Texas Roadhouse, Inc.

Good evening and welcome to the Texas Roadhouse Third Quarter Earnings Conference Call. Today's call is being recorded. All participants are now in listen-only mode. After the speaker's remarks, there will be a question and answer session. 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 today's conference, please press star followed by zero and an operator will assist you. I would now like to introduce Tonya Robinson, the Chief Financial Officer of Texas Roadhouse. You may begin your conference.

Thank you, Emma, and good evening, everyone. By now, you should have access to our earnings release for the third quarter, and it's September 28, 2021. 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 pandemic. 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 Jerry Morgan, Chief Executive Officer of Texas Roadhouse. Following our remarks, we will open the call for questions. Now I'd like to turn the call over to Jerry.

Thanks, Tanya, and good evening. Our sales momentum continued in the third quarter with strong comparable sales growth versus 2020 and 2019. It is encouraging to continue to see our dining rooms busy while our to-go volumes remain elevated. Our operators and their teams are delivering on the promise of legendary food and legendary service each and every shift. Their commitment to the quality of our food and the level of our service remains unwavering. And the benefit of this commitment is seen in the growing number of guests choosing our restaurants. Our strong top-line performance during the quarter led to continued unprecedented growth in the restaurant margin dollars and earnings per share. At the same time, industry-wide labor and supply chain issues on top of rising commodity inflation remain a challenge. While inflation is certainly impacting our financial results, we remain focused on what we can control and executing on our top priority, which is taking care of our guests. With sales growing and margin dollars increasing, we are confident that we are doing the right things for the long-term success of our business. As I mentioned on our last call, during the third quarter, we completed our normal process of evaluating our menu pricing. With the feedback from our operators, we implemented a menu price increase of approximately 4.2% last week. This increase will help offset some of the structural cost pressures that our restaurants are facing. While 4.2% pricing is above our typical range, we are comfortable that we are maintaining our leading value position in the industry. On the development front, our pipeline of openings remains on track despite the challenges of buying the supplies and equipment necessary to open new restaurants. We opened seven company restaurants in the third quarter and expect to open as many as 11 more in the fourth quarter, for a total of 29 company openings in 2021. This total is expected to include five Bubba's and one Jagger's. Our franchise partners should open two more Roadhouse locations in the fourth quarter, which would give us a total of four franchise openings this year. As we look ahead to next year, we are targeting 25 to 30 company-owned Texas Roadhouse and Bubba's 33 restaurant openings. Additionally, we look forward to adding seven more restaurants to our company base as we have a non-binding agreement with one of our franchisees to acquire their restaurants at the beginning of 2022. As I conclude my prepared remarks, I want to again thank all of our managing partners, our managers, and roadies for their efforts. I want to extend a special congratulations to David Hollinger, our managing partner from Greenville, North Carolina, for recently being named our 2019 Managing Partner of the Year. While COVID caused us to delay recognizing David until just recently, it does not diminish the passion, partnership, integrity, and fun that David consistently brings to the restaurant and to Texas Roadhouse. Congratulations, David and Team G Vegas. Now Tanya will provide a financial update.