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Date

May 7, 2026

Call participants

  • Chief Executive Officer — Jerry Morgan
  • Chief Financial Officer — Michael Bailen
  • President — Mike Lenihan

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Takeaways

  • Revenue -- $1.6 billion, reflecting a 12.8% increase driven by a 6.8% rise in average weekly sales and a 5.7% growth in store weeks.
  • Comparable sales -- 7.1% growth, with traffic growth of 4.5% and average check increasing 2.6%.
  • Average weekly sales -- Over $174,000 per restaurant, with ToGo representing more than $25,000, or 14.6%, of total weekly sales.
  • Restaurant margin dollars -- Increased 10.5% to $264 million.
  • Diluted EPS -- Increased 9.6% to $1.87.
  • Restaurant margin percentage -- Decreased 36 basis points to 16.3% due to a 122 basis point increase in food and beverage costs, primarily from 6.2% commodity inflation.
  • Labor as percentage of sales -- Improved by 46 basis points to 32.9%, with labor dollars per store week up 5.4%, driven by wage/labor inflation of 3.8%, and 1.6% growth in hours.
  • Other operating costs -- Accounted for 14% of sales, a 36 basis point improvement enabled by higher sales and a $600,000 insurance reserve credit.
  • General & administrative (G&A) expense -- Increased 8.7% to 3.7% of revenue, with full-year guidance for a low double-digit percentage increase in total G&A dollars.
  • Depreciation expense -- Increased 6.5% to 3.5% of revenue; full-year guidance is a low teens percentage increase in total depreciation expense.
  • Effective tax rate -- 14.3% for the quarter, with full-year guidance maintained at 14%-15%.
  • Commodity inflation guidance -- Full-year 2026 guidance lowered to 6%-7%, with the second quarter expected to be highest (7%-8%), and the back half at or below 6%.
  • Wage and labor inflation guidance -- Maintained at 3%-4% for 2026.
  • Cash and capital position -- $215 million in cash; $259 million from operating cash flow offset by $158 million in capex, dividends, share repurchases, and $72 million for franchise restaurant acquisition.
  • Capital expenditures (Capex) -- Full-year guidance unchanged at approximately $400 million.
  • Unit development -- Four new Texas Roadhouse restaurants opened in the first quarter, nine expected across brands in the second quarter, and approximately 35 company-owned openings planned for the full year.
  • Franchise and international growth -- One domestic Jaggers franchise and one international Texas Roadhouse restaurant opened; three additional Jaggers and up to six more international Texas Roadhouse locations expected for the year.
  • Pricing actions -- Menu pricing increased 1.9% at the start of the second quarter, with Q2 and Q3 at 3.6%, and Q4 at 1.9% plus any additional changes.
  • Traffic by month -- January 4.3%, February 5.7%, March 3.7%, and approximately 3.5% in the first five weeks of Q2.
  • Sales by brand -- Average weekly sales of nearly $180,000 for Texas Roadhouse, over $125,000 for Bubba’s 33, and $71,000 for Jaggers.

Summary

Texas Roadhouse (TXRH 0.99%) delivered double-digit revenue growth and high single-digit earnings growth, credited to strong traffic and successful menu pricing actions. Management announced a lowered commodity inflation outlook, attributing the adjustment primarily to shifting beef market dynamics and improved cost visibility. The company demonstrated ongoing labor productivity improvements and leveraged technology advancements to enhance both guest and employee experience. Expanding ToGo sales and strategic unit development remain integral to operational focus, with disciplined capital allocation supporting new openings and shareholder returns.

  • Company executives confirmed the cadence of traffic and sales remained stable, notably outperforming industry volatility trends.
  • Labor efficiency gains were achieved through reduced turnover and adoption of kitchen technology, including handheld order tablets and digital display systems.
  • Mix trends were described as steady, with minor negative mix primarily from lower alcohol attachment rates as ToGo grows faster than dine-in.
  • The company received its second consecutive Datassential 500 Award for America’s Best Restaurant Experience, recognizing superior guest satisfaction, service, and atmosphere.
  • Management reinforced a conservative pricing philosophy, intentionally maintaining price leadership versus other steakhouse competitors.
  • Franchise and international openings showed momentum, reflecting diversified growth beyond company-owned units and the core U.S. market.
  • Management stated, "we have not been able to find a correlation between gas prices and our traffic trends," addressing concerns about potential consumer pullback.
  • Executives provided color that a net 20 basis point negative impact affected the 7.1% comp from weather and the New Year’s Eve holiday shift, implying sales would have been closer to 7.3% absent these factors.
  • The Bubba’s 33 concept was highlighted as a differentiated growth vector, with early success in new unit volumes and a smaller prototype under evaluation.

