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April 4, 2025
Texas Roadhouse Surpasses Olive Garden To Become No. 1 Casual Dining Chain in America: Can It Keep Up the Pace?
Texas Roadhouse has accomplished quite the feat in dethroning Olive Garden as the No. 1 casual dining chain in America, according to Restaurant Business.
The news comes after the steakhouse chain posted impressive Q4 2024 earnings outlining a comparable sales increase of 7.7% at company restaurants and 6.3% at domestic franchise restaurants. Average weekly sales at company restaurants increased from $141,653 (of which $17,793 were to-go orders) the year prior to an average of $153,867 (of which $20,067 were to-go orders).
Citing Technomic data crowning Texas Roadhouse the U.S. champion of casual dining, Restaurant Business also indicated that the steakhouse had pushed systemwide sales upward by 14.7% last year and had opened 26 new locations (an improvement of 4.1%).
By contrast, Olive Garden reported a 2024 sales improvement of just 0.8%, representing a trend for most of the top 10 restaurants profiled by Technomics. Applebee’s (-5.8%), Outback Steakhouse (-3.9%), Red Lobster (-22.7%), and Red Robin (-4.2%) all saw a downward trend in yearly sales figures, and the overall average — even including big winners such as Texas Roadhouse, Chili’s (+15%), and LongHorn Steakhouse (+7.2%) — was just 0.6% in the positive direction.
Despite the apparent headwinds facing the U.S. casual dining market as a whole, it appears that Texas Roadhouse has managed to carve out a path to success — at least for now.
CNBC’s Jim Cramer Is Bullish on Texas Roadhouse’s Future Fortunes
Controversial stock analyst and TV personality Jim Cramer appears to be bullish regarding the prospect of Texas Roadhouse’s immediate future, as Insider Monkey reported.
“Texas Roadhouse (TXRH) stock I like so much we decided to buy some for the charitable trust two weeks ago. These guys reported what I thought was a darn good quarter, with better-than-expected same-store sales up 7.7% alongside a healthy earnings beat. Sure, not as crazy as the results from Brinker, absolutely, but Texas Roadhouse is a much more mature company. It just happens to be a real steady operator with a lot of room to grow,” Cramer began.
“Also, unlike Brinker, Texas Roadhouse has held up surprisingly well, with the stock down only a few from early February, even as it had a tough week and a tough day. At one point, it was down 6.5 bucks today. That said, I like this one for the same reason I like Brinker. Texas Roadhouse offers what I call relative value. It may be a steakhouse, but it’s a bargain versus the competition. Where else can you get an 8-ounce steak with two sides for $9.99 on the Wild West?” he added.
Cramer isn’t exactly alone in his rosy outlook concerning the steakhouse’s prospects in the U.S. market. A TipRanks breakdown of the stock’s current value versus expectations affords TXRH a “moderate buy” call, with 18 experts rating it a buy, 17 rating it a hold, and none rating it a sell.
Discussion Questions
Will Texas Roadhouse be able to sustain its current momentum in the casual dining market? Why or why not?
What aspects of the steakhouse’s operating model have resulted in its apparent success over the course of the past year?
What challenges lie ahead, and how might it navigate these?
Poll
Loading …BrainTrust
Richard J. George, Ph.D.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Carol Spieckerman
President, Spieckerman Retail
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Texas Roadhouse has performed well. Some of this was from opening new locations, which always boosts revenue. Some was from same-restaurant sales from winning new customers. However, the switch with Olive Garden is also due to the lackluster performance of that chain. Olive Garden has a bigger exposure to more pressured consumers who have cut back on dinning and this dampened its growth.
Oh that’s the one HQ’ed in Kentucky…right? 🙂
I suppose this might be of interest to those in the restaurant industry, but the rest of us are likely to be…less inpressed: a single year title seems like being in first place mid-season. As for Jim Cramer being bullish on it – no pun intended – forget being leary of your Mastercard, kids….Controversial stock analyst and TV personality…now that’s something to avoid.
Texas Roadhouse has been building its following with a menu which appeals to many. But the real thing driving growth? Texas Roadhouse Rolls, hot from the oven with cinnamon butter and honey beats Olive Garden’s fresh breadsticks!
100% agree with this!!! I love their rolls ! I think Olive Garden has reformulated their breadsticks and it’s not the same. I believe customer can see the perceived value in what they order at Roadhouse they are very satisfied of how they are taken care of when they go to their restaurants. I have two locations near me, and they are always packed.
No doubt. Those things are like crack. Every good dining experience should have some sort of indulgence. Every customer is happy, smiling, feeling good about the value at Texas Roadhouse.
Texas Roadhouse has done a terrific job with families. It has made it a fun place to dine compared to the more staid casual chains. Plus its offering combines taste with value – a winning combination. Expect to see them on the leaderboard for some time to come.
The recent trend towards dining out and the increasing demand for casual dining experiences bode well for Texas Roadhouse’s continued success.
Additionally, their focus on quality food and customer service has helped them maintain a loyal customer base. However, rising food costs and labor shortages could pose challenges to sustaining their current momentum in the long run.
Their menu innovation has played a significant role in attracting and retaining customers. By regularly introducing new dishes and limited-time offerings, Texas Roadhouse keeps the dining experience fresh and exciting. This approach not only caters to diverse tastes but also encourages repeat visits from patrons eager to try the latest culinary creations.
To address rising food costs, Texas Roadhouse could explore strategic partnerships with local suppliers to reduce expenses and ensure a steady supply of ingredients.
Additionally, implementing cost-effective menu changes or offering seasonal specials could help mitigate the impact of fluctuating prices. By focusing on operational efficiencies and waste reduction, they can maintain profitability while continuing to deliver high-quality dining experiences.
It never ceases to amaze me that the Texas Roadhouse a few miles away is continually packed to the rafters. The parking lot was completely full at 3:00 on a recent drive-by. At the end of the day, it’s a family-friendly place where everyone gets full without breaking the bank. Also, “steak” still has an indulgent connotation for many dinners (more so than mere pasta). Yes, the rolls are a thing but bang-for-the-buck is the sustaining draw.
This is more about the Olive Garden concept becoming more stale than it is about Texas Roadhouse excellence. In fact I think a case can be made for the entire casual dining segment to shrink. Red Lobster? TGIF’s? Applebee’s? Boring sums this segment up perfectly, and that is a large problem to overcome.