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Texas Roadhouse Inc  (NASDAQ:TXRH)
Q1 2019 Earnings Call
April 29, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good evening, and welcome to the Texas Roadhouse First Quarter 2019 Earnings Conference Call. Today's call is being recorded. All participants are now in a listen-only mode. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

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

Tonya R. Robinson -- Chief Financial Officer

Thank you, Mike, and good evening, everyone. By now you should have access to our earnings release for the first quarter ended March 26, 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 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 Scott Colosi, President of Texas Roadhouse. Following our remarks, we will open the call for questions.

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

Scott M. Colosi -- President

Thank you, Tonya, and good evening, everybody. We're pleased to see our top line momentum continue this quarter with comparable sales growth of 5.2%, including 2.6% traffic growth. Our comparable sales growth combined with new openings resulted in another quarter of double-digit revenue growth. And our healthy sales trends continue to reinforce our belief in both the strength of the positioning of Texas Roadhouse and the quality of the guest experience we are providing.

Bottom line profits this quarter were significantly impacted by higher labor costs. We currently expect this trend to continue for the rest of the year, and as a result, we've updated our guidance on labor per store week growth for 2019. The additional 1.5% pricing we put in place at the beginning of the second quarter will provide a significant benefit to our bottom line the rest of the year. Still, as we said last quarter, we may or may not be able to hold margins flat as a percentage of sales for the year.

Now, we're certainly facing labor challenges in our business right now, and it was disappointing to give back some money on a bottom line this quarter. However, it's important to remember that our operators have paid off the bottom line, and they have a vested interest in effectively managing our labor spending to protect sales over the long-term, even if it results in some short-term pain.

Ultimately, we're going to stay focused on what we know are the right decisions for the long-term health of our company. And we continue to maintain a strong and flexible balance sheet which we can use to create value for our shareholders as opportunities arise.

With our proven track record, we feel good about weathering any storm by remaining committed to and focused on the fundamentals that have got us to where we are today. We believe we are on our way to growing our average unit volumes to $6 million over the coming years, and our confident that profit growth will follow.

Now, Tonya, will walk you through the financial update.

Tonya R. Robinson -- Chief Financial Officer

Thanks, Scott. For the first quarter of 2019, revenue growth of 10% was driven by 5.6% store week growth and a 4.6% increase in average unit volume. Restaurant margin dollars grew 2.7% to $122.6 million, while net income decreased 7.6% to $50.4 million or $0.70 per diluted share.

As Scott mentioned, comparable restaurant sales for the quarter increased 5.2%, comprised of 2.6% traffic growth and a 2.6% increase in average check. Comparable sales during the quarter saw a net benefit of approximately 50 basis points, primarily from the positive impact of the calendar shift of New Year's Eve.

By month, comparable sales increased 7.2%, 4.7% and 4% for January, February and March periods respectively. Comparable sales for the first four weeks of the second quarter were up 2.9%, lapping an 8.5% increase in comps from the same time frame last year. To put it in perspective, April 2018 (ph) was not only our highest monthly traffic comp from last year, but also the highest single month since mid-2015.

Before moving from sales, I will mention that total sales were negatively impacted by approximately $1.5 million during the quarter as a result of higher gift card fees, net of gift card breakage income, increased gift card sales during the fourth quarter of 2018, led to higher redemptions and resulting fee, which impacted restaurant margins by approximately 18 basis points. We expect these higher gift card sales to have an impact on restaurant margin of approximately 10 basis points for all of 2019.

For the quarter, restaurant margin decreased 128 basis points to 17.9% as a percentage of total sales compared to the prior year period. The change in margin was primarily driven by increases in cost of sales and labor. Cost of sales as a percentage of total sales increased 7 basis points compared to the prior year period. The benefit of a higher average check was more than offset by the impact of approximately 1.8% commodity inflation, any impact of a shift to higher priced but lower gross margin menu items.

Our guidance for full year inflation of 1% to 2% remain unchanged. However, we do expect that second quarter inflation will be approximately 3%, implying lower quarterly inflation for the back half of the year. Labor as a percentage of total sales increased 118 basis points to 32.7% and labor dollars per store week were up 8.2% compared to the prior year period. The components of the increase include wage and other inflation of approximately 5.2% and growth in hours of approximately 3.1% including the impact of higher guest count. As Scott mentioned, we now expect our full year labor per store week growth to be 7% to 8% including the impact of traffic growth.

Finally, other operating costs, as a percentage of total sales, increased 2 basis points compared to the prior year period. The benefit of sales growth was more than offset by the $1.2 million impact of the quarterly actuarial reserve adjustment for general liability insurance. This includes $0.8 million charge this year, and $0.4 million credit last year.

Moving below restaurant margin, G&A cost for the quarter increased $5.8 million or 19.2% compared to the prior-year period. The primary drivers of the increase were higher salaries and share-based compensation cost, along with increased marketing expenses. The expansion of our regional operations support structure had an approximately $0.7 million impact on year-over-year growth in G&A. We currently expect costs to be approximately $3.3 million higher for the full year 2019 as a result of the expansion. Overall, we continue to expect 2019 cost to grow 12% to 13% on a 53-week basis compared to the prior year.

