What does a Texas Roadhouse franchise cost to open? Texas Roadhouse requires a $40,000 franchise fee with a liquid capital ranging from $442,000 to $641,500. Total startup cost will be $3,595,500 to $6,463,500 before you can open the doors. This is a significantly higher startup cost than other franchise restaurants like Little Caesars that tops out at an investment level of $1.6 million.
A franchise agreement with Texas Roadhouse requires an initial term of 10 years which is renewable in 5-year terms. Texas Roadhouse is one of the top-ranked steakhouses in the U.S. with 28 current international chains. This is also a testament to the growth and stability of the concept globally.
In this franchise review, I evaluate the total cost to invest in this steakhouse restaurants and help you decide if it’s worth the price tag. Take our 8-minute franchise quiz to find out if this is the right option for you.
- Financial Requirements
- Average Sales / Revenue per Year
- Franchise Facts
- How Much Profit Do a Texas Roadhouse Franchisee Make Per Year?
- Is the Texas Roadhouse right for you?
Here’s a snapshot of the fees and expenses associated with opening a Texas Roadhouse.
|Fees/ Expenses||Financial Amount|
|Initial Franchise Fee:||$40,000|
|Working Capital||$442,000 to $641,500|
|Total Investment||$3,595,500 to $6,463,500|
Take note that the initial franchise fee is the amount you must pay Texas Roadhouse in order to open your own restaurant. Working capital is the amount you have on hand and can access immediately if needed. Total investment is the estimated amount you’ll need to get the franchise up and running.
Average Sales / Revenue per Year
Texas Roadhouse’s current annual sales sat at $2.969 billion at the end of June 2021. Despite the health crisis pandemic, total revenue has increased by 18.52% from 2019. The average annual sales per unit is at $5,359 (thousands). Texas Roadhouse doesn’t show much of their average profit per franchise, but estimates show that each franchise earns a net profit of $522,000 per location after EBITDA (@ 12.3% EBITDA margins).
Profits from a Texas Roadhouse franchise like any other business are dependent on a variety of factors like location and marketing.
|Total Units||611 outlets in 49 states with 28 international branches in ten countries|
Texas Roadhouse is a steakhouse chain with a distinctly Western-style with a diverse menu of steaks, ribs, chicken, and seafood. The steaks at Texas Roadhouse are always fresh-cut in the restaurant and never frozen. With their ribs and steaks, the restaurant chain has even won national cooking competitions.
The average Texas Roadhouse employs about 100 individuals and serves between 220 and 270 visitors at any time. Today, there are 69 Texas Roadhouse franchised sites in the United States as of the 2021 Franchise Disclosure Document. The expansion plan for Texas Roadhouse is to establish each of their concepts as a local hometown favorite for a large swath of customers looking for high-quality, inexpensive meals provided by friendly, appealing service.
How Much Profit Do a Texas Roadhouse Franchisee Make Per Year?
At this point you understand this franchise will require an investment between $3 – $4 million. And I’m sure you’re curious… Will I make this money back? Back in 2017, each Texas Roadhouse franchise brought in an annual gross profit of $1 million before EBITDA.
Considering that 2017 was one of the years the restaurant had scaled down profits on year-on-year comparison, times have changed and Texas Roadhouse’s revenue has been on the uptick in recent years. Today, each Texas Roadhouse franchise store earns an average of $4.25 million before EBITDA. That’s a whopping 325% increase in just the past 4 years.
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As with most food franchises, there are advantages and challenges in opening up a brick-and-mortar restaurant. In this section, I present the different benefits of operating one of the biggest restaurants in the country.
Texas Roadhouse is a rapidly expanding restaurant corporation that primarily operates three casual dining restaurants: Texas Roadhouse, Bubba’s 33, and Jaggers. In Clarksville, Indiana, the first Texas Roadhouse opened in 1963. After more than 50 years in business, it’s clear this concept has staying power.
Growth Strategy for the Long Run
The following fundamental components underpin the operating strategies that support growth.
Competitive compensation for managers. Individual restaurant managers and multi-restaurant operators are referred to as managing partners and market partners, respectively, under Texas Roadhouse’s performance-based compensation structure. Every one of these partners is paid a base pay as well as a performance bonus based on a percentage of their restaurant’s pre-tax revenue. This approach helps you retain top talent since management is fairly compensated.
Providing freshly prepared, high-quality meals. Most steaks are hand-cut with sides that are made from scratch. If you’ve ever dined at a Texas Roadhouse before, you know some of the side are one of a kind like the loaded baked potatoes, sweet potato, and Texas chili.
Dinner is the name of the game. Te