Texas Roadhouse, Inc. (TXRH): PESTLE Analysis [Nov-2025 Updated]

You want a clear-eyed view of Texas Roadhouse, Inc. (TXRH) through the PESTLE lens, and the short answer is: they are defintely fighting a two-front war in 2025. Persistent food commodity inflation-specifically the 6% commodity inflation guidance for the year-is squeezing margins hard, while labor market tightness pushes wage inflation near 4%. Our analysis shows that while TXRH's strong value proposition is a sociological advantage, their strategic success hinges on defending their Q3 2025 Income from Operations margin, which fell to 6.7% of total revenue. This isn't just about steaks; it's about smart cost management and strategic expansion to maintain profitability.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Political factors

Federal and state minimum wage increases drive labor cost pressure.

The patchwork of US labor laws, particularly around minimum wage, is a primary political risk for Texas Roadhouse, Inc. (TXRH). While the federal minimum wage has been stagnant at $7.25 per hour since 2009, over 30 states and dozens of localities have mandated significant increases for 2025, creating a complex and costly operating environment.

For fiscal year 2025, Texas Roadhouse's management is already forecasting a substantial increase, projecting wage and other labor inflation of approximately 4%. This inflation is a direct result of state-level political decisions, forcing the company to raise wages in high-cost markets like California, where the minimum wage is $16.50, and New York, where it is also $16.50 in key areas. This pressure is universal, with a September 2024 survey showing 89% of restaurant operators expect labor costs to increase in the upcoming 12 months.

Here's a quick look at the wage environment in key states as of 2025:

Jurisdiction Type	State/Locality Example	Minimum Wage (2025)	Tipped Wage Note
Federal Floor	Texas (State Minimum)	$7.25 per hour	Tipped wage floor is $2.13/hr, with employer making up the difference.
High-Cost State	California	$16.50 per hour	No separate tipped minimum wage; all workers earn full minimum wage.
Indexed State	Washington	$16.66 per hour	Highest state minimum wage in the US.
Phasing-In State	Florida	$14.00 per hour (Sep 30, 2025)	Part of a scheduled increase to $15.00 in 2026.

The good news is that Texas, a major market for the company, still adheres to the federal $7.25 minimum wage, which helps keep the overall corporate labor cost in check. Still, the need to compete for talent in all markets means the effective starting wage is often much higher than the legal minimum. That 4% labor inflation is defintely a headwind.

Shifting trade policies affect beef and commodity import costs.

As a steakhouse, Texas Roadhouse's profitability is acutely sensitive to the political climate governing beef and commodity imports. The company is already bracing for 2025, projecting a commodity cost inflation of approximately 5%, which includes the estimated impact of tariffs.

The trade landscape has been volatile this year:

• Tariff Volatility: In April 2025, a baseline 10% tariff was announced on all imports, with country-specific duties ranging up to 50%, raising the average US tariff to 18.3%.
• Brazilian Beef Rollback: A major relief came in November 2025 when the administration signed an executive order removing an extra 40% tariff on Brazilian agricultural imports, including fresh and frozen beef. This rollback is crucial because Brazil is the world's largest beef exporter and a key supplier of the lean manufacturing beef used in US processing.
• Supply Constraints: Political trade actions are compounding domestic supply issues. The US cattle population was at its lowest level since 1951 as of January 1, 2025, which has already pushed domestic beef prices to record highs.

The political decision to remove the Brazilian tariff helps stabilize the supply chain and lowers import costs, but the overall 5% inflation forecast shows the cost pressure is far from over. The USDA revised its 2025 US beef import estimates to 5.274 billion lb in August 2025, a 13.8% increase from 2024, indicating a greater reliance on foreign supply which is now subject to these complex tariff structures.

Increased scrutiny on worker classification and unionization efforts.

The political and regulatory environment for labor relations is highly dynamic, creating legal risk for the restaurant industry.

