Q2 2026 Texas Roadhouse Inc Earnings Call

August 6, 2026

Holly: Good evening, welcome to the Texas Roadhouse Q2 Earnings Conference Call. Today's call is being recorded. All participants are now in 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, Vice President of Investor Relations for Texas Roadhouse. You may begin your conference.

Operator: Good evening, welcome to the Texas Roadhouse Q2 Earnings Conference Call. Today's call is being recorded. All participants are now in 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 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. I would now like to introduce Michael Bailen, Vice President of Investor Relations for Texas Roadhouse. You may begin your conference.

Speaker #1: 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.

Speaker #1: Should anyone need assistance at any time during the conference, please press star 0 and an operator will assist you. I would now like to introduce Michael Bailen, Vice President of Investor Relations for Texas Roadhouse.

Speaker #1: conference.

Speaker #2: Thank you, Holly, and good evening. By now, you should have access to our earnings release for the second quarter and the June 30th, 2026.

Michael Bailen: Thank you, Holly, good evening. By now, you should have access to our earnings release for Q2 ended 30 June 2026. 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, 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. 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.

Speaker #2: It may also be found on You may begin your texasroadhouse.com in the Investor section. I would like to remind everyone that part of our discussion today will include forward-looking statements.

Speaker #2: These statements are not our website at guarantees of future performance and therefore undo reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC.

Speaker #2: 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.

Speaker #2: If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse, and Mike Lenahan, our Chief Financial Officer.

Michael Bailen: On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse, and Mike Lenihan, 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, could everyone please limit yourself to one question? Now I would like to turn the call over to Jerry.

Speaker #2: Following the prepared remarks, we will be available to answer your questions. In order to accommodate everyone that would like to ask a question, could everyone please limit yourself to one question?

Speaker #2: Now, I would like to turn the call over to Jerry.

Speaker #3: Thanks, Michael. And good evening, everyone. We're excited with our second quarter results as revenue approached $1.7 billion. We continued our top-line momentum with same-store sales increasing 6.2%, including 3% traffic growth.

Jerry Morgan: Thanks, Michael, good evening, everyone. We're excited with our Q2 results as revenue approached $1.7 billion. We continued our top-line momentum with same-store sales increasing 6.2%, including 3% traffic growth. We're especially pleased that our Q2 average weekly sales exceeded $175,000 for the first time in our company's 33-year history. There's a lot to be proud of across our portfolio of restaurants. Each of our brands is at a different point in their journey, I want to take some time to talk about the potential growth each brand has going forward. Texas Roadhouse ended Q2 with 755 system-wide locations across the United States and 10 foreign countries. Average weekly sales at company restaurants were over $183,000. We are confident in our operators' ability to continue driving sales through traffic growth.

Speaker #3: We're especially pleased that our second quarter average weekly sales exceeded $175,000 for the first time in our company's 33-year history. There's a lot to be proud of across our portfolio of restaurants.

Speaker #3: Each of our brands is at a different point in their journey, and I want to take some time to talk about the potential growth each brand has going forward.

Speaker #3: Texas Roadhouse ended the second quarter with $755 system-wide locations across the United States, and 10 foreign countries. Average weekly sales at company restaurants were over $183,000.

Speaker #3: We are confident in our operators' ability to continue driving sales through traffic growth. The sales volume and consistent growth that our restaurants have delivered over the long term are a testament to the strength of the brand and the commitment of the best operators in the industry.

Jerry Morgan: The sales volume and consistent growth that our restaurants have delivered over the long term are a testament to the strength of the brand and the commitment of the best operators in the industry. This year, we expect to open approximately 20 Texas Roadhouse restaurants spread throughout the country. With the momentum in our existing locations and a full pipeline of sites under development, the future continues to be incredibly bright for Texas Roadhouse. Bubba's 33 ended the quarter with 59 restaurants in 16 states. Just last week, we celebrated the opening of our 60th location, which is our first in the state of Iowa. Average weekly sales for the brand were over $129,000 in Q2, and our recent openings continue to perform very well.

Speaker #3: This year, we expect to open approximately 20 Texas Roadhouse restaurants spread throughout the country. With the momentum in our existing locations, and a full pipeline of sites under development, the future continues to be incredibly bright for Texas Roadhouse.

Speaker #3: Above its 33, end of the quarter with 59 restaurants in 16 states. And just last week, we celebrated the opening of our 60th location which is our first in the state of Iowa.

Speaker #3: Average weekly sales for the brand were over $129,000 in the second quarter, and our recent openings continue to perform very well. Our expectation is to open at least 10 above its 33 restaurants this year and maintain this low double-digit pace of openings for the next several years.

Jerry Morgan: Our expectation is to open at least 10 Bubba's 33 restaurants this year and maintain this low double-digit pace of openings for the next several years. Lastly, Jaggers also continues to perform well. In the quarter, weekly sales exceeded $76,000, and we opened our 11th company location. The remainder of this year's growth of the company side will be focused in our existing markets. We expect a total of four company openings this year. On the topic of development, we remain on track for approximately 35 company-owned openings this year. Nine of these occurred in Q2, including five Texas Roadhouses, three Bubba's 33s, and one Jaggers. As we mentioned last quarter, our openings this year are heavily weighted toward the end of the year. At this time, six are scheduled for Q3. The remainder of the 2026 openings are planned for Q4.

Speaker #3: Lastly, Jaggers also continues to perform well. In the quarter, weekly sales exceeded $76,000, and we opened our 11th company location. The remainder of this year's growth of the company side will be focused in our existing markets.

Speaker #3: We expect a total of four company openings this year. On the topic of development, we remain on track for approximately 35 company-owned openings this year.

Speaker #3: Nine of these occurred in the second quarter, including five Texas Roadhouses, three Bubba's 33s, and one Jaggers. As we mentioned last quarter, our openings this year are heavily weighted toward the end of the year.

Speaker #3: At this time, six are scheduled for the third quarter, the remainder of the 2026 openings are planned for the fourth quarter. On the franchise side, our partners opened one international Texas Roadhouse during the second quarter, we expect as many as five more international openings as well as two domestic Jaggers franchise openings in the second half of 2026.

Jerry Morgan: On the franchise side, our partners opened one international Texas Roadhouse during Q2. We expect as many as five more international openings, as well as two domestic Jaggers franchise openings in H2 of 2026. Moving on to menu pricing. We remain committed to maintaining our everyday value while also continuing to deliver on legendary food with high level hospitality. Based on recently completed discussions with our operators, we will take a menu price increase of 1% at the beginning of Q4. We believe this level of pricing strikes an appropriate balance between helping to offset structural inflation and maintaining our everyday value position. During H1 of 2026, our operators continued to deliver on our mission of providing legendary food and legendary service.

Speaker #3: Moving on to menu pricing, we remain committed to maintaining our everyday value while also continuing to deliver on legendary food with high-level hospitality. Based on recently completed discussions with our operators, we will take a menu price increase of 1% at the beginning of the fourth quarter.

Speaker #3: We believe this level of pricing strikes an appropriate balance between helping to offset structural inflation and maintaining our everyday value position. During the first half of 2026, our operators continued to deliver on our mission of providing legendary food and legendary service.

Speaker #3: In the second quarter, we saw tremendous demand on Mother's Day and Father's Day, which along with Valentine's Day are the three legs of what we call our triple crown.

Jerry Morgan: In Q2, we saw tremendous demand on Mother's Day and Father's Day, which along with Valentine's Day, are the three legs of what we call our Triple Crown. 90% of our restaurants set daily sales records this year on one of those three days. A handful of our restaurants really crushed it with single day sales exceeding $100,000 on one of those holidays. The trust that our guests show our restaurants on the most important dining occasions is one of our competitive advantages. This trust is earned and something we will not take for granted. Now Mike will provide some thoughts.

Speaker #3: Ninety percent of our restaurants set daily sales records this year on one of those three days. And a handful of our restaurants really crushed it, with single-day sales exceeding holidays.

Speaker #3: The trust that our guests show our restaurants on the most important dining occasions is one of our competitive advantages. This trust is earned in something we will not take for granted.

Speaker #3: Now, Mike will provide some thoughts.

Speaker #2: Thanks, Jerry. During the second quarter, guests continued to reward us for their overall experience at our restaurants. Sales and mixed trends within our dining rooms were both positive, and we maintained an impressive growth rate in our to-go business during the quarter.

Mike Lenihan: Thanks, Jerry. During Q2, guests continued to reward us for their overall experience at our restaurants. Sales and mix trends within our dining rooms were both positive, and we maintained an impressive growth rate in our to-go business during the quarter. These trends continued into the first five weeks of Q3, with comparable sales up 6.2% and our restaurants averaging weekly sales of $168,000. Moving on to commodities. While the overall beef supply outlook remains dynamic given a variety of factors, our Q2 commodity inflation came in at 7%, which was at the bottom end of our forecasted range. As previously stated, our H2 inflation outlook remains lower than our H1 inflation. Based on our updated forecast, we are reducing our full year 2026 commodity inflation guidance from between 6% and 7% to approximately 5%.

