Texas Roadhouse (TXRH) 16 Feb 232022 Q4 Earnings call transcript

Company Profile

Participants

Keith Humpich	Interim Chief Financial Officer
Jerry Morgan	Chief Executive Officer
Regina Tobin	President
Michael Bailen	Investor Relations
Chris Carril	RBC Capital Markets
Brian Harbour	Morgan Stanley
Brian Bittner	Oppenheimer
David Palmer	Evercore ISI
David Tarantino	Baird
Jeffrey Bernstein	Barclays
Peter Saleh	BTIG
Sara Senatore	Bank of America
Dennis Geiger	UBS
Andrew Strelzik	BMO Capital Markets
Joshua Long	Stephens
Andy Barish	Jefferies
John Ivankoe	JPMorgan
Jon Tower	Citigroup
Brian Vaccaro	Raymond James
Nick Setyan	Wedbush

Call transcript

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Operator

Good evening, everyone, and welcome to the Texas Roadhouse Fourth Quarter Earnings Conference Call.

Just a reminder, today’s call is being recorded. All participants are now in a listen-only mode. But after the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

to like now would introduce Mr. I the Humpich, Interim Chief Roadhouse. Texas for Officer Financial Keith Mr. begin. may you Humpich,

Keith Humpich

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

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

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

Chief is of you Roadhouse; On and financial to Most today's Head, Relations. the so Texas call Investor Texas Morgan, Michael of today with update. provide Bailen, Jerry know Regina Executive President of me have Tobin, him asked I Roadhouse; Michael, Officer

remarks, questions. we be Following the answer your all prepared to available will

Now, to to the Jerry. I'd like call over turn

Jerry Morgan

Thanks, evening, Keith, everyone. and good

for Before them veterans are Michael forward of further look appreciation we for They stepping to Roadhouse, thank for begin them seeing call company roles. to our and Texas the and formal all my express contribute remarks, more and growth joining Keith to the come. Regina, I want the today, me on of into to I years visible

the I the Roadhouse, nothing years. behalf of with of her company, like Tonya privilege for to also contribution to Texas recent Tonya would address she made for Robinson, the as wish and want of to her the retirement I CFO. but had thank I best. XX I On working the

utmost Keith appreciate our for and national we're Interim We permanent leadership experienced role as the confidence escalated him Moving our a of rest CFO. taken and process in have on a in the CFO, the search team. an forward, financial we of

we Texas $X And remarks. in for ago in exceeded annual prepared move There revenues Roadhouse, year XXXX only on is is for doubt was in revenue. with a our years was our the first we milestone five especially surpassing now as no This billion history. remarkable, that X billion time it will to

maintaining In over opening the dollars, to earnings see By concepts, long significant restaurant results XXXX, all us decade. per we achieve strong restaurants, income net potential our of top growth inflationary in the of the next pressures despite again helped share. margin line on revenue our term our our throughout focus across and double business,

million over dividends, $XX We $XXX form our shareholders of million also $XXX returned over of stock. in of debt, repaid and million repurchased the to

Additionally, at $XX are actions All create these to benefited during value. our disposal levers eight numerous our we acquired XXXX, we and to million. have franchise pleased restaurants shareholders for

been of by consumer. the have strength we XXXX, to Turning impressed the

beginning the our to our, The amount We grown carry business. in has this significant of over demand Roadhouse to to on restaurants continue into pleased of we from to see dine momentum XXXX to hold are a sales year. and

slowing are is commodities rate even underlying the to and We for still encouraged potential also the costs labour a by escalated. for of though inflation, remain

plans margin percentage. to no our have we lower long-term Looking target

believe as are improve other And will strong. over subside. commodity we costs percentages pressures dollars margin and margin operating Our time,

approach with business continue a As focused a our value result, the to manage disciplined long-term he on will proposition. and we

leading profit believe menu this growth, year a be to pricing sales industry pricing price taken of achieve We value. Speaking a solid of our value, operators menu increase. up our sets will we recently with of and calls level X.X% us while completed furthering and

As know, years. rewarded approach this consistently many guests you shareholders the and of XX past our has over

in XXXX. well development, in as we expect XX all three XXXX, daggers. across and Roadhouse as to on restaurants concepts company opened Moving between we Bubba's openings, Texas XX in And company XX,

international as in partners franchise to them seven we XXXX, and and open International locations as open XX, XXXX. expect Roadhouses Our in Domestic many

strategic comes will is We long-term care of our existing believe focus when restaurants. our best maintain to continue shareholder and cash capital We and the restaurants taking new value building it allocation and to creation. of our most use

remainder operating the our and flow our shares balance down grow position earlier, will our pay Additionally, to acquire opportunistically as I sheet dividends, franchise debt. strong consistently repurchase us cash alluded of and to and restaurants

When comment partner president asked managing I always promotion to want XX needed was Roadhouse Texas I Gina, on I to years Gina's from first learn people, name to which Roadhouse. Finally, joined and of mentioned. Texas the ago,

could you you During have thoughts a Department, Roadhouse, Culture Training most partner, with our don't and in not excited partner, more a her everyone? career, has Why taking Texas role Gina at and a our few managing been as Gina of a head company. partner, share third to Chief be and market Learning bigger my Officer. the recently,

Regina Tobin

Thanks, been to business our on and mentality, long-term Jerry. partner that view always our keeping I which managing to an of carry at we has the the am mission excited with ensuring of key the the universe, to have the centre success. the opportunity operator's

operators roadies all our to and and that each culture with serving our I day. partnering look every forward maintaining

culture a our values past our successes, our many As our our unique of and by advantage. with people, which us hardships, you been provides competitive has shaped know,

And are at president. as are and is often we people always of to just can said, people our put forefront stake. my It promise work the first a serve company commitment, that it happens my to

provide update. a Now, Michael will you financial

Michael Bailen

Thanks, Gina.

