Texas Roadhouse: Same-Store Growth Beats Other Casual Restaurants

Same-store sales growth (or SSSG), expressed as a percentage, is a measure of revenue growth for existing restaurants over a certain period of time. SSSG is driven by ticket size and traffic.

SSSG is an important metric for investors to monitor since it increases a company’s revenue without increasing capital investment. It’s also a direct reflection of how much traffic each location is driving without adding more stores. Higher SSSG indicates a company’s value proposition in attracting customers.

Casual dining restaurants didn’t have a good 1Q16. The five companies in our series posted a median SSSG of -1.5% compared to 4.2% in 1Q15.

With an SSSG of 4.3%, Texas Roadhouse (TXRH) beat the other four companies in our series in 1Q16. Company-owned restaurants with SSSGs of 4.6% outperformed franchised SSSGs at 3.1%. TXRH’s SSSG was mainly driven by traffic growth at its restaurants. Traffic growth contributed 3.1% to company-owned restaurants’ SSSGs, while check size contributed 1.5%.

TXRH was followed by The Cheesecake Factory (CAKE) with SSSG of 1.7%. CAKE’s SSSG was primarily driven by an increase in menu prices. CAKE, which forms 0.15% of the holdings of the iShares Core S&P Mid-Cap (IJH), has raised its menu prices by 2.7% since 1Q15. However, lower traffic and negative product mix offset a 1% rise in SSSG.

Brinker International (EAT) posted a systemwide SSSG of -3.1%, the lowest of our five companies. Chili’s Grill & Bar and Maggiano’s Little Italy brands reported SSSGs of -3.2% and 0.2%, respectively. The decline in traffic was the major factor in Chili’s negative SSSG. However, a price rise of 1.1% offset some of the decline in SSSG.

EAT was followed by Buffalo Wild Wings (BWLD) with a 2% decline in SSSG. Company-owned restaurants posted a decline of 1.7%, while franchised restaurants declined 2.4%.

The overall SSSG of Bloomin’ Brands (BLMN) also declined in 1Q16. The company posted an overall SSSG of -1.5% due to lower traffic. Below is the SSSG of BLMN brands:

• Outback Steakhouse: -1.3%
• Carrabba’s Italian Grill: -2%
• Bonefish Grill: -2.7%
• Fleming’s Prime Steakhouse & Wine Bar: 1.3%

In the next part, we’ll look at unit growth for casual dining restaurants in 1Q16.