Texas Roadhouse(TXRH) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for 2024 reached nearly $5.4 billion, with average unit volume exceeding$ 8 million for the first time in history, reflecting strong performance across all brands [6][7] - The company reported a 23.5% revenue growth for Q4 2024, driven by a 6.6% increase in comparable average unit volume and 13.7% store week growth [22] - Diluted earnings per share increased by 60.1% to $1.73, with restaurant margin dollars increasing by 37.3% to$ 243 million [22][23] Business Line Data and Key Metrics Changes - Same-store sales increased by 8.5% for the year, with traffic growth of 4.4% [15] - Weekly sales averaged $159,000 at Texas Roadhouse,$ 119,000 at Bubba's 33, and $71,000 at Jaggers, indicating strong performance across all brands [16] - Restaurant margin as a percentage of total sales increased by 172 basis points to 17% [26] Market Data and Key Metrics Changes - Comparable sales for Q4 increased by 7.7%, driven by 4.9% traffic growth and a 2.8% increase in average check [24] - The company experienced a 2.9% increase in comparable sales for the first seven weeks of Q1 2025, despite weather impacts [24][43] Company Strategy and Development Direction - The company plans to open approximately 30 company-owned restaurants across all brands in 2025, with an additional focus on franchise development [9][10] - A 1.4% menu price increase is expected in Q2 2025 to maintain everyday value, which is a competitive advantage [11] - The company is focused on technology initiatives, including the conversion to a digital kitchen and upgrades to the guest management system [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business despite recent performance irregularities due to external factors [39][40] - The company anticipates continued labor inflation of 4% to 5% and commodity inflation of 3% to 4% for 2025 [17][18] - Management remains optimistic about the company's ability to deliver high-level hospitality and maintain strong guest relationships [33][100] Other Important Information - The company celebrated its 20-year anniversary as a public company and opened its 750th systemwide restaurant in 2024 [7] - The company has a strong balance sheet with over$ 245 million in cash and generated over $750 million in cash flow from operations [16] Q&A Session Summary Question: Can you provide context on the quarter-to-date trend in Q1? - Management noted that restaurants are fully staffed and experienced strong sales during Valentine's week, indicating confidence in underlying business fundamentals despite some irregular performance [39][40] Question: How much visibility do you have on costs this year regarding inflation? - Management indicated that the majority of the inflation increase is driven by beef, with about 40% of the overall basket locked for the full year, providing some clarity on costs [49][50] Question: What are the margin drivers expected this year? - Management expects to see leverage on operating costs due to moderating costs, with labor inflation projected at 4% to 5% [55][57] Question: Can you clarify the components of comparable sales? - Management confirmed that the 7.7% sales growth included 4.9% traffic growth and a 2.8% increase in check, with some negative mix due to alcohol sales [63] Question: How is the company staying top of mind for consumers? - Management highlighted local store marketing efforts, early dine features, and value-driven promotions as key strategies to maintain consumer engagement [75][76] Question: What is the outlook for new unit openings? - Management confirmed a cautious approach to new openings, focusing on quality over quantity, with a target of 30 new restaurants [90][91] Question: What are the expectations for commodity inflation in 2025? - Management expects commodity inflation to remain in the 3% to 4% range, with ongoing supply issues affecting costs [18][135]