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Texas Roadhouse Franchise Costs $2.6M – $6.8M (2024 Fees & Profits)

Texas Roadhouse, Inc. is a prominent casual dining restaurant chain that was founded in 1993 by Kent Taylor in Clarksville, Indiana. The concept was born out of Taylor’s vision to provide a place where guests could enjoy made-from-scratch food in a lively and welcoming atmosphere. Over the years, the brand has grown significantly, becoming well-known for its hand-cut steaks, fall-off-the-bone ribs, and freshly baked bread served with honey cinnamon butter.

Headquartered in Louisville, Kentucky, Texas Roadhouse began franchising its operations early in its development, allowing it to expand rapidly. As of 2024, the company and its franchisees operate 753 restaurants in 49 states and ten foreign countries. This includes not only Texas Roadhouse locations but also Bubba’s 33 and Jaggers restaurants.

One of the standout features of Texas Roadhouse is its commitment to quality and consistency. The restaurant’s unique selling proposition includes serving USDA Choice steaks, which are hand-cut daily in-house, and ensuring that all food is made from scratch, which enhances the dining experience. The brand’s international presence began in 2010 with an agreement to open locations in the Middle East, demonstrating its global appeal and the strength of its franchise model.

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Initial investment

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Franchise fees & Royalties

Initial Franchise Fee

You must pay an initial franchise fee of $40,000 in two installments: $15,000 when you sign the Franchise Agreement and the remaining $25,000 four weeks before your restaurant opens for business.

Royalty Fee

The royalty fee is 4% of Royalty Sales, payable on the 10th of each month for the preceding month.

Marketing/Advertising Fee

The Local Marketing fee is 2% of Royalty Sales, payable monthly. Additionally, there is a Marketing Fund fee currently set at 0.3% of Royalty Sales, which can be raised to a maximum of 2.5%.

Lease or Rent Fee

Leasehold/building improvement costs range from $800,000 to $2,600,000 depending on renovation or new build-out.

Transfer Fees

A transfer fee of $3,500, or a higher amount necessary to cover reasonable costs and expenses in reviewing the transfer application, is required.

Renewal Fees

The renewal fee is the greater of 30% of the then-current franchise fee or $15,000, plus all amounts necessary to cover reasonable out-of-pocket costs and expenses associated with renewing.

Management Fees

Management fees for training and support include initial training fees ($3,500 per person for additional personnel beyond the first restaurant), ongoing coaching fees ($7,500 annually per restaurant), and other associated training and certification costs.

a financial plan for a franchise
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a financial plan for a franchise
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Franchise pros and cons

Pros

  • Competitive Business Model: Texas Roadhouse’s business model rests on selling affordable steaks, drinks, and bar food. From a recent Hardware study, the company’s business model positions each of its restaurants as the domestic destination for the other segmented consumers looking for high-quality, affordable, attentive, and friendly meals. This competitive business model has enabled the restaurant to drive sales growth even as competitors have struggled. 
  • Trained Support Team: the restaurant chain offers a trained crew who will help you through the process of opening up a restaurant. Their team will provide on-site evaluation, so you determine if your preferred site is suitable and determine the best marketing strategies to help you drive sales.
  • Solid Brand: Texas Roadhouse has earned numerous awards over the past two decades, highlighting why it is a strong brand. The awards showcase the restaurant’s high-quality food and beverages and excellent customer service from skilled employees. A solid marketing strategy and excellent customer service have helped the restaurant achieve a strong brand.
  • Strong customer service: Texas Roadhouse ensures attractive packages for its employees and managers. In that regard, the motivated team strives to provide a variety of price points to meet each guest’s budget and value expectations compared to most steakhouses.

Cons 

  • Changing business model: the franchisor might introduce changes to the business model without the franchisee’s consent. Such changes might require additional investments in your Texas Roadhouse franchise or even harm your profitability.
  • Supplier Restrictions: the franchisor might require you to buy or lease items from the franchisor or a limited group of suppliers the franchisor designates. These supplier restrictions might be more expensive than similar items you could source from alternative suppliers.

How to open A texas roadhouse franchise

1. Review Franchise Requirements

  • Experience and Background: Potential franchisees should have experience in the restaurant industry or a similar field, showcasing a strong operational background.
  • Financial Requirements: Ensure you meet the financial criteria, which typically includes a significant net worth and liquid assets to cover initial investments and ongoing expenses.

2. Submit an Application

  • Application Form: Complete the franchise application form available on the Texas Roadhouse website or through direct contact with their franchising department.
  • Detailed Information: Provide detailed information about your background, financial status, and why you are interested in opening a Texas Roadhouse franchise.

3. Initial Screening and Interview

  • Initial Screening: After submitting your application, it will undergo an initial screening process to ensure you meet the basic qualifications.
  • Interview Process: If you pass the initial screening, you will be invited for an interview to discuss your application in detail and evaluate your fit for the franchise.

4. Financial Disclosure and Business Plan

  • Financial Disclosure Document (FDD): Review the FDD provided by Texas Roadhouse, which includes comprehensive information about the franchise, costs, and obligations.
  • Business Plan Submission: Prepare and submit a detailed business plan outlining your strategy for managing and growing the Texas Roadhouse franchise.

5. Franchise Approval and Agreement

  • Approval Notification: If your application and business plan are approved, you will receive notification and an official franchise agreement.
  • Sign Franchise Agreement: Carefully review and sign the franchise agreement, ensuring you understand all terms and conditions.

6. Training and Site Selection

  • Comprehensive Training: Attend the mandatory training program provided by Texas Roadhouse, which covers all aspects of restaurant operations and management.
  • Site Selection: Work with the Texas Roadhouse team to select an appropriate location for your restaurant, ensuring it meets all company standards and market requirements.

Disclaimer

Disclaimer: This content has been made for informational and educational purposes only. We do not make any representation or warranties with respect to the accuracy, applicability, fitness, or completeness of the information presented in the article. You should not construe any such information or other material as legal, tax, investment, financial, or other professional advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any franchises, securities, or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the franchise and/or securities laws of such jurisdiction.

All content in this article is information of a general nature and does not address the detailed circumstances of any particular individual or entity. Nothing in the article constitutes professional and/or financial and/or legal advice, nor does any information in the article constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this article before making any decisions based on such information or other content.

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