-casual dining franchise by sales. Now, loyal customers might feel an extra strain on their wallets as Texas Roadhouse jacks prices up once again — plus, perhaps an extra strain on morale. As of September 2023, Texas Roadhouse has 630 U.S. restaurants, up from 607 last October. The chain has announced investments of over $340 million into elaborate nationwide expansion plans to build new restaurants and update older ones. If all goes to plan, the chain will open 12 new locations by the end of the year and open 15 more in the first half of 2024. Earlier this year in February, the chain opened its largest location yet, a whopping 12,000-square-foot store in Lubbock, Texas.
Read the original article on Tasting Table.