Q1 2024 Texas Roadhouse Inc Earnings Call

Operator: Good evening, and welcome to the Texas Roadhouse First Quarter Earnings Conference Call. This call is being recorded. All participants are now in a listen-only mode. After the speaker's remarks, there will be a question and answer session. At that time, if you would like to ask a question, please press star, then the number 1 on your telephone keypad. Should anyone need assistance at any time during the conference, please press star zero, and an operator will assist you. I would now like to introduce Michael Bailen, Head of Investor Relations for Texas Roadhouse. You may begin your presentation.

Good evening and welcome to the Texas Roadhouse first quarter earnings Conference call today's call is being recorded.

Operator: All participants are now in a listen only mode.

Operator: After the Speakers' remarks, there will be a question and answer session.

Operator: At that time, if you would like to ask a question. Please press Star then the number one on your telephone keypad.

Operator: Should anyone need assistance at any time during the conference. Please press star zero and an operator will assist you.

Michael Bailen: I'd now like to introduce Michael Balan head of Investor Relations for Texas Roadhouse, you May begin your conference.

Operator: Okay.

Michael Bailen: Thank you, Brianna, and good evening. By now, you should have access to our earnings release for the first quarter ended March 26, 2024. It may also be found on our website at texasroadhouse.com in the investor section. I would like to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC.

Michael Bailen: Thank you Breanna and good evening by now you should have access to our earnings release for the first quarter ended March 26, 2024. It may also be found on our website at Texas Roadhouse Dot com in the investors section.

Michael Bailen: I would like to remind everyone that part of our discussion today will include forward looking statements.

Michael Bailen: These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC.

Michael Bailen: These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures. If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings report.

Michael Bailen: These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward looking statements.

Michael Bailen: Additionally, we may refer to non-GAAP measures.

Michael Bailen: Applicable reconciliations of non-GAAP measures to the GAAP information can be found in our earnings release on the call with me today is Gerry Morgan Chief Executive Officer of Texas, Roadhouse, and Christopher <unk>, Our Chief Financial Officer.

Michael Bailen: On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse, and Chris Monroe, our Chief Financial Officer. Following the prepared remarks, we will be available to answer your questions. In order to accommodate everyone that would like to ask a question, we kindly ask analysts to please limit themselves to one question. Now, I'd like to turn the call over to Jerry.

Michael Bailen: Following the prepared remarks, we will be available to answer your questions in order to accommodate everyone that would like to ask a question. We kindly ask analysts to please limit yourself to one question and now I'd like to turn the call over to Jerry.

Gerald L. Morgan: Thanks, Michael, and good evening, everyone. There is no doubt that 2024 is off to a great start with first quarter revenue of over $1.3 billion and same store sales growth of 8.4%. Our strong results continue to reflect our operators' commitment to the consistency and quality of the food, the hospitality they provide, and our everyday value. The benefit of our long-term approach to the business and our focus on always prioritizing the guest experience is evident in the record sales, margin dollars, and net income for the first quarter.

Gerald L. Morgan: Thanks, Michael and good evening everyone.

Gerald L. Morgan: There is no doubt that 'twenty 'twenty four is off to a great start with first quarter revenue over $1.3 billion and same store sales growth of eight 4%.

Gerald L. Morgan: Our strong results continue to reflect our operators commitment to the consistency and quality of the food the hospitality they provide and our everyday value the benefit of our long term approach to the business and our focus on always prioritizing the guest experience is evident in the record sales.

Gerald L. Morgan: Margin dollars and net income for the first quarter.

Gerald L. Morgan: While the Texas Roadhouse brand generated average weekly sales of over $163,000 in the first quarter, I want to also highlight the progress our operators are making at Bubba's 33 and Jagger's. Bubba's 33 averaged over $120,000 in weekly sales during the first quarter.

Gerald L. Morgan: While the Texas Roadhouse brand generating average weekly sales of over $163000 in the first quarter I want to also highlight the progress our operators are making above is 33 and jaggers bubbas 33 averaged over $120000.

Gerald L. Morgan: In weekly sales during the first quarter with four locations scheduled to open this year and a growing pipeline for the coming years, we remain confident in the future for Bubbas 33.

Gerald L. Morgan: With four locations scheduled to open this year and a growing pipeline for the coming years, we remain confident in the future for Bubba's 33. Jaggers, our quick service brand, is also experiencing momentum and delivered nearly $68,000 in average weekly sales. We continue to expect a mix of company and franchise Jaggers over the coming years, and the first international franchise in South Korea is scheduled to open later this year. Our investment and commitment to opening new restaurants at a more even pace has been successful. In the first quarter, we opened nine company-owned Texas roadhouses.

Gerald L. Morgan: Jaggers, our quick service brand is also experiencing momentum and delivered nearly $68000 in average weekly sales. We continue to expect a mix expect a mix of company and franchised jaggers over the coming years and the first international franchise in South Korea escape.

Gerald L. Morgan: Build to open later this year.

Gerald L. Morgan: Our investment and commitment to opening new restaurants at a more even pace has been successful in the first quarter. We opened nine company owned Texas Roadhouse is we currently expect to open an additional six company owned restaurants during the second quarter.

Gerald L. Morgan: We currently expect to open an additional six company-owned restaurants during the second quarter. For the full year, we remain on track to open approximately 30 company-owned restaurants across the three brands. Our franchise partners opened two international Texas Roadhouse locations and a domestic Jaggers during the first quarter. We continue to expect as many as 14 franchise openings this year, including four Jaggers.

Gerald L. Morgan: For the full year, we remain on track to open approximately 30 company owned restaurants across the three brands.

Gerald L. Morgan: Our franchise partners opened two international Texas Roadhouse locations and a domestic jaggers there in the first quarter. We continued to expect as many as 14 franchise openings this year, including four jaggers.

Gerald L. Morgan: On the technology front, our conversion to digital kitchens is going as planned, with 30% of the approximate 200 scheduled conversions completed so far. The feedback from our operators remains highly positive. In addition to kitchen efficiencies, our operators also appreciate the calmer kitchen and less stressful execution during power hours. Also, on the technology front, we are preparing to go live during the second quarter with a new people system, which we call Roadie First Technology. The system will provide our employees with a more user-friendly platform for easier access to their data and records. It should also improve the recruiting and employee management processes for our management.

Gerald L. Morgan: On the technology front, our conversion to digital kitchens is going as planned with 30% of the approximate 200 scheduled conversions completed so far the feedback from our operators remains highly positive. In addition to kitchen efficiencies. Our operators also appreciate that.

Gerald L. Morgan: <unk> kitchen, and less stressful execution during power hours.

Gerald L. Morgan: Also on the technology front, we are preparing to go live during the second quarter with a new people system, which we call rotary <unk> technology. The system will provide our employees with a more user friendly platform for easier access to their data and records. It should also improve the recruiting and employee.

Gerald L. Morgan: Management processes for our managers the first the rotary <unk> technology name reflects our commitment to enhancing the roadie experience at all levels, which will allow us to continue hiring training and retaining the best people in the industry.

Gerald L. Morgan: The Roadie First technology name reflects our commitment to enhancing the roadie experience at all levels, which will allow us to continue hiring, training, and retaining the best people in the industry. Finally, we just returned home from our annual Managing Partner Conference in Austin, Texas. It was a great week celebrating our operator's success in 2023, planning for the future, recognizing our top talent, and having a little fun. We also unveiled our first purpose statement, which is serving communities across America and the world. We believe our purpose builds clarity for our roadies and will inspire them for our journey ahead.

Gerald L. Morgan: Finally, we just returned home from our annual managing partner conference in Austin, Texas. It was a great week celebrating our operator's success in 2023 planning for the future recognizing our top talent and having a little fun. We also unveiled our first purpose statement, which is <unk>.

Gerald L. Morgan: Serving communities across America, and the World. We believe our purpose builds clarity for our Roadies and will inspire them for our journey ahead speaking of inspiration I want to congratulate Casey Cohen from Turnersville, New Jersey as she was named our Texas Roadhouse.

Gerald L. Morgan: Speaking of inspiration, I want to congratulate Casey Cohen from Turnersville, New Jersey, as she was named our Texas Roadhouse Managing Partner of the Year. I also want to congratulate Vanessa Blanca Quesada from Albuquerque, New Mexico, for being named our Bubba's 33 Managing Partner of the Year. Additionally, I want to recognize Benito Galindo of Covington, Louisiana for being named our National Meat Cutting Champion and Frank Fernandez for being named our Support Center Roadie of the Year. And lastly, I would like to congratulate and thank our award finalists for their contributions and accomplishments. Now Chris will provide some thoughts.

Gerald L. Morgan: <unk> managing partner of the year.

