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Texas Roadhouse (TXRH) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 6, 2026

Source: earnings call transcript

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

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

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
————

Risks & headwinds

Commodity inflation FY26

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 sales Q4 FY26

approximately 75 basis point negative impact

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

Overall beef supply tightness Q4 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

Q3 FY26 commodity inflation

next quarter (Q3 FY26 results)
Current 7% in Q2 FY26
Target 2%-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.

Find out whether TXRH delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.