Speaker #2: These trends continued into the first five weeks of the third quarter, with comparable sales up 6.2%, and our restaurants averaging weekly sales of $168,000.

Speaker #2: Moving on to commodities, while the overall beef supply outlook remains dynamic given a variety of factors, our second quarter commodity inflation came in at 7%, which was at the bottom end of our forecasted range.

Speaker #2: As previously stated, our second half inflation outlook remains lower than our first half inflation. And based on our updated forecast, we are reducing our full year 2026 commodity inflation guidance from between 6 and 7 percent to approximately 5%.

Speaker #2: We will provide an initial outlook on 2027 commodity inflation during our quarterly call in November. With regards to labor, second quarter inflation of 3.9% was in line with our expectations.

Mike Lenihan: We will provide an initial outlook on 2027 commodity inflation during our quarterly call in November.

Jerry Morgan: With regards to labor, Q2 inflation of 3.9% was in line with our expectations, and we are maintaining our full year 2026 wage and other labor inflation guidance of 3% to 4%. Labor productivity continued its positive trend with labor hours growing at approximately 25% of comparable traffic growth. On the topic of our capital position, we ended the quarter with $202 million of cash. Cash flow from operations for the Q2 was $180 million, which was offset by $191 million of capital expenditures, dividend payments, and share repurchases. Our guidance for 2026 capital expenditures remains unchanged at approximately $400 million. As always, our capital allocation framework prioritizes new restaurant development and maintaining our existing restaurants. Now Michael will provide the Q2 financial update.

Mike Lenihan: With regards to labor, Q2 inflation of 3.9% was in line with our expectations, and we are maintaining our full year 2026 wage and other labor inflation guidance of 3% to 4%. Labor productivity continued its positive trend with labor hours growing at approximately 25% of comparable traffic growth. On the topic of our capital position, we ended the quarter with $202 million of cash. Cash flow from operations for the Q2 was $180 million, which was offset by $191 million of capital expenditures, dividend payments, and share repurchases. Our guidance for 2026 capital expenditures remains unchanged at approximately $400 million. As always, our capital allocation framework prioritizes new restaurant development and maintaining our existing restaurants. Now Michael will provide the Q2 financial update.

Speaker #2: And we are maintaining our full year 2026 wage and other labor inflation guidance of 3 to 4 percent. Labor productivity continued its positive trend with labor hours growing at approximately 25% of comparable traffic growth.

Speaker #2: On the topic of our capital position, we ended the quarter with $202 million of cash. Cash flow from operations for the second quarter was $180 million, which was offset by $191 million of capital expenditures dividend payments and share repurchases.

Speaker #2: Our guidance for 2026 capital expenditures remains unchanged at approximately $400 million. As always, our capital allocation framework prioritizes new restaurant development and maintaining our existing restaurants.

Speaker #2: And now, Michael will provide the second quarter financial update.

Speaker #1: Thanks, Mike. For the second quarter of 2026, we reported revenue growth of 11.1% driven primarily by a 5.9% increase in average weekly sales and a 5% increase in store weeks.

Michael Bailen: Thanks, Mike. For Q2 of 2026, we reported revenue growth of 11.1%, driven primarily by a 5.9% increase in average weekly sales and a 5% increase in store weeks. We also reported a restaurant margin dollar increase of 6.9% to $275 million and a diluted earnings per share decrease of 0.7% to $1.85. Average weekly sales in Q2 were over $177,000, with to-go representing more than $25,000, or 14.3%, of these total weekly sales. Comparable sales increased 6.2% in Q2, driven by 3% traffic growth and a 3.2% increase in average check. By month, comparable sales grew 6.2%, 6.7%, and 5.7% for our April, May, and June periods, respectively. In Q2, restaurant margin dollars per store weeks increased 1.9% year over year to over $29,000. Restaurant margin as a percentage of total sales decreased 66 basis points to 16.4% as compared to the same period last year.

Speaker #1: We also reported a restaurant margin dollar increase of 6.9% to $275 million and a diluted earnings per share decrease of 0.7% to $1.85. Average weekly sales in the second quarter were over $177,000, with to-go representing more than 25,000 dollars or 14.3% of these total weekly sales.

Speaker #1: Comparable sales increased 6.2% in the second quarter driven by 3% traffic growth and a 3.2% increase in average check. By month, comparable sales grew 6.2%, 6.7%, and 5.7% for our April, May, and June periods respectively.

Speaker #1: In the second quarter, restaurant margin dollars per store week increased 1.9% year over year to over $29,000. Restaurant margin as a percentage of total sales decreased 66 basis points to 16.4% as compared to the same period last year.

Speaker #1: Food and beverage costs as a percentage of total sales were 35.4% for the second quarter. The 136 basis point year-over-year increase was primarily driven by 7% commodity inflation.

Michael Bailen: Food and beverage costs as a percentage of total sales were 35.4% for Q2. The 136 basis point year-over-year increase was primarily driven by 7% commodity inflation. The inflationary pressure was partially offset by the benefit of a 3.2% check increase. Labor as a percentage of total sales improved 40 basis points to 32.5% as compared to Q2 2025. Labor dollars per store week increased 4.7% due to wage and other labor inflation of 3.9% and growth in hours of 0.8%. Other operating costs were 14.2% of sales, which was 28 basis points better than Q2 2025. The leverage was a result of higher sales, combined with a $1.1 million net benefit to our quarterly reserve for general liability insurance. This insurance benefit included a credit of $800,000 this year as compared to $300,000 of additional expense last year.

Speaker #1: The inflationary pressure was partially offset by the benefit of a 3.2% check increase. Labor, as a percentage of total sales, improved 40 basis points to 32.5% as compared to the second quarter of 2025.

Speaker #1: Labor dollars per store week increased 4.7% due to wage and other labor inflation of 3.9% and growth in hours of 0.8%. Other operating costs were 14.2% of sales, which was 28 basis points better than the second quarter of 2025.

Speaker #1: The leverage was a result of higher sales combined with a $1.1 million net benefit to our quarterly reserve for general liability insurance. This insurance benefit included a credit of $800,000 this year, as compared to $300,000 of additional expense last year.

Speaker #1: Moving below restaurant margin, G&A dollars increased 15.4% as compared to the second quarter of 2025 and came in at 4.3% of revenue for the second quarter.

Michael Bailen: Moving below restaurant margin, G&A dollars increased 15.4% as compared to Q2 2025 and came in at 4.3% of revenue for Q2. For full year 2026, we continue to forecast a low double-digit percentage increase in our total G&A dollar expense. Depreciation expense increased 15% year-over-year in Q2 and came in at 3.5% of revenue. For full year 2026, we continue to expect a low teen percentage increase in our total depreciation dollar expense. Our effective tax rate for the quarter was 13.5%. At this time, we are updating our guidance for the full year 2026 income tax rate from between 14% and 15% to approximately 14%. Lastly, we want to highlight the likely negative impact to same-store sales growth in Q4 from several holiday shifts.

Speaker #1: For full year 2026, we continued a forecast a low double-digit percentage increase in our total G&A dollar expense. Depreciation expense increased 15% year over year in the second quarter and came in at 3.5% of revenue.

Speaker #1: For full year 2026, we continued to expect a low teen percentage increase in our total depreciation dollar expense. Our effective tax rate for the quarter was 13.5%.

Speaker #1: At this time, we are updating our guidance for the full year 2026 income tax rate from between 14 and 15 percent to approximately 14%.

Speaker #1: Lastly, we want to highlight the likely negative impact to same-store sales growth in the fourth quarter from several holiday shifts. Year over year, Halloween is shifting from a Friday to a Saturday, and Christmas Day is shifting from a Thursday to a Friday.

Michael Bailen: Year-over-year, Halloween is shifting from a Friday to a Saturday, and Christmas Day is shifting from a Thursday to a Friday. In total, we estimate an approximately 75 basis point negative impact to Q4 same-store sales growth from these shifts. Now I will turn the call back over to Jerry for final comments.

Speaker #1: In total, we estimate an approximately 75 basis point negative impact to fourth quarter same-store sales growth from these shifts. Now, I will turn the call back over to Jerry for final comments.

Speaker #3: Thanks, Michael. In September, we will begin our annual fall tour where we visit with approximately 800 managing partners across the country. I'm looking forward to listening to the best operators in the business and learning how we can better support them and help them continue to grow our legendary company.

Jerry Morgan: Thanks, Michael. In September, we will begin our annual fall tour where we visit with approximately 800 managing partners across the country. I'm looking forward to listening to the best operators in the business and learning how we can better support them and help them continue to grow our legendary company. Finally, over the last several months, the world was watching as the US hosted FIFA World Cup matches. It was amazing to see the social media posts from visitors who experienced Texas Roadhouse for the first time. These guests fell in love with our high-level hospitality, legendary food, especially our fresh-baked bread and those free peanuts. These experiences inspire us further as we continue with our purpose of serving our communities across America and the world. Let's go, Roadhouse.

