Rising commodity and other costs are leading Texas Roadhouse Inc. to bake a 3% menu increase into its mid-April menu, executives said Tuesday.
The Louisville, Ky.-based casual-dining brand, which also owns Bubba’s 33 and the fast-casual Jaggers, took a 4.2% menu-price increase in November.
“At this time, we have not seen a negative reaction from the price increases that we took in May and November of 2021,” said Jerry Morgan, Texas Roadhouse president, in a fourth-quarter earnings call.
“All indications are that our guests continue to view Texas Roadhouse as a great value because of the prices that we charge and the quality of food and service that we provide,” he said. “However, we will never take our guests for granted and know that we must earn their business each and every day.”
Morgan said dinner-service Texas Roadhouse is offering a to-go menu for earlier dining, offered before the dinner rush.
“We've got 15 items that are at a better price point,” Morgan said. “We will be promoting that a little stronger maybe than we did in 2021.”
To-go sales have held up as dining rooms reopened from the pandemic, said Tonya Robinson, Texas Roadhouse chief financial officer. “The to-go seems to be sticky and I think a lot of it is because of the online opportunity that we have and we're seeing, I think it's above 65% of the to-go is through online transactions. … I think you're seeing a guest that likes the convenience of it and they like the ability to get online, get it done, step on the way home to get it.”
The to-go sales tend to be in the earlier part of the week, Monday through Wednesday, she added.
For the fourth quarter ended Dec. 28, Texas Roadhouse’s net income was $53.1 million, or 76 cents a share, from $19.5 million, or 28 cents a share, in the same period last year. Revenue rose to $895.6 million from $638 million in the prior-year quarter.
Same-store sales at company-owned restaurants were up 33.1% from the 2020 fourth quarter and up 21.2% from the pre-pandemic 2019 quarter. Same-store sales at domestic franchised units were up 34.8% from the 2020 quarter and up 18.8% from the pre-pandemic 2019 period.
The development pipeline for Texas Roadhouse’s brands has encountered some equipment-supply difficulties, Morgan noted.
“During the fourth quarter, despite equipment-supply challenges, we were able to open all 11 restaurants that were scheduled to open,” he said. “These openings included nine Texas Roadhouse, one Bubba's 33 and one Jaggers. We remain very pleased with how our new restaurants are performing. To put that into perspective, for the first seven weeks of 2022, the 10 Texas Roadhouse and Bubba's 33 restaurants that opened in the fourth quarter averaged over $142,000 in weekly sales.
This year, Texas Roadhouse is targeting 25 company-owned restaurants, including as many as four Bubba's 33 openings. Franchise partners are expected to open as many as five Texas Roadhouse units in 2022.
“The reduction in the number of expected openings in 2022 is due to continued delays in the initial permitting and building approval process,” Morgan said. “With this step taking longer than normal, we are pushing several second half 2022 openings into 2023.”
Texas Roadhouse, founded in 1993, has more than 660 restaurants in 49 states and 10 other countries.
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