The first flashpoint is worker classification, particularly the status of delivery drivers or other gig-economy workers. The federal Department of Labor (DOL) adopted a six-factor 'Economic Realities' test in 2024 but then suspended its enforcement in May 2025, leading to a legal paradox where the rule is technically valid but not enforced by the agency. This federal uncertainty forces multi-state operators like Texas Roadhouse to navigate a patchwork of state laws, such as the stricter ABC Test used in California and New Jersey.

The second major factor is unionization. While the incoming administration is expected to roll back some of the prior National Labor Relations Board (NLRB) policies that made organizing easier, the labor movement in the restaurant sector remains invigorated. Large chains with significant profit margins, like Texas Roadhouse, face continued union pressure. While the company has historically maintained a non-union workforce, the political momentum behind labor organizing means management must be hyper-vigilant about workplace conditions and employee engagement to mitigate this risk.

Local zoning and permitting processes impact new restaurant expansion.

Texas Roadhouse's growth strategy relies heavily on its ability to open new locations efficiently. For 2025, the company plans for a store week growth of approximately 5%, supported by total capital expenditures of approximately $400 million. This expansion is directly constrained by local political and municipal processes.

New restaurant development requires navigating complex local zoning, planning, and permitting bodies. These local political decisions impact every aspect of a new store, from the maximum building size and design to specific-use permits for alcohol sales and, critically, the number of required parking spaces. The time it takes to get approval for a zone change or a specific-use permit can add months to a construction timeline, delaying revenue generation and increasing pre-opening costs. For a company focused on aggressive growth, delays in a single city's planning and zoning commission can slow down the entire expansion pipeline.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Economic factors

Persistent food commodity inflation, especially for beef, squeezes margins.

The single biggest near-term risk to Texas Roadhouse, Inc.'s profitability is the relentless climb in food costs, particularly for beef. The company's full-year 2025 commodity inflation guidance was updated to approximately 6%, a full percentage point higher than prior estimates. This is a direct result of the cattle cycle reaching multi-decade lows, which drives up the cost of prime cuts.

Honestly, the pressure is already visible in the financials. For the third quarter of 2025, actual commodity inflation spiked to 7.9%, driving the cost of food and beverage to 35.8% of restaurant and other sales, up from 33.5% in the prior year quarter. This cost surge caused the restaurant-level profit margin to compress by 168 basis points, settling at 14.3% of sales in Q3 2025. They are managing the headwind, but it's defintely a fight.

To mitigate this, Texas Roadhouse implemented a modest menu price increase of 1.7% at the start of the fourth quarter of 2025, choosing to protect their value proposition over fully offsetting the inflation.

Metric	Q3 2025 Actual / FY 2025 Guidance	Impact
Full-Year 2025 Commodity Inflation Guidance (Updated)	~6%	Directly increases Cost of Goods Sold (COGS).
Q3 2025 Commodity Inflation (Actual)	7.9%	Driven by beef prices at record highs.
Q3 2025 Restaurant Margin Percentage	14.3%	Down 168 basis points YoY due to inflation.
Q3 2025 Food & Beverage Costs as % of Sales	35.8%	Up from 33.5% in Q3 2024.

Consumer discretionary spending remains cautious due to interest rates.

High interest rates and persistent inflation have made the US consumer cautious, especially the lower- and middle-income cohorts who are key to the casual dining segment. Forecasts suggest nominal U.S. consumer spending growth is likely to weaken to 3.7% in 2025, a noticeable slowdown from the 5.7% growth seen in 2024.

Also, the real growth in disposable personal income-what people actually have left after inflation-is projected to slow to just 1.4% in 2025, down from a stronger 2.7% gain in 2024. This economic squeeze means consumers are trading down or simply eating out less often. Over 60% of consumers report feeling that interest rates are too high, which prompts them to reduce spending on nonessentials.