Speaker #3: Finally, over the last several months, the world was watching as the US hosted World Cup matches. It was amazing to see the social media posts from visitors who experienced Texas Roadhouse for the first time.

Speaker #3: These guests fell in love with our high-level hospitality legendary food, especially our fresh baked bread and those free peanuts. These experiences inspire us further as we continue with our purpose of serving a communities across America and the world.

Speaker #3: Let's go Roadhouse.

Speaker #1: That concludes our prepared remarks. Holly, please open the line for questions.

Michael Bailen: That concludes our prepared remarks. Holly, please open the line for questions.

Speaker #4: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand.

Holly: We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Tarantino with Baird. David, your line is open. Please go ahead.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Tarantino with Baird. David, your line is open. Please go ahead.

Speaker #4: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #4: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of David Tarantino with Baird.

Speaker #4: David, your line is open. Please go ahead.

Speaker #5: Hi. Good afternoon. My question's on the pricing philosophy going forward. So thank you for the update on what you're planning. For the start of Q4, but my bigger picture question is, how do you think you and the system will approach price increases in a scenario where inflation moderates more meaningfully?

David Tarantino: Hi. Good afternoon. My question's on the pricing philosophy going forward. Thank you for the update on what you're planning for the start of Q4. My bigger picture question is: How do you think you and the system will approach price increases in a scenario where inflation moderates more meaningfully? I know Texas Roadhouse has had a long history of pricing below inflation, and it's served you well. The last year or two, you've absorbed quite a bit of inflation. Just maybe explain maybe how you might recapture some of that absorption, if you will, as we move forward.

Speaker #5: I know Texas Roadhouse has had a long history of pricing below inflation, and it's served you well. But the last year or two, you've absorbed quite a bit of inflation.

Speaker #5: So just maybe explain maybe how you might recapture some of that absorption, if you will, as we move forward.

Speaker #3: Hey, thanks, David. This is Jerry. You know, I think we always go into these pricing conversations with a conservative approach and we've had to make adjustments over the last several years and I think we look at it from an over an annual basis on what are we facing structurally, and then what do we feel like will change in you know, we're going to go into it.

Jerry Morgan: Hey, thanks, David. This is Jerry. I think we always go into these pricing conversations with a conservative approach, and we've had to make adjustments over the last several years. I think we look at it from an over an annual basis on what are we facing structurally, and what do we feel like will change. We're going to go into it. We're going to talk to our operators. We really want to see what's going on, not only in their communities, but maybe in their state, and then try to match it up to what we believe that the company needs. I think we've always had that approach. To keep value into our menu is absolutely critical for us as we continue to try to take care of our staff and our guests and our shareholders.

Speaker #3: We're going to talk to our operators. We really want to see what's going on, not only in their communities, but maybe in their state and then try to match it up to what we believe that the company needs.

Speaker #3: So I think we've always had that approach to keep value into our menu is absolutely critical for us as we continue to try to take care of our staff and our guests and our shareholders.

Speaker #3: But understanding that, we have a conservative approach. We believe that this strategy and philosophy have paid very well over the years. We'll continue to review it on a biannual basis, have great conversations with our operators, and make that decision at that time.

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

Speaker #5: Great. Thank you.

David Tarantino: Great. Thank you.

Speaker #3: Thank you. Best wishes to you.

Jerry Morgan: Thank you. Best wishes to you.

Speaker #4: Your next question comes from the line of David Palmer with Evercore ISI. David, your line is open. Please go ahead.

Holly: Your next question comes from the line of David Palmer with Evercore ISI. David, your line is open. Please go ahead.

Operator: Your next question comes from the line of David Palmer with Evercore ISI. David, your line is open. Please go ahead.

Speaker #2: Thanks, good evening. I want to ask you a question about labor productivity a bit. You know, one could say you guys have been on a hot streak since the fourth quarter of '23 with labor hours growing less than half percent, half as fast as traffic since then.

David Palmer: Thanks. Good evening. I want to ask you a question about labor productivity a bit. One could say you guys have been on a hot streak since Q4 2023, with labor hours growing less than half as fast as traffic since then. Wondering, it doesn't look like it's going to stop, but I don't want to take it for granted, so I was just wondering if you could give us a sense of what you're seeing. You've talked about things like digital kitchens and guest management systems. You're testing handhelds. Perhaps that's giving you a little bit of confidence to lean into To Go. Just want to give you a sense of will this hot streak continue, and what are some of the things going on behind the scenes, and thanks.

Speaker #2: Wondering and it doesn't look like it's going to stop, but I don't want to take it for granted. So I was just wondering if you could give us a sense of what you're seeing you know, that you've talked about things like digital kitchens and guest management systems.

Speaker #2: You're testing handhelds. Perhaps that's giving you a little bit of confidence to lean into to go. So just want to give you a sense of will this hot streak continue and what are some of the things going on behind the scenes and thanks.

Speaker #1: Yeah. Hey David, it's Mike. Thanks for the question. You know, you hit on it nicely. It is a number of items that are continuing to build on themselves on a quarter-to-quarter basis.

Michael Bailen: Yeah. Hey, David, it's Mike. Thanks for the question. You hit on it nicely. It is a number of items that are continuing to build on themselves on a quarter-to-quarter basis that is driving that momentum. A quieter kitchen is a factor. That's a beneficial part of the technology investments that we've made. Importantly, the managing partners staffing for the level of sales that they want. The other thing that helps with that ratio for us is tenure of our Roadies being as high as it is, and also the continued growth of the To Go business. All of those are working in concert. Importantly, it's not a metric that we target our operators with. While we like what we see, we don't target them on it. We do hope that it will continue based on the trends we're seeing.

Mike Lenihan: Yeah. Hey, David, it's Mike. Thanks for the question. You hit on it nicely. It is a number of items that are continuing to build on themselves on a quarter-to-quarter basis that is driving that momentum. A quieter kitchen is a factor. That's a beneficial part of the technology investments that we've made. Importantly, the managing partners staffing for the level of sales that they want. The other thing that helps with that ratio for us is tenure of our Roadies being as high as it is, and also the continued growth of the To Go business. All of those are working in concert. Importantly, it's not a metric that we target our operators with. While we like what we see, we don't target them on it. We do hope that it will continue based on the trends we're seeing.

Speaker #1: That is driving that momentum. A quieter kitchen is a factor. That is a that's a beneficial beneficial part of the technology investments that we've made.

Speaker #1: Importantly, the managing partner staffing for the level of sales that they want. You know, the other thing that helps with that ratio for us is tenure of our roadies.

Speaker #1: Being as high as it is and also the continued growth of the to-go business, all of those are working in concert. And so you know, importantly, it's not a metric that we target our operators with.

Speaker #1: And so while we like what we see, we don't target them on it. And we do hope that it will continue based on the trends we're seeing.

Speaker #2: Thank you.

David Palmer: Thank you.

Speaker #4: Your next question comes from the line of Zach Fathom with Wells Fargo. Zach, your line is open. Please go ahead.

Holly: Your next question comes from the line of Zach Fadem with Wells Fargo. Zach, your line is open. Please go ahead.

Operator: Your next question comes from the line of Zach Fadem with Wells Fargo. Zach, your line is open. Please go ahead.

Speaker #5: Hi. Good afternoon. Could we start with the food and beverage margin bridge in terms of commodity impact versus check impact versus entree mix? And in terms of that entree mix, grocery prices are starting to peak for beef.

Zach Fadem: Hi. Good afternoon. Could we start with the food and beverage margin bridge in terms of commodity impact versus check impact versus entree mix? In terms of that entree mix, grocery prices are starting to peak for beef, so maybe we could talk through what that typically means for entree mix as well as traffic as grocery prices retrace.

Speaker #5: So maybe we could talk through what that typically means for entree mix as well as traffic as grocery prices retrace.

Speaker #1: Yeah. Hey, Zach. It's Michael. So I mean, certainly if I understand your question correctly, I mean, we do see a benefit to our traffic.

Michael Bailen: Yeah. Hey, Zach, it's Michael. Certainly, if I understand your question correctly, we do see a benefit to our traffic. We're seeing a benefit to the steak category, given the high price of beef at retail. What may happen in a world where beef prices come down? Will we see a change in our traffic trends? Hard to know. I think we certainly over, you know, quite a number of years through multiple beef cycles, seeing very strong traffic performance. We do, like I said, tend to outperform in a time of this inflationary beef environment. I certainly would not expect that we won't be able to continue to grow in a lower inflationary environment. Times like this, it introduces new people to Texas Roadhouse, and we believe once they've come in, they're going to want to come back.

Speaker #1: We're seeing a benefit to the state category given the high price of beef at retail. What may happen in a world where you know, beef prices you know, come down, will we see you know, a change in our traffic trends?

