Americans have been hit hard by soaring menu prices in recent years as restaurants pass on rising food and labor costs. But Texas Roadhouse has fought to keep prices low, offering steak, potatoes, and vegetables for around $20 to $25 – and it’s paying off as families flock to the chain.
The 31-year-old company, founded in Indiana rather than Texas, reported an 8.5 percent sales increase from July to September compared to the same period in 2023, continuing the momentum from earlier in the year. Such a jump means millions more steaks sold over the last year at the 655 restaurants spread out across the US.
This success stands in stark contrast to many of its competitors. Sales have fallen at Olive Garden, Starbucks, and TGI Friday’s. Meanwhile McDonald’s eked out just a 0.1 percent sales increase, and that was only with the help of the wildly popular $5 meal deal.
Unlike most chains that face backlash over rising prices, Texas Roadhouse is winning praise on social media. On Reddit, a ‘Texas Roadhouse never disappoints’ thread has 5,700 upvotes.
Another, shows a photo of a steak dinner with the caption ‘incredible value for $22 at Texas Roadhouse’ – and users lined up to agree. ‘She’s a beaut,’ one user commented on the photo of the steak.
Texas Roadhouse’s main rival Longhorn Steakhouse – with just under 600 locations – is also seeing sales rise, but by a more modest four per cent. Both chains have a history of performing well during economic downturns.
It may seem surprising that steakhouses are thriving in tough times, but the two brands have achieved what many restaurants aspire to – making customers feel like they are getting value for money. Compared to local establishments or upscale chains like STK Steakhouse, the two chains are ‘very affordable’, Jim Salera, a research analyst at Stephens, told CNN.
The average per-person check at Longhorn is $26 and for Texas it is $22. Steak is considered a luxury still, so getting a decent-sized cut along with potatoes and vegetables for that price is good value, experts say. ‘For their core consumer, it really represents an affordable luxury,’ Salera said.
A recent Bank of America note discussing LongHorn’s results echoed the sentiment: ‘Consumers recognize the center-of-plate value offered by steak.’ Most restaurants have imposed big price rises. McDonald’s, for example, has raised prices by an average of 40 percent since 2019, it recently said. Things are different at LongHorn and Texas, BTIG restaurant analyst Peter Saleh told CNN. He said they’ve been trying to raise prices below inflation ‘for a while now.’
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