primarily unit quarter week driven XXXX, reported we fourth X.X% in XX.X% store by X.X%. revenue So of growth of of growth the and average a increase volume

per reported also by increased net XX.X% earnings a increased $X.XX. diluted million $XX.X to in income We to XX.X% share

the or X.X%, quarter, X.X% for respectively. XX.X% represented by driven By these of weekly sales increased restaurant check average in a and $XX,XXX grew X.X% our For increase X.X% sales. the approximately November growth X.X% and weekly over and in averaged X.X% guest traffic. period sales Comparable restaurants month, quarter, $XXX,XXX total October, and fourth our December in comparable To-Go sales

Turning XXXX. the period comparable to first as not levels continue, move sales the more in over current our in weeks up do coming any and compared restaurants level downplay higher same same guests than with as traffic At past weeks. past the the Omicron We go do of results, to in for seven seven we to as time, period growth averaged against our weeks, the of sales the the weekly to over want not XXXX, $XXX,XXX history. averaged in comp XX.X% expect of this we lapping

the sales, and were fourth $XXX.X as grew For XXX a the as quarter, for total of X last total percentage compared X.X% fourth dollars to to million of basis compared year. restaurant points a and sales basis quarter, points percentage down XX.X% up beverage XX.X% Food as margin to costs were XXXX.

offset line commodity higher in was Inflation than menu the increase quarter, inflation benefit primarily with mostly X.X% produce of the by was pricing. of expectations, largely This to quarter the in other costs. due for fourth

our came full As in XX.X%. a inflation year at commodity result,

inflation remains unchanged X%. guidance XXXX, at commodity For to our X%

that be costs. higher expect the driven We beef also to by majority inflation XXXX continue for of will

will XX% the on first inflation current half end locked above year in year the half visibility, commodity full based of approximately We the have And basket first we the of be of our guidance. for year. expect the top of the

X.X%. by week Labor increased labor increased total X.X%. the other basis dollars as labor to labor sales and per to store of in while points and of as XXXX, wage a per fourth driven in inflation store dollars percentage This X.X% growth was of XX of compared XX.X% week hours quarter increase

a reserves adjustments to group benefit our adjustments These insurance workers million million comp, The favorable increases include the adjustment last a year were year. by $X.X related this to million $X.X partially offset adjustment programs. the unfavorable $X.X reserve net of and and

our other XXXX, wage inflation guidance For and remains between X% X% of unchanged. and

operating sales, a expense. benefit the The continuation we're quarter points was of charges, fourth areas compared of in and maintenance card costs the of credit leverage more basis Other repair than higher up as were costs XX to which utilities, as by XXXX. offset such was sales of year-over-year and seeing XX.X%

fourth decrease equity with overall primary one-time XXXX. down margin was the accrual of expense a $X.X versus cash adjustments G&A restaurant the and year-over-year The G&A revenue, and benefit quarter decrease the million from or $X.X spend total below Moving X% drivers of million million $X compensation. in a in

Our XX.X% full effective fourth tax quarter, the rate was XX.X% year. for and for the

rate we expect now changes income tax approximately XXXX. tax an Assuming XX% to for of code, no the

expenditures $XX the This $XX quarter by of $XXX to with of debt. $XX million payments, was from offset dividend operations flow, and year debt regards million. flow With repayment. of billion we cash million $XX capital cash of was of for the fourth ended Cash $XXX and billion million

full expect XXXX year to be approximately capital to $XXX continue expenditures We million.

on we These are of store the day And franchise fiscal million week of $XX included I restaurants. will first mention also our least XXXX, domestic growth. X% spent in the of restaurants on eight acquisition at expectation approximately that

in of today from announced per increasing earnings our per has increase as release, it Finally, authorized share in $X.XX share our directors XXXX. XX% in board quarterly $X.XX to our payment, a dividend

Now comments. I final will for the Jerry to call turn over back

Jerry Morgan

Michael. Thanks,

legendary driving and depends on Our every a to future growth success on guest. experience line providing focused staying top

take of the and centrepiece our of care do care guests. who will menu will value We keeping our at that by turn roadies, of in the taking

Tomorrow has best over annual years. the the partner,s of very forward over conference opening anniversary marks this celebrating the become who at anniversary the look to this the first company XXX managing past our I XX Roadhouse. XXth of what Texas of represent with

That remarks. lines Operator, for the concludes please questions. our prepared open

Operator

first Markets. from Instructions] Morgan. Mr. RBC you, [Operator afternoon Thank our Chris this Carril of question take Capital We'll

Chris Carril

the thanks Hi, for question.

to you bit my accelerated three commentary weeks in the maybe December particular. year start is the seven the can if in of the math XXXX around on So meaningfully more stack Jerry, a XQ be year the appears first versus of correct, in expand demand the

additional any will there? helpful detail So be

Jerry Morgan

we've softened Yes, escalation, a little bit back about in I And, came seen excited December, demand we mean, concept. the our the and roaring in, it for but in very we're

you, part line the and I pushing and plate. of of on will just quality that tell first putting that's top we're the our that. drives keep will I think And, sales. I it's helped we this the think about execution And what February, January, about our so product

Chris Carril

outlook, what remarks, of on that, prepared doubling of in brands? around are the then, next think the development XX the years. long-term the And three revenue Got I a over you maybe it the specifically it. was underpinnings across mentioned Thanks. But

Jerry Morgan

I couple if and five existing we doubled last look we see the restaurants years, a isn't of we the of growth comments like continued that three can and with attainable feel with the it, out. that might definitely way from currently the sales concepts trends we we've we our have think how gross back our model there. at on escalations, Yes, there, get Michael, and the

Michael Bailen

doing to really that, it's of you bit maybe the development that XX-ish Roadhouse in Keep know, then you're could growth. that low than restaurants year and gets grow little restaurants seeing Chris, those really top XX obviously you not and us of seeing underlying some right check to a on And different around Yeah, is Bubba's traffic see But growth double-digits. a that in now. of XX there. and Jagger's the assumption assumption modest what

Chris Carril

Got it. Thanks much. so

Jerry Morgan

you. Thank

Operator

Harbour Thank now Brian We Morgan you. of next Stanley. to go

Brian Harbour

to kind of just more proposition? Can kind are the that short-term talk you year that pricing second bit. if, just the a there, know, of times Yes, example, of inflationary there you becomes much. still per decision the still with very pricing, little and beef thank want you you or think on do two volatility going stick to And, you're do kind you to for address be value more focused you half, in will about

