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Lifestyle and Leisure

Texas Roadhouse Inc.

08/07/2026 | Press release | Distributed by Public on 08/07/2026 07:01

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT

This report contains forward-looking statements based on our current expectations, estimates, and projections about our industry and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 30, 2025, and in Part II, Item 1A in this Form 10-Q, along with disclosures in our other Securities and Exchange Commission ("SEC") filings discuss some of the important risk factors that may affect our business, results of operations, or financial condition. You should carefully consider those risks, in addition to the other information in this report, and in our other filings with the SEC, before deciding to invest in our Company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statements, except as may be required by applicable law. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties, and other factors that may affect our business, results of operations, or financial condition.

Our Company

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. Our late founder, W. Kent Taylor, started the Company in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to three concepts with 832 restaurants in 49 states, one U.S. territory, and ten foreign countries. As of June 30, 2026, our 832 restaurants included:

●

732 company restaurants, of which 712 were wholly-owned and 20 were majority-owned. The results of operations of company restaurants are included in our unaudited condensed consolidated statements of income and comprehensive income. The portion of income attributable to noncontrolling interests in company restaurants that are majority-owned is reflected in the line item net income attributable to noncontrolling interests in our unaudited condensed consolidated statements of income and comprehensive income. Of the 732 company restaurants, we operated 662 as Texas Roadhouse restaurants, 59 as Bubba's 33 restaurants, and 11 as Jaggers restaurants.

●

100 franchise restaurants, of which 14 we have a 5.0% to 10.0% ownership interest. The income derived from our minority interests in these franchise restaurants is reported in the line item equity income from investments in unconsolidated affiliates in our unaudited condensed consolidated statements of income and comprehensive income. Of the 100 franchise restaurants, 31 were domestic Texas Roadhouse restaurants, six were domestic Jaggers restaurants, 62 were international Texas Roadhouse restaurants, including two restaurants in a U.S. territory, and one was an international Jaggers restaurant.

We have contractual arrangements that grant us the right to acquire at pre-determined formulas the equity interests in 18 of the 20 majority-owned company restaurants and 32 of the 37 systemwide domestic franchise restaurants.

Throughout this report, we use the term "restaurants" to include Texas Roadhouse and Bubba's 33, unless otherwise noted.

Presentation of Financial and Operating Data

Throughout this report, the 13 weeks ended June 30, 2026 and July 1, 2025, are referred to as Q2 2026 and Q2 2025, respectively. The 26 weeks ended June 30, 2026 and July 1, 2025, are referred to as 2026 YTD and 2025 YTD, respectively. Fiscal year 2026 will be 52 weeks in length, with the quarters 13 weeks in length. Fiscal year 2025 was 52 weeks in length, with the quarters 13 weeks in length.

Key Measures We Use to Evaluate Our Company

Key measures we use to evaluate and assess our business include the following:

●

Comparable Restaurant Sales. Comparable restaurant sales reflect the change in sales for all company restaurants across all concepts, unless otherwise noted, over the same period of the prior year for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a full 18 months before the beginning of the period measured excluding restaurants permanently closed during the period, if applicable. Comparable restaurant sales can be impacted by changes in guest traffic counts or by changes in the per person average check amount. Menu price changes, the mix of menu items sold, and the mix of dine-in versus to-go sales can affect the per person average check amount.

●

Average Unit Volume. Average unit volume represents the average quarterly, year-to-date, or annual restaurant sales for Texas Roadhouse and Bubba's 33 restaurants open for a full six months before the beginning of the period measured excluding sales of restaurants permanently closed during the period, if applicable. Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth levels lower than the company average. At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth levels higher than the company average.

●

Store Weeks and New Restaurant Openings. Store weeks represent the number of weeks that all company restaurants across all concepts, unless otherwise noted, were open during the reporting period. Store weeks include weeks in which a restaurant is temporarily closed. Store week growth is driven by new restaurant openings and franchise acquisitions. New restaurant openings reflect the number of restaurants opened during a particular fiscal period, excluding store relocations. We consider store openings that occur simultaneously with a store closure in the same trade area to be a relocation.

●

Restaurant Margin. Restaurant margin (in dollars, as a percentage of restaurant and other sales, and per store week) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent, and other operating costs. Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.