Speaker #1: Hard to know. I think we certainly over you know, quite a number of years through you know, multiple beef cycles seeing very strong traffic performance.

Speaker #1: We do you know, like I said, tend to outperform in a time of this inflationary beef environment. But certainly would not expect that we won't you know, be able to continue to grow you know, in a lower inflationary environment.

Speaker #1: Times like this, you know, it introduces new people to Texas Roadhouse and we believe once they've come in, they're going to want to come back.

Speaker #5: Thanks for the time.

Zach Fadem: Thanks for the time.

Speaker #3: Thank you.

Jerry Morgan: Thank you.

Michael Bailen: Thank you.

Speaker #4: Your next question comes from the line of Andrew Charles with TD Cohen. Andrew, your line is open. Please go ahead.

Holly: Your next question comes from the line of Andrew Charles with TD Cowen. Andrew, your line is open. Please go ahead.

Operator: Your next question comes from the line of Andrew Charles with TD Cowen. Andrew, your line is open. Please go ahead.

Speaker #5: Great. Thank you guys so much. I had a two-part question on the reduced commodity inflation. You know, first, what did you attribute to the favorable commodity inflation of the quarter versus your forecast?

Andrew Charles: Great. Thank you guys so much. I had a two-part question on the reduced commodity inflation. First, what did you attribute to the favorable commodity inflation in the quarter versus your forecast, as you guys were about 80% contracted? Curious, on how much visibility you have, how contracted are you in the back half of the year with commodities and relative to how contracted you were a year ago at this time for your back half 2025?

Speaker #5: Did you guys were about 80% contracted? And then curious, you know, on how much visibility you have? How contracted are you in the back half of the year with commodities?

Speaker #5: And relative to you know, how contracted you were a year ago at this time for your back half '25?

Speaker #3: Yeah. Hey, Zach. It's you know, Michael. So our second quarter commodity inflation you know, was only slightly better than you know, what we were you know, maybe internally modeling.

Michael Bailen: Hey, Zach, it's Michael. Our Q2 commodity inflation was only slightly better than what we were maybe internally modeling. Because we were well-informed on that going into the last call. We did see in June, we saw sirloin prices really start to move lower and some deflation there, and that's really been the biggest benefit to our commodity expectations. Expecting to see much lower inflation in Q3 than we had originally anticipated. Now expecting 2% to 3% inflation in Q3 before it's stepping back up to approximately 5% in Q4. Sirloin is the biggest driver of that improvement. As far as contracted, on our overall commodity basket, we're about 80% locked for Q3 and about 40% locked for Q4, and that's not much different than you would have seen us having at this time last year for 2025.

Speaker #3: So it was not you know, because we were you know, well informed on that going into the last call. We did see a continuation or like you know, in June, we saw sirloin prices really start to move lower and you know, and some deflation there.

Speaker #3: And that's really been the biggest benefit to you know, our commodity expectations. So expecting to you know, see you know, much lower inflation in the third quarter than we had originally anticipated.

Speaker #3: Now expecting 2% to 3% inflation in Q3 before it steps back up to approximately 5% in the fourth quarter. So, you know, sirloin is the biggest driver of that improvement.

Speaker #3: As far as contracted, we're about 80 on our overall commodity basket. We're about 80% locked for Q3 and about 40% locked for Q4. And that's not much different than you would have you know, seen us having at this time last year for 2025.

Speaker #5: That's great. Thank you, Michael.

Andrew Charles: That's great. Thank you, Michael.

Holly: Your next question comes from the line of Brian Harbour with Morgan Stanley. Brian, your line is open. Please go ahead.

Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Brian, your line is open. Please go ahead.

Speaker #4: Your next question comes from the line of Brian Harbor with Morgan Stanley. Brian, your line is open. Please go ahead.

Speaker #5: Yeah. Thanks. Hi guys. I guess Jerry, you know, you started just by talking about you know, the pipeline and development. What could you talk a little bit about just some of the you know, the recent openings where you've been you know, finding success kind of size of the pipeline in you know, how you feel about Texas Roadhouse unit growth specifically?

Brian Harbour: Yeah, thanks. Hi, guys. I guess, Jerry, you started just by talking about the pipeline and development. Could you talk a little bit about just some of the recent openings where you've been finding success, kind of size of the pipeline, and how you feel about Texas Roadhouse unit growth specifically?

Speaker #3: Yeah. Thanks. Yeah. So I mean, the pipeline is obviously we continue to focus on that 20-ish a year in openings that continue to be very successful all across the country.

Jerry Morgan: Yeah. Thanks. Yeah. The pipeline is obviously we continue to focus on that 20-ish a year in openings that continue to be very successful all across the country. We've got a full pipeline for 2026, 2027, 2028. We're really working into 2029. Working a lot of deals. We continue to have success. I'll tell you, wherever we go, we're focused on our food, our service. To open our restaurant at the volume that we're at is really just hats off to these operators at every level, the single unit, the multi-unit, the regionals, everything, the commitment, all the coaches and the training managers that it takes to really make a first impression in every community that we open up at. When you have your reputation out there, even if you're new to the community, there are expectations.

Speaker #3: So you know, I mean, we've got a full pipeline for 26, 27, 28. We're really working into 29. So with that in view, so working a lot of deals you know, we continue to have success.

Speaker #3: I'll tell you, wherever we go, we're focused on our food, our service, and you know, open our restaurant at the volume that we're at is really just hats off to these operators at every level of senior unit, the multi-unit, the regionals, everything the commitment, all the coaches and the training managers that it takes to really make a first impression in every community that we open up at.

Speaker #3: And when you have your reputation out there, even if you're new to the community, there are expectations. And I'm really proud of the team and all of our operators that get out there and open the doors and hustle to show our guests and our community what legendary food and legendary service is about.

Jerry Morgan: I'm really proud of the team and all of our operators that get out there and open the doors and hustle to show our guests and our community what legendary food and legendary service is about. The pipeline is strong. We continue to focus, and we have great success at the openings.

Speaker #3: But the pipeline is strong. We continue to focus, and we have great success at the openings.

Speaker #4: Your next question comes from the line of Lauren Silverman with Deutsche Bank. Lauren, your line is open. Please go ahead.

Holly: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren, your line is open. Please go ahead.

Operator: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren, your line is open. Please go ahead.

Speaker #6: Thank you very much and congrats on the great results. Just a clarifying question and my actual question. The clarifying is just on the commodity inflation.

Lauren Silberman: Thank you very much. Congrats on the great results. Just a clarifying question, my actual question. The clarifying is just on the commodity inflation. Why is it stepping up in Q4? Just help me understand that. The actual question is on average weekly sales. I mean, your fifth quarter of double-digit growth has been amazing. What do you think is driving the momentum? Anything that you're doing differently? Can you remind us how the labor model works with to-go and what capacity the restaurants have with the current labor?

Speaker #6: Why is it stepping up in Q4? Just help me understand that. And then the actual question is on average weekly sales. I mean, your fifth quarter of double-digit growth has been amazing.

Speaker #6: What do you think is driving the momentum? Is there anything that you're doing differently? And then, can you remind us how the labor model works with to-go, and what capacity the restaurants have with the current labor?

Speaker #1: Hey, Lauren. I'll start with the commodity question. So again, in the third quarter right now, we are seeing some good benefit on the sirloin side.

Michael Bailen: Hey, Lauren, I'll start with the commodity question. Again, Q3 right now, we are seeing some good benefit on the sirloin side. We do think, again, these cuts, as one moves one way and the other doesn't move quite as much, that does change how the retailers look about what they're going to buy and what they're going to market. We do think that as sirloin prices fall, that may then lead them to purchase more of that into Q4 as something that they will put into their stores. It's based upon what we have locked, what we're lapping, and how we believe the cuts will move over time and also factoring in what's going on with supply.

Speaker #1: You know, we do cuts as one moves one way and the other you know, doesn't move quite as much, that will that does change how the retailers look about what they're going to buy and what they're going to market.

Speaker #1: So we do think that you know, as sirloin prices fall, that may you know, then lead them to purchase more of that into the fourth quarter.

Speaker #1: As something you know, that they will you know, put into their stores. So it's our current you know, it's based upon what we have locked, what we're lapping, and how we believe the cuts will move over time.

Speaker #1: And you know, also factoring in you know, the you know, what's going on with supply.

Speaker #3: And Lauren, this is Jerry. I'll just on the overall sales growth. I mean, we obviously are continuing to have momentum on traffic, which means to me that we're opening or operating quality shifts.

Jerry Morgan: Lauren, this is Jerry. Just on the overall sales growth, we obviously are continuing to have momentum on traffic, which means to me that we're opening or operating quality shifts, and that we're finding ways to get more people through the dining room. All of the components of pay at the table, our guest management system upgrade, the digital kitchen, our operators just really focusing on a high level in the peak times and even in the non-peak times. It just tells me not only growing dining room sales, we're growing our to-go traffic because of the ease to order, the ease to pick up. Our operators are focused on making sure that we have all the items that the guest has ordered, so that when they get home and they open up our food at their own dining room tables, they have everything that they need.

