Consumers can’t get enough of Texas Roadhouse right now.
The 697-unit steakhouse chain said Thursday that it has averaged more guests so far this year than any other period in its history.
Same-store sales are up 15.8% over that time, with average weekly sales reaching a record high of $146,000. Traffic is up 10% year over year.
It’s a step change compared to the fourth quarter that ended Dec. 27, in which same-store sales rose 7.3% year over year on 1.1% traffic growth. Average weekly sales were $130,176.
And it comes as some analysts are predicting negative traffic for restaurants this year.
The sudden jump seemed to awe both analysts and Roadhouse executives, who were unable to put their finger on what, exactly, has customers flocking to its restaurants in unprecedented numbers.
Yes, the chain is lapping the thick of the omicron variant of COVID-19 from one year ago, although the virus didn’t exactly slow it down: Its same-store sales were up 16% in Q1 of last year.
Perhaps some other anomaly, like weather, the Super Bowl or Valentine’s Day, could be inflating the results?
Not really, said Michael Bailen, senior director of finance. “It’s been a pretty consistently strong performance throughout the seven weeks.”
New President Gina Tobin noted that recent investments in technology could have something to do with it. More than 600 of the chain’s restaurants now offer Roadhouse Pay, which allows guests to pay their bill and leave as they please. The chain has also found efficiencies with new kitchen display systems, though that initiative is still in its early stages.
“We really look at any piece that can help the speed in our restaurants, which obviously increases the traffic growth,” she said.
Further questioning by analysts uncovered another clue: Menu mix has been negative to start the year, specifically in the entree section. This, too, has stumped the chain’s brass, but Bailen theorized it could reflect customers trading up to Texas Roadhouse from other casual-dining brands.
“Maybe they are coming in and driving traffic growth but coming in at a lower price point on the menu,” he ventured.
CEO Jerry Morgan, who has worked at Texas Roadhouse since 1997, suggested that this is simply the result of the brand doing what it does best. “I think it’s about our execution and about the quality of the product that we’re putting on the plate,” he said.
The call yielded no clear answers. And Bailen cautioned investors that they should not expect the red-hot traffic to continue. “The percentage probably comes down from there as we start to lap some more normalized numbers,” he said. “But I think we still have opportunity to grow.”
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