TXRH - Earnings call transcript Q3 2019

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Operator

Good evening and welcome to the Texas Roadhouse Third Earnings Conference Call. Today’s call is being recorded. All participants are now in a listen-only mode. [Operator Instructions] I would now like to introduce Tonya Robinson, the Chief Financial Officer of Texas Roadhouse.

You may begin.

Tonya Robinson

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

part are upon our reliance begin should therefore, include need everyone today remarks, Before them. of of These future we discussion statements formal our statements. undue placed guarantees to not I remind be that not forward-looking and will performance

with actual filings SEC We relevant those release differ of and more refer discussion for materially you earnings detailed recent all a our factors to our that results from the of the statements. could forward-looking cause to

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

with Taylor, On Officer me Chief Executive Kent Texas today and is of Founder Roadhouse. the call

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

I’d turn Now to like call over Kent. to the

Kent Taylor

Thanks, Tonya.

third another restaurant revenue that to pleased results include quarter are and performance margin but only not growth. growth per earnings report We share strong of also strong quarter solid

Our were including X.X%. growth of up quarter comps the traffic X.X% in third

And benefit into in volume of average X.X% comps October along our productivity growth of labor improvement during with in unit quarter. restaurant to X.X%. margin momentum sales resulted has increasing continued expansion the The approximately with

serve our levels the on service standards and quarter. us staffing Their throughout of Tonya deserve focus saw all operators on our specific will at for to efficiency will the scheduling labor update drivers highest improvement you well. will more we continue quality of maintaining and to say that execute the while right food but the give detail in I our financial the credit

experience. sales bottom counts generating focus driving Sales growth X.X%. on with growth increased Bubba’s to of this in at employee the quarter growing comp XX line the continue through an XX the guest on with or restaurants base satisfying to continued We guest emphasis without those

earlier to delays began quarter several X.X% year. X.X% that locations in lunch permitting five third challenge of more X.X adding a in of this test growth, into continue year X.X be Bubba pushed which opening and early next Our equals Construction which the minus contributed growth.

growth With to the these the including X.X% of benefit store delays now week. XXXX XXrd have in approximately expect we

have in the six and a three five fourth restaurants far give So basis quarter, us more including we XX in to restaurants that opened year-end. open new expect Bubba will full-year On XXXX sites. XX before

with many restaurant currently at how Looking together. ahead as pipeline as We targeting our is excited Bubba’s. openings, are including eight at company plus XX XXXX, coming I’m development least

two and our We forward which rate also another opening both inflationary look to are not wage Jaggers a From outlook. expect XXXX commodity to in be we next year. perspective, year, development included

in the of X.X% As price a a to late menu of menu roll result, increase we’ll out that rolling November be approximately to pricing replace plan we off.

Whether including be this continued and levels labor on productivity. pricing to in experience a and growth, restaurant of offset inflation we traffic of depend improvement enough XXXX exact the maintain in factors number action will inflation our will margins

line, you. the the in productivity, continued labor our repeat let on Roadhouse For thank me folks those for improvement

about we traveling from month managing our of to Gary the continuing tour. employees fall long-term as average operators for never guests of our thank I to want meeting those and I and likes grow to Finally, spent our on our business entire care sales, partners opportunities. came the the and take the our country say. meetings growth last and team our and Grimes annual with for away confident direction accepting

Now, update. Tonya will financial walk you through our

Tonya Robinson

Thanks, Kent.

increased as unit increase million, a to week points growth grew restaurant sales driven Restaurant while X.X% to XX.X% XX and a of $XXX the in average quarter third total dollars by XX.X%. For basis XXXX, volume. margin store X.X% grew margin percentage revenue of X%

Additionally, of month, restaurant comprised check. traffic Comparable our and the respectively. increase sales net to increased X.X% X.X%, X.X% growth quarter, in increased income comparable or XX.X% August sales and during share. average increase million X.X% By in diluted for X.X% $XX.X per September and July, $X.XX increased periods a X.X%

And mentioned, approximately in more period. the higher updated full commodity impact offset guidance period. average a total inflation we for the commodity upon have expectation for than comparable a the benefit check. of our as points year Cost X.X% fourth decreased percentage X%. X.X% of by as was sales XXXX Based our quarter, Kent X.X% to prior of to sales year increased sales to basis XX inflation The October compared of inflation