Industry glossary

  • Store weeks: The aggregate number of weeks all restaurants are open during the reporting period, used to normalize sales and margin calculations.
  • Restaurant margin: Profit earned at the restaurant level before corporate overhead and non-operating costs, often measured as dollars per store week or a percentage of sales.
  • ToGo: Off-premises sales channel where guests place and collect orders for pickup, distinct from dine-in or third-party delivery sales.
  • Commodity inflation: Increase in the cost of food inputs such as beef, poultry, pork, and produce that directly impact restaurant operating margins.

Full Conference Call Transcript

Jerry Morgan: Thanks, Michael, and good evening, everyone. We are proud of the results our operators delivered for the first quarter of 2026, driven by a same-store sales increase of 7.1%, including 4.5% traffic growth. Revenue surpassed $1.6 billion for the quarter. We are also pleased with the strong flow-through of sales to the bottom line. Our traffic and mix trends show that our guests continue to trust us to provide an experience worthy of their time and money. Our operators continue to focus on what they can control, which is maintaining our value proposition for our guests and delivering on our mission of legendary food and legendary service.

This all leads to us being a place where Roadies want to work and guests want to dine, and we continue to be recognized for the experience that we deliver to our guests. For the second year in a row, Texas Roadhouse, Inc. has been named America’s Best Restaurant Experience in the Datassential 500 Awards. This award goes to the brand that earns the highest overall consumer ratings for service quality, atmosphere, and guest satisfaction. On the development front, we continue to expect approximately 35 company-owned openings for the full year. In the first quarter, we opened four Texas Roadhouse, Inc. restaurants and expect as many as nine openings across all brands in the second quarter.

This means that openings in 2026 will be weighted towards the back half of the year. On the franchise side, during the first quarter, our Jaggers partners opened one domestic restaurant, and we expect they will open an additional three locations over the remainder of the year. Internationally, our partners also opened one Texas Roadhouse, Inc. in the first quarter and we expect they will open as many as six more throughout the rest of the year. Our international business has significant momentum as Texas Roadhouse, Inc. continues to connect with guests around the world.

Moving on to technology, the results from our restaurants and the feedback from our managing partners tell us that our investments continue to positively impact operations. Our digital kitchen technologies are supporting operators as they execute a higher volume of ToGo orders without negatively impacting the dine-in experience. We are also encouraged by the initial feedback from the testing of upgraded handheld tablets that servers can use to input guest orders at the table. Our strategy remains to slowly expand this test as we continue gathering feedback. Last week, we had our annual Managing Partner Conference in Nashville.

The theme was “Kicking It Up,” which was certainly appropriate based on our operators’ mindset of continuing to elevate their level of performance. It was an inspiring week filled with education, motivation, and celebration as well as giving back to the local community. We were also able to kick up our level of fun while we were together. Speaking of celebration, I want to congratulate the following Roadies: Mary Landry of Jacksonville, Florida for being named our Texas Roadhouse, Inc.

Managing Partner of the Year; Philip Severson from Killeen, Texas for being recognized as our Bubba’s 33 Managing Partner of the Year; Alvaro Galinda of Covington, Louisiana for winning our National Meat Cutter Championship; and Alison Williams for being honored as our Support Center Roadie of the Year. And lastly, I would like to congratulate all of our award finalists for their contributions, accomplishments, and passion for all of our brands. Now Mike will provide some thoughts.

Mike Lenihan: Thanks, Jerry. During the first quarter, I spent a lot of time training in our Texas Roadhouse, Inc. and Bubba’s 33 restaurants. I am grateful to the managing partners Stephanie, Brian, Tim, and Jeff for welcoming me so graciously into their stores. I saw firsthand throughout my training how their people-first and guest-focused mentality drives our winning recipe for growing sales and traffic. I also echo Jerry’s comments on our Managing Partner Conference, as it was an incredible way for me to experience our culture and celebrate what has and will continue to make this company so special. Moving on to the first quarter, all of our brands delivered positive comparable sales growth.

