Texas Roadhouse, Inc. Q3 FY2025 earnings call

• Strong top-line momentum continued with revenue topping $1.4 billion, achieving highest quarterly growth in revenue, same-store sales, and traffic. - Opened 7 company-owned locations in Q3, with plans to open ~30 restaurants across 3 brands in 2025; acquired 20 franchise restaurants, including 3 in Q4 and 5 California franchises in 2026. - Guests favored larger entrees and beverages like mocktails and dirty sodas; To-Go business showed momentum. - Retail segment with products in over 120,000 retail outlets for brand awareness. - 95% of restaurants use digital kitchen and guest management system, to be completed by year-end.

For the third quarter of 2025, Texas Roadhouse reported revenue growth of 12.8%, primarily driven by a 5.5% increase in average weekly sales and 6.8% store week growth. Average weekly sales in the third quarter were over $157,000, with to-go representing approximately $21,500 or 13.6% of these total weekly sales. Comparable sales increased 6.1% in the third quarter, driven by 4.3% traffic growth and a 1.8% increase in average check. Weekly sales at Texas Roadhouse averaged nearly $162,000, at Bubba's 33 ~$119,000, and at Jaggers over $75,000. Restaurant margin dollar increased by 1.1% to $204 million, while diluted earnings per share decreased by 0.8% to $1.25.

• 2025 commodity inflation updated to ~6%, 2026 guidance ~7%; 2025 wage and labor inflation unchanged at ~4%, 2026 guidance 3%-4%. - Ended Q3 with $108 million cash, $144 million cash flow from operations. - 2026 expects 5%-6% store week growth, ~$400 million CAPEX excluding CA franchise acquisition. - 2026 plans 35 new stores and 5 acquired CA franchises.

• Volatility in beef prices impacting commodity inflation. - Labor inflation uncertainties. - Potential impact of inflation on consumer demand and pricing decisions.

Q: Clarification on beef inflation outlook and beverage mix.

A: Michael Bailen discussed cyclical nature of beef inflation and negative alcohol mix offset by mocktails.

Q: Confidence in beef inflation being transitory.

A: Michael Bailen cited cattle cycle as transitory, managed through.

Q: Consumer demographics impact.

A: Jerry Morgan noted no significant differences, focus on value menu.

Q: Pricing impact on MP compensation and Bubba's performance.

A: Jerry Morgan discussed MP compensation tied to performance, Bubba's challenges in competitive set.

Q: Consumer acquisition and traffic.

A: Jerry Morgan emphasized reputation and hospitality driving traffic.

Q: Beef lock-in for 2026 and KDS impact.

A: Michael Bailen discussed beef lock-in and KDS enhancing guest experience.

Q: Franchise acquisitions and CAPEX.

A: Keith Humpich discussed remaining franchises and CAPEX considerations.

Q: OpEx and G&A guidance for 2026.

A: Michael Bailen discussed low single-digit growth in other OpEx.

Q: Quarter-to-date trends and Halloween impact.

A: Michael Bailen discussed stable trends except Halloween.

Q: Rent and restaurant investment.

A: Michael Bailen discussed rent straight line and ongoing restaurant maintenance.

Q: Retail impact and menu pivot.

A: Gerald Morgan discussed retail brand awareness and commitment to steak offerings.

Q: Development pace and Texas Roadhouse openings.

A: Gerald Morgan discussed pipeline and confidence in future openings.