Gerald L. Morgan: Also want to congratulate Vanessa Blanca Cassata from Albuquerque, New Mexico for being named our Bubbas 33, managing partner of the year. Additionally, I want to recognize the nito good lindo of Covington, Louisiana for being named our National meat cutting champion and Frank.

Gerald L. Morgan: Fernando for being named our support center roadie of the year and lastly, I would like to congratulate and thank our award finalist for their contributions and accomplishments now Chris will provide some thoughts.

Chris Monroe: Thanks, Jerry. I want to echo your comments regarding what an impactful time we shared with our managing partners in Austin. They are doing a fantastic job, and it was great to be a part of celebrating the best of the best. Having an operator mentality and focus on the guest experience continues to pay financial dividends for us. While it's only been five weeks since we implemented a 2.2% menu price increase, we are encouraged by the traffic and mix trends we've seen so far. In fact, our mix trends improved as we moved through the first quarter and into the beginning of the second quarter. We've always taken a long-term approach to pricing with the goal of driving sustainable traffic growth.

Chris: Thanks, Gerry I wanted to Echo your comments regarding what an impactful time, we shared with our managing partners in Austin.

Chris Monroe: They are doing a fantastic job and it was great to be a part of celebrating the best of the best.

Chris Monroe: Having an operator mentality and focus on the guest experience continues to pay financial dividends for us.

Chris Monroe: While it's only been five weeks since we implemented a two 2% menu price increase we are encouraged by the traffic and mixed trends. We've seen so far in fact are mixed trends improved as we moved through the first quarter and into the beginning of the second quarter with.

Chris Monroe: We've always taken a long term approach to pricing with the goal of driving sustainable traffic growth.

Chris Monroe: We believe our guests continue to reward us for this approach by choosing to come to our restaurants more often. Commodities, more particularly beef, have performed better than we'd expect. We're benefiting from the improved cost environment as only a small portion of this year's beef purchases have been made through fixed price contracts. While we still expect beef inflation to increase as we move through the year, we now expect full-year 2024 commodity inflation will be approximately 3%.

Chris Monroe: We believe our guests continue to reward us for this approach by choosing to come to our restaurants more often.

Chris Monroe: Commodities more particularly beef have performed better than we'd expected.

Chris Monroe: We're benefiting from the improved cost environment as only a small portion of this year's beef purchases have been made through fixed price contracts.

Chris Monroe: While we still expect beef inflation to increase as we move through the year. We now expect full year 2020 for commodity inflation will be approximately 3%.

Chris Monroe: Currently, we expect to be above the full-year inflation forecast in the back half of the year. Labor is benefiting from improved productivity as our hiring efforts have resulted in well-staffed restaurants with longer-tenured roadies. This is allowing our managers to staff their restaurants more efficiently and focus on the employee experience. So far this year, wage and other labor inflation have played out as anticipated. As such, we continue to expect 4 to 5 percent inflation for the full year.

Chris Monroe: Currently we expect to be above the full year inflation forecast in the back half of the year.

Chris Monroe: Labor is benefiting from improved productivity as our hiring efforts have resulted in well staffed restaurants with longer tenured roadies. This is allowing our managers to staff their restaurants more efficiently and focus on the employee experience.

Chris Monroe: So far this year wage and other labor inflation has played out as anticipated as such we continue to expect 4% to 5% inflation for the full year.

Michael Bailen: Our cash flow from operations continues to support our balanced approach to capital allocation. We're pleased with the returns we are generating from our ongoing investments in the business, including new store openings, bump outs, kitchen expansions, and digital kitchen conversion. During the first quarter, we generated over $240 million of operating cash flow, which was used to fund over $125 million of capital expenditures, dividend payments, and share repurchase. As we have done throughout our history, we will continue to return capital to shareholders and invest in growth projects. And now, Michael will walk us through the first quarter results.

Chris Monroe: Our cash flow from operations continues to support our balanced approach to capital allocation.

Michael Bailen: We're pleased with the returns we are generating from our ongoing investments in the business, including new store openings bump outs kitchen expansions and digital kitchen conversions.

Michael Bailen: During the first quarter, we generated over $240 million of operating cash flow, which was used to fund over 125 million of capital expenditures dividend payments and share repurchases.

Michael Bailen: As we've done throughout our history, we will continue to return capital to shareholders and invest in growth projects.

Michael Bailen: And now Michael will walk us through the first quarter results.

Michael Bailen: Thanks, Chris. For the first quarter of 2024, we reported revenue growth of 12.5%, driven by a 7.7% increase in average unit volume and 4.9% store week growth. We also reported a restaurant margin dollar increase of 23% to $228 million and a diluted earnings per share increase of 31.4% to $1.69. Average weekly sales in the first quarter were over $159,000, with take-out representing approximately $21,000, or 13.1% of these total weekly

Michael Bailen: Thanks, Chris for the first quarter of 2024, we reported revenue growth of 12, 5% driven by a seven 7% increase in average unit volume and four 9% store week growth. We also reported a restaurant margin dollar increase of 23.

Michael Bailen: <unk> to $228 million and a diluted earnings per share increase of 31, 4% to $1 69.

Michael Bailen: Average weekly sales in the first quarter were over $159000 with to go representing approximately $21000 or 13, 1% of these total weekly sales.

Michael Bailen: Comparable sales increased 8.4% in the first quarter, driven by 4.3% traffic growth and a 4.1% increase in average check. By month, comparable sales grew 4.2%, 10.4%, and 10.2% for our January, February, and March periods, respectively, and comparable sales for the first five weeks of the second quarter were up 9.3 percent, with our restaurants averaging sales of approximately $158,000 per week during that period. In the first quarter, restaurant margin dollars per store week increased 17.3% to over $27,500, and restaurant margin as a percentage of total sales increased 148 basis points year over year to 17.4 percent.

Michael Bailen: Comparable sales increased eight 4% in the first quarter.

Michael Bailen: Riven by four 3% traffic growth and a four 1% increase in average check.

Michael Bailen: By month comparable sales grew four 2% 10, 4% and 10, 2% for our January February and March periods, respectively.

Michael Bailen: And comparable sales for the first five weeks of the second quarter were up nine 3% with our restaurants, averaging sales of approximately $158000 per week during that period.

Michael Bailen: In the first quarter restaurant margin dollars per store week increased 17, 3% to over $27500 restaurant margin as a percentage of total sales increased 148 basis points year over year to 17 four.

Michael Bailen: Percent.

Michael Bailen: Food and beverage costs, as a percentage of total sales, were 33.9% for the first quarter. The 131 basis point year-over-year improvement was driven by the benefit of a 4.1% check increase offsetting the 0.9% commodity inflation for the quarter. Labor, as a percentage of total sales, decreased 51 basis points to 32.5% as compared to the first quarter of 2023.

Michael Bailen: Food and beverage costs as a percentage of total sales were 33, 9% for the first quarter.

Michael Bailen: The 131 basis point year over year improvement was driven by the benefit of a four 1% check increase offsetting the 0.9% commodity inflation for the quarter.

Michael Bailen: Labor as a percentage of total sales decreased 51 basis points to 32, 5% as compared to the first quarter of 2023.

Michael Bailen: Labor dollars per store week increased 5.7 percent due to wage and other labor inflation of 4.3 percent and growth in hours of 1 percent. The remaining 0.3% increase in labor dollars per store week was primarily driven by a $0.7 million net unfavorable adjustment to our quarterly insurance reserve. Other operating costs were 14.7% of sales, which was 39 basis points higher than the first quarter of 2023. Higher operator bonuses as a percentage of sales resulting from an increased year-over-year restaurant-level profitability drove 23 basis points of the increase. Also included in the year-over-year change is an approximately 35 basis point negative impact from adjustments to our quarterly reserve for general liability insurance.

Michael Bailen: Labor dollars per store week increased five 7% due to wage and other labor inflation of four 3% and growth in hours of 1% to remaining 0.3%.

Michael Bailen: <unk> and labor dollars per store week was primarily driven by a zero point $7 million net unfavorable adjustment to our quarterly insurance reserve.

Michael Bailen: Other operating costs were 14, 7% of sales, which was 39 basis points higher than the first quarter of 2023.

Michael Bailen: Higher operator bonuses as a percentage of sales, resulting from an increased year over year restaurant level profitability.

Michael Bailen: <unk> 23 basis points of the increase.

Michael Bailen: Also included in the year over year change isn't an approximately 35 basis point negative impact from adjustments to our quarterly reserve for general liability insurance.