In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We exclude pre-opening expenses as they occur at irregular intervals and would impact comparability to prior period results. We exclude depreciation and amortization expenses, substantially all of which relate to restaurant-level assets, as they represent a non-cash charge for the investment in our restaurants. We exclude impairment and closure expenses as we believe this provides a clearer perspective of the Company's ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry. A reconciliation of income from operations to restaurant margin is included in the Results of Operations section below.

Other Key Definitions

●

Restaurant and Other Sales. Restaurant sales include gross food and beverage sales, net of promotions and discounts, for all company restaurants. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from restaurant sales in our unaudited condensed consolidated statements of income and comprehensive income. Other sales primarily include the net impact of the amortization of third-party gift card fees and gift card breakage income and content revenue related to our tabletop kiosk devices.

●

Royalties and Franchise Fees. Royalties consist of franchise royalties, as defined in our franchise agreement, paid to us by our domestic and international franchisees, as well as royalties related to our royalty-based retail products. Domestic and international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory.

●

Food and Beverage Costs. Food and beverage costs consist of the costs of raw materials and ingredients used in the preparation of food and beverage products sold in our company restaurants. Approximately half of our food and beverage costs relate to beef.

●

Restaurant Labor Expenses. Restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners and market partners. These profit sharing expenses are reflected in restaurant other operating expenses. Restaurant labor expenses also include share-based compensation expense related to restaurant-level employees.

●

Restaurant Rent Expense. Restaurant rent expense includes all rent, except pre-opening rent, associated with the leasing of real estate and includes base, percentage, and straight-line rent expense.

●

Restaurant Other Operating Expenses. Restaurant other operating expenses consist of all other restaurant-level operating costs, the major components of which are supplies, utilities, profit sharing incentive compensation for our restaurant managing partners and market partners, credit card fees, general liability insurance, advertising, repairs and maintenance, property taxes, and outside services.

●

Pre-opening Expenses. Pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of any new or relocated company restaurant and consist principally of opening and training team compensation and benefits, travel expenses, rent, food, beverage, and other initial supplies and expenses. The majority of pre-opening costs incurred relate to the hiring and training of employees due to the significant investment we make in training our people. Pre-opening costs vary by location and concept depending on a number of factors, including the size and physical layout of each location; the number of management and hourly employees required to operate each restaurant; the availability of qualified restaurant staff members; the cost of travel and lodging for different geographic areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining final licenses and permits to open each restaurant.

●

Depreciation and Amortization Expenses. Depreciation and amortization expenses include the depreciation of property and equipment and amortization of intangibles with definite lives, substantially all of which relate to restaurant-level assets.

●

Impairment and Closure Costs, Net. Impairment and closure costs, net include any impairment of long-lived assets, including property and equipment, operating lease right-of-use assets, intangible assets, and goodwill, and expenses associated with the relocation or closure of a restaurant. Closure costs also include any gains or losses associated with the sale of a closed restaurant and/or assets held for sale.

●

General and Administrative Expenses. General and administrative expenses comprise expenses associated with corporate and administrative functions that support development and restaurant operations and provide an

infrastructure to support future growth. This includes salary, incentive-based, and share-based compensation expense related to executive officers and Support Center employees, salary and share-based compensation expense related to regional and market partners, software hosting fees, professional fees, group insurance, and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.

●

Interest Income, Net. Interest income, net includes earnings on cash and cash equivalents and is reduced by interest expense, net of capitalized interest, on our debt or financing obligations including the amortization of loan fees, as applicable.

●

Equity Income from Investments in Unconsolidated Affiliates. Equity income includes our percentage share of net income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates. As of June 30, 2026, and July 1, 2025, we owned a 5.0% to 10.0% equity interest in 14 and 17 domestic franchise restaurants, respectively.

●

Net Income Attributable to Noncontrolling Interests. Net income attributable to noncontrolling interests represents the portion of income attributable to the other owners of our majority-owned restaurants. Our consolidated subsidiaries include 20 and 19 majority-owned restaurants as of June 30, 2026 and July 1, 2025, respectively.