Labor total impact a were and dollars points percentage the main per The other up X.X% labor growth inflation wage period. X.X% and year to of XX.X% the of to of compared were week basis as sales of included prior XX hours drivers guest and X.X% increased counts. which in tore higher

million labor week this reserves in the the health Labor full for our total, and workers’ week growth to group claims due year per to $X quarter. benefited history, X.X% development the claims, adjustments XXXX year dollars prior of associated per X% expense compensation experience. store be In X%. We growth insurance these adjustments our in with store $X.X of compared million to resulted to to by quarter, expense between now expect

the percentage a total Lastly, compared flat sales period. essentially to other year operating prior of costs were as

insurance premiums. see year-over-year We to continue higher

However, our insurance. a compared million $X.X quarter, was year by in increase liability for this $X.X credit resulted this quarterly a million analysis These adjustments in prior general adjustments to credit favorable actuarial offset to the reserve quarter. related

fourth and percentage year points a million year. X.X%. the the decrease of expect basis approximately drivers primary operations our additional were currently of Those we last will and costs XX by offset incentives benefits $X.X expansion by as The of million. structure, G&A to begin last last to an began quarter were Moving $X.X regional settlement million which lapping will of operations $X.X XXXX’s impacted that equity partially the year. during expenses million regional of of our have G&A expansion legal the But to support margin, on lap the impact as $X a million $X.X expenses from approximately fourth in quarter expansion from we restaurant decreased which revenue compensation negative increased and

Overall, additional to within to of year XX% flat week $X.X be primarily revenue included grow $XX.X to cost a on the compared The months. a period. related prior which as of we to the restaurants, depreciation, to G&A million million increased continue compared expected $X or relocated is approximately as year. to X.X% XX expense expect nine to increase basis next accelerated percentage XXXX prior Depreciation million the

$X.X fourth quarter. the of depreciation accelerated additional million expect approximately in We

quarter tax unchanged which the period. for in in XX.X%, the came Our prior year at is rate rate from our

XX%. to Our full rate year guidance remains unchanged at income tax XX%

count Finally, our year-over-year basis share on was as result total a of a repurchase activity. share down

third The along impact in approximately quarter, with shares of the year’s the second XXX,XXX X.X million repurchased benefited per in the by share repurchased shares growth earnings quarter this X.X%.

We will a in and of way continue on discipline our focus operating to acquisitions. franchise and brands, a flow smart growth our cash with dividends, allocate balanced share repurchases

in strong with Our $XXX balance million cash. remains as ended the we quarter sheet

million generated of flow and $XX quarter, $XX expenditures the from $XX paid of capital incurred stock. we of dividends repurchased million, cash operations, XX million in million During

approximately expenditures million. projected XXXX updated $XXX to capital have our We

quarter end full Christmas part and which the will and period. the falls have earnings we’ll we this near estimate approximately usually benefit extra extra want week to of it’s year for between the As January an growth XXXX. share I remind Year, New XXXX, by of week, everyone We fourth diluted our that per X%

payments. our year-end timing year the to the quarter on of due fourth this of Finally, two December have dividend XX, will

XXXX, initial sales including comparable to as mentioned, expectations positive XX at ahead Bubba’s many XX eight growth, store openings least and as our Kent include Looking restaurants. new as

benefit be We commodity to store grow openings weighted the X.X% XXXX, commodity this week XXrd of currently expect evenly on basket our restaurant to XX% to the X.X% inflation will fixed we from X% we throughout time. approximately lapping of year. more at the week with prices with by X% While expect

labor as growth of mandated pressure the for impact rates growth. in week per growth traffic market expectation to impact to wage includes ongoing expense hours digit as mid Our due state well of labor the increases single and store

XX% of million. expenditures include XXXX rate expectations of and Our XX% also an million $XXX capital to to $XXX tax income

our the questions. for line And remarks. prepared open concludes Holly, please That

Operator

Instructions] come line first to the of is question from [Operator going Baird. David Our Tarantino with

David Tarantino

margin the drive And sustainable a you do what those some think and then mentioned exactly efforts you wanted labor and follow-up. as enhancements line have you fourth how are good is restaurant on it Hi, in a pretty performance the in delivered on running. to you mark And particular My point inflection doing to what you quarter you’ve relative afternoon. of that the productivity to are think ask XXXX? does I QX, about question nice been I the

Tonya Robinson

still improvements been Sure, We’ve we’re David. our We meetings QX, but a just learning had market of labor. tour. with talking we’ve about bit, fall saw happen throughout we partners. Really kind a some off labor came those lot so

we that number hasn’t restaurant to the that counts guest – need we’re is, of grow course, they and really haven’t number sales But that their stores to counts, the they seen meet what just about of talking guest yet. the Of really continue what’s impact their have. hours to

been So doing. that’s we’ve really what

where great lot they remember the did back we at of initiatives job you We past. staffing a had. year? little We like the may be the getting really Do understaffed staffed the about a of talked of a properly, bit beginning felt in people

what then stores. some So, said will if we from you some could’ve been was overcorrection there

now bit bit balancing bringing what little So in kind some line. I we’re of more think that little you will, just of of that a seeing and a just of a tweaking that if is right

that be now indication Too line guidance I early little we traffic great right sustainable. our forward think digit be say we mid to will those mid that – to that what it and into start our XXXX, going and QX will digit is will maybe more below expect. a we we But expectation traffic even in will labor built be single that growth with see of single expect hours growth. for a So

Kent Taylor

And meetings lot see doing to Doug was in little I training very executing of educated those few up those and class folks part the and heck you productivity. tell stores. quite managers of Thompson was better. coming geared tour for will out out million a energized that of a of a on a $X did one are on we to and brought And now labor get I then fall of quite within amazed people And

