Company Reports

Texas Roadhouse delivered 4.3% comparable sales growth in the third quarter, including 3.6% check and 0.7% traffic lifts. As a result, sales leverage and check growth outpacing food inflation buoyed restaurant-level margin expansion by 30 basis points to 14.2%.

We surmise Texas Roadhouse is a stout operator poised for market share gains in the competitive full-service dining vertical. Years of conservative price hikes and investment in a throughput-focused operating model have built a flywheel that peers have struggled to replicate. We believe strong traffic enables them to invest in labor, capacity, technology, and pricing, as it helps preserve the dependable value and experience that keep consumers hooked. That, in turn, supports full dining rooms, attractive unit economics, and gives Texas Roadhouse more room to invest in value and the experience. We posit that this has propelled 7.5% comparable sales growth in the last decade, against 3.2% total sales growth for the full-service industry, according to Euromonitor. Our forecast calls for a 4.2% lift in comparable sales and 4.6% growth in company-owned units over the next five years, outperforming our 3% sales outlook for the full-service category.

Texas Roadhouse served up 6.2% comparable sales growth in the second quarter of 2026, driven by 3.2% and 3.0% increases in average check and traffic, respectively. Sales leverage was more than offset by input cost inflation, crimping restaurant-level margins by 50 basis points to 16.4%.

We surmise Texas Roadhouse is a stout operator poised for market share gains in the competitive full-service dining vertical. Years of conservative price hikes and investment in a throughput-focused operating model have built a flywheel that peers have struggled to replicate. We believe strong traffic enables them to invest in labor, capacity, technology, and pricing, as it helps preserve the dependable value and experience that keep consumers hooked. That, in turn, supports full dining rooms, attractive unit economics, and gives Texas Roadhouse more room to invest in value and the experience. We posit that this has propelled 7.5% comparable sales growth in the last decade, against 3.2% total sales growth for the full-service industry, according to Euromonitor. Our forecast calls for a 4.0% lift in comparable sales and 4.4% growth in company-owned units over the next five years, outperforming our 3% sales outlook for the full-service category.

As peers leaned on price or cut investments to defend profits, Texas Roadhouse held firm to its low entry price points while reinvesting in labor, technology, and capacity to win consumers. As such, comparable sales grew 7.5% over the last decade, outpacing full-service's 3.2% total sales rate.

We are transitioning our coverage for Texas Roadhouse and plan to publish an updated report shortly. Our report on Texas Roadhouse will now utilize our quantitative ratings in conjunction with an analysis on the firm's business strategy and competitive advantage from our analyst team. The quantitative ratings are philosophically analogous to Morningstar's proprietary, analyst-driven equity ratings. However, they are derived using advanced techniques that compare the firms to those with similar attributes from our universe of analyst-driven ratings.

As food cost inflation continued to squeeze profit margins during the second quarter, Texas Roadhouse TXRH delivered solid top-line growth as same-store restaurant sales grew 4.5% and 5.3% at company and franchise restaurants, respectively. Increased revenue was largely consumed, however, by an uptick in sales costs and higher general and administrative expenses, which included a higher-than-expected outlay to finance the company's annual managing partner conference held in Hawaii, which cost $2.3 million more than the prior year. Higher sales costs were largely a factor of increased commodity prices, which knocked the company's restaurant margin by nearly 50 basis points. During the period, Texas Roadhouse opened seven company restaurants and one franchise restaurant, bringing it to 36% of its 2013 target of 28 company restaurant openings.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

Texas Roadhouse TXRH reported impressive first-quarter results despite ongoing food cost inflation that has toppled several of its casual dining peers. The firm generated solid bottom-line growth on the back of positive traffic trends and an improved guest check, and it also announced positive early second-quarter results that have sent the firm's shares higher in early trading. At this point, we plan to reassess our operating assumptions and are placing our $16 fair value estimate under review. We intend to maintain our no-moat rating.

Texas Roadhouse TXRH posted fourth-quarter results that were bolstered by solid same-store sales. The firm continues to deliver respectable numbers against an increasingly competitive casual dining restaurant landscape, but continued food cost inflation looms, which may bite into any hopes of meaningful margin expansion. We are maintaining our $16 fair value estimate and our no-moat rating.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

While Texas Roadhouse TXRH is admittedly facing strong pressure from elevated food costs, particularly for beef, produce, and dairy, the company still posted solid fourth-quarter and yearly results. Given the firm's resilience in withstanding such high food-cost inflation and solid 2012 guidance, we will be placing our fair value estimate under review as we reassess our outlook for Texas Roadhouse.

Texas Roadhouse, like the majority of casual diners, is hampered by conservative discretionary spending, an issue that has been exacerbated by rising food costs and the inability to fully offset these expenses with price increases. However, we think the company still has enough prospects to excel over the long term.

Texas Roadhouse, like the majority of casual diners, is hampered by a reining in of discretionary spending, but we think the company still has enough prospects to lift the firm once the economy turns the corner.

Texas Roadhouse, like the majority of casual diners, is hampered by a reining in of discretionary spending, but we think the company still has enough prospects to lift the firm once the economy turns the corner.

Texas Roadhouse, like the majority of casual diners, is hampered by a reining in of discretionary spending, but we think the company still has enough prospects to lift the firm once the economy turns the corner.

Texas Roadhouse, like the majority of casual diners, is hampered by a reining in of discretionary spending, but we think the company still has enough prospects to lift the firm once the economy turns the corner.