Texas Roadhouse: Made from Scratch
We read the most important book about Texas Roadhouse and summarized it for you. Here's what you can learn from the legendary success story of Texas Roadhouse.
If there is only one key point you should take away from this article, it’s this:
Texas Roadhouse is successful because it breaks the traditional rules of the restaurant business. Their unconventional strategies—like not advertising nationally, offering unlimited free bread and peanuts, and prioritizing employee engagement—have driven consistent growth and long-term success. This approach shows that breaking the rules, when done right, can lead to good returns for shareholders.
Want to know more? Keep reading, then. It will be quick and to the point.
There is one company that shows how powerful the unexpected can be in the business world, where conformity is often king. We just finished the book “Texas Roadhouse: Made from Scratch” and want to give you all the important parts of the book.
Why? This article should save you money and time, while still getting the most important elements from the book.
Welcome to Texas Roadhouse, a restaurant chain that breaks the rules with exceptional results and a unique way of running the business.
The unconventional path to success
Weird stuff? Is it unusual for a restaurant chain not to advertise nationally, keep prices low, not hire highly educated college graduates, give away unlimited peanuts and bread, have the employees dance, or have a baker and butcher in every single restaurant? It's kind of weird, isn’t it?
Texas Roadhouses unconventional approach, however, has led to remarkable success. The restaurant chain has delivered shareholders a fantastic 15% CAGR since its IPO back in 2006.
How did they do this? Let’s find out!
Starting with just over $2 million in sales a year at its first store, Texas Roadhouse has experienced significant growth, now operating close to 650 stores with average annual sales of nearly $7 million per restaurant. The consistency in their approach, regional pricing decisions, and focus on budget-conscious families have driven an average 8% increase in same-store sales over the last five years.
Getting the recipe right
I have listed the most significant aspects of Texas Roadhouse strategy and culture, which are discussed in the book:
Careful selection of store locations.
Listen carefully to employee and customer feedback.
A strong emphasis on the appearance of the store, atmosphere, and outfit.
A commitment to never do national advertising.
Giving away unlimited free bread and peanuts.
Treating suppliers like partners.
Finding creative solutions to problems.
Making the food from scratch. This means having an in-house bakery and butcher.
Owning the stores themselves, instead of using the franchise model.
Giving back to the local community, to create goodwill.
All these elements still play a big role in Texas Roadhouse’s culture today.
But that’s not all! They refer to their team members as “Roadies,” avoiding the term “employees,” and everyone wears shirts that say, “I love my job!”
Their team-building activities, like dancing every hour, also serve as customer engagement tools. In the waiting area, a screen displays pictures of Roadies having fun and being part of a family, with their photos prominently displayed on the wall. The positive atmosphere is clear.
Why is it important? The various elements Texas Roadhouse implements are valuable for several reasons. Some directly contribute to higher customer retention, while others build goodwill, making people eager to return. Additionally, these elements collectively enhance the overall quality—whether it’s the quality of the food, the caliber of employees, the level of service, or the atmosphere itself.
All of this matters because Texas Roadhouse isn’t just focused on short-term profits; they’re investing in a strategy designed for long-term success. By creating an environment where customers feel valued and employees are genuinely engaged, they’re ensuring that people will keep coming back, not just today, but for years to come.
Fundamental analysis of Texas Roadhouse
Sadly, the visionary behind this success story, Kent Taylor, took his life in March 2021. He struggled with severe tinnitus, a consequence of contracting COVID-19.
We tell his story more in-depth in our fundamental analysis of Texas Roadhouse. We also talk about: valuation, competitive advantage, the financials, the industry and much more.
Furthermore, we have a growing list of research reports, for less than a cup of coffee a week.
