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, 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 Michael Balin, Head of Investor Relations for Texas Roadhouse. You may begin.

Thank you, Emma, and good evening. By now, you should have access to our earnings release for the second quarter ended June 27th, 2023. It may also be found on our website at TexasRoadhouse.com in the investor section. I would like 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 in 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, and Chris Monroe, our newly appointed Chief Financial Officer. Following the prepared remarks, we will be available to answer your questions. In order to accommodate everyone that would like to ask a question, we kindly ask analysts to please limit yourself to one question. Now, I'd like to turn the call over to Jerry.

Thanks, Michael, and good evening, everyone. Before we begin our formal remarks, I want to welcome Chris Monroe to Texas Roadhouse. I am thrilled to have Chris join the Texas Roadhouse family, and I look forward to working closely with him to make us bigger, faster, and stronger. I am confident that Chris is going to add value to our leadership team, our finance department, and our company. I also want to thank Keith Humpik and our amazing financial team for stepping up and ensuring that we did not miss a beat over the last six months. Moving on to our quarterly results, we are pleased with our strong sales and profits growth in the second quarter. Our sales momentum carried over from the first quarter as we averaged nearly $147,000 in weekly sales with comparable sales up over 9%. There is no doubt that our guests continue to support our commitment to serving made from scratch food in a fun and friendly atmosphere. On the cost side, commodities have performed largely in line with our expectations, and beef remains the primary driver of inflation. On the labor front, we remain committed to ensuring we are properly staffed to provide a legendary experience for every guest. We are encouraged by our outlook for the remainder of the year as we continue to expect strong margin dollar growth, which is central to how we run our business. We will soon begin the normal process with our operators to determine the level of menu pricing to take in October. As is typical for us, our pricing decisions will focus on maintaining our value proposition while also looking to offset the impact of wage inflation, including any state mandated wage increases. On the development front, We opened two company-owned Texas Roadhouses and one Bubba's 33 during the second quarter. In addition, our franchise partners opened three restaurants, including two international locations. For the full year, we expect to open as many as 28 company-owned Texas Roadhouse and Bubba's 33 restaurants, as well as three Jagger's. At this time, all remaining restaurants in the class of 2023 are under construction. Lastly, we expect our franchise partners to open as many as 13 international and domestic restaurants, including Three Jaggers. Last week, I attended the opening of our first Jaggers franchise restaurant in Jacksonville, North Carolina. It was great to see the passion that our franchise partner has for the brand. And we look forward to seeing how they will build upon our foundation. Finally, we continue to reinvest in the business through our new store pipeline, maintenance of our existing restaurant base, and technology initiatives. We believe our capital investments will enable future growth and contribute to improved operating results. With a healthy balance sheet and an expectation of continued growth in cash flow, we will continue to focus on long-term sustainable growth, which has enabled us to generate consistent total returns for our shareholders throughout our history. So Chris, you have been on the team for a month, mostly training in our restaurants. Can you share your initial thoughts on what you have experienced.