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Texas Roadhouse remains anti-delivery while beefing up takeout

Despite companywide same-store sales growth, the steakhouse chain calls its Bubba’s 33 spinoff "a work in progress."

Texas Roadhouse reported a 5.8% jump in company-owned same-store sales for the fourth quarter of 2017, while also offering tempered enthusiasm for its emerging Bubba’s 33 sports bar brand.

“Our unit economics on Bubba's are still very much a work in progress,” Scott Colosi, the chain’s president and chief financial officer, said during the earnings call. “We continue to tweak our prototype. … Essentially, Bubba's has just been pretty mixed and continues to be a pretty mixed bag. We've got some restaurants that are doing exceptionally well, we've got others that aren't doing so well, and we are still trying to sort out some of the causes and factors of that.”

Nevertheless, Texas Roadhouse intends to open seven new Bubba’s 33 units this year. Some of those locations were slated to open in 2017, but were delayed by construction hold-ups and other issues, chain executives said.

The steakhouse chain, which has remained focused on dine-in consumers and has not launched any large-scale off-premise initiatives to date, reported it will see operating costs jump $3.5 million to $4 million this year, due in large part to new to-go packaging that’s more environmentally friendly and aesthetically appealing.

Despite founder and CEO Kent Taylor being vocally against delivery, even previously encouraging Texas Roadhouse’s competitors to “do as much delivery as they can, so they can deliver lukewarm food,” the chain can’t completely resist the onslaught. Over the last five years, to-go sales as a percentage of total sales have doubled from 3% to an average of 6% per unit, Colosi said. The chain is expecting an even larger uptick in to-go purchases after recently rolling out an online ordering platform and updated mobile app.

Texas Roadhouse reported total fourth quarter revenue of $545.1 million, up 12.5% year over year. Same-store sales increased 4.7% for franchised locations during the fourth quarter.

The chain saw a significant boost from the new tax laws, reporting a tax savings of $3.1 million for the fourth quarter, or a tax decrease from 28.8% to 19.8% year over year. Some of that money will be distributed to Texas Roadhouse employees, in the form of increases in wages and benefits. Company officials said they were not ready to specify how the savings would be shared companywide.

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