Texas Roadhouse to open 35 new restaurants in 2026 amid 7 % commodity inflation

Texas Roadhouse, Inc. (NASDAQ: TXRH) has confirmed its intent to open approximately 35 new company-owned restaurants in 2026, reinforcing its long-term expansion strategy even as inflationary pressures continue to weigh heavily on the restaurant sector. Alongside the expansion update, the company projected that commodity inflation could approach 7 percent in 2026, further highlighting the cost challenges facing casual dining operators that rely heavily on beef and other protein-based menu items.

The announcement underscores Texas Roadhouse, Inc.’s belief in the resilience of its guest base, brand equity, and operating model. As one of the most recognizable names in full-service casual dining, the company has consistently delivered above-sector traffic performance and strong loyalty metrics, enabling it to take a growth-oriented posture even in the face of rising input prices. However, investor attention is now pivoting to whether the company’s beverage strategy, menu pricing actions, and operational discipline will be enough to preserve unit economics and restaurant-level margin performance.

Why is Texas Roadhouse, Inc. pushing for restaurant expansion despite persistent input cost inflation?

The decision to open 35 new restaurants in fiscal 2026 reflects a continuation of Texas Roadhouse, Inc.’s methodical expansion roadmap. The company operates over 800 restaurants system-wide across the United States and select international markets and has historically favored a company-owned growth model over franchising. By maintaining direct operational control, Texas Roadhouse, Inc. can preserve service quality, customer experience standards, and brand consistency.

In a market environment where several restaurant peers are scaling back development due to capital cost increases and construction delays, Texas Roadhouse, Inc. is signaling that it views current macroeconomic challenges as manageable within its operating framework. New builds allow the company to target high-growth suburban and exurban locations with favorable demographics while leveraging standardized layouts that incorporate learnings from prior store generations. These stores also allow greater design flexibility for enhancing front-of-house beverage operations, an area the company is actively optimizing to improve check averages and overall margins.

From a unit economics standpoint, the company’s confidence stems from strong historical returns on investment, with newer units typically reaching targeted sales volumes faster than prior vintages due to increased brand awareness, better location vetting, and improved pre-opening playbooks. In this context, expansion is not just about footprint growth but about achieving sales leverage and contributing to overhead absorption in a period when fixed costs, including real estate and utilities, remain stubbornly high.

What role does 7 percent commodity inflation play in shaping the brand’s pricing, menu, and sourcing strategies?

Texas Roadhouse, Inc. is forecasting commodity inflation of approximately 7 percent for 2026, with beef and dairy categories representing the most significant sources of cost pressure. In recent quarters, the company had already reported beef inflation running in the low double digits, and this trend appears to be persisting rather than reverting to pre-pandemic levels. While inflation has moderated in some broader economic indicators, restaurant input costs remain elevated due to global supply chain imbalances, reduced herd sizes, and weather-driven volatility in agricultural yields.

This cost backdrop places significant pressure on the company’s restaurant-level margins, which had already declined to 14.3 percent in the most recent quarter, down 168 basis points year-over-year. In addition to food inflation, wage costs have risen by nearly 4 percent, creating a two-front margin battle for operators like Texas Roadhouse, Inc. The company has historically been cautious about price hikes, preferring to protect its reputation as a value-driven brand. Instead of aggressive pricing, it has pursued a mix of strategic sourcing adjustments, tighter portion control standards, and renegotiated vendor contracts to offset volatility.

Yet with inflation proving more persistent than initially anticipated, moderate pricing actions may become more frequent in 2026, especially if beef prices remain structurally elevated. The company’s success in navigating this environment will depend heavily on its ability to protect guest traffic while passing through limited cost increases without eroding perceived value. This will likely require a continued focus on check-average growth via beverages and shareable menu items, rather than blunt entrée pricing adjustments.

Why is beverage strategy now emerging as a frontline tool for margin recovery?

Among the clearest margin enhancement levers being utilized by Texas Roadhouse, Inc. is its beverage program. The company has reported strong performance from regionally curated beverages, mocktails, limited-time offerings, and locally popular cocktails designed to appeal to evolving guest preferences. Unlike entrees, which have higher food cost volatility, beverage items typically deliver gross margins in the 70 to 80 percent range and require less kitchen preparation labor.

