Q1 2025 Texas Roadhouse Inc Earnings Call
Good evening and welcome to the Texas Roadhouse first quarter earnings Conference call. Today's call is being recorded all participants are now in a listen only mode. After the Speakers' remarks, there will be a question and answer session at that time, if you'd like to ask a question. Please press Star then the number one.
One on your telephone keypad.
Should anyone need assistance at any time during the conference. Please press star zero and an operator will assist you.
Speaker Change: I would now like to introduce Michael Balan head of Investor Relations for Texas Roadhouse, you May begin your conference.
Michael Balan: Thank you Kayla and good evening.
Michael Balan: By now you should have access to our earnings release for the first quarter ended April one 2025. It may also be found on our website at Texas Roadhouse Dot com in the investors section I.
Michael Balan: 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 Balan: 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 release.
Gerry Morgan: On the call with me today is Gerry Morgan, Chief Executive Officer of Texas, Roadhouse, and Christopher <unk>, Our Chief Financial Officer.
Gerry Morgan: Following the prepared remarks, we will be available to answer your questions.
Gerry Morgan: In order to accommodate everyone that would like to ask a question could everyone. Please limit yourself to one question now I would like to turn the call over to Gerry Thanks, Michael and good evening, everyone. We recently returned from our annual managing partner Conference, where we celebrated the performance of our restaurants and recognize the.
Gerry Morgan: Of our top operators spending time surrounded by our partners leaves me inspired and energized by the passion and enthusiasm they have for operating great restaurants.
Gerry Morgan: over $1.4 billion of revenue and same-store sales increase 3.5% including positive traffic growth.
Gerry Morgan: After a somewhat mixed start to the year, our top line trends have returned to more normalized levels in March, April and May. In fact, our average weekly sales for March hit all-time highs at all three brands.
Gerry Morgan: While we can't control the broader economic landscape including potential tariffs, consumer sentiment, and other macro conditions, we see the current environment as an opportunity to double down on what we do best.
Gerry Morgan: We will stay true to our mission, values and purpose and continue to focus on what we can control, which is delivering legendary food and legendary service.
Gerry Morgan: It is our belief that despite any external factors, our recipe-right food, high-level hospitality and everyday value will continue to resonate with our guests and drive long-term growth [inaudible]
Gerry Morgan: On the development front, during the first quarter we opened eight company-owned restaurants, including one Bubba's 33 location, [inaudible]
Gerry Morgan: With an additional 15 restaurants already open or under construction, we remain on track to open approximately 30 company-owned restaurants this year.
Gerry Morgan: Our current outlook for franchise openings this year includes five international Texas roadhouses and two domestic jaggers
Gerry Morgan: In addition to the 13 franchise restaurants that were acquired at the beginning of the year, we purchased one additional restaurant later in the first quarter and we expect to acquire another three restaurants in the second quarter. [inaudible]
Gerry Morgan: We also opened our 50th Bubbles 33 during the first quarter and have already opened two additional locations in the second quarter.
Gerry Morgan: We just completed our guest attitude and usage study for Bubba's 33 and it is providing us with a lot of good insight into the brand.
Gerry Morgan: It has reinforced our belief that, above us, 33 is a family-friendly sports-themed restaurant that appeals to consumers of all ages [inaudible]
Gerry Morgan: Our guests express love for the brand and appreciation for the consistency, quality, and taste of our food. We also received high praise for our fun and energetic atmosphere.
Gerry Morgan: From a technology standpoint, our current initiatives are progressing as planned 65% of our restaurants are currently using a digital kitchen.
Gerry Morgan: and the remainder of our restaurants are scheduled to convert by the end of this year. As we have said before, we believe these conversions are creating a more efficient kitchen and a less stressful environment for our roadies.
Gerry Morgan: Additionally, the upgrade of our guest management system is moving quickly. 70% of our restaurants have the new system with the rest on track to receive it by the end of year.
Gerry Morgan: This upgrade is allowing our operators to quote more accurate wait times and better manage their floor plan.
Gerry Morgan: This week we are in the process of rolling out new beverage menus for our Texas Roadhouse restaurants.
Gerry Morgan: We are excited that for the first time we will be using regional beverage menus that are tailored to specific geographic preferences. These menus will also include our mocktails as well as our $5 all day, everyday beer and margarita offerings.
Gerry Morgan: Finally, I want to recognize, I want to congratulate Ron Marcus from Concordville, Pennsylvania, as he was named our Texas Roadhouse Managing Partner of the Year.
Speaker Change: On the Bovis 33 side, congratulations to Kyle Morris from Glenn Bernie Maryland for being named the Brands Managing Partner of the Year.
Gerry Morgan: Additionally, I want to recognize Daniel Rivera of Covington, Louisiana, for being named for the third time our National Meat Cutter Champion.
