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High food costs cut into Texas Roadhouse’s Q2 profit

Though Texas Roadhouse Inc. reported increased comp sales in the second quarter, increased food costs cut into the company’s profit.

Same-store sales at the steakhouse company rose 8.2 percent at company-owned restaurants and 6.9 percent at franchised restaurants compared to the same period the previous year, Texas Roadhouse reported Monday.

But a food-cost inflation of 9.4 percent, driven primarily by rising beef costs, dragged down the impact of higher unit volume, the company said.

Net income at the company fell 8 percent year over year to $21.1 million, from $23.1 million.

In spite of “solid top-line performance,” including a 15 percent revenue gain year over year, the commodity inflation “resulted in earnings per share that were lower than the prior year period as it more than offset modest price increases taken in late 2014,” Texas Roadhouse CEO Kent Taylor said.

The Louisville, Kentucky-based company expects food costs to mitigate throughout the rest of the fiscal year, with a year-over-year inflation rate between 4 and 4.5 percent at year’s end.

Texas Roadhouse said sales have been strong at recently opened units and plans are underway to open 30 new company-owned restaurants during 2015, including as many as five under the Bubba’s 33 burgers-and-pizza brand. 

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