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    TXRH
    Earnings call· Jun 2026(Q2 FY26)

    Texas Roadhouse Q2 FY26 earnings call TXRH

    Aug 6, 2026 Source

    Executive summary

    Texas Roadhouse Q2 FY26 — Strong Sales and Traffic Growth Amidst Commodity Headwinds

    Texas Roadhouse delivered robust top-line performance in Q2 FY26, driven by strong traffic and record average weekly sales across its brands. While commodity inflation impacted margins, the company is proactively managing costs and maintaining its value proposition with a modest price increase. Development pipelines remain strong, supporting continued unit growth for all three brands, with a focus on operational excellence and guest experience.

    Highlights

    5

    • Revenue grew 11.1% to nearly $1.7 billion in Q2 FY26.

    • Same-store sales increased 6.2% in Q2 FY26, driven by 3% traffic growth.

    • Average weekly sales exceeded $175,000 for the first time in company history, with Texas Roadhouse company restaurants averaging over $183,000.

    • Full-year 2026 commodity inflation guidance reduced from 6%-7% to approximately 5%.

    • 90% of restaurants set daily sales records on one of the three major holidays (Mother's Day, Father's Day, Valentine's Day).

    Concerns

    5

    • Diluted earnings per share decreased 0.7% to $1.85 in Q2 FY26.

    • Restaurant margin as a percentage of total sales decreased 66 basis points to 16.4% year-over-year.

    • Food and beverage costs as a percentage of total sales increased 136 basis points to 35.4% due to 7% commodity inflation.

    • G&A dollars increased 15.4% compared to Q2 FY25.

    • Estimated 75 basis point negative impact to Q4 same-store sales growth due to holiday shifts.

    Guidance & targets

    16
    CategoryTargetConfidence
    Texas Roadhouse restaurant openings
    approximately 20
    medium materiality
    High
    Bubba's 33 restaurant openings
    at least 10
    medium materiality
    High
    Bubba's 33 restaurant openings pace
    low double-digit pace
    low materiality
    Medium
    Jaggers company openings
    4
    low materiality
    High
    Total company-owned restaurant openings
    approximately 35
    high materiality
    High
    International franchise openings
    as many as 5 more
    low materiality
    Medium
    Domestic Jaggers franchise openings
    2
    low materiality
    Medium
    Menu price increase
    1%
    medium materiality
    High
    Full-year 2026 commodity inflation
    approximately 5%
    high materiality
    High
    Full-year 2026 wage and other labor inflation
    3% to 4%
    medium materiality
    High
    Full-year 2026 capital expenditures
    approximately $400 million
    high materiality
    High
    Full-year 2026 G&A dollar expense increase
    low double-digit percentage increase
    medium materiality
    High
    Full-year 2026 depreciation dollar expense increase
    low teen percentage increase
    medium materiality
    High
    Full-year 2026 income tax rate
    approximately 14%
    medium materiality
    High
    Q4 same-store sales growth impact from holiday shifts
    approximately 75 basis point negative impact
    medium materiality
    High
    Commodity inflation outlook
    initial outlook on 2027 commodity inflation
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Texas Roadhouse (System-wide)
    Confident in operators' ability to drive sales through traffic growth. Strong momentum in existing locations and a full pipeline of sites under development.
    System-wide locations: 755Average weekly sales (company restaurants): >$183,000
    		————
    Bubba's 33
    Recent openings continue to perform very well. First Iowa location opened. Focused on long-term growth and applying learnings from new restaurants.
    Restaurants: 59 (60th opened last week)States: 16Average weekly sales: >$129,000
    		————
    Jaggers
    Continues to perform well. Remainder of this year's company growth focused in existing markets. Learning from franchise partnerships.
    Company locations: 11Weekly sales: >$76,000
    		————

    Operational metrics

    30
    Revenue growth
    11.1%
    Q2 FY26

    Driven by a 5.9% increase in average weekly sales and a 5% increase in store weeks.

    Restaurant margin dollar increase
    6.9%
    Q2 FY26

    Increased to $275 million.

    Diluted earnings per share
    $1.850.7% decrease
    Q2 FY26

    Year-over-year decrease.

    Average weekly sales
    $177,000
    Q2 FY26

    Exceeded $175,000 for the first time in company history.

    To-go sales as percentage of total weekly sales
    14.3%
    Q2 FY26

    To-go sales represented more than $25,000 of average weekly sales.

    Comparable sales growth by month
    6.2%
    April 2026

    Monthly comparable sales growth.

    Comparable sales growth by month
    6.7%
    May 2026

    Monthly comparable sales growth.

    Comparable sales growth by month
    5.7%
    June 2026

    Monthly comparable sales growth.

    Restaurant margin dollars per store week
    $29,0001.9% increase YoY
    Q2 FY26

    Year-over-year increase.

    Restaurant margin as percentage of total sales
    16.4%66 bps decrease YoY
    Q2 FY26

    Compared to the same period last year.

    Food and beverage costs as percentage of total sales
    35.4%136 bps increase YoY
    Q2 FY26

    Primarily driven by 7% commodity inflation, partially offset by 3.2% check increase.

    Labor as percentage of total sales
    32.5%40 bps improvement YoY
    Q2 FY26

    Compared to Q2 FY25.

    Labor dollars per store week increase
    4.7%
    Q2 FY26

    Due to wage and other labor inflation and growth in hours.

    Other operating costs as percentage of sales
    14.2%28 bps better YoY
    Q2 FY26

    Leverage from higher sales and a $1.1 million net benefit to general liability insurance reserve.

    G&A dollars increase
    15.4%
    Q2 FY26

    Compared to Q2 FY25.