Gerry Morgan: and Katie Vincent for being our support center, Rodi of the Year.
Chris: And lastly, I would like to congratulate and to thank all of our award finalists for their contributions, accomplishments and passion for Texas Roadhouse Now Chris will provide some thoughts
Chris: Thanks, Jerry. For the first quarter, Weekly Sales averaged $167,000 at Texas Roadhouse, $123,000 above us $33,000 and $71,000 at Jaggers.
Chris: All three brands delivered positive same-store sales and traffic growth during the quarter with momentum building in the back half of the quarter.
Chris: This momentum has carried forward into the first five weeks of the second quarter with comparable sales up 5% and our restaurants averaging weekly sales of approximately $164,000.
Chris: The positive sales trend through the first five weeks includes the benefit of the 1.4% menu price increase that we implemented at the beginning of the second quarter, as well as improved mixed trends.
Chris: Before discussing our inflation outlook, I would like to address our current thoughts on the potential impact of tariffs.
Chris: The most likely areas of our business impacted by tariffs are commodities, supplies and equipment
Chris: However, there are still many unknowns including how much of the expense will be passed through, as well as the timing of when we will see the increased expense. [inaudible]
for commodities.
Seafood will be the most impacted portion of our basket . . .
Chris: Much of this category comes from non-USMCA countries. Outside of seafood, there are no other significant components of our commodity basket that are purchased from outside North America.
Chris: Within supplies, tariffs on some items, such as disposables and plateware, will be the most impactful to us. However, due to inventory and orders already in transit, the higher cost should not be felt until the back half of the year.
Chris: For equipment, the potential impact this year is lessened as we typically order much of our new restaurant equipment well in advance. However, we could also see some impact from unplanned equipment replacement at existing restaurants. [inaudible]
Now moving on to our outlook for commodity inflation.
Chris: While first quarter inflation was in line with our internal forecast, we have increased our guidance for full-year commodity inflation to approximately 4%.
Chris: This increase is based on our updated expectations for beef costs through the remainder of the year, as well as the impact of tariffs. We currently estimate that tariffs will drive approximately 30 basis points of the full-year commodity inflation. This increase is based on the full-year commodity inflation, which is based on our updated expectations for the full-year commodity inflation.
Chris: Labor inflation in the first quarter was also in line with our projections. The ongoing focus by our operators on productivity resulted in labor hours growing at approximately 35% of comparable traffic growth.
Chris: Based on our outlook for the remainder of the year, we are maintaining our 4-5% wage and other labor inflation guidance for the full year.
Chris: With regard to cash flow, we ended the first quarter with 221 million in cash.
Chris: Cashflow from Operations was 238 million, which was offset by 173 million of capital expenditures, dividend payments, and share repurchases, as well as 78 million for the acquisition of 14 franchise restaurants.
Chris: Our guidance for 2025, capital expenditures including any terra-related cost pressures remains unchanged at approximately 400 million and now Michael will walk us through the first quarter results
Michael Balan: Thanks, Chris. For the first quarter of 2025, we reported revenue growth of 9.6% primarily driven by a 2.4% increase in average unit volume and 7.1% store-a-week growth.
Michael Balan: We also reported a restaurant margin dollar increase of 4.7% to $239 million, and I diluted earnings for share increase of 1% to $1.70
Michael Balan: Average weekly sales in the first quarter were over $163,000 with to-go representing approximately $22,000 or 13.6% of these total weekly sales.
Michael Balan: My month, comparable sales grew 5.5%, 0.5%, and 4.6% for our January , February , and March periods respectively.
Michael Balan: In the first quarter, restaurant margin dollars per store week decreased 2.2% to approximately $27,000.
Michael Balan: Restaurant margin as percentage of total sales decreased 77 basis points year-over-year to 16.6%.
Michael Balan: Food and beverage costs as a percentage of total sales were 34.1% for the first quarter.
Michael Balan: The 22 basis point year over year decline was driven by 2.1% commodity inflation combined with shifts within the entree category, partially offset by the benefit of a 2.4% check increase. The 22 basis point year over year decline was driven by 2.4%
Michael Balan: Labor, as a percentage of total sales, increased 79 basis points to 33.3% as compared to the first quarter of 2024.
Michael Balan: Labor dollars per store week increase 4.8% due to wage and other labor inflation of 4.6% and growth in hours of 0.3%
Michael Balan: Other operating costs were 14.4% of sales, which was 32 basis points better than the first quarter of 2024.
Michael Balan: The improvement was driven by leverage on operator bonuses as well as the year-over-year change in our quarterly reserve for general liability insurance
Michael Balan: Moving below restaurant margin, GNA dollars grew 6.9% year-over-year and came in at 3.9% of revenue for the first quarter
Michael Balan: Our effective tax rate for the quarter was 14.8%, our expectation for the full year 2025 income tax rate remains unchanged at between 15 and 16%.
