Texas Roadhouse, Inc. (NASDAQ: TXRH)

$182.36 ▼ -1.18 (-0.64%)

As of May 12, 2026 12:12 PM

Sector: Consumer Cyclical Industry: Restaurants CIK: 0001289460

Market Cap 10.67 Bn

P/E 26.37

P/S 1.82

Div. Yield 0.00

ROIC (Qtr) 0.06

Revenue Growth (1y) (Qtr) 1,192.09

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About

Texas Roadhouse, Inc. is a restaurant company that operates predominantly in the casual dining segment. The company was incorporated under the laws of Delaware in 2004 and its principal executive office is located in Louisville Kentucky. It traces its origins to 1993 when the founder opened the first Texas Roadhouse restaurant in Clarksville Indiana. As of the latest reporting date the company owned and operated 714 restaurants and franchised an additional 102 locations across 49 states one U S territory and ten foreign countries. The brand portfolio...

Texas Roadhouse, Inc. is a restaurant company that operates predominantly in the casual dining segment. The company was incorporated under the laws of Delaware in 2004 and its principal executive office is located in Louisville Kentucky. It traces its origins to 1993 when the founder opened the first Texas Roadhouse restaurant in Clarksville Indiana. As of the latest reporting date the company owned and operated 714 restaurants and franchised an additional 102 locations across 49 states one U S territory and ten foreign countries. The brand portfolio consists of three concepts Texas Roadhouse Bubba’s 33 and Jaggers. Texas Roadhouse offers moderately priced full service casual dining with a focus on hand cut steaks ribs seafood chicken and made from scratch sides. Bubba’s 33 provides a similar full service experience with a menu centered on burgers pizza wings and a selection of draft beer and cocktails. Jaggers operates as a fast casual concept featuring drive thru carry out and dine in service with offerings such as burgers chicken sandwiches salads and milkshakes. The company mission statement is Legendary Food Legendary Service and its core values are Passion Partnership Integrity and Fun with Purpose. Its overall strategy aims to make each restaurant the local hometown favorite for consumers seeking high quality affordable meals served with friendly attentive service. In addition to dining the firm has developed retail initiatives that sell branded food products such as frozen rolls whipped buttery spreads beef jerky and steak sauces to customers through online channels and select retail partners. The company places a strong emphasis on community involvement and encourages its operators to participate in local charitable events and sponsorships. This approach helps build brand loyalty and reinforces the perception of Texas Roadhouse as a neighborly establishment.

The company generates revenue primarily from the sale of food and beverages at its company owned and operated restaurants. Additional revenue streams include franchise fees and ongoing royalties paid by franchisees who operate under the Texas Roadhouse Bubba’s 33 and Jaggers brands. The company also earns income from its retail initiatives which involve the sale of branded food and merchandise such as frozen rolls whipped buttery spreads beef jerky and steak sauces. These retail products are distributed through online channels and select retail partners. Revenue is recognized when meals are served to guests or when goods are delivered to customers. The franchise model contributes a steady flow of fees based on a percentage of gross sales and supports brand expansion without requiring the company to bear the full cost of new unit development. Beyond the core restaurant and franchise operations the firm benefits from ancillary income such as gift card sales and promotional partnerships that further diversify its earnings base. Management monitors comparable restaurant sales and average check size to gauge performance and to identify trends in consumer spending. Cost control measures focus on food procurement labor efficiency and utility management to protect margins. Overall the diversified revenue base helps stabilize performance across different market conditions.

The company operates through the following segments Texas Roadhouse Bubba’s 33 Jaggers and Retail Initiatives. These segments are defined based on the nature of the products and services offered and the distinct operational models associated with each concept. The classification allows the firm to allocate resources effectively and to evaluate performance separately for each business line.

• The Texas Roadhouse segment operates full service casual dining restaurants that serve hand cut steaks ribs seafood chicken pork chops pulled pork and vegetable plates along with a variety of salads sandwiches and hamburgers each entrée comes with two made from scratch side items and guests receive complimentary roasted in shell peanuts and fresh baked yeast rolls. The concept emphasizes a rustic southwestern lodge atmosphere with decor that includes wood walls stained concrete floors hand painted murals neon signs southwestern prints rugs and artifacts. Music programming features upbeat country hits that play continuously throughout the dining area. Service standards focus on maintaining low table to server ratios to allow personalized attention and timely order fulfillment.

• The Bubba’s 33 segment operates full service casual dining restaurants featuring a menu of burgers pizza wings appetizers sandwiches and dinner entrées complemented by a selection of ice cold draft beer and signature cocktails and the concept also provides lunch and dinner service with delivery available at most locations. The interior design includes walls lined with televisions showing sports events and music videos decorations with sports jerseys neon signs and local flair that create an energetic atmosphere. Service focuses on quick order processing and friendly interaction to enhance the guest experience.

