TXRH - Earnings call transcript Q4 2018

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Operator

Good evening, and welcome to the Texas Roadhouse Fourth Quarter Earnings Conference Call. Today's call is being recorded. [Operator Instructions]. I would now like to introduce Tonya Robinson, the Chief Financial Officer of Texas Roadhouse.

You may begin your conference.

Tonya Robinson

good and Rob, you, evening, everyone. Thank you for the now should XX, have release earnings our to fourth access XXXX. By quarter December ended in be website It on the texasroadhouse.com also Investors may section. found at our

with part are upon could our reliance filings begin should therefore, SEC. include need We everyone of materially release today remarks, results of and Before statements. them. provide refer more of of These to These future we discussion forward-looking statements you formal our statements. earnings a undue placed guarantees to not I remind be recent that all not forward-looking documents our the to our relevant cause and differ the will detailed discussion those factors from that actual performance

to If the measures. we In in applicable, GAAP can refer addition, measures non-GAAP earnings be may of our information found the to reconciliations release. non-GAAP

On is country the Roadhouse; today's today our Texas me us join Taylor, CEO call. Scott out of President on currently is Colosi, call unable to with and of Founder, Kent and the

we Following for questions. the call remarks, will open our

to turn like Scott. over call I'd Now to the

Scott Colosi

quarter X.X%, double-digit Thank that quarter growth Comparable good you, XXXX with everybody. on same-store in and our very were up growth. operating of sales consecutive Tonya, restaurant sales traffic strong guest us of for gave the included evening, a fourth counts increasing growth driven note growth. by ended and and revenue week XXth which X.X%, us

increase up guest of For counts. year, the which included sales full in a X.X% restaurant X.X%, comparable were

within restaurants and increase A margin the did in our drove highly market most experience labor While significant our sales of levels restaurant XXXX. we to were own staffing focus pressure very competitive strong, pressure. margin

of price XXXX, second commitment of commodity in go and with do which X.X%, adding menu managers, ongoing we increase some along an will experience. quarter. include to beginning expect inflation. into at Heading hourly finalizing long-term we're into the In which initiatives, employee process pressures of labor continue and approximately our effect Our to guest the additional our the reflect employees response,

business We most they such, operate. view our of our country. unprecedented nearly that pressure experiencing operators in our X.X% as continue perspective we to the increase are we of increase as the from should XXX understand labor the of result partners with managing the XXXX, November offset restaurants And pressure of Combined this across a of facing our in the help are the operators took inflation. most margin upcoming

our -- strong good company for new on development, to open track are ahead restaurant with to overall sales volumes our deliver that new us. Roadhouse Looking continue very to restaurants returns financial

targeting expect month. we For as military Korea as to base as at of XX South XXXX, our Bubba's including many last we just openings, four markets. opened in first primarily Humphreys on And this restaurants, eight company that Camp international to XX are includes our as many franchise restaurant XX restaurants. in partners a total location open And a

approved this or While permitting to XX back-end have we fully XX expect under year, restaurants construction loaded we additional in more company our be openings already either and currently the process.

of many plan also our as to relocate in six as restaurants We XXXX. company

the obtain momentum Over and which very With to shaping restaurants, update current up focus of fundamentals, to solid relocated be them we the years, is terms. Texas us designed prototypical top line to a last a XXXX strong several allows for have and/or our favorable year handful continued Roadhouse. more on lease

to always operational we execution and the know not we to for And partners through upcoming financial seeing now Tonya walk of annual another I thank is that look success. take great to and of will behalf and for conference. and our As our always, anything you year myself, On our forward want everyone update. key the all continued granted our Kent operators do at do

Tonya Robinson

Thanks, Scott.

growth X.X% million per average to For week $XX.X XXXX, million XX.X% driven by diluted or the income increased dollars X% share. and growth $X.XX grew and was in net to store X.X% revenue unit increase $XX.X of volume. X% quarter fourth a of Restaurant margin

the in of XXXX. calendar the shift of negative bump we the the As holiday, for average X.X% sales Scott comparable and mentioned, respectively. net QX comprised X.X% comparable December the Christmas saw increased a growth November October, sales hurricane X%, of X.X% sales basis comparable X.X% restaurant points impact overlapping XX traffic sales a increase X.X% By impact quarter benefit of the for month, increased and and in of check. a from periods, positive post had

the accounting reclassification net impact no on guidance, The restated. not new the of comparable in first the resulted and revenue the increased certain the financial comparative implemented At approximately impact X%, expenses the including of sales recognition For the XX has information which beginning shift from had New reclassification calendar we been holiday. XXXX, of days credits. and approximately of XXXX, income Year's X.X% positive of

card for As reclassifications a in net $X.X and we card franchise-related sales million quarter, items. of result reduced income, fees, increased by breakage gift gift revenue other the for the of $X.X million

$X.X of million or points. No XX were or million reclassifications or made decreased $X.X basis million $X.X sales labor. point. basis and XX costs points decreased cost direct XX G&A Other Additionally, operating in increased basis

basis total points in of of percentage X an as to the change sales. a labor sales However, increase resulted in

the compared in by of total to other in labor, basis an points points driven of as decrease an increase in primarily cost For increase decreased period. restaurant quarter, change was basis XX XX costs percentage year a in XX.X% sales XXX of percentage The offset as to operating of basis prior by margin sales. sales margin total points a and of basis a XXX of partially points

previously approximately prices by benefit back inflation. in and impact was of quarter For expectation cost impact of more half above than due of to beef higher for reclassifications quarter. the commodity the of offset mentioned the sales, check the of the X% the Inflation average was the

full X.X%. was for result, year XXXX commodity As a inflation

in main in the inflation wage line, X.X% the were growth approximately X.X%. labor growth and approximately hours other of the dollars of drivers store labor X% per week On of and

