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ECO 201 Module Three Checkpoint Assignment

This document is a checkpoint assignment by Travis Hupp for a Microeconomics course, focusing on Texas Roadhouse's supply and demand dynamics. It highlights the company's revenue growth, factors influencing supply and demand, and the impact of price elasticity on their pricing strategy. The analysis indicates that Texas Roadhouse has maintained profitability despite price increases due to the quality of its offerings and strategic expansion.

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190 views4 pages

ECO 201 Module Three Checkpoint Assignment

This document is a checkpoint assignment by Travis Hupp for a Microeconomics course, focusing on Texas Roadhouse's supply and demand dynamics. It highlights the company's revenue growth, factors influencing supply and demand, and the impact of price elasticity on their pricing strategy. The analysis indicates that Texas Roadhouse has maintained profitability despite price increases due to the quality of its offerings and strategic expansion.

Uploaded by

huppman212
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Module Three Checkpoint Assignment

Travis Hupp

Southern New Hampshire University

ECO 201: Microeconomics

Mr. Jing Li

November 12, 2024


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Introduction

For this project, I will be researching and informing you about Texas Roadhouse. Texas

Roadhouse is a legendary steak restaurant serving American cuisine from the best steaks and ribs

to made-from-scratch sides & fresh-baked rolls. They have been serving customers and putting

smiles on faces since 1993.

Supply and Demand

The supply and demand for Texas Roadhouse has fluctuated over the past 5 years due to

the amount of food that can be provided versus the number of customers that are wanting that

food. For the sake of Texas Roadhouse, the company’s revenue growth has been on average

14.1% over the last 5 years. “The increased revenue comes from having 772 open locations

including the rapid opening of multiple new locations causing a 5.9% annual growth in just the

last two years alone” (Stockstory – 24 Oct). On average, each location has skyrocketed their

sales growth by 9.1%, which has helped the company has a whole to profit and open more doors

for more customers. That alone will tell you that if Texas Roadhouse has the supply (seats

available and food to be sold) then there will always be a demand from customers.

The 1st determinant of supply that I found while researching was that Texas Roadhouse

increased the price of their menu by 0.9% due to the increased volume of customers compared to

the traffic of customers at the competition restaurants. This allows them to profit more while still

maintaining the same quantity of supplies and personnel. The 2nd determinant of supply that I

found would be the skyrocketing opening of new locations. This is a determinant because a new

business draws new customers and allows for a higher pitch in sales. The determinants of

demand, I would have to say, would be COVID and the inability to retain customers. COVID
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was a lockdown time for the entire world, that means that Texas Roadhouse could not get the

business needed to maintain a competitive market. This caused a setback for the company in

2019 as they did not reach back to their average sales pitch until the end of 2020.

Price Elasticity

The determinants of price elasticity come from a few different inputs including, where a

restaurant is located, how much traffic the restaurant gets, the price of living in the area as well

as what the menu is priced at. The location of a restaurant is very detrimental to its success

because the prices need to reflect an appropriate price for the town or area it is located in as well

as the number of customers the restaurant will receive in order to meet a demand. The price of

what is on the menu is also determined by competition factors. For example, Texas Roadhouse

rose their prices by 2.2% this past spring, following earlier hikes of 2.7% in October 2023 and

2.2% in April 2023 due to the 5.1% advantage in sales over competing franchises.

Based on my analysis, I would say that Texas Roadhouse is inelastic. This is due to the

quality of food and services that Texas Roadhouse has to offer. Over the past year, the menu has

increased on 3 separate occasions and profits still continue to rise. Whether or not Texas

Roadhouse is always generating explosive revenue, I do believe that they will continue to trend

upwards due to the quality of their food.


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References

Texas Roadhouse’s (NASDAQ:TXRH) Q3 Earnings Results: Revenue In Line With

Expectations - The Globe and Mail

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