Michael Bailen: These adjustments include $3.5 million of additional expense this year and a $0.8 million credit last year. Moving below restaurant margin, G&A dollars grew 5.5% year over year and came in at 4% of revenue for the first quarter. GNA dollar growth benefited from lapping an approximately $2.6 million one-time cost related to an executive retirement. Our effective tax rate for the quarter was 13.9%. Our expectation for the full-year 2024 income tax rate remains unchanged at approximately 14 percent.

Michael Bailen: These adjustments include $3 $5 million of additional expense this year and a 0.8 million credit last year.

Michael Bailen: Moving below restaurant margin G&A dollars grew five 5% year over year and came in at 4% of revenue for the first quarter.

Michael Bailen: G&A dollar growth benefited from lapping an approximately $2 $6 million, one time cost related to an executive retirement.

Michael Bailen: Our effective tax rate for the quarter was 13, 9% or.

Michael Bailen: Finally, as a reminder, 2024 is a 53-week year for us. As such, the fourth quarter will have 14 weeks versus our normal 13 weeks. We estimate that the additional week could benefit full-year 2024 earnings per share growth by approximately 4%. Now, I will turn the call back over to Jerry for final comments. Thanks, Michael.

Gerald L. Morgan: Thanks, Michael. The theme of our Managing Partner Conference was Buckle Up. It is a fitting message as we prepare for our journey ahead. At conference, I encourage our operators to buckle up and double down on our mission, our core values, and our purpose of serving our communities across America and the world. Last but certainly not least, we are honored to have Casey and Vanessa, our Managing Partners of the Year, with us on the call today. Congratulations again to both of you. Let's go to Roadhouse and Bubba's!

Gerald L. Morgan: That concludes our prepared remarks. Brianna, please open the line for questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. To withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Our first question today comes from David Palmer with Evercore ISI; please go ahead.

David Sterling Palmer: Thanks. I'll try to squeeze in just two quick ones.

David Sterling Palmer: First, on other operating expenses, it's up 9% per store in the quarter. That was a similar type of growth rate in all of 23. Could you remind me what's driving that growth in that line item? And as you look ahead, is it reasonable to assume that that growth rate might slow, and you'd be able to leverage that line a little bit more? And then just any comments or details you can give about the digital kitchen initiative. It obviously has a great uptake. Any quantification about the benefits you're seeing, table turns, order accuracy, anything that could help the business? Thanks.

Michael Bailen: Hey, David, thanks for the question. It's Michael.

Michael Bailen: I'll start with the question from the other operating company. Yeah, you know, as we mentioned, we did have a general liability adjustment on that line of $3.5 million. So, that is driving some of that increase. Obviously, as we're doing higher sales volumes, that also is driving those dollars per store week, as there are items in there that are directly correlated with sales. And we also mentioned that the higher profitability of the restaurants is leading to more compensation expense.

Michael Bailen: So, it is certainly possible and probably expected that that dollar per store week growth for other operating will not increase at that high of a level throughout the remainder of the year. But obviously, we don't know what other adjustments we may have to make, but all of us being equal, that should come down. And I can start off on the digital kitchen, and then I'll turn it over, you know, probably to Jerry.

Michael Bailen: We're a little early for us to give any comments, actual throughput, or any kind of numerical quantitative information on it, but we are very happy with the qualitative feedback that we're getting so far and encouraged by what we're seeing. Yeah.

Gerald L. Morgan: Yeah, David, on the digital kitchen, I think as we're still early into it, we are very excited about the positive feedback we're getting from our operators. We are being able to see and track our cook times a little bit, the timing of our food, and really the calmness in the organization that the digital kitchen brings to our back of the house. So I believe that there is just a quality of life or experience on the job that will benefit us as we move forward. So we are definitely excited about getting more done as we move through the year and getting some more feedback, but so far, really, really good feedback.

David Sterling Palmer: Thanks, guys. Congratulations.

Michael Bailen: Thank you very much.

David E. Tarantino: Your next question comes from David Tarantino with Baird. Please go ahead.

David E. Tarantino: Hi. Good afternoon, and congrats on a good start to the year.

Chris Monroe: My question is about the margin outlook. I think you've talked in the past about the potential to get long-term restaurant margins back to 17, 18%. I know that's a long-term target, but my question is related to how much progress towards that target you might be able to make this year in light of the easing inflation environment and the productivity gains you're making. Just wondering if you could frame this year in the context of progress towards that long-term target. Thanks.

Chris Monroe: Sure, David. This is Chris, and thanks for the question.

David E. Tarantino: Well, clearly, you know, we've had solid margin expansion in Q1 here and reached 17.4. So we're in the zone of our goal of 17 to 18 percent, and that's where we'd like to be. And honestly, we feel like we have an opportunity to expand it similarly on a year-over-year basis in Q2. But in the second half, there's some commodity pressure that we're expecting, and so it'll be more difficult to do that.

David E. Tarantino: But then when you get to the full year after you've added all that up, you know, we should see modestly higher than we were in 2023, and with still a long-term goal of consistently delivering between 17 and 18 percent.

Chris Monroe: Great. Thank you very much.

Chris Monroe: And then, if I could ask a follow-up question, you mentioned labor productivity gains. So could you maybe elaborate on what you're doing there? And is that just a matter of kind of more stable staffing in the current environment? Or are you actually, you know, making progress in other ways? So any help there?

Chris Monroe: Yeah, David, this is Chris again. I think, I think it is a reflection of more stable staffing and having our tenured or longer tenured roadies, as I talked about in my prepared remarks, it just allows our operators to just have a team that's together, that's working together, that gets reps together, and they they're just more efficient. And, you know, we're far away from the situations that we were in during the pandemic where, you know, it was difficult to get people to come in.

Chris Monroe: And, and we were having difficulty with staffing. So now that we have our staff in place, and we, and our turnover is certainly lower, much lower than it was before. That's driving some of the benefits on that line.

Brian James Harbour: Great. Thank you very much. Your next question comes from Brian Harbour with Morgan Stanley. Please go ahead.

Michael Bailen: Yeah, sure, Brian. This is Michael.

Michael Bailen: I can talk a little bit about that. Yeah, I mean, I'd say really not seeing anything changing in our consumers' behavior. We are seeing less alcohol, and a negative mix than we had been seeing, and that was something that has been trending, you know, back more to neutral over the last several months. We're still running a little bit negative on alcohol, but entrees, appetizers, add-ons, all those items, which were never really overly negative, have really flattened out. So, I'm very encouraged by what we're seeing there, and to me, it shows that the consumer is still seeing the everyday value that we're offering.

Jeffrey Andrew Bernstein: Your next question comes from Jeffrey Bernstein with Barclays. Please go ahead.

Jeffrey Andrew Bernstein: Great, thank you very much. I have two questions. The first one just on the, you made reference to the Texas Roadhouse brand versus the Bubba's brand. Clearly, both of them are very strong welders for the industry, but when you compare them against each other... The Texas Roadhouse and the two-year stacks on comps are 22%, and their AUVs are 8.5 million. The Bubba's two-year stack is 12, and the AUV is like the low sixes. Just wondering what you view as the greatest driver of the discrepancy between the two?

Jeffrey Andrew Bernstein: And would you say that with the passage of time? You know, the gap would narrow in terms of both comp and AUV and make the brands more similar in terms of being indifferent to which brand you open. And then I had one follow-up.

Michael Bailen: Hey, it's Michael. Thanks for the question. You know, some of that's going to get into a little speculation that, you know, will be hard for me to answer.

Michael Bailen: Obviously, the Texas Roadhouse brand has been around for quite a while longer than Bubba's had been around, so we are very happy with what both brands are doing. It's hard for anybody to compete with what Texas Roadhouse, you know, has been doing. But Bubba's at $120,000. It was a very strong number for us. And, you know, when you only have less than 50 Bubba's, you know, you can always, it's easier for those numbers to be skewed one way or another by a few stores.

Michael Bailen: So we are very encouraged by what we are seeing there. And, and, you know, we generate, you know, similar returns from both concepts. And, you know, we're excited to see what we see in the future.

Gerald L. Morgan: That's the issue when your big brother is Texas Roadhouse. That is very true. My follow-up question is just to clarify on the unit openings. I think you mentioned still being confident in the 30 companies operating this year. I know you mentioned 10 years to date and 18 under construction. Maybe these things open pretty quickly. But can units start construction in the coming months and still open before year end? Or might you come in closer to that 28 number for the full year, 24, just for modeling purposes? Thank you. Yeah, we can. We can get them.

Gerald L. Morgan: Yeah, we can get them under construction now and get them into this year. So we're still approximately 30 between the three brands, and obviously, the pipeline for 25 is being worked hard too.

Peter Mokhlis Saleh: So I believe that we'll hit that number. We have a lot of confidence in it right now. Everything kind of is working well for us. So we'll stay right there for the moment.

