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Why Texas Roadhouse’s Revenues Keep Growing

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Revenue trend

In the previous few parts of this series, we learned about the Texas Roadhouse (TXRH) restaurant menu and ambiance. Here, we’ll look at how all that has translated into revenues over a five-year period.

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Revenues keep growing

In the chart above, we can see a revenue growth trend over a five-year period for TXRH. As of the fiscal year ended 2013, the company had revenues of $1.4 billion compared to $1.2 billion in the fiscal year ended 2012. This was a revenue growth of 12.6% in 2013. So it appears that the company’s detailed attention to customer satisfaction is paying off. Later in this series, we’ll look at what led to this revenue growth. But let’s see first how TXRH’s competition has performed in the past year.

Peer performance

We discussed earlier how TXRH is a casual dining restaurant. Other players in this segment include:

  • Buffalo Wild Wings (BWLD), which reported revenues of $1.2 billion—growth of 21%
  • Darden Restaurants (DRI), which reported revenues of $5.9 billion—growth of 11%
  • Bloomin’ Brands (BLMN), which reported revenues of $4.1 billion—growth of 3%
  • Brinker International (EAT), which reported revenues of $2.8 billion—growth of 1%

Growth in revenue can relate to same-store sales, which indicates the performance of a restaurant over a period of time, and unit growth, which is the number of new restaurants added over a period of time.

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TXRH earns revenues from company-operated stores as well as royalties and fees collected from its franchise restaurants. Since the majority of the company’s restaurants are company-operated, the majority of the revenue in the above chart represents revenues for company-operated restaurants. Let’s look at revenues in the form of royalties and fees from franchises in the next part of this series.

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