Despite a challenging restaurant environment, Texas Roadhouse continues to demonstrate exceptional same-store sales growth, with company-owned locations up 8.5% and franchises up 7.2% in the latest quarter.
This consistent performance has been driven by a winning combination of value pricing and quality offerings and suggests each of the firm’s three brands has strong consumer appeal that transcends economic cycles.
What’s more, a successful digital ordering and delivery option expansion has created additional revenue streams without cannibalizing core dine-in business.
Meanwhile, the stock trades at a reasonable 27.3 times the company’s forward earnings forecast despite having gained 231% over the last five years and a strong 63% in 2024 alone.
TEXAS ROADHOUSE INC. (Symbol TXRH on Nasdaq; texasroadhouse.com) is a full-service, casual-dining restaurant chain with 772 locations spread across 49 U.S. states and 10 foreign countries. Each of those restaurants operates under one of three banners—Texas Roadhouse (713 locations), sports restaurant Bubba’s 33 (48), and Jaggers (11). Jaggers is a new fast-food concept featuring hamburgers, chicken, milkshakes and salads made from scratch.
Founded in 1993, the Texas Roadhouse chain offers moderately priced, full-service dining. It specializes in handcut steaks cooked over an open grill. Ribs, seafood, chicken, pork chops, pulled pork and vegetable plates are also on the menu, along with hamburgers, salads and sandwiches.
Texas Roadhouse also gives its guests a free unlimited supply of in-shell roasted peanuts and fresh-baked dinner rolls.
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Bubba’s 33 is a family-friendly sports restaurant offering an assortment of wings, sandwiches, pizza and burgers. That includes its signature 33% bacon-grind patty. In addition, the chain offers an extensive selection of draft beer.
Jaggers is a new fast-food concept featuring hamburgers, chicken, milkshakes and salads made from scratch.
Growth Stocks: Sales soar, earnings rocket even higher at Texas Roadhouse
In the quarter ended September 24, 2024, overall sales jumped 14.1%, to $1.27 billion from $1.12 billion a year earlier. Same-store sales rose 8.5% for company-owned restaurants and 7.2% for U.S. franchise locations. Some seven company restaurants and three franchise restaurants were opened in the quarter.
Texas Roadhouse made $84.4 million, or $1.27 a share. That was up 32.3% from $63.8 million, or $0.96.
During the pandemic, the company successfully expanded its takeout, pick-up and delivery business. Its own mobile ordering app has also encouraged repeat business. Not only that, the addition of new delivery channels and digital capabilities puts Texas Roadhouse—with its winning formula of moderately priced but high-quality food—in position to move even higher as the economy normalizes.
Texas Roadhouse raised its quarterly dividend by 10.9% with the March 2024 payment, to $0.61 from $0.55. The stock now yields 1.2%.
Recommendation in Power Growth Investor: Texas Roadhouse Inc. is a buy.