XXXX, year labor store week grew full X.X%. For per dollars

the in costs the to year million of operating the previously along made $X.X relief. to the reclassifications the fourth hurricane was prior lapping Finally, mentioned, a in to improvement of benefit related donation compared due primarily with other XXXX quarter period

the XXX full For down restaurant XXXX. to year were XX.X%, points XXXX, margins basis compared

the basis or impact percentage point basis increased the was compared of Moving G&A primary revenue, to The a million below to the as the XX margin, reclassifications. increase X.X% for points restaurant driver quarter year was of of which a period. prior cost $X.X XX $X.X million increase

recorded $X.X points or approximately we of costs XX quarter. addition, In onetime basis million during the

to related a the of Depreciation favorable Finally, expense, basis $X.X to marketing higher points share-based expense also a million prior driven fees which The XX onetime compared costs improvement to $XX.X legal year was million. $X.X or and adjustment million revenue, as of to period. decline materials increase. the compensation, X.X% a of training increased by percentage contributed was

of $X.X our quarter related that tax rate benefited return, XX.X% rate XXXX quarter additional in at compared we rate adjustment which tax the in lowered rate period. Finally, an from prior approximately the recorded for came reform X.X%. in the filing year our X.X% fourth tax tax the in with million The the to conjunction to the by

year. cash, $XX up ended $XXX million sheet. million balance last the in year to with the to We compared Moving

in generated $XXX one dividends cash debt acquire During expenditures of $XX XXXX, spent from to operations, $XXX we $XX million of repaid flow restaurant. franchise million million, capital and $X million incurred million, paid of approximately

payment, our for increasing in to release, increase announced as press from Directors also in XXXX, to per XXXX. by forward year it XXXX will Moving XX% an authorized Board quarterly of XX-week us. our $X.XX a dividend share our be $X.XX in

approximately of weeks. As growth versus We full per XX have our that share will earnings XXXX fourth estimate additional XX quarter week X.X%. weeks year could the such, the by benefit normal

X% We year. prices commodity continue X% to our commodity time with this expect fixed for and to inflation labor XX% of the inflation basket approximately mid-single-digit at on approximately

more on increase costs to compensation significant expect to support the G&A grow investments the front, we the structure The of executive drivers XX-week to regional basis include operations our higher share-based XX% On prior compared and XXXX in XX% year. costs. a

conference, our held XXXX Florida costs. to Marco partner the in Island, with line of we in will now April, be managing addition, expect be In cost late in XXXX which

to relocations. result a rate of rates net interest to on now As expect That questions. to our is the please of timing as throughout of $XXX higher expected in expect XX%. is our million $XXX open We remarks. of and generate interest income prepared income to primarily expenditures in $X line approximately tax higher incur $X million we uses approximately during cash cash our be the increase for and six being million. capital XXXX many as restaurant The expenditures XXXX the balance, a depending year XXXX by year. the And approximately driven of capital openings Rob, in concludes million to

Operator

[Operator Morgan comes your the line of John first from Instructions]. Stanley. Glass from And question

John Glass

Tonya, building does labor what's X%. pricing in assumption assumption that you are still about wages in taper in more in line. as inflation or talk XXXX? on incremental First, your of just I underlying hours labor store? What's you the understand up the Are -- the your XXXX, the off dollars on per

Tonya Robinson

will growth will range in reason expecting it generate. growth we additional updated the we also inflation of taper for far built that's we number the some back would how hours that. mid-single-digit much are That's building XXXX. that beyond be, see above off -- of And in hedge that but end what for as traffic are maybe into We part as as the XXXX, and the

Scott Colosi

John, Hey, this Scott. is

elaborate a bit to little Just more.

one our two related related I traffic hours growth to mean, -- growth. some strictly just parts have the increasing percentage just going related of to We're there's growth. traffic of just hours. So to to traffic is

managers that. reasons. certain part staffing those have there's is life we for side doing. the is on One volumes quality other Two we're where And themselves. for of managers. parts a been One of the is is for number that adding to The the restaurants to two support management to initiatives

And And excluding at to partners. managing turnover. the so management That's level improve our single-digit continues management dramatically. almost turnover for we're

that's assistant progress we managers, our we there. managers, that some kitchen can So make managers, amazing. thing, assistant And kitchen still think service managers, of service which is kind

made side, the hourly On as much we progress. haven't

us the on our environment XX Roadhouse in a ago of up slightly a because right has. with people unemployment environment turnover and all in days hire hourly X% Our turnover journey figure the still still side. the first them stay to of that's a a Texas longer is we that in have to continues XX most busy how to pretty to can were that the And things we where do year out be

some know of our we where staffed have exactly on all XXX they polled they more and hired them So are or them bit, haven't We a ask have schedules. to that in quite labor of restaurants up flexibility their journey.

moving are little slower pace. at a bit Some a

we point probably in the gone so exact have own polled left. aren't going overall some do don't backwards far dynamics just us. talent. there initiative, particular they're competitive particular their much we good think as for But nature of Some already And is the everybody decided just their year have and of and hours turnover an of market will off haven't some of We even place specifically a then in anything. at do for level because as answer their to much that increasing how at have

John Glass

the have underlying so would just you to is there's upstaffing on it or much we Just restaffing it increase. the G&A how comp staffing increase of What a going be just field? of how exec is. G&A you then XX-week is on some And a comp, the the much but field maybe in breakdown, know G&A I on basis? growth a it understand said is levels. higher if exec what And And basis? XX-week

Tonya Robinson

Yes.

