Texas Roadhouse, Inc.

And welcome to the Texas Roadhouse third quarter conference call. Today's call is being recorded. All participants are now in a listen-only mode. After the speaker's remarks, there will be a question and answer session. At that time, if you would like to ask a question, please press star and then the number one on your telephone keypad. Should anyone need assistance at any time during the conference, please press star zero. and an operator will assist you. I would now like to introduce Tanya Robinson, the Chief Financial Officer at Texas Roadhouse. You may begin your conference.

Thank you, Sunidra, and good evening, everyone. By now, you should have access to our earnings release for the third quarter, and it's September 29, 2020. It may also be found on our website at TexasRoadhouse.com in the Investors section. Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. including factors related to the COVID-19 outbreak. In addition, we may refer to non-GAAP measures. If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Kent Taylor, founder and chief executive officer of Texas Roadhouse. Following our remarks, we will open the call for questions. Now I'll turn the call over to Kent.

Thanks, Tonya. We are pleased with the top-line improvement we saw in the third quarter, which included comps down only 6.3% and a less than 10% decline in year-over-year traffic. As Tonya will discuss in more detail shortly, sales improved consistently throughout the quarter, and our sales recovery trend continued in October with comps turning slightly positive. Weekly sales in our Texas Roadhouse restaurants continue to climb and average approximately $100,000 per week in October. Consumer demand to dine inside our restaurants is strong, and we are pleased to be holding onto most of our to-go sales as well. The recovery at Bubba's has also been strong, with positive comps in both September and October. The results are great to see and are due to the efforts of our operators and our support teams. Beginning in mid-March, we all had the choice to either accept the consequences of our dining room shutting down or adjust and pivot and find new ways to serve our guests. It has never been our style to sit back and be satisfied with a business-as-usual approach, and we weren't going to sit back as we faced our biggest challenge ever, except for maybe when three of the first five restaurants failed, but we won't go there right now. Our innovation began right away by taking our operations outside to our parking lots and offering to go curbside in an efficient and safe manner. With a business focus on off-premise sales, we rolled out family packs and ready-to-grill steaks to meet the challenging needs of our guests. We also rapidly sourced protective equipment and put several programs in place to ensure that we were helping with the financial needs of our employees. In addition, we implemented electronic surveys and temperature checks for our employees in our restaurants. And in early May, as some of our dining rooms were preparing to reopen, we began installing partitions around the booths at our restaurants and had this finished by early July. Now, as almost all of our dining rooms have reopened in some capacity, we are working on ways to serve even more guests inside and outside of our restaurants in that same efficient and safe manner. This includes adding outdoor dining to some locations and testing the conversion of many of our corrals to include to-go curbside staging and pickup areas. Our new mobile app for both Texas Roadhouse and Bubba is recently rolled out with more features, including the ability to accept gift cards as a method of payment. And we are introducing a new two-way texting system for our to-go curbside guests to further improve the pickup process while also potentially improving labor efficiency. We're even testing drive-through windows in a few Texas roadhouses. Our fast casual brand, Jaggers, has seen significant increase in sales and margin performance over the past six months. Later this year, we will be opening our third Jaggers location with a new prototype in Louisville, Kentucky. We will continue to evaluate our options for Jaggers, which could include a franchise model to allow for faster growth. Innovation is taking place outside of our restaurants, too. During the shutdown, our restaurants experienced a demand from guests looking to stock up on steaks at home. As a result, we saw an opportunity to provide the same Texas Roadhouse hand-cut quality and value to our guests with our new online initiative, Texas Roadhouse Butcher Shop. We are also working on several retail opportunities and we will share more details with you on those in early 2021. These are low-risk initiatives with minimal investment costs and the potential for attractive margins. Many things are happening at Texas Roadhouse, but we are most excited about the job that our operators are doing to stay focused on serving every plate and every to-go container of food in a legendary way. With sales trends closer to historical levels, our managers have been able to spend more time focusing on details such as food quality, waste, and labor efficiency, which will help our margins over the long run. To assist with margin improvement, we are rolling out a menu price increase of approximately 1% effective this week, With the positive mixed trends that we are seeing from both our dine-in and to-go guests, we feel comfortable moving forward with this increase, which was originally scheduled for early April of this year. As we move into the last month of 2020, we are pleased to see strong cash flows from operations, which allows us to continue to invest in and grow our business. The strength of our balance sheet sets us up well to face any challenges or opportunities in front of us. I want to thank the entire Texas Roadhouse, Bubba's 33, and Jagger's family for their commitment to taking care of our company and our guests throughout this unprecedented year. I look forward to working with all of you to continue our current momentum and grow our business going forward. Now, Tanya will take it away.