Texas Roadhouse Is Seeing Record Traffic

The popularity of Texas Roadhouse is undeniable. Not only did it come back stronger than its competitors in the post-pandemic recovery, but the chain's popularity continues to soar even in this less euphoric time, as inflation forces Americans to rethink their dine-out budgets.

America's largest steakhouse chain announced Thursday that its restaurants had averaged more guests in the past seven weeks than in any other period in its history. Additionally, same-store sales were up 15.8% in the same time period. Michael Bailen, the senior director of investor relations and financial analysis at Texas Roadhouse, said that traffic accounted for "just a tick over 10% of that 15.8%," while the rest comes from pricing.

So, what could possibly be the reason for this record traffic? While Texas Roadhouse executives couldn't definitively point to why, they did provide some potential explanations.

Gina Tobin, who was named the chain's new president in January, suggested that technological improvements could be driving traffic. Tobin mentioned Roadhouse Pay, a service that allows guests to pay for their food with a tablet at their table. Since launching Roadhouse Pay in March of last year, the chain has expanded it to more than 600 locations, Restaurant Business reported.

Allowing guests to pay on their own time makes it possible for Texas Roadhouse to "turn our tables faster, which is what we've seen," Tobin said. This means that the chain can serve even more parties than before and make sure that customers don't have to spend extra time waiting to get their checks from busy servers, perks that are likely making the guest experience at Texas Roadhouse even better and encouraging people to come back.

Texas Roadhouse has also added kitchen display systems at some locations, which can help restaurants manage customer orders. Effective order management can decrease the amount of time customers are waiting for their food, likely boosting guest satisfaction and allowing Texas Roadhouse to serve more customers and make room for more traffic.

"So we really look at from a technology standpoint, any piece that can help the speed of our restaurants which obviously increases the traffic growth," Tobin said.

Additionally, higher staffing levels and employee experience have lead to increased productivity, efficiency, and speed, promoting stronger traffic, she added.

Bailen suggested that the traffic increase could be attributed to customers "trading up" to Texas Roadhouse from fast-casual chains with similar prices in order to get the full table service offered by the steakhouse. He indicated that elements outside of Texas Roadhouse's control, like the Super Bowl, Valentine's Day, and the weather, are likely not the cause of the strong start to 2023. Both the Super Bowl and Valentine's Day have taken place within the last week, but the chain has seen "a pretty consistently strong performance throughout the seven weeks," Bailen said.

Meanwhile, Texas Roadhouse CEO Jerry Morgan believes that the strong start to the year can be traced back to the quality of their brand as a whole.

"I think it's about our execution and about the quality of the product that we're putting on the plate," he said.

Bailen said that the company is unsure what the next six weeks of the quarter will bring, though sales will likely come down "as we start to lap some more normalized numbers." However, "I think we still have opportunity to grow," he added.