Texas Roadhouse Inc.TXRH

Morningstar Rating

Stock Research and Analysis

by Jeremy Cohen

Texas Roadhouse, like the majority of casual diners, is hampered by a reining in of discretionary spending, but we think the company still has enough prospects to lift the firm once the economy turns the corner.

Texas Roadhouse operates a moderately Read more

Bulls Say

Although same-store sales have been negative during the downturn, Texas Roadhouse has outpaced other casual steakhouse competitors by a healthy margin.

In a Consumer Reports Restaurant Customer Satisfaction Survey, Texas Roadhouse ranked first among 21 chains in the pub style or grill category.

Texas Roadhouse boasts a loyal customer base. Guests who eat at Texas Roadhouse at least two times per month account for more than 70% of total visits.

The chain has ample opportunities for expansion in both domestic and international markets. Management sees potential for 1,000-plus total restaurants. Read more

Bears Say

Casual diners are susceptible to declines in consumer spending. A weakened economy is forcing customers to curb discretionary spending and instead allocate their money elsewhere.

The federal minimum wage rose nearly 10% in July 2009. This will likely hamper profitability for the firm.

Health and dietary concerns could cause a shift in consumer preferences away from steaks, which can be high in artery-clogging fat, leading to higher cancer risk. Read more

Strategy

Unit growth is expected to slow as the company carefully manages its expansion amidst the downturn. In 2010, management projects to open approximately 15 units, almost half of the total developed in Read more

Management

W. Kent Taylor founded Texas Roadhouse in 1993 and now serves as chairman of the board. Taylor also served as CEO from 2000 until the completion of the company's IPO in October 2004. G.J. Hart, who joined as president in May 2000, succeeded Taylor as Read more

Profile

Founded in 1993, Texas Roadhouse is a growing full-service casual dining restaurant chain, offering an assortment of steaks, ribs, fish, seafood, chicken, pork chops, vegetable Read more

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