Texas Roadhouse Inc. (NASDAQ: TXRH) reported first-quarter revenue surpassed $1.6 billion, as comparable sales grew 7.1 percent driven by strong traffic gains and continued consumer response to its value proposition.
"Our traffic and mix trends show that our guests continue to trust us to provide an experience worthy of their time and money," Chief Executive Officer Jerry Morgan said in the company’s earnings call.
The casual dining chain posted strong results for the quarter, with traffic as a key driver. The company did not disclose consensus estimates for comparison.
Shares of Texas Roadhouse reacted positively to the news, as the strong performance and improved inflation outlook suggest continued momentum. The company’s focus on value and operational execution appears to be resonating with consumers, separating it from competitors in the casual dining space.
Texas Roadhouse lowered its full-year 2026 commodity inflation outlook to a range of 6 to 7 percent, an improvement from the previous forecast of approximately 7 percent. Chief Financial Officer Mike Lenihan noted that first-quarter inflation was slightly better than expected, providing greater visibility for the remainder of the year.
Food and beverage costs rose 122 basis points to 35.3 percent of sales, primarily driven by beef prices. However, executives now expect commodity inflation to peak in the second quarter at 7 to 8 percent before moderating in the second half of the year.
Labor costs as a percentage of sales improved, declining 46 basis points to 32.9 percent. The company noted that labor hours grew at about 35 percent of comparable traffic growth, indicating improved productivity, partly aided by less labor-intensive to-go sales. To-go orders represented 14.6% of weekly sales.
Development remains on track, with plans for approximately 35 company-owned restaurant openings in 2026. The company opened four new locations in the first quarter and expects openings to be weighted toward the second half of the year.
The strong quarterly results show management's strategy of focusing on value and the in-restaurant experience is paying off with increased traffic. Investors will watch the second-quarter earnings release in August for confirmation that commodity inflation is peaking as forecasted.
This article is for informational purposes only and does not constitute investment advice.
