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Bubba’s 33 Part of Texas Roadhouse’s Unit Growth Expansion Plans

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Texas Roadhouse’s operations

In this part, we’ll discuss another revenue driver—unit growth. By the end of 2Q16, Texas Roadhouse (TXRH) was operating 499 restaurants—415 company-owned restaurants and 84 franchised restaurants.

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Unit growth

In last 12 months, Texas Roadhouse has added 31 company-owned restaurants, of which eight were in 2Q16. Also, the company has added four franchised restaurants, which includes one in 2Q16.

The company-owned restaurants also include 11 Bubba’s 33 concept restaurants. Bubba’s 33 is a family-oriented restaurant, which sells pizza, burgers, and beer.

Peer comparisons

In 2Q16, Buffalo Wild Wings (BWLD) has added 15 units, while the unit count of Bloomin’ Brands (BLMN) has declined by two units. During the same period, Brinker International (EAT) is expected to add 12 units.

Outlook

In 2016, Texas Roadhouse has plans to add 30 company-owned restaurants, which includes eight Bubba’s 33 restaurants. In the first two quarters, the company has added 14 restaurants. The company’s management stated that this is in line with its expansion policy.

Analysts are expecting the company to add overall 18 units in last two quarters of 2016. They are also expecting to add seven and eight restaurants in 1Q17 and 2Q17, respectively.

Next, we will look at the EBIT margins of Texas Roadhouse.

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