Q2 2026 Financial Highlights

Total revenue increased $167.9 million or 11.1% to $1,680.0 million in Q2 2026 compared to $1,512.1 million in Q2 2025 primarily due to increases in comparable restaurant sales and store weeks. Comparable restaurant sales and store weeks increased 6.2% and 5.0%, respectively, at company restaurants in Q2 2026 compared to Q2 2025. The increase in comparable restaurant sales was due to an increase in guest traffic along with an increase in per person average check. The increase in store weeks was due to new store openings and the acquisition of franchise restaurants.

Net income decreased $2.2 million or 1.7% to $121.9 million in Q2 2026 compared to $124.1 million in Q2 2025 as the increase in restaurant margin dollars, as described below, was more than offset by increases in pre-opening, depreciation and amortization, and general and administrative expenses. Diluted earnings per share decreased 0.7% to $1.85 in Q2 2026 from $1.86 in Q2 2025 due to the decrease in net income partially offset by the impact of share repurchases.

Restaurant margin dollars increased $17.8 million or 6.9% to $275.1 million in Q2 2026 compared to $257.3 million in Q2 2025 primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased to 16.4% in Q2 2026 compared to 17.1% in Q2 2025. The decrease in restaurant margin, as a percentage of restaurant and other sales, was primarily due to commodity inflation of 7.0% and wage and other labor inflation of 3.9% partially offset by higher sales.

Cash provided by operating activities was $180.1 million and capital allocation spend included capital expenditures of $98.7 million, dividends of $49.3 million, and repurchases of common stock of $42.6 million.

Results of Operations

(in thousands)


	13 Weeks Ended				26 Weeks Ended
	June 30, 2026		July 1, 2025		June 30, 2026		July 1, 2025
	$	%	$	%	$	%	$	%
Condensed Consolidated Statements of Income:
Revenue:
Restaurant and other sales	1,672,913	99.6	1,503,974	99.5	3,299,602	99.6	2,944,316	99.5
Royalties and franchise fees	7,063	0.4	8,080	0.5	13,540	0.4	15,386	0.5
Total revenue	1,679,976	100.0	1,512,054	100.0	3,313,142	100.0	2,959,702	100.0
Costs and expenses:
(As a percentage of restaurant and other sales)
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage	591,525	35.4	511,324	34.0	1,165,827	35.3	1,002,315	34.0
Labor	544,001	32.5	495,049	32.9	1,078,620	32.7	975,024	33.1
Rent	25,247	1.5	23,028	1.5	49,960	1.5	45,505	1.5
Other operating	237,020	14.2	217,230	14.5	465,646	14.1	424,845	14.5
(As a percentage of total revenue)
Pre-opening	8,492	0.5	5,464	0.4	15,128	0.5	12,276	0.4
Depreciation and amortization	58,341	3.5	50,744	3.4	115,184	3.5	99,544	3.4
Impairment and closure, net	153	NM	111	NM	153	NM	139	NM
General and administrative	72,409	4.3	62,763	4.2	133,495	4.0	118,980	4.0
Total costs and expenses	1,537,188	91.5	1,365,713	90.3	3,024,013	91.3	2,678,628	90.5
Income from operations	142,788	8.5	146,341	9.7	289,129	8.7	281,074	9.5
Interest income, net	1,021	0.1	1,044	0.1	1,566	NM	2,345	0.1
Equity income from investments in unconsolidated affiliates	182	NM	1,426	0.1	326	NM	1,651	0.1
Income before taxes	143,991	8.6	148,811	9.8	291,021	8.8	285,070	9.6
Income tax expense	19,477	1.2	22,118	1.5	40,512	1.2	42,318	1.4
Net income including noncontrolling interests	124,514	7.4	126,693	8.4	250,509	7.6	242,752	8.2
Net income attributable to noncontrolling interests	2,581	0.2	2,608	0.2	5,143	0.2	5,005	0.2
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	121,933	7.3	124,085	8.2	245,366	7.4	237,747	8.0

NM - Not meaningful



Reconciliation of Income from Operations to Restaurant Margin
($ In thousands, except restaurant margin $ per store week)
	13 Weeks Ended				26 Weeks Ended
	June 30, 2026		July 1, 2025		June 30, 2026		July 1, 2025
Income from operations	$	142,788	$	146,341	$	289,129	$	281,074

Less:
Royalties and franchise fees		7,063		8,080		13,540		15,386

Add:
Pre-opening		8,492		5,464		15,128		12,276
Depreciation and amortization		58,341		50,744		115,184		99,544
Impairment and closure, net		153		111		153		139
General and administrative		72,409		62,763		133,495		118,980
Restaurant margin	$	275,120	$	$ 257,343	$	539,549	$	496,627

Restaurant margin $/store week	$	29,092	$	28,562	$	28,649	$	27,776
Restaurant margin (as a percentage of restaurant and other sales)		16.4%		17.1%		16.4%		16.9%

See above for the definition of restaurant margin.