Depreciation expense increased $3.3 million to $27.8 million or 4% as a percentage of revenue, which was an increase of 12 basis points compared to the prior year period. The increase this quarter included $1.5 million of accelerated depreciation, primarily related to the restaurants expected to be relocated in the next nine to 12 months. We expect additional accelerated depreciation of approximately $3 million for the rest of 2019 with approximately half of that coming in the second quarter.

For the quarter, we had interest income of $0.8 million as compared to interest expense of $0.4 million in the comparable period last year. The change was primarily driven by higher earnings on cash and cash equivalents, as well as paying off our outstanding credit facility in the second quarter of 2018. Also our tax rate for the quarter came in at 14.9% compared to the 13% rate in the prior year period. The increase was primarily due to lower excise tax benefits related to our share-based compensation. We continue to expect a full year 2019 rate of approximately 15%.

Finally, in the first quarter, we adopted new accounting guidance that required our operating leases to be recorded on the balance sheet. This does not have an impact on either our income statement or statement of cash flow. We continue to expect to incur approximately $210 million to $220 million in capital expenditures for the year. The increase is primarily driven by the timing of openings during the year as well as planned restaurant relocation.

Our balance sheet remains strong as we ended the quarter with $252 million in cash. During the quarter, we generated $111 million in cash flow from operations, incurred capital expenditures of $42 million, and paid dividends of $18 million.

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

Questions and Answers:

Operator

(Operator Instructions) Your first question comes from David Tarantino from Baird.

David Tarantino -- Baird -- Analyst

Hi. Good afternoon. Just maybe a first question on the labor trend that you guided to. Tonya, I think you're now including the potential impact from traffic growth in that number and I don't think you did that last time. So can you maybe explain whether the outlook has changed in your view, either up or sideways?

Tonya R. Robinson -- Chief Financial Officer

Sure, David. You're right. Before we were speaking mid single-digit inflation excluding the impact of traffic. Now, we're saying 7% to 8% with the impact of traffic. So, really overall we don't feel like it has changed a whole lot essentially. It depends on what you call mid single-digit, I suppose. But we really kind of just took the lower end of the range off the table if you will. Just based on what we saw in Q1 with 8.2% on a per store week growth, it feels like that's the trend. We didn't really see much change in wage inflation or other inflation, and not a lot of change -- actually a little bit of an uptick in growth in hours given the traffic that we had in Q1. So, I'm really more about taking, I guess, the lower end of the range off the table.

David Tarantino -- Baird -- Analyst

Great. And it does seem, I guess, then that you're assuming some traffic growth in the balance of the year. And I guess the implied number for April isn't -- if you can confirm, it doesn't seem like traffic grew in April. But is your view that April is unusual because of the comparison, and we should get back to traffic growth as the year progresses? Is that how to frame up the guidance?

Tonya R. Robinson -- Chief Financial Officer

When you're speaking specifically to April, I mean, I tell you that we're definitely lapping that. That tougher comparison is one piece of it. And also we didn't really get into quantifying some of the differences, some of the variability we saw throughout the period. But when you look at week one included Easter last year, week four included Easter this year, we would have expected that to just kind of be a net nothing impact. But it seemed to be a little more negatively impactful than we would have thought.

Again, we didn't really quantify it. It's hard to say that definitely because of Easter being in different weeks. But it -- or is it tied to some spring break shipped or something like that. But it felt like there was a little bit of that going on too, and that gave us some confidence -- gives us some confidence on traffic going forward.

Scott M. Colosi -- President

And hey David, this is Scott. I think also if we look at this, we do sometimes look at the two year and three year comps, and -- because of the comparisons, and I mean the April two-year comp was better than what it was in March and February. On a three year basis, it's just as good as it was in March, and quite a bit better than February. I'm sure there are probably some flips. With Easter in there, I'm sure there's some weather-related stuffs in there. Here, in Chicago, I heard it snowed 5 inches yesterday or something in Chicago. So, yes, there's all sorts of stuff going on. I think, we are very, very bullish on the strength of our business and our ability to grow traffic longer term, because of the way we staff our restaurants and now we're very protective of our food quality, and also the conservatism, or let's say, less aggressiveness over time we've taken with regards to pricing. And we feel very, very good about the strength of our business.

David Tarantino -- Baird -- Analyst

Great. Makes sense. Thank you.

Operator

Your next question comes from Jeffrey Bernstein from Barclays.

Jeffrey Bernstein -- Barclays -- Analyst

Great. Thank you very much. Two questions as well. First just on the -- I guess, the most recent price increase, it would seemingly be the case that you're already aware of these updated assumptions for, I guess, now 7% to 8% increase in labor. I'm just wondering how you think -- we should think about the margins for '19 in this new environment. Scott, I know you said pricing -- or may or may not hold restaurant margin flat. I'm just trying to think about the outlook for the rest of the year based on the price you took at the end of March, presumably knowing the inflation outlook for the rest of the year?

