Texas Roadhouse same-store sales rose 5.9 percent at company restaurants in the third quarter, the chain said on Monday, but rising food costs continued to weigh on margins.
Most of the Louisville, Kentucky-based chain’s sales improvement in the period came in the form of additional customers, as traffic rose 4.4 percent, CEO Kent Taylor said in the company’s earnings release. And the company’s sales momentum has continued into the fourth quarter. Same-store sales in the first four weeks of the current period are up 7 percent.
Still, Texas Roadhouse’s sales in the third quarter weren’t quite enough to offset rising food cost inflation, and restaurant margins fell 40 basis points to 16.8 percent. Food costs rose 4.5 percent in the quarter. Beef prices have been at record territory recently, and the price for other proteins has been up this year, too.
The company now says that food cost inflation for the full year 2014 will be 3 percent.
Total revenue in the third quarter rose 15 percent, to $385.2 million, and net income rose 10 percent to $18.9 million. Earnings per share rose 12 percent to 27 cents. The chain’s cost of sales rose 18 percent, to $137.7 million. Labor costs rose 13.7 percent to $112.5 million.
Texas Roadhouse said it is on track to open 25 new locations for the full year 2014. The company opened three new restaurants in the third quarter and has opened 15 new units so far this year. Franchisees have opened just one additional location this year.
The chain expects similar unit growth in 2015, when it’s projecting 25 to 30 openings. Capital expenditures, expected to total $110 million in 2014, should be at a similar level next year, the company said in its 2015 outlook.
As for those food costs, Texas Roadhouse is projecting 2015 food cost inflation to be in the “low-to-mid single digits.” That’s about the same amount as this year.
3Q NET INCOME
Result: $18.9 million, 27 cents per share% Increase: 10% (from $17.2 million, or 24 cents per share)
3Q REVENUE
Result: $385.2 million% Increase: 15% (from $334.8 million)
3Q SAME-STORE SALES
% Increase at company-own units: 5.9%
Source: Company report
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Contact Jonathan Maze at [email protected].
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