Jerry: Now I will turn the call back over to Jerry for final comment.
Jerry: Thanks Michael. As I mentioned, we just returned from our managing partner conference where the theme was going all in.
Jerry: It is clear to me that our operators are going all in on the fundamentals of our business and purpose of serving communities across America and the world.
Jerry: Speaking of our communities around the world, I recently completed store visits in the Philippines. I can tell you that no matter the country, the culture or brand, the passion for legendary food and legendary service is truly amazing.
Let's go, Roadhouse.
Speaker Change: That concludes our prepared remarks. Caleb, please open the line for questions.
Speaker Change: At this time, I'd like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad Our first question comes from the line of Sara Senatore would think of America, your line is open [inaudible]
Sarah Sinatour: Oh, thank you very much. Just quickly, the component of the tech, Michael Fido Mine, I think you have probably about 3%
Speaker Change: Price, and I wanted to sort of make sure I understood it sounds like you'll probably price below inflation, not just kind of this updated commodities, but also maybe even wage inflation. I wanted to make sure that that was...
Speaker Change: Correct, and then the question is about mix. If you could just talk about is that the sort of the new alcohol program or what are you seeing that's driving your improvement in mix which I think has been a headwind for a little while now. Thank you.
Thanks, Sara. So we did have 3.1% pricing.
Speaker Change: In the first quarter, that drops down to 2.3% in the second and third quarter. So, yeah, we are priced below, you know, the inflation guidance that we have but that's typically, you know, we're typically not going to price for
Speaker Change: Camada inflation, so that change there is really not something that is driving our decisions there as far as the mix.
The benefit that we saw in the first five weeks [inaudible]
Speaker Change: with a little bit of improvement, further improvement from already having positive mix in the on-trade category.
Speaker Change: and then some improvement as well in the appetizers, appetizers softened a little bit.
Speaker Change: in the first quarter and came back here so far in the second quarter, and alcohol has remained as we have been seeing down a little over a half a point.
Speaker Change: You're just, I think you're also pricing below wage inflation. Was that the right interpretation? That seems like something you've historically priced for. Thanks.
Thank you.
Speaker Change: You know, with 4 to 5% being our wage and other guidance, now within that 4 to 5, the underlying wage pressure is probably about 3, but you know, we do tend to price
Speaker Change: for structural inflation. It doesn't mean that we always price for all of it all at once, so it's something that we're very careful on and very methodical in our pricing decisions.
Speaker Change: Anderson it seems to be working for you. Thank you very much. Thank you very much.
Thank you.
Speaker Change: Your next question comes on the line of David Palmer, would ever core ISI, your line is open.
Speaker Change: Volatile as that first quarter was, but in the quarter, that labor leverage which had gotten better than that 50% ratio that you've been doing.
was less so, close sort of one to one. [inaudible]
Speaker Change: I'm wondering, you know, should we not look into that too much as sort of an end of an era or was it really about that volatility?
Speaker Change: Or maybe when things just moderate, in general, you're not going to be going down in hours like you would let your hours go up less than the traffic or just any thoughts about what that means if anything for the year. Thanks.
Speaker Change: David, Chris, and I just want to clarify, because I thought I had it in my comments, but just to be clear, we did in the first quarter have 35% labor hours to traffic growth, so we were back under that 50%.
Speaker Change: and that's the sixth straight quarter below 50% on that metric and so that has continued and we've stayed very productive.
Speaker Change: and the operators have stayed very productive even through the difficulties and in particular it was February but largely you can attribute a lot of that of course to their focus but the turnover has remained low. [inaudible] It's the first time
Speaker Change: The hourly turnover is below pre-pandemic levels and as is manager turnover so that's that's continued as well . .
No, I misheard that. Thank you. That's helpful. Thank you
Sure.
comment.
Speaker Change: and your next question comes from the line of David Tarantino with Beard, your line is open. [inaudible]
Hi, good afternoon. My question is about restaurant margin performance and
Speaker Change: I think if I look at the long history of Texas Roadhouse, there's been very few periods where we've seen restaurant profit dollars per week.
Speaker Change: I'm just wondering if you could maybe think about or frame up your thought process around.
Speaker Change: What that metric could look like for this year, given some of the inflation and the very small amount of pricing
Speaker Change: And specifically, is it important to you that you try to keep that positive or because it was so positive last year you're willing to give some back? I guess what is the philosophy and how you manage that line for this year?
