Texas Roadhouse Profile
Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment.
The company’s operating strategy is designed to position each of its casual dining restaurants as the local hometown favorite for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. The company owns and operates restaurants and franchises an additional domestic restaurants and international restaurants.
Restaurant Concepts
The company operates as Texas Roadhouse restaurants, Bubba’s restaurants, and Jaggers restaurants.
Texas Roadhouse is a moderately priced, full-service, casual dining restaurant concept offering an assortment of specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open grills. In addition to steaks, the company also offers its guests a selection of ribs, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The majority of the company’s entrees include two made-from-scratch side items, and the company offers all its dine-in guests free roasted in-shell peanuts and fresh baked yeast rolls.
Bubba’s 33 is a moderately priced, full-service, casual dining restaurant concept featuring scratch-made food for all with a little rock 'n' roll, ice-cold beer and signature drinks. The company’s menu features burgers, pizza and wings as well as a wide variety of appetizers, sandwiches and dinner entrees. The company’s first Bubba’s 33 restaurant opened in May 2013 in Fayetteville, North Carolina.
Jaggers is a fast-casual restaurant concept offering burgers, hand-breaded chicken tenders and chicken sandwiches served with scratch-made sauces. In addition, the company offers fresh salads that are made-to-order and served with homemade dressings. Jaggers offers drive-thru, carry-out and dine-in service options. The company also offers delivery services at certain locations. The company’s first Jaggers restaurant opened in December 2014 in Noblesville, Indiana.
Segments
The company manages its restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba’s 33, Jaggers and retail initiatives (including the company’s online store and royalty-based licensing arrangements) as separate operating segments. In addition, the company has identified Texas Roadhouse and Bubba's 33 as reportable segments.
Operating Strategy
The operating strategy that underlies the growth of the company’s restaurants is built on the following key components: offering high quality, freshly prepared food; creating a fun and comfortable atmosphere with a focus on high quality service; and focusing on dinner.
Restaurant Development and Unit Economics
The company consistently evaluates opportunities to develop restaurants in new and existing markets. The company’s site selection process is critical to the company’s growth strategy. The company works actively with experienced real estate brokers in target markets to select high quality sites and to maintain and regularly update the company’s database of potential sites.
The company designs its restaurant prototypes to provide a relaxed atmosphere for the company’s guests, while also focusing on restaurant-level returns over time. The company’s prototypical Texas Roadhouse restaurant consists of a freestanding building with approximately 7,600 to 8,400 square feet with seating for approximately 270 to 325 guests and parking for approximately 180 vehicles either on-site or in combination with some form of off-site cross parking arrangement. The company’s prototypes are adaptable to in-line and end-cap locations and/or spaces within an enclosed mall or a shopping center.
The company’s prototypical Bubba’s 33 restaurant consists of a freestanding building with approximately 7,600 square feet with seating for approximately 270 to 330 guests. Some locations include patio seating for approximately 60 guests. Parking is targeted for approximately 180 vehicles either on-site or in combination with some form of off-site cross parking arrangement.
Food
Menu. The company’s restaurants offer a wide variety of menu items at attractive prices that are designed to appeal to a broad range of consumer tastes. At Texas Roadhouse restaurants, the company offers a broad assortment of specially seasoned and aged steaks, all cooked over open grills and all but one hand-cut daily on the premises. The company also offers its guests a selection of ribs, seafood, chicken, pork chops, pulled pork and vegetable plates, and an assortment of burgers, salads and sandwiches. Entree prices include roasted in-shell peanuts, fresh baked yeast rolls and most include the choice of two made-from-scratch sides. Other menu items include specialty appetizers such as the ‘Cactus Blossom’ and ‘Rattlesnake Bites’. The company also provides a ‘12 & Under’ menu for children that includes a selection of smaller-sized entrees served with one side item and a beverage.
At Bubba’s 33 restaurants, the company offers a broad assortment of burgers, pizza and wings as well as a wide variety of appetizers, sandwiches and dinner entrees. The company’s Bubba’s 33 restaurants also offer an extensive selection of draft beer and signature cocktails. The company provides a ‘12 & Under’ menu for children that includes a selection of items, including a beverage.
At Jaggers restaurants, the company offers fresh, authentic, scratch-made food, including double stacked burgers, hand-breaded chicken sandwiches and chicken tenders, made-to-order fresh salads and hand-spun milkshakes. The company also provides a ‘12 & Under’ menu for children that includes a selection of smaller-sized entrees, a side, a drink and a cookie.
