Texas Roadhouse Earnings Call Highlights Growth Momentum
Texas Roadhouse ((TXRH)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Texas Roadhouse’s latest earnings call struck an upbeat tone as management balanced robust growth with manageable cost pressures. Executives highlighted double-digit revenue gains, strong traffic-driven comps and nearly 10% EPS growth, underscoring healthy demand and solid execution. While commodity inflation, especially in beef, weighed on margins, leadership emphasized cash generation, productivity gains and tech investments as key offsets.
Strong Top-Line Growth
Revenue climbed past $1.6 billion, rising 12.8% year over year as the chain continued to expand and drive higher unit volumes. The company reported a 6.8% increase in average weekly sales alongside a 5.7% increase in store weeks, showing both organic momentum and network growth contributed to the top line.
Healthy Comparable Sales and Traffic
Comparable sales rose 7.1% in the quarter, fueled by 4.5% traffic growth and a 2.6% increase in average check, demonstrating both more guests and modest pricing power. Monthly comps remained consistently strong, with January at 6.9%, February at 8.3% and March at 6.3%, despite some weather-related volatility.
Profitability and EPS Improvement
Diluted EPS improved 9.6% to $1.87, while restaurant margin dollars rose 10.5% to $264 million, reflecting solid profit growth even with cost headwinds. On a per-store-week basis, restaurant margin dollars increased 4.5% to more than $28,000, signaling stronger unit-level earnings power.
Strong Cash Flow and Balance Sheet
Texas Roadhouse generated $259 million in operating cash flow during the quarter and ended with $215 million in cash, reinforcing balance sheet strength. Management continued to fund growth initiatives while returning capital through acquisitions, dividends and share repurchases, showing confidence in the underlying cash engine.
Operational Productivity Gains
Labor efficiency improved as labor costs fell 46 basis points to 32.9% of sales, despite labor dollars per store week rising 5.4% on higher wages and hours. Notably, labor hours grew at roughly 35% of comparable traffic growth, indicating productivity gains and better scheduling are helping to leverage rising volumes.
Digital and Technology Progress
Management pointed to digital kitchen tools and upgraded handheld tablets as emerging contributors to smoother operations and throughput. These technologies are enabling higher to-go order volumes while preserving the dine-in experience and enhancing order accuracy and speed.
To-Go and Weekly Sales Mix
Average weekly sales at Texas Roadhouse topped $174,000, with brand-level commentary referencing nearly $180,000, underscoring strong restaurant demand. To-go orders accounted for more than $25,000, or 14.6% of weekly sales, and early second-quarter comparable sales were running at 6.5%, suggesting momentum is continuing.
Franchise and International Development Momentum
The company plans about 35 company-owned openings for the full year, with four new Texas Roadhouse units opened in the first quarter. Franchise partners are also expanding both domestically and abroad, with additional U.S. units and up to six more international Texas Roadhouse openings expected, signaling a growing global footprint.
Guidance and Cost Visibility Improvement
Management narrowed full-year commodity inflation guidance to a 6% to 7% range, after Q1 inflation came in at 6.2% and visibility improved for the second half. Wage and other labor inflation guidance remained at 3% to 4%, giving investors clearer line of sight on key cost inputs.
Brand Recognition and Awards
Texas Roadhouse was named America’s Best Restaurant Experience by the Data Central 500 for the second consecutive year, highlighting strong guest satisfaction. Leadership also cited internal awards and recognition that underscore the company’s culture, brand strength and employee engagement.
Commodity Inflation and COGS Pressure
Food and beverage costs rose to 35.3% of sales, up 122 basis points year over year, primarily due to 6.2% commodity inflation, with beef a noted driver. Management reiterated that commodity inflation is expected to peak in the second quarter at around 7% to 8% before easing later in the year, leaving near-term pressure but a potentially improving backdrop.
Restaurant Margin Percentage Compression
Restaurant margin as a percentage of sales slipped 36 basis points to 16.3%, even as margin dollars grew, reflecting inflation and mix headwinds. The company framed this as a trade-off where strong sales expansion and margin-dollar growth are prioritized over near-term percentage compression.
Negative Mix from To-Go and Alcohol
To-go growth, now 14.6% of sales, and soft alcohol attachment rates weighed on sales mix by roughly 50 basis points versus pure pricing benefit. Since off-premise orders tend to include fewer beverages and alcohol sales have lagged, the shift in mix is a modest drag on margins despite the top-line lift.
Elevated Operating Expense Items
General and administrative costs increased 8.7% and depreciation rose 16.5%, with depreciation now 3.5% of revenue, as investment activity ramps. For the full year, management expects G&A to grow at a low double-digit rate and depreciation in the low teens, adding pressure below the restaurant margin line.
Beef Market Uncertainty
The company highlighted ongoing volatility in the beef market, citing supply constraints, shifting retail demand and changing cut preferences as key uncertainties. While management refrained from commenting on longer-term structural changes, they acknowledged that future beef cost exposure beyond the current planning window remains unclear.
Weather and Timing Noise
Weather weighed on first-quarter comparable sales by roughly 80 basis points, though this was partially offset by a favorable New Year’s Eve timing benefit of about 60 basis points. The net 20 basis point headwind introduced some noise into quarterly trends, but management suggested underlying demand remained healthy.
Forward-Looking Guidance and Outlook
For 2026, Texas Roadhouse expects commodity inflation of 6% to 7%, with Q2 as the peak and easing in the back half, while wage inflation should stay in the 3% to 4% range. Capital expenditures are projected around $400 million, with roughly 35 company-owned openings, additional domestic Jaggers units, and up to six international Texas Roadhouse franchise openings, supported by a solid cash position and ongoing margin-dollar leverage.
Texas Roadhouse’s earnings call painted the picture of a growth brand leaning into demand, unit expansion and technology while navigating elevated input costs. Strong traffic, rising EPS, robust cash flow and clear development plans suggest a constructive outlook, even as commodity inflation, beef volatility and mix shifts temper near-term margin percentage gains.
