In the fourth quarter ending December 31, Texas Roadhouse reported a significant 23.5% increase in revenue, reaching $1.44 billion, which exceeded Wall Street’s expectations of $1.41 billion. The company’s earnings per share rose by 60% to $1.73, compared to the anticipated $1.64. This remarkable performance was driven by a 7.7% rise in comparable store sales, a result of both increased customer traffic (up 4.9%) and higher average check totals (up 2.8%).
Despite this robust end to 2024, the initial weeks of the new year have presented challenges. Comparable restaurant sales for the first seven weeks saw only a 2.9% growth compared to the previous year. The company attributed this slowdown to external factors, particularly inclement weather, which caused store delays and closures. Management estimated a 1.5 percentage point negative impact on sales due to calendar shifts and adverse weather conditions.
January began on a positive note with a 5.5% increase in comparable sales, buoyed by New Year’s Day benefits and countered by a 2% weather-induced decline. However, subsequent weeks were less favorable, as February brought calendar shifts and cold weather that flattened year-over-year sales. Despite these hurdles, Texas Roadhouse remains optimistic about future traffic growth as the weather improves.
The company took strategic steps at the start of the fiscal year by acquiring 13 domestic franchises, enhancing its control over operations. Plans are in place for approximately 30 new company-owned restaurant openings and several franchise expansions throughout 2025. Additionally, they intend to relocate some high-performing restaurants to larger sites with more parking, maintaining a balance that ensures a positive first impression.
Financially, Texas Roadhouse announced an 11% increase in quarterly dividends and initiated a new $500 million share repurchase program. Despite slight adjustments in their 2025 outlook due to expected cattle supply constraints leading to commodity cost inflation of 3% to 4%, the company plans a 1.4% menu price increase to counter these pressures, confident in maintaining their value offerings.
While Texas Roadhouse faces immediate challenges due to uncontrollable weather conditions, the company is strategically positioned for long-term growth. With strong fiscal measures and expansion plans in place, the outlook remains promising for investors.
