TXRH Q2 2025: Revenue Tops $1.5B, 5.8% Same-Store Sales Growth
- Robust Revenue and Same-Store Sales Growth: The call highlighted that revenue grew to over $1.5 billion for the first time and same-store sales increased by 5.8%, reflecting strong top-line momentum and effective execution across all brands.
- Expanding Store Pipeline and Brand Diversification: The management emphasized a solid pipeline with a potential increase to approximately 30 openings this year and active growth initiatives for Bubba’s, Texas Roadhouse, and Jaggers. This bolstering of the brand portfolio and expansion strategy positions the company for future growth.
- Digital and Operational Enhancements Driving Off-Premise Sales: Investments in the mobile app and digital kitchen technology have improved order accuracy and efficiency, contributing to strong off-premise sales growth. This shift not only supports revenue expansion but also enhances operational efficiencies and customer experience.
- Rising Commodity Inflation: With beef inflation expected to reach 7% in Q3 and continuing pressure from tightening supply (with only 80% of beef locked for Q3 and 50% for Q4), there is a risk of sustained margin compression if cost increases persist.
- Negative Mix Pressure: The earnings call highlighted that negative mix effects are driven by the alcohol category, which could continue to exert downward pressure on overall profitability even as other menu categories perform well.
- Expansion and Execution Risks: The aggressive pace of new store openings and acquisitions—while driving top-line growth—also raises concerns about operational challenges and the potential dilution of margins if execution lapses occur during rapid expansion.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Commodity Inflation | FY 2025 | no prior guidance | 5% | no prior guidance |
Labor Inflation | FY 2025 | no prior guidance | 4% | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | $400 million | no prior guidance |
Tax Rate | FY 2025 | no prior guidance | 15% | no prior guidance |
Company-owned Restaurant Openings | FY 2025 | no prior guidance | 30 restaurants | no prior guidance |
International Restaurant Openings | FY 2025 | no prior guidance | 4 restaurants | no prior guidance |
Beef Inflation | Q3 2025 | no prior guidance | 7% | no prior guidance |
Inflation | Q4 2025 | no prior guidance | 4%-5% range | no prior guidance |
Menu Pricing | Q4 2025 | no prior guidance | 1.7% increase | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Same-Store Sales Growth and Traffic Momentum | Q1 2025 discussions emphasized steady growth with 3.5% increases and positive traffic momentum ; Q4 2024 reported an 8.5% year‑over‑year increase with strong quarterly figures ; Q3 2024 highlighted 8.5% growth with consistent traffic | In Q2 2025, growth remains consistent with 5.8% same‑store sales growth, underpinned by accelerated traffic momentum across all brands | The sentiment remains positive with improved traffic numbers and steady growth. The focus has shifted toward emphasizing acceleration in traffic trends while maintaining consistent sales performance. |
Expansion Strategy and Brand Diversification | Q1 2025 stressed a balanced mix of company-owned openings and franchise acquisitions across its three brands ; Q4 2024 detailed 31 company‑owned and international expansion plans ; Q3 2024 outlined targets for 30 new openings and strategic acquisitions | Q2 2025 continued the emphasis on expanding with new openings across Texas Roadhouse, Bubba’s 33 and Jaggers, including acquisitions and international locations | The strategy remains consistent and optimistic. While expansion plans continue at a robust pace, there is a cautious note about execution quality, especially as the growth in newer brands like Bubba’s 33 accelerates. |
Digital Transformation Driving Off‑Premise Sales | Q1 2025 described digital kitchen systems at 65% conversion and upgrades to the guest management system to enhance to‑go ordering ; Q4 2024 outlined digital kitchen conversions and guest management upgrades ; Q3 2024 noted progress on digital systems | Q2 2025 highlights 80% digital kitchen implementation, enhanced mobile app features, and strong off‑premise sales growth driven by improved order accuracy and operational enhancements | Continued and accelerated digital adoption improves off‑premise sales and operational efficiency. The positive sentiment around the digital initiatives and customer experience is growing across periods. |