Restaurant Unit Activity


		Total	Texas Roadhouse	Bubba's 33		Jaggers
Balance at December 30, 2025		816	744	56		16
Company openings		13	9	3		1
Franchise openings - Domestic		1	-	-		1
Franchise openings - International		2	2	-		-
Balance at June 30, 2026		832	755	59		18


	June 30, 2026	July 1, 2025
Company - Texas Roadhouse	662	634
Company - Bubba's 33	59	52
Company - Jaggers	11	9
Total company	732	695

Franchise - Texas Roadhouse - Domestic	31	39
Franchise - Jaggers - Domestic	6	5
Franchise - Texas Roadhouse - International (1)	62	57
Franchise - Jaggers - International	1	1
Total franchise	100	102

Total	832	797

(1)	Includes a U.S. territory.

Q2 2026 compared to Q2 2025

Restaurant and Other Sales

Restaurant and other sales increased 11.2% in Q2 2026 compared to Q2 2025 and 12.1% in 2026 YTD compared to 2025 YTD. The following table summarizes certain key drivers and/or attributes of restaurant sales at company restaurants for the periods presented. Company restaurant count activity is shown in the restaurant unit activity table above.


		Q2 2026			Q2 2025			2026 YTD			2025 YTD
Company Restaurants:
Increase in store weeks			5.0	%		7.2	%		5.3	%		7.1	%
Increase in average unit volume			5.3	%		4.8	%		6.0	%		3.6	%
Other			0.9	%		0.8	%		0.8	%		0.5	%
Total increase in restaurant and other sales			11.2	%		12.8	%		12.1	%		11.2	%

Store weeks			9,457			9,010			18,833			17,880
Comparable restaurant sales			6.2	%		5.8	%		6.7	%		4.7	%

Texas Roadhouse restaurants:
Store weeks			8,574			8,226			17,093			16,337
Comparable restaurant sales			6.5	%		5.9	%		7.0	%		4.7	%
Average unit volume (in thousands)		$	2,380		$	2,246		$	4,724		$	4,439

Weekly sales by group:
Comparable restaurants (626, 590, 619, and 583 units)		$	183,982		$	173,349		$	182,652		$	171,492
Average unit volume restaurants (20, 28, 23, and 28 units) (1)		$	155,639		$	144,493		$	156,086		$	140,338
Restaurants less than six months old (16, 16, 20, and 23 units)		$	180,822		$	163,767		$	171,785		$	159,002

Bubba's 33 restaurants:
Store weeks			742			668			1,470			1,310
Comparable restaurant sales			1.3	%		4.3	%		1.1	%		4.1	%
Average unit volume (in thousands)		$	1,659		$	1,645		$	3,272		$	3,237

Weekly sales by group:
Comparable restaurants (48, 43, 48, and 41 units)		$	128,185		$	126,812		$	125,905		$	125,195
Average unit volume restaurants (6, 5, 4, and 7 units) (1)		$	122,880		$	124,187		$	124,988		$	120,474
Restaurants less than six months old (5, 4, 7, and 4 units)		$	159,187		$	149,788		$	146,239		$	148,376

(1)	Average unit volume restaurants includes those open a full six to 18 months before the beginning of the period measured, excluding sales from restaurants permanently closed during the period, if applicable.

The increase in restaurant sales for Q2 2026 and 2026 YTD was primarily attributable to an increase in comparable restaurant sales and an increase in store weeks. The increase in comparable restaurant sales was driven by an increase in guest traffic count along with an increase in our per person average check as shown in the table below. The increase in store weeks was driven by new store openings and the acquisition of franchise restaurants.


