Shares of Texas Roadhouse soared to record highs Tuesday as investors digested the casual dining company’s better-than-expected first-quarter results. While Texas Roadhouse surprised analysts with the numbers, how it got there was far from complicated, executives explained in a conference call.
“… we've just keep doing what we're doing, which is [being] very protective of our food quality and our price points and our flavor standards, same things you've heard forever and we kind of just stuck to that and continue to do that and gets work for us,” said Scott Colosi, president and chief financial officer. Shares were up as much as 11 percent to $51.22 on Tuesday.
The steakhouse chain reported comparable same-store sales gains of 3.1 percent year-over-year at company owned locations and 3.8 percent at domestic franchise units—around double the growth during the fourth quarter of 2016.
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Revenue also jumped 10 percent to $567.7 million, topping Street forecasts of $561.5 million. The Louisville-based company reported diluted earnings per share of 48 cents, down 4.4 percent—credited to a 13-cent charge related to a legal matter settled in March.
Perhaps the biggest note, though, was the company’s intention to keep growing. Texas Roadhouse said it expects to open roughly 30 new units in 2017 and has already debuted seven company-owned restaurants and two franchise locations to begin 2017. That includes opening 24 new Roadhouses and six Bubba’s 33, of which there are currently 16. Thirteen restaurants are under construction and expected to open by the end of September.
The company operates more than 525 restaurants in 49 states and six foreign countries.
“Overall, we feel very good about the direction of our business … We will continue to challenge ourselves to get stronger and create more value to our employees, our guests and our shareholders,” Colosi said.
Texas Roadhouse isn’t sitting quiet. The brand is readying to unveil new menus with small portion entrees.
“We will roll-out new menus this week at all restaurants that will include calorie counts, along with some small changes to the menu. The changes include the companywide roll-out of two smaller portion entrées with the addition of a 5-ounce salmon and an 8-ounce New York strip. We will also be implementing a price increase of about 0.5 percent as part of the roll-out,” CEO Wayne Kent Taylor said.
Like many casual dining brands, Texas Roadhouse is leveraging off-premise service and technology in its climb back to the green.
The company said it expects its app to be available throughout most of the country by the end of the year. The app, which first tested in Houston, allows guests to call ahead, pay their bill, and order to-go meals.
Texas Roadhouse also has a guest management system in place. “We've got our back office system, which helps us better understand our food costs, P&L and look at labor and so forth, which we're very happy with,” Colosi said.
At the moment, Colosi added, Texas Roadhouse doesn’t have any plans to add table-side tablets.