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Texas Roadhouse, Inc. (TXRH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $1.448B (+9.6% YoY) and diluted EPS was $1.70 (+1% YoY); comps rose 3.5% with positive traffic, but restaurant margin rate contracted 77 bps to 16.6% on commodity (+2.1%) and wage inflation (+4.6%) .
  • Versus S&P Global consensus, revenue modestly beat while EPS and EBITDA missed; management pointed to mix shifting toward steaks and inflation cadence (commodity ~4% for 2025, including ~30 bps from tariffs) as drivers of margin pressure . Estimates marked with * retrieved from S&P Global.
  • Guidance: 2025 commodity inflation raised to ~4% including tariffs; store week growth ~5%, wage inflation 4–5%, effective tax rate 15–16%, capex ~$400M all reiterated; a 1.4% menu price increase implemented in early April .
  • Near‑term catalysts: sustained traffic momentum (Q2-to-date comps +5% with ~3.1% traffic), tech rollouts (digital kitchen ~65% of stores; guest management upgrade ~70%), and continued development plus franchise acquisitions; watch beef/tariff inflation vs pricing actions into fall .

What Went Well and What Went Wrong

What Went Well

  • Positive comps (+3.5%) with traffic growth and record March average weekly sales across all three brands; average weekly sales reached $163,071 with to‑go $22,146 .
  • Development and portfolio strategy: eight company openings in Q1, 50th Bubba’s 33 opened, and acquisition of 14 domestic franchise restaurants; total restaurants at quarter end 792 (688 company, 104 franchise) .
  • Operational leverage in “other operating” costs (−32 bps YoY) and strong productivity with labor hours growing ~35% of traffic growth for sixth straight quarter; hourly and manager turnover below pre‑pandemic levels .

What Went Wrong

  • Restaurant margin rate fell 77 bps to 16.6%; mix shifted toward steaks (benefits sales but pressures COGS rate), and labor percent deleveraged on slower AWS growth vs inflation .
  • Commodity inflation outlook increased to ~4% for 2025 including tariffs, with beef outlook tighter; rent line deleveraged partly due to acquired units (many in CA) and new store rents .
  • Versus consensus, EPS and EBITDA missed despite revenue beat; margin dollars per store week declined ~2.2% YoY, highlighting pressure despite growth and prior strong 2024 lap . Estimates marked with * retrieved from S&P Global.

Financial Results

Quarterly Actuals

MetricQ3 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$1,273 $1,437.9 $1,447.6
Net Income ($USD Millions)$84.4 $115.8 $113.7
Diluted EPS ($USD)$1.26 $1.73 $1.70
Restaurant Margin %16.0% 17.0% 16.6%
Restaurant Margin $ ($USD Millions)$202.1 $242.6 $239.3

YoY Comparison – Q1

MetricQ1 2024Q1 2025
Total Revenue ($USD Millions)$1,321.2 $1,447.6
Net Income ($USD Millions)$113.2 $113.7
Diluted EPS ($USD)$1.69 $1.70
Restaurant Margin %17.4% 16.6%
Restaurant Margin $ ($USD Millions)$228.4 $239.3

Actual vs S&P Global Consensus – Q1 2025

MetricConsensus*ActualOutcome
Revenue ($USD Millions)$1,440.3*$1,447.6 Beat
Diluted EPS ($USD)$1.758*$1.70 Miss
EBITDA ($USD Millions)$188.4*$183.6Miss

Values marked with * retrieved from S&P Global. EBITDA actual from S&P Global aggregation; company does not report EBITDA in release.

