Business Context and Reporting Period
Company: Texas Roadhouse, Inc. (TXRH)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 30, 2025 (52 weeks)
Business Overview: A growing casual dining restaurant company operating three concepts: Texas Roadhouse (steakhouse), Bubba's 33 (burgers/pizza), and Jaggers (fast-casual). As of period end, the company operated 714 company-owned restaurants and franchised 102 restaurants across 49 states, one U.S. territory, and ten foreign countries.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Total Revenue | $5.88 billion | $5.37 billion |
| Net Income (Attributable to TXRH) | $405.6 million | $433.6 million |
| Diluted Earnings Per Share | $6.10 | $6.47 |
| Restaurant Margin (Non-GAAP) | $905.7 million (15.5%) | $915.8 million (17.1%) |
| Operating Cash Flow | $730.1 million | $753.6 million |
| Capital Expenditures | $388.0 million | $354.3 million |
| Debt | $0 outstanding (Credit Facility: $450M capacity) | $0 outstanding |
| Cash and Equivalents | $134.7 million | $245.2 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 9.4% to $5.88 billion, driven by a 5.0% increase in store weeks (new openings and franchise acquisitions) and a 4.9% increase in comparable restaurant sales.
- Profitability Decline: Net income decreased 6.5% to $405.6 million. Restaurant margin dollars fell 1.1% to $905.7 million, and the margin percentage dropped to 15.5% from 17.1%.
- Cost Pressures: Food and beverage costs rose to 35.0% of sales (from 33.4%) due to 6.1% commodity inflation, primarily beef. Labor costs increased to 33.3% of sales (from 33.1%) due to 3.7% wage inflation.
- Store Count: Total system-wide restaurants increased to 816 (from 784), including 28 new company openings and the acquisition of 20 domestic franchise restaurants for $107.5 million.
- Shareholder Returns: The company repurchased $150.0 million of common stock and paid $180.3 million in dividends.
Guidance, Outlook, and Risks
- 2026 Outlook:
- Store Week Growth: Expected to be 5% to 6%.
- Capital Expenditures: Projected at approximately $400 million.
- Inflation: Commodity inflation expected at ~7%; wage inflation expected at 3% to 4%.
- Effective Tax Rate: Expected to be 14% to 15%.
- Pricing: A menu price increase of approximately 1.9% is planned for Q2 2026.
- Management Commentary: Management highlighted the impact of higher beef costs and labor inflation on margins. They noted that comparable restaurant sales growth was driven by increased guest traffic and higher average checks.
- Key Risks:
- Commodity Costs: Continued inflation in beef and other food products.
- Labor Market: Wage pressures and potential shortages.
- Geographic Concentration: Approximately 21% of company restaurants are located in Texas and Florida, exposing the company to regional economic and weather risks.
- Cybersecurity: Reliance on IT systems for operations and data security.
Investor Verification Checklist
- Margin Compression: Verify the sustainability of the 1.6 percentage point drop in restaurant margin and the company's ability to pass on cost increases via menu pricing without impacting traffic.
- Beef Supply Chain: Confirm the stability of the four primary beef suppliers and the potential impact of supply disruptions or further price hikes.
- Franchise Acquisitions: Review the integration progress and return on investment for the 20 franchise restaurants acquired in 2025 and the 5 acquired in early 2026.
- Capital Allocation: Assess the balance between aggressive capital expenditures ($400M expected in 2026), share repurchases, and dividend growth amidst margin pressure.
- Geographic Exposure: Evaluate the specific economic and weather risks associated with the high concentration of units in Texas and Florida.