What Texas Roadhouse Has in Common With Red Robin Gourmet Burgers and Kona Grill

There is certainly no shortage of places in America to get dinner, but many of them have been hurting lately due to a combination of the weak economy and the terrible weather. Texas Roadhouse (NASDAQ: TXRH  ) has been an exception, however. There are a couple of things that it has been sharing lately with Red Robin Gourmet Burgers (NASDAQ: RRGB  ) and Kona Grill (NASDAQ: KONA  ) , and it certainly isn't their menus.


Source:  Texas Roadhouse.

Texas-size results
On Feb. 24, Texas Roadhouse reported its fiscal fourth-quarter results. Revenue increased 21% to $376 million. Diluted earnings per share popped 22% to $0.24. Part of the reason for those gains was an extra week in the fiscal year. Same-store sales rose 2.1% at company locations and 4.5% at franchisees. It was the fourth year and 16th quarter in a row of same-store sales growth.

CEO Kent Taylor expects Texas Roadhouse to continue to grow in 2014. He plans to put the cash generated to use in three ways: more restaurants, more buybacks in the open market, and more dividends. This is a win-win-win for shareholders.

Texas Roadhouse plans to open between 7% and 8% more restaurants systemwide this year alone. With only 420 restaurants so far and barely any presence outside of the United States, Texas Roadhouse potentially has a long way to go, with an average of around just eight restaurants per state and just now starting more international expansion.

Weather worries are for wimps
While Texas Roadhouse admits that the bad weather "probably" had some negative impact, management is quick to dismiss it as anything it worries about. For instance, during the conference call, CFO Price Cooper stated, "At the end of the day temporary things like weather disruptions do not impact how we run our business for the long term."

Source: Texas Roadhouse.

President Scott Colosi took it a step further. He said, "We just historically haven't spent much time trying to calculate what we think that impact is. Some of the weather, remember there is always bad weather, a year ago as well, so when you're looking at [it,] it's not just about what's happening this year, and sort of what was the weather last year, and none of that changes what we do in our business day in and day out." One thing that probably makes it easier for Texas Roadhouse to dismiss the weather is its consistent positive same-store gains.

The roadhouse has company
There are a couple of interesting things that Red Robin Gourmet Burgers and Kona Grill share with Texas Roadhouse.

In the most recently reported quarter, Red Robin saw same-store sales jump 3.2%. Kona Grill saw its same-store sales jump a similar 3.5%. Both of these figures are right around the same range as Texas Roadhouse.

Also, while Red Robin and Kona Grill were serving the goods with similar growth numbers, both companies were brushing off the cold just like Texas Roadhouse.

CFO Stuart Brown of Red Robin stated, "I think we are obviously affected, as everybody, as we try not to use weather as an excuse." He even pointed out that even if bad weather affects the company, there would likely be a "cabin fever" effect where much of those lost sales bounce back when the chill thaws. Brown added, "Overall, we try not to talk much about weather."

Meanwhile, Kona Grill CEO Berke Bakay stated, "I am not going to speculate what our sales would have been, if that -- we have had better weather." Kona Grill is more interested in taking sales from competitors. Bakay added, "And I guess just the answer is our performance and the Knapp Track and how that gap continues to widen each quarter. We're proud of that and to me that indicates just gaining market share."

Foolish final thoughts
Texas Roadhouse is in good company. It seems often that companies that don't like to make excuses, even if the excuses are valid, perhaps exist in a culture of focused successful execution. In this case the bad weather is a valid excuse, as across the country the roads were closed to some restaurants some days, and many people just simply refused to leave their house. Almost every dining chain was affected. With Texas Roadhouse doing so well during times of challenge, look for it to really flex its muscle when the roads clear.

Beyond the roadhouse, look for investing ideas in your own house
Texas Roadhouse will only capture a few of the dollars you spend, but the real money is with the companies fighting for space in your living room.  You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.


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