But, Texas Roadhouse is bucking the trend because of its strong value proposition. They are capturing market share from pricier full-service restaurants and struggling fast-casual brands. For Q3 2025, comparable restaurant sales still grew a strong 6.1%, fueled by a 4.3% increase in guest traffic. That is a clear sign that value wins when budgets tighten.

Strong US dollar impacts international expansion and purchasing power.

While Texas Roadhouse is primarily a domestic operation, its international footprint is growing, with restaurants operating in 10 foreign countries as of Q3 2025. The persistent strength of the US dollar creates a headwind for this expansion.

A strong dollar means that revenues generated in foreign currencies (like the Euro or Canadian Dollar) translate into fewer US dollars when repatriated, reducing the reported earnings from those markets. It also makes the franchise fee and initial investment costs-which are often dollar-denominated-more expensive for foreign franchise partners.

• Foreign sales are less valuable in USD terms.
• International franchise development plans for 2025 include 7 new Texas Roadhouse locations.
• Strong dollar effectively raises the price of the brand's value proposition for international customers.

Labor market tightness keeps wage growth elevated, increasing operating expenses.

The US labor market remains tight, even as the unemployment rate ticked up to 4.4% in September 2025, up from 4.1% a year earlier. This near-full employment environment, plus mandated minimum wage increases in 21 states in 2025, keeps labor costs elevated for the restaurant industry.

Texas Roadhouse's full-year 2025 guidance for wage and other labor inflation is approximately 4%, with the third quarter actual coming in at 3.9%. This is a significant operating expense pressure, but the company has managed it well. Labor expenses as a percentage of sales actually saw a slight decrease to 33.6% in Q3 2025 (down from 33.8% in Q3 2024). This is the quick math: higher guest checks and improved labor productivity are offsetting the wage inflation, showing strong operational execution.

The industry segment of food services and drinking places continues to add jobs, with an increase of +37,000 in September 2025 alone, demonstrating sustained demand for workers. This means the competition for quality staff is not going away anytime soon.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Social factors

Strong consumer preference for perceived value and large portions favors their model.

The current economic environment has made the US consumer incredibly value-conscious, but they still want a quality experience. Texas Roadhouse is defintely capitalizing on this trade-down effect, where diners shift from fine dining or upscale casual to a high-value option. The company's strategy of keeping menu price increases below the overall inflation rate is a key driver. For example, in its second quarter of fiscal 2025, Texas Roadhouse reported that its prices were up just over 2% year-over-year, while it anticipates overall commodity cost inflation to be approximately 5% for the full year. This deliberate pricing gap reinforces the perception of value.

This value proposition, combined with their signature large portions-like hand-cut steaks and made-from-scratch sides-is directly translating to market outperformance. The American Customer Satisfaction Index (ACSI) 2025 study named Texas Roadhouse the top-rated sit-down restaurant for the second consecutive year. This is a clear signal that the market is rewarding the company's focus on perceived value over aggressive price hikes.

Metric (Q2 Fiscal 2025)	Value	Context
Comparable Restaurant Sales Growth	5.8%	Indicates strong customer traffic and spending at existing locations.
Average Weekly Sales (Company Restaurants)	$167,350	A concrete measure of high-volume customer demand.
Menu Price Increase (YoY)	~2%	Kept intentionally low to maintain the value perception.
2025 Expected Wage & Labor Inflation	~4%	The cost pressure TXRH is absorbing to keep consumer prices competitive.

Growing demand for transparency in food sourcing and nutritional information.

Consumers, especially younger demographics, are increasingly demanding to know where their food comes from and what is in it. This growing social pressure for transparency extends beyond just nutritional facts (calorie counts) to ethical sourcing and sustainability (Environmental, Social, and Governance or ESG concerns). Texas Roadhouse addresses this with its core promise of 'Hand-Cut Steaks Only,' which is visible to the customer through its open kitchen concept, creating immediate transparency in preparation.

