Texas Roadhouse executives expect to spend around $50 million expanding and remodeling some of its restaurants this year, according to a conference call with analysts.
In 2015, the Louisville-based steakhouse chain has continued efforts to “bump out” existing restaurants to add more seating for customers. Eleven restaurants have been expanded this year, and another 30 to 40 are planned during the next 15 months.
The company has had to buy additional parking for some of its restaurants to accommodate the traffic, CEO Kent Taylor said during the Monday conference call. “We’ve had the fortunate problem of needing more parking.”
Executives previously attributed increases in same-store sales at existing restaurants to bump outs. This quarter, Texas Roadhouse reported high single-digit increases in same-store sales.
A portion of the capital spending also is for kitchen and bathroom remodels, re-landscaping and the renovation of the bars in some of its stores. The company is opening up the bar areas, adding more televisions and installing large blue lights shaped like a star in the ceiling over the bars, which executives referred to as Star Bars.
“It just kind of gives a fresh look to the bar area,” Taylor said. “It adds a little more energy.”
Taylor added that the idea to liven the bar area came from its Bubba’s 33 concept. Bubba’s 33 is a sports-focused restaurant with burgers, pizza, beer and plenty of televisions.
About 300 Texas Roadhouses now feature the Star Bar layout, and the company plans to complete the remaining 150 within the next 12 months, Tonya Robinson, Texas Roadhouse’s senior director of investor relations and financial reporting, said during the call. The average amount spent on each store remodel is $123,000.
Overall, the company expects to spend $160 million on capital expenditures in 2015, which includes about 30 new stores. The build-out of a completely new Texas Roadhouse is about $4.7 million, Robinson said, which includes equipment, furniture, employee training and other pre-opening expenses.
Looking ahead to 2016, Texas Roadhouse plans to opening 20 to 25 new steakhouses and at least five new Bubba’s 33 locations.
The first Bubba’s 33 in the Greater Louisville area will open next year at 1525 Veterans Parkway in Clarksville. The store is located next to the Kentuckiana Medical Center.
Texas Roadhouse leaders are still cautiously optimistic about the growth of Bubba’s 33, which currently has seven locations nationwide.
“We’re still trying to figure everything out. We’re very pleased with the performance so far, but yet, a lot of the stores are not even six months old,” Taylor said.
“The costs are a little bit higher than Texas Roadhouse, but believe it or not, our returns are slightly better at this point. But again, it’s only seven stores.”
During the same conference call, executives also discussed plans to increase menu prices at Texas Roadhouse due to rising labor costs. You can read more about that here.