Peter Mokhlis Saleh: Your next question comes from Peter Saleh with BTIG. Please go ahead.

Gerald L. Morgan: Great. Thanks for taking the question. Just maybe two quick ones for me.

Peter Mokhlis Saleh: On ZOSC, can you just remind us maybe what percentage of the sales are now going through that platform? And aside from maybe the table turns, which I am assuming that's benefiting you on table turns, what else are you learning about the customer given that so much of the sales are going through that platform? Any other data that you're able to collect, and what are you learning about the customer? And then I have a follow-up as well.

Gerald L. Morgan: Yeah, I mean, it's the pay at the table. So I believe approximately 80% of our guests use the roadhouse pay, as we call it, the pay at the table feature. I don't know, there's a lot to learn there other than it just helps when they're ready to go; they can swipe their cards and be on their way. So I think from that, it's more of a convenience factor. And it's, it's a transaction that allows them to leave when they're ready. And it's, it's obviously been very well liked and utilized by our guests.

Peter Mokhlis Saleh: And then, I think you guys mentioned that you're expecting commodity inflation to be higher in the, I guess, the second half of the year, you know, getting to that full 3% for the full year. Can you just give us a sense of how much of your basket is locked in for the second half and how much variability we have around that number?

Michael Bailen: Yeah, hey, Peter, it's...

Michael Bailen: Hey, Peter, it's Michael. Yeah, you know, like in similar quarters, we're not going to give a lot of detail on what is locked for competitive reasons. You know, at this point in time, we're not going to, you know, we have been having difficulty putting a lot of beef into a fixed price contract, both from our side seeing the volatility and the packers seeing the volatility. So hard to agree upon a fixed price.

Michael Bailen: We certainly have entered into supply contracts for most of the beef that we'll be using over the remainder of the year. So yeah, there is the potential for volatility in that inflation number as we move through the year, both higher or lower, if the market were to behave differently than we expect.

Sara Harkavy Senatore: Your next question comes from Sara Senatore with Bank of America. Please go ahead.

Michael Bailen: Your next question comes from Sara Senatore with Bank of America. Please go ahead.

Michael Bailen: Hi, thank you. I guess two questions. One, just on the mix and pricing the comp, could you just remind us how much price you have? I think you said last time we spoke it was like 5% price, so just trying to calculate the mix, it sounds like it's less than a percentage point headwind at this point.

Sara Harkavy Senatore: Hi, Thank you.

Michael Bailen: I guess two questions one on the on.

Michael Bailen: Next in pricing that the comp could you just remind us how much price you had I think you said last time, we spoke with like 5% price. So just trying to calculate the next it sounds like it's less than a percentage point headwind at this point.

Michael Bailen: Hey Sara, it's Michael. In the first quarter, we had 4.9% pricing, and you are correct, we had about 80 basis points of negative mix, but that did come down quite a bit in the first five weeks of our second quarter to only about 20 basis points of negative mix as we continued to have about 4.9% pricing in the menu for both the second quarter and the third quarter.

Michael Bailen: Yes, Sir it's Michael Yes in the first quarter, we had four 9%.

Michael Bailen: Pricing and you are correct, we had about 80 basis points of negative mix.

Michael Bailen: But that did come down quite a bit in the first five weeks of our second quarter to only about 20 basis points of negative mix as we continue to have about four 9% pricing in the menu for both the second quarter and the third quarter.

Gerald L. Morgan: Okay great that is that's very helpful and that's sort of the approach the question I have related to that is just you know as you think about again your business versus everybody else you know where everybody else is seeing like check management do you have a sense of again who you know what what's what's driving that is I know it's somewhat speculation but are you getting people who maybe are trading in from other concepts who you know relative value is still very good it's so good at Texas that it encourages them to you know attach more I'm just trying to understand the dynamics which seem to be running contrary to the rest of the industry in a good way

Michael Bailen: Okay, Great that is that's our alpine and that sort of that.

Gerald L. Morgan: The question I have related to that is just.

Gerald L. Morgan: As you think about again your business first as everybody else, we know where everybody else is saying like check management do you have a sense of again here you know what what what's driving that is I know, it's somewhat speculation, but are you getting people, who maybe are trading and from other concepts to relative value is still very good.

Gerald L. Morgan: So good at Texas that it encourages them to attach more and I'm just trying to understand the dynamics that seem to be running contrary to the rest of the industry in a good way.

Gerald L. Morgan: Well, thank you very much for that kindness. We believe that our offerings and the value that's built into our menu is really what is allowing people to be very happy when they do trade in from wherever. And our focus on our food, our service, and the experience that we provide with the value built into our menu is really what we see happening. I don't really see anything else in the mix to tell me anything different than to keep doing what we're doing, Legendary Food and Legendary Service, and keep making sure that we're making sure that guests have great experiences in all of our businesses. Well, certainly we're

Speaker Change: Well, thank you very much for that kindness.

Gerald L. Morgan: We believe that our offerings and the value that is built into our menu is really allowing people to be very happy when they do trade in from wherever and are focused on our food our service and the experience that we provide with the value built into our menu is really what we see happening I don't really see anything else in the <unk>.

Gerald L. Morgan: Mixed to tell me anything different than keep doing what we're doing legendary food and legendary service and keep making sure that guests have great experiences in all of our businesses.

Sara Harkavy Senatore: Well, certainly working for you. Thank you.

Speaker Change: Certainly working for you. Thank you.

Speaker Change: Thanks Sarah.

Dennis Geiger: Your next question comes from Dennis Geiger with UBS. Please go ahead.

Sara Harkavy Senatore: Your next question comes from Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Great Thanks, guys. Jerry, I was wondering if you could just talk a little more about looking ahead to later in the year and thinking about pricing. I know you spoke to it at a high level earlier, but anything philosophically there, given where traffic is, given you've underpriced competitors in recent years, but given cost inflation that you've seen over the years, any kind of high level as you look to that next pricing increase that you can share today or just how you're thinking about it, how the operators are thinking about it?

Dennis Geiger: Great. Thanks, guys. Jerry I'm wondering if you could just talk a little more looking ahead to later in the year and then thinking about pricing I know you spoke to it at a high level earlier, but anything philosophically there given given where traffic is giving you are under price competitors and in recent years, but given cost inflation that you've seen over the year is there any kind of.

Dennis Geiger: High level as you.

Dennis Geiger: Look to that next pricing increase that you can share today or just how youre thinking about it how the operators are thinking about it.

Gerald L. Morgan: Well, Dennis, we'll follow the same procedure we always have. We were just five, six weeks into this last round.

Jerry: Well Dennis will.

Jerry: We will follow the same procedure. We always have we were just $5 six weeks into this last round, we will gather our feedback from all of our managing partners and our market partners probably in August September and talk about what we would or wouldn't do in October so still a little early we will take the approach of being conservative.

Gerald L. Morgan: We'll see what happens in the industry going forward and then we'll absolutely partner up with our operators and decide what is best for each and every one of their store or their market or the region.

Gerald L. Morgan: We'll gather feedback from all of our managing partners and our market partners probably in August and September and talk about what we would or wouldn't do in October. So, still a little early, we'll take the approach of being conservative. We'll see what happens in the industry going forward, and then we'll absolutely partner up with our operators and decide what is best for each and every one of their stores or their market or their region. And then, as a company, we'll help them make that decision that will also be very good for our consumers and our shareholders.

Gerald L. Morgan: And then as a company we will help them make that decision that will also be very good for our consumer and our shareholder.

Dennis Geiger: Makes good sense, Chair. Just one more, maybe, if I could.

Speaker Change: Makes good sense Gerry just one more maybe if I could just on on staffing hours as it relates to that traffic. We've seen some some really really good relationship there and in recent quarters.

Chris Monroe: Just on staffing hours, as it relates to that traffic, you know, we've seen some really good relationships there in recent quarters. And anything additional on the go forward there, as we think about that relationship relative to, you know, last year, kind of recent quarters, a good way to think about the go forward, would you say? Thank you.

Chris Monroe: Anything additional on the on the go forward there as we think about that relationship relative to last year kind of recent quarters, a good way to think about the go forward would you say thank you.

Chris Monroe: Hey, Dennis, it's Chris. Thanks for that question. I'll start, and Michael can clean up anything I mess up here.

Chris Monroe: Hey, Dennis it's Chris Thanks for that question I'll start and Michael can clean up anything I mess up here, but I think that we.

Chris Monroe: We've talked about having a historical average of 50% growth rate.

Chris Monroe: Our store of our hours.

Chris Monroe: Hours growth to our traffic growth trying to keep it around 50% level and in the fourth quarter of last year last year, you'll remember that we hit that and so we actually came in a well with a number even better than that in the first quarter something more like 25%. So we.

