Texas Roadhouse (NASDAQ:TXRH) executives highlighted another year of sales and unit growth in 2025 while acknowledging continued pressure from beef-driven commodity inflation as the company heads into 2026. On the company’s fourth-quarter earnings call, management said all three brands posted positive sales and traffic growth, and the system notched its 60th consecutive quarter of comparable restaurant sales growth, excluding 2020.
2025 performance and key milestones
Chief Executive Officer Jerry Morgan said 2025 revenue grew to “nearly $5.9 billion,” and the company opened its 800th system-wide restaurant. The company also acquired 20 franchise locations and said more than 70% of restaurants set daily and weekly sales records during the year.
Chief Accounting and Financial Services Officer Keith Humpich said full-year 2025 same-store sales increased 4.9%, including 2.8% traffic growth. Consolidated average unit volume exceeded $8.4 million, and he cited average weekly sales of more than $166,000 at Texas Roadhouse, $122,000 at Bubba’s 33, and nearly $73,000 at Jaggers.
Despite cost pressures, Humpich said the company generated the “second highest restaurant margin dollars, income from operations, and earnings per share” in its history, while noting that commodity inflation and the lapping of an additional week in the prior-year period weighed on earnings growth.
Fourth-quarter results: sales growth, but margin pressure
Investor Relations Vice President Michael Bailen emphasized that the fourth quarter of 2024 included an extra week, which negatively affected year-over-year comparisons. For the fourth quarter of 2025, Texas Roadhouse reported:
- Revenue growth of 3.1%, driven by a 4% increase in average weekly sales, partially offset by a 0.6% decline in store weeks.
- Restaurant margin dollars decreased 15.6% to $205 million.
- Diluted earnings per share declined 26.1% to $1.28.
Average weekly sales were over $160,000, with to-go representing about $22,000, or 13.8%, of weekly sales. Comparable restaurant sales rose 4.2% in the quarter, driven by 1.9% traffic growth and a 2.3% increase in average check. By month, comparable sales increased 6.1% in October, 4.8% in November, and 2.2% in December.
Profitability was pressured by higher food costs. Restaurant margin as a percentage of total sales fell 309 basis points to 13.9%. Food and beverage costs were 36.4% of sales, up 281 basis points year over year, driven by 9.5% commodity inflation and shifts within the entree category, partially offset by the higher average check.
Labor as a percentage of sales increased 18 basis points to 33.2%, while other operating costs were 14.9% of sales, slightly better than the prior-year quarter. Bailen said the quarter also reflected higher general liability insurance reserves, with $3.5 million of additional expense in 2025 versus $2.7 million in 2024.
Early 2026 trends, pricing plans, and inflation outlook
Management said comparable sales for the first seven weeks of the first quarter were up 8.2%, with restaurants averaging approximately $170,000 per week in sales. Bailen also detailed calendar impacts: holiday shifts and year-end timing combined with Halloween shifting created about a 1% negative impact on fourth-quarter results, while the first seven weeks of the first quarter benefited by a little over 1% due to New Year’s Eve falling in the first quarter.
Weather also affected results. In response to a question about Winter Storm Fern, Bailen said it had roughly a 2.5% negative impact on the first seven weeks, partially offset by lapping weather last year, resulting in a net weather impact of about 1.5% for that period.
On pricing, management reiterated a conservative approach focused on maintaining value. Morgan said the company remains “well underneath” the full-service dining segment on pricing. The company plans to implement a 1.9% menu price increase at the beginning of the second quarter of 2026. Bailen provided additional cadence details, saying pricing was 3.1% in the fourth quarter and would remain 3.1% in the first quarter, then rise to 3.6% in the second and third quarters after the 1.9% increase takes effect, before the company considers any potential pricing at the start of the fourth quarter.
For 2026, Humpich maintained the company’s guidance for approximately 7% commodity inflation and 3% to 4% wage and other labor inflation. He said beef inflation accounts for nearly all expected commodity inflation. Bailen added that the company is about 65% locked on fixed-price commodities in the first half of the year and about 25% locked in the back half. He said the company expects first-half commodity inflation to be above the 7% guidance, with the highest inflation in the second quarter, potentially in the “very high single digit” range, before easing in the back half of the year.
Asked about margin expectations in 2026, Bailen said it could be “a challenge to get leverage” on cost of sales given the inflation and pricing outlook, and restaurant margin percentage may remain under pressure. However, he said restaurant margin dollars have a path to increase, which he described as a key focus during the cattle cycle.
Development plans, capital allocation, and shareholder returns
On development, Morgan said the company added 48 restaurants to its company-owned base in 2025, including 28 new store openings and the acquisition of 20 franchise restaurants. Franchise partners opened four restaurants, including three international Texas Roadhouse locations and one domestic Jaggers.
For 2026, the company expects approximately 35 company restaurant openings across its three brands and said it will benefit from the acquisition of five California franchise restaurants that occurred on the first day of the fiscal year. Franchise development expectations were unchanged: six international Texas Roadhouse openings and four domestic Jaggers openings.
Humpich said the company ended 2025 with over $130 million in cash and generated more than $730 million in operating cash flow. That cash flow funded $388 million of capital expenditures and the $108 million acquisition of 20 franchise restaurants. The company also returned capital to shareholders through $180 million of dividends and $150 million in share repurchases.
For 2026, capital expenditures are expected to be approximately $400 million, excluding the $72 million paid to acquire the five California franchise locations. Humpich said the company borrowed $50 million on its credit facility to help fund that acquisition. Management also announced a 10% increase in the quarterly dividend to $0.75 per share.
Operational initiatives: Digital Kitchen, handhelds, and guest management
Management said technology investments remain a priority following the late-2025 rollout of the Digital Kitchen and upgraded Guest Management Systems. Bailen described the Digital Kitchen as contributing to a “calmer, quieter” kitchen environment and said it can help free capacity for more to-go business. Morgan said the Digital Kitchen rollout will not lead the company to pursue a delivery service “at this time.”
In 2026, the company plans to expand testing of handheld tablets for servers to input orders at the table. Morgan said the company temporarily pulled back the test to rewrite software, then resumed testing, and is working to ensure reliability. He said handhelds can improve speed and order accuracy, and he expects later in the year the company may be ready to offer the option more broadly for operators to opt in.
On the upgraded guest management software, Morgan said it helps manage wait lists, floor plans, and quoting accuracy, and he cited the company’s ability to handle high volume during Valentine’s Day weekend as an example of how the tools contribute to execution.
The call also introduced Mike Lenihan, who joined Texas Roadhouse as chief financial officer in December. Lenihan said he has been learning the company’s culture and will begin operations training across each brand.
About Texas Roadhouse (NASDAQ:TXRH)
Texas Roadhouse, Inc is a casual dining restaurant chain specializing in hand?cut steaks, fall?off?the?bone ribs, chicken, seafood and house specialties. Each restaurant features a Western?themed décor, open kitchens and a signature line dance presentation of fresh, made?from?scratch sides and breads. The company emphasizes an energetic dining experience, focusing on hospitality, value and a family?friendly environment.
The concept was created in 1993 by founder Kent Taylor, who sought to combine high?quality steaks with an approachable, community?oriented atmosphere.