Michael Bailen

it's Brian, Michael. Hey,

the we at think to sometime early year. menu are in pricing a at in look with pricing intention of We committed October. twice April taking and I looking it

something as that don't might commodity cyclical is in We our that focus we nature. You on. typically inflation view remember that pricing menu

to the items, structural labor we component, are pricing take. when focused level going So what we're on determining of the we're more

costs to we're commodities deal will in with or were one and being lines, point other and what Obviously, really pricing. factoring above that expect this for react knee-jerk we any labor don't we our long-term below pricing the menu in the commodity also help we at to take pressures when might but

Brian Harbour

Makes sense.

intent second And half. as do down on of then to pay thank cash. some you you sense also, running you. have just debt the return repurchased kind of And here, the Do low the then I doesn't in shares you're it uses But think rest year, you had to earlier Okay, makes – an pretty think of in do look that? much it on like you that? to

Keith Humpich

But this plan paying to Brian, all debt, in years, and On share year. do that Yeah, on our this in that making Thanks first the for created the coming that the really program question. that that. we'll back live probably proud quarter. repurchases, over be we've our is share we from Yeah, of even decision the weeks. Keith. We'll we're repurchase on value the

of we to interests And and years, shareholders our we've and our then company. on definitely back allocation then going anything some needs, it which gong includes cash we our decisions of market that this feel I stock. and have repurchased I'd conditions whatever after pandemic XXX like the our we're years, that And other capital make the our dilution, year, last but in at the depend four when to best buy will to say balances, over looked and look really we to million was

Brian Harbour

you. Okay. Thank

Operator

now Brian Thank you. Bittner of We go next to Oppenheimer.

Brian Bittner

full your guys. go last trends Thanks. to that? level the quarter? there? math reason weekly based up XX%. the comps And are the a that trending at that rest sales about think to how the is the that should are trending? like for why business on you Can I of And year, for commentary going to $XXX,XXX decelerate about that weekly there lower you're average sales Hey, Is back sales said quarter? Is confirm so where are average are we implies Is those average quarter, think In correct first I'd some weekly the level. to you far. seeing the

Michael Bailen

Brian, Hey, again. Michael it's Yeah.

then I growth lapping six which look I said my don't average Your you're next on. going And -- weeks quarter math we was say bring? in is Omicron, Yes, helped weeks. pretty of large would XX.X% Certainly, that seven the to growth. spot we remarks over were the were XXX,XXX with comp seeing. we what some the that know are of we those first

we've level shown as the lap to that grow our percentage range So that but XXX,XXX, we there, see, able that we that's certainly will start something some that sales we yes, probably opportunity restaurants. around have are our think still from but continue going operators I to numbers, whether more down how business. we're inside to comes And generate do to more that's normalized to

Jerry Morgan

forces reasons I gift Yeah. some at And there's it I across about, would which been there's couple card some excited that the country say, it's we've now, been with very redemption, great weather will think enthusiasm and long good driving some being aggressive of on how why right and out there. level. hold But we're a

Brian Bittner

But should cost fourth the far, moving the Because costs in My the given of comps missed think per labor the for the in Yeah, operating type on labor that you line? the get that I because inflation Michael, inflation question apologize question out much that in the operating XXXX do that you've added operating have have how about follow-up is this prepared line? for off XXXX, quarter. call leverage of must guidance but labor week particularly we becomes, the seeing on you're so us the punch remarks, been XXX,XXX the the so forward, how sorry, with for that. on the labor hours I week cost, per out is,

Jerry Morgan

Yeah.

We're to we something stronger quarter still hours it's rebuilding I obviously be need. staffing gotten the in Omicron impact of and think year, there's has last a from determined the first sort levels to of getting there. the much

some get think or hours of back the the term of else. better traffic XX% our point going historical the or new to So in that's our as a closer how normal down if lack back in algorithm for maybe or see we grow growth. probably and hours the year, I our to We'll at to half something come growth is of traffic

pressure going healthy so our be our guidance and throughout the consumer. line But to of no I doubt there's midpoint some think wage years is labor That to you the pressure of -- wouldn't maybe there's in year. a back and steady some the getting know, some the then maybe fairly benefit the the half for me earlier maybe surprise in probably see year holds year expectation,

Brian Bittner

you Thank

Operator

go David We'll now of you. next Thank ISI. Palmer Evercore to

line phone. open. you check Mr. you. your your hear want function your can't We is to Palmer, on might mute

David Palmer

hear Can you me?

Operator

hear can We you now.

David Palmer

assume that to Okay. six Thank be it's you. you of and of and And of inflation six first but that The quarter. inflation sense expecting to five the beef early said that to -- the of of the give a if just sort I other? -- going the you it's five going to be the between above end you're could what us -- to cadence high related would breakdown be in beef,

Michael Bailen

year commodity Yes. Hey to first We not half of -- the David, a going that Pretty say be above -- pressure of expect quarter, basket but year, its we the the beef. that's XXXX the range, commodity the end to did the certainly much yes, we our whole point, lot driven Michael. the and be in is top beef. throughout by inflation is first for of in the major just believe

areas, going to in going of year. that to feel the you're to see, diminish we're as other So, move we pressures maybe some

Ukraine of from The felt hadn't first going in what's yet. really the last as quarter the year impact of on

to So, then some in reason higher lap quarter. the inflation That's start lapping why the higher some we're to second of first still going you're And that. those and of of feel some quarter we numbers.

in maybe as move areas the So, year we through moderation quarters. the throughout other beef pressure and

David Palmer

numbers, and have don't But them how are one Thanks. returns And I versus color you're And some the good. love can Bubba's, in here Are wouldn't see doing South look that the getting and Midwest in those mind you But of units on they was comp Texas? the as those wondering are they ones the just the in we even if here. stack fairly of get set pretty are returns do you Northeast, of versus we placing they in how to returns? the as units? the a seeing in then Roadhouse we'd well about little up a the

Michael Bailen

Michael, the it's we now about excited Yes, David, say look would Bubba's have and we right again. are very surely XX concept. I

as older are We there number in learning, are the have well, on that recent openings of you're but are XX, of some pleased with just some pull very overall when some and underperforming the more you returns there the the that down. ones,

But we its belief for, ability that return generate at mid-teen which that we are certainly in believe in same the is concept, looking the for IRR we're looking to Roadhouse. that

year, we're acceptance are in in great excited. And the areas we about the We really and long very seeing brand we'll them of of runway opened five that and this Southwest, there. go are opening those and South to all the think get

David Palmer

Thank you.

