Same-store sales at Texas Roadhouse Inc. ended 2016 on a bad note, sending the company’s stock down nearly 13 percent on Wednesday.
The Louisville-based casual-dining chain reported same-store sales of 1.2 percent in the quarter ended Dec. 27. Sales are slightly better so far in 2017, up 1.5 percent, the company said on Wednesday. And the chain still expects positive same-store sales in 2017.
That’s good, considering the notoriously weak sales at many of the company’s competitors.
But to investors, who had bid the stock up by more than a third since October, the numbers were disappointing, a sign that the chain is not immune to the problems afflicting the casual dining sector.
Same-store sales fell 2.1 percent in December. And the overall quarterly results were lower than they’d been all year for the chain, which reported 3.5 percent same-store sales growth at company locations for the full year.
“While the casual-dining industry is experiencing difficult times, challenges such as these have always existed to some degree,” Kent Taylor, the company’s CEO, said on the earnings call late on Tuesday. “We will continue to tackle them head on.”
Revenues in the quarter increased 7 percent to $484.7 million, from $454.4 million.
Net income declined 10 percent, meanwhile, to $20.7 million or 29 cents per share, from $23 million or 32 cents.
The company also said that restaurant margin as a percent of sales fell 44 basis points to 17.1 percent — as rising labor costs, which are hitting the industry hard, offset lower food costs in the period. Executives said that labor as a percent of sales increased 147 basis points.
Higher wage rates and the impact of overtime pay changes were behind the higher labor costs, the company said.
Food costs, however, fell by 2.9 percent, thanks largely to lower beef prices.
Texas Roadhouse opened 30 locations in 2016, including nine of its new Bubba’s 33 concept.
Contact Jonathan Maze at [email protected]
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