	Q2 2026		Q2 2025		YTD 2026		YTD 2025
Guest traffic counts	3.0	%	4.0	%	3.8	%	2.6	%
Per person average check	3.2	%	1.8	%	2.9	%	2.1	%
Comparable restaurant sales	6.2	%	5.8	%	6.7	%	4.7	%

To-go sales as a percentage of restaurant sales were 14.3% in Q2 2026 compared to 13.3% in Q2 2025. To-go sales as a percentage of restaurant sales were 14.4% in 2026 YTD compared to 13.4% in 2025 YTD.

Per person average check includes the benefit of a menu price increase of approximately 1.9% implemented in Q2 2026 and menu price increases of approximately 1.4% and 1.7% implemented in Q2 2025 and Q4 2025, respectively.

In 2026 YTD, we opened nine Texas Roadhouse company restaurants, three Bubba's 33 company restaurants, and one Jaggers company restaurant. In 2026, we expect store week growth of 5% to 6%, including the benefit from franchise acquisitions.

Royalties and Franchise Fees

Royalties and franchise fees decreased $1.0 million or 12.6% in Q2 2026 compared to Q2 2025 and decreased by $1.8 million or 12.0% in 2026 YTD compared to 2025 YTD. The decreases were primarily due to decreased royalties related to the franchise stores that were acquired.

Food and Beverage Costs

Food and beverage costs, as a percentage of restaurant and other sales, increased to 35.4% in Q2 2026 compared to 34.0% in Q2 2025 and increased to 35.3% in 2026 YTD compared to 34.0% in 2025 YTD. The increases were primarily driven by commodity inflation of 7.0% in Q2 2026 and 6.6% in 2026 YTD, due to higher beef costs, partially offset by the benefit of a higher average guest check.

In 2026, we expect commodity inflation of approximately 5%, with prices locked for approximately 60% of our remaining forecasted costs and the remainder subject to floating market prices.

Restaurant Labor Expenses

Restaurant labor expenses, as a percentage of restaurant and other sales, decreased to 32.5% in Q2 2026 compared to 32.9% in Q2 2025 and decreased to 32.7% in 2026 YTD compared to 33.1% in 2025 YTD. The decreases were primarily driven by the benefit of a higher average guest check and labor productivity partially offset by wage and other labor inflation of 3.9% in both Q2 2026 and 2026 YTD.

In 2026, we expect wage and other labor inflation of 3% to 4%.

Restaurant Rent Expense

Restaurant rent expense, as a percentage of restaurant and other sales, was 1.5% for all periods presented. In Q2 2026 and 2026 YTD, higher rent expense at our newer restaurants was offset by the increase in average unit volume.

Restaurant Other Operating Expenses

Restaurant other operating expenses, as a percentage of restaurant and other sales, decreased to 14.2% in Q2 2026 compared to 14.5% in Q2 2025 and decreased to 14.1% in 2026 YTD compared to 14.5% in 2025 YTD. The decreases were primarily driven by lower general liability insurance and incentive compensation expense, as well as the increase in average unit volume, partially offset by higher credit card fees and utilities expenses.

Pre-opening Expenses

Pre-opening expenses were $8.5 million in Q2 2026 compared to $5.5 million in Q2 2025 and $15.1 million in 2026 YTD compared to $12.3 million in 2025 YTD. The increases were driven by an increase in our pipeline of new store openings. Pre-opening costs will fluctuate from quarter to quarter based on specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings, and the number and timing of restaurant managers hired.

Depreciation and Amortization Expenses

Depreciation and amortization expenses, as a percentage of total revenue, increased to 3.5% in both Q2 2026 and 2026 YTD compared to 3.4% in both Q2 2025 and 2025 YTD. The increases were driven by higher depreciation expense at our newer restaurants and intangible asset amortization expense related to the acquisition of franchise restaurants partially offset by the increase in average unit volume.

Impairment and Closure Costs, Net

Impairment and closure costs, net were $0.2 million in both Q2 2026 and 2026 YTD, compared to $0.1 million in both Q2 2025 and 2025 YTD. Impairment and closure costs, net in all periods presented primarily included costs related to restaurant relocations.

General and Administrative Expenses

General and administrative expenses, as a percentage of total revenue, increased to 4.3% in Q2 2026 compared to 4.2% in Q2 2025 and was 4.0% in 2026 YTD and in 2025 YTD, respectively. In Q2 2026 and 2026 YTD compared to Q2 2025 and 2025 YTD, higher legal settlement expense and higher incentive and stock compensation expense was partially offset by lower rent expense due to the purchase of our Support Center in 2025 and the increase in average unit volume.

