The present picture, and a tech rush
Q2 is off to a humming start for Texas Roadhouse, with comps in the opening five weeks up 9.3 percent versus last year, a period when dining rooms reopened in full. Average weekly sales clocked in at $135,000 (to-go of about $18,000, or 13.3 percent of total sales). Off-premises is sliding in light of dine-in, but the gap is being more than covered, Robinson said.
Delivering experience inside Texas Roadhouse has become ever-critical, however, Morgan said. First, it was a matter of welcoming guests back to an experience they missed, yet also needed to feel safe with. Now? You can add “measuring up to the extra cost” to the task list.
“I would say that all of the practices that were put in of cleanliness of care and concern even partitions are still up,” he said. “I think we've still maintained a lot of those practices that ensure people are feeling comfortable about being in large groups in full areas. So I do believe a lot of those practices are helping us at this current time.”
A forerunner, potentially, of why Texas Roadhouse’s approach is working is the fact there’s been little evidence of a trade down. In Q1 guests kept ordering higher-priced entrees, as Robinson noted.
Q1 total pricing was about 6 percent; Q2 will be 7.5 percent; Q3 7.4 percent; and Q4, without any additional action, will be 4.1 percent.
There are a few back-end ways Texas Roadhouse is addressing the bigger picture, beyond holding firm to past principles. One is technology, where Morgan said the goal is to enhance guest experience while driving greater efficiencies up and down the P&L.
Some examples include “Roadhouse Pay,” a new kitchen display system, and an app the company is working on for its fast casual Jaggers, complete with loyalty.
The first initiative was announced in March when on-premises digital ordering and payments platform Ziosk entered into an agreement with Texas Roadhouse to bring its Cloud Commerce program to U.S. stores. Texas Roadhouse deploys the company’s “Ziosk Mini,” which is a portrait version of the tabletop tablet, to allow guests to pay at the table. The system can also conduct surveys and enable order entry, although Texas Roadhouse is focusing on payment.
In tests, the brand said 83 percent of dining room guests paid their check with “Roadhouse Pay,” with some stores seeing adoption rates as high as 95 percent. Of those, 47 percent were NFC transactions as guests used either tap to pay with mobile wallet or an NFC enabled credit card. More than four of five customers rated their overall experience as “excellent,” the company added.
Ziosk said guest adoption of pay-at-the-table, industrywide through COVID, has climbed 21 percent.
Robinson said the service is piloting in about 100 locations today. The goal is to cover the 500-unit plus (currently, there are 536 corporate and 63 franchised Texas Roadhouse in the U.S.) system by year’s end.
Additionally, Texas Roadhouse trialed handheld ordering technology for servers. Robinson said that’s “doing a little bit slower.” The KDS launched in one new restaurant and will implement into an existing store later in 2022.
More broadly, the notion COVID cleared barriers to tech adoption has been clear at Texas Roadhouse. Its mobile app was downloaded more than 3.7 million times since the beginning of the 2021. In turn, roughly 70 percent of the chain’s current to-go business is digital—a major help versus phones ringing throughout peak shifts.
Also, “many more” guests started to use the platform’s waitlist function, Morgan said. Robinson noted its “definitely” proven beneficial for sales. When guests show up, they know they’ll be seated within 15 or 20 minutes.
Interestingly, though, the function of Texas Roadhouse being able to suggest times led to early dining occasions picking up and the brand better filling shoulder periods. “Power hours,” or between 6 and 8 p.m., climbed, too. “Those power hours are really about execution and being able to get the folks in, the experience that they're craving, and then get them moving on down the road, I guess,” Morgan said. “But on the same token in that last night hour, maybe even extending a little bit there. But it really comes down to us executing in the power hours and then really trying to drive some folks to the earlier hours and that last hour being able to hold and get that execution piece.”
Robinson said Texas Roadhouse’s staffing levels improved throughout the quarter, although hourly turnover remains high.
“I think that's just the dynamic we're probably going to live with for a little while,” she said. “Staffing has gotten better, but the training costs, things like that, will probably stay up a little bit as we continue. We're very focused on the turnover as far as providing good training to our employees’ development, holding on to them past 90 days, which tends to sometimes be kind of the point that they leave.”
Three company restaurants and two international franchises opened in the quarter. Texas Roadhouse plans to open about 25 stores this year, and will continue targeting smaller markets where returns have been healthy in recent openings.
“Ashland, Kentucky, it's one of our highest volume stores forever in a town of 40,000 people,” Morgan said. “But they come from all over just because of that reputation. So maybe Ashland taught us 28 years ago that we could go to small towns as long as we execute and deliver on our promise of legendary food and legendary service, they will come find us.”