diff --git a/esphome/components/template/text/template_text.cpp b/esphome/components/template/text/template_text.cpp
index 32ed8f047b..5acbb6e15a 100644
--- a/esphome/components/template/text/template_text.cpp
+++ b/esphome/components/template/text/template_text.cpp
@@ -8,16 +8,23 @@ static const char *const TAG = "template.text";
 void TemplateText::setup() {
   if (this->f_.has_value())
     return;
-  std::string value = this->initial_value_;
-  if (!this->pref_) {
-    ESP_LOGD(TAG, "State from initial: %s", value.c_str());
-  } else {
-    uint32_t key = this->get_preference_hash();
-    key += this->traits.get_min_length() << 2;
-    key += this->traits.get_max_length() << 4;
-    key += fnv1_hash(this->traits.get_pattern_c_str()) << 6;
-    this->pref_->setup(key, value);
+
+  if (this->pref_ == nullptr) {
+    // No restore - use const char* directly, no heap allocation needed
+    if (this->initial_value_ != nullptr && this->initial_value_[0] != '\0') {
+      ESP_LOGD(TAG, "State from initial: %s", this->initial_value_);
+      this->publish_state(this->initial_value_);
+    }
+    return;
   }
+
+  // Need std::string for pref_->setup() to fill from flash
+  std::string value{this->initial_value_ != nullptr ? this->initial_value_ : ""};
+  uint32_t key = this->get_preference_hash();
+  key += this->traits.get_min_length() << 2;
+  key += this->traits.get_max_length() << 4;
+  key += fnv1_hash(this->traits.get_pattern_c_str()) << 6;
+  this->pref_->setup(key, value);
   if (!value.empty())
     this->publish_state(value);
 }
diff --git a/esphome/components/template/text/template_text.h b/esphome/components/template/text/template_text.h
index 178b410ed2..e5e5e4f4a8 100644
--- a/esphome/components/template/text/template_text.h
+++ b/esphome/components/template/text/template_text.h
@@ -70,13 +70,15 @@ class TemplateText final : public text::Text, public PollingComponent {
 
   Trigger<std::string> *get_set_trigger() const { return this->set_trigger_; }
   void set_optimistic(bool optimistic) { this->optimistic_ = optimistic; }
-  void set_initial_value(const std::string &initial_value) { this->initial_value_ = initial_value; }
+  void set_initial_value(const char *initial_value) { this->initial_value_ = initial_value; }
+  /// Prevent accidental use of std::string which would dangle
+  void set_initial_value(const std::string &initial_value) = delete;
   void set_value_saver(TemplateTextSaverBase *restore_value_saver) { this->pref_ = restore_value_saver; }
 
  protected:
   void control(const std::string &value) override;
   bool optimistic_ = false;
-  std::string initial_value_;
+  const char *initial_value_{nullptr};
   Trigger<std::string> *set_trigger_ = new Trigger<std::string>();
   TemplateLambda<std::string> f_{};