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Texas Roadhouse Inc. said to-go sales remain strong even as indoor-dining capacity restrictions ease.

Texas Roadhouse sees pandemic strengthening to-go sales

At restaurants with allowed capacity of 75% or more, off-premise dining ran at about 20% of sales in first 7 weeks of 2021, company says

Even with indoor-dining capacity limits increasing at Texas Roadhouse Inc. units in the new year, the casual-dining brand has found to-go sales rates remain strong among COVID-19 pandemic customers, the company said Thursday.

The Louisville, Ky.-based casual-dining company saw positive same-store sales at the 165 restaurants open between 75% and 100% capacity in the first seven weeks of this year, said Tonya Robinson, Texas Roadhouse, chief financial officer, on a fourth-quarter earnings call with analysts.

“It's hard to read a whole lot into just seven weeks of data, but I think that does give us some comfort that we're seeing those stores do well, comp positively and maintain those to-go sales levels,” Robinson said.

At those expanded-capacity units, to-go sales are running at about 20% of sales, she confirmed, or at about $23,000 a week.

Several factors feed into the retention of those to-go sales, executives said.

Jerry Morgan, who was promoted to president in December to succeed CEO Kent Taylor, said, “There are still a lot of folks that I think are trying to stay safe and precautious on how much they get into public places. So that continues to drive our to-go sales.”

Morgan said Texas Roadhouse’s upgrade of its smartphone app and installation of to-go windows, has also helped make those off-premise sales more convenient for the customer. Robinson said 55% of the to-go sales are through digital channels like the app and online ordering.

“The bottom-line is when people take their food home and they open it up and out of that bag in their own dining room table, we were very much happy to serve you your dinner at our dining room table,” Morgan said.

Robinson also noted the digital orders carry a higher per-person check average than in-store orders.

“I think that's just the nature of when you get on that app, you see pictures, you're getting prompted for choices,” she said. “If you pick something, we give you, ‘Hey, you might like this too’ and different things like that.”

January saw a large amount of app downloads, she added. “I think we're starting to see the guests get more and more comfortable using those apps and that really gives us a great way to communicate with them that maybe you don't have if they're calling into the restaurants,” Robinson said.

For the fourth quarter ended Dec. 29, Texas Roadhouse’s net income was down 54.2% to $19.5 million, or 28 cents a share, from $42.7 million, or 61 cents a share, in the same period a year ago. Revenue was down 12% to $638 million from $725.2 million in the prior-year quarter.

For the quarter, Texas Roadhouse’s same-store sales declined 8.9% at domestic company-owned restaurants and fell 11.2% at domestic franchised units. By month, same-store sales were up 0.8% in October, down 18.2% in November and down 18.2% in December as local jurisdictions tightened capacity restrictions in response to a surge in COVID-19 cases.

Peter Saleh, an analyst with BTIG, said in a note: “We believe there is ample evidence of healthy comps and market share gains once dining rooms reopen. Results were dragged down by the weakening sales trends in November and December, leading to a large earnings miss, though trends showed a very encouraging turnaround in January.”

In the fourth quarter, Texas Roadhouse opened nine company restaurants, including one fast-casual Jaggers, and two franchised restaurants.

For fiscal 2020, Texas Roadhouse opened 22 new company-owned restaurants across its three concepts — Roadhouse, Bubba’s 33 and Jaggers —franchise partners opened four restaurants, including two international locations in Korea and Taiwan.

Taylor said the company plans to open between 25 and 30 company-owned restaurants this year, including as many as five Bubba’s 33 restaurants and one Jaggers.

Texas Roadhouse, founded in 1993, has more than 630 restaurants in 49 states and 10 foreign countries.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless

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