Weekly sales averaged nearly $180,000 at Texas Roadhouse, Inc., over $125,000 at Bubba’s 33, and $71,000 at Jaggers. This top-line momentum has carried forward into the first five weeks of the second quarter, with comparable sales of 6.5% and our restaurants averaging weekly sales of $174,000. Included within this positive sales trend is the benefit of the 1.9% menu price increase that went into effect at the beginning of the second quarter. Now moving on to our outlook for commodities.

With first quarter inflation coming in slightly better than expected, as well as an updated forecast for the second quarter and increased visibility into the back half of the year, we are reducing our full-year 2026 commodity inflation guidance from approximately 7% to between 6% and 7%. Our current expectation is to be above the top end of the guidance in the second quarter but at or below the bottom end of the guidance in the second half of the year. On the labor side, first quarter inflation was in line with our expectations, and we are maintaining our full-year 2026 wage and other labor inflation guidance of 3% to 4%.

Also, as expected, labor productivity improved in the first quarter, with labor hours growing at approximately 35% of comparable traffic growth. With regard to our capital position, we ended the first quarter with $215 million of cash. We also generated cash flow from operations of $259 million, which was partially offset by $158 million of capital expenditures, dividend repayments, and share repurchases, as well as $72 million for the previously disclosed acquisition of five California franchise restaurants. Our guidance for 2026 capital expenditures remains unchanged at approximately $400 million. Our strong cash balance and healthy cash flow continue to provide us the flexibility to invest in our growth while also returning capital to shareholders.

And now Michael will provide the first quarter financial update.

Michael Bailen: For the first quarter of 2026, we reported revenue growth of 12.8%, driven primarily by a 6.8% increase in average weekly sales and a 5.7% increase in store weeks. We also reported a restaurant margin dollar increase of 10.5% to $264 million and a diluted earnings per share increase of 9.6% to $1.87. Average weekly sales in the first quarter were over $174,000, with ToGo representing more than $25,000, or 14.6%, of these total weekly sales. Comparable sales increased 7.1% in the first quarter, driven by 4.5% traffic growth and a 2.6% increase in average check. By month, comparable sales grew 6.9%, 8.3%, and 6.3% for our January, February, and March periods, respectively.

In the first quarter, restaurant margin dollars per store week increased 4.5% year-over-year to over $28,000. Restaurant margin as a percentage of total sales decreased 36 basis points to 16.3% as compared to the same period last year. Food and beverage costs as a percentage of total sales were 35.3% for the first quarter. The 122 basis point year-over-year increase was primarily driven by 6.2% commodity inflation. The inflationary pressure was partially offset by the benefit of a 2.6% check increase. Labor as a percentage of total sales improved 46 basis points to 32.9% as compared to the first quarter of 2025.

Labor dollars per store week increased 5.4% due to wage and other labor inflation of 3.8% and growth in hours of 1.6%. Other operating costs were 14% of sales, which was 36 basis points better than the first quarter of 2025. The leverage was a result of higher sales combined with a benefit to our quarterly reserve for general liability insurance. This insurance benefit included a credit of $600,000 this year as compared to $300,000 of additional expense last year. Moving below restaurant margin, G&A dollars increased 8.7% as compared to the first quarter of 2025 and came in at 3.7% of revenue for the first quarter.

For full-year 2026, we continue to forecast a low double-digit percentage increase in our total G&A dollar expense. Depreciation expense increased 6.5% year-over-year in the first quarter and came in at 3.5% of revenue. For full-year 2026, we expect a low-teens percentage increase in our total depreciation dollar expense. Our effective tax rate for the quarter was 14.3%. Our forecast for the full-year 2026 income tax rate remains unchanged at between 14% and 15%. Now I will turn the call back over to Jerry for final comments.

