Texas Roadhouse, Inc.

What they do

The company operates and franchises restaurants primarily in the casual dining segment. Its main concept, Texas Roadhouse, offers moderately priced steaks and other entrees, while Bubba's 33 and Jaggers provide full-service and fast-casual dining, respectively. As of June 30, 2026, it had 732 company restaurants (662 Texas Roadhouse, 59 Bubba's 33, 11 Jaggers) and 100 franchise restaurants (31 domestic Texas Roadhouse, 6 domestic Jaggers, 62 international Texas Roadhouse, 1 international Jaggers).

Revenue drivers

• Texas Roadhouse company restaurants — The largest revenue source, comprising 662 company-operated units; generated comparable restaurant sales growth of 6.2% in Q2 2026 and 6.7% YTD.
• Bubba's 33 — Full-service concept with 59 company units; contributes to total revenue but is smaller than Texas Roadhouse.
• Franchise operations — 100 franchise restaurants (mostly international Texas Roadhouse) provide royalty and other fee income; company has minority ownership in some.
• Retail initiatives — Identified as a separate operating segment, but no financial details were provided in the excerpts.

Recent performance

For Q2 2026 (13 weeks ended June 30, 2026), total revenue was $1.68 billion, up 11.1% year-over-year. Net income was $121.9 million, down 1.7% from $124.1 million, and diluted EPS was $1.85, down 0.7%. Comparable restaurant sales increased 6.2%, with average weekly sales of $177,252 (to-go $25,369). Restaurant margin as a percentage of restaurant and other sales fell 66 basis points to 16.4% due to commodity inflation of 7.0% and labor inflation of 3.9%.

Strategy

Management emphasizes opening new restaurants across all three brands, with 13 company restaurants opened in the first half of 2026. They are also acquiring franchise restaurants, spending $71.8 million on franchise acquisitions in H1 2026. Capital allocation includes dividends ($98.7 million in H1 2026) and share repurchases ($70.8 million). The company focuses on 'Legendary Food, Legendary Service' and building a strong development pipeline with a healthy balance sheet.

Risks

• Commodity cost inflation — Commodity inflation was 7.0% in Q2 2026, pressuring restaurant margins if not offset by price increases.
• Labor cost inflation — Wage and other labor inflation of 3.9% in Q2 2026 could squeeze margins if sales growth slows.
• New restaurant profitability — Opening new restaurants in unfamiliar markets may result in lower sales volumes and higher expense ratios than existing units.
• Growth execution risks — Delays in site selection, construction, or franchise acquisitions could impact the timing and cost of expansion.

Outlook

Management expects meaningful growth opportunities across all three brands in 2026. Comparable restaurant sales for the first five weeks of Q3 2026 increased 6.2% year-over-year. The company maintains a strong development pipeline and disciplined capital allocation to expand its footprint and invest in people.