Texas Roadhouse, Inc. Reports Financial Results for the 13 Weeks Ended April 1, 2025

Overview of Texas Roadhouse’s Q1 2025 Financial Performance

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. In Q1 2025, the company reported strong financial results, with total revenue increasing 9.6% to $1,447.6 million compared to Q1 2024. This was primarily driven by a 7.1% increase in store weeks and a 3.5% increase in comparable restaurant sales at company restaurants.

Net income increased 0.4% to $113.7 million, while diluted earnings per share grew 1.0% to $1.70. The increase in net income was due to higher restaurant margin dollars, which grew 4.7% to $239.3 million. However, restaurant margin as a percentage of restaurant and other sales decreased to 16.6% from 17.4% in the prior year period, primarily due to commodity inflation of 2.1% and wage and other labor inflation of 4.6%.

During the quarter, Texas Roadhouse opened seven new Texas Roadhouse company restaurants and one new Bubba’s 33 company restaurant. The company also acquired 14 domestic franchise restaurants. Looking ahead, Texas Roadhouse expects store week growth of approximately 5% across all concepts in 2025, including a 2% benefit from the franchise acquisitions.

Revenue and Profit Trends

Texas Roadhouse’s total revenue growth of 9.6% in Q1 2025 was driven by a 7.1% increase in store weeks and a 3.5% increase in comparable restaurant sales. The increase in store weeks was due to the acquisition of franchise restaurants and new store openings, while the increase in comparable sales was attributable to higher per person average check and guest traffic.

The company’s Texas Roadhouse and Bubba’s 33 concepts both saw positive comparable sales growth, up 3.5% and 3.9% respectively. This was driven by a 2.4% increase in per person average check and a 1.1% increase in guest traffic across the company’s restaurants.

While revenue grew at a healthy pace, Texas Roadhouse’s restaurant margin as a percentage of sales declined from 17.4% in Q1 2024 to 16.6% in Q1 2025. This was primarily due to commodity inflation of 2.1%, primarily in beef costs, as well as wage and other labor inflation of 4.6%. The company expects these inflationary pressures to continue in 2025, with commodity inflation of approximately 4% and labor inflation of 4-5%.

Despite the margin pressure, Texas Roadhouse was able to grow net income by 0.4% to $113.7 million. This was driven by the higher sales volume, which offset the increased costs. Diluted earnings per share also increased 1.0% to $1.70, benefiting from the net income growth and the impact of share repurchases.

Strengths and Weaknesses

One of Texas Roadhouse’s key strengths is its ability to drive consistent same-store sales growth. The company has demonstrated a track record of positive comparable sales, with a 3.5% increase in Q1 2025 and an 8.4% increase in the prior year period. This indicates that the company’s core Texas Roadhouse and Bubba’s 33 concepts continue to resonate with customers.

Texas Roadhouse has also been successful in expanding its footprint, opening 8 new company restaurants in Q1 2025 and expecting approximately 5% store week growth in 2025. The company’s disciplined approach to new unit development has allowed it to steadily grow its presence across the country.

However, the company faces ongoing cost pressures, particularly from commodity and labor inflation. While Texas Roadhouse has been able to offset some of these higher costs through menu price increases, the 2.1% commodity inflation and 4.6% labor inflation in Q1 2025 put pressure on restaurant-level margins. This is an industry-wide challenge that Texas Roadhouse will need to continue managing effectively.

Another potential weakness is the company’s reliance on beef, which accounts for approximately half of its food and beverage costs. Fluctuations in beef prices can have a significant impact on the company’s profitability. Texas Roadhouse attempts to mitigate this risk through strategic purchasing and menu pricing, but it remains an area of vulnerability.

Outlook and Future Prospects

Looking ahead, Texas Roadhouse appears well-positioned for continued growth and success. The company’s focus on driving comparable sales through menu innovation, operational excellence, and an engaging dining experience has proven effective. Additionally, the company’s pipeline of new restaurant openings and franchise acquisitions should support ongoing unit expansion.

However, the company will need to navigate the persistent inflationary environment, particularly with regards to commodity and labor costs. Texas Roadhouse’s ability to manage these pressures through pricing, productivity improvements, and other cost-saving initiatives will be crucial in maintaining healthy profitability.

The company’s strong balance sheet and access to capital, including its $450 million revolving credit facility, provide financial flexibility to fund growth initiatives and return capital to shareholders through dividends and share repurchases. Texas Roadhouse’s disciplined capital allocation strategy has been well-received by investors and should continue to support shareholder value creation.

Overall, Texas Roadhouse’s Q1 2025 results demonstrate the company’s resilience and ability to deliver solid financial performance even in the face of macroeconomic challenges. With its proven business model, strong brand recognition, and strategic growth plans, Texas Roadhouse appears well-positioned to capitalize on opportunities in the casual dining industry and drive long-term shareholder value.