Interest Income, Net

Interest income, net was $1.0 million in both Q2 2026 and Q2 2025 and was $1.6 million in 2026 YTD compared to $2.3 million in 2025 YTD. The decrease in 2026 YTD compared to 2025 YTD was driven by decreased earnings on our cash and cash equivalents and borrowings on our credit facility.

Equity Income from Investments in Unconsolidated Affiliates

Equity income was $0.2 million in Q2 2026 compared to $1.4 million Q2 2025 and was $0.3 million in 2026 YTD compared to $1.7 million in 2025 YTD. The decreases were driven by lapping a $1.2 million gain on the acquisition of three of the affiliates in Q2 2025 and fewer affiliates due to the acquisition of six of these affiliates in the prior year.

Income Tax Expense

Our effective tax rate was 13.5% in Q2 2026 compared to 14.9% in Q2 2025 and was 13.9% in 2026 YTD compared to 14.8% in 2025 YTD. The decreases in the tax rates were driven primarily by an increase in the impact of the FICA tip tax credit partially offset by a decrease in the excess tax benefit on stock compensation and an increase in non-deductible officers' compensation.

In 2026, we expect an effective tax rate of approximately 14% based on forecasted operating results.

Segment Information

We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba's 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our company Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating segments, which include the results of our company and franchise Jaggers restaurants and the results of our retail initiatives, are included in Other. In addition, corporate-related assets, depreciation and amortization, and capital expenditures are also included in Other.

The CODM uses restaurant margin as the primary measure for assessing performance of our segments. Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent, and other operating costs. Restaurant margin is used by our CODM to evaluate core restaurant-level operating efficiency and performance, assist in the evaluation of operating trends over time, and in making capital allocation decisions. Capital allocation decisions include approving new store openings and the refurbishment, expansion, or relocation of existing restaurants. A reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.

The following table presents a summary of restaurant margin by segment ($ in thousands):


	13 Weeks Ended
	June 30, 2026				July 1, 2025
Texas Roadhouse	$	258,616	16.5	%	$	241,584	17.1	%
Bubba's 33		14,806	15.3			14,353	16.7
Other		1,698	15.5			1,406	15.6
Total	$	275,120	16.4	%	$	257,343	17.1	%

	26 Weeks Ended
	June 30, 2026				July 1, 2025
Texas Roadhouse	$	507,765	16.4	%	$	466,869	16.9	%
Bubba's 33		28,821	15.2			27,135	16.4
Other		2,963	14.6			2,623	15.0
Total	$	539,549	16.4	%	$	496,627	16.9	%

In our Texas Roadhouse reportable segment, restaurant margin dollars increased $17.0 million or 7.1% in Q2 2026 and increased $40.9 million or 8.8% in 2026 YTD. The increases were due to higher sales partially offset by higher food costs due to commodity inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 16.5% in Q2 2026 from 17.1% in Q2 2025 and decreased to 16.4% in 2026 YTD from 16.9% in 2025 YTD. Restaurant margin percentage was primarily impacted by commodity inflation partially offset by higher sales.

In our Bubba's 33 reportable segment, restaurant margin dollars increased $0.5 million or 3.2% in Q2 2026 and increased $1.7 million or 6.2% in 2026 YTD. The increases were due to higher sales partially offset by higher food costs and higher restaurant labor expenses. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 15.3% in Q2 2026 from 16.7% in Q2 2025 and decreased to 15.2% in 2026 YTD from 16.4% in 2025 YTD. Restaurant margin percentage was primarily impacted by the increased expenses noted above, which were partially offset by higher sales.

Liquidity and Capital Resources

The following table presents a summary of our net cash provided by (used in) operating, investing, and financing activities (in thousands):


	26 Weeks Ended
	June 30, 2026		July 1, 2025
Net cash provided by operating activities	$	439,227	$	365,980
Net cash used in investing activities		(241,983)		(259,527)
Net cash used in financing activities		(129,526)		(174,877)
Net increase (decrease) in cash and cash equivalents	$	67,718	$	(68,424)

Net cash provided by operating activities was $439.2 million in 2026 YTD compared to $366.0 million in 2025 YTD. This increase was primarily due to increases in net income, depreciation and amortization expenses, deferred income taxes, and a favorable change in working capital.

Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital, if necessary. Sales are primarily for cash, and restaurant operations do not require significant inventories or receivables. In addition, we receive trade credit for the purchase of food, beverages, and supplies, thereby reducing the need for incremental working capital to support growth.

Net cash used in investing activities was $242.0 million in 2026 YTD compared to $259.5 million in 2025 YTD. The decrease was primarily due to the acquisition of 17 franchise restaurants in 2025 YTD compared to five in 2026 YTD and an increase in proceeds from sale leaseback transactions partially offset by an increase in capital expenditures.

We require capital principally for the development of new company restaurants, the refurbishment or relocation of existing restaurants, and the acquisition of franchise restaurants. We either lease our restaurant site locations under operating leases for periods of five to 30 years (including renewal periods) or purchase the land when appropriate.

The following table presents a summary of capital expenditures (in thousands):


		26 Weeks Ended
	June 30, 2026		July 1, 2025
New company restaurants	$	106,266	$	76,643
Refurbishment or expansion of existing restaurants		60,744		58,898
Relocation of existing restaurants		7,700		31,253
Capital expenditures related to Support Center office		4,135		3,118
Total capital expenditures	$	178,845	$	169,912

Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the timing of those openings, the restaurant prototype developed in a given fiscal year, and potential franchise acquisitions. These requirements will include costs directly related to opening, maintaining, or relocating restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.

We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by operating activities and, if needed, funds available under our revolving credit facility. In 2026, we expect capital expenditures of approximately $400 million.

Net cash used in financing activities was $129.5 million in 2026 YTD compared to $174.9 million in 2025 YTD. The decrease was primarily due to net borrowings of $50.0 million on our credit facility and a decrease in indirect repurchases of shares for minimum tax withholdings related to our stock compensation program partially offset by an increase in share repurchases and an increase in quarterly dividend payments.

On February 18, 2026, our Board approved the payment of a quarterly cash dividend of $0.75 per share of common stock compared to the quarterly dividend of $0.68 per share of common stock declared in 2025. The payment of quarterly dividends totaled $98.7 million and $90.3 million in 2026 YTD and 2025 YTD, respectively.

On August 5, 2026, our Board approved the payment of the Q3 2026 cash dividend of $0.75 per share of common stock. This payment will be distributed on September 29, 2026, to shareholders of record at the close of business on September 1, 2026.

On February 19, 2025, our Board approved a stock repurchase program for the repurchase of up to $500.0 million of our common stock. This stock repurchase program has no expiration date and replaced the previous stock repurchase program which was approved in 2022.

During 2026 YTD, we paid $70.8 million, excluding excise taxes, to repurchase 415,133 shares of our common stock. During 2025 YTD, we paid $60.0 million, excluding excise taxes, to repurchase 342,789 shares of our common stock. As of June 30, 2026, $309.2 million remained under our authorized stock repurchase program.

On April 24, 2025, we entered into an agreement for a revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. This credit facility superseded and replaced our previous credit facility.

The credit facility is an unsecured, revolving credit agreement and has a borrowing capacity of up to $450.0 million with the option to increase the capacity by an additional $250.0 million subject to certain limitations, including approval by the syndicate of commercial lenders. The credit facility has a maturity date of April 24, 2030.

As of June 30, 2026, we had $50.0 million in outstanding borrowings under the credit facility and had $397.6 million of availability, net of $2.4 million of outstanding letters of credit. As of December 30, 2025, we had no outstanding borrowings under the credit facility and had $447.6 million of availability, net of $2.4 million of outstanding letters of credit.

The interest rate on the credit facility as of June 30, 2026 and July 1, 2025 was 4.74% and 5.42%, respectively.

The lenders' obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio. The credit facility permits us to incur additional secured or unsecured indebtedness, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth. We were in compliance with all financial covenants as of June 30, 2026.

Guarantees

As of June 30, 2026 and December 30, 2025, we were contingently liable for $7.5 million and $7.8 million, respectively, for five lease guarantees. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of June 30, 2026 and December 30, 2025 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

Texas Roadhouse Inc. published this content on August 07, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 07, 2026 at 13:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]