Chris Monroe: We'd like to continue that we have now I don't know that we can continue the 25%. Our goal is around 50, but I think that there is there is definitely a lot of work that's been done to improve our labor situation and it's really thanks to our operators and their hiring and their staffing and making sure that their teams are working well together.

Chris Monroe: And now we're delivering these results over the last at least the last two quarters, we are definitely back in the zone, yes.

Chris Monroe: But I think that we're, you know, we've talked about having a historical average of 50% growth rate for our store in terms of our hours, hours growth to our traffic growth, trying to keep it around a 50% level. And in the fourth quarter of last year, you'll remember that we hit that. And so we actually came in well with the number, you know, even back in the zone.

Michael Bailen: Yeah, Chris, I'll echo what you said there. I think, you know, last year, all that hard work of the operators to get their stores staffed the way they needed to be is now paying off in that, you know, percentage for the first quarter. And, you know, we'll see where the next several quarters come out, but it certainly feels like there is strong potential for that to remain at or below that 15 percent level over the next several quarters.

Michael Bailen: Yes, Chris I'll Echo what you said there I think last year all of that hard work of the operators to get their store staffed the way they needed to be.

Michael Bailen: Is now paying off and in that percentage for the first quarter and we'll see where the next several quarters come out but there certainly are.

Michael Bailen: It feels like there is strong potential for that to remain at or below that 50% level over over the next several quarters.

Dennis Geiger: Good stuff. Congratulations, guys.

Speaker Change: Good stuff congrats guys.

Speaker Change: Thank you.

Jeffrey Daniel Farmer: Your next question comes from Jeff Farmer with Gordon Haskett. Please go ahead. Great, thank you.

Dennis Geiger: Your next question comes from Jeff Farmer with Gordon Haskett. Please go ahead, great. Thank you have a quick follow up on commodities and then just one more on capital investment so on commodities.

Jeffrey Daniel Farmer: Great, thank you. I have a quick follow-up on commodities and then just one more on capital investment. On commodities, I understand there's some black box nature to what's going on, but based on what you know now, can you share expected quarterly commodity inflation over the next couple of quarters?

Jeffrey Daniel Farmer: I understand there's some black box nature of what's going on but based on what you know now can you share expected quarterly commodity inflation over the next couple of quarters.

Michael Bailen: Hey Jeff, it's Michael.

Jeffrey Daniel Farmer: Yeah, Hey, Jeff, it's Michael I'm, not going to give specific numbers, but.

Jeff: I'll help guide you all the expectation is the second quarter.

Michael Bailen: I'm not going to get specific numbers, but I'll help guide you all. The expectation is that the second quarter will be above where we were in the first quarter, but probably still below the full-year average. And then Q3 and Q4 are looking fairly similar and are going to be a little bit above that 3% full-year number.

Michael Bailen: We'll be above where we were in the first quarter, but probably still below the full year average.

Michael Bailen: And then Q3 and Q4 are looking fairly similar and you are going to be a little bit above.

Michael Bailen: That 3% full year number.

Jeffrey Daniel Farmer: Okay, that's helpful. And then on average capital investment for a new roadhouse, at least according to the CAO, it's expected to be roughly $8 million in 2024, which is flat versus last year, but it looks like it's up more than 40% versus 2019. I appreciate that a lot of your peers are in the same sort of inflationary boat there, but do you see any opportunities to reduce that $8 million cost for a new roadhouse?

Jeffrey Daniel Farmer: At least according to the K, it's expected to be roughly $8 million in 2024, which is flat versus last year, but it looks like it's up more than 40% versus 19.

Jeffrey Daniel Farmer: I appreciate that a lot of your peers are in the same sort of inflationary both there, but do you see any opportunities to reduce that $8 million cost for our new roadhouse.

Gerald L. Morgan: I think we're going to be pretty close to it. We have expanded the new store openings, I believe, at the beginning of 2023. So we've got to bear that expense. We feel really good about the size of our building, the expanded coolers, just the more room to be able to execute in our back of the house. And so it's probably, I would assume right now, if I'm looking forward, we'll probably be very close to that. I don't see a lot of change.

Jeffrey Daniel Farmer: I think we're going to be pretty close to it we have expanded the new store openings I believe at the beginning of.

Speaker Change: Thank you.

Lauren Danielle Silberman: Your next question comes from Lauren Silberman with Deutsche Bank. Please go ahead.

Gerald L. Morgan: Your next question comes from Lauren Silberman with Deutsche Bank. Please go ahead.

Lauren Danielle Silberman: Thanks a lot and congrats on a great quarter. A few questions. Thanks, Lauren.

Lauren Danielle Silberman: Thanks, a lot and congrats on a great quarter.

Lauren Danielle Silberman: Two questions Lauren.

Gerald L. Morgan: It looked like off-premise grew at a faster rate than on-premise for the first time in a few years. Was that a function of the weather earlier in the quarter? Is there anything else you're seeing, and can you talk about how that trended during the quarter?

Lauren Danielle Silberman: It looks like off premise grew at a faster rate than on premise for the first time in a few years was that a function of weather earlier in the quarter is there anything else, you're seeing and can you talk about how that trended during the quarter.

Gerald L. Morgan: You know, I think it's just about our ability to execute in our dining rooms and, again, getting used to the adjustment of what our take-out volume is, and that's the average volume. We obviously have stores that are doing much higher than that, so I think it's really about our operators settling in and running a full house and being able to execute our off-premise and our takeaway processes of how we make that experience for the takeaway, our food.

Speaker Change: I think it just about our ability to execute on our dining rooms in and again getting used to the adjustment of what our to go volume is and Thats. The average volume. We obviously have stores that are doing much higher than that so.

Gerald L. Morgan: I think it's really about our operators settling in and running a full house and being able to execute our off premise and our to go processes of how we make that experience for the <unk>. Our food, we're putting a lot more effort into executing our to go food at a higher level and I think it's paying off for us as well as getting <unk>.

Gerald L. Morgan: We're putting a lot more effort into executing our take-away food at a higher level, and I think it's paying off for us, as well as getting settled into full dining rooms for longer hours of the day. It's a good problem to have.

Gerald L. Morgan: Settled into full dining rooms for longer hours of the day so.

Gerald L. Morgan: A good problem to have Laura this is Michael just to add on it was actually.

Michael Bailen: Yeah, and Lauren, this is Michael. Just to add on, it was actually, you know, not in the first period during that colder or more winter weather. We saw stronger growth in gas and the sales of the to-go business in the second and third periods of our first quarter. So, strong throughout, but it goes to everything Jerry talked about. We've made it, the ease of that to-go process, we really made that as easy as possible, and the guests, again, continue to reward us for that and use that to-go on a regular basis.

Michael Bailen: Not in the first first purion during <unk>.

Michael Bailen: <unk> or more winter weather.

Michael Bailen: We saw the stronger.

Speaker Change: Growth in the in the gas and the sales.

Michael Bailen: The to go business in the second and third periods of our first quarter. So strong throughout <unk> that goes to everything Jerry talked about just.

Michael Bailen: We've made it.

Michael Bailen: Ease of that to go process.

Michael Bailen: We've really made it as easy as possible and the guests again continues to reward us for that and using that.

Michael Bailen: To go on a regular basis.

Lauren Danielle Silberman: That's awesome. And then just a quick one for modeling purposes.

Speaker Change: That's awesome and then just a quick one for modeling purposes, you talked about the quarter to date in April are running 93, which is incredible can you remind us if there is anything we should be considering in terms of monthly compares particularly as we think about the cadence and then any comments that you have on region or regional differences. Thanks, so much.

Michael Bailen: You talked about the quarter to date in April running 9-3, which is incredible. Can you just remind us if there's anything we should be considering in terms of monthly comparisons for 2Q as we think about the cadence and then any comments that you have on regions or regional differences? Thanks so much. Your Honor, it's my...

Michael Bailen: Yeah, Lauren, it's Michael again. Nothing really that I would call out, you know, to be careful about over the coming months. I mean, again, typically, our, you know, our May period is, you know, tends to be busier than our April. And then, you know, June can look fairly similar to our April period. So, you know, nothing I would call out there. And as far as the trends that we've seen across the region, certainly the first quarter, it was pretty strong across the country. Maybe the South and, you know, the Southeast and Southwest are a little bit stronger, you know, from a comp standpoint, but not dramatically different. So, it was really a solid quarter, you know, nationwide and, you know, across all restaurants.

Lauren Danielle Silberman: Yeah, Lauren it's Michael again, nothing really that I would call out.

Michael Bailen: Yes, it should be careful about over that over the coming months and again typically are our may period is tends to be busier than our April.

Michael Bailen: And then Jim can look fairly similar.