XXrd On $X.X the week, estimate about probably the XX -- that's the we extra million. week,

probably I regional built the So growth. in of to that that $X -- then we calculates X% out think QX another cost. has support building And of starting that the million structure additional about we're that

little So X%. more that's than a

those back you if G&A normalized, your off, a reasonable So do G&A point get those to little more two number. you you items alone, to growth will,

Scott Colosi

I'll This regional is on Scott, of of elaborate again, investment sort and the piece it.

day, three. probably X the way we ago, way, to four in back regions. We down or years had X went going So

to to of a company. And do side. stuck a and partner, limit a that departed G&A keeps fifth time. long One forward, person manage marketing of way on hope at growth the a regions Roadhouse And add instead going we XXX decided trigger. regionals but another have folks, regions, fourth, later, for food was three time. person, we decided help you regional And time, finally of all two person, of a And regions which a part restaurants to and resources region of we those of a in for partner, go human the or to each the just long for as pull worth you a over person, have we adding our And a us product market long, also you training people coach well. have our

there So got you've restaurants us that good many fifth years come. again, number a keeps the And will right whole in a over to to for we time roughly that regional structure supports grow now. XXX think going because spot

Operator

Baird. your from And next comes Tarantino from question line of David the

David Tarantino

planning margin which going implies will to I A the offset to guess, mentioned of that not it's it. of question the inflation, outlook. all the that you you're that most offset maybe take Scott, on, pricing

that accurate? some need margin guess, does And planning? the that to is you secondly, growth even that I see you then you're to that So that, can the hold imply with confirm structure traffic distinction pricing flat do

Scott Colosi

that when the To margin. So that, one most of extent statement the depends. is I is, say it accurate

so one couple three a the the for of of we're the quarter until year. X.X% it the So things, taking beginning is, only remember, quarters have not second of we

against which X% pretty we'll So if that X.X% the get year, bit net a less much the year. little all you you for than have

regards on inflation? inflation. it given our becomes, we've everything what's then with a So okay, So range to

we the lower of actions. that the would just pricing So have margin expansion probably end range, on were at based if we

as percentages higher On the near the growth, at for the year traffic that It margin other if year. fall flat a without some might be at hand of inflationary tough little much end we're keep definitely for won't range, -- this it as to least year. last those

the on. that course where year really, the shake it's of does as inflation So out wears

David Tarantino

to maybe I in guess increase? That take than makes sense. I and through you're why or take. can the was increase how X.X%, amount talk price on Can guess, And the did far then you you you on about chosen what you which that more something seeing And a that decided not elaborate relatedly, response and so higher in quarter. little to that's price normal is flowing fourth less? that

Scott Colosi

a some that year, had six So we through a actually parts say, mix the of least. while, now X.X% or good would probably our the at X.X% We've a some fillets, are positive flowing or months, for that is salads. lot taking, great. menu, is I so of certain combos, The of focused on

know. So probably there we don't slight. pretty little Could of or negative mix bit be a

We April We November, of in but more have Early are taken did on we a up number that. Dine in program. back here also the stores on a doing lot

X.X%. a there. very you have get So mix. be some X.X%, you I could bit add little negative X.X% be don't tell anticipate could but of I it'd you, if it will to much,

of we've that's four amount Why that historically, the roughly the second-highest years. taken that pricing XX So last months. of higher? it Well, isn't in pricing just X.X% we're in taking

took than more to that wage, really we XXXX close on in big changes both back XXXX. in We federal little state you So and level. the when a that bit took minimum had

us. X.X% For of for XXXX and jump that's go a to X.X% roughly in to pretty big from back, to XXXX back us X.X%

part additional margin in doing this how as when though that is on are committed point. of what to inflation the again, all four whether unemployment and upon, might of it's sand sends the to knows. whatever that pretty the down serious the I we're estimates whatnot we year, shows our next traffic committed our margin world's stuff and growing message that it early is, some the So year, and we're X.X% and investors economy, out wouldn't on a far what shows pricing, in matter later we But who the Hopefully, with anything on depending very and take that a lines as it drawing rule the months are road And percent business. percentages. hopefully,

Tonya Robinson

I to did that. information the the them would showed them all how of did, their of restaurants We we three we similar things at kind be with to kind end looks of our market partners, see when like. we what showing really them the David, we course X.X%. of where took impactful, giving look that one before like, inflation things do out called of a them what And year And talked they the process what And of over like landed. the day to a we options sent

a came too. of part bring the in that, And competitiveness to part number very them table different that was the of we to about so of information process. lot things much usual they the a like their pricing, And being market, as

Operator

of Inc. Your comes Will next from question Slabaugh Stephens the from line

William Slabaugh

Just sticking with the pricing question.

go back to that through any back I that back then when decision that's then impact XXXX. did little easily a you or inflationary. beef flow see take believe made bit First, traffic mix can this was Did you higher when highly as in second-guess then did pricing well? you or you impact

Tonya Robinson

Yes. mean, way maybe would have anything well. wasn't we It didn't said, through to hey, go. flowed pretty the see that I that

So XX the to tends basis for go us, from at I it anytime or or look than so that. anywhere points historically, not other you mix and XX one much mean, way more

felt increases good I would the we've say, So that from taken we about historically, perspective.

