Yahoo Finance Why Did Texas Roadhouse’s Revenue Grow in 1Q16?
Can Texas Roadhouse Maintain Its Strong 1Q16 Performance?
Revenue sources
Texas Roadhouse (TXRH) earns its revenue from company-owned restaurant sales, franchise fees, and royalties collected from franchised restaurants. The revenue from company-owned restaurant sales forms more than 99% of the total revenue.
1Q16 performance
In 1Q16, company-owned restaurants generated $511.3 million in revenue—growth of 12.1% from $456.3 million in 1Q15. The revenue from franchised restaurants grew by 8.6% to $4.3 million. The revenue growth was driven by unit growth and same-store sales growth. Compared to 1Q16, the company operated 33 more company-owned restaurants and four more franchised restaurants. The company-owned restaurants include nine Bubba’s 33—compared to four in 1Q15. Bubba’s 33 is a family-oriented restaurant. It provides pizzas, burgers, and beers. The increase in Bubba’s 33 units also boosted Texas Roadhouse’s 1Q16 revenue.
Peer comparison
During 1Q16, Texas Roadhouse’s peers Buffalo Wild Wings (BWLD), Brinker International (EAT), and Bloomin’ Brands (BLMN) posted revenue growth of 15.4%, 5.2%, and -3.2%, respectively.
2016 outlook
Unit growth and same-store sales growth are expected to rise for rest of 2016. Analysts expect Texas Roadhouse to post revenue of $509.4 million, $488 million, and $569 million in 2Q16, 3Q16, and 4Q16, respectively. Texas Roadhouse forms 0.44% of the holdings of iShares Core S&P Small-Cap ETF (IJR). For fiscal 2016, Texas Roadhouse is expected to post revenue of $2 billion. This would be 11.7% growth from $1.8 billion in 2015.
In the next part, we’ll discuss reasons for Texas Roadhouse’s positive same-store sales growth in 1Q16.
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