You could be forgiven for thinking that restaurants of all types would have a hard time in the current economy. But that is not the case for steakhouse chain Texas Roadhouse (TXRH), where customers are still turning out in big numbers despite the slumping economy. But the news did little for Texas Roadhouse stock, which slipped fractionally in Wednesday afternoon’s trading.
The biggest reason that Texas Roadhouse is gaining ground in the American dining landscape is a combination of factors. One, steak is still considered a “premium” dining experience, and that catches attention. Texas Roadhouse’s specialty is steak. Though it offers chicken, some seafood and other beef dishes, steak is front and center at Texas Roadhouse.
But Texas Roadhouse manages to put steak on the table for comparatively moderate pricing. Thanks to its nature as a chain restaurant, it can order food in bulk, and thus secure better pricing per unit. While beef prices can be volatile, the prices at Texas Roadhouse tend to stay about the same. There is some difference, certainly, but Texas Roadhouse is willing to absorb a little bit of higher pricing in in the interest of keeping hungry patrons walking in the door.
A Growing Proposition
And, to underscore just how interested Texas Roadhouse customers are in Texas Roadhouse food, just a couple weeks ago, reports emerged that noted Texas Roadhouse is now the biggest name in fast-casual dining in the United States.
A recent burst of sales, up about 15% year to year, brought it up to $5.5 billion in annual sales. With 26 new locations opened up in 2024—which represented a 4.1% jump—that was enough to bring Texas Roadhouse to the new number one slot. This change comes at a time of great change for the entire industry. In fact, Applebee’s recently took over the number four slot, despite a loss of 5.8% against last year’s figures. The reason? A heavily altered menu that struck a chord with customers.
Is Texas Roadhouse Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TXRH stock based on nine Buys and 10 Holds assigned in the past three months, as indicated by the graphic below. After a 10% rally in its share price over the past year, the average TXRH price target of $191.59 per share implies 18.59% upside potential.