David Tarantino

to then Great. spring related follow-up to think but XXXX. I you’re I manage second that and guess the in X.X% took taking that’s the you X.X%, increase And price price through was And replacing know pressure. you the a Kent I I had XXXX in mentioned a increase just inflationary

XXXX? it? for philosophy consider Just that So one is the XXXX how still like on you’d margins accomplish line something second or what that might then to we is, increasing generally restaurant thinking holding increase about And or question are margins? it’s price you in directionally, whether around

Kent Taylor

Well, bucks, state had the percentage obviously wage went a and I we lot XX took with as we than that percentage. states of were less that our weight the that our then through, and had market higher a probably of in partners meet no states X.X% increase of late all higher a there we bigger took in

the So can’t average, an it’s say it state you you’re on depends in. really

going this didn’t ago next we point were do as far As that year, additional bump. a that at know we year to

So hard to it’s tell.

Tonya Robinson

Yes.

as probably depend the that. of too They’re that’s we’ll be we’ll see I whether now X.X% to really on we rolls that labor how early off going conversations at to say end And to continue having March. doing right those think be trend.

a on to I If of place good we a commodity do from margin as gave, a that we in traffic maintaining range that really restaurant getting environment. be kind think lower inflation labor as and little far that being be bit this maybe with positive. standpoint of think traffic, can would a I driving help is little

Kent Taylor

she Yes. a we’ll first of not of big said know or that’s quarter the what traffic, numbers traffic The indicator do. biggest is and our do say XXXX thing we don’t

David Tarantino

Great. Thank you much. very

Operator

the from Oppenheimer come to of and going Brian Bittner, is question line next our And Company.

Brian Bittner

inflation Question the outlook you. for the XXXX, food X%. Thank cost to on X%

For a better outlook than next pretty be even with you operating currently year on? commentary floating what bit in what that talk it helpful. what Is you’re on suppliers at? now? more based exactly this would it’s about is based year. on yet you is just you’re good, little potentially it rates contracting what be based expect to Any the Or there your Can

Tonya Robinson

the Brian basket. about Well, inflation, early Sure. XXXX of we’re really we And commodity it’s locked on inflation. XX% said XX%, as on

you if will, lot So making what – of about it’s those some might a prices on we’re be estimates floating items.

now, happening to X.X% side QX. of grades the use I bit hangover little like feel is things, XXXX. which Right why from are full that that’s that just supply range see to you narrowed for of seeing into of we on some beef beefs, up overall would if So that We a will, cuts the may of the We’ve restriction certain we’re we that the what you. we year – kind tell guidance. now, right to some of X% on

There of I about number, basket. I a Again, remains tell to overall some or that’s things, are inflation a locked, one we you. have some seen, things, inflation got be this some as of we’ve pork now. we’re across all lot X% really a but that’s the being various There good basket spread assumptions, you more that making one little that really in, prices heading I and not tell X% range We’ve bit that we’re all got as would in, isn’t item the XXXX, of deflationary, feel some – thought would could in we’re it to of baking would about lot I maybe driver. piece as out right The that into floating that we much we built a of call but inflationary.

Brian Bittner

probably have that, when Okay. know we a really last to the you costs and safe approach And surprise when in price we range follow-up, did above we Is this be take but gauging springtime to do I increase? about is thinking how that price say price talked just the you’d take really springtime? about to about quick something labor as it spring food watching should see think you year, you you’re the

Kent Taylor

us. the time could tariffs that maybe that us be at on give help outlook what Well, you some will might

Tonya Robinson

it’s just… I Yes, mean

Brian Bittner

smart, Kent. That’s

Tonya Robinson

I are the labor ranges guidance Those big. given. pretty inflation we’re guidance, looking into were when mean, the commodity

said, depend that’s productivity Kent coming how like labor are think and trends, I rest this traffic going we where So, next into of year heading on seeing, year. the and to a there, what out, lot’s we’re the

would much what to were year thinking same here about much, additional we last might sitting the So pricing way be.

a talking call lot that about February. So on we’ll be more the in

Brian Bittner

you. thank Okay,

Operator

Our next John will of from question line Morgan come Glass, the Stanley.

John Glass

Hi. Thanks.

This a There go it First, lot can I back been the maybe or quarter G&A in some year-on-year. have was like Tonya just flat less to Kent, but sounded commentary? expected. or would than you may noise, came have

would you area those the So items do were expect there partners. onetime in how that this in quarter some And next to partners about maybe – up or think you’ve stepped additional with G&A for XXXX we not now I of after think that number continue? year managing

Tonya Robinson

Sure, John.

last million yes, Just of we the first, we to tackle part had $X.X that that about lacking first of were from question charges year.

settlement, had reform, So, we a with between a to tax we equity due legal that, incentive some compensation paid higher other some bit little bonuses extra and off things.

quarter. biggest of X.X% offset then growth we really regional that that was an that XXXX, saw was XX thing structure, that about to was revenue. Again, this support $X.X looking of about the we percentage So about the million. at saw regional, a And basis the which as the points expansion that we of was call