Michael Bailen: To our to our April period so.

Michael Bailen: Cross region during the first quarter it was pretty strong across the country, maybe the south end.

Michael Bailen: Southeast southwest are a little bit.

Michael Bailen: From a comp standpoint, but not dramatically different so it was really a solid quarter nationwide.

Michael Bailen: <unk>.

Speaker Change: Great. Thanks, so much.

Andrew Strelzik: Your next question comes from Andrew Strelzik with BMO Capital Markets. Please go ahead.

Michael Bailen: Your next question comes from Andrew <unk> with BMO capital markets. Please go ahead.

Andrew Strelzik: Hey, good afternoon. Thanks for taking the time to ask the question. A two-parter on new store performance For me, I noticed in the release for the Texas Roadhouse stores open less than six months, there was an 8% decline in average weekly sales. And that's the third quarter in a row of declines. And those have kind of accelerated over the last few years. So just curious, you know, what is driving that. Any color behind that would be great. And then just more broadly. You know, color on on new store performance would be great. Thank you very much.

Andrew Strelzik: Hey, good afternoon, thanks for taking the question.

Andrew Strelzik: Two parter on new store performance for me.

Andrew Strelzik: Over that period. So just curious what is driving that any color.

Andrew Strelzik: And that would be great and then just more broadly.

Andrew Strelzik: Color on new store performance would be great. Thank you very much.

Michael Bailen: Hey Andrew, it's Michael. Thanks for the question. Yeah, that's something that comes across in the numbers. There's some timing and regional impact in there. When you go back to the first quarter of last year, where I believe there were 15 new stores, three of those were in California. Those are high-volume restaurants. We're going to do some of our highest sales in the country out there, and that's really pushing that number higher. So I would say the anomaly, if you want to call it anything, was how high that number had gotten in that first quarter.

Andrew Strelzik: Hey, Andrew it's Michael Thanks for the question, Yes, that's something that comes across in the numbers. There. There is some timing and regional impact in there. When you go back to the first quarter of last year, where I believe it was 15 new stores three of those were in California.

Michael Bailen: Our high volume restaurants.

Michael Bailen: <unk>.

Michael Bailen: Now, you know, we don't have those California stores in that 25 store number for the first quarter. We're very happy, you know, let me emphasize, very happy with the performance of our new stores and how they are performing. You know, we don't expect every restaurant out of the gate to be doing $150,000, $160,000 per week in sales. But as we look across all of those, there is nothing that is concerning us about their performance or our ability to continue to open more stores. There's just always going to be a little bit of a timing issue and a region, you know, the states that they may open.

Michael Bailen: Sales.

Michael Bailen: But as we look across all of those.

Michael Bailen: The states that they may have opened in.

Andrew Strelzik: All right, that makes sense. Thanks a lot.

James Ronald Salera: Your next question comes from Jim Salera with Stevens. Please go ahead.

Andrew Strelzik: Your next question comes from Jim <unk> with Stephens. Please go ahead.

Gerald L. Morgan: Yes, thanks for taking our question. I wanted to ask if we could get an update on the Butcher House Initiative and, maybe, at a high level, you know, do you really think of it as a way to build brand awareness or more of a frequency increaser or a way to get more customer data? And maybe one tag on to that as well. Does it help you guys with new site selection as you can start to get some, you know, frequency and data information on where people are ordering from?

James Ronald Salera: Yes, thanks for taking my question.

Gerald L. Morgan: Wanted to ask if we could get an update on the Butcher house initiatives.

Gerald L. Morgan: Maybe at a high level do you really think of it as a way to.

Gerald L. Morgan: Brand awareness or more of a frequency increaser or a way to get more customer data.

Gerald L. Morgan: Okay.

Gerald L. Morgan: Um, no. I think mostly what any retail segment of our business is about brand awareness, and we've done some really creative things. We've had a lot of fun with it, and I think that's the real focus of our retail is just really brand awareness and having some fun. You know, we're continuing to look at every aspect of the business and see what we can do with it in the future. But right now, we're uncertain.

Speaker Change: No I think mostly what any of that retail segment of our business is about brand awareness and we've done some really creative things we've had a lot of fun with it and I think that's the real focus on our retail is just really brand awareness and having some fun.

James Ronald Salera: Okay, and then, if I think about, you know, the performance of your brand, obviously, the foot traffic has been very strong, which is divergence from a lot of your peers. It seems like, is there a scenario where the macro gets tougher, and the value proposition at Texas Roadhouse is such that you continue to source more people from peers? In a way, it actually makes your trends more resilient, given the value positioning?

Speaker Change: Okay, and then if I think about the performance of your brand obviously the foot traffic has been very strong which is divergence from a lot of your peers.

Gerald L. Morgan: Well, we certainly believe that, and we continue to do what we do. But we can't really control what they do with.

Gerald L. Morgan: We believe in the values that are built into our menu. We continue to try to be very conservative and take care of our business, but take care of our guests and really understand the dynamic of where we're at today. And so I just believe that we focus on our food being smoking hot. Picture perfect recipe, right?

Gerald L. Morgan: I believe that we focus on our food being smoking Hot picture perfect recipe right fast fun and friendly in our dining rooms, it's rewarding us in all three of our brands have excellent food that we're proud of we loved the hustle to help people and serve in and Thats what gives us the advantage I believe in and we're really proud of everything that our operators are doing.

Gerald L. Morgan: Fast, fun, and friendly in our dining rooms. It's rewarding us, and all three of our brands have excellent food that we're proud of. We love to hustle to help people and serve. And that's what gives us the advantage, I believe. And we're really proud of everything that our operators are doing out there. And they play this game at a very high level.

Gerald L. Morgan: Out there and they play this game in a very high level.

James Ronald Salera: Great. Thanks, guys. I'll hop back into the queue. Your next question comes from Gregory Francfort with Guggenheim Securities. Please go ahead. Hey, thanks. I appreciate the update on Bubba's and Jagger's. I'm just curious how you think.

Gregory Ryan Francfort: Your next question comes from Gregory Francfort with Guggenheim Securities. Please go ahead. Hey, hey, thanks.

Gregory Ryan Francfort: Your next question comes from Gregory Frankfurt with Guggenheim Securities. Please go ahead.

Gregory Ryan Francfort: Hey, thanks.

Gregory Ryan Francfort: I appreciate the update on bubbles in jaggers.

Gregory Ryan Francfort: Just curious how youre thinking about balancing the capital priorities across the three brands in the next couple of years and then for Jaggers, maybe specifically.

Gregory Ryan Francfort: It seems like Youre accelerating the franchise development.

Gerald L. Morgan: Thank you for the question. I believe that we're going to stay focused on Roadhouse and that mid-20 growth. Bubba's, we've talked a little bit about how we're building the pipeline, and it is absolutely our second brand, and we're very invested and excited about what it's doing. You know, Jagger's is exciting for me in a lot of different ways. We've got eight company stores and three franchise stores, and we've got people interested. The food is incredible.

Gregory Ryan Francfort: Thank you for the question I believe that we're going to stay focused on roadhouse and that mid 'twenty growth Barber as we've talked a little bit about how we're building the pipeline and it is absolutely our our second brand and we're very invested in and excited about what it's doing.

Gerald L. Morgan: <unk>.

Gerald L. Morgan: Our service model is really working from a speed of service standpoint. So, we are building our very first international restaurant with Jagger's. So, the thing about franchising is you can go a little bit faster, and you actually learn a lot. We're really good at casual dining, and we really got our heads around Jagger's and what it needs to be highly successful. We wanted to bring some partners in that could help us grow, and that's what we're doing with our franchise partners. We're learning.

Gerald L. Morgan: And you actually learn a lot and we're really good at casual dine and to really get our head around jaggers in what it needs to be highly successful we wanted to bring some partners and that can help us grow and that's what we're doing with our franchise partners. We're learning we're partnering up it's going to help us grow on the company side and on the franchise side.

Gerald L. Morgan: We're partnering up. It's going to help us grow on the company side and on the franchise side. It's hard to tell you what percentage right now, but we're definitely leaning into both and learning a lot. We really appreciate our franchisees' interest in the Jagger's concept.

Gerald L. Morgan: It's hard to tell you what percentage right now going forward, but we're definitely leaning into both and learning a lot and we really appreciate our our franchise interest in the jaggers concept.

Speaker Change: Thank you.

James Jon Sanderson: Your next question comes from Jim Sanderson with North Coast Research. Please go ahead.

Gerald L. Morgan: Your next question comes from Jim Sanderson with Northcoast Research. Please go ahead.

James Jon Sanderson: Hey, thanks for the question. I wanted to go back to a little bit more insight on Bubbas 33. I think the comp was a little bit weaker than Texas Roadhouse, but can you walk through the same store sales breakdown traffic price mix for Bubbas?

