Texas Roadhouse faces costly fallout from viral racist hoax

A viral social-media allegation that Texas Roadhouse says was completely false still managed to leave a mark on the restaurant chain’s business.

The company reported that comparable-sales growth slowed sharply in September after the controversy spread at the end of August. Comparable sales had risen 5.9% in July, and 6.8% in August, but September growth slowed to just 1%.

Texas Roadhouse executives said the slowdown was tied to the social-media controversy. The company has not disclosed a specific dollar amount for business it believes was lost because of the rumor.

The allegation spread quickly online

The controversy centered on screenshots of a Facebook post published under the name “Nancy Smith.”

The post alleged that white servers were discussing contaminating food served to Black customers in a secret Facebook group with more than 400,000 members. It mentioned both Texas Roadhouse and Logan’s Roadhouse.

The allegation spread across social media, bringing anger and calls to avoid the restaurants.

But there was no verified evidence establishing that a food-tampering incident had taken place at a Texas Roadhouse restaurant or that a confirmed employee was responsible.

That distinction became important as the company worked to determine whether the claims had any basis.

Texas Roadhouse investigated the claims

Texas Roadhouse did not simply dismiss the posts without looking into them.

The company conducted its own internal investigation and also hired an outside online-forensics firm to examine the allegations.

The investigation found no evidence supporting the food-tampering claims, no proof of the alleged secret group, and no connection between the allegations and current or former Texas Roadhouse employees.

CEO Jerry Morgan described the findings as clear.

“Through our investigation, which included an external forensic analysis, we were quickly able to determine that the allegations made and the social media posts were completely false.”

Separate examination by Snopes also found no verifiable evidence confirming the alleged conspiracy. It described the accusation as unfounded, although it did not independently establish whether the purported secret group existed.

For Texas Roadhouse, the investigation settled the company’s position on the allegations. The harder issue was dealing with the business impact after the claims had already circulated.

September told a different story from the rest of the quarter

The numbers show why the company viewed September as a problem.

Comparable sales increased 4.3% for the third quarter overall. That figure included a 3.6% increase in average check and 0.7% growth in traffic.

But September was much weaker than the two months before it.

Comparable-sales growth of 1% was still growth, meaning the company was not reporting a decline in sales compared with the previous year. The problem was the sudden loss of momentum.

That difference matters. The controversy did not turn Texas Roadhouse’s business into a companywide sales collapse. Instead, it coincided with a significant slowdown in comparable-store growth.

Total company revenue for the quarter increased 9.5%, reaching approximately $1.573 billion compared with $1.436 billion a year earlier.

So while September was difficult, the broader quarterly picture remained one of growth.

Restaurant teams are trying to win customers back

Texas Roadhouse’s response has moved beyond addressing the online allegation.

Management said restaurant teams were focusing on food quality, customer service, restaurant operations, and local marketing. Operators were also working on rebuilding relationships with customers in their communities.

Michael Bailen, the company’s vice president of investor relations, acknowledged that the recovery had taken longer than some expected.

“Maybe the recovery has taken a little bit longer than some would have expected, but our operators are out there busting their butts and they’ve doubled down on everything they’re doing.”

That effort includes more direct contact with customers.

Morgan described employees reconnecting with people they had not seen recently and making an effort to engage with them again.

The approach puts individual restaurant teams at the center of the recovery. The financial figures, however, cover the company as a whole rather than showing what happened at any particular Texas Roadhouse location.

Early fourth-quarter numbers show improvement

There are signs that the September slowdown may not have continued at the same pace.

Comparable sales increased 1.5% during the first five weeks of the fourth quarter. Management also said sales and traffic improved each week during October and into early November, although it did not provide detailed weekly figures.

Morgan said the company believed customers were returning after the controversy.

“We are definitely business people, but the trends and the signs show that we believe that those were false accusations and that absolutely, our sales are coming back.”

Still, the early fourth-quarter growth remained below the comparable-sales pace Texas Roadhouse recorded in July and August.

The company continued to expect positive comparable-sales growth for the full year. Through the third quarter, comparable sales were up 5.9% compared with the same period in 2025.

The fallout was real, even though the allegation was not

The Texas Roadhouse situation highlights an uncomfortable difference between a false online claim and its potential business consequences.

The company’s investigation found no evidence supporting the food-tampering allegation, yet the controversy was followed by a noticeable slowdown in comparable-sales growth in September.

Texas Roadhouse has not put a dollar figure on the specific impact of the rumor. What it has provided is a clear picture of the timing: strong comparable-sales growth in July and August, a sharp slowdown in September and early signs of improvement afterward.

For now, the company is relying heavily on its restaurant teams to rebuild customer relationships and maintain the momentum it had before the controversy.

The latest numbers suggest that recovery is underway, but they do not show that the fallout has been completely erased.