Scott Colosi

tell this Hard it's believed pricing been to that. better. we definite over traffic by getting driven traffic on able look in say or to And direction we at you when the time you, our and unemployment have side, or all have pricing correlation getting elasticity the worse And changes. unemployment never of haven't draw so really I actions more a would we Will, between

of relative talking be business, they're that areas. we strength hearing our are from But operators our changes and dramatic when who going the business, very aren't changes good of guests what feel these are to what So they to them. these momentum in price our about through could the certain to talking our

than We good more we're about same keep doing. we been. doing very feel very confident. all time So ever the this what we're staffed we're that are at And mind, in we've

as food ever Our is it's as been. good

heaping sides as ever as are been. Our they've

feel on Our ever and a very much quality as they've better been. well we good are cut, hand-cut We're good. steaks is so offense than pretty

William Slabaugh

Got on labor extent talked internal in... initiatives you as output it. those labor just are about And well. active to What are follow-up a going be

Scott Colosi

They're now. now active terms, years been been fully staffed the A never challenging mean, would we've lot I this I've for where three of folks right are staffed? you we've doing to, in people thing because of restaurant our fully turnover. been say, restaurant

for why you've they more life number got to getting experience or future turnover far quality the so little and staffed huge flexibility just day, as guest to to one they be quality what people on us off, every down we're want. when reason it the to challenging even -- what level. to the the is leave concept to flexibility. is us the a where bodes more advantage from single of hourly point And when going every side, a quality means they fully us. your just more management you've day is got for time weekends it of And labor the guest where even And leave. what be life so maybe schedule to giving close open having as management ability in the close that for do competitive And on that's And the some them that then give digits, of them, secondarily a off of

think, traffic that confident it's part know that, we our the and it's now. things about big the I a growth one pretty makes us of right of our, And So future.

Operator

from question of Jeffrey And your Barclays. comes the next Bernstein from line

Jeffrey Bernstein

units. had were doing what keeps prototype tweaks I Two on and wondering, pricing, view. you that smaller slightly questions. up a been Bubba's. it the to was One, know would a just this you time, from it said you I seem like accelerating taking other looking Last just brand. I'm year you've more four. It past like seemed definitely cautious against know testing today? you're four to the a question maybe

think keeps 'XX, accelerating you as 'XX, you than wondering, growth just what about that rather 'XX, I'm sooner later? So from

Scott Colosi

won't were where the of things still that one Bubba's So Roadhouse development the -- and at. later other site opened development, smallest it's one -- there until this open but not development-related that on is the restaurant year, hasn't challenges some Texas yet, prototype the

elements ready to has that so And pushed back store get to We're open. go. that certain

of same-store help Bubba's, And get determine changes quarter. prototype we're that go have of perspective, when from Overall in size influenced about to that us first sales open, know a So prototype. they've how more very we'll operational the of execution some strong will had forward. last where and that we on sales that going a year Bubba's great had the the year

the So doing that lot have stores for momentum, been well. while, open of a a very sales

of side just last opening other the of years, the is, it volumes we've stores that great. the couple been The of some haven't that opened

been have really good. Some

old very that again, We're trying be there's Roadhouse days, well. understand to sure Some somewhere very, why the understand other as haven't positive. we the flow restaurant openings, good. exactly just great. to figure any We're some Every why. like and is far is in It just cash part of from could That where opened done why. We're haven't trying Bubba's. out been away not

at very sales bit people where of this history, we're resonate a with But had growth. point just of where and elements other just we've lot so It's of And exciting. team's it don't don't opened. know places very little us The excited. we've certain seeing folks a

these things of plugging we're figure hopefully, So out. to going and we'll keep along some

are said, that of some the doing. it? things doing about well, we're you Here's If you what

do our road execution making by been before huge and it that in concept we're what they lot than working model better, couple just more consumer big because of know we and to continue today that slow about different of service the to the do. a us in which Bubba's, little asking help started making drive the got Local know already is on folks gives bit we're We've one project also minuses. patient the so. with the pluses down done and locations hamburgers, concept better research we into to it the older of being just in with where store those we Roadhouse pizza, Texas would going So better once communities Texas and years awareness markets we've a Bubba's volumes pretty plan a some you get a just Bubba's our in, sort chance and this communities better, in marketing is and that. of and a Roadhouse, more just our this before and of of We've ago are and And familiar just those concept. never folks

has lot a it's do a of passed we it time then think good since so So to again. time

are role the of lunch. We exploring

locations. Bubba's store locations So the of of a the done couple And open, in closer the lunch it to Bubba's. three X lunch We'll development lastly, in And one most are do mean all a lunch more we're for role. year. that term, the lunch to is, over in day. kind of and of in XX was being bigger by two Florida, four strategy We've last we What store plan we've Texas, We which to add goes. longer add part, more was to is, together. did Indiana, development see place. Colorado Roadhouse how store two like Out that every committed may, this year the done with front, later that the that on have play was the I

road may like that of for to you're together. than kind a of a development kind we so going our Bubba's majority and see bit us so bit probably more build would the of And little closer longer be anybody recognize little going forward,

a one else. that So more somewhere Probably in probably going Tampa. versus the Pasadena. to three Charlotte the Houston. build where couple Charlotte, couple is got Florida, which open area Houston We'll of in in same a Wesley one just thing, the And close we've one time. in to Tampa We're in more opened Charlotte, open Chapel, in DMA, kind already, in