Scott M. Colosi -- President

Well, so with the pricing (Technical Difficulty). But anyway, I would tell you that the pricing will give us a pretty big benefit, and there will be some fluctuation on food inflation -- the rest of the year, somewhat higher in the second quarter, will that lower the rest of the year? And then there's some other expenses, insurance-related stuff like that that come up throughout the year, that could help us on the margin front. But it's going to be close, and a lot of it will depend ultimately on traffic, and it will also depend on does just the level of wage inflation continue. So we've been running the last few quarters, I think, it is about 8% per store week up in labor, and in some combination of wage inflation and other inflation in labor plus hours. And we do think that's going to continue, but we're going to have for the first time in longtime over 3% (ph) pricing, so that's going to go long ways on margins, and I think we've got a shot at keeping it pretty close for the year, but we'll see.

Jeffrey Bernstein -- Barclays -- Analyst

Got it. But the clarification from the earlier question was you really haven't changed your guidance. You're just now layering in a couple of 100 basis points of traffic assumed, and therefore, the mid single-digit went up to 7% to 8%?

Scott M. Colosi -- President

Yes. You can say that. I mean we're just saying, look we've been running this 8% number, and our traffic is a little bit higher, a little bit lower, I'm not sure that's going to change a whole lot. If it's -- if our traffic is substantially higher, substantially lower, yes, our folks are going to do nothing with regards to its scheduling on hours in particular, but you were probably going to be current run rate for the next few quarters at least probably.

Tonya R. Robinson -- Chief Financial Officer

And I think too -- Jeff, this is Tonya. You know, heading into the year back in February with a mid single-digit guidance, there was some hope that perhaps we'd see a little of that inflation abate a little bit whether, you know, mainly on wage inflation and other inflation. And well maybe we'd end up at -- a little bit at the higher end of the range, early in the year maybe we'd see some help there. But just based on what we saw on Q1, we kind of said, hey, it doesn't feel like that. And that was kind of the reason to narrow that back guidance quite a bit and move it just up a tad if you will.

Jeffrey Bernstein -- Barclays -- Analyst

Got it. And my other question was just on the beef outlook. I know you mentioned that your overall commodity basket is still up 1% to 2%, maybe a little bit higher in the second quarter, lower in the back half. But can you give us some color on the percentage locked either on the overall basket or any directional color on beef. It would seem like there's a lot more chatter recently about potential implications from the African swine flu, and I know you were, I guess, a little bit less than half -- half of your basket locked as of last quarter. So it would seem more vulnerable in the back half, but I'm guessing maybe you have some different intel in terms of the beef outlook.

Tonya R. Robinson -- Chief Financial Officer

Sure. Yes, right now on the bulk commodity basket, we're about 50% locked. So a little bit more than where we were back at the beginning of the year, not much. And one of the bigger differences, I guess, that we're seeing, we are locked less than this year than we were last year. So from that perspective, a lot of what happens this year is based on what we were doing last year, if you will. So, we'll continue to see that.

And beef tends to be hiring in Q2 and we're seeing that a bit, but there are some other things too causing a little bit of movement whether it's sweet potatoes, some other produced items into soft bev and things like that. But given that we are floating quite a bit of the basket that does leave you a little more vulnerable. I think from the African swine flu perspective, we feel good about the impacts on pork. We feel good about our pork prices for 2019, could be more impactful in 2020, heading into next year.

And then on the beef side, I think a lot remains to be seen. I think from our perspective seems like maybe we would say that's a little more -- it's hard to know where that -- where that's going to be more impactful from a cut perspective. Is it going to be more focused -- ground beef focused -- or middle meat focused. We feel like maybe it will be a little more impactful on ground beef which isn't -- is a little bore, not as big of a deal for us. But a lot remains to be seen on beef in the back half the year relating to all that. And given that we are still floating a bit in the back half of the year that could be impactful. But we are lapping some higher prices in the back -- from the back half of '18. So and that's why we're still so confident on the 1% to 2% guidance we have.

Jeffrey Bernstein -- Barclays -- Analyst

Very hopeful. Thank you.

Operator

Your next question comes from Peter Saleh from BTIG.

Peter Saleh -- BTIG -- Analyst

Hey, great. Thanks for taking the question. I just want to ask about when you think about the margin profile of the business and labor inflation that's ongoing doesn't seem to have any. Does this change the way you think about unit growth going forward? Or are there projects on the edge that you would say, maybe we're not going to do those projects, or does this have really no impact on your unit growth kind of going forward?

Scott M. Colosi -- President

Hey, Peter, this is Scott. Right now zero impact on unit growth going forward. I mean, I guess, you could say it's one advantage of us growing at the rate that we're growing which is not [00:01:01] a modest number of restaurants. So to do just over 20 Roadhouses and a few Bubba's is not enough for us to have to really think too hard about slowing that down or changing our minds on some deals. So 1% on restaurant margin. If that was permanent, let's say wouldn't be enough to make us rethink. We've had such good sales growth. We've got -- we're in some states where our margins are substantially less than others, but yet we do higher sales, some of that's higher pricing and whatnot. And it ends up all working out.

