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Shares in Texas Roadhouse hit a new all-time high after the causal dining restaurant said strong traffic growth helped it report upbeat first quarter sales at a time when the industry has struggled to keep customers coming through the saloon door.
The national restaurant chain, which encourages customers to throw peanut shells on the floor, is one of few to post consistent traffic growth. Same store sales, a key industry metric, increased 3.1 per cent in the first three months of the year, up from 1.2 per cent from the last quarter of 2016.
“We are pleased with our top-line momentum and operating performance in the first quarter of 2017 with positive comparable restaurant sales and traffic growth,” said Kent Taylor, chief executive. “We credit our success to our operators’ ability to execute on our mission of legendary food and legendary service every single shift.”
Shares in the western-inspired steakhouse rose 9.8 per cent to $50.64 per cent by midday on Tuesday. By comparison, shares in DineEquity, the owner of Applebees and IHOP, fell 4 per cent on the day after missing estimates.
Analysts credit Texas Roadhouse’s success to conservative price increases, helping to maintain its strong value reputation. However the group has struggled with wage inflation eating into margins, partially offsetting lower food costs.
Net income in the quarter missed expectations and fell 4 per cent to $34.3m, or 48 cents per share, over the period in the prior year. Total revenue, meanwhile, increased 10 per cent to $567m, slightly outperforming expectations.
In its 2017 outlook, the company said it expected continued comparable sales growth and reiterated plans to open 30 new restaurants.