It far as those was reasonable So, was good. kind overall, felt G&A revenue of out, growth below things take as number on if reasonable, it concerned, all a you’ve even I’m growth.

reasons that year is good of growth, will bump I extra remind we do that G&A think up weekend G&A. XXXX, And relating as one look to able going on be XX% in G&A we’re with But think which I on do a is QX we would that be – still because on have about too, you we everyone we expectation G&A some to very have growth get on. to the the my full basis. I’ll packed, full the so year X%, that should leverage

have a some but get flattish, leverage like I little feel to there. bit worst it’s think case, we of So, opportunity

Kent Taylor

one tell role. I that person new you bill that will year, me Texas for Roadhouse next can meaning, Well, crisp, be of the $XXX paid

a help might little bit. that So

John Glass

then given leave pricing, where about? be Good quarter to know. price fourth maybe the quarter on And effective the you increase effective clear, the increase, that pricing talked just does Tonya, just first to

Tonya Robinson

because will will about have we before a QX about week the Sure. off roll and run rolling X.X% X.X% XXXX we X.X% that then have in.

the it So we’ll that of XXXX to replace, drop be down X.X%. And rest X.X% at about QX the be off and X.X%. obviously will as of assuming about the year. rolls X.X% then you’ll

you effective. I that So year XXXX X.X% menu basis full the about think for get the in pricing would on

John Glass

you. Got

Okay.

XQ but XXXX, you I XQ mean said is X.X%? assume XXXX You the

Tonya Robinson

Thanks, XXXX. did. I QX Yes, John. Yes,

Operator

will line of Jeffrey the next from Our come Bernstein, question Barclays.

Jeffrey Bernstein

Great, very you much. thank

that look of like like look in how I’m just to at trying we the perhaps this shifts comp It on think looking quarter, current the anticipate months don’t momentum two-year there’s a comp third compared to we December. year if any the and of going play going it you should would difficult at the we get at As of quarter. year. November unusuals the there’s solid or don’t you’d continuation I a trends in rest rest basis know like from more quarter. sequentially out just because whether or that remaining anything seems for of assess the the other into on, things the or this looks

Tonya Robinson

get other the weeks that in typically and week of from that of a Year – week mean, calendar store a think week, week to December, call shift the extra that our X% The be only little bit I one I got biggest quarter And I out busier that it’s growth. December. than a would of you probably thing perspective you’ll so from which December. benefit of a help New then Christmas is in between like adds

Kent Taylor

are be to on on lot Tuesday. Eve We Tuesday, the a a a as which as well Year’s New better a Christmas on Wednesday enjoying going Eve is than and Christmas weekend,

that So, helps.

Tonya Robinson

sure. for Yes,

Jeffrey Bernstein

response back Got on Or even consumer? it. mind? I’m believe sense sentiment the increase through get an not the past And reason will might you all presumably justified consumer But did dictate wondering whether increase your you that back early you many then flowing look of as from of inflation took just this maybe or the is because there any take take in want to you any, year, in months increase there earlier I XXXX? another mean, to of second really push some it the inflation was in if is it terms you

Kent Taylor

the two months, pretty the at Look were okay, comps last right?

Tonya Robinson

Yes. And I indicate that we’re would perspective, pricing. good. by not the being hard now always seeing to a up, I mean, think that isn’t tell when would show really that It really right the feels pricing it’s from anything pretty niche accepted guest. any

at I it longer now be if I pulling probably pricing, of even may from to think here point can that it’s it other pricing quite And at through the show today, takes looking is you feels pretty bit sitting a itself. well, things. not – realize this right at But kind that some fine.

Jeffrey Bernstein

talking Great. said you next My a year units last couple Jaggers going year a then were have spend question CapEx XX similar. this got you into and maybe I of very of the But XX, XXs. think low clarification, you just about and you

change of cost the seems anything there’s shift openings, to going terms there, differential know being in trying the build CapEx mix just how maybe versus of a out, the spend in see – mean, you or to same. just I Texas ahead plays Bubba, like I’m with units that big else So but if there’s the I on

Kent Taylor

like to Well, now in will supposed maybe one open open were in of February. January, December these units that

already to spent. the expenses will open of have and those most So people construction been stores

Tonya Robinson

And we million that Yes, between. built existing $XX that’s the number also two costs we’re up, now support seeing of definitely that. CapEx we’re in the We completely, we’re year. which true, buildings that in building are a expanding filling took that center, then this our about is seeing

had. in those unhold to taking needs just and growth we’ve it it be the – taking getting we’re all where So to

Kent Taylor

doing floors one we’re eight in year. And

all So of the we lot floors a that’s got. – that and

get have and done that So over and it’s it and on with move like let’s with to deal next not year.

Jeffrey Bernstein

Great. Thank you.