Jerry Morgan: Thanks, Michael. I want to give a big shout-out to our vendor partners. It was great to spend time with them at our Managing Partner Conference and to have the opportunity to recognize their ongoing contributions to our success. And a special congratulations to Bounteous for being named our Vendor of the Year for 2025. There is no doubt 2026 is off to a great start. But as you all know, the game is never won in the first quarter. Our operators are focused on the work and opportunity that lies ahead. We are confident that Roadie Nation is up for the challenge of kicking it up and continuing to grow our brands.

Finally, I want to thank all of our Roadies who help support the best operators in the industry. Let’s kick it up, Roadhouse. That concludes our prepared remarks. Amy, please open the line for questions. Thank you.

Operator: The floor is now open for questions. As a reminder, please press star followed by the number 1 on your telephone keypad to join the queue. We do request for today’s session that you please limit to one question. We will pause for just a moment to compile the Q&A roster. Your first call comes from Chris Carroll with KeyBanc Capital Markets. Your line is now open.

Chris Carroll: In your prepared remarks, you pointed to first quarter results and increasing visibility into the rest of the year. But can you please expand on your updated commodity inflation guidance, now 6% to 7%? Perhaps any more detail on specific inputs that drove the change and your latest thoughts on the beef cost outlook? Thank you.

Michael Bailen: Hey, Chris. I appreciate the question. As Mike referenced, our first quarter came in a little bit better than expected at 6.2% inflation, and some of that has carried over into our expectations for the second quarter. We do have a little bit more visibility into our costs for the back half of the year. The supply issues are well known and have not changed, but we have seen some demand shift within the retail segment. While beef is still very popular, there have been some shifts in what cuts are being purchased, and that has been reflected in our updated commodity guidance. Thank you.

Operator: Thank you. Your next question comes from the line of Drew North with Baird.

Drew North: Great. Thanks for taking the question. I wanted to follow up on the commodity outlook and maybe get a little bit more specific. I think previously, the expectation was for commodity inflation to peak in the second quarter, maybe as high as a very high single digits, and moderate through the balance of the year. I appreciate the color on the shape of the year in your remarks, but could you clarify where the expectation is for commodity inflation in the second quarter and how you are thinking about spot prices for beef as we get to the back half relative to where we are currently sitting? Thank you.

Michael Bailen: Drew, thanks for the question. We still expect that our highest commodity inflation of the year will be in the second quarter, but we are now talking somewhere in the range of 7% to 8%. Then, as you said, being below the bottom end of the range in the back half of the year, we would expect that cadence to improve, with the fourth quarter less than the third quarter as far as inflation. We obviously have our internal expectations as to where those prices will be throughout the next six or seven months. It is not just taking current prices and carrying those forward.

As a reminder, some of our inflation into the back part of the year is a result of lapping last year’s fixed price contracts and not just our viewpoints on the spot market.

Operator: Thank you. Your next question comes from the line of Andrew Charles with TD Cowen. Your line is now open.

Andrew Charles: Great. Thank you. Keeping on the beef train, since your last call, given the spike in oil prices and spot beef prices, it is encouraging to see you reduce the 2026 commodity forecast. If we look at the futures curve, with investor optimism that you might see flat commodity inflation in 2027, what are vendors saying? Is there an early peek into next year given the change in beef prices in the spot market since our last call?

Michael Bailen: Hey, Andrew. It is Michael. It is way too early for us to give commentary on next year. There is still a lot of this year to go, so we are going to hold off there. Much later this year we will be talking about our 2027 expectations. Thank you.

Operator: Your next question comes from the line of Andrew Strelzik with BMO Capital.

Jared Lisinski: Hi. This is Jared Lisinski on for Andrew. Thanks for taking the question. With value-tier construction becoming central across casual dining this year, how are you thinking about the role chicken and pork play in your value strategy given their margin profile versus steak? Thank you.

Jerry Morgan: Jared, we have a great selection of chicken entrées and pork, and of course our steak. We will continue to monitor it. We have great products, and if that is what guests choose to opt into, then we are doing our job. We do not try to guide anybody; we want them to come in and get the experience they want and the choice of food they prefer. We have it available, and we are ready to serve it.

Operator: Your next question comes from the line of Zach Fadem with Wells Fargo.

Zachary Robert Fadem: Hey, good afternoon. Could we start with the cadence of traffic through the quarter? And then as you think about market share, could you talk about to what extent you maintained or widened your spread versus the industry as we moved through the first quarter and into April?

