Texas Roadhouse rolls out mobile app, nudges prices higher

The Louisville company has consistently performed well quarter after quarter. | Courtesy of Texas Roadhouse

Texas Roadhouse, a Louisville-grown steakhouse chain, has introduced a mobile application that allows customers to place themselves in the queue for a table before they arrive at the restaurant, pay at their table, order food to go and earn rewards.

The mobile app has debuted and is being advertised at 100 of Texas Roadhouse’s 495 stores. The app has been downloaded nearly 700,000 times so far, according to the company.

All the stores will have the app before the end of the year, Scott Colosi, president of Texas Roadhouse, told analysts Monday evening. He added that the marketing department is working on incentives to encourage customers to create an account and use the app.

Texas Roadhouse released its first-quarter earnings for 2017 on Monday. The company’s stock climbed about 10 percent in midmorning trading, to $50.54.

Its same-store sales rose 3.1 percent at company-owned restaurants and 3.8 percent at domestic franchise restaurants during the first quarter of 2017 compared with the period a year earlier. Same-store sales, which include stores open for at least a year, have continued to increase during the first four weeks of the second quarter, having gone up 2.6 percent compared with the prior year, the company reported.

This quarter, the company will roll out new menus with calorie information as required by new regulations from the U.S. Food and Drug Administration, said Texas Roadhouse founder Kent Taylor. The FDA just pushed back the deadline to May 7, 2018, but Texas Roadhouse officials plan to move forward with the change nonetheless.

With that, it also will introduce two smaller portion options — a 5-ounce salmon fillet and an 8-ounce New York strip steak — as well as increase menu prices by 0.5 percent.

“Some people don’t like to eat as much, and some people don’t like to pay as much. It’s just kind of that simple,” Taylor said of the two new menu items.

Texas Roadhouse has introduced a mobile app in one-fifth of its stores. | Courtesy of Texas Roadhouse

He also told analysts that he spoke with the company’s 50 regional managers about the incremental price increase before making a final decision.

Texas Roadhouse’s revenue during the first quarter increased 10 percent, to $567.7 million. However, its net income and earnings per share both declined 4 percent, to $34.3 million, and $0.40 per share, respectively.

The net income and EPS results could be at least partially attributable to a pre-tax charge of $14.9 million, or $0.13 per diluted share, related the settlement of a discrimination lawsuit filed by U.S. Equal Employment Opportunity Commission.

Insider previously reported that Texas Roadhouse agreed to settle the lawsuit after years of fighting it in court; the company also committed to changing its hiring practices, hiring a diversity director and paying for a decree compliance monitor to ensure the company follows through on its promises.

Analysts noted that Texas Roadhouse keeps a healthy amount of cash on its balance sheet. At the end of the first quarter, the company had $137.5 million in cash and cash equivalents.

Taylor stated that the cash allowed the company to be flexible with how many restaurants it developed each year and left room for stock buybacks and for possible repurchases of Texas Roadhouse stores from franchisees.

At the end of last year, Texas Roadhouse purchased four franchised locations in Georgia and Florida for $16.5 million. Two of them the company owns wholly, while it owns a majority of the remaining two, according to the earnings report.

One analyst asked if the company planned to acquire another restaurant brand anytime in the foreseeable future.

It’s “highly unlikely” that Texas Roadhouse would buy a large chain, and it’s not likely to invest in a small independent chain soon either, Colosi said. “That is a big if, but I would never say never.”