Texas Roadhouse(US:TXRH)2023-07-28 02:35Financial Data and Key Metrics Changes - Revenue for Q2 2023 grew by 14.3%, driven by an 8.7% increase in average unit volume and a 5.6% increase in store week growth [41] - Earnings per share increased by 14.7% to $1.22 per diluted share [41] - Comparable sales increased by 9.1%, with traffic growth of 4.7% and an average check increase of 4.4% [43] - Restaurant margin dollars grew by 8.3% to $182.8 million, while restaurant margin as a percentage of total sales decreased by 88 basis points to 15.7% [41][44] Business Line Data and Key Metrics Changes - Two company-owned Texas Roadhouses and one Bubba's 33 were opened in Q2, with franchise partners opening three restaurants [34] - The company expects to open up to 28 company-owned Texas Roadhouse and Bubba's 33 restaurants, along with three Jaggers for the full year [34] Market Data and Key Metrics Changes - Average weekly sales in Q2 were nearly $147,000, with to-go sales representing approximately 12.6% of total weekly sales [42] - For the first four weeks of Q3, weekly sales averaged over $140,000 with comparable sales of 10.7% [43] Company Strategy and Development Direction - The company is focused on maintaining a strong pipeline for growth and development across all three brands [13] - Capital investments are aimed at enabling future growth and improving operating results, with an increase in expected capital expenditures to approximately $300 million [52][100] - The company is committed to providing a legendary experience for guests while managing labor and commodity costs effectively [32][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong sales momentum and margin dollar growth for the remainder of the year [32] - The company is monitoring labor inflation and expects it to moderate as the year progresses [48] - Management acknowledged the challenges posed by commodity inflation, particularly in beef, and is focused on protecting the value proposition for consumers [19][140] Other Important Information - The company is experiencing a tighter pricing gap compared to competitors, which is being closely monitored [18] - Management is optimistic about the performance of Bubba's 33, noting that it is less affected by inflation compared to Texas Roadhouse [148] Q&A Session Summary Question: What is driving the acceleration in sales? - Management noted improved staffing levels and strong demand as key factors driving sales acceleration [2] Question: What is the expected cadence of unit openings for the rest of the year? - Management confirmed that all scheduled stores are under construction, with some concerns about December openings due to utility issues [12] Question: How does the company characterize its value proposition today? - Management indicated that the value proposition has tightened slightly, but they focus on what is right for their business [19] Question: What is the outlook for restaurant margin percentage in the second half of the year? - Management expects commodity inflation to be at the lower end of the guidance range, with potential for margin expansion in Q4 [68] Question: What are the trends in consumer behavior regarding menu items? - Management observed strong consumer demand, with some trading down to value items while still seeing overall positive trends [76] Question: What is the updated outlook for labor inflation? - Management updated the guidance for labor inflation to between 6% and 7% for the year due to stronger-than-expected wage pressures [48] Question: How is the company addressing the challenges of beef inflation? - Management is monitoring beef prices closely and is prepared to adjust menu pricing as necessary while maintaining value for customers [123]