How Texas Roadhouse Can Afford to Sell Steak at $19

Why It Matters

The strategy shows how mid‑scale steakhouses can maintain affordability while protecting margins, signaling to investors that Texas Roadhouse can navigate commodity price volatility without eroding customer traffic.

Key Takeaways

• Texas Roadhouse offers 8‑oz steak with sides for $19.
• Multiple sirloin sizes let customers choose price and portion.
• Beef prices rose 16% year‑over‑year, squeezing restaurant margins.
• High volume buying secures favorable packer contracts, lowering costs.
• Planned 2% price hikes aim to offset ongoing beef inflation.

Summary

Texas Roadhouse has built a reputation on offering a full 8‑oz hand‑cut steak, two sides, bread and peanuts for $19, a price point that undercuts typical steakhouses where a single steak often costs $60.

The chain achieves this by offering four sirloin portion options—6, 8, 11 and 16 ounces—allowing guests to select a size that matches their appetite and budget. Meanwhile, beef costs have jumped nearly 16% year‑over‑year, prompting the company to rely on its massive purchasing power and long‑standing relationships with packers to keep unit costs manageable.

As a spokesperson noted, “Beef prices have cycled over the 30‑plus years… this one seems to be extended on the upside,” and the firm has already implemented a modest 2% price increase last year with another similar hike slated for April.

By balancing value‑driven menu options with incremental price adjustments, Texas Roadhouse protects margins while preserving its value‑centric brand, a move that reassures shareholders and positions the chain to weather future commodity spikes.

Original Description

Texas Roadhouse is the largest casual dining chain by sales in the U.S. and has continued to keep their steak dinners affordable, even as beef prices have risen. Its free bread and peanuts continue to be a part of its core strategy to provide value and keep customers happy during periods of inflation

WSJ spoke with the restaurant’s CEO Jerry Morgan, who explains how he’s found a way to keep his operations lean and customers happy.

#TexasRoadhouse #Food #WSJ