Operator

next Brian from James. our Raymond come line of question Vaccaro, the will And

Brian Vaccaro

evening. you. Thank Good

day how to Just start retail the back through due that a much dynamic, to throughput week was obviously out of I’m be strong quarter worth to standpoint? staffing versus might what the momentum comps, some fourth anything from curious a improve you’d the pretty accelerated in the a quarter. other attribute to, calling or

Kent Taylor

let service, legendary food, the I’ll fill blanks. in Legendary Tonya

Tonya Robinson

out regional nothing there are all from perspective we’ve different what that parts would out. Nothing point Day call that behaving than would a any seen. similarly, I so I

to just strength So, Kent’s of the I the point. brand think it’s

think We so continue that’s and execute really that just well I to that, seeing we’re great. momentum,

Brian Vaccaro

guess, amount or maybe the the of stores And fruit investment solid Okay. or more that set prior pretty you’re of pretty it the I low you in was in acceleration seeing of acceleration, broad acceleration, where or some making concentrated that quarters based? the were

Tonya Robinson

the I more all country. think based, across tell it’s across I more broad you would Brian. it’s

We’re And to of early seeing you’re across we’re go helping a lot perspective. to certainly continue That’s day signs traffic even seeing seeing it various that, among grow. the from parts. a

year-over-year. continues to sales. be we overall thought up XX% So go about of X% And to our that

the to growth. contributor So to definitely that be a continues

Brian Vaccaro

it the breaking the you curious driving the on then that? COGS. strong something strong reaccelerate execution costs, been to the with all quarters what’s there. think And few awareness is now. plans level else the I Is point in cylinders last on hitting Okay. or you store growth it through the pretty you’re it’s on brand or Kind it to above has mentioned of And

Kent Taylor

No I both it you’ve would say nailed on counts.

two, one, three have the people, been place our years. have now we think I maybe people in there

And the than brand people trusting is stable. or think markets I part thought. in more we various just these relocated getting more were that then So, just

a good thing. so that’s And

Brian Vaccaro

ahead. And go sorry, Okay. I’m

Tonya Robinson

go No, ahead.

Brian Vaccaro

for walk margin you. that’s me. Last you just AUV economic targets the and through all concept Thank could, And unit components I one, could the for if key investment. store the of

Tonya Robinson

great there. a X.X% lot we is I’ll given of out growth the Right again, data that whole looking you, their in now tell Sure. quarter. haven’t sales really

restaurant growth see continue We continue been all to get of which very has to improved margin. year, level that encouraging. They

really, those they’re And encouraging they are that’s So things different in and labor really dive in costs honing certainly on been operators as at. too.

seeing unit costs anywhere I much standpoint, and development From from, store taking million would was in development million. a tell come think from, you those we’re we I one cost now than to right had that. higher that out $X.X $X That’s that

So, was baked we some things other going kind that out. there on There of driving that.

Kent Taylor

That is rent at a XX times.

Tonya Robinson

yes XX Yes, fully for at out. do includes that as cost when we��re we development that And includes, Yes. rent a to mid-teen a from pre-opening, times expect those usually modeling loaded new we factor stores standpoint. see also returns so

we Texas like what looking is Just at for. we’re do Roadhouse

So and the think a spend sales that of we’ve keep of million, than that assuming Texas because building a if talked again, get better you cost sales, those week there can we cost in we in alcohol look I around margin XX,XXX the returns $X then that’s Roadhouse, before if can slightly lower want good.

So…

Kent Taylor

we that have smaller lower but since to some buildings that And open yet. open to provide efficiencies at costs, might they’re are tell slightly getting too not three early ready do

Tonya Robinson

Yes.

Brian Vaccaro

That’s you. All Thank helpful. right.

Operator

from next question Stephens with of Slabaugh line our the come And Incorporated. will Will

Will Slabaugh

in point you on? P&L the of labor in going that or purely a all, market result there’s on productivity is question loosening anything would initiatives labor, just have at I happening any the we’re market of seeing that had that if your different the improvement to that if

Tonya Robinson

it where wage more just hours kind be of I I going tick would growth up to looks know it QX really was now a did we’re wage XXXX. from moderate catching done we’ve we’re down don’t on don’t in some it QX see know I be. that sustainable just, inflation it bit how Will a bit. maybe little mean, to than inflation. little in and

turnaround in expecting is we of bigger saw hours QX guidance. XXXX. of our But that not in We’re where kind really the the

Will Slabaugh

it. Got

Just on a quick follow-up Bubbas.

coming the you few have how smaller think us much are remind stores? up many smaller to next potential you As that how And small if a stores you’re the expect stores and box you you that much you year, opening be then eight Can is there? box saving do in of mentioned, how format about up. you

Kent Taylor

Well, that. as those out. year, a year you’re XXX feet square more just three a far it’s next as want because, always than I like to smaller, it’s say something

Tonya Robinson

it a couple believe and right. I And around I costs. thousand of lower maybe that’s think hundred in comes

Kent Taylor

At XXX target. the was

Will Slabaugh

it, thank you. Got

Operator

Our come Chris O’Cull next of question the line Stifel. will from of

Chris O’Cull

thanks. Good Good, guys. afternoon

New stores the few strong openings? there is volumes company have these generate opened the at volume really anything higher doing to quarter, differently is past

