As far as the cost of server labor goes, at least remember that those are tipped employees. Federally, the base minimum wage for a tipped employee is $2.13. Only eight states — New York, California, Colorado, Minnesota, Oregon, Nevada, Alaska, and Washington — have minimum wages over $10 for tipped employees. Thirty states don’t even require restaurants to pay their employees over $5 an hour. Consumers are already carrying the brunt of server wages through tips. Back-of-house staff wages for Texas Roadhouse average just $10 across the country, according to Indeed.
During the earnings call, Chris Monroe, the Chief Financial Officer, pointed out that beef, not wage inflation, was still the primary driver of this year’s inflated costs. There’s been a shortage of beef since 2022 that’s not looking to get better anytime soon. Long droughts in beef states like Kansas, Texas, Nebraska, and Oklahoma lead to smaller herds and less available beef. Between climate pressures, the rising costs of cattle feed from global events like Russia’s invasion of Ukraine, and supply chain issues dating back to the start of the pandemic, it’s unlikely that beef costs will come down anytime soon. And although Texas Roadhouse executives told investors on the call that purchasing teams have done a “great job” locking in pricing with meatpackers (who have seen soaring profits while consumers face “inflation increases”) through early 2024, customers can likely count on another price hike after those contracts are renegotiated.