Pricing Strategies, Mix Adjustments, and Margin Management | Q1 2025 reflected mixed sentiment with a 3.1% increase followed by concerns over mix shifts toward steak impacting COGS and reduced margins ; Q4 2024 emphasized conservative pricing with modest increases while managing a negative alcohol mix ; Q3 2024 showed pricing increases with mixed effects on margins | Q2 2025 established a planned 1.7% menu price increase (leading to a 3.1% run rate by Q4) while noting negative mix pressure from alcohol and a decline in restaurant margins driven by higher commodity and labor costs | Mixed sentiment persists. While pricing adjustments continue to balance inflationary pressures and value, negative mix aspects and margin pressures remain challenges, though the approach appears more targeted in Q2 2025. |
Commodity Inflation and Cost Pressures | Q1 2025 updated commodity inflation to 4% with beef inflation and supply tightening as primary factors and noted COGS pressure from mix shifts ; Q4 2024 raised guidance to 3%-4% due to tighter cattle supply ; Q3 2024 forecast 2%-3% inflation with beef as the key driver | Q2 2025 cites beef inflation driving a 5.2% commodity inflation, with expectations to peak at 7% in Q3 followed by moderation; supply contracts lock in 80% for Q3 and 50% for Q4 to manage cost pressures | Pressure from commodity (especially beef) inflation is more pronounced in Q2 2025. Although the company is proactively locking in supplies and adjusting prices modestly, there remains a cautious tone regarding ongoing cost challenges. |
Operational Efficiency and Execution Risks in Rapid Expansion | Q1 2025 focused on enhancing kitchen technology and to‑go operations while noting risks with rapid expansion (opening about 30 units and managing labor/training) ; Q3 2024 stressed the importance of operational execution with detailed trainer deployment and cautious expansion – “not stretching resources too far” ; Q4 2024 briefly mentioned technology and relocation but less on risks | Q2 2025 highlights operational improvements such as reduced errors in to‑go orders and enhanced digital tools, while acknowledging risks linked with “tipping their head over the skis” in expansion, especially with increased openings for Bubba’s 33 and Jaggers | The focus on operational efficiency remains strong with continued investments in digital and training. However, as expansion pace increases slightly, execution risks become more pronounced, leading to a cautious but optimistic outlook. |
Reduced Emphasis on Tariff Impacts | Q1 2025 discussed tariffs affecting commodities, supplies, and equipment with an estimated impact of 30 basis points on inflation ; Q4 2024 noted attention to tariffs through external monitoring but without concrete actions ; Q3 2024 provided no insights on tariff impacts | In Q2 2025, tariffs continue to be acknowledged as contributing approximately 30 basis points to inflation, with no significant new impact noted due to pre‑existing inventory | The emphasis on tariffs remains reduced and steady. Although earlier periods explored potential impacts, Q2 2025 reflects minimal change, indicating that tariff risks are being managed and are not a major focus compared to other factors. |
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Commodity Inflation
Q: What’s the outlook for beef inflation in Q3/Q4?
A: Management expects the highest pressure in Q3, with beef inflation reaching around 7%, then easing to about 4–5% in Q4 as supply constraints gradually relax. -
Margin Outlook
Q: Will margins remain near 17–18%?
A: Despite inflation headwinds, the team remains confident in achieving the 17–18% restaurant margins by controlling costs and leveraging value menu dynamics. -
Store Growth
Q: How many new openings are planned?
A: The company is on track to open roughly 30 new company-owned restaurants this year, while also expanding Bubba’s and integrating Jaggers, signaling a robust growth pipeline. -
Pricing Moves
Q: What pricing increases are anticipated?
A: They will implement a 2.3% menu price increase in Q3, adding an extra 0.9% in Q4—resulting in a total effective increase of approximately 3.1% to offset inflationary costs. -
Value Proposition
Q: How is the value mix evolving?
A: Management highlighted a strengthened value proposition through flexible portion choices and new $5 beverage options, reinforcing customer appeal without diluting quality. -
Digital Expansion
Q: How is the mobile app performing?
A: The upgraded mobile app is enhancing order convenience and accuracy, contributing to higher to-go sales and an improved customer experience, though exact active user numbers weren’t disclosed. -
Delivery Strategy
Q: Will delivery expand to more locations?
A: Currently, delivery remains limited to select urban and concept locations like Jaggers, with no broad rollout planned as the focus stays on on-site and pickup efficiency.
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