Texas Roadhouse Exits the First Half of 2019 in Growth Mode
Casual steakhouse chain Texas Roadhouse (NASDAQ: TXRH) is putting up yet another year of double-digit sales growth -- driven by loyal guests who continue to flock to existing locations and a slow-and-steady pipeline of new openings received with equally warm enthusiasm.
In spite of this, the stock is down 15% year to date in 2019. Labor and wage increases have been all the rage -- and not in a good way. Along with other operating expenses, labor costs have been offsetting big gains on Texas Roadhouse's top line, equating to what has been a down year for profits thus far. That trend did moderate in the second quarter, though, and it looks like it is about to moderate even more during the second half of the year.
Total revenue was up 9.6% in the second quarter, adding to the 10% gain in the first quarter and the 10.7% gain in 2018. Fueling Roadhouse's growth was a 4.3% increase in same-store sales (a combination of foot traffic and average guest ticket size) at franchised stores and a 4.7% increase at company-owned stores. With the average U.S. restaurant still struggling under the weight of aggressive industry over-expansion, that makes the steakhouse one of the better performers out there -- at least as far as foot traffic growth is concerned.
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