Texas Roadhouse (TXRH) 10-K Report Analysis (2024)
- Hardik Shah
- Mar 2
- 4 min read
TL;DR - Texas Roadhouse 10-K
Strong Revenue Growth Amid Inflationary Pressures – TXRH reported $5.34 billion in total sales, reflecting solid consumer demand, but rising labor and food costs (especially beef) remain a key challenge.
Aggressive Expansion with Focus on Company-Owned Growth – The company opened new locations and is prioritizing company-owned restaurants over franchises, alongside digital enhancements to improve operational efficiency.
Shareholder-Friendly Capital Strategy but Cost Pressures Persist – TXRH authorized a $500 million share buyback while maintaining dividends, signaling confidence, but inflation and wage growth could squeeze margins.
Business Model & Core Operations
Texas Roadhouse operates in the casual dining segment, focusing on affordable, high-quality steaks and American cuisine served in a lively atmosphere. The company differentiates itself through a high-energy dining experience, generous portions, and a strong owner-operator culture.
Operating Segments:
Texas Roadhouse (Flagship Brand) – Full-service casual dining, known for hand-cut steaks and scratch-made meals.
Bubba’s 33 – Sports-bar-style dining offering burgers, pizza, and wings.
Jaggers – Fast-casual concept with a focus on burgers, chicken sandwiches, and fresh salads, with drive-thru and digital ordering options.
Key Markets & Revenue Streams:
666 company-owned restaurants (primary revenue driver).
118 franchised locations (including international operations in 10 countries).
Revenue Mix: Majority from dine-in sales, with growing to-go and digital ordering contributions. Alcohol sales account for ~10% of revenue.
Financial Performance
Metric | 2024 | 2023 | YoY Change (%) |
Total Revenue ($B) | 5.37 | 4.63 | 16.0% |
Income from Operations ($M) | 516.5 | 354.0 | 45.9% |
Net Income ($M) | 433.6 | 304.9 | 42.2% |
Diluted Earnings Per Share ($) | 6.47 | 4.54 | 42.5% |
Comparable Sales Growth (%) | 7.7% | 10.1% | -2.4% |
Revenue & Profitability Trends:
Total revenue: $5.37 billion, reflecting steady sales growth.
Profitability Concerns: Inflation in food and labor costs pressured restaurant margins. Despite pricing adjustments, rising minimum wages and supply chain disruptions could impact future profitability.
Cash Flow & Shareholder Returns:
$79.8 million spent on share buybacks in 2024, with a new $500 million repurchase authorization.
Dividends maintained, reinforcing a shareholder-friendly approach.
Debt & Leverage:
TXRH maintains a strong balance sheet, with manageable debt levels and consistent cash flow generation.
Strategic Initiatives
Expansion Plans: TXRH continues to expand with 784 restaurants across multiple brands (Texas Roadhouse, Bubba’s 33, and Jaggers). The company focuses on opening new company-owned restaurants while also acquiring franchise locations.
Operational Efficiency: A key component of TXRH’s strategy is a low table-to-server ratio and an owner-operator partnership model, ensuring strong customer service.
Technology Integration: Investments in digital ordering, kitchen display systems, and human capital management aim to drive efficiency and guest experience
Menu & Pricing Strategy: Strategic price increases help offset inflationary pressures, but the company is cautious about maintaining value perception.
Key Risk Factors:
⚠ Inflation & Cost Pressures – Rising food (especially beef) and labor costs remain a threat to margins.
⚠ Competitive Landscape – Growing pressure from fast-casual and quick-service restaurants, as well as meal delivery services.
⚠ Regulatory & Compliance Risks – Wage laws, data security regulations, and supply chain constraints could impact operations.
Management Discussion & Outlook
📌 Positive Long-Term Growth Outlook – TXRH sees opportunities for expansion and expects steady sales growth despite cost challenges.
📌 Cautious on Inflationary Pressures – Management acknowledges that wage growth and food costs will remain a headwind.
📌 Focus on Digital & Operational Efficiencies – Investments in AI, automation, and digital engagement to drive long-term profitability.
According to the Texas Roadhouse Q4'24 release, Management reiterated the following expectations for 2025:
Positive comparable restaurant sales growth including the benefit of 2024 menu pricing actions;
Store week growth of approximately 5%, including a benefit of 2% from the franchise acquisition;
Wage and other labor inflation of 4% to 5%;
An effective income tax rate of 15% to 16%; and
Total capital expenditures of approximately $400 million.
Industry & Competitive Landscape
Market Positioning: TXRH differentiates itself with affordable, high-quality steakhouse dining and a strong customer experience.
Loyalty & Brand Strength: The company benefits from strong customer loyalty and word-of-mouth marketing, reducing reliance on advertising.
Competitive Threats: Rising competition from fast-casual, quick-service, and delivery-based competitors is a challenge.
Industry Trends: Labor shortages, rising costs, and evolving consumer preferences toward convenience (to-go, delivery) present challenges and opportunities.
Red Flags & Warning Signs
🚩 Margin Pressure from Cost Inflation – Labor costs and supply chain disruptions could limit profit expansion.
🚩 Store-Level Closures & Impairments – Recorded $1.2 million in impairment and closure costs, indicating some underperforming locations.
🚩 Large Share Buybacks vs. Investment Needs – While buybacks can signal confidence, the aggressive $500 million repurchase program could raise concerns about capital allocation.
Notable Changes
🔄 Leadership Change: Christopher Monroe appointed as CFO (June 2023), bringing new financial leadership.
🔄 Strategic Shift: Prioritizing company-owned growth rather than franchise expansion.
🔄 Technology Focus: Investments in AI-driven insights, digital ordering, and kitchen automation to streamline operations.
Capital Allocation & Investment Priorities
According to Texas Roadhouse’s official 10-K filing for 2024, it is prioritizing capital allocation toward company-owned restaurant growth, digital investments, and operational efficiency. Key areas of investment include:
New Restaurant Openings: Expecting an increase in capital expenditure for site development, construction, and expansion of company-owned locations.
Technology & Efficiency: Significant investments in kitchen automation, digital ordering, and data analytics to enhance productivity and guest experience.
Shareholder Returns: Continued share buybacks ($500M authorization) and dividend payments, reflecting confidence in financial health but also raising capital efficiency questions.
Cost Management: Addressing inflationary pressures through supply chain optimizations, menu pricing strategies, and labor efficiency initiatives.
Bottom Line
✅ TXRH remains a strong performer in the casual dining space, with steady revenue growth, a disciplined expansion strategy, and strong brand loyalty.
⚠ However, inflationary pressures on food and labor costs pose a significant challenge, requiring continued pricing discipline and cost efficiencies.
📈 The company’s long-term growth strategy appears solid, but investors should watch margin trends and cost pressures as key risk factors.
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