Texas Roadhouse NASDAQ: TXRH executives said the company opened 2026 with strong sales and traffic gains, as first-quarter revenue surpassed $1.6 billion and comparable sales rose 7.1%.
Chief Executive Officer Jerry Morgan said the quarter was driven by 4.5% traffic growth, with guests continuing to respond to the company’s value proposition and in-restaurant execution. “Our traffic and mix trends show that our guests continue to trust us to provide an experience worthy of their time and money,” Morgan said on the company’s earnings call.
The company reported first-quarter diluted earnings per share of $1.87, up 9.6% from the prior year. Michael Bailen, vice president of investor relations, said revenue increased 12.8%, primarily due to a 6.8% increase in average weekly sales and a 5.7% increase in store weeks. Restaurant margin dollars rose 10.5% to $264 million, though restaurant margin as a percentage of sales declined 36 basis points to 16.3%.
Traffic Growth Supports Sales Momentum
Average weekly sales in the first quarter were more than $174,000, including more than $25,000 from to-go orders, which represented 14.6% of weekly sales. Comparable sales growth included a 2.6% increase in average check. By month, comparable sales increased 6.9% in January, 8.3% in February and 6.3% in March.
Bailen said traffic increased 4.3% in January, 5.7% in February and 3.7% in March. Through the first five weeks of the second quarter, comparable sales were up 6.5%, with traffic up approximately 3.5% and average weekly sales of $174,000.
Executives said they were encouraged by the company’s performance relative to the broader restaurant industry. Bailen said Texas Roadhouse maintained “healthy gaps to the industry” throughout the quarter and into the start of the second quarter.
Asked about potential pressure on consumers from macroeconomic factors such as gas prices, Morgan said the company is not seeing concerning changes in guest behavior. He said operators remain focused on “open and operating and closing quality shifts” while delivering value, food quality and hospitality.
Commodity Inflation Outlook Improves
The company lowered its full-year 2026 commodity inflation outlook to a range of 6% to 7%, down from approximately 7%. Chief Financial Officer Mike Lenihan said first-quarter commodity inflation came in slightly better than expected, and management now has increased visibility into the rest of the year.
Bailen said first-quarter commodity inflation was 6.2%, with food and beverage costs rising 122 basis points year over year to 35.3% of sales. He said the inflationary pressure was primarily driven by commodities and was partly offset by the 2.6% increase in check.
Executives said beef remains the primary driver of commodity cost pressure. Bailen said the company now expects commodity inflation to peak in the second quarter at roughly 7% to 8%, before moderating in the second half of the year. He said the updated outlook reflects demand shifts within retail beef, including movement toward different cuts and some trade-down to pork and chicken.
On pricing, Lenihan said Texas Roadhouse had 3.1% pricing in the first quarter. Pricing is expected to be 3.6% in the second and third quarters, and 1.9% plus any additional pricing the company may take in the fourth quarter. Morgan said the company intends to remain conservative with pricing and believes it is “a little lower than most” steakhouse competitors.
Labor Productivity and Margins
Labor costs improved as a percentage of sales, declining 46 basis points to 32.9% in the first quarter. Bailen said labor dollars per store week rose 5.4%, reflecting 3.8% wage and other labor inflation and 1.6% growth in hours.
Lenihan said labor productivity improved in the quarter, with labor hours growing at about 35% of comparable traffic growth. Bailen said management is not necessarily expecting further improvement from that level, but being around 40% would not be surprising based on current trends. He said to-go sales, which are less labor-intensive, have contributed to the productivity gains.
Other operating costs were 14% of sales, improving 36 basis points from a year earlier. Bailen said the improvement reflected higher sales and a benefit from the company’s general liability insurance reserve.
General and administrative expenses increased 8.7% year over year and represented 3.7% of revenue. The company continues to forecast a low double-digit percentage increase in G&A dollars for full-year 2026. Depreciation expense rose 16.5% and was 3.5% of revenue, with the company expecting a low-teens percentage increase in depreciation dollars for the year.
Development Plans Remain on Track
Morgan said the company still expects approximately 35 company-owned restaurant openings in 2026. In the first quarter, Texas Roadhouse opened four company-owned Texas Roadhouse restaurants and expects as many as nine openings across all brands in the second quarter. Morgan said openings will be weighted toward the back half of the year.
On the franchise side, Jaggers partners opened one domestic restaurant during the quarter and are expected to open three additional locations during the remainder of the year. International franchise partners opened one Texas Roadhouse restaurant in the first quarter and are expected to open as many as six more during the rest of the year.
Executives also discussed Bubba’s 33, the company’s sports bar concept. Morgan said Bubba’s is performing well within its competitive segment and that Texas Roadhouse is testing smaller prototypes and conversions to evaluate potential growth opportunities. Weekly sales averaged more than $125,000 at Bubba’s 33 in the quarter, compared with nearly $180,000 at Texas Roadhouse and $71,000 at Jaggers.
Technology and To-Go Orders Remain Focus Areas
Morgan said technology investments continue to support operations, particularly digital kitchen tools that help restaurants handle higher to-go volume without hurting the dine-in experience. He also said the company is receiving encouraging feedback from tests of upgraded handheld tablets that allow servers to enter orders at the table.
The company said the handheld tablets are intended to improve efficiency and accuracy rather than increase the number of tables servers cover. Morgan said Texas Roadhouse is taking a slow approach to the test while gathering feedback from operators and employees.
To-go sales were a recurring topic on the call. Morgan said the company is benefiting from ease of ordering through its app, pickup windows, and improved execution around order accuracy. Bailen said to-go business is beneficial to margin dollars as long as dining rooms remain full and continue growing.
Texas Roadhouse ended the first quarter with $215 million in cash. Lenihan said the company generated $259 million in cash flow from operations, partially offset by $158 million of capital expenditures, dividend payments and share repurchases, as well as $72 million related to the previously disclosed acquisition of five California franchise restaurants. The company maintained its 2026 capital expenditure guidance of approximately $400 million.
About Texas Roadhouse NASDAQ: TXRH
Texas Roadhouse, Inc is a casual dining restaurant chain specializing in hand‐cut steaks, fall‐off‐the‐bone ribs, chicken, seafood and house specialties. Each restaurant features a Western‐themed décor, open kitchens and a signature line dance presentation of fresh, made‐from‐scratch sides and breads. The company emphasizes an energetic dining experience, focusing on hospitality, value and a family‐friendly environment.
The concept was created in 1993 by founder Kent Taylor, who sought to combine high‐quality steaks with an approachable, community‐oriented atmosphere.
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