James Jon Sanderson: Hey, Thanks for the question I wanted to go back to a little bit more.

James Jon Sanderson: Insight on Bubbas 33, I think the comp was a little bit weaker than Texas Roadhouse, but can you walk through the.

James Jon Sanderson: <unk>.

James Jon Sanderson: Same store sales breakdown traffic price mix for both of us.

Michael Bailen: Yeah, hey, Jim, it's Michael. We actually don't, you know, get into that detail as much, or at least not at this time, into that breakdown. I mean, but yeah, you're correct. It's not, it did not compete at the same level that Roadhouse, you know, you know, did, but, you know, you'll, again, Roadhouse is kind of, you know, you know, different than everyone else out there. But again, we are, and with only 45 restaurants, you have a handful that are not growing, it can skew that number. But overall, we saw some, you know, some great performance at Bubba's early this year, and we are very encouraged by, you know, the margins that we're seeing there and what that business can deliver going forward.

James Jon Sanderson: Hey, Jim It's Michael we actually don't get into that.

Michael Bailen: Detailed as much or at least not at this time into that breakdown.

Michael Bailen: Yes, Youre correct its not it did not comp to the same level of roadhouse.

Michael Bailen: Good but.

Michael Bailen: Again roadhouse is kind of a.

Michael Bailen: <unk>.

Michael Bailen: Different than everyone else out there, but yes.

Michael Bailen: Yes, we are and with 145 restaurants, you have a handful or not.

Michael Bailen: Not growing it can skew that number but overall, we saw some some great performance.

Michael Bailen: Bob as early this year and are very encouraged by.

Michael Bailen: The margins that we're seeing there and what that business can deliver going forward yes.

Gerald L. Morgan: Yeah, and I'll add on just a little bit about that. We're really, if we just look at Bubba's and not compare it to Roadhouse, we're very, very happy with the performance, not only in our sales, we're attacking sales, we're controlling our costs, we've done some things in the building to help us long term. And we've done a little bit of menu engineering; we've added a combo appetizer, which has really been a success, and reorganized a little bit of how we do wings.

Speaker Change: And I'll add on just a little bit on that were really if we just look at bubbas did not compare to roadhouse, we're very very happy with the performance not only on our sales. We're attacking sales were in controlling our costs. We've done some things in the building to help us long term and we've done a little bit of menu engineering, we've added a combo appetizer.

Gerald L. Morgan: <unk>, which has really been a success and reorganized a little bit on how do we do wings and we've got a new sandwich were excited about to be offering out there and so there's a lot of momentum some as I look at the first quarter in Bubbas 33. It tells me we're in the right business Burgers and Pizza is in Colbert in rock'n'roll, we're going to be just fine.

Gerald L. Morgan: And we've got a new sandwich we're excited about being offering out there. And so there's a lot of momentum. As I look at the first quarter in Bubba's 33, it tells me we're in the right business; burgers and pizzas and cold beer and rock and roll. We're going to be just fine.

James Jon Sanderson: Okay, can I assume from that that you had positive traffic in 2024 above a certain level? Is that fair?

Speaker Change: Okay can I assume from that that you had positive traffic in 2024 above.

Speaker Change: Is that fair.

Michael Bailen: Yeah, I think that's fair to say.

Speaker Change: Yes, I think Thats fair to say.

James Jon Sanderson: All right. I just want to ask a follow-up question also on same-store sales in April. Is there any issue related to the Easter calendar shift that impacted performance?

Speaker Change: Alright, I just wanted to ask a follow up question also on same store sales in April is there any issue related to the Easter calendar shift.

James Jon Sanderson: That impacted performance.

Michael Bailen: With Easter, no. Easter still fell within our April period, so there was no impact from Easter.

James Jon Sanderson: With Easter now Easter, we're still fell within our April period, So no impact from Easter no shift between okay very very good and then last question for me.

Gerald L. Morgan: No shift between, okay, very, very good. And then the last question for me, how does Texas Roadhouse usually do on Mother's Day? Is that an important event or not so much?

Gerald L. Morgan: How does this Texas roadhouse, usually do.

Gerald L. Morgan: For mother's day is that an important event or not so much.

Gerald L. Morgan: Yeah, it's an incredible event. We, you know, it's all a part of Valentine's Day, Mother's Day, Father's Day. We kind of call it the Triple Crown. And speaking of that, the first leg of the Triple Crown is here in Kentucky for the next couple of days. We're excited about that. But yeah, Mother's Day is huge for Texas Roadhouse and the restaurant industry overall. And we have some dominant players out there. We're excited about Mother's Day and Father's Day. And Jim?

Speaker Change: Yeah, It's an incredible event, we you know we have.

Gerald L. Morgan: It's part of Valentine's day mother's day father's day, we kind of call. It the triple Crown and then speaking of that the first leg of the Triple Crown is hearing Kentucky over the next couple of days and we're excited about that but yes mother's day is huge for Texas Roadhouse and the restaurant industry overall, and we have some dominant players out there we're excited about mother's day.

Chris Monroe: And Jim, this is Chris. I'll just throw in that there's also Mexican Mother's Day that is celebrated as well. We have that as a part of our repertoire as well.

Gerald L. Morgan: And fathers day and Jim This is Chris I'll just throw in there is also Mexican mother's day that a celebrated as well so we have that we.

Chris Monroe: We have that as a part of our repertoire as well.

Jake Rowland Bartlett: All right, thanks. I'll pass it on. Thank you very much.

James Jon Sanderson: All right, thanks.

Jim: Alright, Thanks, I'll pass it on thank you very much.

Speaker Change: Thank you.

Jake Rowland Bartlett: Your next question comes from Jake Bartlett with Truist Securities. Please go ahead.

James Jon Sanderson: Your next question comes from Jake Bartlett with Truth Securities. Please go ahead.

Jake Rowland Bartlett: Great, thanks for taking the question. You know, my first question is just a clarification or kind of a modeling question, but is, do you expect to open, you know, company-owned Jaggers in the 30 company-owned stores you expect, I think you said four, Bubba's, any Jaggers in there? And then the real question, the bigger question, is about G&A. Anything we should think about in the second quarter?

Jake Rowland Bartlett: Great. Thanks for taking the question.

Jake Rowland Bartlett: First is just a clarification or a kind of a modeling question, but do you expect to open company owned Jaggers of this 30 company owned stores do you expect I think you said for Bubba is any jaggers in there and then the real question. The bigger question is about G&A.

Jake Rowland Bartlett: Anything we should think about in the second quarter.

Jake Rowland Bartlett: I know you typically don't disclose how much exactly we spent on the conference, but if there's any variance anything we should be aware of as we try to model G&A.

Gerald L. Morgan: I know you typically don't disclose how much exactly you spent on the conference, but if there's any variance, anything we should be aware of as we try to model G&A? You know, as I kind of try to make the adjustments in the first quarter, I get about 10 basis points of leverage in the first quarter, you know, adjusting for the one time last year. Is that the kind of leverage you expect, you know, going forward just for the year as a whole?

Jake Rowland Bartlett: As I kind of tried to make the adjustments in the first quarter I get about 10 basis points of leverage in the first quarter adjusting for the one time last year is that the kind of leverage you expect going forward just for the year as a whole.

Speaker Change: Thank you.

Michael Bailen: I'll let Michael answer that second part. On Jagger's growth, yeah, we only have one, maybe two this year, as far as we can see, but I'm building the pipeline. I do expect that to grow in the future. We're working on some deals right now that are looking really positive. I believe we had three last year, and so we'll continue to look at the ramping up on that because it is now hitting the goals and the targets that we're looking for.

Speaker Change: I'll, let Michael answer that second part on the Jaggers growth, yes, we only have one maybe two this year as far as we can look at but on building the pipeline I do expect that to grow in the future. We're working on some deals right now that are looking really positive.

Michael Bailen: Believe we had three last year and so we'll continue to look at the ramp up on that because it is it is now hitting the goals and targets that we're looking for.

Chris Monroe: And this is Michael on the G&A question. You know, in the first quarter, yeah, we did, you know, on an unadjusted basis, we did get a little bit of leverage. I think the next several quarters, again, some of it will depend upon your assumptions for top line revenue, but I do think it may be a little bit tougher for us to get leverage on G&A in the second and third quarter when you, you know, when you think about the, some of the investments we're making in, in, you know, you know, roadhouse technology and some of the other things that we're doing internally, we're definitely, you know, investing in the business and this being a 53-week year for us, which should, you know, result in, you know, strong, you know, could continue to result in strong performance.

Michael Bailen: And this is Michael on the G&A question.

Chris Monroe: In the first quarter, yes.