Speaker Change: Hey, David, Michael, appreciate the question and I think you know you're touching on a lot of things that we discussed internally certainly those you know margin dollars per store with something we watch and yeah with the you know this
Speaker Change: With the choppy starts of the year, we just didn't get as much growth in that area as maybe we normally would. Now, how this will play out throughout the year is...
Still to be determined, our traffic is...
Come back very strongly.
But
But you're also right, we've had a really strong 2024 War.
Speaker Change: and you know, you know, laughing that right now in the face of some some commodity pressures.
Speaker Change: You know, we'll probably mean that those margin dollars per store week maybe don't you know grow nearly as much as as we have seen or you know but but it's something we'll keep an eye on and you know be aware of but but you are correct and it's definitely a little bit softer in the first quarter than what we typically see.
Speaker Change: And if I could just ask a quick follow up to that, I guess as you approach your menu price decision later in the year with all this inflation that you're essentially absorbing, including the newfound tariff impacts, I guess, how do you think about? Thank you very much.
Speaker Change: pricing against some of that inflation or maybe catching up for maybe what you haven't taken so far.
Speaker Change: Hey, David, it's Jerry. Yeah, we'll continue on with our strategy. We're just a few weeks into the pricing that we took for basically the spring and the summer. As we get a little closer to the fall decision, we'll get with our operators, we'll kind of see where the climate in the world is at that time and try to make the best decision not only for our shareholders, but for our consumers and for our operators and partners. So we will continue on with that same philosophy. Yeah.
Speaker Change: As we get closer, I think we'll have a better idea of what we'd like to do.
Great. Thank you.
Thank you
Speaker Change: And your next question comes from the line of Brian Harbour with Morgan Stanley , your line is open.
Speaker Change: Hi, this is Kelly Merrill on for Brian . Thank you for taking our question. It looks like a nice start to the quarter with some pickup from Q1, as some peers have noted as well. I'm just curious if what you're seeing is in line with the industry or if there are any roadhouse specific efforts that are driving the acceleration. Thank you for your question.
Speaker Change: I think we've stayed very true to our focus on our food and our service and our value and our execution and I think that's what's continuing to drive that rebound, I guess you would call it, in March, April and May and we feel really good about our game plan as we've always had and our continued focus. So I think our results are a reflection of our operators performing at a high level and
We ward and trust us that we've created an environment that they enjoy spending their time in their money.
Thank you [inaudible]
Thank you [inaudible]
Speaker Change: Next question comes from the line of Dennis Geiger with UBS, Strelzina's Open David Tarantino's Open
Thanks guys, appreciate it!
Dennis Geiger: I'm wondering if we could give or you could give any additional thoughts on on margins for the year obviously given a lot of the pieces on on laboring commodities, anything else as we think about other op acts managing that this year, maybe visibility into the beef side of things any other pieces to help us kind of better put together some puts and takes for full year 25 restaurant margins. Thank you.
Dennis Geiger: Hey, Dennis, it's Michael, now obviously your traffic assumptions will play a part [inaudible]
Dennis Geiger: In that, but if you were to assume that we were going to have some modest traffic growth
Dennis Geiger: Through the year, I think the guidance that we have given would say that…
Dennis Geiger: The Commod V line is going to be under some pressure, you know, through the year and, you know, labor could still have...
and then other operating is...
Just like we said last quarter is probably that line.
Dennis Geiger: where we do have some opportunity to get some leverage and where we got some leverage.
Dennis Geiger: in the first quarter. So, we'll see where the overall margins come in, but it would seem like other off is our, as we sit here today with what we know is the area with the greatest opportunity for some leverage.
Thank you very much.
Makes sense. Thanks Michael.
Speaker Change: And your next question comes from the line of Jake Bartlett with truest securities your line is open.
and the commandeering inflation guidance would suggest. [inaudible]
Speaker Change: And then, within the commodity inflation guidance, you know, I'm wondering whether the cadence is pretty, you know, differs, meaning, you know, I'm kind of thinking maybe the second quarter you'd see the most inflation that it comes down from there, but just any, any, any, any idea about cadence would be helpful.
Sure, let me start off with the...
Speaker Change: with the actual COGS line, because you are correct, we had 2.1% inflation in the first quarter, and our check was up 2.4%.
That math by itself would have...
Speaker Change: said that we should have levered the commodity line by about 10 basis points. So we did have about 30 basis points.
Speaker Change: of pressure on that line from that from that mix shift. What we've started to see a little bit more of is our gas trading from chicken or a seafood entree up into our state category. And I think some of that makes a lot of sense given the cost of, you know, steak at the grocery, I guess, or recognizing the value that we're offering and choosing to, you know, order a steak a little bit more often with us.
with that comms.
