By Heather Haddon | Photography by Garrett Sweet for WSJ
Texas Roadhouse isn't based in Texas. It just acts like it.
It sells a steak dinner for less than $20 and a lot of fun, and that has turned it into the largest sit-down restaurant chain in the U.S. by sales.
On its menu is a "Texas-size" 23-ounce steak. Waiters routinely break into line dancing at some point during their shifts. Peanut shells crunch underfoot. The chain's blazing neon signs feature the state of Texas wearing a big cowboy hat.
The problem for this approach facing Chief Executive Jerry Morgan is something he has to solve but can't control: rising beef prices.
Roughly half of the company's food and ingredient costs come from beef. Average prices for the beef at the core of its menu are roughly a third higher over the last three years. Investors worry about rising costs cutting into the company's margins; customers don't want Roadhouse to raise its prices.
Beef prices are expected to remain high this year, and Roadhouse's profits for 2025 fell 6.5% to $405.6 million. It was the first annual drop since the pandemic hit in 2020.
Morgan is scrutinizing costs from utilities to liquor bills, and betting that keeping sales strong is the best way to weather the steep beef costs. He hopes to keep price increases this year below competitors, and says Texas Roadhouse still turns a profit o n $19 steak meals.
"We have to do a better job to find those pennies out there -- those pennies, nickels and dimes to save and not turn the lights on until you need to," he says. "Our job is to make sure that we control food costs and liquor costs and labor."
The company's margins have taken a hit as beef costs rise. Late last year Morgan increased prices by roughly 2% and expects to raise them again in April, but that won't fully keep up with the cost increases.
Morgan, 65, opened the chain's first actual Texas location in the city of Grand Prairie near Dallas in 1997. He has ridden Harley-Davidson motorcycles with a group of other Roadhouse employees for 20 plus years; one year they rode from NY to California.
"When you serve somebody a country-fried sirloin and it's got gravy, that gravy should have steam coming off of it. You should smell it in your nostrils," said Morgan. "We still have a lot of work to do, but every single experience that we have, to me that food is our trophy."
Texas Roadhouse has some of the highest customer satisfaction scores among sit-down chains, notable for a brand that has changed little over the years, according to market-research firm Technomic.
Taylor made
Louisville, Ky., native Kent Taylor got an early taste of the restaurant industry shaking drinks at a TGI Fridays, after attending University of North Carolina-Chapel Hill on a track scholarship. He was a young dad and former nightclub manager and was pursuing an M.B.A., short on cash, and full of dreams for new restaurant concepts.
While working at a Bennigan's in the early 1980s, he pitched the bar and grill chain's CEO on his ideas. The executive heard Taylor out, and then sent him to manage a struggling Denver location.
It wasn't the career path Taylor envisioned, but it helped him hone a high-octane management style. He poached energetic servers from competitors and encouraged them to recruit friends. He passed out promotional cards to area businesses with freebies for referrals. Sales followed.
Taylor still wanted to strike out on his own. While brainstorming different concepts -- a Rocky Mountain ski lodge or the Florida Salad Company were others -- he sketched a Texas-style restaurant design on a napkin, with wooden interiors and warm lighting, serving steaks, ribs and cold beer. He began circulating a business plan, and after about 80 rejections, three Kentucky doctors agreed to pony up $300,000.
The first Texas Roadhouse opened in 1993 in southern Indiana. A recruit from Chi-Chi's developed a signature margarita and the restaurant quickly made money. Taylor tweaked the menu and recipes, and started expanding.
To ensure managers were invested in their restaurants' success, Taylor set up a profit-sharing program. Managers must put in $25,000 upfront in return for 10% of their location's profits and company stock. Morgan, who was working at Bennigan's when Texas Roadhouse recruited him in 1997, remembers bristling at the buy-in -- and having to borrow from his parents. He got over it when he started making money.
When Texas Roadhouse went public in 2004, some of those early managers became millionaires. Before the chain's IPO roadshow, Taylor's mom persuaded him to buy a tie for banker meetings.
Taylor built a company of "crazies," as he called his staff, and pulled out the stops to keep them loyal. The chain's annual leadership conference became increasingly elaborate, including a 10-year anniversary event in Hawaii where former NFL stars played flag football with staff. Willie Nelson -- who got to know Taylor and went on to make a commercial for the chain -- played music, Taylor said. Taylor wore a grass skirt and partied with Nelson and his crew late into the night, Taylor wrote in his 2021 autobiography "Made from Scratch."
"Many stories, extreme hangovers, and -- since we also invite spouses -- a few 'conference babies' have come as a result of our late-night parties over the years," Taylor wrote.
The company's youthful culture could also be a liability. In 2011, the federal Equal Employment Opportunity Commission sued Texas Roadhouse, alleging the chain discriminated against people 40 years and older for server and bartender positions. The company fought the case to court, and after a 2017 trial ended in a hung jury, Texas Roadhouse agreed to a $12 million settlement and increased recruitment of older workers. The company denied wrongdoing.
A former high-school football lineman and father of three, Morgan turned an early rejection -- one sentence saying "no thanks" -- from Chili's into a three-decade restaurant career. "I never got over that," he said.
Morgan moved to Louisville, thinking he would eventually become CEO after several years of tutelage, with Taylor becoming executive chairman.
However, after months of battling a debilitating ringing in his ears that left him sleepless and unable to concentrate, Taylor died by suicide in 2021. Morgan was suddenly in charge.
Soon after, Morgan saw a leadership coach to assess his style. He skimmed much of the resulting 140-page report, and landed on one conclusion: he was bold, aggressive and decisive. "I was like, yeah, all right, I like that," Morgan said.
Every fall, Morgan tours the chain's restaurants nationwide. He typically makes 28 stops along the way, convening with hundreds of restaurant managers for hourlong question-and-answer sessions.
In his five years as CEO, Morgan has made his own changes, some more successful than others. Last year Texas Roadhouse began offering a select beer for $5 all day and mocktails, moves that have stuck at the bar-heavy chain.
Less successful was Morgan's early call to replace a chicken-and-rib combo with a photo of a double pork chop to a prominent position on the menu flap. Sales dropped, and the incident internally became known as "flapgate." A photo of the more popular combo meal was quickly added back.
"Nobody got thrown under the bus except for me," Morgan said.
Mostly, though, Morgan said he has stuck to Taylor's formula. Diners get unlimited peanuts and freshly-baked bread. Texas Roadhouse doesn't offer delivery outside of one urban location, keeping its dining rooms rollicking instead.
In 2024, the chain passed brands like Olive Garden and Applebee's to become the largest U.S. casual-dining brand by sales, despite operating fewer locations than some of its biggest competitors. Same-store sales grew 5% last year, outpacing many competitors.
Amanda June Jones recently hauled her kids to a Texas Roadhouse in Dallas, where she ordered a steak, broccoli and baked potato, marveling at how busy the place was on a freezing Sunday. The 36-year-old mom of two appreciated the low-fuss atmosphere.
"It was a big relief for parents with kids who make a mess," said Jones.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
March 06, 2026 05:30 ET (10:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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