Zachary Fadem's questions to Texas Roadhouse Inc (TXRH) leadership • Q2 2025
Question
Zachary Fadem of Wells Fargo asked about the negative impact of the entree mix shift towards beef on COGS, questioning if it's a cyclical or structural trend and what the expected impact is for the second half of the year.
Answer
Michael Bailen, Senior Director & Head of IR, quantified the headwind at ~25 basis points in Q2 and expects it to remain in the 20-25 bps range in Q3 before moderating in Q4. He views the shift as a positive sign that guests appreciate the value of steaks on the menu, which benefits long-term top-line growth despite the near-term margin pressure.