Texas Roadhouse ends 2024 on high note with robust sales growth

Overview

Texas Roadhouse reported impressive financial results for the fourth quarter and full year 2024, significantly surpassing previous year figures with record-breaking profitability and growth. The company posted total revenue of $5.37bn for the year, driven by robust sales growth, increased restaurant margins, and effective operational management. Net income rose substantially by 59.9% for the fourth quarter, reflecting strong performance across company and franchise-operated restaurants.

CEO Jerry Morgan highlighted the company’s remarkable performance, attributing it to effective operational execution and sustained customer loyalty: “We ended 2024 on an incredible note, which was highlighted by fourth quarter and full-year traffic growth at all three of our brands. These results are a credit to our operators who continue to create an environment where Roadies want to work, and guests want to dine. I also want to thank Roadie Nation and the more than 250 million guests who supported us by dining in our restaurants.”

Q4 2024 vs. Q4 2023:

• Revenue increased significantly to $1.44bn (+23.5% YoY), driven by strong comparable restaurant sales growth (7.7% for company-owned and 6.3% for domestic franchises).
• Restaurant margin grew by to $242.6m (+37.3% YoY), achieving a margin percentage increase to 17.0% (compared to 15.3% in Q4 2023), due to higher sales, improved labor productivity, and favorable average guest checks.
• Income from operations soared to $138.6m (+65.4% YoY), reflecting efficient management of inflationary pressures in labor (5.0%) and commodities (0.3%).
• Diluted EPS surged to $1.73 (+60.1% vs. Q4 2023), positively influenced by higher margins and an extra operating week.
• Capital allocation included $107.8m in capital expenditures, $40.7m in dividends, and $35.1m in share repurchases.
• In addition, 9 company restaurants and five franchise restaurants were opened.

Full-Year 2024 performance:

• Total revenue reached $5.37bn (+16% YoY), driven by increased comparable restaurant sales and strong consumer demand.
• Comparable restaurant sales increased 8.5% at company-owned and 7.4% at domestic franchises, underscoring strong brand appeal.
• Restaurant margin hit $915.8m (+29.4% YoY), with margins increasing to 17.1% (compared to 15.4% in 2023), primarily due to improved labor productivity and a higher average guest check despite inflationary pressures.
• Income from operations surged to $516.5m (+45.9% YoY), reflecting successful management of operating costs against inflation.
• Diluted EPS increased significantly to $6.47 (+42.5% YoY), positively impacted by increased margins and an additional operating week in 2024.
• Capital allocation included capital expenditures of $354.3m, dividends totaling $162.9m, and share repurchases amounting to $79.8m, showcasing a balanced approach to growth and shareholder return.
• Restaurant openings totaled 31 company restaurants and 14 franchise restaurants, maintaining aggressive expansion efforts.

Looking ahead to 2025, Texas Roadhouse expects continued momentum with positive comparable restaurant sales growth, supported by planned menu pricing increases and strategic franchise acquisitions. Despite anticipated commodity inflation ranging between 3% to 4%, and wage and labor cost increases of 4% to 5%, the company remains focused on managing costs effectively. Texas Roadhouse targets a store week growth of about 5%, reinforced by recent acquisitions, and maintains disciplined capital allocation with estimated expenditures around $400m, ensuring sustainable growth and profitability.

In the case of TXRH shares, the week of reporting the results didn’t bring sudden changes in terms of market price, which saw a slight decrease of approximately -1.5% from the publication of the report until the end of the trading week. In the last year, the company’s shares have continued to have a higher price, by approximately +13.5%.

Author: Ionuț-Adrian Lazar