Texas Roadhouse Shares Decline as Q3 Earnings Fall Short of Expectations

LOUISVILLE - Texas Roadhouse, Inc. (NASDAQ:TXRH) reported third-quarter earnings that fell short of analyst expectations despite strong sales growth, leading to a 3% drop in the company's shares in after-hours trading. The casual dining restaurant chain announced adjusted earnings per share of $1.26 for the quarter ending September 24, missing the analyst forecast of $1.32. Revenue matched predictions at $1.27 billion, marking an 8.5% year-over-year increase.

Comparable restaurant sales rose by 8.5% at company-owned locations and by 7.2% at domestic franchises. Average weekly sales at company restaurants increased to $149,176 (including $18,914 in to-go sales) from $138,668 (including $17,058 in to-go sales) the previous year.

Jerry Morgan, CEO of Texas Roadhouse, stated, "In such a competitive environment, we are extremely pleased to report continued customer traffic growth across all our brands. This is the result of the hard work of our operators who create an environment where Roadies want to work and guests want to dine."

Despite revenue growth, high costs impacted profitability. During the quarter, the company faced 4.7% wage and other labor inflation and 1.3% commodity inflation.

Looking ahead, Texas Roadhouse updated its 2024 outlook, expecting commodity cost inflation to be below 1% and wage inflation around 4.5%. The company also provided its initial guidance for 2025, projecting 5% store week growth and commodity inflation between 2% and 3%.