So, we're very confident we can continue to develop restaurants. No doubt, Texas Roadhouse, that brand in particular already being at 550, I mean there's only so much farther we're going to go. Historically, we've said 700 to 800. Is it 700? Is it 800? Don't know for sure, but we don't see any reason to slow down even with the tough labor market.

We'll adjust over time, and we've always challenged our operators to be as efficient as they can be. They always respond. Again they're paved on the bottom line. So they're not going to do things that they don't believe at, add value back to their business. And at the same time, they're willing to try some things and fire some bullets, and see if those things can work whether it's -- helping them get the sales to above $6 million on average or reduce turnover in some way.

Peter Saleh -- BTIG -- Analyst

Great. And can just give us an update on where you stand with Bubba's and the returns that you're seeing? Also just the top line, and at the margin profile, the new ones you're building are still the same.

Scott M. Colosi -- President

So Bubba's, not really much new news since our last call. The last call we had pretty good same store sales growth in all of 2018 and that's continued on into 2019, at pretty much a similar clip.

I can tell you that we're still on traffic to open for Bubba's this year -- later this year. And again so not much change. The margin profile is still similar, and that the margins are a little bit better than on the Roadhouse side. And that continues to be the case. We'd still like to see our newer Bubba's openings on average do a little bit stronger sales and we're still working on trying to better understand why that is. But the older Bubba's are the ones who've been around more, they're still growing sales again at a pretty good clip.

We did add lunch to one Bubba's in 2018 and we just added four more a couple of months ago, because we do think in certain locations having lunch at Bubba's might be a bigger deal. And we add one store historically in Albuquerque, and that restaurant's done very well sales wise and margin wise, so we've got and it hasn't really impacted the margin as much maybe as it would at Roadhouse and Bubba's lend itself a little more because of the menu in the TVs and everything more to -- more lunch occasions. So we're going see how that works out. But we're hopeful that the momentum is building in Bubba's, and we're going to continue to march down that road. Yes, we're not going to open up 10 Bubba's next year or anything like that. But it gets more encouraging by the day.

Peter Saleh -- BTIG -- Analyst

All right. Thank you very much.

Operator

Your next question comes from Stephen Anderson from Maxim Group.

Stephen Anderson -- Maxim Group -- Analyst

Yes. Good afternoon. I just want to follow up on the question on the beef cost front. Certainly, I guess the other factor to consider has been the Midwestern floods and that's been made as a reason why we're seeing higher beef costs. From your contacts, are you hearing that as a potential for maybe a cut in supplies later on this summer.

Tonya R. Robinson -- Chief Financial Officer

No, Stephen. I haven't heard that. I mean if anything what we're hearing is that supply is actually pretty good in the back half and the expectation on supply is really good in the back half of the year. So I haven't heard yet that could be impacted by any weather or anything like that.

Stephen Anderson -- Maxim Group -- Analyst

All right. Thank you.

Operator

Your next question comes from John Glass from Morgan Stanley.

John Glass -- Morgan Stanley -- Analyst

Thanks very much. Scott, as you think about pricing as two sides of the coin. One is given labor would you consider looking at pricing yet again this year or do you feel like what you've got now is just as much as the consumer you're willing to tolerate? I guess the other side of that question is now that you've got that incremental pricing in place, do you have any evidence that there's been any traffic resistance or do you feel like that's not been an issue at all?

Scott M. Colosi -- President

So, John, it's nothing that we've heard that has said there's been any kind of resistance, that's any different than any other price changes that we've made. Of course, it has only been four weeks, and again we're lapping the toughest comp from three years ago. So, last year and all that. So, it's just too early to tell, but historically we haven't seen it. You know as far as taking any more pricing, I don't see us doing anything really till the end of the year.

I'd be very surprised unless there was an uptick in some way in labor inflation and just something got crazy in the world, but I don't see that happening. I think we're going to really challenge ourselves, particularly on the hours front, and just challenge -- every story different. I mean, we're really a collection -- we can't think we're a collection of individual restaurants. Every story is a little bit different. And in some of our restaurants where they've added hours they probably needed to, you know they probably were a little bit understaffed others, maybe they pushed a little bit too much, and that's for us to manage and make sure we've got a good balance.

So we've kind of talk about you know staffing figure next, you know, 10,000 a week in sales, but we don't necessarily need to be staffed for the next 20,000 a week in sales. So we just want to make sure we got a good balance and we're disciplined, and we believe we're -- that majority of our restaurant that's the case. But like in any concept you've got some outliers, and we want to make sure that we're open on those.

John Glass -- Morgan Stanley -- Analyst

Okay. And then there was pressure up and down the restaurant level P&L. So including other restaurant expenses, was that more timing related, or I mean, how do you think about that one that's been a favorable line in the past particularly given your comps are so strong. Why would that not favorable? I know you cited like marketing and some things, is that sustainable or is that just a first quarter timing issue?

