Texas Roadhouse Just Raised Its Menu Prices

Texas Roadhouse is the fastest-growing restaurant chain in 2023, but that doesn't mean it's immune to the food industry's problems.

Many restaurants have hiked rates in recent years to offset rising food, labor, and other costs. Texas Roadhouse raised prices 2.2% at the start of the second quarter this week.

Texas Roadhouse CEO previewed this price hike in February. "We recently completed pricing calls with our operators and will be contemplating a 2.2% menu price increase," CEO stated in February earnings call.

We think this pricing positions us positioned for a robust year of sales and profit growth while enhancing our industry-leading value. As many of you know, this method has rewarded our visitors and stockholders for 30 years."

In this week's results call, Texas Roadhouse's senior director of investor relations and financial analysis, Michael Bailen, verified the 2.2% rise at the start of the second quarter.

For a restaurant known for its low pricing and reasonable steaks, a 2.2% price hike is significant, and customers seem to be modifying their spending habits as a result.

CEO said diners have been conducting "check management," and some first-time Texas Roadhouse customers had started on the discount menu.

The CEO believes this isn't due to pricing because visitor volumes have been great. Morgan stated on the results call that Texas Roadhouse had record first-quarter guest counts.

Texas Roadhouse credited this good performance to better staffing and technology innovations like Roadhouse Pay, which lets visitors pay with tablets at their tables and speeds up service.

Texas Roadhouse's quarter wasn't all good. Despite record visitor counts and double-digit same-store sales, restaurant-level profitability were down 0.5 percent from last year.

Staffing increases have a double-edged sword effect. Texas Roadhouse can serve more diners and better execute its labor-intensive menu with more personnel, but it also means paying more at a time of strong wage inflation. 

The corporation views these concerns optimistically. CEO anticipates general and labor inflation to moderate this year. Customers may have to pay more for steaks and huge margaritas until Texas Roadhouse's financial woes improve.

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