So that the a from change you'll from strategy. as Roadhouse see little traditional probably over departure us bit time

guests a doing like. are the about number figure we're that restaurants starting are at starting hopefully, hump this excited a have around But than we're little the that the awhile those get Bubba's. us momentum the things bit some And been out. very we'd So of we'll to in over stores again, newer of on just and slower

Jeffrey Bernstein

the Understood. on seem the as internationally, I your in using know international? traveling Kent the be And most negative. international. going just can is the separately, openings But you comps mentioned speak, are think you comment to 'XX I of does data section we franchise supplemental in that like it international are running

average we strongest, think the whether how your that just down of weakest or should what's the performance? international are markets it's about range weighing wondering just I'm just certain So or

Scott Colosi

Well, Middle the East far. by

in Middle three got restaurants a that is oil-related, hurting. franchisee So lot open our Middle the is A really East. Middle the economic-related. Middle most in East East. the in East to the business next is And franchise thing The restaurants interesting is though there we've it's The year. that going of

Texas brand. fewer understand folks it's is economic but So the They they particularly very really Middle East, traveling growing occur love the to Again, States, can of oil the cycles United the some there. in tough outside the tough that there. Roadhouse the They're committed brand.

it's direction. and exciting around see get franchise with that the all But to restaurants on that right going turned in So they'll our there. partners that going eventually, still three opening

Operator

Peter BTIG. the from Saleh from next your of line And comes question

Peter Saleh

like I little about is back Can relocations a it else? or to mean, it looks elaborate to sizable the related I just just CapEx to something related $XX you really increase. Is so. on wanted bit million the why come increase, the or increase? to pretty it a

Tonya Robinson

There's line. a on, couple that things on of going

half if of openings on $XX So bit to. than more you XXXX $XX would XXXX, we it have from million lower anywhere it have look would another at we million. came to XXXX back in expected forecasted a spending the in Typically, little

then between have it's of that do the XXXX $XX another adds And So or six timing that the number. and XXXX. million to relocations $XX kind million you probably

are doing more So in those Center our XXXX. in Louisville, reasons at biggest that things alone existing really the site. two Support getting And space and things some and like for some increase then the the in we're remodels here

little we what not bit a year, bit see. than have increase we're would a would So seeing an in in that normally little we XXXX of a typically more

Peter Saleh

helpful. a of more very bit And the That's and bit development just sense more versus why year. mentioned this little us little the back-end development it. Can back-end Got on this you loaded on loaded you then year think, a a of XXXX? Scott, in -- cadence I give terms

Tonya Robinson

bit I a -- give of you the of that. the just can cadence little

opening just expect is loaded more a bigger QX. year. one front this it between a difference loaded QX to year, lot like 'XX. That's probably -- 'XX and the We in this up, going lot more be was

hit So and That's then right just in to about in we kind like X the the XX. what and QX in QX, have XX looks that now I think one three of pipeline. cadence

development from -- always that XXXX, in we always of that. bit, back-end a things that them things on more just some was Kind a be have though of to move are to because permitting weather, going little them what to a even the always cause we they're push just deals definitely perspective assume little to a we similar little the it get So might going on you or of to on honest. little that assume kind kind a And forecasting go like loaded. earlier, hair bit things from report different

made that this to So year. again we've assumption

Operator

John the from And comes from your of JPMorgan. Ivankoe question line next

John Ivankoe

I maybe for over years, beef been have at anything there of doing overall might and an environment you're there's of if as in the prices be next that for short we nature uptick kind decline on specifically cycle to the cattle think term was supply-demand that? over. of you're if in you're point that of cycle least about prepare be this for some the But signs if seeing couple or preparing obviously, the because or hoping some increases wondering insight the the at was some might I years

Tonya Robinson

supply it like Yes. demand and seems really too. now, I mean, good, good is is right certainly

and standpoint, on leaves, uptick, if that So And the of that we related as the see spike really I didn't in been. cattle from in the quarter. Live the We kind back half of an in you up QX in those in tenderloins rib it's of mentioned, we a way see half back the inflation that's to saw tea eye, will. quarter. the did was really

