Texas Roadhouse(TXRH)2023-10-27 02:57Financial Data and Key Metrics Changes - For Q3 2023, comparable sales increased by 8.2%, driven by a 4.1% growth in traffic and a 4.1% increase in average check [11] - EPS growth for the quarter was 2.6%, significantly impacted by several adjustments [39] - Restaurant margin dollars increased to over 139,000, with to-go sales representing about 12.3% of total weekly sales [67] - The company expects to open approximately 30 company-owned Texas Roadhouse and Bubba's 33 locations in 2024, along with three Jaggers [33] Market Data and Key Metrics Changes - Labor costs for store week increased by 8.5%, primarily due to wage inflation of 5.6% and growth in hours of 3.3% [4] - The effective tax rate for Q3 was 11.9%, with a projected full-year 2023 income tax rate of approximately 13% [43] Company Strategy and Development Direction - The company plans to maintain a balanced and disciplined long-term capital allocation approach, with an initial 2024 capital expenditure guidance of 350 million [3][12] - The company is focused on organic growth and returning capital through dividends and share repurchases to deliver strong shareholder returns [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers dining out, despite external economic pressures [61] - The company anticipates a more normalized and manageable rate of wage increases in 2024, with a forecast of 4% to 5% for wage inflation [42][26] - Management noted that beef remains the primary driver of inflation, with expectations of 5% to 6% commodity inflation for 2024 [41][76] Other Important Information - The company has seen a stabilization in wage increases and is optimistic about achieving efficiencies in labor management [26][80] - The company is committed to the growth of Bubba's 33 and has made significant investments in its operational leadership [91] Q&A Session Summary Question: Thoughts on pricing in the current environment - Management indicated that they will be cautious about pricing, focusing on core wage pressures and beef inflation [6][48] Question: Clarification on menu pricing for Q1 and Q2 - Management confirmed a 5.5% menu pricing for Q4 and discussed the potential for pricing in early 2024 [57][134] Question: Update on commodity inflation outlook for 2024 - Management stated that beef is the primary driver of the expected 5% to 6% inflation, while other commodities are flat to deflationary [76] Question: Discussion on labor efficiency and staffing levels - Management expressed optimism about achieving better labor efficiency as turnover rates have returned to pre-pandemic levels [167] Question: Insights on consumer demand and traffic growth - Management noted consistent traffic growth across various regions and demographics, indicating strong consumer demand [153]