Texas Roadhouse Inc. is pushing some planned restaurant development into fiscal 2019, executives said Monday, as the casual-dining company’s same-store sales fell short of expectations.
Louisville, Ky.-based Texas Roadhouse reported that same-store sales in the second quarter ended July 30 increased 5.7 percent at U.S. company restaurants and 3.9 percent at domestic franchise restaurants, which fell short of analysts’ consensus of 6.2 percent for company restaurants and 5 percent at franchise units.
Wall Street reacted negatively, with shares down more than 4.5 percent at midday Tuesday, trading at around $62.37 a share from Monday’s close of $66.09.
“While missing high expectations, comps remain solid,” said Lynne Collier, a restaurant industry analyst with Canaccord Genuity.
Kent Taylor, Texas Roadhouse founder, CEO and chairman, said the brand had opened 14 company units so far this year and had 14 under construction. That shaved several units off the company’s earlier guidance.
“Due to permitting issues,” Taylor told analysts, “we've pushed the opening of two Bubba’s 33 restaurants into next year and updated our full-year guidance to reflect our current expectation of 27 to 28 company restaurant openings. The remaining openings this year will be back-end loaded with three expected in the third quarter and the balance in the fourth quarter.”
The company had targeted 30 company-owned openings each year, and Taylor said it plans to meet that goal in 2019.
The newest restaurants in the 24-unit Bubba’s 33 division will include a new prototype for the sports-focused brand, Taylor added.
“Our newest prototype — it's a bit smaller — is one of those stores that is pushed in the first quarter of 2019, so we'll see how that works,” Taylor said. Until now, Bubba’s units have typically covered about 8,400 square feet. The brand was a Nation’s Restaurant News Hot Concept in 2017.
Scott M. Colosi, Texas Roadhouse president, said recent Texas Roadhouse locations are performing well, with average weekly sales of more than $105,000 per unit. Bubba’s also produced positive sales momentum in the second quarter, Colosi said, with 12 of the units growing sales by about 7.5 percent, which he called “certainly encouraging.”
For the second quarter ended July 30, Texas Roadhouse reported a 17.6 percent increase in net income to $44.2 million, or 62 cents a share, from $37.6 million, or 53 cents a share, in the same period last year. Revenues rose 11.1 percent to $629.2 million from $566.3 million in the prior-year quarter.
Andy Barish, equity analyst with Jefferies, said Texas Roadhouse’s “best-in-class” same-store sales expectations were “baked” into the company’s stock price, which has “been on a run” since January. Tuesday’s share decline appeared to be giving back some of those gains, Barish added.
Texas Roadhouse, which first opened in 1993, has 566 restaurants in 49 states and eight other countries. The company owns and operates 450 of the Texas Roadhouse units, and domestic and international franchisees operate 90.
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