Texas Roadhouse grapples with rising food prices

Staff Writer
Texas Roadhouse grapples with rising food prices

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Texas Roadhouse founder and chief executive Kent Taylor said some menu items with more favorable food costs have helped the chain mitigate food inflation, and would continue to be an option for the brand next year.

“We’ve introduced a bone-in rib eye in our restaurants at a price point of $21.99, and it’s in 85 percent of stores and expected to be in all stores next year,” Taylor said. “We also have a porterhouse steak from $22.95 that we’re testing in 20 stores, and it should be in 100 to 110 stores next year. They both help our check average.”

Taylor added that the brand’s value proposition on the lower end of the price spectrum has strengthened this year because more Texas Roadhouse locations are participating in the Early Dine value program from 4 p.m. to 6 p.m.

Average check amounts are currently about 2-percent higher compared with a year earlier, Cooper said. The brand is expecting a small gain in traffic next year as well, he said.

Projecting growth in turbulent 2012

Same-store sales at company-owned restaurants in the first four weeks of the fourth quarter increased 4.2 percent, compared with a year earlier, executives said. That momentum, strengthened by further pricing actions and menu development, would enable increased unit count and sales growth next year.

In addition to food cost inflation of up to 9 percent, Texas Roadhouse also is projecting higher labor costs due to increases in minimum and tip wages in six states where 20 percent of its company-owned units are located.

New prototypes are expected to allow the brand to open restaurants faster and cheaper, while still increasing throughput, Colosi said. The chain plans to open 25 restaurants next year.