Forget DRI Stock and Look at TXRH Instead

Core Insights - The restaurant industry faced challenges in 2025 due to inflation and reduced consumer spending, impacting stocks negatively, although Darden Restaurants showed relative strength [1][2] - Darden aims for revenue growth of 8.5% to 9.3%, with Olive Garden focusing on healthier menu options, potentially leading to better stock performance in 2026 [2] - Texas Roadhouse, despite a 6.6% decline in stock value last year, may rebound due to various factors including consumer preferences shifting towards sit-down dining experiences [4][8] Industry Trends - The rise in beef prices significantly affected restaurant chains like Texas Roadhouse, leading to increased operational costs [5] - Consumers' tolerance for higher meal prices has been tested, with the cost of eating out rising nearly double compared to eating at home, which saw a year-over-year increase of 1.9% [6] - The trend of "shrinkflation," where smaller portions are offered at the same or higher prices, has negatively impacted fast-casual restaurant chains [7] Company-Specific Factors - Texas Roadhouse's market cap is approximately $12 billion, with a current stock price of $174.32 and a gross margin of 13.27% [8] - Tax changes related to overtime and tips may indirectly benefit Texas Roadhouse, potentially improving employee retention and attracting new staff [9][10] - Increased retained earnings from overtime workers and larger tax rebate checks could lead to higher casual dining spending in 2026, supporting a rebound for Texas Roadhouse [11]