Rising beef costs sapped into profits at Texas Roadhouse Inc. in the second quarter, the company said on Monday.
Net income fell 8 percent in the quarter ended June 30, to $21.1 million, or 30 cents per share, from $23.1 million or 33 cents in the same period a year ago — despite a 15-percent increase in revenues, to $454.7 million from $395.4 million.
The reason for the profit decline: Food costs rose 9.4 percent, driven mostly by the rising cost of beef in the quarter, the company said.
Those costs drove down restaurant margin as a percentage of sales 193 basis points to 16.2 percent.
Nevertheless, the Louisville, Ky.-based chain still keeps bringing customers into its 465 units: Same-store sales rose 8.2 percent at company locations and 6.9 percent at franchise restaurants.
Same-store sales are also up 7.6 percent at company restaurants so far in the third quarter.
“We are pleased to report strong sales momentum in the second quarter, as we generated double-digit revenue gains,” CEO Kent Taylor said in a statement. “In spite of top-line performance, commodity inflation of 9.4 percent resulted in earnings per share lower than the prior year as it more than offset modest price increases taken in late 2014.”
Shares in Texas Roadhouse fell more than 4 percent in after-hours trading Monday.
The company is forecasting same-store sales growth in the mid-single digits for the full year and about 30 company-owned restaurants.
Texas Roundhouse may also open as many as five locations of its burgeoning Bubba’s 33 chain.
The company does expect food cost inflation to ease in the second half. It expects food cost inflation to be 1 percent to 2 percent in the second half of 2015 and 4 percent to 5 percent for the full year.
Contact Jonathan Maze at [email protected].
Follow him on Twitter at @jonathanmaze
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