Speaker #3: And that we're finding ways to get more people through the dining room and, you know, all of the components of pay at the table, our guest management system upgrade, the digital kitchen, our operators just really focusing on a high level.

Speaker #3: You know, in the peak times and even in the non-peak times, it just tells me that not only are we growing dining room sales, we're growing our to-go traffic because of the ease to order and the ease to pick up.

Speaker #3: Our operators are focused on making sure that we have all the items that the guest has ordered so that when they get home, and they open up our food at their own dining room tables, they have everything that they need.

Speaker #3: So I think it's just all of us putting this energy and towards getting a great experience for our guests. And whether it be through the to-go side of it or to the dining room, but just being energetic when it comes to serving people.

Jerry Morgan: I think it's just all of us putting this energy in towards getting a great experience for our guests, whether it be through the to-go side of it or to the dining room, but just being energetic when it comes to serving people, I think is really what's paid off for us for a long time.

Speaker #3: I think that’s really what’s paid off for us for a long time.

Speaker #6: Thank you.

[Analyst]: Thank you.

Lauren Silberman: Thank you.

Speaker #3: Thank you.

Jerry Morgan: Thank you.

Speaker #4: Your next question comes from the line of Brian Bittner with Oppenheimer. Brian, your line is open. Please go ahead.

Holly: Your next question comes from the line of Brian Bittner with Oppenheimer. Brian, your line is open. Please go ahead.

Operator: Your next question comes from the line of Brian Bittner with Oppenheimer. Brian, your line is open. Please go ahead.

Speaker #7: Thanks. Good afternoon, guys. As it relates to the 1% pricing that you're going to take, can you just confirm does that put you around 3% for 4Q?

Brian Bittner: Thanks. Good afternoon, guys. As it relates to the 1% pricing that you're going to take, can you just confirm, does that put you around 3% for Q4? Can you guys talk about the mix trends that you're seeing maybe in Q2, and how you're anticipating mix to impact average check as we go into Q3 and Q4?

Speaker #7: And can you guys talk about the mix trends that you're seeing? Maybe in 2Q and how you're anticipating mix to impact average check and as we go into 3 and 4Q?

Speaker #1: Yeah. Hey Brian, it's Mike. I'll start with the first on pricing, and Michael will jump in on mix. So with the 1% in Q4, we will have 2.9%.

Michael Bailen: Yeah. Hey, Brian, it's Mike. I'll start with the first on pricing, and Mike will jump in on mix. With the 1%, in Q4, we will have 2.9%, and in Q1 of next year, we'll also have that same 2.9%.

Mike Lenihan: Yeah. Hey, Brian, it's Mike. I'll start with the first on pricing, and Mike will jump in on mix. With the 1%, in Q4, we will have 2.9%, and in Q1 of next year, we'll also have that same 2.9%.

Speaker #1: And in Q1 of next year, we'll also have that same 2.9%.

Speaker #7: Yeah. And Brian, as far as you know, mix is concerned, you know, in the second quarter, you know, we definitely saw you know, improving trends as we moved through the quarter.

Jerry Morgan: Yeah, Brian, as far as mix is concerned, in Q2 we definitely saw improving trends as we moved through the quarter. Still about 40 basis points negative overall for mix, but in the dining room, mix turned positive, which was very good to see. I'll tell you here, in the first five weeks of Q3, we've seen a continued improvement in those mix trends with the vast majority of our pricing flowing through. That is certainly beneficial to profitability when that happens. We'll see if those trends continue, but so far looking very positive.

Michael Bailen: Yeah, Brian, as far as mix is concerned, in Q2 we definitely saw improving trends as we moved through the quarter. Still about 40 basis points negative overall for mix, but in the dining room, mix turned positive, which was very good to see. I'll tell you here, in the first five weeks of Q3, we've seen a continued improvement in those mix trends with the vast majority of our pricing flowing through. That is certainly beneficial to profitability when that happens. We'll see if those trends continue, but so far looking very positive.

Speaker #7: You know, still about 40 basis points negative overall for mix. But in the dining room, you know, mix turned you know, positive. Which was you know, very good to see.

Speaker #7: And I'll tell you here, you know, in the first five weeks of the third quarter, we've seen a continued improvement in those mix trends with the vast majority of our pricing flowing through.

Speaker #7: And so that is certainly you know, beneficial you know, to you know, profitability when that happens. We'll see if those trends continue, but you know, so far looking you know, very positive.

Speaker #7: Thank you.

Rachel Smith: Thank you.

Brian Bittner: Thank you.

Speaker #4: Your next question comes from the line of Dennis Geiger with UBS. Dennis, your line is now open. Please go ahead.

Holly: Your next question comes from the line of Dennis Geiger with UBS. Dennis, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Dennis Geiger with UBS. Dennis, your line is now open. Please go ahead.

Speaker #7: Great. Thank you, guys. Just wondering if you could touch a little more on beef. Michael, you spoke to it a good amount a couple of minutes ago.

Dennis Geiger: Great. Thank you, guys. Just wondering if you could touch a little more on beef. Michael, you spoke to it a good amount a couple of minutes ago, but just anything more on what the team is seeing as far as supply and demand dynamics? I know you kind of gave the output of what supply has meant, but just anything more on the dynamics that the team's observing. Thank you.

Speaker #7: But just anything more on what the team is seeing as far as supply and demand dynamics? I know you kind of gave the output of what supply you know, has meant.

Speaker #7: But just anything more on the dynamics that the teams observing. Thank you.

Speaker #1: Hey, Dennis. Yeah, happy to do that. Not sure necessarily that much has changed of recent, you know, there from what we've spoken about, you know, over the, you know, last several quarters.

Michael Bailen: Yeah. Hey, Dennis. Yeah, happy to do that. Not sure necessarily that much has changed of recent there from what we've spoken about over the last several quarters. Supply is still very tight, and we'll likely see a tight Q4 with regards to beef and cattle supply. Demand overall for beef is still very strong. There's certainly, at retail, still been some movements in trade to other proteins, and trade within the beef category to some extent as well. Trends that we had talked about before. There's been the announcement of the Mexican border reopening later this quarter, but that's more of an opportunity, if any, for next year. It takes a while. One, it's going to be a very small reopening, and that takes a while before you would see any benefit from that.

Speaker #1: Supply is still very tight and will likely see you know, a tight fourth quarter. With regards to you know, you know, beef and cattle supply, demand overall for beef is still very strong.

Speaker #1: There's certainly at retail still been some you know, movements in trade to other proteins. And trade within the beef category to some extent. As well as you know, trends that we had talked about you know, you know, before.

Speaker #1: You know, there's been talk, you know, the announcement of the Mexican border reopening, you know, later this quarter. But that's more of an opportunity, if any, for next year.

Speaker #1: It takes a while—one, it's going to be a very small reopening. And then it takes a while before you would see any benefit from that.

Speaker #7: Thank you very much.

Dennis Geiger: Thank you very much.

Speaker #4: Your next question comes from the line of Jim Solera with Stevens. Jim, your line is now open. Please go ahead.

Holly: Your next question comes from the line of Jim Salera with Stephens. Jim, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Jim Salera with Stephens. Jim, your line is now open. Please go ahead.

Speaker #8: Hey, guys. Good afternoon. Thanks for taking our question. Hoping you can provide some incremental color on the continued traffic outperformance, you know, as you guys continue to deliver very robust traffic gains.

Jim Salera: Hey, guys. Good afternoon. Thanks for taking our question. Just hoping you can provide some incremental color on the continued traffic outperformance. As you guys continue to deliver very robust traffic gains, we see the industry with traffic down low single digits. I wonder if you can help us kind of disaggregate how much is increased guest frequency versus new households coming to the brand. I recognize not everyone might know about Texas Roadhouse, but I feel just the prominence at this point, especially you mentioned some of the World Cup visibility, would allow for most people to at least know that Texas Roadhouse in their area exists. Just wondering if you could help us kind of break out that frequency versus new household drivers.

Speaker #8: We see the industry with traffic down you know, low single digits. And I wonder if you can help us kind of disaggregate how much is increased guest frequency versus new households coming to the brand?

Speaker #8: I recognize not everyone might know about Texas Roadhouse, but I feel just the prominence at this point, especially you mentioned some of the World Cup visibility.

Speaker #8: Would allow for most people to at least know that Texas Roadhouse in their area exists. So just wondering if you can help us kind of break out that frequency versus new household drivers.

Speaker #3: Hey, Dennis. Jerry, I don't know that we measure it necessarily like that. I mean, we focus on trying to give guests a great experience and rely on word of mouth.