Kent Taylor

we’re Yes, towns. in Go figure, huh? smaller located

Tonya Robinson

nothing I true. that, if Yes, than differently. doing mean Other that’s really there’s we’re

out We are that be in performance to really towns in we just expected them of little six we are seeing have a than as great Kent wouldn’t bit maybe And smaller before. are mentioned.

execution So out nothing that standpoint. an I from could point that differently we’ve done really

Chris O’Cull

towns? smaller year How to be going these many are stores in next

Kent Taylor

boy, the tell you. report development of I front me, in if had Oh I’ll

want else? something Tonya you Let’s see, answer to

Tonya Robinson

[indiscernible] I think

Chris O’Cull

one. I’ll ask another

Tonya Robinson

Well and go we’ll on that. then ask do follow-up your

Chris O’Cull

see an really did you base opportunity on back the to productivity quarter? the do of improve portion the labor and to improvement when start this Just think question, has labor store you what still to

Tonya Robinson

is little feel they or questions hard model number a corporate. really, about happened quarter, we opportunities just September. have in hit, not in kind it to bit something giving opportunity would store these we them don’t we’ve and productivity to that I a challenging be from have a that that their down as like labor we’re tell throughout different. Well, has, every labor to but you, of probably the push should because number each what stores target been way know store honest, they the to And say going it’s talking we’re because bigger really what

that make sure to to that see that that I to continuing hard and the continue where they’re feel be. find we’re that going for it’s to focused that say number pretty on might ways confident hitting opportunity But So, to works them.

So they and for can food guest execute sure. quality experience on

Kent Taylor

nine On towns.

Chris O’Cull

outlook then from you you first actually could beef are to suppliers back make the year? Okay. on inflation your the beef, think going what next hearing after quarter just And improve the

Tonya Robinson

we’re hearing they Well, some lot that, I of again, of is what have we’re don’t of course, a think not transparency.

up, on price locked aren’t of lot We locked a things. a on

impact of some not the of it fever that’s just, what wasn’t, hearing all on of how that what the tariffs the and it’s maybe we’re and coming on been was discussion expectation going So year kind swine is would as as off maybe bad beef.

just be. we there thought doesn’t it as be it as seem So to much would

we’ve far a concerns as choice little a if we overall varied again, perspective for industry, in a as will. of bit on just beef, the the from the but supply beef constriction some Now just of supply, just a no supply you grading bit supply restaurants a perspective, little our from

slaughter think rates down are of year-over-year, things. types I those

So X% are again, get we the making assumptions with where lies some on and it that what within comfortable X% then overall inflation. floating, to beef locked-on using we commodity

Chris O’Cull

Great. Thanks guys.

Operator

going from And Palmer, is line of David come question to Evercore the ISI. our next

David Palmer

mentioned into versus helpful same to wage digit Just your labor and that traffic, inflation goes inflation managing productivity, any productivity, on a you on Could hours be have – follow-up in mid-single a breakdown follow-up. XXXX. would assumption obviously break perhaps labor kind about you’ve in store I down of you talked better that

Tonya Robinson

someone. is it Sure,

just thinking digit market thinking that state we’re X.X%. And I I’ve X% We’re coming. it that range, just call another, pressure. you’ve then approximately X.X% would got is about continued increases know that to to we mid X.X% probably mandated single are

group as see that wage on the seeing insurance, pretty us with inflation is we’re category, as We think the other keep the on things that. like would inflation continue. steady just taxes, will which we along X% that far So

of assumptions make that On on to where range, you Because you’ve one got to the, hour things some side of kind traffic. a right? is get get

So give is hoping guidance. we’re know, below of we away, without traffic we tell come traffic see below I’ll of giving growth growth what anticipate what that you typically kind happening. of any don’t one we kind hours traffic, is you

you we hours XX%, or scenarios some if been below but seeing. you know traffic, get at growing which had have is XX% growth. within we’ll traffic Don’t least back typically range of to growth traffic see Hours where about what that

X%. could digit you range, So, that call with to that us made mid-single which X% comfortable

David Palmer

a just productivity a about like made you, up It of can is been area. And obviously and lot about the question, talk your on helpful. focus opening comments That’s seems talking labor some remarks philosophical this. there’s you that Thanks. in

evolutionary gotten, million, you bigger Is about you it there’s now pushed $X had think some Any you about made triggered about Thanks. business. had color be something be you some organizational also where managers that the margins other question where it with focus. how the staffed or there about talked that they had what helpful. why observations do You the this that and would an that for should things to but when up from

Kent Taylor

specifics. Boy, I this I could wish give you

out I of we’re position been we’ve think from just that learned labor folks. we kind evolved listen managing I more our basically then better operators that we And effectively, from and learnings teaching some of our to into think them. those

So just nothing of unusual. best we’ve best labor. the various not It’s the we on ideas sharing done that fronts, just are basically

Tonya Robinson

inflation everything wage a want on stack labor the cost just do from assets David, a you I pressure think can from when to And overall help really, we think perspective. you wage see to the continue does of inflation standpoint, other make it you see, up. to to about

And are that’s ideas said, with and really great really share at. do forward some practices Kent operators best so just is what our best the came great we what as operators

David Palmer

Great. Thank you.

