Texas Roadhouse misses Q3 profit and revenue estimates

Texas Roadhouse (TXRH) missed third-quarter estimates on both profit and revenue. Shares fell 1.3% at 9:37 a.m. ET, from a $191.79 close.

Diluted earnings per share were $1.36, against the $1.49 consensus estimate. Revenue was $1.57 billion, against the $1.62 billion estimate.

Here's how the company did:

• Diluted EPS: $1.36 vs. $1.25 a year earlier, against $1.49 expected
• Revenue: $1.57 billion vs. $1.44 billion a year earlier, against $1.62 billion expected
• Net income attributable to Texas Roadhouse: $89.36 million vs. $83.17 million a year earlier
• Comparable restaurant sales at company restaurants: up 4.3%

Revenue grew 9.5% from a year earlier. Store weeks increased 5.1%, and five company restaurants and three franchise restaurants opened in the quarter.

Restaurant margin dollars rose 11.9% to $228.6 million. Margin as a percentage of restaurant and other sales rose 30 basis points to 14.6%. Commodity inflation was 2.0%, and wage and other labor inflation was 4.1%.

CEO Jerry Morgan said "traffic softened late in the quarter." He said the company's strategic priorities are unchanged.

In the first five weeks of the fourth quarter, comparable restaurant sales rose 1.5% from a year earlier. A menu price increase of about 1.0% took effect at the start of the quarter.

2026 guidance

The company now expects store week growth of 5.0% to 5.5%, including franchise acquisitions, down from 5% to 6% previously.

Wage and other labor inflation is now expected at 3.5% to 4.0%, from 3% to 4%. The effective income tax rate is now about 13.0%, from about 14%.

Total capital expenditures are now expected at about $440 million, from about $400 million. The company reaffirmed positive comparable restaurant sales growth, including menu pricing, and commodity inflation of about 5.0%.

For 2027, the company provided initial expectations: store week growth of 5.0% to 6.0%, commodity inflation of about 4.0%, wage and other labor inflation of about 3.0%, an effective tax rate of about 13.0%, and total capital expenditures of about $425 million.

Cash and capital returns

Cash provided by operating activities was $146.7 million in the quarter. Capital expenditures were $135.6 million, dividends totaled $49.2 million and share repurchases were $12.4 million.

Revenue had risen in each of the last three quarters, from $1.44 billion in the third quarter of 2025 to $1.68 billion in the second quarter of 2026.

Quarterly dividend

The board approved a quarterly cash dividend of 75 cents per share on Nov. 4. It is payable Dec. 29 to shareholders of record at the close of business on Dec. 1.

The quarterly dividend was 68 cents per share a year earlier.