Tonya R. Robinson -- Chief Financial Officer

That figure thing on other ops this quarter was -- we had a general liability, negative impact of about $1.5 million or $1.3 million. So we had a bigger pick -- a bigger hit here Q1 in '19, and we were lapping at $400,000 credit from last year. So I believe that was probably around, you know, call it a couple of pence impact on other ops. We are also seeing higher supplies to go supply with higher to go sales. We're seeing that hang around a bit. We're seeing higher credit card charges hang about -- hang around a bit. So those are some of the things.

There is some leverage that we are getting on some lines like utilities we're seeing, some leverage and things like that. But for Q1 that's kind of where other ops landed. On a full year basis, it feels like with the level of pricing we'll have the menu that on -- we should get a little bit of leverage on the other operating line. And what's going to depend on, again, those general liability actuarial reserve adjustments? And how those kind of play out for 2019, if they're a hit or a credit to the line. So we'll see how those play out, but excluding any impact from those, I would hope to see a -- little bit of leverage on that line this year.

Unidentified Participant -- -- Analyst

Got it. Okay. Thank you.

Operator

Your next question comes from Andy Barish from Jefferies.

Andy Barish -- Jefferies -- Analyst

Hey, guys. Just wondering how you implemented this last pricing increase at the beginning of the 2Q. Was it -- is it fairly broad across the menu or kind of focused? And then on the mix, you've had almost now a point of mix for a couple of quarters. Do you expect that to continue or will some of the pricing actions maybe start to impact what's going on with mix out there?

Tonya R. Robinson -- Chief Financial Officer

On the pricing side on mix, we've been pretty positive. If I'm looking at exactly, we were at -- on the quarter, we were about 20 basis points of positive mix for 2019. So that's what we've seen a little bit -- is more -- a little more positive mix, I guess, in the back half of '18 and adding into '19. Right now I would -- it's hard to say on mix. It could be 20 basis points one way or the other. It doesn't seem like it gets too far beyond that, but on -- and what was your other question?

Scott M. Colosi -- President

Across the board on the pricing.

Tonya R. Robinson -- Chief Financial Officer

On the pricing, yeah. On the pricing, it was -- 1.5% was the average, but you have some stores who maybe took a lot less than that, some who maybe took up to 2%, 2.5% because we -- and it was kind of the flip of whatever we did in December. So if you have stores you did nothing in December, they may have taken a bit more with this last increase. And it was kind of spread across the menu, but different line items, different menu items than what we would have been targeting in December.

Scott M. Colosi -- President

The other thing too is sometimes it's different menu items depending upon different markets as well. So -- and for example, if you take our sirloins, some markets may have taken a little bit more pricing on the sirloins back in November, but others didn't and that may have flipped in this last price increase where some took some -- some who had not taken a pricing on sirloins did this time. And so not everybody moves exactly in sync, depending upon what's going on in their world, especially with minimum wage in the different states. And so it's a little bit different across the board. However, we have seen pretty uniformly over time a nice mix benefit, which has been great, 0.1 or 0.2 will take it. It's a lot better than the negative mix of 0.5%, I'll tell you that.

Andy Barish -- Jefferies -- Analyst

Yeah. I'm sorry, just a clarification on the components of comp if traffic was 2.6 and I thought you had 1.7 of pricing before this last price increase.

Tonya R. Robinson -- Chief Financial Officer

Yeah. No, Andy, you're right. The mix was essentially flat. I think it was just 7 basis points positive mix. So it was a smaller number than what I gave you earlier. So there were 2.5 of pricing, about a tenth on mix, which gave you 2.6 on track and then 2.6 on traffic for the quarter.

Andy Barish -- Jefferies -- Analyst

Okay. Sure. Thank you.

Operator

(Operator Instructions) Your next question comes from Chris O'Cull from Stifel.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

Thanks. Good afternoon, guys. Scott, were you surprised the growth in labor hours was greater than the growth in traffic during the quarter?

Scott M. Colosi -- President

Yeah, I would say yes, a little bit, but it's not that far off from where we've been trending. The last few years -- so that -- this increase in labor hours has been around the 3% range for at least three years now for us. So the only surprise would be, yeah, if our traffic is a little bit less than what it was parts of last year or the year before, why didn't our hours growth slow down. On the other hand, turnover keeps creeping up and the turnover keeps creeping up on a higher base of employees because we've added -- if you go back 10 years, we've gone from doing 3.6 million AUVs to 5.2 million and our average employee per restaurant has gone up a lot. And so it's sort of a multiplicative impact of more employees per restaurant times a higher turnover number, which can lead you to more growth in hours just to rehire the people you're losing and all the training and orientation and all that stuff that you have to do, in addition to any staffing initiatives. So that's the part that I'm not surprised. But given that, again, our guys get paid as a percent of the bottom line, your -- we kind of have a lot of trust in them to make those decisions. So it'll be interesting to see what happens this next quarter if traffic remains similar to what it was in Q1 overall notwithstanding April.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

And that segues into my next question, which was, what is the turnover, the hourly turnover rate for the system right now? And then I know you guys have been working on improving that. Can you talk a little bit about some of the initiatives you may have to try to address it?

