Cattle shortages have been tough on steak chains. | Photo: Shutterstock
Texas Roadhouse has been one of the best-performing restaurant chains in the industry for years, a reliable producer of same-store sales, traffic and revenue growth every quarter.
If there’s been any cause for concern with the chain recently, it has been beef prices.
Drought, labor shortages and high grain costs have driven U.S. cattle herds to their lowest level in decades, which has led to significant increases in the cost of beef. That has been a real problem for steak concepts like Texas Roadhouse.
In the fourth quarter of 2025, the chain reported commodity inflation of a painful 9.5%, mostly from beef, which contributed to a steep decline in its restaurant-level margins: They fell to 14% that quarter, from 17% the year before. The chain even saw a rare drop in restaurant-margin dollars.
Coming into 2026, Texas Roadhouse signaled that it did not expect the situation to get much better. It forecasted commodity inflation of 7% this year, with no clear end in sight, and said it planned to offset the pressure by simply generating more traffic.
So it came as welcome news Thursday when the chain reported that beef inflation had eased ever so slightly. Commodity inflation was 6.2% in the first quarter, better than Texas Roadhouse was expecting, and it lowered its commodity inflation outlook to a range of 6% to 7% for 2026. It’s expecting costs to be higher in the current quarter before dropping below 6% in the second half of the year.
Easing beef costs paired with impressive same-store sales growth of 7.1% produced a healthier bottom line. Restaurant-level margins in the quarter fell by less than half a percentage point, to 16.3%.
The strong results wowed investors: Texas Roadhouse stock surged by 15% Friday morning, erasing its losses over the past 12 months. (Despite the chain’s robust top line, those beef prices had been worrying Wall Street.)
Executives said Texas Roadhouse is benefiting from consumers buying less beef or cheaper cuts at the grocery store due to higher prices.
“I do think there has been some demand destruction,” said Michael Bailen, VP of investor relations, during an earnings call Thursday. “People [are] trading to pork and chicken, but maybe even also within the beef category, there’s been some shift to lower cost cuts.”
According to Circana data, the number of steaks sold at retail declined 2.4% during the quarter ending April 19, while ground beef was up 3.4%; chicken, 2%; and pork, 0.4%.
In a marketplace update last month, Beef Research noted that consumers are still generally accepting higher beef prices at the store, “though the steak volume decline is a reminder that middle-meat price points can be the first area to show resistance when budgets tighten.”
That has freed up some supply on the spot market for restaurants like Texas Roadhouse. And while customers may be skipping steak at the grocery store, they are indulging at Roadhouse: Entree mix was positive last quarter, indicating that customers are opting for pricier proteins.
The chain is not declaring victory over beef inflation just yet. Asked whether prices could flatten out next year, as some analysts have projected, executives said it’s way too early to tell.
“There’s still a lot of this year to go,” Bailen said.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.
