Texas Roadhouse Inc. this week raised its prices and has been extending hours as crowds return amid easing COVID-19 pandemic restrictions, executives said Thursday.
The Louisville, Ky.-based Texas Roadhouse, which also owns the Bubba’s 33 and Jaggers concepts, said same-store sales in the first quarter ended March 30 rose 18.5% at company restaurants compared to 2020 and 8.6% on a two-year comparison with 2019. In March alone, same-store sales were up 64.1% from the same month in 2020, when the pandemic was declared, and 15.5% from March 2019.
With crowds returning, Texas Roadhouse is seeing traffic increase at the shoulder hours as well.
“We've got probably 200 or so restaurants that have opened earlier,” Tonya Robinson, Texas Roadhouse’s chief financial officer, said on a first quarter earnings call. “They're opening at 3 [p.m.] versus 4 [p.m.]. You're seeing folks coming in earlier, obviously, than in those power hours when you have those wait times.”
The earlier hours at more than 40% of the brand’s units, she said, make “it easier to get more people in the building, as you have people coming in earlier, maybe to avoid crowds, things like that.”
Texas Roadhouse took a 1.4% price increase this week, partially to offset higher wage rates, but it is also seeing check averages increase. The two-year price increases total about 5%. Robins said pandemic restriction easing has left the system at about 75% to 80% of capacity.
“There's still a really good amount of positive mix that we see happening in the menu,” Robinson said. “You're seeing guests trading up to higher priced steaks and items, entrées on the menu, bigger steaks. You see that alcohol mix coming back into play as the dining rooms reopen, all those things really playing into what's driving a lot of that sales momentum that we saw in March and April.”
The brand will look at pricing again in the third quarter, she said.
“We're continuing to do some curbside, but our convenient pickup windows that we've really put in across the concept have really been a hit with our guests,” he said. “The ability to text and communicate with our guests for them to stay in their car and then come get their food has been a big win. Our app upgrade has continued to show excitement and user-friendly facility kind of deal.”
Such innovations will help Texas Roadhouse retain some of the off-premise business built during the pandemic, he said.
Robinson said sales strength has continued into the first four weeks of the company’s second quarter with average weekly sales of more than $124,000 and comparable sales up 126.7% vs. 2020 and up 20.9% vs. 2019.
“Our to-go sales trend also continued with to-go over $23,000 per week, representing 18.7% of total sales at all restaurants,” Robinson said. “ nd we continue to maintain elevated levels of to-go sales regardless of the restaurants’ level of dining room capacity.”
For the first quarter ended March 30, Texas Roadhouse’s net income was $64.2 million, or 91 cents a share, compared to $16 million, or 23 cents a share, in the prior-year period. Revenues were up 22.7% to $800.6 million from $652.5 million in the same quarter last year.
Franchise restaurants had slight lower same-store sales increases than the company-owned stores. Same-store sales at domestic franchise restaurants increased 15.2% compared to 2020 and 5.1% compared to 2019.
Morgan said Texas Roadhouse’s strengths would continue after the passing of Taylor.
“Emotionally, the last six weeks have been extremely difficult for us,” he said. “While the business environment and our financial performance have continued to strengthen, we have been mourning the passing of Kent Taylor, our founder, CEO and friend. It was a sudden and unexpected loss, but in typical Kent fashion, he left us with a company built for success and a clear path forward.”
Morgan later said Taylor’s legacy will continue.
“One thing we learned was that the entrepreneurial spirit in this company is strong,” Morgan said. “And we learned that a lot from Kent. He gave us the freedom to be owners and operators and partners. He listened. He asked. We collaborate. We talk to each other. We help each other to find solutions. And it is a strength in our company that we believe in that.”
Texas Roadhouse opened three restaurants in the first quarter and an additional five restaurants so far in the second quarter.
“We continue to expect to open 25 to 30 company restaurants this year, including as many five Bubba's 33 restaurants and one Jaggers,” Morgan said.
Texas Roadhouse, founded in 1993, has more than 640 restaurants in 49 states and 10 other countries.
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