X or months the a lock out. of little seeing differences more heading one it's into is, 'XX, tougher X than So we're to prices now

out we much we're high beef further the to front in are get is the year of So locked the in than half X half. premium that really X any just more than on And the months. back or

other seeing protein. beef So on any that than more that we're

the year. there the swine year. things So flu of there for one impactful happening But half some the X% some hearing the a and -- imports the that's are just there the of maybe some -- over know. with that the be knowing that could could and exports, to back too, of issues some tariffs back reasons, X% X% some of the things is in like too lot be guidance. China, We the of X% potentially of The the they're don't to the of we're feeling range that, in volatility the

getting far what's Just be needs to what as that. and as like exported things --

for that's think a XXXX. uncertainty I So causing little too

Scott Colosi

tons you tons but down and after happen. or you, world living John, world. know. or Scott. down never of time, up or you the I'll of in this And all this long in We're time supposed is a there's kind think of up, there's to living speculation tell down, for it's happen years until that happens three doesn't down, used for never to it up, it up, speculation

or reality. It's, about. our too get you learned end deal anything hear next productivity the So again, to just just pretty bunch. do more of to steaks to like much it. steaks efficiencies smaller, closer becomes if go going again, up to what for much that. reality know it. listen you we'll not after to stick marathon, or the a a cut wants And of that, But sprint. we'll we're guest that to and Not prices of a the how year. with when anything I've patient may sort the we or not kinds of like not those get of We're crazy rid until But do get what and That's year,

Operator

And your the from comes from line next question of Chris O'Cull Stifel.

Christopher O'Cull

we to more new should and we in staffing rate until flow-through growth really in see Scott, going assume it's to is maybe traffic a not the slow market labor tighter slack market? just I'm whether the if a understand labor for some trying investment

Scott Colosi

-- I situation. is mean, the every when think and here's I single restaurant its own thing, Possible, Chris.

a XXX the differences back house of So that's are stories the staffing or of individual collection management front could it's there's trying to they and at between all and looking be in where there again, journey, of above. hourly XXX restaurants when different and own on we're their where the forecast and business, we're of both side and

are it on based history of some out. part it talking shake think part our all we guesstimating, we operators on So of to of and may it and based just where

could do I right think. that, on You be

You this got program X. had since we remember, got Day to that partnership we've

their still the partners on based profits restaurant. So managing our are percentage of is a livelihood Their in paid.

to So they're long-term the benefit need business, do decisions far paid. to that's their making right going they the of but as get they what as for how do

it give their they really think just So they're hire value adds to or going to hours unless business. people people not

our we So the about that And trust right for thing for employees. doing our ultimately, are that. guests operators and it's doing our

Christopher O'Cull

per you Just reflect for to growth investment, clear, to if some does the week, cost will, operating labor guiding that mid-single-digit in you're staffing? be

Scott Colosi

Yes.

Tonya Robinson

you about and any or to normal see wage more But labor like and several assuming taking on mean, we like initiatives wage market To whether line, talking better. we doesn't things mean, I the that these market really we and the seem Yes. that's that would of just don't your is hear it course flow the -- that years. over minimum the getting see are through pressure pressure more $XX the from labor know. continue tipped don't traffic. to states point, the I again next on doing away the the with

the did range. mid-single build into that we So

Scott Colosi

say, a obviously, stories what's going have on? at drive-thrus. the the we that hear like And not drive and to go open But will have that up thing of particular to that. scary they'll hear people well, is we one may out kind location, drive-thru we don't they'll in is a enough someone don't say, And drive-thru Chris, you closed. and is drive-thru stories there us where they'll

staffing, staffing in when X, hour X Easier but so somewhere, it's $XX a in years the XXX world. so quite have not are shifts on bad hourly choices, you're staying fast to good today's if bit just really And really, lot staffing, you lower, very could turnover top a can if ability get really you of you not understaffed if turnover that careful ago paying impact the different turnover world. a many today's world day that job anywhere near everybody's a because it's because was you're next an -- of with

or it's scary. go what So in that their restaurants guest going by how of guests to have, the hear when places it's and or it can I loyalty you about those understaffed see they kind experience certain are and

for what which why don't is in our just we're we're doing part take anything doing. we again, success, So granted future about

Christopher O'Cull

guidance in this inflation X% then Okay. That's cadence beef maybe commodity commodity what the then, you're of for the Tonya, expecting helpful. about the X% year? And to embedded you've can inflation? just inflation And you talk

Tonya Robinson

there But We an perhaps those looks, And we not half mean, pressure have back apart beef, to pretty too whether pulling is the it inflationary of you, -- bev, big a potatoes, that that. opportunity and right is not in it's in tell I quarter. different really any spread every across the of quarters. bit seeing on much different XXXX. lot it amongst alcohol, don't it's you I but the I'll get the tell spread evenly areas, less Obviously, just little from beef QX the with of a Yes. numbers sweet can it's cadence perspective, soft a things Chris, there's into now, way quarter side, in a really it's saw just really, spike of we're not like QX,

So It's it's kind And they're deflationary. across you a at proteins if basket. a the the altogether, bit little look actually of mix. commodity all

Operator

next of Andrew from from your Strelzik the line BMO question comes And Capital.

