Texas Roadhouse on Thursday evening reported a disappointing first quarter, with inclement weather dragging down comparable store sales. However, early signs of a stronger second quarter were giving investors hope, nudging the stock modestly higher in after-hours trading. Revenue in the quarter ended April 1 increased 9.6% year over year to $1.45 billion, exceeding the LSEG-complied Wall Street consensus estimate of $1.44 billion. Earnings per share increased 1% to $1.70, missing the $1.76 expected. TXRH YTD mountain Texas Roadhouse YTD Bottom Line Once again, the Texas Roadhouse results were a tale of two halves. The company entered 2025 with tons of momentum and high single-digit comparable store sales, or comps, driven by a healthy blend of traffic and average check growth. This strength continued through January with comparable sales up 5.5%. However, the company navigated through a significant slowdown in February as rainy, snowy, and cold weather kept people indoors and away from restaurants, leading to comp sales growth of just 0.5%. Texas Roadhouse’s trends improved as the first quarter progressed, with March comps increasing to 4.6%. But if we take the full three-month period together, comparable store sales growth slowed to 3.5%, driven by a 1.1% increase in traffic growth and a 2.4% increase in average check. It may not be the high single-digit growth Texas Roadhouse investors were accustomed to, but it was still a little better than the 3.1% consensus estimate, according to Bloomberg. All three brands delivered positive comps and tariff growth during the quarter. In addition to Texas Roadhouse, the company owns the casual dining chains Bubba’s 33 and Jaggers. Looking forward, we were encouraged to learn that top-line trends returned to normalized levels in March, April, and May. In fact, the company pointed out that its average weekly sales for March hit all-time highs at all three brands. Through the first five weeks of the second quarter, Texas Roadhouse said its comparable sales at company restaurants increased 5% year over year. This puts the company on pace to exceed the second quarter consensus estimate of 4.28%, according to Bloomberg. The company’s quarter-to-date disclosure should help ease some investor concerns about how the uncertain macroenvironment may hurt restaurant sales and force people to trade down to other options or cook more at home. In many ways, this update holds more weight with investors than the reported results, explaining why the shares were higher despite the earnings miss. However, the increase in the full year commodity cost inflation outlook shouldn’t be ignored either. Those higher expected costs will squeeze margins a little bit for the rest of the year. Our takeaway from the evening is that the March rebound and strength through April show that Texas Roadhouse is a loved restaurant chain because of the value and fun experience it offers its customers. Its brand keeps them well equipped to…
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