Scott M. Colosi -- President

Well, it's in the high 120s for us right now. And that's a fully loaded turnover number for us. That includes like transfers and other things that we have in our system, but basically we're constantly talking about culture, treating people right, and we're talking about paying people market level rates whatever they are, front and back of the house. We're talking higher rate and it's a challenge in our world because it's -- we are so busy, a lot of folks haven't faced the volume that they have when we have a Texas Roadhouse. You throw on top of that the Amazons of the world or anybody else offering very high hourly wage rates or high from a historical perspective, there is a lot of even non-restaurant competition out there just fighting for good folks. And so we don't know if our turnover would have been 140, if we weren't doing some of these things with staffing to enable us to have more scheduling flexibility, talking to our folks more about what they need to do a better job, all those kinds of things.

I will tell you though, and we've kind of said this before, but on the management side, the kitchen managers, service managers, those types of positions, our turnover continues to get better and it was high teens just a few years ago and we're low teens today. So we think that really bodes well for the strength of operational execution day to day up to Texas Roadhouse because that management is so key. And as busy as we are, you've got to have a lot of managers, and -- because you've got to have them in the front, you've got to have them in the back to make everybody happy, make everybody feel good. So we're very pleased with that, hourly battle continues, and we're going to just keep fighting hard and getting after it.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

And then just one last one. Tonya, does the 5% hourly wage inflation you provided in the presentation, is that -- does that include tipped employees?

Tonya R. Robinson -- Chief Financial Officer

Yeah, that includes all hourly employees.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

Do you have the wage inflation for non-tipped -- the non-tipped employee group?

Tonya R. Robinson -- Chief Financial Officer

No, I don't have that at my fingertips to break that down for you. I'm not sure how that would break down, that 3.5%. We had -- we were looking at about 3.5% wage rate inflation in Q1. That's pretty close to what it's been actually for the last several years.

Scott M. Colosi -- President

Yeah. Chris, I mean, we've actually been growing hours a little bit faster in the back of house than we have the front of house. So the back of house, and that's where the jobs are -- they are hard. I mean, we're making all that right (ph) from scratch, we still do that. And there is a lot of it and it's really tough, and so it's really competitive. The guys, everyday they're saying I'm having to pay more per hour for just that any position in the back than I ever thought I would because the front of house is more minimum wage based because you got tips on top of that. Back of house is probably more market-based and has this more pressure and so there's still quite a bit of inflation there too.

Tonya R. Robinson -- Chief Financial Officer

Yeah. Chris, I can tell you in that 3.5%, if you just -- our front of house employees, so there could be tipped and non-tipped in that number, but it runs about 1% to 1.5% is what's included in that 3.5% for the front of house employees.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

I thought the hourly wage inflation was 5%.

Tonya R. Robinson -- Chief Financial Officer

Well, you have 3.5% with wage inflation and then you have another 1.6% just relating to other labor items like payroll taxes, group health insurance, things like that.

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

Okay. Fair enough. Thank you.

Operator

Your next question comes from Andrew Strelzik from BMO Capital Markets.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Good afternoon. My first question, I believe when you originally talked about taking the incremental pricing -- excuse me, the intention was to not let the restaurant margins fall below 17%. So I guess, I just want to confirm first that you don't expect to fall below that 17% still with that pricing where it sits today. And in going to 7% to 8% wage inflation and 1Q running a touch higher than that would imply obviously the potential for some moderation. Is that just managing a little bit better like you talked about or it's lapping the investments or is there anything else? What would get you kind of to the lower end of that?

Scott M. Colosi -- President

You got it right. I mean, it's all those things that you mentioned. As far as would there be any slight moderation in the growth per store week, I mean, that would be right on. As far as the 17%, that would be our intention, but if for some reason we were coming in just shy of that, I think that may influence us on pricing, but again, that wouldn't be till later in the year and it could be too late to do anything for 2019, but it would definitely help us in 2020. Again, we finished at 17.4% last year, so it'd have to be quite a bit below that to fall below 17%. And with this kind of pricing -- again, I think we've got a decent shot of holding margins flat. Long ways to go in the year for sure. Again, our intention is that -- is to stay above 17% -- and get back some that we've lost. Our intention is not to stay at 17% longer term. Our intention is to head back toward 18% over time.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Okay. That's helpful. And my last question, you have more cash on your balance sheet than you've had in a pretty long time and you mentioned in the prepared remarks you are having the flexibility with that cash to take advantage of some opportunities as they arise. So what are the opportunities that you may be looking at in the event that they don't arise? Are you comfortable letting that cash balances continue to build?

