LongHorn Steakhouse and Texas Roadhouse have emerged as significant players in the casual dining scene, showcasing contrasting performances as they navigate a complex market landscape. LongHorn Steakhouse, despite showing a gain in traffic in 2024, fell short of Wall Street’s projections for its fiscal third quarter. In stark contrast, Texas Roadhouse stormed past, and in fact, passed Cracker Barrel to become the largest casual dining chain in the United States last year.
LongHorn Steakhouse continues to be the jewel in the Darden Restaurants portfolio, with positive same-store sales growth for all of the past five years. Even when faced with the negative impacts of fluctuating beef prices, LongHorn corporate procurement offices skillfully handle food costs beforehand. This key strategic advantage enables the chain to price competitively enough to drive out any competition from smaller mom-and-pop stores.
In 2024, LongHorn Steakhouse experienced a 4.3% increase in customer visits compared to 2023, according to the data from Placer.ai. This growth happened despite full-service restaurant foot traffic decreasing by 0.2%. Conversely, Texas Roadhouse outperformed its competitor with a 7.2% increase in visits, solidifying its status after surpassing Olive Garden, which had held the top spot since 2018.
Jim Salera, a restaurant analyst, remarked on the appeal of steak dining:
“There’s something about steak that it really rings true to the consumer as still being kind of an elevated or a premium consumption or dining experience.”
Darden has been able to stomach a portion of inflationary costs. This strategy has helped ensure customer loyalty at both LongHorn and Texas Roadhouse. In an inflationary environment that’s impacting the rest of the market, these chains have exercised precision in their pricing strategy to increase customer stickiness.
The need for strong creative leadership at the store level is hard to overstate. David Henkes, a senior principal at Technomic, emphasized this aspect:
“You can’t underestimate the investment that these chains make in their general managers at the store level. The store-level manager really is probably the most critical piece to any restaurant chain’s success.”
And even with LongHorn Steakhouse’s recent disappointment in quarterly earnings, the future still looks bright in that channel, as it continues to see growth in customer engagement. And finally, Texas Roadhouse’s rise to prominence suggests there’s still strong appetite for casual dining chains that can deliver a high-quality business model.