Texas Roadhouse, Inc. (TXRH)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered strong top- and bottom-line growth: revenue $1.44B (+23.5% YoY), EPS $1.73 (+60.1% YoY), with restaurant margin expanding to 17.0% (+172bps YoY), aided by a 14th week, higher average check, and improved labor productivity .
• Comparable sales rose 7.7% at company restaurants (traffic +4.9%, price +3.1%, mix -0.3%), average weekly sales were $153,867 with to‑go at $20,067 (13% of weekly sales) .
• Capital returns increased: quarterly dividend raised 11% to $0.68 and a new $500M share repurchase program authorized; management also completed a $78M acquisition of 13 franchise restaurants on day one of FY25 .
• 2025 outlook tightened on commodities: guidance for commodity cost inflation raised to 3–4% (from prior 2–3%), while wage inflation (4–5%), tax rate (15–16%), store-week growth (5%) and capex ($400M) were reiterated; a ~1.4% menu price increase is planned for early April .
• Near-term narrative: QTD Q1 comps +2.9% with meaningful calendar/weather headwinds; management emphasized value positioning, modest pricing, and technology initiatives (digital kitchen, guest management upgrades) as catalysts .

What Went Well and What Went Wrong

What Went Well

• Restaurant margin expanded to 17.0% (+172bps YoY) on higher sales, average check, and improved labor productivity; margin dollars rose 37.3% to ~$242.6M and ~$26.2K per store week (+20.8% YoY) .
• Traffic growth across all three brands in 2024 drove record AUVs; CEO: “we will be implementing a 1.4 menu price increase… maintain our everyday value,” and technology upgrades are creating “a more efficient kitchen and a less stressful environment” .
• Robust cash generation and balance sheet enabled self-funding of capex ($354M), dividends ($163M), and buybacks ($80M) in 2024, while ending with $245M cash and ~$754M operating cash flow .

What Went Wrong

• QTD Q1 2025 comps were +2.9% but impacted by weather, calendar shifts (e.g., Valentine’s timing) and store closures; management estimates at least ~150bps negative impact from calendar/store closures alone .
• Commodity inflation guidance increased to 3–4% for 2025, largely beef-related tightening expected in H2; implies potential cost of sales deleverage later in the year .
• Labor inflation remains elevated (4–5%) with health insurance cost pressures; labor dollar growth per store week up 8.2% in Q4 driven by ~5% wage inflation and higher group insurance claims .

Financial Results

Quarterly Comparison (Q2 → Q3 → Q4 2024)

Q4 YoY Snapshot

Cost Structure and KPIs (Q4 2024)

Segment/Concept Metrics (Q4 2024)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We will be implementing a 1.4 menu price increase at the beginning of the second quarter. We are confident this level of pricing maintains our everyday value…” .
• “We expect to complete the conversions of all locations to a digital kitchen by the end of the year… creating a more efficient kitchen and a less stressful environment for our Roadies” .
• “We ended the year with over $245 million of cash and generated over $750 million of cash flow from operations. This allowed us to once again self-fund all of our capital allocation priorities…” .
• “Comparable sales for the first 7 weeks of the first quarter of 2025 were up 2.9%... [with] at least a 1.5% negative impact… from calendar shifts and store closures” .

Q&A Highlights

• Near-term comp cadence: January +5.5% with weather impacts; subsequent three weeks “basically flat,” with Valentine’s calendar shift >2% negative impact; underlying demand strong (Valentine’s week ~$183K/store) .
• Commodities: Increased 2025 commodity inflation to 3–4%, largely beef in H2; ~40% of basket locked (more front-half) .
• Margins/Labor: Opportunity for leverage in “other operating” costs; expect 4–5% labor inflation with more pressure first half; labor model responds to sales .
• Pricing run‑rate: 3.1% through Q1; shifts to ~2.3% from Q2 after 1.4% add and 2.2% roll-off; potential Q4 action depending on conditions .
• Development: ~30 openings in 2025 viewed as optimal cadence; relocations (~9) not included in opening count; investment per unit ~$8.5–$8.6M; mid‑teens IRR targets .

Estimates Context

S&P Global consensus data was unavailable at the time of writing due to provider limits; therefore, we cannot quantify beats/misses versus Street for Q4 2024. Actual reported figures are shown in Financial Results; consensus comparisons will be updated when data access is restored. Values would be retrieved from S&P Global.*

Key Takeaways for Investors

• Margin expansion is broad-based; sustained AUV strength, mix improvements, and productivity gains drove 172bps YoY margin lift in Q4 despite cost pressures .
• Watch commodity trajectory: raised 2025 inflation to 3–4% (beef-tight H2) implies potential COGS deleverage later in the year unless pricing/traffic offsets materialize .
• Pricing remains modest and value-centric: +1.4% in April, run‑rate ~2.3% from Q2; management aims to balance value perception vs. inflation, suggesting limited price-driven EPS upside .
• Near-term comp volatility likely transitory: calendar/weather impacts depressed early Q1 comps; underlying demand indicators (e.g., Valentine’s week) and Western region performance remain constructive for normalization .
• Capital deployment is supportive: dividend raised to $0.68 and new $500M buyback authorization; strong cash generation enables self-funding of development and shareholder returns .
• Unit growth and relocations underpin medium-term thesis: ~30 openings in 2025, relocations to larger sites, and ongoing bump-outs should sustain traffic capacity and returns (mid‑teens IRR target) .
• Trading implications: near term, monitor comp normalization and commodity prints; medium term, value positioning, tech-driven throughput, and consistent new unit cadence are the stock’s narrative drivers .