Jerry Morgan: Hey, Jim, it's Jerry. I don't know that we measure it necessarily like that. We focus on trying to give guests great experience. By word of mouth, they tell others, and then we get to try them. I think once they get in and when you try made from scratch food and fresh baked bread and hand cut steaks and all of the things that we do is just kind of the word gets out and we continue to exceed people's expectations. I think that's really what we focus on. We do have a first time guest program, so we absolutely identify guests in a restaurant, and we try to really create a relationship with all of our guests and especially on their first time in, just letting them telling our story, who we are, how we do business, and how we approach things.

Speaker #3: They tell others and then we get to try them. But I think once they get in and you know, when you try meat from scratch food and fresh baked bread and hand-cut steaks and all of the things that we do, it's just kind of the word gets out.

Speaker #3: And we continue to exceed people's expectations. And I think that's really what we focus on. We do have a first-time guest program. So we absolutely identified guests in a restaurant.

Speaker #3: And we try to really create a relationship with all of our guests. And especially on their first time in, just letting them telling our story who we are, how we do business, and how we approach things.

Speaker #3: And you know, we just try to knock their socks off with legendary food and high-level hospitality. And just put a smile on their face.

Jerry Morgan: We just try to knock their socks off with legendary food and high-level hospitality and just put a smile on their face. The worlds are complicated. Our job is to fill their bellies with legendary made from scratch food and put a big smile on their face to just say thank you for coming to our restaurant and providing us with an opportunity to serve them. I think that's really how we focus on driving traffic. Again, on the to-go side, it's just a focus and emphasis on making sure that the guest has everything that they need when they get home and they unpack our bag and our food for their family at their dining room table. It's just our operators do an incredible job of building a strong relationship.

Speaker #3: I mean, the worlds are complicated. Our job is to fill their bellies with legendary meat from scratch food and put a big smile on their face and just say thank you for coming to our restaurant and providing us with an opportunity to serve them.

Speaker #3: So I think that's really how we focus on driving traffic, and again, on the to-go side, it's just a focus and emphasis on making sure that the guest has everything that they need when they get home and they unpack our bag and our food for their family at their dining room table.

Speaker #3: There's just our operators do an incredible job of building a strong relationship. You know, we're a nationally known company, but we like to be known as locally owned and operated.

Jerry Morgan: We're a nationally known company, but we like to be known as locally owned and operated, and our partners really see them owning their communities. Food service and community partnership has always been the key to our success.

Speaker #3: And our partners really see them owning their communities. And food service and community partnership is always been the key to our success.

Speaker #8: Appreciate the thoughts. I'll pass it on.

Michael Bailen: Appreciate the thoughts, Bob Essman.

Jim Salera: Appreciate the thoughts, Bob Essman.

Speaker #7: Thanks, Jim.

Jerry Morgan: Thanks, Jim.

Speaker #4: Your next question comes from the line of Sarah Senatore with Bank of America. Sarah, your line is now open. Please go ahead.

Holly: Your next question comes from the line of Sara Senatore with Bank of America. Sara, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Sara Senatore with Bank of America. Sara, your line is now open. Please go ahead.

Speaker #5: Thank you. I have one clarification—hopefully that doesn’t count as a question—and then a question. The clarification is, I think you know, the negative mix you were mentioning, Michael: effectively, there’s a little bit of pressure on mix from to-go because the average check is lower.

Sara Senatore: Thank you. I have one clarification. Hopefully, that doesn't count as its own question. Then a question. The clarification is, I think the negative mix you were saying, Michael, effectively, there's a little bit of pressure on mix from to-go because the average check is lower. I want to confirm that's true and maybe should we expect that as to-go continues to build as it has nicely as a percentage of sales, maybe you see that a little bit continue. The question actually is about, Jerry, you mentioned a line of sight for Texas Roadhouse even into perhaps 2029. Do you have any sort of different thoughts on how many units you think the market can support? As your volumes keep going up, it would seem that the density you could support would be higher. I was just curious where that stands. Thank you.

Speaker #5: So I want to confirm that's true and maybe, you know, should we expect that as to-go continues to build—as it has nicely as a percentage of sales—you may see that continue a little bit.

Speaker #5: But the question actually is about, you know, Jerry, you mentioned a line of sight for Texas Roadhouse even into perhaps 2029. Do you have any sort of different thoughts on how many units you think the market can support?

Speaker #5: I mean, as your volumes keep going up, it would seem that the density you could support would be higher. But I was just curious where that stands.

Speaker #5: Thank you.

Speaker #1: Thanks, Sarah. I'll keep off on the you know, we have up to a couple of years ago to approximately 900 restaurants. I don't think we're going to change anything at this time.

Jerry Morgan: Thanks, Sara. I'll kick off on the. We have upped it a couple of years ago to approximately 900 restaurants. I don't think we're going to change anything at this time. We feel confident in what we are game plan currently. We're focused on that 20-ish restaurants a year being highly successful openings. We won't update that guidance at this time, but we are very confident that America wants more Texas Roadhouses out there serving them high level hospitality and legendary food.

Speaker #1: We feel confident in what we are game plan currently. We're focused on that 20th restaurants a year being highly successful openings. So we won't update that guidance at this time.

Speaker #1: But we are very confident that America wants more Texas Roadhouses out there serving them high-level hospitality and legendary food. And Sarah, I'll clarify on the mix.

Michael Bailen: Sara, I'll clarify on the mix. In Q2, we did have about 40 basis points of overall negative mix. In the dining room, mix was just slightly positive, offset by the rising to-go mix. Quarter to date, Q3, overall mix is flat, dining room has gotten more positive, and the to-go mix has actually gotten a little bit better, even though the to-go is still growing.

Speaker #1: In the second quarter, we did have about 40 basis points of overall negative mix. In the dining room, mix was just slightly positive, offset by the rising to-go mix.

Speaker #1: Quarter to date, Q3, overall mix is flat. And dining room has gotten more positive. And the to-go mix has actually gotten a little bit better, even though to-go is still growing.

Speaker #5: Thank you.

Sara Senatore: Thank you.

Speaker #4: Your next question comes from the line of Gregory Frankford with Guggenheim Partners. Gregory, your line is open. Please go ahead.

Holly: Your next question comes from the line of Gregory Francfort with Guggenheim Partners. Gregory, your line is open. Please go ahead.

Operator: Your next question comes from the line of Gregory Francfort with Guggenheim Partners. Gregory, your line is open. Please go ahead.

Speaker #8: Yeah. Thanks. You could add two or three restaurants in Bergen County, New Jersey. I would love that. But my question is.

Gregory Francfort: Yeah, thanks. You could add two or three restaurants in Bergen County, New Jersey. I would love that. My question is.

Jerry Morgan: We're working on it.

Speaker #3: We're working on it.

Gregory Francfort: I appreciate that. My question's on the smaller brands and just Bubba's. The comps have been okay, but I think the new stores the last six months have just been phenomenal. Just what you're seeing there and Jaggers. I think the reason to keep it franchised has been because maybe there wasn't a lot of QSR talent in the organization existing at Roadhouse. Mike, I guess I'm wondering with you coming in, do you think about maybe changing that into maybe a company operated model going forward? Or just any other thoughts in terms of your experience from QSR and bringing it into the Jaggers space? Thanks.

Speaker #8: I appreciate that. My question is on the smaller brands and just Bubba’s. The comps have been okay, but I think the new stores over the last, you know, six months have just been phenomenal.

Speaker #8: Just what you're seeing there and Jaggers, I think the reason to keep it franchised has been because maybe there wasn't a lot of QSR talent in the organization existing at Roadhouse.

Speaker #8: And Mike, I guess I'm wondering, with you coming in, do you think about maybe changing that into a company-operated model going forward, or just any other thoughts in terms of your experience from QSR and bringing it into the Jaggers space?

Speaker #8: Thanks.

Speaker #3: Yeah. I'll start off and we'll let Mike answer that last part. You know, on the Bubba's 33, we continue to focus on the food and the experience and we feel really, really good about the brands.

Jerry Morgan: Yeah, I'll start off and we'll let Mike answer that last part. On the Bubba's 33, we continue to focus on the food and the experience, and we feel really, really good about the brands. All the openings these last couple of years have done extremely well. We continue to work on it. We've got the right leadership. We've got the focus on the food and the service model. Just being consistent about it is that component. I do think that there's a lot more competition for Bubba's 33. It's not as well known, so we got to continue to work hard on our local store marketing side. We absolutely have great food and the same service model. A lot of excitement and energy around there.

Speaker #3: All the openings these last couple of years have done extremely well. We continue to work on it. We've got the right leadership. We've got the focus on the food and the service model.

Speaker #3: Just being consistent about it is that component. I do think that there's a lot more competition for Bubba's 33. It's not as well known.

Speaker #3: So we got to continue to work hard on our local store marketing side. But we absolutely have great food and the same service model.

Speaker #3: There's a lot of excitement and energy around there. We focus on the burgers, the pizzas, the rock and roll, the energy, the sports theme, and all of those things are components of what we believe, long-term, Bubba's 33 will continue to have tremendous success with in that competitive set.

