Texas Roadhouse had a good January and a not-so-good February. But it hasn’t looked back since.
Same-store sales at the steakhouse chain rose 3.5% year over year in the first quarter, including 1.1% traffic growth. That’s good, especially given the current environment, but still not the type of result the high-flying Texas Roadhouse is used to seeing.
But, executives said, the muted result was largely due to bad weather in February that forced the chain to close some restaurants temporarily. It came back to life in March, posting a record high for average weekly sales that month.
By month, same-store sales grew 5.5%, 0.5% and 4.6% for January, February and March, respectively. Through the first five weeks of the current quarter, same-store sales are up 5%.
“It really did come down to the weather and some influenza,” said CFO Chris Monroe during an earnings call Thursday. “The bounce back came when the weather got better.”
He allayed concerns that the consumer anxiety being felt by other restaurant chains might finally be hitting Texas Roadhouse.
“They're coming back, they are enjoying what we have to offer and we have strength and momentum that's carrying into the second quarter,” he said.
Customers actually splurged a bit at Texas Roadhouse in the quarter. More people ordered steak, rather than chicken or seafood, which helped boost average check size.
“I think some of that makes a lot of sense given the cost of steak at the grocery,” said Michael Bailen, senior director of investor relations and financial analysis. “I guess they’re recognizing the value that we're offering and choosing to order a steak a little bit more often with us.”
Off-premise sales also ticked up by about 60 basis points quarter over quarter, to 13.6% of total weekly sales, which executives attributed to better execution and the fact that more customers stayed home in February.
The chain also announced a rare bit of menu news. It’s in the process of rolling out new beverage menus that feature mocktails and $5 all-day beer and margaritas. For the first time, the beverage menu is regional, with some items tailored to different geographic areas.
The new menu was a response to customer demand, said CEO Jerry Morgan. Customers said they missed the value-priced margaritas Roadhouse served before the pandemic.
“We were a little slow getting it back on, but it was a popular item by our consumer, and that's really the driver,” Morgan said.
The same goes for mocktails, which have become more common on beverage menus industrywide. They have been popular so far at Roadhouse, which has reported softer alcohol sales in recent quarters.
“This will be our first full year in that [mocktail] segment, but we are excited with what we are seeing so far,” Morgan said.
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