Some positive [inaudible]
Speaker Change: Overall mix, it helps the top line, but it does put pressure on the cogs line because those
Speaker Change: Stake Items are not as high a margin item as maybe on a percentage basis as chicken is, so it's kind of net neutral to our margin dollars, but you do see that pressure very obviously on the commodity or on the cost of sales line.
Speaker Change: We do think that'll stay with us into the second and third quarters, maybe not to that full 30 basis points we're thinking more like 20 basis points of pressure and then the fourth quarter we think it may step down to about 10 basis points of pressure. [inaudible]
Speaker Change: and then as far as the cadence of our inflation for the year, you're probably...
Speaker Change: Fairly similar is our expectations, certainly for a second and third quarter maybe it comes down a little bit into the fourth quarter but pretty similar is our expectation right now [inaudible]
Thank you very much.
Jeffrey Bernstein: And your next question comes on the line of Jeffrey Bernstein with Barclays. Your line is open.
Jeffrey Bernstein: Great, thank you very much. Just looking back, get the comp trends you offered for the first quarter. Unlike others, it seemed like you were running mid-single digit and then trends really fell off in February and then bounced back to that mid-single digit.
Jeffrey Bernstein: I'm just wondering what you attribute that slow down. I mean, a lot of people talk about whether others have been referred to a slow and macro.
Jeffrey Bernstein: The weather seems to have subsided, but the macro almost to argue is still challenged. So the fact that you made it all the way back to kind of where you were running before, I'm just wondering how you think about the weakness and...
Jeffrey Bernstein: You know, whether on the heels of that, you've seen any change in consumer behavior. You're, um...
Jeffrey Bernstein: Whether it's weekday, weekend, or any makeshift changes that you mention actually consumers.
Jeffrey Bernstein: potentially trading up into stake. I was thinking maybe there would be trade in the other way. So any thoughts on the drivers of the pullback and the lasting impact from that since then? Thank you.
Jeffrey Bernstein: Hey Jeff, it's Chris, and thank you for that question. It's a thoughtful one, and it's something we've been studying here the entire quarter
Jeffrey Bernstein: And it really did come down to the weather and some flu influenza, different parts of the country had it worse than others It was worse, it was worse, it was worse, it was worse
Jeffrey Bernstein: But it was absolutely store closures from snow, it was the weather, it was people staying in, we saw more to go business during that period of time [inaudible]
Jeffrey Bernstein: and then the bounce back came when the weather got better and so we're not seeing anything that's concerning us in any sort of geographic area and any sort of any other way you would divide up the consumer base.
Jeffrey Bernstein: They're coming back, they're enjoying what we have to offer and we have strength and momentum that's carrying into the second quarter.
Thank you
Jeffrey Bernstein: Your next question comes from the line of Jeff Farmer with Gordon Haskett, your line is open. Thank you for your time.
Jeff Farmer: Thanks, you guys did briefly touch on it, but you just returned from the managing partner conference, so I'm curious if there were anything you heard from your restaurant operators that were surprising to you, anything about Ops or just how the consumers holding up in general.
Jeff Farmer: Basically, I'm just looking for anything you guys heard from us, sort of a boots on the ground perspective about your restaurants [inaudible]
Speaker Change: Yeah, Jeff, I appreciate it. You know, I think it was all very positive. We were celebrating the success of 2024. We did discuss a little bit of our start to 2025, and I believe we had a strong January, and we all know what happened in February across the country, and we bounced right back in March, April, and May, and I think they're feeling very, very confident. Again, there's still concerns. We all have questions about some of the things that are going on, but I think in general
Speaker Change: Restaurants are packed full of people that love our our mate from scratch food and our high level hospitality and and they're feeling very confident that as the world kind of settles we'll be right back to doing what we always do and that's to deliver on legendary food and legendary service and we will focus on what we can control and and do everything we can to serve communities across America and the world at the at the highest level.
and that's what we're focused on.
Okay, thank you [inaudible]
Thank you.
Speaker Change: And your next question comes from the line of Lauren Silberman with Deutsche Bank, your line is open.
Speaker Change: Thank you very much. I wanted to follow up actually on the quarter to date comp. I believe price in April is lower than what you had in...
That includes traffic of about 3.1%.
meaning that the track was up.
Speaker Change: 1.9%, and that was with 2.3% pricing, so about 40 basis points of negative mix.
As compared...
Speaker Change: You know, to the 60 basis points we saw in the first quarter and again, that improvement was coming in the entree and the appetizer categories and maybe a little bit in the mocktails as well as what drove that improvement as far as...
Speaker Change: The regional trends that we're seeing, like Chris said, whether it be for the first quarter or the first five weeks
We're seeing strong performance.
Speaker Change: throughout the country, you know, all days of the week and all segments of the day. So, you know, we're very pleased with how the guests is using us right now. Thank you very much.