Operator

David you. with next go to now Thank Tarantino Baird. We’ll

David Tarantino

using Hi. expect is, I to commodity how and And said, to guess Good you getting get just do Jerry, I on path percentages clarify, And costs could if over margin afternoon. over percentage question about you time? mentioned my is like traffic, higher think there. some time. to margin you but other the items leverage of kind you restaurant you really that recover

it in And front puts this and give on terms percentage you is margin then side? on whether progress the Michael, all can cost the year think possible takes on you comment of that

Michael Bailen

you see Jerry range And then do and start I’ll Michael. I the assumption guidance add healthy. the be going XXXX. what it's determine. remains I of margin -- some consumer to But think our David, side the could that growth level in we on to year midpoint percentage growth you in. modest use guys yes, the Hey, the and let's let Yes. of see to improvement some and that's to think moving up

labor ranges certainly And into where should operating commodities easiest upon we within path areas. I and on think some get is maybe other factor our leverage forward would depending that those much how in maybe margin improvement. we for the guidance are, of then

important flowing not pricing to that line us, those is but just that seeing the And are way, percentages the is obviously, important tell menu you think, important. I another so dollars are but through more growth as top driving way, maintain traffic if one and I'll restaurant maintain margin

Jerry Morgan

really that and Yes. cost to And to we there's making continue to part going do here I have as and this and would outside doing. it, the line we just and then that of our protein. labor, watch relief the staff sales that our top volume maybe sales handle we some we're attack that in controllables, from other hope that emphasized of investment, of continue throughout inflation we've do say, we're And so getting that goods, as can obviously, obviously year,

we So hopefully, to added have pot, really our we people. have XX,XXX

we volume levels we pandemic that back above, So are have. the to basically the and handle

we the of So a the now. people lot that ability for didn't ramping the of to really utilize And handle was them tenure do the our sales. volume, want to there up to

for So year I some categories sure. those should that we headway going even into feel make two some this relief see comfortable and on very

David Tarantino

Great. there the lead about would, And traffic a guess, that the or thinking think break growth point should expansion would margin even about Michael, I a year? some that that traffic just clarification, of level to that we for shares is you're

Michael Bailen

to last but drives leverage labor probably, continuing that already what year. Traffic margin does going we've year, traffic there's probably to necessarily benefit lot than is know percents the there. and will traffic more get top you I easily modest other growth pricing Obviously, need us and operating growth. a even help growth certainly generated of don't some a on versus see through traffic, break if the line line fairly continue to some

David Tarantino

much. Great. Thank you very

Operator

now Thank Barclays. Bernstein you. We’ll go Jeffrey of next to

Jeffrey Bernstein

on side you XX know maybe talking about things. I this One, originally questions. the of were Two year, just Thank you very much. unit openings.

Michael, you to guys do for humming kind XX. XX of mentioned, the wondering of many headwinds In years can the kind you the there's just short XX ties I just that or come, refer into you any a you then are to think, And above whether I Now, believe particular XX with term, and well weighing things potentially that that or still had near-term on still three just I year? comfort assume in that's constraint to, up. the wondering, anything going would year. just I'm follow what there's zone your XX concepts whether one now be not know, wondering or along, XX, to per whether

Jerry Morgan

you number, Jeffrey, Listen, we a the are double-digit buddy? and then you as Yeah, focus how low-XXs. our as on know, Jaggers continue is the to working also it. still that a into doing, about of start we believe little that put do I will will bit Bubba’s towards I that Roadhouse do early to to kick add in we pipeline. believe at see what it we can growth to excited am continue portfolio. And I

do is So can of years and where in to the I couple that low-XXs focuses our get believe and the high-XXs next pipeline. our target we

will aware very do see we we're into kick it comfortable the of at incremental, we do get going up number other But will will what more But with Bubba’s, be Jaggers us in next years, we XXs from there. say, would the Roadhouse is the as I that higher. the do can or pipeline two could for be driver and to a to there. I then over escalating jump. the big And three be with where they It but be not be it's and

on would that the be my thought side. So there

Jeffrey Bernstein

delays ongoing there maybe whatnot would Is prior or and particular it. XX? that year temper terms Got of that any in still headwind this

Jerry Morgan

some is our there believe part. on concerns I Yeah,

in of municipality. of bit property getting between a cities by our transition or landlords Just it's things, Permitting seen still But when little couple negotiation, the challenge we've of better. a that. is delays a a still we're things

that. So we're of through all getting anticipating

the years. be cautious last in We also of what of have seen to couple we've

Michael Bailen

is we the Jeff, growth seeing. week XX, store our XX this the want the had from Michael, Yeah. thoughts update, just just impact with felt no XX of year. on really you thing the if approximately It like the to for were that adjustment but on some mention right to movement And the to down to

going So growth would you change but the be year, pretty number. deals it not into to really already late like were next look was to week just that know, store again, early year, expected realistically they're but slip that in

Jeffrey Bernstein

Got up it? I follow Might earlier on question from is beef. the

going majority I know, your you from is said Beef. You think to of come the inflation

you one wondering if provide they that specifically know for and peers at it's this share maybe of your And today, can they I'm Just we're product, you rate you're about. Beef? were reported at that mid how talking assuming for earlier how contracted wondering talked we what or inflation be you. achieve Thank different would compares, XXX% specifically, just single-digit inflation. contracted you you're great? as larger maybe of but about different look currently something terms what any I XXX%, specs, outlets to would looking through you a the beef, it's color can year in of, know, move Beef,

