Texas Roadhouse: Store Unit Economics
Former Managing Partner at Texas Roadhoue
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Texas Roadhouse: Store Unit Economics(May 15, 2025)
Former Managing Partner at Texas Roadhoue
Interview Transcript
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Maybe going back to the kind of $17 per person. On average, was that made out of what people ordered? How does that work?
When you're looking at total sales, alcohol sales are somewhere between 10% and 13%. So 10% to 13% of total sales probably come from alcohol, which leaves about 85% to 87% as food. The percentage of appetizers and steaks, and the overall menu contribution for the company, varies depending on your location. It makes a big difference and will skew if you are open for lunch. Non-alcoholic beverages usually average about $3 per person. So, for non-alcoholic beverages, they're averaging about $3 per person, and the rest is food.
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When you're opening a store, how much spend per store do they want to make? How much do you want to target in terms of sales? What are the typical locations that have worked really well? Maybe walk me through a little bit, like, what's the perfect Texas Roadhouse?
The company is currently averaging between $5 and $6 million per store. Years ago, it was about $4 million per store. The average store now is doing above $5 million, so between $5 to $6 million a year is what most stores are doing. This puts you in the conversation above $100,000 a week, somewhere between $120,000 to $130,000 a week in sales for an average store. Some stores do much more than that. As far as guest counts are concerned, that puts you somewhere between 5,000 and 6,000 a week, about 6,000 a week.
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Do you know the targeted cash-on-cash returns for new openings, and perhaps for your own stores? Specifically, the EBITDA contribution divided by the capex to open a store, essentially the initial investment.
The initial investment to build and staff a Texas Roadhouse is around $4 million. Constructing the building costs approximately $3 million, and then you have the expenses to staff the restaurant. In a given year, a particular unit might not generate positive cash flow for the first six months to a year, although it's unlikely to continue beyond that period. So, it's around $4 million to get one off the ground.
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