You can see the company's response to broader sourcing demands in its public-facing materials, which include a dedicated section for 'Nutrition & Allergens' and a 'Corporate Sustainability Report'. While the company's focus is on a hearty, value-driven menu, this commitment to disclosing nutritional information and discussing responsible sourcing-such as their statement on serving safe, made-from-scratch food that starts with responsible sourcing-is a necessary defense against a skeptical consumer base. Honestly, every major chain needs to have this data readily available now.

Post-pandemic dining habits show sustained casual dining traffic.

The initial post-pandemic surge in dining out has settled into a sustained trend for the casual dining segment, which is outperforming other restaurant categories like Quick Service Restaurants (QSR) and Fast Casual in same-store sales growth. The consumer is prioritizing the full, experiential dining-in experience over just convenience, especially when a great value is attached. Texas Roadhouse is a prime example of this sustained traffic, reporting a 6.1% increase in comparable restaurant sales in Q3 2025.

Plus, the shift to off-premise dining (takeout and delivery) is now a permanent fixture. While Texas Roadhouse is primarily a dine-in experience, its to-go business remains a vital component of its average weekly sales, contributing $22,243 per week in Q2 2025. This dual success-strong dine-in traffic plus a robust to-go channel-shows the company has successfully adapted to the new normal of consumer dining flexibility.

Labor pool attitudes require better benefits and flexible scheduling to attract and retain staff.

The restaurant industry's labor market remains tight, forcing companies to increase wages and improve working conditions to attract and retain employees (or 'Roadies'). Labor costs are the top challenge for 96% of restaurant operators in 2025. Texas Roadhouse is directly feeling this pressure, projecting wage and other labor inflation to be approximately 4% for the full fiscal year 2025.

To mitigate high turnover, which is a massive hidden cost, the company focuses on a people-first culture, which is a critical social factor for the workforce. Its job listings emphasize:

• Flexible work schedules
• Discounts in restaurants
• Formal training and career growth
• A fun culture with recognition

This focus on non-wage benefits and flexibility is a direct response to the modern labor pool's desire for a better work-life balance and a more engaging workplace. What this estimate hides is the true cost of turnover, which can easily negate the savings from a lower hourly wage.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Technological factors

Increased investment in digital ordering and reservation systems to manage traffic.

You're seeing Texas Roadhouse, Inc. double down on digital to handle their massive customer traffic, and the numbers for 2025 show it's working. They aren't just relying on their famous free peanuts and rolls anymore; they're digitizing the front door. The most visible win is in off-premise dining, where To-Go sales hit 13.6% of total restaurant sales in Q3 2025, a solid jump from 12.7% in the same quarter last year.

This growth is powered by their proprietary mobile ordering app and upgraded guest management systems, which are key to managing the flow of guests and to-go orders without sacrificing the in-store experience. Their total capital expenditures (CapEx) for 2025 are projected to be around $400 million, and a chunk of that is for maintaining and upgrading the technology infrastructure that supports this digital volume. You have to invest where the customer is, and right now, the customer is on their phone before they even leave the house.

Kitchen automation and back-of-house technology to offset rising labor costs.

Labor costs are the biggest headwind in the restaurant industry, with wage and other labor inflation projected at 4% to 5% for Texas Roadhouse in 2025. To counter this, the company is leaning hard into back-of-house technology, specifically their Digital Kitchen System. This system streamlines order flow and improves productivity, which is critical when every minute counts.

This isn't about robots flipping steaks, but about smart process management. By the end of 2025, approximately 95% of Texas Roadhouse restaurants are expected to be using this digital kitchen and upgraded guest management system. Here's the quick math: their restaurant labor expenses as a percentage of sales actually decreased slightly to 33.6% in Q3 2025 from 33.8% in Q3 2024, proving that tech-driven productivity gains can defintely help absorb wage inflation.

Data analytics used to optimize menu pricing and personalized loyalty programs.

