Speaking of that standard …
Texas Roadhouse reported another record-setting run in Q1. The chain’s same-store sales grew 12.9 percent at company units (564) and 13.3 percent at franchises (54). Although a somewhat difficult period to measure given the Omicron lap, average weekly sales clocked in at $148,437, of which 12.8 percent were to-go sales. This time last year, those figures were $132,263 and 14.8 percent.
The $148,000 was the highest result Texas Roadhouse has ever turned in, besting Q4’s $130,176 by a wide margin. Before COVID, Texas Roadhouse restaurants averaged about $118,000.
A seismic shift being to-go mixed $8,741 of the brand’s weekly sales leading up to the pandemic. Today, it’s closer to $19,000.
Still, the brand is witnessing record guest counts and growing across the board. Texas Roadhouse’s to-go, on a percentage basis, is down from last year, yet the dollars are only a “few hundred” lower, year-over-year, Michael Bailen, director of financial analysis, said.
“Probably some of those guests are now coming into the dining room and dining with us,” he said.
The 12.9 percent comp was driven by 7.6 percent traffic growth and a 5.3 percent jump in average check. By month, same-store sales lifted 20.1 (Omicron peak), 10.6, and 9.3 percent in January, February, and March, respectively.
Texas Roadhouse enjoyed growth seven days a week; early, late in the day, and throughout the entire week, Bailen added. “Maybe it’s a little bit stronger on weekends, on a percentage basis, but very pleased to see that it’s coming across the board, which I think that’s guests learning where there is opportunity to get into a Texas Roadhouse and managing their schedules there,” he said.
The company exited the quarter with revenue of $1.174 billion, 18.9 percent above last year’s $987,486.
Net income rose 14.9 percent to $86.39 million and income from operations climbed 12 percent to $100.9 million.
Restaurant margin dollars increased 15.2 percent to $185.7 million from $161.2 million in the prior year primarily due to higher sales. Per store week, Texas Roadhouse was up 8.7 percent and hit an all-time high of over $23,500.
The chain is off to a fast start in Q2, with weekly sales at $145,000 across its opening five weeks and comps growth of 8.6 percent.
Morgan was asked by investors where to credit Texas Roadhouse’s surge, whether to menu initiatives, focus points, or otherwise. He offered a very-Texas Roadhouse-like retort.
“I believe that our focus on executing a great shift will always be [the reason],” he said. “And as we have been able to hire and train and get staffed up, and more about the retention of our people as they get more experienced and more reps on running shifts and whether it be front of the house or back of the house, I just believe that really and truly it comes down to our ability to execute to get people in, get them the experience that they are looking for, and thank them for coming and joining our business that night is the real focus. We are very much on target for that.”
Technology continues to play a bigger role in achieving those base principles. “Roadhouse Pay,” the company’s pay-at-the-table tech with Ziosk, is now systemwide at corporate stores. In addition to offering guests convenience during the check and change period, Morgan said, it allows the brand to sell and redeem gift cards and promote sign-ups for its VIP loyalty club.
At the same time, the company’s is reporting success with its “Digital Kitchen” effort or new kitchen display system, which first went live at a store in Shakopee, Minnesota, and a conversion in Austin, Texas. There are four currently.
These stores are improving cook times and order accuracy, Morgan said. The majority of openings this year (25–30 total) will include the format. Some older units will convert as well. It should amount to about 20 new locations and 10 conversions.
“All the indicators right now … are that we are going to see our food hitting the window in a timely manner, which should save us time,” he said. “And it’s very early, but that should save us some minutes. And if we can do that, then that can really help us, and our power hours might even turn the restaurant another half the time to a whole time.”
In terms of the health of the guest, Bailen said alcohol mix has remained negative, as was the case in February and March. The same is true of entrees. This suggests some diners are managing checks due to inflation. However, as the brand noted in previous calls, there’s also been evidence of new guests coming into the system and starting lower on the value side of Texas Roadhouse’s menu. “Certainly, our guest’s volumes tell us that people still want to be at Roadhouse,” Bailen said. “But we’ve seen maybe a little bit of trade down. But I’ll end with a comment our mixing still extremely positive relative to pre pandemic levels.” For Q2, Texas Roadhouse will have 5.6 percent pricing on the menu. Q3 5.1 percent. And before the brand takes anything else in October, it would only have 2.9 percent in Q4.
“We are seeing a little bit of negative mix in the entree category, which I believe is showing that some guests are maybe trading into us who were not casual dining guests on a regular basis before and in are coming in at some of our value items,” Bailen added. “So I think we are continuing to gain new guests in this high-cost environment and our traffic trends are feeling the benefit of that.”