Texas Roadhouse, Inc. (NASDAQ:TXRH) Q4 2019 Earnings Conference Call - Final Transcript

Feb 20, 2020 • 05:00 pm ET

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Texas Roadhouse, Inc. (NASDAQ:TXRH) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good evening, and welcome to the Texas Roadhouse Fourth Quarter Earnings Conference call. Today's call is being recorded. [Operator Instructions]

I would now like to turn the conference over to Tonya Robinson, the Chief Financial Officer of Texas Roadhouse. You may begin your conference.

Executive
Tonya Robinson

Thank you, Carmen, and good evening, everyone. By now, you should have access to our earnings release for the fourth quarter ended December 31, 2019. It may also be found on our website at texasroadhouse.com in the Investors section. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC.

These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures. If they're applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Kent Taylor, Founder and Chief Executive Officer of Texas Roadhouse. Following our remarks, we will open the call for questions.

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

Executive
W. Kent Taylor

Thanks, Tonya. 2019 was another strong year for Texas Roadhouse with double-digit revenue growth, including a 4.7% increase in comparable restaurant sales and a 1.8% increase in guest counts. We ended the year with significant momentum in the fourth quarter, driven by operating week growth, increasing guest counts and expanding margins. Comparable restaurant sales also remained strong during the fourth quarter, growing 4.4%, giving us our 40th consecutive quarter of growth. Our restaurants saw a return to overall margin expansion in the back half of the year. This allowed us to keep restaurant margin as a percentage of total sales, essentially, flat year-over-year and to grow restaurant margin dollars per store week, 4.3% for the full year. Heading into 2020, we expect both wage rate pressure from a highly competitive labor market and moderately and moderate commodity inflation to continue.

We are in the process of assessing a second quarter price increase as approximately 1.5% rolls off at the end of March. It is likely that we will take somewhere between 0.5% and 1% pricing with higher amounts in restaurants impacted by state-mandated minimum and tip wage increases. An increase in that range in the second quarter would give us effective pricing of 2.5% to 3% for the full year. Moving on to development. Our new Roadhouse company restaurants continue to open with strong sales volumes and are on track to deliver healthy financial returns. For 2020, we are targeting at least 30 company restaurant openings, including as many as seven Bubba's 33. We continue to see strong sales growth at Bubba's 33. Comparable sales were up 7.1% for a full year 2019 at eight restaurants