Texas Roadhouse uses data analytics to make surgical pricing adjustments, keeping their value proposition intact while offsetting commodity inflation. They're not guessing on price hikes; they're analyzing guest traffic and check averages to find the sweet spot. For instance, the comparable restaurant sales increase of 6.1% in Q3 2025 was driven by a 4.3% increase in guest traffic and a 1.8% increase in the per-person average check.

This is a direct result of data-informed decisions, like the menu price increase of approximately 1.7% implemented at the start of Q4 2025. They are using data to manage the delicate balance between price and volume. While the company doesn't disclose specific loyalty program financials, the overall strategy is clear: use transaction data to optimize the menu mix and pricing, which is a far more precise lever than blanket price increases.

Q3 2025 Operational Technology Impact Metrics	Value (Q3 2025)	Year-over-Year Change / Context
To-Go Sales as % of Restaurant Sales	13.6%	Up from 12.7% in Q3 2024
Digital Kitchen System Rollout Completion	Approximately 95%	Full rollout expected by year-end 2025
Restaurant Labor Expense as % of Sales	33.6%	Slight decrease from 33.8% in Q3 2024, showing productivity gains
Per-Person Average Check Increase	1.8%	Driven by strategic, data-informed menu pricing

Cybersecurity risks require robust system upgrades to protect customer data.

With the rapid expansion of digital ordering and the rollout of new guest management systems, the attack surface for Texas Roadhouse grows every quarter. The restaurant industry is a prime target for ransomware and data exfiltration, often through third-party vendors, as seen in other major 2025 breaches where millions of customer records were compromised.

Protecting the payment card industry (PCI) data and personal customer information is now a non-negotiable cost of doing business. What this estimate hides is the specific allocation of the $400 million CapEx toward hardening IT security, but you can bet a significant portion is dedicated to network defenses, endpoint security, and compliance with data privacy regulations. Failure here means not just a financial hit but a massive loss of the customer trust they've worked decades to build.

Here's the concrete next step: Finance: conduct a quarterly review of IT CapEx allocation versus industry-average cybersecurity spending as a percentage of revenue to ensure adequate risk mitigation.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Legal factors

Stricter enforcement of food safety and hygiene regulations post-pandemic.

The regulatory environment for food safety is defintely tightening in 2025, moving beyond simple inspections to demand enhanced traceability and digital record-keeping. Regulators are increasing scrutiny on key areas like temperature control and allergen management, which are critical for a high-volume steakhouse concept like Texas Roadhouse. Recent reports indicate that over 60% of health inspection failures in the past year were due to non-compliance with updated sanitation and food handling rules, which shows the seriousness of the enforcement shift.

For a company with hundreds of locations, maintaining a documented Hazard Analysis and Critical Control Points (HACCP) plan at every single restaurant is non-negotiable. Plus, the push for enhanced traceability systems means Texas Roadhouse must invest in digital tools to track ingredients from supplier to plate, which adds capital expenditure to the bottom line. This isn't just about avoiding a bad health score; it's about mitigating the legal and reputational fallout from a foodborne illness outbreak, which can easily cost millions.

New state and local mandates on employee sick leave and scheduling laws.

The patchwork of state and local labor laws, often called Fair Workweek or predictive scheduling laws, is a major compliance headache for a national chain like Texas Roadhouse. These laws, which are active in major markets like Seattle, New York City, and Philadelphia, require employers to provide schedules up to 14 days in advance. If a change is made within that window, the company must pay the employee predictability pay, often an extra hour's wage.

