Emulating Texas Roadhouse—One of the Most Successful Restaurant Chains

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on Aug 21, 2018 5:00:00 AM
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In 2017, PopWrapped created a list of the top five underrated chains in America. This was based on the quality of food, the service, and the treatment of their employees.

Texas Roadhouse came in at number one.

This year, the staff at Money decided to take a survey on what they considered the best restaurant chains in America. Their choices were limited to those that had over 100 units nationwide, offered a full-service experience, and provided moderately priced food. They included the cost of a dinner entrée and customer experience in their decision process.

Texas Roadhouse came in the top 25 chains.

This year’s American Customer Satisfaction Index was based on the opinion of 22,500 customers who evaluated their recent experiences at the largest brands. These included expectations and perceptions on value and quality.

Texas Roadhouse came in at number one.

I overheard a conversation the other day at one of my favorite outdoor restaurant venues. A guest was talking to his waiter about his dreams of owning his own restaurant someday. The guest suggested he study and emulate the business model of, yes, you guessed it, Texas Roadhouse.

Texas Roadhouse is now comprised of 527 units and exceeds $2 billion in revenue with an average unit bringing in about $5 million. While 2017 saw traffic decline by anywhere from 1 to 7 percent at most chains, Texas Roadhouse increased its traffic by 3.6 percent. Same company store sales rose by 5.8 percent while U.S. franchised units saw a 4.7 percent sales growth. Compare this to Applebee’s same store sales which declined by 5.3 percent and you have to wonder how Kent Taylor, founder and CEO of this lucrative chain, created this gold mine.

And all this occurred in the wake of a 0.3 percent increase in prices due to the rising cost of labor.

So, just what is the secret to Texas Roadhouse’s success?

Some would say that it is a man with a vision that doesn’t waver. Visionaries, after all, rarely go along with the masses. Does this casual dining chain promote their delivery services as many in the industry turn to this viable strategy? No. In fact, according to Food News Feed, Taylor was quoted as telling a group of investors that he encouraged his competitors “to do as much delivery as they can so they can deliver lukewarm food to their people that order it.” Despite their lack of promotion, the chain’s to-go business has doubled from 3 to 6 percent of sales in the past five years.

Do they change their menu once a month and offer daily specials? Word is that their last menu change was about four years ago and that their number one seller has remained their 6-ounce USDA choice top sirloin since they opened their doors in 1993. Since that time, they have been known for their hand-cut steaks and fall-off-the-bone ribs.

Here is what they believe in: selling affordable, high-quality, made-from-scratch meals, ice-cold draft beer, and providing friendly service. Bakers make their fresh-baked yeast rolls served with homemade cinnamon butter while butchers cut, on average, $1 million worth in meat every year at each store. Steaks account for 44 percent of their menu. They are also committed to consistency across the chain. Except for weekends, they are a dinner-only chain, in part because they are committed to providing their employees with a balanced lifestyle.

They believe that happy employees make for happy guests and, to this end, offer line-dancing competitions and provide the top meat cutter with an end-of-the-year $20,000 bonus. General managers are said to make more at this chain than most of their competitors.

Emulating this successful chain involves menu pricing strategy such as drawing in customers for their high value steak offerings and then making up the profits on higher margin options such as alcoholic beverages.

They are also said to sign two-year contracts with their beef suppliers, ensuring steady beef prices at a time of rising costs.

They protect their brand by carrying their core values across all units. This may be one of the reasons they were ranked #1 Consumer Pick in Nation’s Restaurant News List of casual steak restaurants, named America’s Top Chain Restaurant by Forbes and received Large Company of the Year by Business First.

For those entering this challenging industry, finding your mentor in the shadow of Texas Roadhouse and their significant success is definitely a good place to start.

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Topics: Data Intelligence, Staff

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