Texas Roadhouse(US:TXRH)2020-10-29 05:06Financial Data and Key Metrics Changes - Comparable restaurant sales for Q3 2020 declined by 6.3%, with monthly declines of 13%, 6.6%, and 0.5% in July, August, and September respectively [22] - Total revenue for the quarter decreased by 3%, driven by a 7.2% decline in average weekly sales, partially offset by a 4.6% store week growth [25] - Restaurant margin as a percentage of total sales decreased by 219 basis points to 14.5% [25] - Cash flow from operations was $84 million, leading to an increase in cash to $329 million, up $46 million from the previous quarter [31] Business Line Data and Key Metrics Changes - To-Go sales accounted for approximately 23% of total sales in Q3 and about 20% in October [23] - Average weekly sales for To-Go remained consistent at approximately $21,000 per restaurant throughout the quarter [23] - The fast casual brand Jaggers saw significant increases in sales and margin performance over the past six months [13] Market Data and Key Metrics Changes - Approximately 40% of restaurants were at 100% capacity, with 32.5% of the total portfolio operating at full capacity [66] - Outdoor dining contributed an estimated 2% to 2.5% to comparable sales performance in Q3, with about 35% of restaurants offering outdoor dining [24] Company Strategy and Development Direction - The company is focusing on innovation, including the rollout of a new mobile app and testing drive-through windows [13] - Plans to open at least 20 new company-owned locations by the end of the year, with projections of up to 10 new openings in the first half of 2021 [32] - The company is exploring retail opportunities with minimal investment costs and potential for attractive margins [16] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding sales recovery, with positive trends continuing into October [6][22] - The company anticipates mid-teen restaurant margins moving forward, despite ongoing pressures from labor and COVID-related costs [41][44] - Management noted that labor inflation is expected to persist into 2021, with state-mandated increases likely [55] Other Important Information - The company has implemented various safety measures and operational adjustments in response to COVID-19, including outdoor dining and curbside pickup [12][10] - G&A costs decreased by $9.3 million compared to the prior year, driven by reductions in travel and meeting expenses [30] Q&A Session Summary Question: What are the expectations for sales volumes moving forward? - Management noted that while some regions may see a decline in outdoor dining due to colder weather, they expect to maintain sales momentum through effective operational strategies [38][39] Question: Can you clarify margin expectations given current sales volumes? - Management indicated that while they expect mid-teen margins, they are being cautiously optimistic due to ongoing challenges related to labor and COVID-19 expenses [41][44] Question: How does the company view the impact of the butcher shop initiative on customer acquisition? - Management believes the butcher shop initiative will attract new customers without negatively impacting in-store sales, enhancing brand awareness [48] Question: What is the outlook for labor and commodity inflation in 2021? - Management expects labor inflation to continue, with potential state-mandated increases, while commodity inflation remains uncertain [50][55] Question: How is the company managing capacity utilization in restaurants? - Management stated that they are currently operating at about 98% of restaurants with some level of dining room capacity, and they are focused on maximizing seat utilization [66][58] Question: What are the common themes among best and worst-performing restaurants? - Management highlighted that operator talent and team dynamics significantly influence restaurant performance, with strong operators driving better results [113]