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Texas Roadhouse, Inc. (TXRH)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue of $1.512B (+12.7% YoY) beat consensus ($1.501B*) on strong traffic; diluted EPS of $1.86 (+4.0% YoY) was a modest miss vs $1.91*, as restaurant margin compressed 108 bps to 17.1% on beef inflation and steak mix shift .
    Values retrieved from S&P Global.
  • Comparable sales rose 5.8% (traffic +4.0%, check +1.8%); average weekly sales were $167,350, with to‑go at ~$22,243 (13.3% of sales), underscoring resilient demand across brands .
  • Full‑year guidance updated: commodity inflation raised to ~5% (incl. ~30 bps tariffs), wage inflation lowered to ~4%, tax rate to ~15%; capex ~$400M and ~5% store‑week growth reiterated .
  • Management expects peak beef pressure in Q3 (~7%) with 1.7% pricing planned at the start of Q4; continued development and franchise acquisitions (800th system‑wide restaurant opened) remain catalysts .

What Went Well and What Went Wrong

What Went Well

  • Strong demand and traffic: “Strong traffic growth… drove a 5.8% increase in same store sales… revenue… over $1.5B for the first time,” with all three brands contributing .
  • Weekly sales strength: Texas Roadhouse averaged ~$172K weekly sales; Bubba’s 33 ~$128K, Jaggers nearly ~$76K, reflecting broad-based brand momentum .
  • Operational execution and tech: Digital kitchen rollout ~80% complete, improving capacity and guest experience; off‑premise execution and app upgrades enhanced to‑go experience .

What Went Wrong

  • Margin compression: Restaurant margin fell 108 bps to 17.1% on 5.2% commodity inflation (beef) and 3.8% wage inflation, partially offset by higher sales .
  • Alcohol mix headwind: Negative mix pressure largely from alcohol; steak trading up aids top line but pressures COGS percent (25–30 bps impact easing into H2) .
  • Beef inflation outlook: Q3 commodity inflation could reach ~7%, tapering to ~4–5% in Q4; ~80% of Q3 beef locked, ~50% in Q4, limiting flexibility near term .

Financial Results

Headline Financials vs Prior Periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Billions)$1.438 $1.448 $1.512
Diluted EPS ($USD)$1.73 $1.70 $1.86
Restaurant Margin %17.0% 16.6% 17.1%
Comparable Sales % (Company)7.7% 3.5% 5.8%

Margins and Cost Structure

MetricQ4 2024Q1 2025Q2 2025
Food & Beverage Costs (% of Sales)33.5% 34.1% 34.0%
Labor (% of Sales)33.0% 33.3% 32.9%
Other Operating (% of Sales)15.0% 14.4% 14.5%
Restaurant Margin $/Store Week ($USD)$26,159 $26,977 $28,562

KPIs

MetricQ4 2024Q1 2025Q2 2025
Average Weekly Sales (Company) ($USD)$153,867 $163,071 $167,350
To‑Go Weekly Sales ($USD)$20,067 $22,146 $22,243
To‑Go Share of Weekly Sales (%)13.0% 13.6% 13.3%
Store Weeks (Company)9,276 8,870 9,010

Segment Breakdown (Q2 2025)

SegmentAverage Unit Volume ($USD)Comparable Restaurant Sales (%)
Texas Roadhouse (Company)$2,236 5.9%
Bubba’s 33 (Company)$1,645 4.3%
Texas Roadhouse (Domestic Franchise)—7.0%

Actuals vs Consensus

MetricQ2 2024Q1 2025Q2 2025
Revenue – Actual ($USD Billions)$1.341 $1.448 $1.512
Revenue – Consensus ($USD Billions)$1.339*$1.440*$1.501*
EPS – Actual ($USD)$1.79 $1.70 $1.86
EPS – Consensus ($USD)$1.64*$1.76*$1.91*
# of EPS Estimates26*26*27*
# of Revenue Estimates24*21*25*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Commodity Cost InflationFY 2025~4% (incl. tariffs) ~5% (incl. ~30 bps tariffs) Raised
Wage & Other Labor InflationFY 20254–5% ~4% Lowered
Effective Tax RateFY 202515–16% ~15% Lowered
Capital ExpendituresFY 2025~$400M ~$400M Maintained
Store Week GrowthFY 2025~5% ~5% Maintained
Menu PricingQ2/Q3/Q4 2025+1.4% in early Apr (Q2) ; ~2.3% (Q3) +1.7% at start of Q4; ~3.1% pricing in Q4 and FY26 Raised (Q4)
Beef Inflation CadenceH2 2025—Q3 ~7%; Q4 ~4–5% Added detail
DividendQ3 2025$0.68 declared (May 7) $0.68 declared (Aug 6) Maintained

