|New Threads Only:|
|New Threads & Replies:|
Forum List » Business News and Headlines|
SEC Filings, Earing Reports, Press Releases
Texas Roadhouse Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 3, 2012 11:22AM
Texas Roadhouse Inc. (TXRH) filed Quarterly Report for the period ended 2012-06-26.
Highlight of Business Operations:Maintaining and/or Improving Restaurant Level Profitability. We plan to maintain, or possibly increase, restaurant level profitability through a combination of increased comparable restaurant sales and operating cost management. In Q2 2012, our average unit volumes and comparable restaurant sales increased 4.1% and 4.5%, respectively, for Texas Roadhouse restaurants. In 2012 YTD, our average unit volumes and comparable restaurant sales increased 4.9% and 5.3%, respectively. The growth in these measures was primarily due to a combination of menu price increases taken throughout 2011 and 2012 along with higher guest traffic counts. In an effort to partially offset inflationary pressures, we increased menu prices approximately 2.2% in early 2012 and 2.5% to 3.0% during 2011. In general, we continue to balance the impacts of inflationary pressures with our value positioning as we remain focused on the long-term success of Texas Roadhouse. This may create a challenge in terms of maintaining and/or increasing restaurant margins, as a percentage of sales, in any given year, depending on the level of inflation we experience. However, in addition to restaurant margin, as a percentage of sales, we also focus on restaurant margin growth per store week as a measure of restaurant level profitability. In terms of driving higher guest traffic counts, we remain focused on encouraging repeat visits by our guests through our continued commitment to operational standards relating to our quality of food and service. We also continue to drive various localized marketing programs in order to attract new guests and increase the frequency of visits of our existing guests.
Restaurant Sales. Restaurant sales increased by 14.6% in Q2 2012 as compared to Q2 2011 and 14.5% in 2012 YTD compared to 2011 YTD. These increases were primarily attributable to the opening of new restaurants and an increase in average unit volumes, primarily comparable restaurant sales.
Restaurant Labor Expenses. Restaurant labor expenses, as a percentage of restaurant sales, decreased to 29.4% in Q2 2012 compared to 29.9% in Q2 2011 and decreased to 29.2% 2012 YTD from 29.7% in 2011 YTD. These decreases were primarily driven by an increase in average unit volumes, partially offset by labor inefficiencies associated with recently opened restaurants and higher average wage rates. The timing of restaurant openings in 2011 and 2012 YTD led to an increase in labor inefficiencies, as a percentage of restaurant sales, in Q2 2012 and 2012 YTD. Typically, restaurants open with an initial start-up period of higher than normalized sales volumes and higher than normalized labor costs, as a percentage of restaurant sales.
Restaurant Rent Expense. Restaurant rent expense, as a percentage of restaurant sales, decreased to 2.0% in Q2 2012 compared to 2.1% in Q2 2011 and remained unchanged in 2012 YTD at 2.0%. The benefit from an increase in average unit volumes was offset by the impact of leasing more land and buildings than we have in the past.
General and Administrative Expenses (G&A). G&A, as a percentage of total revenue, decreased to 5.5% in Q2 2012 from 5.8% in Q2 2011 and increased to 5.8% in 2012 YTD from 5.3% in 2011 YTD. The decrease in Q2 2012 was primarily attributable to an increase in average unit volumes and lower costs related to our annual managing partner conference. This decrease was partially offset by higher performance-based bonus expense of $0.7 million as a result of below plan profitability in 2011 YTD and higher share-based compensation costs. In Q2 2012 and 2012 YTD we incurred costs of $1.6 million and $1.9 million, respectively, related to our annual managing partner conference compared to $2.8 million and $3.1 million in Q2 2011 and 2011 YTD, respectively.
Stocks Discussed: TXRH,