• The Jaggers segment runs fast casual restaurants that offer drive thru carry out and dine in service with a menu centered on burgers hand breaded chicken sandwiches chicken tenders made to order fresh salads and hand spun milkshakes. The layout typically includes a drive thru lane a counter for order pickup and a dining area with modern seating. Emphasis is placed on speed of service accuracy of order assembly and cleanliness of the environment to satisfy customers seeking a quick meal.

• The Retail Initiatives segment develops and sells branded food products and merchandise such as frozen rolls whipped buttery spreads beef jerky steak sauces seasonings and other items through online platforms and select retail partners. The segment also explores opportunities to license the brand for use in non food categories such as apparel and accessories. Revenue from this stream is generated by wholesale agreements and direct to consumer sales that contribute to overall brand visibility.

The company holds a solid position within the highly competitive casual dining restaurant industry where it competes with national chains such as Olive Garden Applebee s Chili s Outback Steakhouse and Texas based rivals like LongHorn Steakhouse. Its competitive advantages stem from a focus on high quality freshly prepared food built on proprietary recipes that ensure consistency across all locations. The firm emphasizes a fun and comfortable atmosphere with distinct decor for each concept ranging from the rustic southwestern lodge feel of Texas Roadhouse to the sports themed vibe of Bubba s 33 and the modern clean look of Jaggers. A key element of its strategy is the owner operator partnership model which aligns the interests of managers with restaurant performance through profit sharing and equity participation. This model helps attract and retain experienced operators who treat the business as their own. Another advantage is the everyday value proposition that combines generous portions attractive price points and free complimentary items such as peanuts and yeast rolls which enhances guest loyalty. The company also invests heavily in training and development programs for employees and uses technology to improve service speed and accuracy. These factors together enable Texas Roadhouse Inc to maintain strong comparable sales and to capture a share of the market that values both quality and affordability. In addition the brand benefits from a strong community orientation where operators are encouraged to engage with local schools charities and civic groups. This community focus helps differentiate the company from competitors that rely more heavily on national advertising. The firm's commitment to food safety and sanitation further strengthens its reputation and reduces the risk of operational disruptions. Overall the combination of product quality service excellence and community involvement gives Texas Roadhouse a resilient competitive stance.

The company serves a broad spectrum of consumers who seek high quality affordable meals in a casual dining setting. Its typical guests include families looking for a comfortable place to celebrate birthdays anniversaries and other special occasions. Individuals and couples also frequent the restaurants for a relaxed dinner after work or during weekend outings. Groups of friends and coworkers often visit for casual gatherings celebrations or to watch sporting events on the televisions available in many locations. The friendly attentive service and the complimentary peanuts and yeast rolls create a welcoming environment that encourages repeat visits and positive word of mouth. Because the menu offers a wide range of options from steaks and ribs to burgers pizza and salads the brand appeals to diverse taste preferences and dietary needs. Guests who prefer protein rich meals can choose from steaks ribs chicken or pork options while those seeking lighter fare may opt for salads or vegetable plates. The presence of a full bar in many locations attracts guests who enjoy craft beer cocktails and other alcoholic beverages. In addition the availability of take out delivery and drive thru services at certain concepts expands the reach to customers who prefer off premise dining. The company also benefits from traffic generated by nearby retail centers offices and residential neighborhoods which helps steady flow of walk in patrons. Loyalty programs and occasional promotions further incentivize return visits and help build a stable customer base. Overall the customer base consists of a mix of local residents visitors and travelers who value the combination of quality food generous portions and a friendly atmosphere.