Jerry Morgan

if on remarks same for has the commodity of our I could know, percent beef be Beef. kind the get locked obviously, year overall majority, back have into we baskets, more range. almost that, second XX% half is we're from in inflation of our come it for you did, expected year. of the our into the quarter to what to locked in know, a the general is year, basket, say being think do of call the our in Yeah, not Beef in we with that and going percent you of of to And the XX-ish quarter than we're you I locked first that in half And, our the

double to if would beef you're or digits easier embedded just end going have imply inflation the for in bottom digit So, our the that low in of expectation. again, math range inflation, that you took high is what's single of that commodity X%

beef buy where it something little we, -- really tell to fact you different it it beef, I our does can on restaurants, age do. what are a maybe we our than yeah, from, can't I just do the our how require we others the what we with us buy bit cut And way doing, others that comment other and in

they time make think result we if those our when it's on and appropriate. procurement in what And, when and time decisions have is do right you best that. department, to be we're we certainly will done, to cost know the in some locking locking think know, buy problem smart can also, no they when's obviously, in wait, we who have We people the will will right for be pretty in us. the But

Jeffrey Bernstein

Thank Understood. you.

Michael Bailen

you. Thank

Operator

Thank go Peter at now BTIG. you. Saleh next We’ll to

Peter Saleh

really noticed pretty year mostly weekly saw a Great. come mostly Are you performance, the I question. consumers this sizable average seven sales up? want fourth to increase of you for I Is are spending that in is the to terms in quarter change to about Can Thanks what increase there? understand was the sales and about is seeing? Just talk in hood weeks, far just check under my so in anything traffic? trying any look that you you that taking the when first behavior consumer going behavior the back you're XXX,XXX. on, weeks, in XXX,XXX the seven seeing those first

Michael Bailen

we're that be last pricing, Hey, XX.X%, were the it's Yeah. we that seeing call in mentioned the about that flowing first through. X% Of we've of quarter Michael. Peter, most on going to

growth. XX% traffic the over of And say tick would I XX.X%. a rest check is is the of So it that just

Peter Saleh

be you with expect feel a level? staffing to just step just feel levels it at like Do feel you're you is here And that guys for seen. you Do on like up? say and have high sales How that the highest average appropriately the average staffed? Great. with need the sales surprising on increase about weekly maybe would we you from how that, weekly do Should labor given second, help appreciated? any to hours this you

Regina Tobin

Hey, our current to is that's know Peter, which are increase now. right I'll and very our we tell overall, to down. are numbers; Gina. on retention going that hired productivity. we we labor help to working with our seen what is is in quality down now, you an happy increase of right that, is people drive going this that And percent, staffing going we've definitely the currently turnover And

turnover that that our to amount to will create continue tenure culture people reduce on. matters to be So connections worked and and

Peter Saleh

Thank you very much.

Operator

Senatore our from now you. Bank of Thank We next America. of Sara take question

Sara Senatore

to I go you. just the Hi, want question. unit growth to thank back

of, I is noticed, though are high that target some the following during repair sort or December. CapEx inflation January I pandemic? like, more that deferred that, I any on to ask you on we'll was and you're I should is still year unchanged. seeing units updating relatively the Maybe margin. sort said just, maintenance guess costs, the And the think CapEx to say you a the of see kind wanted guide build in there on of I of spending in of or

the And like other expenses, were operating repair are note, related you said, maintenance high.

some to which So, costs? trying kind of strong sufficiently whether it's part that has what the Just as or elevated they is broadly, not sort are, understand, of some of be, or think also still of kind up building and we're of seeing would returns you of offsetting the is parcel that. elevated of that volumes how gone these it's given -- marginal should higher the are maybe cost

Michael Bailen

We're going I the Sara, Hey this open still question. it’s building to are that be late first to CapEx restaurants Yes. those say, going Michael. year. on

So not most of be it'll end our year, or increase like the isn't in the of though just February next till part for cost. this year. change because that, probably reason, number It's the assumption even by our of store simply the CapEx didn't open builds the for main January may

need So did not the move. CapEx number to at

a to in maintenance talked pressure in and those running also pressures elevated. go new haven't some other new the lot of a are are to As point, we continue services there's that continued are repair there the when line. lot forces. and But, still feel pressure go other part And, that driving future, far the business, with fees that. of supplies, paying there, that of as out aren't costs associated other for really -- operating, whether a part that's be a there roll about utilities to the And operating, technology in or continue huge we equipment costs lot their that installations, into we there there, and

way I'm the our other But items into So, new area. seeing also the see different that grow that introduced won't we're of with seeing growth and optimistic we're operating use certainly volumes, it some it we more those items. has in we have store we that on see hopeful have exactly XXXX. I'm grow potential way line But won't all see wait $X will in leverage and more the out. weeks on that and for plays per it we some how that

Sara Senatore

were say build much of it Thanks. opening sense sense the can couple being maybe stand -- of me that things you of on opened. a seen Just most ago? the it sense little I have work you done makes on where they give can so let's bit is Okay. if And the How like, before then, inflation just get versus know, a versus pre-COVID? years CapEx, I costs, a

Michael Bailen

There's you into the But at but and the the total There's where a over can past. versus can't the one that the building -- obviously and costs that. have building we're just a to things of you we're because, costs rents in one look we've in seen a building in But we probably the increases year have everything few the on building -- again, cost. Yes. There's have restaurant math is, than rents. ballpark else, also do bigger XX% that the impact embedded go cost next other open probably restaurants and the restaurant. XX% your an seen

So, it's out. hard those items to separate two

Sara Senatore

Thank Understood. you.

