Texas Roadhouse Earnings: Traffic Gains and Tech Upgrades Power Q1 Growth
- Hardik Shah
- May 8
- 3 min read
TLDR
Traffic Growth & Positive Mix: Same-store sales rose 3.5%, driven by 1.1% traffic and improved mix from entree and appetizer categories.
Margin Pressure Despite Revenue Gains: Revenue grew 9.6% YoY, but restaurant margin declined 77 bps due to inflation and unfavorable mix shift toward higher-cost steak items.
Expansion & Tech Investments: Opened 8 new restaurants, rolled out digital kitchens in 65% of stores, and continued upgrading guest management systems.
Business Overview
Texas Roadhouse, Inc. is a leading U.S. casual dining operator with over 790 locations across three main brands: Texas Roadhouse, Bubba’s 33, and Jaggers. It operates company-owned and franchised units both domestically and internationally. Known for its value-driven offerings and made-from-scratch menu, TXRH emphasizes guest satisfaction and operational consistency across its brands.
Texas Roadhouse Earnings - Q1'25 Highlights
Revenue: $1.45 billion, up 9.6% YoY
Net Income: $113.7 million, up 0.4% YoY
EPS: $1.70, a 1.0% increase
Same-Store Sales: +3.5% (Traffic +1.1%, Check +2.4%)
Restaurant Margin: 16.6%, down 77 bps due to 2.1% commodity inflation and 4.6% labor inflation
To-Go Sales: Accounted for 13.6% of weekly sales
Weekly Sales: Averaged $167K at Texas Roadhouse, $123K at Bubba’s 33, and $71K at Jaggers
Forward Guidance
Q2 Trends: Comparable sales up 5% in the first five weeks; 1.4% menu price hike implemented in April.
Inflation Outlook: Raised full-year commodity inflation guidance to 4%, including 30 bps impact from tariffs (mainly seafood, disposables, and plateware).
Labor Outlook: Wage and labor inflation remains at 4–5%, with productivity gains continuing to offset hours growth.
Tax Rate: Expected to be 15–16% for FY25.
Operational Performance
Unit Growth: Opened 8 new company-owned restaurants in Q1, including the 50th Bubba’s 33; on track for ~30 new openings this year.
Franchise Acquisitions: Acquired 14 franchise units in Q1 and expects 3 more in Q2.
Digital Kitchen: Now live in 65% of stores, expected to reach 100% by year-end.
Guest Management System (AGM 2.0): 70% penetration, enhancing table turns and wait time accuracy.
New Beverage Menu: Introduced $5 all-day beer/margarita specials and regionalized drink offerings.
"It is our belief that despite any external factors, our recipe-right food, high-level hospitality, and everyday value will continue to resonate with our guests." – CEO Jerry Morgan
Market Insights
Consumer Behavior: Trade-up trends observed—guests opting for steak over chicken/seafood due to perceived value.
Weather Impact: February slowdown attributed to influenza and severe weather, with a full rebound in March–May.
Tariffs: Management remains cautious about their potential mid-year impact, especially on seafood and disposables.
Industry Positioning: Strong performance continues across all regions and dayparts, indicating brand resilience.
Strategic Initiatives
Growth Strategy: Continued investment in new units and franchise acquisitions to drive footprint expansion.
Technology: Digital kitchens and AGM 2.0 systems improving both kitchen efficiency and guest experience.
Brand Health: Positive sentiment confirmed via Bubba’s 33 guest study—reinforcing its “food-for-all” family-friendly positioning.
"We’re excited to continue our digital kitchen rollout—it creates a more efficient kitchen and a less stressful environment for our Roadies." – CEO Jerry Morgan
Capital Allocation
Dividend: $0.68/share declared, payable July 1, 2025
Buybacks: $50.2M of common stock repurchased in Q1
CapEx: $77.4M in Q1; Full-year guidance unchanged at ~$400M
Cash Balance: $221M at quarter-end
The Bottom Line
Texas Roadhouse continues to thrive through disciplined pricing, operational focus, and tech upgrades—even amid inflation and potential tariffs. With strong guest demand, expanding store base, and effective capital deployment, TXRH remains a formidable player in the casual dining segment.
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