Texas Roadhouse continued to defy broader industry trends, reporting an 8.5% increase in same-store sales at company-owned restaurants in the third quarter, including over 5% traffic growth.
This consistent outperformance comes as many of its peers in the casual-dining segment struggle with traffic and sales erosion. During the company’s earnings call Thursday after market, chief executive officer Jerry Morgan said these results come from the chain’s operational excellence, focus, environment, and food.
“We do all the things great restaurants do – greet people, get them fed, thank them … We just double down on everything we do,” he said. “We are laser focused on food, service, and community partnerships … This is just a continuation of operators doing what they always do, and we’re being rewarded for that.”
Average weekly sales at company restaurants were $149,176, of which $18,914 were to-go sales, as compared to average weekly sales of $138,668, of which $17,058 were to-go sales in the prior year. Restaurant margin dollars increased 24.1% to $202.1 million from $162.8 million in the prior year primarily due to higher sales. Restaurant margin increased to 16% from 14.6%, also driven by higher sales.
Revenues were $1.3 billion in the quarter, putting the company on pace to easily surpass $5 billion this year. In 2023, the company finished with $4.8 billion, according to Technomic data.
Texas Roadhouse took a pricing increase of 0.9% during the quarter, which Morgan said is an appropriate level to maintain its value proposition.
On the tech side, the company completed more than 200 digital kitchen conversions and expects to have 250 converted by the end of the year, with the entire 770-ish-unit system done by the end of 2025.
Chief financial officer Chris Monroe added that he’s “especially encouraged” by all three brands – including Jaggers and Bubba’s 33 – delivering positive traffic and sales growth, adding that the momentum has continued thus far in the fourth quarter. Comp sales at company restaurants for the first four weeks of Q4 increased 8.3% compared to 2023.
Notably, Texas Roadhouse has received a somewhat surprising tailwind from lower-than-forecasted beef prices, and Monroe said there is a “positive outlook” for commodities and labor inflation. Additionally, labor-hour growth relative to traffic growth remains below the company’s 50% historical levels with five straight months of this metric improving, Monroe said.
Further, Texas Roadhouse continues to garner a positive entrée, soft drink, and add-ons mix – despite the 0.9% price increase – while alcohol sales remain negative, but steady.
“We're seeing good results from our guests, not hearing of any pushback on the menu pricing that we have taken. I believe we're still screaming value,” Monroe said.
Remarkably, restaurants were impacted by recent hurricanes, but Monroe said those stores were able to reopen swiftly and experience a bounce back. By month, comparable sales grew 8%, 8.1%, and 9.3% for July, August, and September, respectively, while the first four weeks of October were up 8.3%. An important driver of this recovery is Texas Roadhouse’s focus on local store marketing, versus national marketing.
“We try to own the communities we’re in,” Monroe said. “If competition goes into the market, our operators aren’t waiting for us to come in with some program, they’re competing every day in that community.”
Acquisition of franchised restaurants
Texas Roadhouse will acquire 13 franchised restaurants – seven in Indiana and Ohio and six in California – in the beginning of 2025 using cash on hand. Head of investor relations Michael Bailen said the acquisition will drive volume increases and a slight increase in margin dollars.
Morgan added that such acquisitions have been a part of the company’s plan for the past 20-plus years.
“This is a very exciting transaction for us and we will continue to talk to others out there,” he said.
Texas Roadhouse Q3 by the numbers
- Total revenue: $1.27 billion, compared to $1.12 billion a year ago, a 13.5% increase
- Net income: $84.4 million, compared to $63.7 million
- Comp store sales increased 8.5% at company restaurants and 7.2% at domestic franchise restaurants
- Average weekly sales at company restaurants were $149,176 of which $18,914 were to-go sales as compared to average weekly sales of $138,668, of which $17,058 were to-go sales in the prior year
- Restaurant margin dollars increased 24.1% to $202.1 million from $162.8 million in the prior year primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 16% from 14.6% in the prior year driven primarily by higher sales.
- Seven company restaurants and three franchise restaurants were opened
- Capital allocation spend included capital expenditures of $91.1 million, dividends of $40.7 million, and repurchases of common stock of $9.6 million.
Contact Alicia Kelso at [email protected]