Andrew Strelzik

Two questions for me.

some commodities labor the favorable potentially the about other isn't you're environment of behind better you. The talking any getting first, and being and how cycle the beef

three an just perspective years from any the those menu? wondering the inflationary the price plus if So several there's I'm question, do anything environment And I maybe next whatever know guess with assume or change, if over plans just with does second that excuse. that are time comfortable are continuing just the not the you run percent for to pricing is? guys, are. an infrequent we what the gives frame wondering to XXXX for plans the I you you but menu

Scott Colosi

we're industry. impacting more So that, that are everybody pressures apt the this I'll Scott. is but inflationary never comfortable in tell if you Andrew, certainly pricing, to taking are We're take there pricing

-- stuff you know tell a is to don't I will we So that But this all point. speculation.

performance, go And think back our half, our half I of they look the down. other margins at years, the I years XX and so up. were the were And when past almost

lot with -- handle different one so a And to we of restaurant or pressures. like companies and way you kind figure of deal another, way out do, your of inflationary figure out the how

I'm will, the if our that, in that cheapening people, will. pay experience cheapening way so continue we the to out changing confident guests for our And you that our we figure without way, or

comfortable with but I we'll it So think it. figure never out, we're

to chicken Texas looks side, big like item new roll the our menu going couple years new out in sandwich. we're Roadhouse. the last for That be may a On of menu

much been the pretty change game super in There I that's currently for And test isn't menu. tell today. you a would while. dramatic that's changer, a not it something is that but So a for anything

Operator

question next of Bittner the from Brian Your from comes line Oppenheimer.

Brian Bittner

in at on the but answered, line we should as been ask that pricing keep we've mean, think it have Scott, I'll willing mentioned sand, questions of call. my you just XX% this topic tying to in about the of on bow kind kind Most that of been margins up above. just a I of you're all or kind margin

to clearly. basis? your some see Tonya, past year some the want levels the in is don't to and G&A do willing a looks that. to to do impacting and secondarily, about think And it we think there this when growth should this manage these below of 'XX you we how slip really get investments G&A But just ability things what company forward, them about of you're You takes those once talked structure we about on moving overhead cost how G&A

Tonya Robinson

question tackle I Sure. G&A that first. can

growth. we I talked that it, we've at grow G&A, being below long-term our think always goal it revenue about we keep we look when

we percentage we are At operates I be to it X%. at and to we think when operational know that these revenue, the look how to it as of need see to investments we'd same the a important closer know mean, it unit, the we I to like business make those. time, and

things. those of balance a is really it So

the bake we week get like what And happen. see would these term, so But XXXX, we're X%. that's I think to in that, XXrd do won't you the long probably I and to when don't to -- making, we over able be investments

Scott Colosi

four on I pricing months huge take to in margin line the and margin X.X% I in a the again, -- number pricing, mean, yes, us question take. for think, of for sand, us, So to is worth

answer. big that's think of a I part So that

that? we we lot but our Now up X% point. get had upon doubt, hey, was we to subject to who that if the don't of, way are percentages mean depending give works. the that important pricing do do would world always relation I scenario. of kind case, with percentages. year we But does And going the in some bit in to next six little starting of take to talk your we line knows, ago about margin had about, we draw this take the months bank, that if a you the but at sand no what know a may But that on dollars conversation

it's we'd to number looking just still is that they've we one bounced that to long we And seeing be now as our is reasonable little today. how felt worth as position us in for X.X% to was right so think like around a I our business in at the XX% pricing think reasonable stay that think And bit, and there. like And be the we number reasonable history that of of it's there. north

the below we're So it the again, they reason playing $X what to is. not is cute, year. cheapen that's decade. were having get why our anything without us It's part of again, And AUVs of of million guest, part and offense, growth for we why well our traffic the million had at last reason beginning $X.X the

That's about happy very us that down going part here what's that. we're we're So so got to road. in continue

Tonya Robinson

of March I XXXX think one that's in took knew pricing heading coming, took was we into of the 'XX. of X.X% reform 'XX, end of sitting the December of 'XX, X.X% about we December things another too in to tax we at as were important remember is,

out, in to with a going we such was even and knowing going benefit though But had labor took of that not opportunity knew that lot that, to 'XX. we was labor offset really horizon play in a take of lot probably on 'XX how inflation of reform, that pricing an not tax big lot as a see that was to 'XX. pricing a again the be the to reform in tax the So

I now 'XX think to not net led And that the margins now where and of look that knew how -- think were at on 'XX, margin. could across because we let's on us pretty in take income consistently 'XX down into kind we the of we hey, say, So that's a to since the dip to out played has labor continue see the those are. margins seeing a little of going net bit income

Operator

next question Tower from line your Wells And Fargo. comes of Jon from the

Jon Tower

perhaps customers through get because And I responding Just options that's do that? to you day. of I'm traffic prices, year? just your hiccups then six yourselves some favorite the Meaning, in relocations you to plan from the could to step-up. if how back a were topic if go form the piece to or you separately, recent do curious you to pushback history? of comment would of that hear the on, higher you this to pricing compare come? absorbing to you're see was value hoping of highlight tied on a lower thoughts the some the Seems just that How doing menu does the traffic like insert they do on

sort from historically, of what a And have now? relocations? you on why these so, sales lifts if standpoint So seen

Scott Colosi

at if pricing, it these momentum our wouldn't We within walls. pricing from pushback our On be four we traffic Yes. -- on blaming execution be price looking for slowed, our think changes. own we'd I

increases just and that haven't most similar we've the price of an For they're part, before much overreaction. And substantial. had seen that not

thing. one So that's

look competition. on And you pricing our every at our is, have menu. value thing we Second day

