Texas Roadhouse Inc (TXRH) Q1 2026 Earnings Call Transcript
Neutral Restaurants 11.83B USA
Next Earnings
2026-05-06
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Texas Roadhouse delivered solid 2025 top-line growth and project 2026 pricing and inflationary headwinds, with ongoing investments in technology and expansion, while maintaining a value-focused approach amid margin pressures.
⭐ Key Highlights
Record milestones and growth momentum
2025 featured 60th consecutive quarter of comparable restaurant sales growth and opening of 800th system-wide restaurant, plus 48 company-owned openings and 20 franchise acquisitions.
Strong cash generation and capital allocation
Full-year cash flow from operations exceeded $730 million, enabling $388 million in capex, $108 million for franchise acquisitions, $180 million in dividends, and $150 million in share repurchases.
Significant 2026 pricing and inflation dynamics
Menu pricing to rise 1.9% in Q2 2026, with overall 2026 commodity inflation guided around 7% and labor inflation 3–4%, maintaining a cautious but growth-focused stance.
Technology investments progressing
Completed rollout of Digital Kitchen and upgraded guest management; test of handheld ordering progressing with potential broader rollout later in 2026.
Dividend and capital structure actions
10% dividend increase to $0.75 per quarter and modest financing activity (e.g., California franchise acquisitions funded via debt) to support growth.
✔Positive Signals
- 60th consecutive quarter of comp sales growth (excluding 2020).
- Over $730 million cash flow and strong balance sheet with >$130 million cash at year-end.
- Significant capital returns: $180 million dividends and $150 million share repurchases in 2025.
- 48 company-owned restaurant openings in 2025 and 800th system-wide restaurant milestone.
- 10% increase in quarterly dividend to $0.75.
✖Negative Signals
- Q4 restaurant margin declined to 13.9% (down 309 basis points year over year).
- Q4 margin dollars per store week fell 15.1% to $22,200; margin pressures due to beef/commodity inflation.
- Full-year 2025 food and beverage costs rose 281 basis points as commodity inflation hit 6.1%.
- 6%+ full-year commodity inflation guidance implies ongoing cost pressure into 2026, with higher input costs in early year.
- G&A expected to rise with a low double-digit percentage for 2026, pressuring margins.
📊Financial Results
- Q4 revenue growth of 3.1% (excluding the impact of the extra week in 2024) with comparable sales up 4.2% and traffic up 1.9%.
- Q4 restaurant margin dollars per store week down 15.1% to $22,200; restaurant margin as a percentage of sales down 309 bps to 13.9%.
- Full-year 2025 cash flow from operations >$730 million; capital expenditures ~$388 million; acquisitions of 20 franchise restaurants for $108 million.
- Full-year 2025 diluted earnings per share declined 26.1% to $1.28 due to lapping the extra week and margin pressure.
- Beef inflation for 2025 totaled ~6.1%; labor inflation for 2025 averaged 3.7% wage and other, with 3–4% expected in 2026.
🔮Future Guidance
- 2026 menu price increase of 1.9% beginning in the second quarter; pricing expected to contribute to top-line growth with a multi-quarter cadence (3.1% in Q4 2025 continuing into Q1 2026, then 3.6% in Q2–Q3 2026).
- Commodity inflation guidance unchanged at ~7% for 2026, with higher inflation in the first half (Q2 potentially the peak) and a moderation in the second half.
- Labor inflation guided at 3%–4% for 2026; wage inflation expected to moderate, while insurance and benefits may trend higher.
- Capex guidance unchanged at approximately $400 million for 2026, excluding $72 million for California franchise acquisitions funded at year start.
- G&A dollars projected to rise in low double-digit terms for 2026, with headquarters relocation benefits already contributing to the year’s cost structure.
💡Interesting Insights
- Management expects handheld ordering and digital kitchen capabilities to mainly enhance efficiency and to-go throughput, with no immediate plan to enter third-party delivery.
- Beef inflation remains a key uncertainty; the company views 2026 as challenging for margin even with continued top-line growth.
Detailed Analysis
AI-generated summary of Texas Roadhouse Inc earnings call transcript.
Texas Roadhouse posted a 2025 revenue near $5.9 billion with 4.9% same-store sales growth and 2.8% traffic growth, supported by 800 total restaurants and 48 company openings. Despite commodity and beef inflation pressures, the company generated strong cash flow (~$730 million) and consumed capital to fund expansions ($388 million capex) and acquisitions (20 franchise restaurants for $108 million), while returning capital to shareholders via dividends and buybacks. For 2026, management guided approximately 7% commodity inflation (above the initial half-year), 3–4% labor inflation, and about $400 million in capex, alongside a 1.9% menu price increase in Q2 and a 10% higher quarterly dividend. The company also highlighted ongoing technology enhancements (Digital Kitchen, guest management, and handheld ordering tests) as a key driver to sustain top-line growth and improve efficiency, while acknowledging near-term margin pressure from higher costs and product mix shifts, particularly in food costs and to-go mix.
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