Investment thesis

Bull case

Texas Roadhouse’s recent quarter demonstrated a robust top‑line trajectory with 12.8% revenue growth, largely driven by a 5.5% rise in average weekly sales and a 6.8% increase in store weeks. The company’s strategic focus on traffic acquisition and average check expansion has translated into a 1.8% lift in check size, indicating that guests are willingly spending more in each visit. Even though restaurant margin as a percentage of sales fell to 14.3%, total margin dollars edged up 1.1% to $204 million, reflecting a shift from margin compression to volume‑led margin enhancement. This dynamic positions the firm to continue capitalizing on a growing customer base while preserving profitability through disciplined cost management.
The expansion plan for 2025–2026 is ambitious yet disciplined, with a projected 5%–6% store‑week growth driven by 30 new company‑owned restaurants and 35 additional units in 2026, including 20 Texas Roadhouse, 10 Bubba’s 33 and 5 Jaggers. The franchise portfolio is simultaneously expanding, with 20 new acquisitions in 2025 and a full slate of 5 California franchises in early 2026, bringing the total franchise pool to 31 units. The ability to capture 30 new units while simultaneously absorbing new franchise partners demonstrates strong scalability and market penetration, key drivers for long‑term earnings growth. These openings are supported by a well‑structured capital allocation that earmarks $400 million for 2026 capex, ensuring that new stores can be built at the right pace without over‑leveraging.
Technology rollout, particularly the near‑completion of the digital kitchen and guest management system at 95% of restaurants, is poised to unlock operational efficiencies. The system’s data analytics capabilities will allow operators to optimize staffing, reduce wait times, and improve order accuracy, directly feeding into higher table turns and customer satisfaction. By moving from manual to automated processes, the firm can maintain or even increase service speed while controlling labor costs, mitigating one of the main pain points in the industry. These efficiencies translate into a higher revenue per labor dollar and a stronger competitive position in a cost‑sensitive market.
The company’s retail presence—over 120,000 grocery store locations carrying Texas Roadhouse products and gift cards—serves as a powerful brand awareness engine. By leveraging the national distribution network, the brand reinforces its premium steakhouse positioning while generating a new revenue stream that is more resilient to foot‑traffic fluctuations. The retail channel also fosters customer loyalty; guests who purchase in-store items are more likely to visit the restaurant, creating a virtuous cycle that can help sustain traffic growth. This diversification mitigates concentration risk and provides an incremental margin‑attractive income source that complements the core restaurant business.
The management team’s pricing strategy has been conservative yet responsive. A 1.7% menu price increase in Q4 was executed without detectable negative consumer behavior, indicating a strong price elasticity profile among the customer base. Future price adjustments are planned for April 2026, allowing the firm to buffer against rising commodity and labor costs while preserving value perception. This disciplined approach ensures that the firm can maintain profitability even in a high‑inflation environment, reducing the likelihood of aggressive margin erosion.

Texas Roadhouse’s recent quarter demonstrated a robust top‑line trajectory with 12.8% revenue growth, largely driven by a 5.5% rise in average weekly sales and a 6.8% increase in store weeks. The company’s strategic focus on traffic acquisition and average check expansion has translated into a 1.8% lift in check size, indicating that guests are willingly spending more in each visit. Even though restaurant margin as a percentage of sales fell to 14.3%, total margin dollars edged up 1.1% to $204 million, reflecting a shift from margin compression to volume‑led margin enhancement. This dynamic positions the firm to continue capitalizing on a growing customer base while preserving profitability through disciplined cost management.
The expansion plan for 2025–2026 is ambitious yet disciplined, with a projected 5%–6% store‑week growth driven by 30 new company‑owned restaurants and 35 additional units in 2026, including 20 Texas Roadhouse, 10 Bubba’s 33 and 5 Jaggers. The franchise portfolio is simultaneously expanding, with 20 new acquisitions in 2025 and a full slate of 5 California franchises in early 2026, bringing the total franchise pool to 31 units. The ability to capture 30 new units while simultaneously absorbing new franchise partners demonstrates strong scalability and market penetration, key drivers for long‑term earnings growth. These openings are supported by a well‑structured capital allocation that earmarks $400 million for 2026 capex, ensuring that new stores can be built at the right pace without over‑leveraging.
Technology rollout, particularly the near‑completion of the digital kitchen and guest management system at 95% of restaurants, is poised to unlock operational efficiencies. The system’s data analytics capabilities will allow operators to optimize staffing, reduce wait times, and improve order accuracy, directly feeding into higher table turns and customer satisfaction. By moving from manual to automated processes, the firm can maintain or even increase service speed while controlling labor costs, mitigating one of the main pain points in the industry. These efficiencies translate into a higher revenue per labor dollar and a stronger competitive position in a cost‑sensitive market.
The company’s retail presence—over 120,000 grocery store locations carrying Texas Roadhouse products and gift cards—serves as a powerful brand awareness engine. By leveraging the national distribution network, the brand reinforces its premium steakhouse positioning while generating a new revenue stream that is more resilient to foot‑traffic fluctuations. The retail channel also fosters customer loyalty; guests who purchase in-store items are more likely to visit the restaurant, creating a virtuous cycle that can help sustain traffic growth. This diversification mitigates concentration risk and provides an incremental margin‑attractive income source that complements the core restaurant business.
The management team’s pricing strategy has been conservative yet responsive. A 1.7% menu price increase in Q4 was executed without detectable negative consumer behavior, indicating a strong price elasticity profile among the customer base. Future price adjustments are planned for April 2026, allowing the firm to buffer against rising commodity and labor costs while preserving value perception. This disciplined approach ensures that the firm can maintain profitability even in a high‑inflation environment, reducing the likelihood of aggressive margin erosion.

