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LOUISVILLE - Texas Roadhouse Inc. (NASDAQ:TXRH) shares fell 2.7% after the restaurant chain reported second-quarter earnings that missed analyst expectations despite posting stronger-than-expected revenue growth.
The casual dining operator reported earnings per share of $1.86 for the quarter ended July 1, falling short of the $1.91 analyst estimate. Revenue rose 12.7% YoY to $1.51 billion, slightly above the consensus estimate of $1.5 billion. Comparable restaurant sales increased 5.8% at company restaurants, driven by positive traffic across all three of the company’s brands.
"Our operators delivered another quarter of strong comparable restaurant sales growth driven by positive traffic across all three of our brands," said Jerry Morgan, Chief Executive Officer of Texas Roadhouse. "While we expect commodity inflation to further impact our profitability for the rest of the year, we remain focused on what we can control—preserving our value proposition and maintaining a relentless focus on operational excellence across all our brands."
Restaurant margin as a percentage of sales decreased 108 basis points to 17.1%, as the company faced commodity inflation of 5.2% and wage inflation of 3.8%, which were only partially offset by higher sales. The company opened four new company restaurants and one franchise restaurant during the quarter.
For the first five weeks of the third quarter, comparable restaurant sales increased 5.3% compared to the same period in 2024. Management updated its 2025 outlook to include commodity cost inflation of approximately 5% and wage inflation of about 4%.
The company also announced a quarterly cash dividend of $0.68 per share, payable on September 30 to shareholders of record as of September 2.
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