Texas Roadhouse, Inc.

Texas Roadhouse, Inc. operates predominantly in the casual dining segment of the restaurant industry. The company has grown to three concepts with 816 restaurants in 49 states, one U.S. territory, and ten foreign countries. Competition in the restaurant industry is intense, with competitors including well-established food service companies, independent local operators, well-capitalized national restaurant chains, meal kit delivery services, and the supermarket industry. The company competes on the basis of taste, quality, price and value of the food offered, service, atmosphere, location, take-out and delivery options, as well as the overall dining experience.

The company's primary competitors include a large and diverse group of restaurant chains and individual operators. Texas Roadhouse's competitive advantages include its owner-operator partnership model, which offers a performance-based compensation program supported by competitive benefits and health programs to individual restaurant managers and multi-restaurant operators. The company also emphasizes offering high quality, freshly prepared food, creating a fun and comfortable atmosphere with a focus on high quality service, offering everyday value, serving communities, and focusing on dinner. The company does not rely on national television or print advertising to promote its brands.

Texas Roadhouse generates revenue primarily through restaurant and other sales at company-owned restaurants, which accounted for 99.5% of total revenue in fiscal 2025. The company also generates revenue from royalties and franchise fees, which accounted for 0.5% of total revenue. Restaurant sales include gross food and beverage sales, net of promotions and discounts, for all company restaurants. Other sales primarily include the net impact of the amortization of third-party gift card fees and gift card breakage income and content revenue related to tabletop kiosk devices. Royalties consist of franchise royalties paid by domestic and international franchisees, as well as royalties related to royalty-based retail products. Franchise fees include initial franchise fees and/or development fees for each new restaurant or territory.

The company operates three restaurant concepts: Texas Roadhouse, Bubba's 33, and Jaggers. Texas Roadhouse is a moderately priced, full-service, casual dining restaurant concept offering an assortment of specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open grills, along with ribs, seafood, chicken, pork chops, pulled pork, vegetable plates, hamburgers, salads, and sandwiches. As of December 30, 2025, the company owned and operated 648 Texas Roadhouse restaurants. Bubba's 33 is a moderately priced, full-service, casual dining restaurant concept featuring scratch-made food, burgers, pizza, wings, appetizers, sandwiches, and dinner entrées, with 56 company-owned locations. Jaggers is a fast-casual restaurant concept offering burgers, hand-breaded chicken sandwiches and chicken tenders, made-to-order fresh salads, and hand-spun milkshakes, with ten company-owned locations. The company also franchises an additional 102 restaurants, including 36 domestic Texas Roadhouse restaurants, five domestic Jaggers restaurants, 60 international Texas Roadhouse restaurants (including two in a U.S. territory), and one international Jaggers restaurant.

In fiscal 2025, the company opened 28 company restaurants, including 20 Texas Roadhouse restaurants, seven Bubba's 33 restaurants, and one Jaggers restaurant. Franchise partners opened four restaurants, including three international Texas Roadhouse restaurants and one domestic Jaggers restaurant. The company completed the acquisitions of 20 domestic franchise Texas Roadhouse restaurants for a total purchase price of $107.5 million ¹, net of cash acquired. The company also completed the acquisition of its previously leased office buildings in Louisville, Kentucky that house its Support Center for a total purchase price of $22.8 million ², and the acquisition of previously granted franchise development rights related to three future restaurants in California for a total purchase price of $6.0 million ³. On February 19, 2025, the Board approved a stock repurchase program under which the company may repurchase up to $500.0 million ⁴ of its common stock. In 2025, the company paid $150.0 million ⁵, excluding excise taxes, to repurchase 869,007 ⁶ shares of its common stock. The company also paid dividends of $180.3 million ⁷ in 2025.

Total revenue increased $504.7 million ⁸ or 9.4% ⁹ to $5.9 billion ¹⁰ in fiscal 2025 compared to $5.4 billion ¹¹ in fiscal 2024. Net income decreased $28.0 million ¹² or 6.5% ¹³ to $405.6 million ¹⁴ in fiscal 2025 compared to $433.6 million ¹⁵ in fiscal 2024. Diluted earnings per share decreased 5.8% ¹⁶ to $6.10 ¹⁷ from $6.47 ¹⁸ in 2024. Restaurant margin dollars decreased $10.1 million ¹⁹ or 1.1% ²⁰ to $905.7 million ²¹ in fiscal 2025 compared to $915.8 million ²² in fiscal 2024. Restaurant margin, as a percentage of restaurant and other sales, decreased to 15.5% ²³ in fiscal 2025 compared to 17.1% ²⁴ in fiscal 2024.

Management expects store week growth of 5% to 6% ²⁵ across all concepts in 2026, including the impact of franchise acquisitions. The company expects commodity inflation of approximately 7% ²⁶ for the year with prices locked for approximately 45% ²⁷ of forecasted costs and the remainder subject to floating market prices. Wage and other labor inflation of 3% to 4% ²⁸ is expected in 2026. The company plans to implement a menu price increase of approximately 1.9% ²⁹ in Q2 2026. An effective tax rate of 14% to 15% ³⁰ is expected based on forecasted operating results. Capital expenditures of approximately $400 million ³¹ are expected in 2026.