Michael Bailen: Unadjusted basis, we did get a little bit of leverage.

Chris Monroe: The next several quarters.

Chris Monroe: Again, some of it will depend upon your assumptions for for topline revenue, but I do think it may be a little bit tougher for us to get leverage on G&A in the second and third quarter when you.

Chris Monroe: When you think about the some of the investments we're making are in.

Chris Monroe: Roadhouse technology in some of the other things that we're doing internally we're definitely.

Chris Monroe: Investing in the business and this being a 53 week year for us, which should result in strong.

Chris Monroe: Could continue to result in strong performance will probably be taken some extra accruals for bonuses.

Chris Monroe: We'll probably be taking some extra accruals for bonuses and compensation during the year. So, I would expect you could probably see G&A for the year being in a flattish range, but the second and third quarters could be a little bit more difficult to get some leverage.

Michael Bailen: Compensation during the year. So I would expect you could probably see G&A for the year being in a flattish range, but second room third quarters could be a little bit more difficult to get some leverage and I'll just add to that in the back half of the year it could be impacted by the change in the timing of our equity grants that we talked about and that is probably what you were.

Jake Rowland Bartlett: And I'll just add to that, the back half of the year could be impacted by the change in the timing of our equity grants that we talked about, and that is probably what you were referring to, at least in part, in the second and third quarter.

Jake Rowland Bartlett: Referring to an at least in part they are in the second and third quarter.

Michael Bailen: Great. And if I could sneak just one quick one in,

Speaker Change: Great and then if I could sneak just one quick one in on the.

Michael Bailen: Extra operating week impact on EPS, it's greater than that.

Speaker Change: The proportion of the week.

Michael Bailen: I think in 2019, there was a 60 basis point benefit on the restaurant level margins from the extra operating week is that.

Michael Bailen: Any reason to think that would be different this time around.

Jake Rowland Bartlett: On the Extra Operating Week, in fact, on EPS, it's greater than just the proportion of the week. I think in 2019, there was a 60 basis points benefit on the restaurant level margins from the Extra Operating Week. Is that kind of, you know, any reason to think that would be different this time around? Yeah, I mean, I think so.

Michael Bailen: Yeah, I mean, in the prepared remarks, we said we're expecting about a 4% benefit to EPS from that extra week, and whether that's 60 basis points or somewhere, it would obviously benefit some parts of margin, it's going to benefit some items outside of margin, but we estimate about a 4% benefit to EPS.

Speaker Change: Yes, I mean, I think in the prepared remarks, we said, we're expecting about 4% benefit to EPS from that extra week, and whether that's 60 basis points or somewhere.

Michael Bailen: Obviously benefits some parts of margin, it's going to benefit some items outside of margin, but we estimated about a 4% benefit to EPS.

Speaker Change: Great. Thank you very much.

Brian Michael Vaccaro: Your next question comes from Brian Vaccaro with Raymond James. Please go ahead.

Michael Bailen: Your next question comes from Brian Vaccaro with Raymond James. Please go ahead.

Brian Michael Vaccaro: Hi, thanks, and good evening. Just regarding the commodity outlook, I'm curious to just get your perspective on the supply and demand dynamics in the beef market, just what you might be hearing that's driving the near-term favorability, and then kind of what informs your view that beef costs could move higher later in the year, and then is there anything worth noting on the non-beef side, and maybe level set what level of inflation you're expecting on that other 50% of your basket?

Brian Michael Vaccaro: Maybe level set what level of inflation, you're expecting on that other 50% of your basket.

Michael Bailen: Hey, Brian, it's Michael. Maybe I'll do the easier part first.

Michael Bailen: Another half of the basket, you know, flat to deflationary, really nothing to call out or speak of there. And, you know, similar, it's really continued to perform as we would expect it. So, you know, items being flat to deflationary and offsetting a little bit of the beef inflation, the supply has been a little bit better than what, you know, industry-wide than what was anticipated.

Michael Bailen: Flat to deflationary really nothing to call out or speak of there similar it's really continued to perform as we would expected so being.

Michael Bailen: Items being flat to deflationary.

Michael Bailen: And offsetting.

Michael Bailen: Little bit of the beef inflation.

Michael Bailen: Industry wide than what was anticipated so that certainly helped beef in the first.

Michael Bailen: So that certainly helped beef in the first part of the year, and we think it will continue to help it over the next several months. And then retail demand has probably been a little bit weaker, or what they've been marketing has probably led to a benefit for us. So I think we've seen less marketing of ribeyes and maybe more marketing of strips by the grocery stores. And obviously, a ribeye is a more important item for us.

Michael Bailen: As part of the year and where we think we will continue to help it over the next several months and then the retail demand has been probably a little bit weaker or what what they have been marketing.

Michael Bailen: Maybe more marketing of.

Michael Bailen: So things like that have led to some of that benefit that we've seen. And our expectation is that, you know, things are going to catch up, and that supply tightening will have a bigger financial impact on us in the industry as we move into the back half of the year.

Michael Bailen: That we've seen and our expectation is that.

Michael Bailen: Things are going to catch up and that supply tightening.

Michael Bailen: We will have a bigger financial impact on us in the industry as we move into the back half of the year.

Brian Michael Vaccaro: All right, thank you for that. And then just one quick follow up on Bubba's, if I could.

Speaker Change: Alright. Thank you for that and then just one quick follow up on Bubba is if I could not understand the strong sales that you are seeing and I think store margins at least in 2023 or a little bit below 14% is if my notes are right I guess I'm, just curious where would you like to see that over time as <unk>.

Brian Michael Vaccaro: I understand the strong sales that you're seeing, and I think store margins, at least in 2023, were a little bit below 14%, if my notes are right. I guess I'm just curious, where would you like to see that over time, as part of your unit economic model? And then what's the path towards driving higher margins at the Bubba's brand?

Brian Michael Vaccaro: Thanks very much.

Speaker Change: <unk> has actually seen quite a bit of improvement or early this year and I think youll see that youll.

Brian Michael Vaccaro: Youll see that in some of our.

Brian Michael Vaccaro: Documents that will get filed in the coming days.

Brian Michael Vaccaro: So I think a margin again in that 17% to 18% range for for a Barber is kind of what we're looking for just like what we are looking for on the roadhouse side.

Michael Bailen: Yeah, I mean, Bubba's has actually seen quite a bit of improvement early this year, and I think you'll see that in some of our documents that will get filed in the coming days. You know, so I think a margin, again, in that 17 to 18% range for Bubba's is kind of what we're looking for, just like, you know, what we're looking for on the roadhouse side. And, you know, again, that Bubba's team has been working hard and has made great strides, and I think you're going to see the fruit of that labor coming through here. Yeah, and I'll just add to that, you know, what you're seeing.

Michael Bailen: Great strides and I think youre going to see.

Michael Bailen: The fruit of that labor coming coming through here and I'll, just add to that what youre seeing is.

Gerald L. Morgan: Yeah, and I'll just add to that, and we're recognizing it here today with Vanessa here with us, but you have local Bubba's that are doing fantastic work with their local store marketing in places like Albuquerque and others where the sales are growing, and that's really what it's going to take. And again, to Michael's earlier point, there are only 45 Bubbas out there, and they're working really hard on expanding their sales, and now that's beginning to come through. And I think that Michael's comment about the 17 to 18 percent makes a lot of sense.

Gerald L. Morgan: We're recognizing adhere today with Vanessa here with us, but you have local bubbles that are doing fantastic work and with their local store marketing.

Gerald L. Morgan: In places like Albuquerque, and others, where the sales are growing and that's really what it's going to take and again to Michael's earlier point, there's only 45 Bubba is out there and they're working really hard on expanding their sales and now thats beginning to come through and I think that that that Michael's comment about the 17% to 18% makes a lot of sense.

Gerald L. Morgan: Yes.

Speaker Change: Very helpful. Thank you.

Gerald L. Morgan: I see no further questions at this time, so I will now turn the call back to Jerry Morgan for any closing remarks.

Gerald L. Morgan: Seeing no further questions at this time I will now turn the call back to Gerry Morgan for any closing remarks.

Gerald L. Morgan: I just wanted to close and say thank you all very much for your support and time. And I know here in our hometown of Louisville, Kentucky, where we host the Kentucky Derby, it's going to be a fantastic weekend. Hope you all have a great one. Let's go.

Gerald L. Morgan: I just wanted to close and say thank you all very much for your support and time and I know here in our hometown of Louisville, Kentucky, hoping hosting the Kentucky Derby is going to be a fantastic weekend hope you all have a great one let's go.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: [music].

Operator: Yes.

Operator: Okay.

Operator: [music].

Operator: Okay.

Speaker Change: Thank you.