    G&A as percentage of revenue
    4.3%
    Q2 FY26

    For Q2 FY26.

    Depreciation expense increase
    15%
    Q2 FY26

    Year-over-year increase.

    Depreciation expense as percentage of revenue
    3.5%
    Q2 FY26

    For Q2 FY26.

    Effective tax rate
    13.5%
    Q2 FY26

    For the quarter.

    Cash and investments balance
    $202 million
    Q2 FY26 end

    Ended the quarter with this cash balance.

    Capital expenditures, dividends, and share repurchases
    $191 million
    Q2 FY26

    Offset cash flow from operations.

    Commodity inflation
    7%
    Q2 FY26

    At the bottom end of the forecasted range.

    Commodity inflation
    2%-3%
    Q3 FY26

    Expected, lower than originally anticipated due to sirloin prices.

    Commodity inflation
    approximately 5%
    Q4 FY26

    Expected to step back up.

    Labor inflation
    3.9%
    Q2 FY26

    In line with expectations.

    Labor hours growth vs. comparable traffic growth
    25%
    Q2 FY26

    Labor hours growing at approximately 25% of comparable traffic growth.

    Pricing in Q4 FY26 and Q1 FY27
    2.9%
    Q4 FY26 and Q1 FY27

    Includes the 1% price increase at the beginning of Q4.

    Mix trends
    -40 bps
    Q2 FY26

    Overall negative mix, with dining room positive offset by rising to-go mix.

    Mix trends
    flat
    Q3 FY26 (first 5 weeks)

    Overall mix is flat, with dining room mix becoming more positive.

    Franchise locations remaining (Texas Roadhouse)
    31
    current

    The company has roll-up rights for the majority of these sites.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps6.2%%
    Net unit growth development pipelineapproximately 35company-owned openings

    Risks & headwinds

    3
    Commodity inflationFY26

    7% in Q2 FY26, 5% for full-year 2026 (reduced from 6%-7%)

    Mitigation: Menu price increase of 1% in Q4 FY26; 80% locked for Q3, 40% for Q4; sirloin price deflation.

    Holiday shifts impacting Q4 same-store salesQ4 FY26

    approximately 75 basis point negative impact

    Mitigation: None stated, but impact is quantified and communicated.

    Overall beef supply tightnessQ4 FY26 and potentially next year

    Supply still very tight

    Mitigation: Monitoring Mexican border reopening for potential future supply, but small impact expected initially.

    What to watch in Q3 FY26

    4

    Q3 FY26 commodity inflation

    next quarter (Q3 FY26 results)
    Current7% in Q2 FY26
    Target2%-3%

    Why it matters

    Verifying the expected moderation in commodity inflation is crucial for margin stability and profitability.

    Now expecting 2% to 3% inflation in Q3 before stepping back up to approximately 5% in the fourth quarter. So sirloin is the biggest driver of that improvement.

    Q&A highlights

    6

    How will the company approach future price increases if inflation moderates, and how might they recapture past inflation absorption?

    Management maintains a conservative, value-focused pricing approach, making adjustments annually based on structural inflation and operator discussions. They believe this strategy has served them well and will continue to be evaluated biannually.

    “We believe that, that strategy and philosophy has paid very well over the years. And we'll continue to look at it on a biannual basis, have great conversations with our operators and then make that decision at that time.”

    asked by David Tarantino · answered by Gerald Morgan

    2 min read5 chapters

    Detailed Narrative

    01

    Development Pipeline and Unit Growth

    Texas Roadhouse maintains a robust development pipeline, with approximately 35 company-owned openings planned for FY26. This includes around 20 Texas Roadhouse locations, at least 10 Bubba's 33 restaurants, and 4 Jaggers company openings. The company is already working on sites for FY27, FY28, and FY29, indicating sustained confidence in its expansion strategy. Additionally, 5 more international Texas Roadhouse franchise openings and 2 domestic Jaggers franchise openings are expected in H2 FY26.

    02

    Pricing Strategy and Commodity Outlook

    The company plans a 1% menu price increase at the start of Q4 FY26, aiming to offset structural inflation while preserving its value proposition. Full-year 2026 commodity inflation guidance has been lowered to approximately 5% from 6%-7%, primarily due to favorable sirloin prices. Management expects Q3 inflation to be 2%-3% before rising to approximately 5% in Q4, and will provide an initial 2027 outlook in November.

    03

    Labor Productivity and Operational Efficiency

    Labor productivity continues its positive trend, with labor hours growing at approximately 25% of comparable traffic growth. This efficiency is attributed to technology investments like quieter kitchens, guest management systems, and digital kitchens, as well as high Roadie tenure and the continued growth of the to-go business. Management emphasizes that this is a natural outcome of operational focus, not a targeted metric for operators.

    04

    Brand Performance and Strategy

    Texas Roadhouse company restaurants achieved average weekly sales over $183,000, while Bubba's 33 reached over $129,000 and Jaggers exceeded $76,000. Bubba's 33 is focused on long-term growth, with new openings performing well and learnings being applied across the system. Jaggers is pursuing a mixed company-owned and franchise model, leveraging strong operator DNA from the Texas Roadhouse family. The company continues to prioritize local store marketing and community engagement over national advertising.

    05

    California Market Expansion

    California is identified as a significant growth market, with 20 Texas Roadhouse stores currently open and 6 more in development. Despite operational complexities, the company sees substantial sales opportunities and high-volume stores in the state, driven by consumer demand for its offerings. Management is actively identifying new markets within California for future expansion.

    AI-generated summary of the company’s earnings call. Not investment advice.