Great. Thanks so much. Congrats on the performance.
Thank you [inaudible]
Speaker Change: And your next question comes from the line of Brian Vaccaro with Raymond James, your line is open.
Speaker Change: Hi, thanks for good evening. I'm just back to the quarter today. Just curious, can you clarify how the shift of disturbed or spring break timing? How does that impact your March versus April ?
Sure, Brian , are we talking about for the quarter today, right? Yes
Speaker Change: It had about, for the five weeks, about a 50 basis point negative impact on our reported
Speaker Change: So that should come out to about a 20 basis point negative on the quarter, second quarter, and we had about a 20 basis point positive impact in the first quarter. We had estimated at about 30 basis points and the actual was about 20.
Speaker Change: Okay, very helpful. Thank you. On commodity inflation, obviously you took the guy up to 4%, we've seen it's about safe prices increase pretty mainly through April , seems like some industry participants think we could sustain through the early times of half of retention. We'll see, but just curious if you could kind of expand on your latest on the deep outlook, both from a supply and an end perspective.
Speaker Change: You know, sure, Brian , I mean, obviously, you know, things haven't…
Speaker Change: changed that dramatically in our outlook. We still expect a tightening supply and it looks like that is continuing to happen. And demand has stayed robots both in the food service sector and retail at this point.
In the grocery store, people are still...
You know, willing to pay for the beef and so that is...
You know
coming along with this tighter supply you're seeing. [inaudible]
Speaker Change: The suppliers, maybe tighten how much they're producing and you know that is led to some of those higher prices that you're talking about so whether or not we're seeing that hepper retention as of yet. [inaudible]
Speaker Change: It's something we're watching as well and that can obviously drive prices higher if when that occurs and so all of those things are baked into our guidance of the approximately 4% for the full year.
Speaker Change: All right, thanks. And if I could just slip one more in on the margins.
Speaker Change: It did look like the ramp line, picked up a little bit, increased, I don't know, 78% on our map per week. I just wanted to confirm, is that the impact of the acquisition or there's some one-timers we should be mindful of in that line?
Thank you
Now you
Speaker Change: Hey, Brian , it's Michael. Yeah, you're correct. A lot of that is driven by the acquisition that we made and some of those, you know, half those stores are nearly half being in California with some higher rents and new stores in general tend to have higher rents as well. So those are the two things driving that. And I would expect that to, you know, probably continue. Maybe not to that.
Speaker Change: As much of a degree as the first quarter, a little bit more sales, you know, potential sales growth, but that late that rent line could, you know, be levered just slightly in 2025.
Yep, thanks very much.
Speaker Change: And your next question comes from the line of Jim Salera with Stephen's Inc. Your line is open.
You guys, good afternoon. Thanks for taking our question.
Speaker Change: I wanted to ask about the GO sales. It looks like my mask is correct. It's set up about 60 basis points sequentially from four to you. You talk about what you're seeing there from the consumer and maybe just remind us margin differential between the GO sales and the restaurant dining. [inaudible]
Speaker Change: I mean, I can talk to the sales side of it a little bit. You know, again, I think it's just our focus on the execution. You know, we did mention a little bit of that some of that.
Speaker Change: February might have ticked it up a little bit also with some of the weather. [inaudible]
Speaker Change: And so we've seen that. But I think if you really look at the last 24 months, I mean, we've really continued to execute very well. We've really improved our, how are measurable of missing items to some degree and just we've changed our packaging. We've done a lot of things operationally to provide a better to go experience and I think those have been good payoffs for us in the long run. [inaudible]
Speaker Change: I'd like to talk about it is under the assumption that our dining room is full, which largely it is, that to go business, it is...
Speaker Change: A great incremental margin dollar occurrence for us and it's probably just about margin new tools just slightly positive having the step up in the to go business. You have to remember we don't get the beverage. [inaudible]
Speaker Change: Attachment typically with the to-go order, but if we're already full in the dining room and our kitchen is fully staffed, getting those to-go sales are definitely beneficial to the dollars and neutral slightly positive on the percents.
Okay, great. That's very helpful. Thank you
Operator: And your next question comes from the line of Peter Saleh, would BTIG your line is open? [inaudible]
Peter Salah: Great, thanks for taking the question. Just two quick ones, one clarification. Your prior commodity guidance was...
Peter Salah: The tariffs. So I'm just curious, did anything really change other than the tariffs on the commodity inflation picture? Has anything really changed there? And then I guess my second question would be more on the on the Bubba's side. You guys mentioned you completed a study recently. Can you share some of the learnings there and if you if you learned anything about.
Guest Frequency, with that brand, thanks.
Peter Salah: Peter, I'll start off with your your your cost of sales question. You know, we certainly, you know
Have taken a slightly higher, you know...