Michael Bailen: Zach, as far as traffic by month, it was 4.3% in our January period, 5.7% in our February period, 3.7% in our March period, and approximately 3.5% in the five weeks so far, quarter-to-date. We are very pleased with the cadence of that traffic and how it compares to the industry. We have maintained healthy gaps to the industry throughout those time periods.

Operator: Thank you. Your next question comes from the line of Jeff Bernstein with Barclays.

Jeffrey Bernstein: Great. Thank you. Following up on that comp trend, I think it was 6.3% in March and 6.5% in the first five weeks of this quarter. It sounds like traffic has been in the mid-3% range in March and then in April. From the outside, there appears to be stability, but it feels like a lot of your peers are talking about a big ramp-up in volatility. It does not seem that way with your results. Are you seeing any change in consumer behavior, whether you think it is attributed to the macro more broadly or attention to gas prices, especially on the lower and middle-income consumer? Any color on your view of the consumer trend would be helpful.

Thank you.

Jerry Morgan: Hey, Jeff. We are really pleased with what we are seeing. We believe our operators are executing great shifts. The value proposition in our menu, the taste profile of our food, and the hospitality we provide continue to tell us that what we are doing is working and people are responding. Our operators are very excited to see that. We know there is a lot going on in the industry, but we focus on opening, operating, and closing quality shifts, and providing great places for our employees to work and for our guests to join us and spend their time and money.

I will let Michael get into some of the details, but we are really excited about the loyalty to the Texas Roadhouse, Inc. brand.

Michael Bailen: Jeff, on the mix side, our mix has been very steady throughout the year, not seeing anything of concern. Most of the negative mix is still coming from the alcohol category. When you look at our dine-in trends overall, they are pretty much flat. We are seeing positive mix in entrées and in some other areas. We are very encouraged by what we are seeing out of the consumer.

Operator: Your next question comes from the line of Sarah Senatore with Bank of America. Thank you very much.

Sara Harkavy Senatore: I have two quick follow-ups. One is on the ToGo business. I noticed it was at 14.6%. I think that is the highest sales mix we have seen since shortly after COVID. Is there anything going on, or is that just a function of weather being more of a headwind so people stayed home? And then I have a question about your beverage platform.

Jerry Morgan: Hey, Sarah. I think we continue to operate at a high level. The technologies we are using help us manage the business, but it comes down to the ease of placing the order through the app, the pickup windows we have, and the transaction there. People grab their food, get home, and have everything they ordered. Our ToGo food travels well, and we are continuing to improve upon it. It is resonating with guests. We never have enough rolls and butter in there, but we keep trying hard. It is about demand for our product and the execution our operators continue to focus on.

Michael Bailen: On beverages, we had 3.1% pricing in the first quarter, and the check was up 2.6%, so about 50 basis points of negative mix. That is coming from a combination of still some negative mix in the alcohol category, although that has been improving, combined with the ToGo business growing at a faster rate than dine-in. Dine-in is still growing, but ToGo has a lower average check and typically not a beverage attachment, which puts pressure on overall mix. We are not seeing anything in the entrée or other food categories that concerns us.

Operator: Your next question comes from the line of Elliot Simon with Evercore. Your line is now open.

Elliot Simon: Hey, guys. Jerry, first I have to compliment the burger-eating prowess, and the beer looked tasty too. I wish there was a Bubba’s closer to New York City. On Bubba’s, you have talked about potential for the brand to grow well beyond 200 restaurants over time. The unit economics are solid, but the comp energy still feels different than Texas Roadhouse, Inc. As you evaluate the brand today, what are the biggest unlocks to getting Bubba’s performing more like Roadhouse over time? Is it brand awareness, site selection, marketing, operational maturity, or the smaller format restaurants?

When everything starts humming for the brand, what is the big audacious goal in terms of how many Bubba’s you can build in a year?

Jerry Morgan: Thanks, Elliot. If you put Bubba’s 33 against competitors in its segment, it is at the top of the class. We are proud of the operations, the people, and the work to get it there. The energy has similarities to Texas Roadhouse, Inc., with a different vibe—more into rock and roll—but still the sports, music, energy, and entertainment, and most importantly, fantastic food. We will continue to work on that and keep growing. We have tried a smaller prototype, and we have number two up and running now. We will continue to evaluate it as we build more. We have had a couple of conversions that we are very excited about from a profitability standpoint.