Segment/KPI Snapshot

KPIQ1 2024Q1 2025
Company Avg Weekly Sales ($)$159,378 $163,071
To‑Go Weekly Sales ($)$20,815 $22,146
Company Comps (%)8.4% 3.5%
Food & Beverage (% of Sales)33.9% 34.1%
Labor (% of Sales)32.5% 33.3%
Other Operating (% of Sales)14.7% 14.4%
Restaurant Margin $/Store Week ($)$27,577 $26,977
TXRH Concept AUV ($000)$2,126 $2,182
TXRH Concept Comps (%)8.7% 3.5%
Bubba’s 33 AUV ($000)$1,541 $1,592
Bubba’s 33 Comps (%)3.5% 3.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Commodity InflationFY 20253–4% ~4% incl. ~30 bps tariffs Raised
Store Week GrowthFY 2025~5% incl. ~2% from franchise acquisition ~5% Maintained
Wage & Other Labor InflationFY 20254–5% 4–5% Maintained
Effective Tax RateFY 202515–16% 15–16% Maintained
Total CapexFY 2025~$400M ~$400M Maintained
Menu Price ActionQ2 2025Planned 1.4% early April Implemented 1.4% early April Executed
Q2-to-date CompsFirst 5 weeksN/A+5.0% vs 2024 New datapoint
DividendQ2 2025$0.68 declared Feb. 19 for Apr. 1 $0.68 declared May 7 for Jul. 1 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Pricing & Mix0.9% price increase late Sep. 2024 1.4% price increase early Apr.; mix shifting toward steaks pressures COGS rate Pricing steady; mix shift persists
Commodity/Tariffs2024 commodity <1% 2025 commodity ~4% incl. ~30 bps tariffs; beef supply tight Inflation up; tariff impact added
Labor Productivity2024 margins benefited from productivity Labor hours ~35% of traffic growth; turnover below pre‑pandemic Sustained productivity
Technology InitiativesNot highlighted in PRDigital kitchen ~65% rollout; guest management upgrade ~70% Implementation advancing
Demand/TrafficQ4 AWS $153,867; comps +7.7% Q1 comps +3.5%; record March AWS; Q2-to-date comps +5% Momentum normalized post Feb
Development & M&APlanned acquisition of 13 franchises 14 franchises acquired; 8 openings; Bubba’s 33 at 50 units Execution continuing

Management Commentary

  • “We remain pleased with the direction of our overall business… average weekly sales for March hit all‑time highs at all three brands… focus on delivering legendary food and legendary service.” — CEO Jerry Morgan .
  • “We have increased our guidance for full year commodity inflation to approximately 4%… ~30 bps from tariffs… labor hours growing at approximately 35% of comparable traffic growth.” — CFO Chris Monroe .
  • “Restaurant margin dollars per store week maybe don’t grow nearly as much as we have seen… softer in the first quarter.” — IR lead Michael Bailen .
  • “65% of restaurants using a digital kitchen… 70% upgraded guest management system.” — CEO Jerry Morgan .

Q&A Highlights

  • Pricing below inflation: ~3.1% price in Q1; 2.3% in Q2/Q3; methodical approach to structural inflation, not pricing for commodities; mix improved in entrees/appetizers, alcohol still down slightly .
  • Labor leverage: labor hours grew ~35% of traffic growth (sixth straight quarter <50% rule), aided by low turnover; February volatility noted .
  • COGS/mix dynamics: guests trading into steak from chicken/seafood; positive for top line but pressures COGS rate by ~20–30 bps in Q2–Q3 cadence .
  • Rent deleverage: driven by acquisition/new stores, including higher‑rent California units; slight deleverage expected in 2025 .
  • To‑go: sequential step‑up; margin neutral to slightly positive assuming full dining rooms and staffed kitchens .
  • Calendar effects: Easter/spring break shifts impacted reported comps by ~+20 bps in Q1 and ~−20 bps in Q2 .

Estimates Context

  • Q1 2025: Revenue beat consensus ($1,447.6M actual vs $1,440.3M*), while EPS ($1.70 actual vs $1.758*) and EBITDA ($183.6M actual vs $188.4M*) missed as margin rate declined on mix and inflation . Values marked with * retrieved from S&P Global.
  • Near‑term (Q2-to-date): comps +5% with ~3.1% traffic; pricing +2.3% in Q2/Q3 should aid leverage against labor, but commodity/tariff pressures and steak mix remain watch items for margin trajectory .

Key Takeaways for Investors

  • Top line resilient: traffic positive and AWS at records in March; Q2‑to‑date comps +5% suggest continued demand normalization post weather‑impacted February .
  • Margin pressure transitory but visible: steak mix and beef/tariff inflation (2025 ~4%) compress COGS rate; watch fall pricing decision and cadence of commodity costs .
  • Productivity intact: operators sustaining labor efficiency (hours ~35% of traffic growth) and leveraging “other operating” line; supports medium‑term margin recovery as mix/inflation stabilize .
  • Growth drivers: ~30 company openings targeted in 2025, Bubba’s 33 expansion (50 units achieved), and franchise roll‑ups deepen control and economies of scale .
  • Tech stack roll‑out: digital kitchen and guest management upgrades (~65%/~70% coverage) should improve throughput/experience; monitor measurable benefits as full deployment completes .
  • Capital allocation consistent: ~$400M capex, ongoing dividends ($0.68/share) and buybacks; balance sheet capacity sustained .
  • Trading setup: focus on margin commentary, steak mix trend, and tariff pass‑through; a clear plan on fall pricing could be a stock reaction catalyst alongside sustained traffic comps .

Additional Press Releases (Q1 Context)

  • Company announced Q1 earnings call logistics on April 10, 2025 [7].
  • Dividend declared $0.68 per share on May 7, 2025, payable July 1, 2025 .

Values marked with * retrieved from S&P Global.