Tonya R. Robinson -- Chief Financial Officer

Well, I think there is always the opportunity on share buybacks. We do have about $70 million remaining on our outstanding facility and that doesn't expire. So that's an opportunity. And then using -- there's always the opportunity, if we can take it to use cash to buy back franchisees, to look at other things like that, but if those opportunities don't present themselves as you suggest, Andrew, I think to a point where we're OK letting cash get to a certain amount, because given how much we are focused on being company-owned versus franchise, we like having a little bit more cash on the books just for -- just to have for a rainy day, if you will. So I don't think that bothers me too much to see that cash grow a little bit more.

Andrew Strelzik -- BMO Capital Markets -- Analyst

Great. Thank you very much.

Operator

Your next question comes from Will Slabaugh from Stephens.

Will Slabaugh -- Stephens Inc. -- Analyst

Yeah. Thank you. I had a question on Bubba's. You mentioned you were pretty pleased with the sales there. So if you could give any more color on that, that would be great, just (Technical Difficulty) older and then the newer stores. And then secondarily, given how far we are in '19, and Scott, you mentioned it's unlikely that we'll be building 10 or more next year. I assume it's realistic to think that that acceleration probably wouldn't happen in 2020. So my question is would there be any sort of meaningful acceleration happening, in your mind, 2021 or beyond or are we still in sort of a little bit of a holding pattern until we learn more?

Scott M. Colosi -- President

Well, we're learning at Bubba's for sure. I mean, again, we're very pleased with the momentum of the existing stores from a same-store sales growth perspective. The last couple of years, we opened nine Bubba's and a number of those, having started out with sales that are -- that aren't that great, they're not terrible. They're just not that great that they don't say, hey, let's go build a bunch of more Bubba's. I say that because some of that's comparing to Roadhouse which is just a whole another world. Compared to most sports restaurants or sports bars, the sales that we're opening with are actually like pretty darn good. But a comparison to what we know we can do vis-a-vis Roadhouse and what it's costing us to get these Bubba's open from a return on investment perspective, we want to be doing more.

If these restaurants, once they get some history behind them, and a lot of it is people learning who we are over time and it is very similar to Texas Roadhouse where in a lot of cities we were in, the way we developed, we were by ourselves, if you will, we opened one in this town and one in this town and one in this town, and it took a long time for folks to know who we were. And we did kind of just OK sales for a long time, and then when people figured it out, the sales started taking off and you see a lot of same thing with Bubba's. So hopefully 2021 would be a year we'd be stepped on the gas a little bit. Easy for me to say that now in April of 2019 because 2021 is 20 months away. So it's easy to throw out a comment like that. But you'd certainly hope so with $200 million in cash in the bank, you'd really hope so, to the prior question. I mean, that's really what we'd like to do, is to build a lot of Bubba's in addition to the Texas Roadhouses. So we think we've got the people pipeline we're putting together, and we've got the most stable best Bubba's team we've had and it started to show in the sales growth. And we're learning something new every day where we're doing a lot of research on Bubba's. I mean, our guys are getting better and better just like in Roadhouse, at executing legendary food at Bubba's. We're just trying to be patient and disciplined and not trying to grow faster than what we should. And I can tell you internally everybody's dying to grow faster, grow the concept faster. It's kind of in our blood. We're competitive and all that. But at the same time, we believe we're doing the right thing for our shareholders and ultimately for our people. So hopefully I can say in 2021, next year, we're going to build more, but we'll see.

Will Slabaugh -- Stephens Inc. -- Analyst

Got it. That's helpful. And sticking with the development thing for a minute, you mentioned with Roadhouses, obviously you're at 580, I believe, as of quarter end, and 700, 800 is that ultimate goal. As you think about the stores that you've seen open recently, it sounds like there is no sort of even yellow light in terms of KPIs slowing down, be it AUVs or store (ph) strength at all. So just curious what you've seen in those more recent openings and if you have seen anything that's different than what you've seen in prior years.

Scott M. Colosi -- President

I can tell you, we've opened six stores this year company Texas Roadhouses and they averaged in their first week $148,000 in their first week. So -- and that's not the first month, it's just the first week and there's a pretty big honeymoon, but $146,000, $148,000, some of these are in some pretty small towns. So we're pretty jacked about that. And it just says -- it just says how strong the Texas Roadhouse brand, which of course is in its 27th year is relative to Bubba's. And so it's just very exciting. I mean, the reception we're getting, it's just kind of blown us away that at this level we start to get this kind of reception. Obviously our challenge is to retain as much of those sales as we can as early as we can to get the returns, and again, because our partners make a percentage of the bottom line, we want to make sure they're making a really good living in running a Texas Roadhouse, so hopefully retain a lot of the sales, but man, these openings are as exciting as they've ever been.

Will Slabaugh -- Stephens Inc. -- Analyst

Good to hear. And thank you.

Operator

Your next question comes from John Ivankoe from JPMorgan.

John Ivankoe -- JPMorgan -- Analyst

Hi. Thank you. Obviously there's been a lot of focus on the store level side of cost, but I was wondering if we could, you talked at the organizational level or at the administration level, that doesn't take place in the stores. In a higher cost environment, is there anything that you can do that you would do to kind of slow the overall growth of G&A? Is there any type of longer term G&A metric that you're beginning to think about that kind of a maturing, but still growing company should have over the next couple of years?