Jerry Morgan: We focus on the burgers, the pizzas, the rock and roll, the energy, the sports theme, and all of those things are components of what we believe long term Bubba's 33 will continue to have tremendous success in that competitive set. In Jaggers, I think we have had some franchise partnerships. We've really learned a lot with them. We like that learning from that standpoint. We'll continue to look at building the company out as well as our few franchise partners having continued success in growing that side of the business and then Mike might have a comment.

Speaker #3: In Jaggers, you know, I think we have had some franchise partnerships. We've really learned a lot with them. We like that learning from that standpoint.

Speaker #3: And so we'll continue to look at building the company out as well as our few franchise partners having continued success and grow in that side of the business.

Speaker #3: And then Mike might have a comment.

Speaker #1: Yes, sir.

Mike Lenihan: Yes, sir. Listen, on Jaggers, I agree. I think there's a place for both franchise partners and company ownership with where the brand sits in its life cycle. I think importantly, just to piggyback on Jerry's comments around the operating DNA that exists in Jaggers because it's part of the Texas Roadhouse family, our franchisees are very strong operators, and we're learning just as much from them as in our own company restaurants. For the time period, it is a very beneficial mix for us to have both.

Speaker #7: Listen, on Jaggers, I agree. I think there's a place for both franchise partners and company ownership with where the brand sits in its life cycle.

Speaker #7: I think, importantly, just to piggyback on Jerry's comments around the operating DNA that exists in Jaggers—because it's part of the Texas Roadhouse family—our franchisees are very, very strong operators, and we're learning just as much from them as in our own company restaurants.

Speaker #7: So for the time period, it is a very beneficial mix for us to have both.

Speaker #4: Your next question comes from the line of Logan Reach with RBC Capital Markets. Logan, your line is open. Please go ahead.

Holly: Your next question comes from the line of Logan Reich with RBC Capital Markets. Logan, your line is open. Please go ahead.

Operator: Your next question comes from the line of Logan Reich with RBC Capital Markets. Logan, your line is open. Please go ahead.

Speaker #8: Hey, good afternoon. Thanks for taking my question. I wanted to ask on the fact-finding delivery test you guys did in a couple stores. Recently, just any sort of learnings from that test that you would be able to share today?

Logan Reich: Hey, good afternoon. Thanks for taking my question. I wanted to ask on the fact-finding delivery test you guys did at a couple stores recently. Just any sort of learnings from that test that you would be able to share today?

Speaker #3: Thank you very much. We, you know, like I said, it is a micro test of four stores. It is first-party delivery. We do third-party at Jaggers and at Bubba's and also at our new Rochelle location.

Jerry Morgan: Thank you very much. Like you said, it is a micro test of four stores. It is first-party delivery. We do third party at Jaggers and at Bubba's 33 and also at our New Rochelle location. I think most importantly is having a few conversations with folks is that we want to get educated. We view the test as beneficial to fact-finding purposes. We also know there's some operational complexities that we want to know about, in case any of our operators ever did get curious about it. I think the micro test is still very early on. I can't say that we've got a lot of learnings to be able to share at this time, but it is a micro test of four restaurants across different parts of the country.

Speaker #3: I think most importantly is having a few conversations with folks is that we want to get educated. We view the test as beneficial to fact-finding purposes.

Speaker #3: We also know there's some operational complexities that we want to know about in case any of our operators ever did get curious about it.

Speaker #3: So I think the micro test is still very early on. I can't say that we've got a lot of learnings to be able to share at this time.

Speaker #3: But it is a micro test of four restaurants across different parts of the country.

Speaker #8: Got it. Very helpful. Thank you.

Logan Reich: Got it. Very helpful. Thank you.

Speaker #3: Thank you.

Jerry Morgan: Thank you.

Speaker #4: Your next question comes from the line of John Tower with City. John, your line is now open. Please go ahead.

Holly: Your next question comes from the line of Jon Tower with Citi. Jon, your line is now open. Please go ahead.

Operator: Your next question comes from the line of Jon Tower with Citi. Jon, your line is now open. Please go ahead.

Speaker #5: Hi. Hi, this is Karen Holthaus on for John. Thanks for taking the question. I wanted to dig a little bit into the Bubba's same-store sales performance.

Karen Holthouse: Hi, this is Karen Holthouse on for Jon. Thanks for taking the question. I wanted to dig a little bit into the Bubba's same-store sales performance. Maybe if there's ways to decompose that a little bit into maybe some older legacy units, more recent units, more recent markets, units that are closer to where you want the current prototype to be versus the ones that are not. Trying to get a better sense of if you could isolate the part of that system that's the closest to where you want it to be, is that chunk out-comping the total system?

Speaker #5: And maybe if there's, you know, ways to decompose that a little bit into maybe some older legacy units, more recent units, more recent markets, you know, units that are closer to where you want the current prototype to be versus the ones that are not.

Speaker #5: Trying to get a better sense of, like, if you could isolate the part of that system that's the closest to kind of where you want it to be, is that chunked out, comping the total system?

Speaker #1: Yeah. Hey, Karen. It's Mike. I think with Bubba's, again, where it is in its life cycle with, you know, 60 restaurants, you know, the metric that we are more focused on as it relates to performance are some of the newer restaurants because they embody some of the learnings that we've got there and then applying it backwards.

Mike Lenihan: Yeah. Hey, Karen, it's Mike. I think with Bubba's, I think, again, where it is in its life cycle with 60 restaurants, the metric that we are more focused on as it relates to performance are some of the newer restaurants because they embody some of the learnings that we've got there and then applying it backwards. I think the other really important thing to consider with Bubba's, is that we are very much taking it with a long-term approach and not a quarter-to-quarter approach. When we do that and we measure where Bubba's is at 60 restaurants and compare it to where Texas Roadhouse was at 60 restaurants, some of the metrics are extremely encouraging. With that approach and applying some of the learnings to the new ones, that's where we believe the better focus is on same-store sales.

Speaker #1: I think the other really important thing to consider with Bubba's is that we are very much taking it with a long-term approach, and not a quarter-to-quarter approach.

Speaker #1: When we do that and we measure where Bubba's is at 60 restaurants, and compare it to where Texas Roadhouse was at 60 restaurants, some of the metrics are extremely encouraging.

Speaker #1: So, with that approach and by applying some of the learnings to the new ones, that's where we believe the better focus is—on same-store sales.

Speaker #5: Great. Thanks for taking the question.

Karen Holthouse: Great. Thanks for taking the question.

Speaker #4: Your next question comes from the line of Jim Sanderson with North Coast Research. Jim, your line is open. Please go ahead.

Holly: Your next question comes from the line of Jim Sanderson with Northcoast Research. Jim, your line is open. Please go ahead.

Operator: Your next question comes from the line of Jim Sanderson with Northcoast Research. Jim, your line is open. Please go ahead.

Speaker #6: Hey, thanks for the question. I wanted to go back to same-store sales in the second quarter. Any benefit or impact from the world comp?

Jim Sanderson: Hey, thanks for the question. I wanted to go back to same-store sales in Q2. Any benefit or impact from the World Cup? I noticed that you had said June decelerated a little bit, wondering if that brand exposure inspires you to accelerate international franchising.

Speaker #6: I noticed that you had said June decelerated a little bit, and I'm wondering if that brand exposure inspires you to accelerate international franchising.

Speaker #1: Yeah. Hey, Jim, it's Mike again. I think from a sales impact in Q2, we didn't really see anything significant. Across the system as a whole, we saw certain Bubba's restaurants have bigger impact on an individual basis on game days.

Mike Lenihan: Yeah. Hey, Jim, it's Mike again. I think from a sales impact in Q2, we didn't really see anything significant across the system as a whole. We saw certain Bubba's restaurants have a bigger impact on an individual basis on game days, but nothing really measurable in the quarter across the portfolio. You did hit on a really positive impact that the World Cup had on us, that was the social media that we got from people experiencing it for the first time. It is very helpful to some of the conversations we're having with some of the folks that posted those internationally and some of our sales efforts there.

Speaker #1: But nothing really measurable in the quarter or across the portfolio. You did hit on a really positive impact that the world comp had on us.

Speaker #1: And that was the social media that we got from people experiencing it for the first time. And, you know, it is very helpful to some of the conversations we're having with some of the folks that posted those internationally and some of our sales efforts there.

Speaker #6: All right. No, just one follow-up question. Are there any expectations of purchasing franchised restaurants here in the U.S. that you can talk about?

Jim Sanderson: All right. Just one follow-up question. Any expectations of purchasing franchised restaurants here in the US that you can talk about?

Speaker #1: Yeah. I mean, we've got about 31 franchised locations left on the Roadhouse side, and we have roll-up rights for the majority of those sites.

Mike Lenihan: Yeah. We've got about 31 franchise locations left on the Roadhouse side. We have roll-up rights for the majority of those sites. We talk all the time with our franchisees, and they know when they're ready to step back, that we're ready to step forward.

