Texas Roadhouse (TXRH 2.81%), the steakhouse chain known for its hand-cut steaks and made-from-scratch sides, recently announced financial results for its fourth quarter of 2024 on Feb. 20, 2025. The key highlight from the earnings release was a revenue increase of 23.5% to $1.44 billion, compared to the prior year's $1.16 billion. This boost was partly due to an additional week in the reporting period. The company's performance was still notable, with earnings per share (EPS) rising 60.1% to $1.73. Overall, the quarter was marked by robust growth and strategic restaurant openings.
| Metric | Q4 2024 | Q4 2023 | Y/Y Change |
|---|---|---|---|
| EPS (Diluted) | $1.73 | $1.08 | +60.1% |
| Total Revenue | $1,437.9M | $1,164.4M | +23.5% |
| Net Income | $115.8M | $72.4M | +59.9% |
| Comparable Restaurant Sales (Company-owned) | +7.7% | 9.9% | -2.2 pp |
Overview of Texas Roadhouse
Texas Roadhouse is a popular casual dining chain specializing in steakhouse-style meals with a focus on freshly prepared, high-quality food. The company operates both company-owned and franchise restaurants across several states and international locations. In its recent business strategy, Texas Roadhouse has emphasized expansion and restaurant development as a core growth driver. In 2024, the company expanded its portfolio by opening 31 company-run and 14 franchise locations. Strategic site selection and adapting restaurant prototypes have been critical to its success.
NASDAQ: TXRH
Key Data Points
Food quality and operational consistency remain cornerstones, with proprietary recipes and rigorous training contributing to brand image. In an effort to manage costs and combat rising inflation, the company relies on a competitive pricing strategy while ensuring quality standards.
Notable Developments in the Quarter
The fourth quarter of 2024 saw significant achievements for Texas Roadhouse. With total revenue reaching $1.44 billion, the company reported a year-over-year increase of 23.5%, partly enabled by an additional week in the reporting period. Income from operations rose by 65.4% to $138.6 million, demonstrating effective management and operational efficiencies. Net income for the quarter also increased by 59.9% to $115.8 million, underscoring successful cost containment amid inflationary pressures on labor and commodities.
Comparable restaurant sales, a key metric that reflects the percentage change in sales for company restaurants open for a defined period, rose by 7.7% at company-operated locations. Restaurant margins improved significantly to 17.0% from 15.3% the previous year. This was driven by higher sales volumes, improved labor productivity, and an increase in the average guest check, supported by minimal commodity inflation of 0.3% and controlled labor inflation of 5.0%.
On the expansion front, Texas Roadhouse added nine company restaurants and five franchise locations during the quarter, with plans to acquire 13 franchise restaurants in early 2025.
Noteworthy events in the quarter also included a strategic menu price increase of 1.4% slated for early April 2025. This pricing strategy aims to manage costs effectively while maintaining a competitive edge in the market. Moreover, the company distributed dividends of $0.61 per share, underscoring a commitment to returning value to shareholders consistently, and announced a dividend increase to $0.68 per share.
Outlook and Expectations
Looking ahead, Texas Roadhouse management is optimistic about its trajectory in 2025. It expects comparable sales growth and will continue leveraging 2024's pricing strategies. Store week growth is anticipated to rise by approximately 5%, bolstered by strategic acquisitions and ongoing new restaurant openings. The company remains vigilant about inflationary pressures, forecasting commodity cost inflation between 3% and 4% and labor inflation of 4% to 5% in the upcoming year. Capital expenditures are projected at about $400 million, reflecting continued investment in restaurant development and operational advances.
