In the three months ending on May 29, sales at Longhorn Steakhouse locations open at least a year popped 10.6%.
Texas Roadhouse reported that in the first three months of the year, sales at company-owned restaurants open at least a year jumped 16%. The chain is slated to release its second-quarter earnings Thursday afternoon.
Demand for steak was rising even before the pandemic, said Robert Byrne, director of consumer and industry insights at the restaurant consulting firm Technomic.
Although it may seem counterintuitive, people may also feel like their money goes further when they spend on steak compared to fast casual or fast food meals — especially if they visit chains like Texas Roadhouse and Longhorn Steakhouse, where the portions are big and the prices are relatively cheap.
More steak for your buck
Longhorn “has made significant investments over the past few years in the quality of their food,” he said during a June analyst call. One big change: “They’ve increased the size of most of their steaks.”
Larger steaks make people feel like they’re getting a good deal, which is especially important as inflation soars.
“Consumers see the value in what we put on the plate,” Cardenas said. “For every dollar they spend at a steakhouse, they get more food.”
During a May call with investors discussing Texas Roadhouses’ first quarter earnings, an analyst asked how inflation might impact consumer interest in the chain moving forward.
To get through hard times, “you deliver on your promise,” CEO Jerry Morgan responded. At Texas Roadhouse that includes a commitment to “heaping sides and keeping our portions strong.”
The strategy appears to be working.
Longhorn Steakhouse and Texas Roadhouse tied for the top spot for full-service restaurants in the American Customer Satisfaction Index (ACSI) restaurant study for 2021-2022, which was published in June. Both restaurants achieved scores of 80, unchanged from the previous year.
Generally, customers are more satisfied with their experiences at full-service restaurants, where a server takes the order and delivers food to the table, than at fast food chains, according to the index.
The two steak restaurants are in something of a sweet spot, said Forrest Morgeson, director of research emeritus at the ACSI and an assistant marketing professor at Michigan State University. “They’re not outrageously expensive… but they’re certainly a notch or a notch and a half above your fast food or your fast casual restaurants.”
Plus, consumers may be especially satisfied with larger meal sizes at these places because they’re seeing portions shrinking elsewhere, Morgeson noted.
Plus, large portion sizes can smooth over service shortcomings, noted Byrne.