Speaker #1: We talk all the time with our franchisees, and, you know, they know when they're ready to step back that we're ready to step forward.

Speaker #6: All right. Thank you.

Jim Sanderson: All right. Thank you.

Speaker #4: Your next question comes from the line of Peter Sala with U.S. Bancorp, BTIG. Peter, your line is open. Please go ahead.

Holly: Your next question comes from the line of Peter Saleh with BTIG. Peter, your line is open. Please go ahead.

Operator: Your next question comes from the line of Peter Saleh with BTIG. Peter, your line is open. Please go ahead.

Speaker #7: Great. Thanks, guys. Jerry, a few minutes ago you mentioned, you know, the brand is a national brand, but you like to keep it more on the local level.

Peter Saleh: Great. Thanks, guys. Jerry, a few minutes ago you mentioned the brand is a national brand. You like to keep it more on the local level. Just wondering, historically, your marketing and advertising is very much on the local side. You guys don't spend a ton on the percentage of sales on marketing. Is there any thoughts about changing that or increasing the contribution or any change in strategy or going forward on the marketing side?

Speaker #7: Just wondering—you know, historically, your marketing and advertising have been very much on the local side. You guys don't spend a ton as a percentage of sales.

Speaker #7: Regarding marketing, are there any thoughts about changing it, increasing the contribution, or any changes in strategy going forward on the marketing side?

Speaker #3: Yeah. Thanks, Peter. No, we have not ever spent any money on national TV advertising. We absolutely believe that local-store marketing grassroots kind of approach, getting out into the local communities, shaking people's hands, delivering some fresh baked bread and just talking about Texas Roadhouse and what we can do for them, for their business, for their family.

Jerry Morgan: Yeah. Thanks, Peter. No, we have not ever spent any money on national TV advertising. We absolutely believe that local store marketing, grassroots kind of approach, getting out into the local communities, shaking people's hands, delivering some fresh baked bread and just talking about Texas Roadhouse and what we can do for them, for their business, for their family. We've always taken that approach to legendary food, legendary service, and just high level community engagement and involvement. If they need us to do something to help them out in some way, shape, or form, we just want to be a go-to in that deal. Whether it be local hotels, schools, churches, we want to be their partners on any of their needs. That's really been our approach.

Speaker #3: So we've always taken that approach to, you know, legendary food, legendary service, and just high-level community engagement and involvement—if they need us to do something to help them out in some way, shape, or form.

Speaker #3: We just want to be a go-to in that deal. And whether it be local hotels, schools, or churches, we want to be their partners for any of their needs.

Speaker #3: And that's really been our approach. You know, again, just keeping it as a locally owned and operated business—that's just always been our approach.

Jerry Morgan: Again, just keeping it as a locally owned and operated business, that's just always been our approach and it's worked very well.

Speaker #3: And it's worked very well.

Speaker #7: Thank you very much.

Peter Saleh: Thank you very much.

Speaker #4: Your next question comes from the line of Brian Vaccaro with Raymond James. Brian, your line is open. Please go ahead.

Holly: Your next question comes from the line of Brian Vaccaro with Raymond James. Brian, your line is open. Please go ahead.

Operator: Your next question comes from the line of Brian Vaccaro with Raymond James. Brian, your line is open. Please go ahead.

Speaker #8: Thanks. Good evening. Just a quick clarification. On the lower commodity guide for the year of '26, I'm curious, was there any change in your non-beef basket inflation for the year?

Brian Vaccaro: Thanks, good evening. Just a quick clarification. On the lower commodity guide for the year in 2026, I'm curious, was there any change in your non-beef basket inflation for the year?

Speaker #1: Hey Brian, it's Michael. There's a little bit of an uptick in produce with everything that's, you know, gone on there, but nothing significant.

Michael Bailen: Hey, Brian, it's Michael. There's a little bit of an uptick in produce with everything that's gone on there. Nothing significant.

Speaker #8: Okay. Okay. And then the question I had was, you know, Jerry, you started off talking about the long-term growth opportunity that remains in front of you for the core Texas Roadhouse brand.

Brian Vaccaro: Okay. The question I had was, Jerry, you started off talking about the long term growth opportunity that remains in front of you for the core Texas Roadhouse brand. I'm curious how California factors in to that future growth. I think you only have about 20 stores in that market. You've been buying those stores in recent years, making them company-owned. Are you spending more time and focus mapping out California and maybe we could see a rising mix within your pipeline over the next three to five years? Thanks again.

Speaker #8: I'm curious how California factors into that future growth. I think you only have about 20 stores in that market. You've been buying those stores in recent years, making them company-owned.

Speaker #8: Are you spending more time and focus mapping out California? And maybe we could see a rising mix within your pipeline over the next three to five years?

Speaker #8: Thanks again.

Speaker #3: Well, thank you. Yeah. I mean, we have 20 open. I think we have six in development. You know, we continue to identify markets in California.

Jerry Morgan: Thank you. Yeah, we have 20 open. I think we have six in development. We continue to identify markets in California and exercise where we want to go there. We know that there is a lot of sales opportunities in California. We've got some really high volume stores. We believe that over the time we've learned how to manage and control business and work in California, even with all of the complexities that it consistently challenges businesses. We do know people love to eat and all across there, and there's a lot of folks in California that love hand-cut steaks and fresh baked bread and ice-cold beer and a legendary margarita, and we're going to be available to serve them.

Speaker #3: And exercise where we want to go there. We know that there is a lot of sales opportunities in California. We've got some really high-volume stores.

Speaker #3: We believe that over time, we've learned how to manage and control business and work in California, even with all of the complexities that it consistently challenges businesses.

Speaker #3: But we do know people love to eat. And all across there, there are a lot of folks in California who love hand-cut steaks, fresh-baked bread, ice-cold beer, and a legendary margarita.

Speaker #3: And we're going to be available to serve them.

Speaker #8: Thank you.

Brian Vaccaro: Thank you.

Speaker #4: Your next question comes from the line.

Holly: Your next question comes from the line-

Operator: Your next question comes from the line-

Jerry Morgan: We'll be component

Speaker #3: Will be component.

Speaker #4: Your next question comes from the line of John Ivanko with JP Morgan. John, your line is open. Please go ahead.

Holly: Your next question comes from the line of John Ivankoe with JPMorgan. John, your line is open. Please go ahead.

Operator: Your next question comes from the line of John Ivankoe with JPMorgan. John, your line is open. Please go ahead.

Speaker #5: Hi. Thank you. This is Chris Roland for John. I wanted to ask about your labor. So as you keep expanding toward your TAM, how are you thinking about labor availability, both at the store level and especially in the managing partner pipeline?

[Analyst] (JPMorgan): Hi, thank you. This is Crystal on for John. I wanted to ask on your labor. As you keep expanding towards your TAM, how are you thinking about labor availability and both at the store level and especially at the managing partner pipeline? Do you see any need to revisit your compensation plans or incentivize your incentives to strengthen the pipeline and ensure that you have enough high quality operators to support growth?

Speaker #5: Do you see any need to, like, revisit your compensation plans or incentivize or incentives to strengthen the pipeline and ensure that you have enough high-quality operators to support growth?

Speaker #1: Yeah. This is Michael. On the labor side, we have, you know, no concerns about our ability to staff our existing restaurant staff, new restaurants, you know, we, you know, new managers.

Michael Bailen: Yeah, this is Michael. On the labor side, we have no concerns about our ability to staff our existing restaurants, staff new restaurants. New managers for new locations, we don't feel will be an issue. Whether that's bringing people, promoting from within or bringing in people who are already living in the community that we may expand into. I don't think we foresee any needed change in our compensation plan. We have a very strong managing partner program and feel very good about that. No expected changes at this time.

Speaker #1: For new locations, you know, you know, we don't feel we'll be an issue. You know, whether that's bringing people, promoting from within, or, you know, bringing in people.

Speaker #1: Who are, are you living in the community that we may expand into? And I don't think we foresee any needed change in our compensation plan.

Speaker #1: We have a very strong managing partner program and feel very good about that, so no expected changes at this time.

Speaker #5: All right. Thank you.

[Analyst] (JPMorgan): All right. Thank you.

Speaker #4: We have reached the end of the Q&A session. I will now turn the call back to Jerry Morgan for closing remarks.

Holly: We have reached the end of the Q&A session. I will now turn the call back to Jerry Morgan for closing remarks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Jerry Morgan for closing remarks.

Speaker #3: Thank you all very much. I just wanted to say thanks to Roadie Nation for all they do to make our company stronger and stronger every single day.

Jerry Morgan: Thank you all very much. Just wanted to say thanks to Roadie Nation for all they do to make our company just stronger and stronger every single day. Have a great summer. Enjoy your evening. Yeehaw, Roadhouse.

Speaker #3: So have a great summer. Enjoy your evenings. Yee-haw, Roadhouse!

Holly: This concludes today's call. Thank you for attending. You may now disconnect.

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

Q2 2026 Texas Roadhouse Inc Earnings Call

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