Operator

from UBS. is to the come Geiger, Our of going line Dennis next question

Dennis Geiger

you. Thank

satisfaction Wondering of you’re customer inflation metrics, just labor managed broadly more kind across on the you’re on but the tightly where at just then given maybe Just those about context of per system? now trends, employee stores could what throughput better store you the talk in seeing the and if scheduling and also and considering labor efficiencies?

Kent Taylor

of into that guests faces to look continue our with the I’ll I stores, interacting people and see at the forth. our go back are I going When smiles and

So we’re keeping staff appropriate I think point interactions. in those have levels guests employee to still the at great the to

anything I to So new don’t report on. see really

Tonya Robinson

are right traffic doing great growth And the things. Yes. indication think that I strong seeing from – traffic we we’re the customer is too a experience

Dennis Geiger

maybe if of the an here update where currently And from total then the sit opportunity Okay. where we system on and Thank stand now? provide could basis right you. bump-outs just either annual with or on just for in we you from an kind

Tonya Robinson

Sure.

XXXX the And in those to-date XXX So so completed. of we we’ve far got bump-outs. have done XX think at I about

any So the as the from time. meeting at in to point usual bump-outs. that And to – about to see we we those there’s continue we hurdles in XX anywhere internally those of usually pipeline XX stores feel continue to like expect of kind approved get for

being sustain I bump-out being units of exciting. the perspective, able that. Roadhouse like from see XX% to a eventually pretty that’s I a So mean, think it I could

encouraging seeing. really be that’s So to

Dennis Geiger

Thanks.

Operator

to the Andy Our of from going question next Barish, come is Jefferies. line

Andy Barish

this guys. Two about having and should XXrd just questions, holidays, just out impact XXXX how the Hey we from that think the shift? starting the week year on

Tonya Robinson

Yes.

bit little of from offset. average sales versus space, see falling that’ll sales sales on impact much a just QX because over have average be as numbers, do to at, the we PXX a week so in perspective. to QX won’t But It weeks weeks impact looking bit benefit being as comp XX from it in an So that higher in it’ll we’re XX a be an Andy we weekly be group. going think won’t be from negative little will that have because sales It’ll impact. be PX. of a comp Comps weekly tends busier a for sales on – the a that’s we’ll see

Andy Barish

lunch of rolling driving rest Okay. And of like at sales, been incremental tests the to point? you’re Bubba’s obviously going stores kind then applicable Bubba on, work up the to out that seeming just that’s is how following the the on this

Kent Taylor

something Like six and slow kind everything, we months. like we we’re give that basically move testing just of knew

numbers. possible significant stores to – don’t but out few year, I lay more So next not a it’s

Andy Barish

you. Thank Okay.

Operator

Our from is next Peter line with going of come BTIG. question Saleh the to

Peter Saleh

back the cost you footage bar Thanks. to the the smaller removed Great. savings? bar, smaller the Bubba’s, just to removal just moved to just have that around want you’ve one conversation the the square and the now surface I come for reason is because format, format,

Kent Taylor

the did we it’s service remove bar. Yes,

big party those a three have We table that will be of out coming stores.

money. with we of And bar took and a out But we think as also the in square footage. four costs lot speakers. pretty like the well have it. TVs Then bar, you that’s few lose that’s a equipment I that So little the a much

Peter Saleh

point think And spoke, and your that we with last had at or in kind are worked one you do? the touched still considering favor, time of to then guys I Roadhouse doing you co-marketing is that you Bubba’s are mentioned, that something

Kent Taylor

Yes, very that a stores had with honest that that mention in was kind connected of volume connected mentioned then I we in a or was beneficial. lower we I’ll where and guy billboard that each a that. few did of be you. really was favor did not were And the market were that

the apparently I was we’ll in more wrong do future. that and So

Peter Saleh

top from sort Any of at the marketing? magnitude

Kent Taylor

just because to hard It’s up. stores tell are those all

– there that those is that but a little say, I would So benefit had yes. those than more did not, on so

Peter Saleh

much. Great. Thank you very

Operator

And our Ivankoe John next question from will the with of come JPMorgan. line

John Ivankoe

Hi, thank you.

an fiscal XXXX, we low high as think comp at kind or look and look about Tonya, average insurance laps Was XXXX? and year potential of think Firstly how it or general workers’ liability year we in the you about as in fiscal year at do XXXX?

Tonya Robinson

there get will to can you we and as think and XXXX, but comp, increasing than continue insurance, tell of mean, things we I a absorb kind be inflation something see workers’ just the will, would some definite again, expect in were some I GL more contract that you, like that. up, they I insurance they other if Well, it’s on see line lines, of we probably to within tighter little workers’ operating lines

So, to I up little a bit think we’ll insurance to continue happening year. on little bit creep see that’s a XXXX. seems every And

just a how experience, really that John, claims going to or any for never that’s know a premium that’s put going sure work things it’s and the from on be how happen just based of going that’s actuarial take on that’s given perspective, or and whether Now adjustments a like in one, to you quarter.

