Bubba's 33 is ready to kick up growth in 2020.
There are some parallels forming between Texas Roadhouse and its spin-off concept, Bubba’s 33. Namely, an element of patience.
Given the company’s 40 consecutive quarters of sales growth—an almost unheard of run in this corner of the restaurant industry—it can be easy to forget that three of Texas Roadhouse’s first five locations failed. The reasons weren’t anything foreign to upstart concepts—site selection, consistency. Founder Kent Taylor, who hailed from Bennigan’s and KFC, had to feel out his new, entrepreneurial concept. The same was true of customers.
Texas Roadhouse originally opened in Clarksville, Indiana, then Cincinnati, Ohio; Sarasota and Clearwater, Florida. So, each location was pretty much on its own from an awareness standpoint.
Two things really kicked Texas Roadhouse forward into the 581-unit (553 domestic) brand it is today. Firstly, Taylor linked with George Lask in 1996 and built a prototype that opened in Louisville, Kentucky. Minus a bar remodel and some kitchen upgrades, Texas Roadhouse's current restaurants pretty much mirror the old look.
The second was less in Texas Roadhouse’s control—it simply took time for guests to learn about the chain. And once that gained momentum, Texas Roadhouse could open in similar or nearby markets and stack upon its own success.
CFO Tonya Robinson said Thursday afternoon during the company’s Q4 and full-year review that some Bubba’s appear to be “getting the legs underneath them in their communities.”
Currently, Texas Roadhouse runs 28 locations of its TV-laden sports concept that specializes in burgers, pizza, and wings. It identifies as “family dining meets garage bar,” and takes its branding from Taylor’s “Bubba” nickname. The first opened in May 2013 in Fayetteville, North Carolina. Like Texas Roadhouse, it didn’t cluster growth out of the gates; it opted instead to work its way across the map and see what each market revealed.
There are units in North Carolina (one); New Mexico (one); Colorado (two); Texas (11); Ohio (two); Virginia (one); Indiana (three); Maryland (one); Oklahoma (one); New Jersey (one); Arizona (one); Michigan (one); Florida (one); and Kansas (one).
A LOOK BACK AT 2019:
Q3 2019: Texas Roadhouse is staffing restaurants for the future
Q2 2019: Taylor: We hire all the cool people
Q1 2019: Texas Roadhouse squares off with rising labor costs
Texas Roadhouse named America's brand of the year
Report says Texas Roadhouse has the most-satisfied customers (again)
“We continue to talk about how do we build that brand awareness a bit faster, maybe in the newer restaurants to help them get there quicker. And a lot of it is we talk about just having patience,” Robinson said.
Yet one clear reality—akin to Texas Roadhouse’s early days as well—is emerging. The mature units are thriving once they get going. Texas Roadhouse counts 18 Bubba’s in its same-store sales base (restaurants open a full 18 months before the beginning of Q4). Those venues reported comps gains of 7.1 percent, year-over-year, for the full fiscal 2019 calendar, the company said. Adding lunch at five stores, a pilot that began at the start of the year, contributed 2 percent of the growth. Same-store sales climbed 8.8 percent in Q3.
A key upcoming change, though: Texas Roadhouse opened just three Bubba’s in 2019. It plans to bring as many as seven to market in 2020, which would represent a significant uptick. And it would also be a sizable slice of the 30 total company openings Texas Roadhouse has planned for its entire system.
To put it plainly, doing so would turn Bubba’s into a true growth vehicle for Texas Roadhouse.
Here’s a look at how Bubba’s footprint has progressed by total unit count at year’s end:
- 2014: 3
- 2015: 7
- 2016: 16
- 2017: 20
- 2018: 25
- 2019: 28
- 2020: 35 (if projections come to fruition)
Former Texas Roadhouse president Scott Colosi, who retired in June, said earlier the company hoped 2021 would be the year Bubba’s kicked into gear. “We’re just trying to be patient and disciplined and not trying to grow faster than what we should,” he said in May. “And I can tell you, internally, everybody’s dying to grow the concept faster.”
Part of that was committing to opening restaurants closer together in successful markets, like Houston, Pasadena, Tampa, and Charlotte.
Taylor also admitted last quarter it was a misstep on the company’s part to not co-market some areas and show the two brands were related. In some lower-performing stores, Texas Roadhouse bought billboards to emphasize the connection. “And that was very beneficial,” Taylor said in Q3, adding they’d lean more into that strategy, when needed, moving forward.
Robinson added opening seven Bubba’s in 2020 will “definitely give us a lot of information.” Texas Roadhouse has already targeted more sites for 2021 than it has this year, but will let 2020’s openings dictate progress before any announcement is made.
An important part of Bubba’s potential comes on the margin side, too, and figuring out efficiencies that encourage sustainable growth. One thing Texas Roadhouse does not want to do, to Colosi’s point, is scale the concept too fast and fall into a footprint that needs retracting later on.