Texas Roadhouse, Inc.

Good evening and welcome to the Texas Roadhouse second quarter earnings 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 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 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 second quarter ended June 28, 2022. 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 Red House. Following our remarks, we will open the call for questions. Now I'd like to turn the call over to Jerry.

Thanks, Sonia, and good evening. We are pleased with our second quarter results driven by impressive sales at our concepts. For the quarter, our restaurants averaged over $135,000 in sales per week. It was great to see that dine-in guest counts at comparable restaurants remained above both 2021 and 2019 levels throughout the quarter. It was also encouraging that our restaurants still averaged nearly $18,000 per week in to-go sales. Seeing our operators generating these sales volumes both in the dining room and in to-go, is why our enthusiasm for the future remains as high as ever. In the second quarter, we saw a return to our historical seasonal sales trends, which we did not have in 2020 or 2021. As a result, we experienced a slight decline in our year-over-year total traffic, as the increase in our dine-in guest counts was offset by a decrease and the to-go guests. We do not believe this reflects a change in overall demand for our restaurants. Rather, it appears that more people are getting back to their normal routines when it comes to dining habits, work schedules, and vacations. Additionally, we believe that sales and traffic performance that we saw in the first four weeks of the third quarter supports a continuation of this trend. Despite the decline in second quarter to-go traffic, we remain confident in our ability to execute a successful to-go business. As our to-go sales are settling in well above our pre-pandemic levels, we are investing in several digital and development initiatives to improve our overall long-term execution and ensure our to-go guests receive the same legendary food and legendary service that our dining guests receive. At this time, we are evaluating our October menu pricing. As always, we will stick to our tried and true process of gathering feedback from our operators and listening to what they believe is right for their restaurants. We are pleased that we have not seen any signs of guest pushback or negative mix from the price increases that we have taken over the last 12 months. This menu price acceptance by the guest is important because our value proposition has been and always will be one of our key differentiators. So we expect to be cautious when it comes to menu pricing, especially at a time when the consumer is feeling inflationary pressures. On the development front, we opened four company-owned Texas roadhouses and one Bubba's 33 during the second quarter. and we have already opened an additional two Texas Roadhouses in July. We remain on track to open approximately 25 company-owned Texas Roadhouse and Bubba's 33 restaurants this year, with all remaining unopened restaurants currently under construction. It is worth noting that any construction or supply chain delays could push a few of them into early next year. We also expect to open two company-owned Jagger's and our first Jagger's franchise restaurant later this year. Lastly, our international franchise partners are on track to open six restaurants in 2022. Our new Texas Roadhouse restaurants continue to open with high sales and guest counts and are holding onto these volumes. The restaurants that we have opened this year and the majority of the restaurants that we expect to open going forward are larger buildings. These new prototypes are being built with a similar number of seats, but more storage and cooler space in the kitchen, as well as a more dedicated to-go area. This will better support the volumes and the mix of business that we expect going forward. While the added square footage is pushing development costs higher, Our returns remain comfortably above our target due to the strong sales of these restaurants. As I said at the beginning, we are excited for the future of all three of our restaurant concepts. They are each at different stages of development, but combined, they provide us with a long runway for future sales and profit growth. Now, Tanya will provide a financial update.