Operator

of next We'll take from now Geiger question Dennis UBS. our

Dennis Geiger

XXXX, contributing called items and your on to Great, on to color everyone a going to there? But thoughts G&A G&A anything year-over-year any it's any of provide what couple ask year? out quarter. expanded to I investment and percentage you the growth this and Whether promotions as in expect on G&A congrats levels the could sales in roles. curious, you a to G&A on thanks, want or fourth if be on of

Keith Humpich

in we leverage Yeah. of target be little back. bit And get always Yeah, to than this G&A where Keith. year growth, that Thanks, a keep our revenue might G&A, I lower XXXX, a is Dennis, think growth. for we

couple of those, our the our Partner being quite anniversary, a as event. ready have talked annual We XXth to G&A And to growth year about XX it's going we're this Managing challenges in anniversary, with that of getting Conference. one have be and as XXXX, our we

some I this will of cost a elevated be definitely can going a look have to conference And that you that's see of having in. new big think then system also driver so we human that, year. us And capital management

to able that incurring going we're year. this been have we've So non-capitalize several costs

So a that's going to factor. be

pandemic cases to of gradually the recovering our of people been on really But think going on kind I some And in the and travel training with piece lot us like really to. recovering is be things. where We've to going is up see catching then this the you're fully even other year slowdown. a and in be things to and going investing

So I year. think main those your to this be are driver going

Dennis Geiger

One given couple it it there? effective Appreciate March to pricing, quarters current color, that moves relates that of looks quarter and Keith. as one, the the Thanks you're kind more quick relates off next of taking like very what maybe curious levels by on to in what level just as just the and pricing much. the over

Michael Bailen

I that. – help Michael can can is This Yeah. with you I

pricing in the second X.X% in quarter, And, we that's be first X.X% first any in and will about October, something X.X% pricing we X.X% looking pricing. will again, the in X.X% most quarter menu taking additional a assuming, cadence So without pricing. any at have and then likely the with And fourth the take third we in quarter, for quarter, the but quarter. October, don't

Dennis Geiger

it. Thanks, Michael. Appreciate

Operator

We Strelzik go Andrew BMO Capital next Thank to Markets. at now you.

Andrew Strelzik

afternoon. questions. have Thanks two. the for taking I good Hey,

growth, the don't those The years. grow you're for does like one, almost But looking with pipeline that to building comfortable I curious, the that three more margins farther even believe hear the Do you're to said investments pipeline really it as of first I'm we any that they're out. competition, you you system higher to costs that, color potential volumes everyone be franchise second be that units, new would of just is you those average? this stores feel question over from show units. next your pretty The things or types unit where around relative peers get see Thanks. question? all any want to up at acquired first or accelerate

Jerry Morgan

and Yeah, take a I'll we've states, And there. working out and there areas. are, I do. our think been our to it's markets Michael, this plan And there's successful had there to incorporating it but targeted Jaggers how to little there's for around while, we're think always here part. that one that as Obviously, second closer -- that real we growth competition have first for there. on the is I quite basin grab no there's estate probably obviously, a very then Kentucky the it, but And strategy and been And Bubba's. And I and part. systematically, out heartland for grow keeping and or us and Roadhouse be competition.

or parking in a store us real in take that relocated, but need a on really to openings, new excited looking or outs Texas, I and dining for cooler estate, us a do than But We are for in we We're and relocations our some And they are it, I'm in we do helping sure forward. which to incorporating opportunities put into other focus extra which restaurant, doing. that be bump is as we think, more system some different the about well, to adds a we forward what able volume, store expansions bigger, do on also to have way. also it a rooms, But continue be as look in focused our things to others spot whether not how right. our to some it. little say are going bigger very strategy. bigger

Keith Humpich

from are standpoint. pretty franchise would those those a stores profit and on say acquisitions, I sales average Andrew, Yeah, performing

to kind built that's there our of CapEx requirement, is of think a $XXX movement don't into that. And going I and from because year. million So in the needed estimate company CapEx our any you're see overall some for numbers,

Andrew Strelzik

you Great. much. very Thank

Operator

now of Joshua next go to Stephens. We'll Long

Joshua Long

my for thank Great, taking you question.

to impact a really from little pillar in everyone growth. shift is Omicron the maintain think capital In one, in see other color done able first sort good about about like year you've human First of going secondarily, year. more in the for trends is Valentine's leaves industry, trends seeing it provide there's solid then as but how underlying part to to because year also the January bit of be strong Super are first you capital focused first And spot, also a if thinking for would from Bowl to the I key last you the the you can just at might one. in get context, trying the of human Day sort and if there all underlying gap calendar -- that the they're a here on wanted forward of that just trends on to work some the aspect part the here be of get growth sounds between the my then out peers the going provide

done You've that historically. well, really

get revenue out and Just some of human capital doubling the two, you roadie curious, think into earlier five, chapter culture of talked next over you of kind that investments three, how the years about XX to that in about next four, call. that that

Michael Bailen

Super numbers Josh, throughout to seven I’ll for Bowl. the going be with Hey, lot it call weeks, year. a of I'll weather And start and weather different seen of you. year this on, winter year, the or we've Valentine's the there's the We've tell seen a have first really don't say, Omicron. a of the seven whether weeks lot lapping things the maybe strength out winter it's about first question this. of always you, Michael, last I'll of timing

So not call of kind would or need I you downwards, any it because adjust there's upwards say, to number and really something. hey, of out

seven pretty the take something it'd like say been strong add off. to And consistently it all, you have think, I a I'd I backing throughout performance without it's be said, something weeks. to -- unfair to

Keith Humpich

all so part tell of are on we that I staffing you We're side, it. XX on will that capital, months [indiscernible]. think the last And the No. the human I in

management last staffing of the in in the So and aggressive our of position in our the about side, the side restaurants people front on months feel on in house, a been back the the we have house, team. no, really good our very XX we

piece that of investment. So, big it has been a

with focus hoping that an our investment that and So keeping in. on we be we will would a this be and year, will year hope. this on our settle obviously We our as reduce our -- we folks. folks return we're really be connecting That turnover, see

Joshua Long

Thank you.

Jerry Morgan

you. Thank

Operator

We'll go Andy next to of Barish now Jefferies.

