Texas Roadhouse Earnings Dip as Commodity Costs Pressure Margins
The steakhouse chain reported diluted earnings per share of $1.85 for the quarter ended June 30, 2026.
Texas Roadhouse (TXRH), the casual dining steakhouse operator, reported a slight decline in quarterly earnings as rising commodity costs offset revenue gains.
The results marked a shift in the company's growth trajectory. While the previous quarter saw a nearly 10% increase in earnings, the most recent period showed a reversal in profit growth despite continued expansion of the restaurant footprint.
Total revenue for the 13 weeks ended June 30, 2026, rose 11.1% year-over-year to $1.68 billion. This represented a deceleration from the 12.8% growth reported in the prior quarter. Diluted earnings per share decreased 0.7% year-over-year to $1.85, compared to a 9.6% increase to $1.87 in the first quarter.
Comparable restaurant sales increased 6.2% year-over-year, slowing from the 7.1% growth seen in the prior quarter. Performance varied by brand, as Bubba's 33 comparable restaurant sales grew only 1.3% year-over-year. Average weekly sales continued an upward trend, rising to $177,252 from $167,350 in the prior year.
Profitability was impacted by accelerating input costs. Commodity inflation rose to 7.0% in the second quarter, up from 6.2% in the first quarter. Consequently, restaurant margin as a percentage of sales decreased 66 basis points year-over-year to 16.4%.
To support growth, the company opened nine company restaurants during the quarter, more than double the four locations opened in the prior quarter.
Texas Roadhouse lowered its 2026 commodity inflation expectation to approximately 5%, down from the previous range of 6% to 7%. The company also narrowed its 2026 effective income tax rate guidance to approximately 14%.