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Heard on the Call: Texas Roadhouse Inc.

Chain to keep prices hikes modest to build market share

Texas Roadhouse Inc. officials said the chain would stay conservative with menu price increases this year in hopes of taking traffic from competitors that are likely to take bigger price hikes.

Texas Roadhouse tested a 2-percent price increase across the menu last year, but arrived at a 1-percent hike for systemwide implementation this year to hedge against expected food cost inflation of about 3 percent while maintaining or growing guest counts, chief executive G.J. Hart said in a conference call with investors Tuesday to discuss fourth-quarter results.

“While we anticipate losing some margin, we’re going after market share and positioning ourselves to win longer-term,” Hart said. “By taking less pricing now, we’ll be in a much better position should we face higher inflationary pressures in 2012 and beyond.”

Texas Roadhouse reported a 16-percent increase in net income for the Dec. 28-ended fourth quarter on increased sales and new restaurant openings. FULL RESULTS

The company, which operates or franchises 345 casual-dining restaurants, expects earnings growth of 10 percent in 2011 and said Tuesday that same-store sales were up 3.8 percent through the first seven weeks of its first quarter.

Price Cooper, Texas Roadhouse’s vice president of finance, said the company is encouraged by higher average unit volumes produced by recently opened stores. While the more than 250 restaurants in the chain’s same-store sales base are averaging weekly sales of about $68,600, Cooper said, stores opened in the past six to 18 months are producing weekly volumes of about $73,500. The newest stores, opened in the past six months, have average unit volumes of $80,600 a week.

Contact Mark Brandau at [email protected].

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