Most of the company’s full-service restaurants feature a full bar that offers a selection of draft and bottled beer, major brands of liquor and wine, as well as made in-house margaritas and signature cocktails. Managing partners are encouraged to tailor their beer selection to include regional and local brands. In 2023, alcoholic beverages at all company restaurants accounted for 10.3% of restaurant sales.
The company works with a third-party vendor to manage an online tool to provide nutritional information, as well as help customers identify known allergens in each of the company’s menu items. This information is available for all concepts.
Restaurant Franchise Arrangements
Franchise Restaurants. As of December 26, 2023, the company had 21 franchisees that operated 106 Texas Roadhouse and Jaggers restaurants in 20 states and ten foreign countries. Domestically, franchise rights for the company’s Texas Roadhouse restaurants are granted for specific restaurants only, as the company has not granted any rights to develop a territory. The company is not accepting new domestic Texas Roadhouse franchisees. Approximately 85% of the company’s franchise restaurants are operated by ten franchisees and no franchisee operates more than 16 restaurants.
The company’s standard Texas Roadhouse domestic franchise agreement has a term of ten years with two renewal options for an additional five years each if certain conditions are satisfied. The company’s current form of domestic franchise agreement generally requires the franchisee to pay a franchise fee for each restaurant opened and royalties based on a percentage of gross sales. In addition, domestic Texas Roadhouse franchisees are required to pay a percentage of gross sales to a national marketing fund for system-wide promotions and related efforts.
The company has entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in several foreign countries and one U.S. territory. For the existing international agreements, the franchisee is generally required to pay the company a development fee for the company’s grant of development rights in the named countries, a franchise fee for each restaurant to be opened and royalties on the sales of each restaurant.
The company has also entered into area development agreements for Jaggers, the company’s fast-casual concept. The company has agreements in place that allow for the development and operation of restaurants in specific territories in Texas, Oklahoma, and North Carolina. As part of these agreements, the franchisees are required to pay the company a development fee for its grant of development rights in the named territories, a franchise fee for each restaurant to be opened and royalties based on a percentage of gross sales. The company opened its first two Jaggers franchise restaurants in 2023.
The company’s standard Texas Roadhouse and Jaggers domestic franchise agreements give the company the right, but not the obligation, to compel a franchisee to transfer its interests to the company based on pre-determined formulas included in the company’s franchise agreements.
Any of the company’s area development or franchise agreements, whether domestic or international, may be terminated if the franchisee defaults in the performance of any of its obligations under the development or franchise agreement, including its obligations to develop the territory or operate its restaurants in accordance with the company’s standards and specifications. A franchise agreement may also be terminated if a franchisee becomes insolvent, fails to make its required payments, creates a threat to the public health or safety, ceases to operate the restaurant, or misuses the company’s trademarks.
Management Services
The company provides management services to certain domestic franchise restaurants, some in which the company has an ownership interest and others in which the company has no ownership interest. Such management services may include accounting, operational supervision, human resources, training, and food, beverage and equipment consulting for which the company receive monthly fees. The company also makes available to these restaurants certain legal services, restaurant employees and employee benefits on a pass-through cost basis.
Trademarks
The company’s registered trademarks and service marks include, among others, the company’s trade names and logos and proprietary rights related to certain core menu offerings. The company has registered all of its significant marks for the company’s restaurants with the United States Patent and Trademark Office. The company has registered or has registrations pending for the company’s most significant trademarks and service marks in multiple foreign jurisdictions. To better protect the company’s brands, the company has also registered various Internet domain names.
Government Regulation
In addition to domestic regulations, the company’s international business exposes the company to additional regulations, including antitrust and tax requirements, anti-boycott legislation, import/export and customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.
The company’s facilities must comply with the applicable requirements of the Americans with Disabilities Act of 1990 (‘ADA’) and related state accessibility statutes. Under the ADA and related state laws, the company must provide equivalent service to disabled persons and make reasonable accommodation for their employment.
Seasonality
The company’s business is subject to seasonal fluctuations. Historically, sales in most of the company’s restaurants have been higher during the winter months of each year.
History
Texas Roadhouse, Inc. was founded in 1993. The company was incorporated under the laws of the state of Delaware in 2004.