Furthermore, the federal Department of Labor's new overtime rule, effective January 1, 2025, raises the minimum salary threshold for an employee to be exempt from overtime. This new threshold is $1,128 per week, or $58,656 per year, up from the previous $684 per week threshold. For Texas Roadhouse, this means a significant number of salaried managers who make less than $58,656 annually must now be reclassified as non-exempt, making them eligible for overtime pay. Here's the quick math on the compliance challenge:

• Overtime Threshold: Increased to $58,656 annually.
• Sick Leave: New 2025 state mandates in places like Alaska, Missouri, and Nebraska require employees to accrue one hour of paid sick leave for every 30 hours worked.
• Predictive Pay: In covered cities, last-minute shift changes trigger a penalty payment.

Litigation risks related to premises liability and employment practices.

Texas Roadhouse faces persistent litigation risk, particularly in employment practices, which can lead to substantial financial settlements. The company's history shows a pattern of costly labor disputes, including a $12 million settlement in 2017 for an age discrimination lawsuit with the Equal Employment Opportunity Commission (EEOC). More recently, in August 2025, a conservative legal group filed a civil rights complaint with the EEOC, accusing Texas Roadhouse of illegal discrimination in its hiring and board nomination practices due to its Diversity, Equity, and Inclusion (DEI) policies.

This new litigation, which alleges a violation of the Civil Rights Act of 1964, puts the company's employment policies under intense legal and public scrutiny. Premises liability, covering customer injuries on-site, also remains a constant threat. Given the high volume of customer traffic-with average weekly sales at company restaurants hitting $167,350 for the 13 weeks ended July 1, 2025-the exposure to slip-and-fall and other injury claims is significant.

Compliance with evolving data privacy laws (e.g., CCPA) for customer data.

As Texas Roadhouse increasingly relies on digital platforms for to-go orders (which averaged $22,243 per week in sales for the 13 weeks ended July 1, 2025) and its mobile app, compliance with data privacy laws like the California Consumer Privacy Act (CCPA) is crucial. The CCPA's thresholds and penalties were adjusted in 2025 to keep pace with inflation. Since Texas Roadhouse's total revenue for the first half of fiscal 2025 was $2.96 billion, it is well above the updated CCPA revenue threshold of $26,625,000.

The cost of non-compliance is rising. Effective January 1, 2025, the maximum administrative fine for a CCPA violation is up to $2,663 per violation, and for intentional violations, it jumps to $7,988 per violation. Plus, consumers can seek statutory damages ranging from $107 to $799 per consumer per incident. This means a single data breach affecting thousands of California customers could quickly escalate into multi-million-dollar liability.

Legal Risk Area (2025 Focus)	Key Compliance Requirement/Regulation	Maximum Penalty/Risk Exposure (2025 Data)
Employment Practices Litigation (DEI/Discrimination)	Civil Rights Act of 1964 (Title VII)	Prior settlement history includes a $12 million age discrimination payment; current August 2025 EEOC complaint poses new, unquantified litigation risk.
Data Privacy (CCPA/CPRA)	Annual revenue threshold for coverage is $26,625,000 (TXRH revenue is $2.96 billion); requires 'Do Not Sell/Share' mechanisms.	Up to $7,988 per intentional violation; statutory damages of $107 to $799 per consumer per incident.
Labor Law (Overtime/Scheduling)	Fair Labor Standards Act (FLSA) Overtime Rule; Local Fair Workweek Ordinances.	New exempt salary threshold of $58,656 annually (Jan 2025); predictability pay (e.g., one hour's wage) for schedule changes in covered cities.

What this estimate hides is the soft cost: the time spent by management defending lawsuits and the resources diverted to compliance training instead of restaurant operations. Finance: track all legal and regulatory compliance spend against a $1.5 million annual budget by Q4 2025.

Texas Roadhouse, Inc. (TXRH) - PESTLE Analysis: Environmental factors

Growing investor and consumer pressure for sustainable beef sourcing practices.

You're seeing a real shift in how the market views beef sourcing, and Texas Roadhouse is defintely in the spotlight. Because beef is the core of their menu, the company faces intense pressure from both investors and consumers over its supply chain's environmental impact, particularly concerning deforestation.

