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Call sheet · Q3'25

Texas Roadhouse (TXRH)

Q3'25 earnings call · held November 6, 2025 · compared with the Q2'25 call · management-credibility review
9/12
Disclosure score
2 high, 3 medium, 3 low flags
Financial quality
Bottom line
The sleeper story is managing partner pay crisis - restaurant margin dollars per store week down 21% sequentially to $22,500, forcing Jerry to reconsider his sacred 'conservative pricing' philosophy for the first time in years. Everyone's focused on the 4.3% traffic acceleration, but when your store managers are taking effective pay cuts two years running, that's unsustainable. The binding constraint isn't demand (traffic is accelerating), it's beef inflation creating a margin death spiral. 'We'll continue to look at our philosophy on pricing' - that's Jerry Morgan admitting the model is breaking. My view changes if restaurant margin dollars per store week stabilize above $25,000 or they take pricing above 2%.

The 30-second version

  • Managing partner pay is about to crater for second straight year
  • Traffic growth accelerating while industry struggles, but beef inflation creates massive margin pressure
  • They quietly stopped talking about digital kitchen efficiency gains

What changed this quarter

MetricQ2'25Q3'25Change
Revenue$1.35B (+12.7% YoY)$1.43B (+12.8% YoY)Slight acceleration, traffic-driven
Same-Store Sales+5.8% (4% traffic, 1.8% check)+6.1% (4.3% traffic, 1.8% check)+30 bps acceleration, all from traffic
Restaurant Margin %17.1% (-108 bps YoY)14.3% (-168 bps YoY)-280 bps sequential, -60 bps worse YoY deterioration
Restaurant Margin $ per Store Week$28,500 (-1% YoY)$22,500 (-5.3% YoY)-$6,000 sequential collapse
Food & Beverage Costs %34% (+131 bps YoY)35.8% (+224 bps YoY)+180 bps sequential, +93 bps worse YoY
Commodity Inflation5.2% in Q27.9% in Q3+270 bps acceleration
Labor % of Sales32.9% (+6 bps YoY)33.6% (-18 bps YoY)+70 bps sequential but improving YoY
Average Weekly Sales$167,000$157,000-$10,000 sequential decline despite comps acceleration
Diluted EPS$1.86 (+4% YoY)$1.25 (-0.8% YoY)-$0.61 sequential, turned negative YoY
Cash Flow from Operations$128M$144M+$16M sequential improvement

Accountability tracked

7 new promises made4 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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