Business Context and Reporting Period
Company: Texas Roadhouse, Inc. (TXRH)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter ended September 30, 2025 (Q3 2025) and the 39 weeks ended September 30, 2025 (YTD 2025).
Operations: The Company operates three concepts: Texas Roadhouse, Bubba's 33, and Jaggers. As of September 30, 2025, the system included 806 restaurants (702 company-owned, 104 franchised) across 49 states, one U.S. territory, and ten foreign countries.
Key Financial Metrics
| Metric | Q3 2025 (13 Weeks) | Q3 2024 (13 Weeks) | YTD 2025 (39 Weeks) | YTD 2024 (39 Weeks) |
|---|---|---|---|---|
| Total Revenue | $1,436.3 million | $1,273.0 million | $4,396.0 million | $3,935.4 million |
| Net Income (Attributable to TXRH) | $83.2 million | $84.4 million | $320.9 million | $317.8 million |
| Diluted EPS | $1.25 | $1.26 | $4.82 | $4.74 |
| Restaurant Margin | $204.3 million (14.3%) | $202.1 million (16.0%) | $700.9 million (16.0%) | $673.1 million (17.2%) |
| Operating Cash Flow (YTD) | $509.6 million (vs. $516.1 million YTD 2024) | |||
| Cash and Equivalents | $108.2 million (as of Sept 30, 2025) | |||
| Debt | No outstanding borrowings under $450.0 million credit facility. |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 12.8% in Q3 2025, driven by a 6.8% increase in store weeks (new openings and acquisitions) and a 6.1% increase in comparable restaurant sales (guest traffic +1.8% and average check +4.3%).
- Profitability Pressure: Net income decreased 1.5% in Q3 2025 despite revenue growth. Restaurant margin percentage declined to 14.3% from 16.0% due to commodity inflation (7.9%) and wage inflation (3.9%).
- Acquisitions: The Company acquired 17 domestic franchise restaurants for $94.2 million during the first 39 weeks of 2025, contributing to store week growth.
- Capital Allocation: Capital expenditures increased to $298.8 million YTD 2025 (vs. $246.5 million YTD 2024), driven by new openings, refurbishments, and the $22.8 million purchase of the Support Center office building.
- Shareholder Returns: Dividends increased to $0.68 per share (from $0.61). The Company repurchased $100.0 million of stock YTD 2025 (vs. $44.7 million YTD 2024).
Guidance, Outlook, and Risks
- Outlook: Management expects store week growth of approximately 5% in 2025 and 5% to 6% in 2026. Capital expenditures are projected at approximately $400 million for both 2025 and 2026.
- Inflation Expectations: Commodity inflation is expected to be ~6% in 2025 and ~7% in 2026. Wage inflation is expected to be ~4% in 2025 and 3% to 4% in 2026.
- Tax Rate: The effective tax rate is expected to be approximately 14.5% in 2025 and 15% in 2026, aided by the FICA tip tax credit.
- Liquidity: The Company maintains a $450.0 million revolving credit facility with $446.8 million available. No debt is currently outstanding.
- Risks: Key risks include commodity price volatility (specifically beef), labor market pressures, and the impact of general economic conditions on guest traffic. The filing notes no material changes to risk factors from the 2024 10-K.
Investor Verification Checklist
- Margin Compression: Verify the sustainability of restaurant margins given the 7.9% commodity inflation and 3.9% wage inflation cited in Q3.
- Comparable Sales Drivers: Confirm the split between traffic growth (4.3%) and check growth (1.8%) to assess demand resilience versus price sensitivity.
- Capital Expenditure Efficiency: Monitor the return on the $298.8 million YTD capital spend, particularly regarding the new Support Center acquisition and franchise buyouts.
- Debt Covenants: Review the fixed charge coverage and leverage ratios to ensure continued compliance with the new $450 million credit facility terms.
- Franchise Conversion: Track the integration and performance of the 17 acquired franchise restaurants to ensure they meet projected profitability targets.