Additional items: ~80% of Q3 beef locked; 50% Q4 locked . Support center purchase in Q3 ($23M), expected ~$2.5M annual rent savings thereafter .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Digital kitchen / tech65% of restaurants on digital kitchen; guest management upgrade underway; regional beverage menus incl. mocktails and $5 offerings ~80% of concept rolled out; operators see capacity and efficiency gains; continued app/UI improvements Positive execution momentum
Supply chain & beefTightening supply and robust retail demand; commodity inflation guide raised to ~4% incl. tariffs Commodity inflation ~5%; peak beef pressure in Q3 (~7%); retail demand resilient; suppliers cut production Pressure increasing near term
Tariffs / macroEstimated ~30 bps of full‑year inflation impact; commodities (seafood), supplies, equipment timing effects ~30 bps tariff impact reaffirmed within ~5% inflation; limited impact on construction costs to date Stable but monitored
Pricing & value+1.4% pricing in April; methodical, below commodity inflation; $5 beverage/margarita; mocktails rollout +2.3% pricing Q3; +1.7% planned Q4, yielding ~3.1%; value positioning reinforced; guests trading up to steaks Incrementally higher pricing
Off‑premise / deliveryTo‑go margin neutral/slightly positive with full dining rooms; execution improvements To‑go ~13.3% of weekly sales; no broad TXRH delivery (case‑by‑case exceptions); app and pickup flow enhanced Sustained, disciplined
Mix dynamicsAlcohol softness; entrée mix positive; steak trade‑up pressuring COGS % (~30 bps Q1) Alcohol remains the mix headwind; steak trade‑up ~25 bps Q2, 20–25 bps Q3, easing in Q4 Improving through H2
Labor productivityBelow 50% hours/traffic growth; low turnover aiding productivity Labor leverage possible with continued traffic; wage inflation ~4%; hours grew at ~40% of traffic Constructive

Management Commentary

  • “Strong traffic growth throughout the quarter drove a 5.8% increase in same store sales… revenue… over $1.5B for the first time… all three brands contributed” — CEO Jerry Morgan .
  • “We will take a menu price increase of approximately 1.7% at the beginning of the fourth quarter… to maintain our everyday value while offsetting… inflationary pressures” — CEO .
  • “We increased our guidance for full year inflation to approximately 5%, primarily due to higher… beef inflation, particularly in the third quarter… ~30 bps… related to tariffs” — Interim CFO Keith Humpich .
  • “To Go representing approximately $22,000 or 13.3% of… weekly sales… [comps] driven by 4% traffic and a 1.8% increase in average check” — IR Head Michael Bailen .
  • “We are maintaining our full year capital expenditure guidance at approximately $400,000,000…” — Interim CFO .

Q&A Highlights

  • Beef inflation cadence: Expect Q3 commodity inflation ~7% (highest), moderating to 4–5% in Q4; steak trade‑up adds COGS pressure, but supports top line .
  • Mix and alcohol: Negative mix primarily from alcohol; mocktails well received; entrée mix positive with guests trading up to steaks .
  • Labor and other op leverage: With modest traffic growth, continued leverage in other operating line; potential flat to slight leverage on labor in H2 .
  • Pricing roadmap: 2.3% in Q3; +1.7% at start of Q4, resulting in ~3.1% pricing for Q4 and FY26; value gaps vs peers monitored with emphasis on portion/quality .
  • Off‑premise strategy: To‑go remains focus; broad delivery not pursued for TXRH (exceptions in urban markets); app and pickup execution prioritized .

Estimates Context

  • Q2 2025: Revenue $1.512B vs $1.501B* (beat); EPS $1.86 vs $1.91* (miss). 25 revenue est., 27 EPS est.
    Values retrieved from S&P Global.
  • Trailing context: Q1 2025 revenue $1.448B vs $1.440B*; EPS $1.70 vs $1.76*. Q2 2024 revenue $1.341B vs $1.339B*; EPS $1.79 vs $1.64*.
    Values retrieved from S&P Global.
MetricQ2 2024Q1 2025Q2 2025
Revenue – Actual ($USD Billions)$1.341 $1.448 $1.512
Revenue – Consensus ($USD Billions)$1.339*$1.440*$1.501*
EPS – Actual ($USD)$1.79 $1.70 $1.86
EPS – Consensus ($USD)$1.64*$1.76*$1.91*

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Top‑line resilience: Broad traffic strength and AUV growth across brands drove a revenue beat; to‑go at ~13% of sales provides incremental dollars with disciplined delivery stance .
  • Margin headwinds near term: Beef inflation and steak mix are compressing restaurant margin; expect peak pressure in Q3 (~7%) before easing in Q4 (4–5%) .
  • Pricing offsets coming: Q4 +1.7% price action (3.1% pricing in Q4/FY26) should partially offset inflation while preserving value, supporting margin recovery trajectory into 2026 .
  • Capital allocation steady: Capex ~$400M maintained; dividend $0.68 declared; share repurchases at least to offset dilution, plus support center purchase to reduce annual rent by ~$2.5M .
  • Development pipeline: On track for ~30 company openings in 2025 with Bubba’s acceleration and Jaggers in 2026, plus franchise acquisitions expanding owned footprint (800th system‑wide restaurant opened) .
  • Estimates likely to adjust: Given Q3 inflation cadence and mix dynamics, modest EPS estimate risk for Q3; revenue trajectory supported by traffic/pricing .
  • Governance update: Interim CFO appointed in June; continuity in financial leadership with prior interim experience mitigates execution risk .

All statements and figures are sourced from the company’s Q2 2025 press release, 8‑K, and earnings call transcript, unless otherwise noted. Citations: .