Andy Barish

build set? Hi, guys, see it's through we XQ the on that help Two us unusual wasn't to was XQ, -- of the help level quite something in the just level December from there mean, me, you or look for we, to know, off you flow margin. ones that as down to about restaurant quick margin there you I kind performance the what expected thanks. go can XQ, any margins just of XX.X%

Michael Bailen

hi, Yes, it's actually Michael. It's more do third quarter. to with the

million our quarter we a recall breakage called for benefit operating sales we on in received our reserve we benefit million liability as to general other a $X.X you well out our we -- may that that when or third adjustments. other may $X.X If the not earnings, as a

So benefit X% in benefit up the those third caught QX X.X% our quarter to restaurant numbers and probably those the margin. of two to have

XX.X% mark a on that QX. XX.X% an from really out of QX up basis to adjusted in we in will So go

to had those really beneficial it quarter. more So do with items last

Andy Barish

other obviously gets tougher kind I appreciate execution or -- pay as and I traffic you it's to it numbers thank beyond. mean, Service be you'd figure on -- You the bump traffic and Legendary remodeled mean or Legendary out to out hallmark tried Okay, And but be maybe that. out, thinking know, a of times like growth continues we these Food anything are Jerry few Roadhouse we call growth volume little mentioned crack things then that to as there or should for -- XXXX Regina, phenomenal about? and you've a

Regina Tobin

one we guests items in we and we've can of – in seen. recently put -- and are there looking which what Yes, where faster, our Roadhouse it well, manner, our are that we tables is we've the a in speed pay is at timely absolutely, those turn always can restaurants pay

We times. our ticket which are putting KDS in some of helps our kitchens,

help restaurants the can increases from which obviously So our technology any look that growth. the at we really traffic of a piece standpoint, speed

at So we that. look

there we've have our said faster are up, as get -- the our and as this more come and operators, become may their we roles. other experienced, in obviously, gotten And levels staffing be -- more our productivity up, people and they restaurants tenure we've and some in the goes staffed and efficient

So stronger all to traffic. of that leads

Jerry Morgan

testing on almost bit. now have been still just we of a And little handheld it, tablets, software. that a stores kitchen piece we win Roadhouse do so last on been I'll a we're we mobile has year, that expand our huge are ordering XXX can working digital pay

two get then we far As is two perfect XX Kitchen, want make it Digital to opened as this to we go, Kitchen, restaurants it's the probably obviously converted execute our restaurants stores, there are and out Digital of a we exciting. and we to and have moving year new sure when which as committed to very

high-volume it. one excited about that been We are and store -- we we very it just opened restaurant, The are has successful. a relocated, operators

forward. excited and invest we the -- to we're in move seeing rewards So, some as real

be a us stores it existing will This with opening even big new and converting stores. some Digital a to when Kitchen, comes year for

to with on us So, we be help and technology really, faster get kind complement leaning going to definitely technology. some service want of, to our

Andy Barish

it. Appreciate helpful. Very

Operator

of John to up next go We'll Ivankoe JPMorgan.

John Ivankoe

Roadhouse you to seeing is be Are the areas, profile numbers, Roadhouses round XX Texas can I your successful, even next new over years changing? site But suppose. --XXX where Texas maybe at major site the but is just maybe the for emerging also next chapter? a evolving higher of cost, cities, or maybe some the how profile come higher overall sales, much would closer

Keith Humpich

say and City in do we've in suburbs. pretty New the tried would restaurant York that a we'll to probably true New I But we Yes, of stay our at. philosophy looked have Rochelle

to could or so bit -- city which be more those. in higher starting a got are little a a area look of we've We traffic, couple

expanding had are in can communities we some smaller into. or we've go success lower-populated some areas a we bit, So, little that

stay we a we true. have at accomplish, us. might we got But got test a I some to help we've and So, scope And mind to try and and that size things looking our broad what option. at new in company to at a want every think

brands. looking at all we're and three looking we're at Jagger's, and help would because And Bubba's, probably we're looking areas are that expanding at

we opened where So, estate we it. a what in trying side team I But scope of expand all to will do think of that real try, and so have understands three. clearly what that the have lot our of we can we're and success will go we with

are different we're So, there's on, we're that than what us. working a to couple they turn done little in things of past a that we've out for see the excited how and

John Ivankoe

secondly, brand? related, is And for Roadhouse the out can of mentioned or you You've I have and basically do Texas significant relocations, chain you development, at opportunities still an significant bump That's great. are done for there point? this what Thank on you. opportunity relocations the suppose how

Keith Humpich

see proven a real in We like that far every bump so well. to I say would we have of over them probably years, and pretty dozen, sales. a last have them, they're proven out the five one

that's exciting. So,

people on is energy maybe we as lease, And the our when or turn out reinvest to their that's what at start if opportunity XX-year to some. or looking relocate moved

that's strategy I business smart a think from So, standpoint. a

I on stats far a as And couple bumped think has from that, out, of as so that. Michael,

Michael Bailen

-- say potential or and considered been long they've Yes, start John, their I there every new for restaurants there's volumes either is us enough. that be kind out. as grown bumped opportunity think at year ones of to they've really, I'd look potentials I still qualify open enough to and

XX plus out top for beyond. probably and on restaurants and are to XX we in be pipeline I of that open bump XXXX, or For wouldn't surprised -- XXXX XX the another see us have that, to already XX

definitely take a in get legal to side getting work done. restaurants get they a to approvals that But interested for still considered – them Sometimes of and qualify kind new all the more bit on the on year them kind month out. of our we every, and every radar be little of a of have little ones lot

John Ivankoe

Thank you.