We are looking at options to ensure Bubba’s can bring burgers, pizzas, wings, beer, margaritas, and fun to any community we enter. We are very excited about the Bubba’s brand and the energy it continues to bring to our company.

Operator: Your next question comes from the line of Jim Salera with Stephens Inc.

Jim Salera: Hey, guys. Good afternoon. Thanks for taking my question. Two-part question on the consumer. First, historically, is there any correlation from periods with higher gas prices? Do you see a point where consumer engagement starts to fade, or perhaps do you benefit given your overall value proposition? Second, have you seen any demand destruction at retail given higher beef prices, and is that supporting the robust trends you continue to see on traffic?

Michael Bailen: Hey, Jim. On higher gas prices, we have not been able to find a correlation between gas prices and our traffic trends. People still want to go out and have that simple luxury of a casual dining meal with friends and family. They are going to be picky as to where they go, and our value proposition likely benefits us. If someone is watching what they spend because they are paying more at the gas pump, Texas Roadhouse, Inc. becomes a great option. As far as demand for beef at retail, I do think there has been some demand destruction—people trading to pork and chicken, and within beef, some shift to lower-cost cuts.

We are seeing that as well at retail.

Operator: Thank you. The next question comes from the line of Lauren Silberman with Deutsche Bank.

Lauren Danielle Silberman: Thank you, and congrats on the quarter. On the mix side as it relates to COGS, you talked about the increase in beef consumption last year being a bit of a pressure point on COGS. Are you still seeing that, or has it stabilized? And on comps, any color on trends—differences across regions or dayparts?

Michael Bailen: Hey, Lauren. It really has stabilized. There may still be a little bit in there. I would expect maybe around 10 basis points of COGS pressure is related to that going forward. We have lapped a lot of it. We are still seeing a lot of steak demand, but not as much of a pressure point within the COGS percent at this point.

Mike Lenihan: On comps by region and daypart, the quick answer is no unusual differences. We continue to see strength across all regions and across all ages of our restaurants. Encouragingly, we continue to see the trend of our highest comp restaurants also being some of our highest volume restaurants.

Operator: Your next question comes from the line of Peter Saleh with BTIG. Your line is now open.

Peter Mokhlis Saleh: Thanks for taking the question, and congrats on the quarter. Jerry, you mentioned the handhelds in the stores that you are testing. Can you give more color on what this unlocks at Texas Roadhouse, Inc.? Does this help servers cover more tables, or is that not what you are looking for? And Mike, could you give us the pricing by quarter embedded now going forward, given the pricing you took in April?

Jerry Morgan: Hey, Peter. Technology is to enhance the experience. We have a workforce very used to technology. Handhelds may speed things up when placing and sending orders, but the motivation is not to run more tables. It is to be more efficient and improve the complete guest experience. We want our servers comfortable, whether using a hardwired POS or a handheld. We have seen order accuracy improve with handhelds, which we like. We are still working on it and going slow, but attitudes are favorable.

Mike Lenihan: On pricing cadence, we had 3.1% in the first quarter. For the second and third quarters, we will have 3.6%. In the fourth quarter, it will be 1.9% plus whatever additional we may choose to take at the beginning of the fourth quarter.

Operator: Thank you. Your next question comes from the line of Jeff Farmer with Gordon Haskett. Your line is now open.

Jeffrey Daniel Farmer: Thanks. Michael, you called out improved labor productivity in the quarter. Do you see an opportunity to drive further productivity gains on the labor side?

Michael Bailen: Hey, Jeff. A reminder: the ratio we discuss is not a measurement our operators focus on; it is an output. We still want them to staff for the volumes they want. With that said, I think there is an expectation we could be below the historical 50% level. Whether we drop further from the 35% we saw in the first quarter, I would not expect that, but being around 40% would not be surprising based on trends. Part of that is the benefit of ToGo, which is a bit less labor intensive, so as that grows, you get additional labor productivity.

Operator: Your next question comes from the line of Dennis Geiger with UBS.