Inflation view for Port B.
Peter Salah: to our relationships with some of the produce generating countries. We modified some of our assumptions there, so that was a little bit of an offset.
Peter Salah: And then on the Bubba's question, what we really learned was that...
Peter Salah: The food for all, messaging that we have is really something they understand. It's family-friendly. They love the energy and the enthusiasm around it. I mean, you know, Roadhouse is stakes and potatoes and cold beer and margaritas and buffers is more burgers and pizzas and kind of a rock and roll and sports theme because of all the TVs and things like that. So what we really learned was mostly was that they really love the vibe of...
Peter Salah: Bubbeth, and they love the food for all, being so family friendly. So it was a great learning for us for that go round.
Thank you very much [inaudible]
Thank you
Speaker Change: And your next question comes from the line of Andrew Strelzik with ZMO Capital Markets, your line is open.
Andrew Strelzick: Hey, thanks for taking the question. You guys have been pretty consistent talking about the kitchen technology is improving the back of the house and just making a better kind of work environment back there, but I guess, you know, as you have more quarters under your belt and more stores under your belt, are you getting to the point where you can start to identify more operational benefits through put table turns, labor efficiency, any color on that would be great. Thanks.
Andrew Strelzick: Hey, thanks, Andrew. This is Jerry. Appreciate the question. Yeah, we're excited about getting it wrapped up with all of our AGM enhancements to the stores and to the digital kitchen. And, you know, I think we are learning some things, but it's from a measurable really able to discuss it at this time. We'd really like to see everybody up and running on it and really understand what are the efficiencies, but the bottom line is in the back of the house that digital kitchen. Our employees really love
Andrew Strelzick: David, our managers really love it. It does help manage the mathematics of the work orders a little bit. And in that dining room that the AGM 2.0 is we're calling it really about managing the floor plan. And even helping us manage some of the wait list that we have for different reasons that might people come and go and change positions. But really it just helps us calculate how to keep moving fast.
Andrew Strelzick: And for us, that's the key component at this point in time, so thanks for the question, Andrew.
Yeah, thank you.
Speaker Change: And your next question comes from the line of Andy Barish with Jeffries, your line is open. Thank you very much.
Hey, guys.
Andy Barish: I'm just wondering on the labor line that's quarter, was there any any unique items in there that you know drove um I don't know if it's you know kind of you know state taxes or things like that at the beginning of the year just uh just wondering if there's any other call out there [inaudible]
Michael Balan: Hey, Andy, it's Michael. Nothing really to to call out there. I mean, you know,
Michael Balan: The D leverage there is really a function of, you know, while we had, you know, same comparable sales growth of 3.5% in Q1 as we talked about on the last call.
because of the mismatch of the winks.
Michael Balan: We were expecting average weekly sales to be as much as...
2.3% average we could sales growth, [inaudible]
Michael Balan: and had our normal commodity inflation right in the middle of our, I'm sorry, labor.
Michael Balan: Inflation of 4.5% right in the middle of our guidance with good productivity, you know, from our stores on the laborer's side. So it's just a function of only having the 2.3% average weekly sales growth in the first quarter. [inaudible]
Speaker Change: Okay, that's helpful color. And then any update on V&A dollar growth, I assume mid-single digit dollar growth is still in the ballpark for 25.
Speaker Change: Yeah, that would still be our assumption, not much change what we thought last year, we had a big single, just under 7%.
Speaker Change: G&A Dollar Gross in the first quarter, could see that come up a little bit in the second quarter, and then, you know, should be, could be, you know, flat in the third quarter and should be lower Q-4 because of laughing the extra week. So that probably gets you into, you know,
Load of, you know, mid-single-digit dollar-run. [inaudible]
Okay, thank you
Speaker Change: In your next question comes from the line of Gregory Francfort with Guggenheim, Irvine is open.
Gregory Frankfurt: Okay, thanks. Thanks for the question. I had a maybe a little bit longer-term question on
on Stora Hours, I think.
Gregory Frankfurt: You guys have kind of over the last 5-10 years opened up a little earlier and earlier so I think you're opening a lot of stores like 3-clock [inaudible]
Gregory Frankfurt: How productive has it been and I guess is there an opportunity to open later some of your stores like I think a lot of close at 10 or 11 depending on the day of the week and just do you think there is an opportunity to kind of keep pushing hours out a little bit more than you happen
Gregory Frankfurt: And you know, thank this, Jerry. Thanks for the question. I like our hours where we're at. I think, uh...
Gregory Frankfurt: Closing at 10 during the week seems to make sense, you know, just-
Gregory Frankfurt: In general, we stay a little open like you say, a little later on the weekends for Roadhouse and Bubba's even stays a little longer than that. And Bubba's is open for lunch. So I think that there is a demand than a conversation would be, maybe we keep opening incrementally a little bit earlier to capture that versus stay in late. [inaudible]
Thanks for the thoughts. Appreciate it.
