Clearly, the most underrated chain restaurant in the usa is Texas Roadhouse. The standard of Texas Roadhouse’s food is probably the highest of any American chain restaurant. Excluding children’s menu items such as Kraft Macaroni & Cheese, applesauce, and sausages, everything on the Texas Roadhouse menu is made of scratch using an original recipe, including salads and dressings. All of their famous steaks are hand-cut and never frozen, excluding their T-bone steak, which is prepared off-site and vacuum-sealed.
The service can be just as legendary. Steak-hungry customers are encouraged to hand pick their very own steak upon entering the restaurant, but there’s never too much pressure on customers to invest more then they’re confident with. As another evidence of how care-free each establishment is, every table provides a free bucket of shelled peanuts, with patrons encouraged to toss the empty shells on the floor.
Even outside of the restaurant, Texas Roadhouse full menu employees participate in a variety intercompany competitions including the bartender’s “Real Bar” competition, and an annual “Meat Cutters” competition, that allows for many different restaurant workers to exhibit their skill. All the quality of Texas Roadhouse, regardless of the chain having over 450 locations spread out across 49 U.S. states and a number of foreign countries, is extremely consistent, making Texas Roadhouse probably the most underrated American chain restaurant currently operational.
Initially when i first advocated looking into restaurant stocks last November, the shares of many casual dining companies lay mired in negativity. Amid falling grocery prices, oversupply, falling foot traffic, and changing consumer preferences, chain restaurants became relatively undervalued.
However, Texas Roadhouse (TXRH) never suffered during the “restaurant recession.” Indeed, the company has consistently beaten earnings even in a tough environment; shares are up 180 percent during the last five years, and 30 percent year to date.
Here I examine what makes Texas Roadhouse appealing to customers as well as investors. The business has trumped a tricky operating environment due to almost flawless execution, and management has been careful not to overextend the brand. However, investors are still paying a sizable premium for this performance, even when projected future earnings are factored into the valuation.
What exactly is the secret sauce that continues bringing diners back and enriching Texas Roadhouse shareholders? Part of the reason is that Texas Roadhouse provides diners with the “experience” that numerous brick-and-mortar retail and restaurant establishments find it difficult to provide. The chain is well-known because of its lively atmosphere and quality food in a bargain price. In many ways, Texas Roadhouse was ahead of it is time. The steakhouse is well-designed for a period where consumers crave freshness and authenticity, preparing its food on your own at your location and allowing customers handy pick steaks through the counter. Food consultant Darren Tristano says it best.
Texas Roadhouse’s first-quarter performance surprised financial pundits. There was no such effect Monday because the brand’s second-quarter financials arranged with Wall Street expectations. That fact, however, was far qyucjp a negative one.
Total revenue climbed 11 percent to $566.3 million inside the second quarter. Net income grew 12 percent to $37.6 million (earnings per share of 53 cents), and comparable same-store sales accelerated 4 percent at company-owned restaurants and 3.6 percent at domestic franchise stores. Like the first-quarter review, Scott Colosi, Texas Roadhouse’s president and chief financial officer, broke on the leads to straightforward terms.