Bear case

The company’s margin as a percentage of sales has slipped 168 basis points year‑over‑year to 14.3%, driven by a 224 basis point jump in food and beverage costs. The sustained reliance on beef, coupled with a projected 6%–7% commodity inflation for 2025–2026, signals a significant headwind that could erode profitability if pricing power fails to keep pace. Even with a conservative 1.7% price increase, the firm remains vulnerable to further cost spikes that could exceed historical thresholds. These dynamics threaten to compress future earnings and challenge the company’s ability to deliver value to shareholders.
Management’s responses to commodity pricing questions have been evasive, describing the beef inflation trajectory as “transitory” and deferring to commodity experts. The lack of a clear, definitive outlook on whether the current cycle is truly cyclical or has become structural leaves investors uncertain about long‑term cost dynamics. This ambiguity introduces a risk that the firm may face prolonged periods of high inflation without adequate hedging, increasing the probability of sustained margin erosion.
The company’s lapping of a 14‑week quarter has a projected 10% negative impact on fourth‑quarter EPS growth. While this is a one‑time adjustment, it underscores the company’s exposure to non‑recurring events that can distort earnings trajectories. The reliance on such lapping to smooth out seasonal fluctuations can mask underlying performance weaknesses, potentially leading to over‑optimistic outlooks that are later corrected by management.
Labor cost inflation guidance—4% for 2025 and 3%–4% for 2026—exposes the firm to rising wage pressures that could outpace revenue growth. The labor market is tightening, and the firm’s heavy reliance on a large operator workforce may limit flexibility in adjusting staffing levels without compromising service quality. If labor costs rise faster than traffic or average check, the company could see further deterioration in labor efficiency, negatively affecting operating margins.
The capital allocation for 2026 remains flat at $400 million despite an increase in the number of new store openings. This suggests a potential underinvestment in new locations or a reliance on cost‑effective, lower‑quality sites that may underperform. If the firm cannot sustain a consistent pace of profitable expansion, growth momentum could slow, reducing the ability to capture market share in key regions.

The company’s margin as a percentage of sales has slipped 168 basis points year‑over‑year to 14.3%, driven by a 224 basis point jump in food and beverage costs. The sustained reliance on beef, coupled with a projected 6%–7% commodity inflation for 2025–2026, signals a significant headwind that could erode profitability if pricing power fails to keep pace. Even with a conservative 1.7% price increase, the firm remains vulnerable to further cost spikes that could exceed historical thresholds. These dynamics threaten to compress future earnings and challenge the company’s ability to deliver value to shareholders.
Management’s responses to commodity pricing questions have been evasive, describing the beef inflation trajectory as “transitory” and deferring to commodity experts. The lack of a clear, definitive outlook on whether the current cycle is truly cyclical or has become structural leaves investors uncertain about long‑term cost dynamics. This ambiguity introduces a risk that the firm may face prolonged periods of high inflation without adequate hedging, increasing the probability of sustained margin erosion.
The company’s lapping of a 14‑week quarter has a projected 10% negative impact on fourth‑quarter EPS growth. While this is a one‑time adjustment, it underscores the company’s exposure to non‑recurring events that can distort earnings trajectories. The reliance on such lapping to smooth out seasonal fluctuations can mask underlying performance weaknesses, potentially leading to over‑optimistic outlooks that are later corrected by management.
Labor cost inflation guidance—4% for 2025 and 3%–4% for 2026—exposes the firm to rising wage pressures that could outpace revenue growth. The labor market is tightening, and the firm’s heavy reliance on a large operator workforce may limit flexibility in adjusting staffing levels without compromising service quality. If labor costs rise faster than traffic or average check, the company could see further deterioration in labor efficiency, negatively affecting operating margins.
The capital allocation for 2026 remains flat at $400 million despite an increase in the number of new store openings. This suggests a potential underinvestment in new locations or a reliance on cost‑effective, lower‑quality sites that may underperform. If the firm cannot sustain a consistent pace of profitable expansion, growth momentum could slow, reducing the ability to capture market share in key regions.

Product and Service Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

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6	YUMC	Yum China Holdings, Inc.	17.88 Bn	19.23	1.52	0.03 Bn
7	DPZ	Dominos Pizza Inc	11.42 Bn	19.43	2.29	4.88 Bn
8	CAVA	Cava Group, Inc.	10.81 Bn	169.65	9.16	-

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