Thank you
Speaker Change: and your next question comes to the line of John Ivanko with JP Morgan, your line is open.
John Ivanko: Relative to average unit volumes. Do you expect them to get to average unit volumes? And, you know, I know at least what I see are maybe some other times, you know, we've talked about, you know, some intense, it's some intentional cannibalization
John Ivanko: You know, we're filling up markets that would, you know, lower average volumes and that would overall grow over time is that some of the phenomenon that we're seeing at this point where we're adding capacity to a market and it's just going to take some time, you know, for customers to refill some of the seats all the time. Thank you.
John Ivanko: Hey, John , it's Michael. I do appreciate that question and you know, that is a you know a lot of people.
group of sores and you know that someone is-
John Ivanko: Subject to how many stores are in there and the geographic makeup of the restaurants that are in there, you know, in maybe last year's number, there are a few more California stores, which can, you know, be very high volume, whereas, you know,
John Ivanko: You know, this year there's some stores in there that are in parts of the country where, you know, we don't...
John Ivanko: Well, also, so we're not feeling any concern by the volumes we're seeing there. It's kind of to be expected. And then if you look at that newest store group, we're seeing some very strong performance there as well.
Speaker Change: For sure, thank you. I know it's had to flow over the years, but overall averaging of violence has gone up, so thank you so much
You're welcome. Thank you.
Speaker Change: Your next question comes from the line of Jim Sanderson with North Post Research. Your line is open.
and Michael Bailen. Thank you. Thank you.
Speaker Change: Thanks for the question. I wonder if you could provide a little bit more feedback on the franchisee acquisitions you've mentioned going forward and how we should look at the mix of franchisee versus company or if eventually you would consider refranchising some of the company's stores. Thank you.
Speaker Change: Hey, Jim, it's Chris, you know, we've got less than 40 domestic Texas Roadhouse franchises that are left and we do maintain an active dialogue with all of our franchisees . . . .
Speaker Change: And when they're ready to step back, we're ready to step in, but it is an ongoing conversation with them. And there's not a specific plan to roll up any more anytime soon. In fact, we don't have anything imminent.
Speaker Change: beyond what we've already disclosed. But those are conversations that we have quarterly meetings with the franchisees individually with them. This is a moment.
Speaker Change: and have a great dialogue going. And then the second part of your question was, are we thinking about adding franchises? That's more of a Jagger's question, so we are adding franchises and Jaggers but not in Texas Roadhouse. [inaudible]
Speaker Change: Right, and any consideration as far as selling the company owned stores to franchisees for the Texas Roadhouse system? No, Jim, there's not. All right, thank you. Yep.
Todd Brooks: Your next question comes from the line of Todd Brooks with Benchmark, your line is open. Thank you very much.
Speaker Change: How do you test something like this? And then, if we think about adding in mocktails but also a more regional mix in the offering, how do we think about the profitability profile of the Bar Business going forward? Thanks, Bernie Collar. Thank you very much.
Gerry Morgan: Hey Todd, this is Jerry. I'll tell you the conversation about a $5 all day every day.
Speaker Change: Margarita, Beer and LIT offering really came from the consumer as we traveled out over the last few years about what we're offering at our bar specials and
Speaker Change: You know, so that conversation kind of created, we used to have a 10 ounce margarita and for great value and then we didn't have it, I guess coming out of the pandemic
Delphur in a pint and an ice-cold pint glass. That's it.
Speaker Change: And so they've got a lot of flexibility on that. So that's a big win overall. The mocktails, you know, I think is really again driven by consumer and some of the demand of the flavor profile of beverages these days. And and so we've seen very there've been become very popular for us. And and we like we're going to still pretty new to it. I think maybe October , November of last year, we really got it on most of the menus and probably even a little later on some of the stores. So this will be our first full year in that segment.
Edmund, but we are excited with what we are seeing so far.
That's great, thanks Sharer.
Thank you.
Speaker Change: And as a reminder, if you'd like to ask a question, please press star then the number one on your telephone keypad.
We'll pause for just a moment.
Speaker Change: and it appears there are no further questions at this time. Jerry Morgan, I will turn the call back over to you.
Jerry Morgan: Thank you very much. Just want to appreciate all of you being on the call with us today and to all of Rodi Nation out there, 2024 was an incredible year. I thank you from the bottom of my heart for you. Appreciate all of your efforts and everything you've done. Let's stay focused on legendary food and legendary service and supporting one another as we continue on. Let's go! Go!
This concludes today's conference call. You may now disconnect.
Jerry Morgan: Yeah.