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As comps grow, Texas Roadhouse looks to combat labor costs

In an effort to counteract climbing labor costs, Texas Roadhouse said it will this month raise menu prices 1.7 percent, a move the casual-dining chain said should keep comps growth positive in the coming fiscal year.

Same-store sales at the chain increased 6.9 percent at company-owned restaurants and 7.7 percent at franchised locations during the third quarter, rising on increased traffic and higher average checks, executives noted on an earnings call Monday.

Net income increased 8 percent over the year-ago quarter, to $20.5 million, on revenues of $438.1 million.

“We are pleased to report another solid quarter, highlighted by double-digit revenue growth, driven by increasing guest counts and strong operating week growth,” CEO Kent Taylor said.

Beef costs continued to be an issue for the chain in Q3, with food-cost inflation outpacing a previous increase in menu price. However, that pressure should ease in 2016, the chain notes, as it expects food costs to deflate. 

The easing of food costs is “welcome news after battling high food cost inflation for the last several years,” Taylor said.

Still, the chain anticipates those gains will be offset somewhat as minimum-wage increases are phased in across several markets during 2016. 

Texas Roadhouse reiterated plans to open 30 new restaurants during the current fiscal year, including four under its Bubba’s 33 brand.

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