The company continues to evaluate opportunities to develop restaurants in existing markets and in new domestic and international markets. Domestically, the company remains focused primarily on markets where significant demand exists because of population size, income levels, the presence of shopping and entertainment centers, and a significant employment base. The company also continues to pursue opportunities to acquire domestic franchise locations to expand its company restaurant base. Internationally, the company has entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in numerous foreign countries and one U.S. territory, and has also entered into domestic and international area development agreements for Jaggers.

The company continues to focus on driving comparable restaurant sales to maintain or improve restaurant level profitability. This includes a pricing strategy that balances the impacts of inflationary pressures with long-term value positioning. The company remains focused on encouraging repeat visits by guests and attracting new guests through continued commitment to operational standards relating to food and service quality. To attract new guests and increase frequency of visits, the company continues to drive various localized marketing programs, focus on speed of service and kitchen efficiency, increase throughput by adding seats and parking at certain restaurants, and enhance the guest digital experience.

The company expects its average capital investment for Texas Roadhouse restaurants to be opened in 2026 to increase to approximately $8.9 million ³² primarily due to higher rent and building costs. For Bubba's 33 restaurants, the company expects average capital investment for restaurants to be opened in 2026 to decrease to approximately $8.5 million ³³ primarily due to lower building and sitework costs associated with a smaller prototype of approximately 6,700 square feet ³⁴, partially offset by higher rent. The company expects to utilize this smaller prototype in 2026.

Capital allocation spend in 2025 included capital expenditures of $388.0 million ³⁵, franchise acquisitions of $107.5 million ³⁶, dividends of $180.3 million ³⁷, and repurchases of common stock of $150.0 million ³⁸. On February 18, 2026, the Board declared a quarterly cash dividend of $0.75 ³⁹ per share of common stock, representing a 10% ⁴⁰ increase compared to the quarterly dividend declared in the prior year period. As of December 30, 2025, $380.0 million ⁴¹ remained authorized for stock repurchases under the current program.

The company experienced higher than normal commodity inflation in 2025, specifically relating to beef, impacting restaurant margin, and management anticipates these higher inflationary conditions to continue into 2026. The company is susceptible to increases in food costs as a result of factors beyond its control, such as food supply constrictions, inflationary cycles, weather conditions, food safety concerns, global pandemics, product recalls, global market and trade conditions, and government regulations including the imposition of tariffs. The company currently purchases its beef primarily from four beef suppliers coming from the United States or Canada, which represent a significant portion of the total beef marketplace.

The company faces risks related to its growth strategy, which primarily depends on its ability to open new restaurants that are profitable. One of the biggest challenges in executing the growth strategy may be locating and securing an adequate supply of suitable new restaurant sites that satisfy financial targets. Competition for suitable restaurant sites in target markets may be intense. The company also faces risks from changes in consumer preferences and discretionary spending, which is influenced by general economic conditions, including high inflationary periods, and the availability of discretionary income.

The company's profitability depends in part on changes in food and supply costs, and in 2025 the company experienced higher than normal commodity inflation, specifically relating to beef, impacting restaurant margin, with these higher inflationary conditions anticipated to continue into 2026. The company currently purchases its beef primarily from four beef suppliers coming from the United States or Canada, which represent a significant portion of the total beef marketplace. The company is also subject to risks from increased labor costs due to competition, increased minimum and tipped wages, changes in hourly and overtime pay, and other employee benefits costs. Approximately 21% of company restaurants are located in Texas and Florida, with 101 company restaurants in Texas and 50 company restaurants in Florida as of December 30, 2025, making the company particularly susceptible to adverse trends and economic conditions in those states. The company's growth strategy depends on its ability to open new restaurants that are profitable, and one of the biggest challenges may be locating and securing an adequate supply of suitable new restaurant sites that satisfy financial targets.

Management's message emphasizes the company's long-term strategies to grow earnings per share and create shareholder value, which include expanding the restaurant base, maintaining and/or improving restaurant level profitability, leveraging scalable infrastructure, and returning capital to shareholders. The company's mission statement is 'Legendary Food, Legendary Service' and its core values are 'Passion, Partnership, Integrity, and Fun with Purpose.' Management highlights the owner-operator partnership model as a key component of the operating strategy, where managing partners and market partners are required to sign multi-year employment agreements and make refundable deposits at the time of hire. The company's purpose statement is 'Serving Communities Across America and the World.' Management expects store week growth of 5% to 6% ⁴² across all concepts in 2026, commodity inflation of approximately 7% ⁴³, wage and other labor inflation of 3% to 4% ⁴⁴, and an effective tax rate of 14% to 15% ⁴⁵ based on forecasted operating results. Capital expenditures of approximately $400 million ⁴⁶ are expected in 2026.