- Revenue Growth: 2025 revenue reached nearly $5.9 billion, driven by 3.1% Q4 revenue growth and 4.9% annual same-store sales increase.
- Restaurant Margin Performance: Generated second-highest restaurant margin dollars, despite a 15.6% Q4 decline to $205 million due to cost pressures.
- Dividend Increase: Quarterly dividend raised by 10% to $0.75 per share, reflecting confidence in financial stability.
- Commodity Inflation Guidance: 7% inflation expected in 2026, with beef inflation as the primary driver, impacting cost management strategies.
- Capital Allocation: Maintained $400 million capex guidance for 2026, prioritizing new restaurant development and infrastructure upgrades.
Operational Highlights
The company achieved several operational milestones, including opening its 800th system-wide restaurant and completing the rollout of digital kitchen and upgraded guest management systems. According to Jerry Morgan, "We're committed to legendary food and legendary service, with a focus on high-level hospitality and value." The digital kitchen has led to a calmer kitchen experience and allowed for more to-go business.
Guidance and Outlook
Texas Roadhouse expects commodity inflation of approximately 7% for 2026, with beef inflation accounting for nearly all of the expected commodity inflation. The company will maintain its pricing strategy, with 3.1% pricing in the first quarter, followed by 3.6% in the second and third quarters. Michael Bailen noted that the company is "more locked in on fixed prices for the first half of the year (65%) compared to the back half (25%)."
Valuation Metrics
With a P/E Ratio of 29.14 and an EV/EBITDA of 19.22, the market is pricing in a certain level of growth for Texas Roadhouse. Analysts estimate next year's revenue growth at 9.3%. The company's Dividend Yield is 1.52%, and the Free Cash Flow Yield is 6.14%, indicating a relatively attractive return profile. The ROIC of 19.97% and ROE of 28.2% demonstrate the company's ability to generate strong returns on capital.
Future Prospects
The company is optimistic about its growth prospects, with plans to continue investing in new restaurant development and maintaining the condition of existing locations. Gerald Morgan expressed confidence in the performance and growth potential of Bubba's, stating that it will "reach around 10 locations this year and continue to add value to the company." The company's focus on innovative ideas, such as adding smother or sidekicks to menu items, is expected to drive future growth.