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 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, 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 of Texas Roadhouse. You may begin your conference.

Thank you, Josh, and good evening, everyone. By now, you should have access to our earnings release for the third quarter and to September 27, 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. 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. We are proud of our third quarter results, which were highlighted by strong top-line performance, driven by the hard work of our operators. We were especially pleased to see sales growth accelerate month to month. resulting in an 8.2% comparable sales growth for the full quarter. This top line momentum helped generate strong growth in restaurant margin dollars, leading to nearly 24% earnings per share growth. These results were achieved in spite of the continued impact of cost pressures throughout the business. Our August and September periods benefited from strong guest demand resulting in increased quarterly dine-in traffic compared to both 2019 and 2021. Weekly to-go volumes also remained healthy throughout the quarter at over $16,000 per restaurant. During the third quarter, we completed our semiannual review of menu pricing for both Texas Roadhouse and Bubba's 33. Based on our discussions with our operators, we recently implemented a 2.9% price increase. Taking menu pricing is never an easy decision for us. However, we are confident that our commitment to protecting our value proposition will continue to build long-term relationships with our guests, which we have done for nearly 30 years. Moving on to development, we remain encouraged by the performance of our newest restaurants, including Texas Roadhouse openings in smaller towns. This performance confirms our belief that we still have significant growth opportunities for many years to come. As we sit here today, we believe the Texas Roadhouse concept has the potential to grow to as many as 900 domestic restaurants from its current size of just over 600. We are on track to open 23 Texas Roadhouse and Bubba's locations in 2022, with 14 open so far this year. And our international franchise partners have opened six Texas Roadhouse restaurants, with one or two more expected by year end. We are also pleased that our fifth Jagger's location opened in October. For 2023, our development pipeline remains strong and we are targeting approximately 30 Texas Roadhouse and Bubba's openings as well as Three Jaggers. Additionally, we have a tentative agreement with one of our domestic franchisees to acquire eight restaurants at the beginning of next year. We also expect our franchise partners to open 12 international and domestic locations in 2023, including three Jagger's. As we look to next year, our strong financial position allows us to invest in our restaurants, focus on our people development, and provide the infrastructure needed to support operational excellence. We will continue with this tried and true approach. which has proven to be a consistent builder of shareholder value. Finally, over the past month, as part of our annual fall tour, I had the opportunity to see our managing partners. It was great to meet face to face and listen, learn, and take action on their feedback to better support their restaurants. Their passion, along with their commitment to our operating principles, will continue to push us forward to even greater successes in the future. Now, Tanya will provide a financial update.