Management has outlined that beverage performance has been particularly strong among younger diners and frequent guests, many of whom see customized drinks as part of the dining experience. This aligns with broader consumer trends in casual dining where guests are seeking novelty and personalization even within familiar brand settings. Seasonal drinks, local flavor infusions, and curated bar menus can create repeat engagement without significantly increasing cost to serve.

In new restaurant builds, Texas Roadhouse, Inc. is increasingly incorporating bar layout improvements and back-of-house beverage efficiency tools to maximize throughput. These improvements support incremental revenue per guest while absorbing fixed labor and rent costs more effectively. The strategy serves dual purposes: reinforcing dine-in occasion appeal and improving store-level cash flow despite upward pressure on food and labor inputs.

How are investors and analysts interpreting Texas Roadhouse, Inc.’s stock outlook under these inflationary conditions?

Texas Roadhouse, Inc. has traditionally been viewed favorably by institutional investors due to its operational discipline, growth visibility, and brand strength. However, the rising inflation outlook has tempered some of the bullishness around short-term margin recovery. During the most recent quarter, the company delivered year-over-year revenue growth and comparable restaurant sales increases of 6.1 percent, but diluted earnings per share fell short of consensus estimates due to inflation-driven cost compression.

Investor sentiment currently leans toward cautious optimism. While the expansion plan and beverage innovation suggest a proactive margin defense strategy, concerns remain around whether commodity inflation could exceed current forecasts. Buy-side analysts are watching food cost indices, labor availability trends, and guest traffic flows closely to determine whether the pricing environment remains favorable.

FII and DII flow trends around Texas Roadhouse, Inc. stock have reflected this cautious positioning, with moderate accumulation by long-term holders and limited short-term momentum buying. The stock has traded in a relatively narrow band post-results, reflecting wait-and-watch behavior among both retail and institutional segments. Analysts continue to maintain neutral to overweight ratings on the stock, but note that any signal of margin stabilization in upcoming quarters could unlock upside if supported by stable traffic and positive check dynamics.

What does the Texas Roadhouse, Inc. expansion plan say about the future of dine-in casual dining?

Texas Roadhouse, Inc.’s ongoing expansion stands in contrast to several peers that have slowed down or paused growth due to macroeconomic concerns. The company’s decision to forge ahead suggests a long-term conviction in the relevance of full-service, dine-in hospitality in the United States consumer landscape. While the industry has seen meaningful shifts toward digital ordering, delivery, and hybrid models, Texas Roadhouse, Inc. remains anchored in its belief that in-person dining experiences retain a durable edge in guest engagement and brand loyalty.

This conviction is being reinforced by the operational tweaks the company is making, including menu engineering, beverage-centric design enhancements, and market-by-market pricing customization. These moves show a broader strategy of tuning store-level economics without losing the human touch that defines the Texas Roadhouse brand. At a time when much of the industry is leaning into tech-led cost deflation, Texas Roadhouse, Inc. is doubling down on scale-driven brand intimacy.

For competitors, this sets a challenge. Can scaled operators retain guest loyalty in a world where value and experience must coexist? And for investors, the company offers a case study in how brand clarity, disciplined growth, and tactical innovation can coexist even under sustained inflationary pressure.

What are the key takeaways from Texas Roadhouse’s plan to open 35 restaurants while facing 7% commodity inflation?

• Texas Roadhouse, Inc. will open approximately 35 new restaurants in 2026, maintaining a strong development pipeline despite cost headwinds.

• The company expects commodity inflation to average 7 percent in 2026, with beef and protein prices remaining the most challenging.

• Restaurant-level margins have come under pressure, falling to 14.3 percent due to food and labor cost escalation.

• The beverage program has emerged as a critical tool for sustaining check averages and improving profitability.

• Institutional sentiment remains neutral to moderately bullish, with analysts awaiting margin stability signals.

• Texas Roadhouse, Inc. continues to bet on the enduring appeal of dine-in value and hospitality-led service, even as inflation reshapes the cost landscape.