Financial institutions managing nearly $9 trillion in assets have publicly committed to eliminating agricultural commodity-driven deforestation from their portfolios by the end of 2025. This isn't a minor activist group; it's a systemic financial risk. The company's reliance on a consolidated beef processing industry, where major players like JBS and Marfrig have high cattle-driven deforestation exposure, ties Texas Roadhouse to this risk.

The core issue is transparency. Unlike peers, Texas Roadhouse has not publicly disclosed the geographic origin of its purchased beef or adopted a formal policy to eliminate deforestation from its supply chain. This lack of disclosure makes it harder for investors to assess long-term commodity and reputational risk.

Increased reporting requirements for carbon footprint and supply chain emissions.

The biggest environmental risk for Texas Roadhouse isn't the electricity bill; it's the supply chain. For the 2023 fiscal year, the company's Scope 3 greenhouse gas (GHG) emissions-the indirect emissions from its value chain, including purchased goods like beef-represented a massive 91.3% of its total emissions. Here's the quick math on their 2023 emissions breakdown:

Emission Scope	Description	2023 GHG Emissions (Approx.)	Percentage of Total Emissions (2023 FY)
Scope 1	Direct emissions (e.g., natural gas, company vehicles)	102.994 billion kg CO2e	<strong>8.7%</strong> (combined with Scope 2)
Scope 2	Indirect emissions from purchased energy (e.g., electricity)	165.523 billion kg CO2e	<strong>8.7%</strong> (combined with Scope 1)
Scope 3	All other indirect emissions (primarily supply chain/beef)	Not publicly disclosed in kg CO2e	<strong>91.3%</strong>

The company has measured its Scope 3 emissions for the first time based on a 2023 base year, which is a start, but they still have not set specific reduction targets under the Science Based Targets initiative (SBTi). That 91.3% figure is the number that keeps analysts up at night. Until they set a clear, science-based plan for reducing that supply chain footprint, they will lag behind competitors like Darden Restaurants and McDonald's.

Focus on reducing food waste and improving energy efficiency in restaurants.

On the operational side, the focus is on conservation, and here, Texas Roadhouse has some concrete wins. Their in-house Meat Cutters, who cut an average of $1.1 million of beef per year per store, are a key factor in reducing food waste, as all food is cooked-to-order. Plus, they have a robust cooking oil recycling program, which is a smart financial and environmental move.

In 2023, the company recycled almost 500,000 gallons of used cooking oil across all three of its brands. This oil is converted to biofuel, which they call their 'frequent fryer' program. For energy efficiency, they are rolling out digital kitchen display systems, which are expected to save over 1,100 pounds of paper per year per location by removing five ticket printers. They are also testing a 'green store' concept, opened in November 2024, which includes:

• Rooftop solar panels.
• Sustainable building materials.
• Energy-efficient equipment.
• Water-saving measures.

This operational efficiency saves money and reduces their Scope 1 and 2 footprints, but the supply chain remains the dominant challenge.

Water usage management becomes critical in drought-prone operational regions.

Water scarcity is a growing, immediate risk, especially since a significant portion of Texas Roadhouse's operating footprint is in the U.S. Southwest and Texas, which are prone to severe drought. As of mid-October 2025, parts of South Texas are in Stage 3 water restrictions, requiring a 15% reduction in overall usage for the local population and businesses. The Texas Water Development Board projects that if a severe drought were to occur in 2030, the state would face a water shortage of 4.7 million acre-feet, which is over 20% of projected demand.

This risk impacts the company in two ways: first, mandatory water restrictions can directly affect restaurant operations and cleaning processes; and second, the drought conditions severely stress the U.S. cattle herd, which drives up the cost of their primary commodity-beef. For example, the 2023 beef production was forecast to be 6% lower than 2022 due to drought and high feed costs, which directly translates to the company's projected commodity cost inflation of approximately 5% for the 2025 fiscal year.