Dennis Geiger: You gave great color on food cost and COGS and just spoke to labor. Anything else as it relates to restaurant margins over the balance of the year—maybe how to think about OpEx over the coming quarters?

Michael Bailen: Dennis, under the assumption we continue these positive traffic trends, I think there is opportunity on the labor line as well as the other operating line to continue to get leverage, fairly similar to what we saw in the first quarter. Traffic trends and pricing flow-through will have a big impact on exact levels. Those are areas under our control, and our operators are doing a tremendous job managing the business. More important to us are the margin dollars and dollars per store week. If these trends continue, we would expect both to continue to grow year-over-year throughout the year.

Operator: Your next question comes from the line of Gregory Francfort with Guggenheim Securities. Your line is now open.

Gregory Ryan Francfort: Hey, thanks for the question. Jerry, your off-prem business seems like it is accelerating. As the base grows, is there anything you did specifically this quarter to add to that? Other strategies you are working on, and any reason any level it could get to over time?

Jerry Morgan: Thanks for the question. We are continuing to execute at a high level. When people get home and open their food, they have everything they ordered. We have worked really hard on not having missing items and making the experience great. We revamped parts of the order guide, added pictures, refined language—making ordering easier through guest feedback and our own learnings. Pickup at the window has been streamlined, and our operators dedicate people to ToGo. It is growing because of the effort we put in, delivering on the promise of legendary food and legendary service, and the ease of pickup.

Operator: Thank you. Your next question comes from the line of Brian Bittner with Oppenheimer & Co. Your line is now open.

Brian Bittner: Thanks for the question. Last quarter, you said you expected the second quarter to be the peak and “very high single digits” for COGS inflation. Has that changed? Is it going to be better than that given the change to the inflation guide? And for the full year, as you brought inflation to 6% to 7% from about 7%, is that all related to beef, or is anything else in the basket helping?

Michael Bailen: Hey, Brian. Our second quarter expectation for commodity inflation is still the highest for the year, but we would say it is more of the 7% to 8% range now. The change is really beef—it is the lion’s share of the shift in our outlook.

Operator: Your next question comes from the line of John Ivankoe with JPMorgan. Your line is now open.

John Ivankoe: Thank you very much. On Bubba’s new unit volumes, particularly in your newest class, volumes look quite strong and seem to be compressing more toward Texas Roadhouse, Inc. volumes. What are you learning in terms of those new unit volumes, and what can you do to retain and grow that customer base post-honeymoon?

Jerry Morgan: Hey, John. We are very excited about Bubba’s and the growing brand recognition as we approach 60 units. The big thing is opening and operating through high-volume openings successfully, serving more people, and ensuring satisfaction. Then it is about running great shifts and getting into the community—local store marketing so people know who we are, the food we serve, our vibe and energy, and how we can partner with them. It is the same playbook as Texas Roadhouse, Inc.: boots on the ground, shaking hands, and being great community partners.

First and foremost, deliver on the experience: greet at the front door, get them seated and fed, let them watch sports and have an ice-cold beer, pizza, burgers, wings, and fun, and make sure they feel appreciated. Provide great food, great service, great hospitality, and be great partners in our community. That approach is working well.

Operator: Your next question comes from the line of Jim Sanderson with Northcoast Research. Your line is now open.

James Jon Sanderson: Thanks for the question. On pricing, you mentioned carrying about 3.6% pricing. How does that compare to peers in the steakhouse category? Are you satisfied with your value position relative to those peers?

Jerry Morgan: Jim, we believe firmly in our conservative approach to pricing. We implemented pricing in April that will run through October. We will start conversations with our operators in August and decide in September where to go from there. I believe we are a little lower than most of our steak competition. We try not to focus on them; we make sure we feel good about the pricing we charge our consumer. If guests are paying more, we need to do a better job.

The consumer knows we have had to charge a little more because of beef and everything going on in the world, but they expect at least the same service and hospitality, if not better, and more focus and hustle to serve them. Our intention is always to be conservative.

Operator: Thank you. Your next question comes from the line of Logan Reich with RBC. Your line is now open.

Logan Reich: Good evening. Thanks for taking the question. On the carryout business, is there any opportunity to ramp up marketing given the kitchen is operating at a higher level? And how do margins compare on carryout versus in-store?