John Ivankoe

their office impact And Okay. your very – come news general, you any into your types that Is the managing idea adding least you markets of delivery you in temporary best delivery tape in, even certain third-party as maybe this Thank store. your an give Have on at sure even some type delivery. there’s might today on within in pitch. you. to excuse twister, locations have may any seen any that many or basis in the point markets, certain partners certain do stores just around some of to competitors, there a of at to road any – you have tried of a say, make listen competitive delivery third-party free that to, promotions I’m out more was run on hey, reaching me, sense, of delivery terms tongue may in

Tonya Robinson

Sure.

Kent Taylor

our delivery to We stores. our for go that more drives love third-party competitors into

Tonya Robinson

we Yes. go tell And big things coming to topic. a you, off just I’ll our talked it’s about to a of – with lot

in see we As – volumes grow lot restaurants. to volumes our go of a

delivery of part of was not was not So the the conversation. delivery Doing conversation. part

enough like just seeing feel so to got handle in go think no changes we’re with they I to volume there. they’ve

Kent Taylor

helps that we state drive TV also on people stores. because our competitors when And advertise love more our into

John Ivankoe

Thank you.

Tonya Robinson

Thanks.

Operator

Strelzik, line Andrew comes Markets. of next Our from Capital BMO question the

Andrew Strelzik

Thanks questions. the afternoon. good Hey, for taking

creeping an and quarter of the that’s there I’m better the in of to so the the in you’ve been talked couple kind quarters any me, those for improvement metrics higher how wondering turnover of past holding of Did productivity? maybe labor improving First is contribute important labor to onto about how trending. some

Tonya Robinson

from we Sure. change. a see standpoint, I much didn’t a of mean, turnover too

I versus slightly we were last saw think down hourlies what year.

Andrew Strelzik

down. also is turnover Management

Tonya Robinson

management Yes, things ago. compensation management years turnover. on two about quite time for we lot now. did come turnover seeing to the A some We’ve been that down with really do has some of of

been life things Some we’ve of from doing quality the of standpoint.

really be see just is impactful, good. to continue we So which that

perspective, So that, come see those mean, down. I always turnover a like to numbers turnover overall we from would

things really hard employees. We on our work the by right right, we’re making are doing we sure hiring

one another huge those all employees. to just correctly, with is collectible retaining paying We’re schedule things being

we quite talked a that operators. So about the with bit

Kent Taylor

off more because managers little while every can added each a once in fact he store, servers servers additional might think a maybe more off time stores hopefully. the managers the and that to if off more get that it’s we easier our concert. we’ve now managers, in means for we in And to night to our go get have And a

Andrew Strelzik

and broadly at are lot restraint a That’s just the guess And kind my healthy, heard throughout traffic second question, the the consumer your to Great. some quite I just industry more sequentially. about slow comps level, maybe very we’ve on obviously touch. quarter spending did helpful. of but

talking reaccelerating, broader a you maybe spending be the environment loosening viewing strings Have consumer? great. back seen view of kind pull are of the the at purse you Now of Just or about things would how all? any consumer

Tonya Robinson

you would I in a hearing really mean, I tell good Andrew, be in good seems really to we The shape a and place. just good Sure. – consumer don’t from that. operators, hear really our

people know levels and So They want a because eat have experience I have, to out. great so choose great service. want continue to products and we they’re value that that because to us great they going continue of think they to the get execution to

from really but consumer I that’s nothing think and is very our to important a I where standpoint. focus is would point what that

Kent Taylor

do. Yummy for that’s their we tummy, what

Andrew Strelzik

much. very you Thank Great.

Operator

line Tower, next of Our question Wells the from come Jon Fargo. will

Jon Tower

Great, thanks.

the any remains – alterations doing inserts or additions? with menu menu Are on perhaps ensure What you and Just pricing. value the center product to are consumer? you new another plan or stick doing for any that front round to of

Kent Taylor

are No, kind This York. everywhere, much states And in New increase is that really those our like of Oregon, states the in like see California, had mentioned I I think consumers not minimum that the Washington And wage same. before, Kent. more happens the pretty and increasing the of restaurant. in just

Jon Tower

me. That’s All Thank you. it right. for

Tonya Robinson

Thanks Jon.

Operator

questions. final this management over team further any time, At turn for have the no back we like call to to I’d remarks. the

Tonya Robinson

joining And for Holly. Thanks thanks tonight. us everyone

feel questions, great night. later date. Have have at a to please out a us other Thanks. reach you any to If free

Operator

quarter for third you XXXX we’d thank earnings Incorporated call. like Roadhouse, Texas again, in participating to conference Once today’s

disconnect. may You now

Texas Roadhouse (TXRH) 28 Oct 192019 Q3 Earnings call transcript