Business Context and Reporting Period
Company: Texas Roadhouse, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter ended July 1, 2025 (Q2 2025) and Year-to-Date (26 weeks ended July 1, 2025).
Operations: The Company operates three concepts: Texas Roadhouse, Bubba's 33, and Jaggers. As of July 1, 2025, the system included 797 restaurants (695 company-owned, 102 franchised) across 49 states, one U.S. territory, and ten foreign countries.
Key Financial Metrics
| Metric | Q2 2025 (13 Weeks) | Q2 2024 (13 Weeks) | YTD 2025 (26 Weeks) | YTD 2024 (26 Weeks) |
|---|---|---|---|---|
| Total Revenue | $1,512.1 million | $1,341.2 million | $2,959.7 million | $2,662.4 million |
| Net Income (Attributable to TXRH) | $124.1 million | $120.1 million | $237.7 million | $233.3 million |
| Diluted EPS | $1.86 | $1.79 | $3.57 | $3.48 |
| Restaurant Margin | $257.3 million (17.1%) | $242.6 million (18.2%) | $496.6 million (16.9%) | $471.1 million (17.8%) |
| Operating Cash Flow (YTD) | $366.0 million | |||
| Cash and Equivalents (End of Period) | $176.8 million | |||
| Debt Outstanding | $0 (Revolving credit facility available: $446.8 million) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 12.7% in Q2 2025 and 11.2% YTD, driven by a 7.2% increase in store weeks (due to new openings and franchise acquisitions) and a 5.8% increase in comparable restaurant sales.
- Comparable Sales Drivers: Comparable restaurant sales growth was driven by a 4.0% increase in guest traffic and a 1.8% increase in the per-person average check (benefiting from a ~1.4% menu price increase).
- Margin Compression: Restaurant margin percentage decreased to 17.1% in Q2 2025 from 18.2% in Q2 2024. This was primarily due to 5.2% commodity inflation (notably beef) and 3.8% wage/labor inflation, partially offset by higher sales volume.
- Acquisitions: The Company acquired 17 domestic franchise restaurants in the first half of 2025 for a total purchase price of $93.9 million, contributing to store week growth.
- Capital Allocation: Share repurchases increased significantly to $60.0 million YTD (vs. $35.1 million prior year), and quarterly dividends were raised to $0.68 per share (from $0.61).
Guidance, Outlook, and Risks
- 2025 Outlook:
- Store Week Growth: Expected to be approximately 5% across all concepts.
- Capital Expenditures: Projected at approximately $400 million for the full year.
- Inflation: Commodity inflation expected at ~5% (including tariff impacts); labor inflation expected at ~4%.
- Tax Rate: Effective tax rate expected to be approximately 15%.
- Liquidity: The Company maintains a $450 million revolving credit facility (maturity April 2030) with no outstanding borrowings as of July 1, 2025. Management intends to fund capital requirements via cash on hand, operating cash flow, and the credit facility if needed.
- Risks: Key risks include commodity price volatility (beef), labor market pressures, and the impact of tariffs on costs. The filing notes no material changes to risk factors previously disclosed in the 2024 10-K.
Investor Verification Checklist
- Margin Sustainability: Verify if the 1.1% decline in restaurant margin percentage (Q2 2025 vs. Q2 2024) is a temporary inflationary impact or a structural shift in cost dynamics.
- Acquisition Integration: Monitor the performance of the 17 newly acquired franchise restaurants to ensure they meet projected unit economics.
- Capital Discipline: Assess the balance between aggressive capital allocation ($60M buybacks + $90M dividends YTD) and the $400M capital expenditure plan for growth.
- Comparable Sales Trend: Track the deceleration in comparable restaurant sales growth (5.8% in Q2 2025 vs. 9.3% in Q2 2024) to gauge consumer demand resilience.
- Debt Covenants: Confirm continued compliance with the fixed charge coverage and leverage ratios under the new 2025 credit facility.