Restaurant company Texas Roadhouse (NASDAQ:TXRH) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 9.6% year on year to $1.45 billion. Its GAAP profit of $1.70 per share was 3.4% below analysts’ consensus estimates.
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Texas Roadhouse (TXRH) Q1 CY2025 Highlights:
- Revenue: $1.45 billion vs analyst estimates of $1.44 billion (9.6% year-on-year growth, 0.6% beat)
- EPS (GAAP): $1.70 vs analyst expectations of $1.76 (3.4% miss)
- Adjusted EBITDA: $196.1 million vs analyst estimates of $188.4 million (13.5% margin, 4.1% beat)
- Operating Margin: 9.3%, in line with the same quarter last year
- Free Cash Flow Margin: 11.1%, down from 12.5% in the same quarter last year
- Locations: 792 at quarter end, up from 753 in the same quarter last year
- Same-Store Sales rose 3.5% year on year (8.1% in the same quarter last year)
- Market Capitalization: $11.38 billion
Jerry Morgan, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to report that our operators successfully navigated us through a number of challenges this quarter and once again delivered traffic growth across all three of our brands. During this period of economic uncertainty, as always, we remain focused on the fundamentals of our business and on what we can control, which is creating an environment where our Roadies want to work and our guests want to dine.”
Company Overview
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ:TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $5.5 billion in revenue over the past 12 months, Texas Roadhouse is one of the larger restaurant chains in the industry and benefits from a well-known brand that influences consumer purchasing decisions.
As you can see below, Texas Roadhouse grew its sales at an impressive 13.9% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it opened new restaurants and increased sales at existing, established dining locations.
This quarter, Texas Roadhouse reported year-on-year revenue growth of 9.6%, and its $1.45 billion of revenue exceeded Wall Street’s estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to grow 8.1% over the next 12 months, a deceleration versus the last six years. Despite the slowdown, this projection is above the sector average and implies the market is forecasting some success for its newer menu offerings.
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Restaurant Performance
Number of Restaurants
A restaurant chain’s total number of dining locations often determines how much revenue it can generate.
Texas Roadhouse sported 792 locations in the latest quarter. Over the last two years, it has opened new restaurants at a rapid clip by averaging 6.1% annual growth, among the fastest in the restaurant sector.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at restaurants open for at least a year.
Texas Roadhouse has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 7.9%. This performance suggests its rollout of new restaurants is beneficial for shareholders. We like this backdrop because it gives Texas Roadhouse multiple ways to win: revenue growth can come from new restaurants or increased foot traffic and higher sales per customer at existing locations.
In the latest quarter, Texas Roadhouse’s same-store sales rose 3.5% year on year. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Texas Roadhouse can reaccelerate growth.
Key Takeaways from Texas Roadhouse’s Q1 Results
We enjoyed seeing Texas Roadhouse beat analysts’ EBITDA expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this print had some key positives. The stock traded up 1% to $174.50 immediately after reporting.
Indeed, Texas Roadhouse had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.