We our Early priced. have menu Dine aggressively very that's

have us. and other that for programs Roadhouse. potato, side a six very a one couple We get concepts eight nice sirloin ice-cold big at aggressively get our meals, are lot in of an salad sized that's Texas basic than more A now priced. ounce baked But you you bowl still price a a old just

second pay want $X.XX to side, another you $X.XX. you that or If got

good levels degree. on not should execution-related high-quality is first menu hard, the menu. we're guest pricing food it maybe these be, We of food all working it now, our this So good scratch extreme else we issues from before already staffed part well, for at on and maybe ever it And menu day -- blame we're counts we would and not we before went like or the be, economy as should on at our value in we're because and we're some staffed looking it pricing. we'd a something be so would as right friendly well because if maybe we're be ourselves because making we're as blame down, every as we got and saying, it's as

Tonya Robinson

those. two relocations, a in And Yes. we've last Maybe a we couple. for of think done XXXX. couple had And on the had the years, I couple of we've

the a was that volume of on relocated. flow depends say typically, the restaurant would on through, I So lot the

average, maybe at that through than say of So one the less it's restaurant. volume probably XX% I but higher-volume or a that a that's depending has flow maybe would little more restaurant on

Scott Colosi

they're way, the -- relos, of are different of by number kind And reasons. these there

kitchen, restaurants older, of how of And -- is were so you in, other. all you're got super you And small top many they're and is on day up and all conversions size some each the not of else. of some it and proud where then chopped the you've the them, and have older, So front the of employees our house of walk you up. cut go even of older something in

getting And both and situation of is so around guest. employees location of out to and for all better that some the getting the that a

property. We our have one that's condemnation of

So compensating is relocating for over our And city got because us they're store a but we're it, move. the taking to property. we

our aggressively time just bunch talking same operators whole different year, there's to So about the why are relocations. have but reasons portfolio. all same our in these we you the a have coming at We

So we time. locations, and or don't got change some thing want position in catching years a of you portfolio ship, particularly we've viability both on now. this be that asset stale, of kind the right areas we're into image where this got just amount especially, up our a trade of of over if will, do to XX And all do to a we've to huge sudden

restaurants we got old. lot a that years of are So XX

bump is, make Sometimes a of spending, lot have term, it ultimately, from to to XX% change traffic capital Less whatever let's these changed, better lot in you're lease and way to longer deals. about the more or better well years and and the sales XX what a going term, get deal it's relocate be really you where get. does going from XX a beyond trade drives areas longer XX% such now where patterns where sense it the even now a be do avoid years let's about say, say, might bump, that's you're

Jon Tower

more level up here? early is will six stepped guesstimate of relocations or to this to too it future the the in whether foreseeable not be So

Scott Colosi

no. many. than be that. I there It lower will no, mean, be that No, won't

much I think high six is very number. unusually a

Operator

Holthouse Goldman And of from from line Karen question your comes Sachs. next the

Karen Holthouse

wanted one Just your few questions or on I to the final answer one to... back ago. pricing going a to

Scott Colosi

us. hear Karen, you're breaking on can't breaking on you. us. up you're up Karen, We

Tonya Robinson

Sorry, little just a bit.

Karen Holthouse

then I pricing or of a opposition from a to necessarily couple Going heard back just outright make from there couple a quarters be higher this questions X.X% level correctly the question of a year for just be to competitive price the inflationary ago. to that -- you'd that the continuing want the couple and consumer, of consumer the on running that sense pricing environment? your I sure also question of beyond wouldn't depending competition

Scott Colosi

doubtful this it's of Karen, we're I mean, we already being above at the Scott. for would do is the rest X%. probably anything year

However, going minimum upon kind to just nothing states that. that depending do addition going already to that wage just every with a upon year, that in pressure depending what and new up passed legislation with a not have especially, of ones happens is, are we're of there's lot sit what the number

is commodities the something of If in help stuff top our out, is how shakes business know right i.e. to doing the which that, see doing. not it But So with unless depending on that inflation to world beginning us how we'll commodity-related, upon we're economy, is dramatically deal of in that. now in more an ongoing there see is more could all changes reality than have recession. something at the likely and I year we again, the

take have as well. to to to expect most we continue other as more people So pricing expect would I

Operator

Group. comes your question Stephen Maxim Anderson of And from line from the next

Stephen Anderson

Going to the two back question, question. relocation more

do any costs add the a construction maybe even at quarter you do some ago? see a markets potentially Friday that question remodels, the above lunch? if see you it's those those just your since where for have even First, to in locations And look locations you projected opportunities lunch is, have you of some in you as of second

Scott Colosi

Steve, this Scott. is

inflationary let to hasn't and least of estate. projections. you from given quarter for inflation cost our of cost labor, alone ago, will, be construction a or healthy cost the continues the us it at Though Our real if changed for economy, the construction

the still new old there. the knocking same still that's building relos of the in -- they're By a same lot. literally, in like lot. one and the a them actually inflation -- basically just relos, So way, store we're are down We're calling parking but there's couple really parking

major happening. are considering not is not it. perspective, lot piece from We stores have So we're remodel are a no do clarify But I want -- be for no, we to calling just something that but so and not rebuild relo do a we may forth. lunch. lunch, that weekday of Friday weekday there to a a lunch, of initiative do

Operator

are back at there no some turn And the will over call remarks. I further questions for to closing time. presenters our this

Tonya Robinson

us. everybody any Thanks, look joining We forward taking questions. for to Thanks Rob.

us If call. you have a free have all give a Thanks any, please feel great and to night.

Operator

today's This conference concludes call.

may now You disconnect.

Texas Roadhouse (TXRH) 19 Feb 192018 Q4 Earnings call transcript