Texas Roadhouse 2025 Q1 Earnings Misses Targets as EPS Falls Short

Texas Roadhouse (TXRH) reported its fiscal 2025 Q1 earnings on May 08th, 2025. Texas Roadhouse Inc (TXRH, Financial) released its 8-K filing detailing the financial results for the first quarter of 2025, ending April 1. The company, a prominent player in the casual dining segment, operates through its Texas Roadhouse, Bubba's 33, and Jaggers brands, with the majority of its revenue generated from the Texas Roadhouse segment. The company's total revenue of $1.45 billion slightly exceeded analyst expectations, but its earnings per share (EPS) of $1.70 missed the consensus estimate by 3.4%. Texas Roadhouse anticipates continued growth in comparable restaurant sales, supported by recent menu price increases. Management also expects commodity cost inflation of about 4% for the year.

Revenue
Texas Roadhouse saw a 9.6% increase in total revenue, reaching $1.45 billion in Q1 2025 compared to $1.32 billion in Q1 2024. The restaurant and other sales contributed $1.44 billion, while royalties and franchise fees added $7.31 million to the total revenue.

Earnings/Net Income
The company's EPS rose to $1.71 in Q1 2025 from $1.69 in Q1 2024, indicating continued earnings growth. Net income grew marginally by 0.1%, reaching $116.06 million from $115.99 million. Although the EPS showed slight growth, it fell short of analyst expectations, indicating a mixed performance.

Price Action
The stock price of Texas Roadhouse slightly increased by 0.05% during the latest trading day, climbed 3.48% during the most recent full trading week, and jumped 11.39% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Texas Roadhouse shares following a quarter-over-quarter revenue drop and holding them for 30 days has historically delivered strong returns over the past five years. This approach achieved an impressive 308.21% return, significantly outperforming the benchmark's 92.56% return, with an excess return of 215.65%. The strategy effectively capitalized on market opportunities, despite experiencing a maximum drawdown of -27.84%. Maintaining a relatively high Sharpe ratio of 0.91, it indicated good risk-adjusted returns. This suggests that investors who adopt this strategy could potentially benefit from periods of short-term market volatility, leveraging the company's historical resilience and operational strengths. The strategy's proven track record highlights its ability to navigate market fluctuations and deliver substantial returns.

CEO Commentary
Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc., expressed satisfaction with the company's performance, stating that operators effectively navigated challenges and achieved traffic growth across all brands. He emphasized a commitment to business fundamentals, focusing on creating a welcoming environment for both employees and guests. Morgan highlighted the continued expansion through new store openings, including the 50th Bubba's 33 restaurant, and reiterated the company's disciplined capital allocation strategy, which balances operational funding, franchise acquisitions, dividends, and share repurchases.

Guidance
The company expects comparable restaurant sales growth to remain positive, bolstered by recent menu price increases of approximately 1.4%. For 2025, management anticipates commodity cost inflation of about 4%, store week growth of around 5%, and labor inflation of 4% to 5%. Additionally, they project an effective income tax rate between 15% and 16%, with total capital expenditures estimated at approximately $400 million.

Additional News
Texas Roadhouse announced a quarterly cash dividend of $0.68 per share, payable on July 1, 2025, to shareholders of record as of June 3, 2025. The company continues to focus on expanding its footprint by opening eight new restaurants in Q1 2025, including its 50th Bubba's 33 location. Additionally, Texas Roadhouse is on track to implement digital kitchen technology across all locations by year-end, currently at 65% of its locations. This modernization effort is part of the company's strategy to enhance operational efficiency and customer experience, reflecting its commitment to leveraging technology for growth and improved service.