Operator

of Tower to Thank We Citigroup. next you. now Jon go

Jon Tower

previous for try the a and about Thanks question little nice in quick. mix I’ll and up In a you taking quarters, the menu. talked make Great.

are menu? on your just This mix much the the there to you trade quarter Kind Is seeing was of anything fourth like going perhaps flat. else as perspective, not quarter? curious get in up looks on

Michael Bailen

And pre-pandemic. bit other because appetizers. add-ons, that a seeing soft is now, even we're our know little right are negative mix lapped in say, seeing year, of Michael. growth. we that coming John, higher at. still to this we're negative this tremendous or with a right, But beverage. we're driving in. guest now were We're seeing But still move we're traffic mix and seeing, that in seeing we well are chosen But where bit not what what Hey, that do. question determine at far so we're seeing entree. mix we're interesting negative looking in it's not in it seeing Yes, what of we're a is one above looking little I'd a to been trying And it's we've to don't not we certainly you entree this seeing bit in is the bit little check up we little it we're has of it that a that

it can also a seated restaurant a compared some a of could But it relative be waited going up – to similar somebody be of little us sees to now Texas the and as value And a casual down our Roadhouse they very be could some to upon. that, a fast for bit. honestly, customers price trading trading

those the traffic of of menu. growth. on in people now some some coming But our they some driving maybe maybe at coming so and And are lower in of points are this price

the last But rest is of it's little But of we're bit thing category. it, a something it's watching. weeks handful over the the the in we're not seeing So menu. unique the just in entree

still on we people are alcohol that, we soft We move bit. already a alcohol moving from seeing mix. were seeing that little bev, are up soft to a because seeing mix that bit maybe the little bev But

Jon Tower

on Got tapped And for earlier just lastly then but it. of been of I you sort appreciate has maybe call, I me, in Roadhouse productivity phenomenal. think new color. this the that in that

there average productivity – bigger the this driving anything store versus new the seeing would that X% is of in of I the building maybe comp you're that stores. answered acceleration up you past? the on XXXX. sale in But think earlier base weekly going versus And in form else be store it's

Michael Bailen

it's do Yes. Michael. Nothing -- you don't would I Gina, there's driving that Nothing there? I think that know. that. if anything be can of would

Regina Tobin

think can nothing of. not, I No, Not.

Jon Tower

you. Thank right. All

Operator

Vaccaro Thank Brian We'll next Raymond of you. to James. go now

Brian Vaccaro

Hi, thanks. evening. Good

quick two ones. Just

First, how the us trending on some pre-COVID of labor, few hourly just that ballpark Gina, levels? to perspective us? where is for sort that turnover last give Can maybe And on over compares quarters? you

Regina Tobin

number tell that will we down seeing you I over sure. turnover are consistently quarter-over-quarter. Yes, going the

turnover difference. as like We And it's I said quality with And the people once And that of people in before, the makes are for keep experience, longer. seeing is those good that that we get quality we, which more application flow, them of a really with piece. helps us. really we can

go see really it to down promising. continue is which we which is So

Michael Bailen

Michael. some up is And that. just I put can Yes. this Brian, to numbers

every again, Our look our remember, company a differently. period. seen which a number last turnover bit over -- we've But and at XX-month calculates we little maybe

So moving we're number, now, it's XXXX, a high XXXs the of down were slow the XXXs. right but middle in we in mid

definitely we've down So XXX somewhere come were right. that in pre-pandemic. We XXX, probably seen I and that say would to

of we getting better. a go, lot still to So room we're but have

Brian Vaccaro

everyone then first quarter, environment And an of margin sort in in be term a on of page just where expectations of sales it That's the sort last can near great. getting so spirit strong and the just store disorienting. same little helpful. just the in on are Okay, one,

about think this quarter first or historical store Is I bps. Is maybe guardrails up the provide year? you expectation? guess, something on versus QX? I maybe that So there's case the perspective, that reasonable, where could there in it's be any a XXX usually wouldn't current margin environment

Michael Bailen

certainly Yes. highest our Hey, are typically their typically QX possible you out going I Brian, into highest. QX, are that at percents it’s spelled what deep because margin and sales too don't at Michael. to I’m I our think volumes that is one. certainly in not their But --

but we So move to case. something last half see not, hey, kind first yeah, be we there's the XXX year-over-year, about, the And basis saw something as the margins like a happen. what you're not half higher the see say to need year, magnitude of in just to of would could that talking improvement so we year. potential margins or expect that's going said, to point a I'm it's you margin whether some in first of higher some would overall

Brian Vaccaro

very you Okay. All much. right. Fair enough. Thank

Operator

Thank from Nick our at question you. Wedbush. And come final will Setyan

Nick Setyan

Thank you.

through just in want walk inflation QX just to of we And commodity of the perhaps as Just QX that's XXXX. the sign couple in I in similar dynamic in questions a base me. of QX, off QX for lower QX. current assume, maybe we if and

So presumably, from sequentially, QX. to should QX the percentage fair? down Is be cost that

Keith Humpich

From QX to QX?

Nick Setyan

Yes.

Keith Humpich

Is that what you said actually?

Nick Setyan

Yes.

Keith Humpich

called it where be it's underlying to the are but our depends in as I where given structures being on numbers, they numbers out each down can cost Whether ballpark see that going the other, and probably or within fairly up our same we've similar. or are. it costs again,

Nick Setyan

in looks terms in historically, January terms Okay, sales fair February? average seasonality, what of March versus just and then of like remind And enough. us

Keith Humpich

strong me go in pull If XXX,XXX a tend second back were month and sales XXXX, both give wanting look be to January sales. a weekly maybe to that for us. period March March at weekly up, Yeah, our period we very to XXX,XXX to were and around were XXX,XXX,

tend increase do see So in we period. a a bit to that March of little

Nick Setyan

very you much. Thank Great.

Operator

comments does I'd back you Thank may closing you. and our to to question Mr. this concludes session like Morgan, That for have. things turn you afternoon. any answer

Jerry Morgan

tomorrow in couldn't see be throughout folks excited partnership say accomplished have to has very to years support what very our tomorrow, I and we here three appreciate concepts. we and it's restaurants and Yeah. proud ago, conference celebrate everyone's this exciting Roadhouse accomplished. partners of journey, Thank this you company our what with opened proud XX first April. and I just but Louisville over our XXX very couldn't we Texas and as I our in when much. want to more be we're company of And this all has more

all So your for partnership. thank you support and

We high a will at perform continue level. to

Operator

I'd great that Mr. very all quarter Roadhouse, to you, conclude all Thank earnings a much and evening. like us much. wish Ladies so you Thank and joining call. you gentlemen, today's thank you Morgan. for Again fourth will conference Texas

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