Scott M. Colosi -- President

Hey, John. This is Scott. We talk about that a lot. Obviously I don't think it's shown in our numbers as a percentage of revenue, but certainly post some of these accounting reclassifications or revenue recognition post that, we'd like to be in the low 5s and we think over time we can get there, provided we continue to get at least high to low mid single -- high single digit to low double digit revenue growth, we think we can get some leverage on G&A over time. We've had this case with some compensations, particularly for folks that are paid a lot in stock, and given the rise in the stock price over the last few years and the accounting for that has added quite a bit to our G&A. We added a couple of more regions to our regional structure and that causes some money again. We will not have to do that for a long time if at all on the Texas Roadhouse side. So we don't have any more major investments. We are expanding our support center in Louisville because we've had people sitting in the hallways for a few years now. We're just totally out of space. And so we're doing that. That will add some depreciation and some building rent for us, but we're doing that instead of going out and building a new building. We're not building a new campus, we're not going out doing anything crazy. We're not putting our name on a football stadium, we're not -- there is a lot of things that we're not doing, but we're still encouraging our people to travel, go out and be in the restaurants and go out and celebrate and recognize people and have some fun. We are in the hospitality business. So we are going to continue to do that. We've got a lot of energy in our company because we think we've got a pretty good balance on telling our people we need to be diligent and manage our cost structure outside the restaurant, support our operators, but at the same time, be on offense, if you will, which means promote people, continue to challenge our organization and celebrate and all those things. So it's a balance. And I think once we get through this period of -- we had -- through this period of adding the regionals, Tonya's promotion, our VP of Ops got promoted to Chief Operating Officer, really don't have any bluff tier (ph) coming up in our organization to any degree. So I think we've got more upside opportunity to reduce our G&A as a percent of revenue kind of going forward.

Will Slabaugh -- Stephens Inc. -- Analyst

Very helpful. Thank you.

Operator

Your next question comes from Bob Derrington from Telsey Advisory Group.

Bob Derrington -- Telsey Advisory Group -- Analyst

Yeah. Thank you. Scott, could you help us understand, typically the Company is very disciplined around the capital plan, around spending whether it's new store development, share repurchase activity, dividend payout et cetera, but your cash is growing pretty nicely. I'm just wondering what is it that would trigger you to move on -- move more so on one of those things. I don't think you've bought shares back since maybe 2016, if my math is correct. And I know that the cost of new store development has continued to rise, which you are cautious about spending there. So what is it that would trigger one of those more so than where you currently are.

Scott M. Colosi -- President

Well, I'll just say, as we've always said, we'll continue to be opportunistic on share buyback and jump in there and we can jump in in a big way if and when we feel that opportunity is right for us. Obviously we've raised our dividend substantially over the years from where we had started including this most last year where we took a big jump and so we've got a lot of powder to jump even farther. We'd love to be growing Bubba's faster, we'd love to buy back some of our franchisees. So there is a lot of opportunities to spend some money. But we also do want to have a certain amount of cash in the bank. In just any unforeseen storm, we'd like to have that.

Beyond that, we don't have all the answers. A lot of companies tend to go out and buy stuff, make acquisitions with that. I think like any company, we've got people that are for and against that strategy. I think when we go out and talk to investors, I think a lot of them are maybe more against that strategy because it is so tough to make acquisitions work. I'm talking not our franchisees. I'm talking other restaurant companies in that realm and (inaudible) knows we get pitched a lot of stuff when you're in our position. So ideally it's keep growing Roadhouse, grow the heck out of Bubba's, raise our dividend, yes, buy back some stock, we love it to do that as well and have done a lot over the years albeit not too much recently. But I think those opportunities will be there and we'll end up spending some of that cash .

Bob Derrington -- Telsey Advisory Group -- Analyst

Thank you, Scott. Appreciate it.

Operator

And that was our last question at this time. I will turn the call back over to the presenters.

Tonya R. Robinson -- Chief Financial Officer

Thanks everybody for joining us tonight. If you have any other questions, please let us know. And have a great week. Thank you.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 54 minutes

Call participants:

Tonya R. Robinson -- Chief Financial Officer

Scott M. Colosi -- President

David Tarantino -- Baird -- Analyst

Jeffrey Bernstein -- Barclays -- Analyst

Peter Saleh -- BTIG -- Analyst

Stephen Anderson -- Maxim Group -- Analyst

John Glass -- Morgan Stanley -- Analyst

Unidentified Participant -- -- Analyst

Andy Barish -- Jefferies -- Analyst

Chris O'Cull -- Stifel, Nicolaus & Company, Inc. -- Analyst

Andrew Strelzik -- BMO Capital Markets -- Analyst

Will Slabaugh -- Stephens Inc. -- Analyst

John Ivankoe -- JPMorgan -- Analyst

Bob Derrington -- Telsey Advisory Group -- Analyst

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