Jerry Morgan: We do not really market ToGo specifically. We believe the brand and the food market themselves. We continue to execute, and high demand allows us to give guests the choice of dining in or planning a meal at home by stopping by their local Texas Roadhouse, Inc. or Bubba’s 33.

Michael Bailen: On profitability, so long as the dining room is full and continues to grow, the ToGo business is very beneficial to margin dollars and is probably slightly beneficial to overall restaurant margin percent. You can allocate costs between the two differently and make one look more or less profitable, but at the end of the day, if we keep the dining room busy and add incremental ToGo, I would expect a little benefit to the margin percent and a strong benefit to dollars.

Operator: Your next question comes from the line of Jacob Aiken-Phillips with Melius Research. Your line is now open.

Jacob Aiken-Phillips: Hi. Good afternoon. Another beef question: what would you need to see to decide these costs are structurally higher? Is it a matter of waiting until the herd rebuilds? In that scenario, should we expect a similar pricing cadence based on other inflationary pressures until you can decide if it is structurally higher or just appropriately higher?

Michael Bailen: Hey, Jacob. There is always a portion of the beef cycle that is structural, but we believe it is a cycle and we will see relief over time—we have to be patient. We price for structural inflation and often use labor as the guidepost for determining that level. Pricing we take benefits COGS and all lines of the P&L. We will be patient and see where things settle in the future and where beef prices land to help determine whether we have taken the appropriate amount of pricing as COGS percent settles over time. We have seen it come down in past cycles, and that is what we would expect to occur here again.

Operator: Before we continue with questions, I would like to remind you: if you would like to enter the queue, press star 1 on your telephone keypad. Your next question comes from the line of Brian Harbour with Morgan Stanley. Your line is now open.

Brian Harbour: Yes, thanks. Hi, guys. The good performance you had on labor hours—do you think that is a retention thing? Are your operators doing anything differently in stores? Do you think you are seeing benefits from the kitchen display system or anything else behind that?

Jerry Morgan: Brian, our turnover is down, keeping people in positions longer, which makes them more productive. The technology in the kitchen helps, too, by creating a calmer experience and allowing cooks to look at the screen and know what they have to do. There are several factors helping labor productivity.

Operator: Your next question comes from the line of Brian Vaccaro with Raymond James. Your line is now open.

Brian Michael Vaccaro: Hi. Thanks, good evening. Jerry, in your prepared remarks, you noted tech investments positively impacting operations. Could you elaborate on the benefits and any metrics you might share—kitchen output, speed of service, etc.? Then I had a quick bookkeeping question on comps.

Jerry Morgan: Brian, pay-at-the-table allows the guest to choose when to pay out; that has been a big win for the consumer and our operators. Our guest management upgrade helps us manage the dining room and seat people quickly and efficiently at the right-sized table. The digital kitchen lets us track some cook times and identify things we previously did manually, and we will continue to learn from that technology. We are also continuing to look at handhelds. Technology is designed to enhance the guest experience, and it is doing that. It is also enhancing the employee experience by doing some of the math for our positions and helping managers run their business more efficiently. Altogether, it is definitely helpful.

Michael Bailen: On comps and external factors, for the first quarter, the New Year’s Eve shift had about a 60 basis point benefit to the quarter. That was offset by weather. The January weather had about a 1.4% negative impact on the quarter, but lapping last year’s weather was about a 60 basis point benefit. Net, weather was about an 80 basis point negative, while the holiday was a 60 basis point positive, for an overall 20 basis point negative impact to the quarter. So the 7.1% comp maybe would have been closer to 7.3% if not for that noise. Nothing to call out as far as Easter or any other items to date in the second quarter.

Operator: There are no further questions at this time. Mr. Morgan, I turn the call back over to you for closing remarks.

Jerry Morgan: Thanks, Amy. Just a reminder: Sunday is Mother’s Day, so happy Mother’s Day to all of you out there, and to Mama Morgan. If your plans include your favorite steakhouse, it might be good to use our digital waitlist as we are usually very busy. Thank you all, and have a great evening. Let’s kick it up, Roadhouse.

Operator: That concludes today’s conference call. You may now disconnect.