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Texas Roadhouse Inc (TXRH) Q2 2019 Earnings Call Transcript
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Texas Roadhouse Inc (NASDAQ: TXRH)
Q2 2019 Earnings Call
Jul 29, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks

  • Questions and Answers

  • Call Participants

Prepared Remarks:

Operator

Good evening, and welcome to the Texas Roadhouse Second Quarter 2019 Earnings Conference Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to introduce Tonya Robinson, the Chief Financial Officer of Texas Roadhouse. You may begin your conference.

Tonya Robinson -- Chief Financial Officer

Thank you, Kelly, and good evening everyone. By now you should have access to our earnings release for the second quarter ended June 25th, 2019. It may also be found on our website at texasroadhouse.com in the Investors section.

Before we begin our formal remarks, I need to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance and therefore undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures. If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Kent Taylor Founder and Chief Executive Officer of Texas Roadhouse. Following our remarks, we will open the call for questions.

Now I'd like to turn the call over to Kent.

W. Kent Taylor -- Chairman of the Board & Chief Executive Officer

Thanks, Tonya, and good evening everyone. We maintained our top line momentum during the second quarter, highlighted by comparable sales growth of 4.7%, including 1.7% traffic growth. The strong sales momentum has continued into the third quarter, with comps increasing approximately 4.3% in July. We credit our top line strength to our operators who continue to keep the fundamentals of our business front and center. As you know, margins continue to be a challenge for us and labor inflation remains our biggest headwind. Most of the inflation we have experienced this year has been driven by wage rate increases in both our front and back of the house. Low unemployment has led to a highly competitive labor market, which is the biggest factor driving wage rates.

Additionally, our focus over the last few years to increasing staffing level -- I'm sorry. additionally. our focus over the last few years to increase staffing levels within our restaurants to maintain the highest levels of service to our guests has added to the pressure. While the additional investments create short-term pressure, we believe the long-term sales benefit is worth it. The menu increase that we implemented at the beginning of the second quarter appears to have been well received to date with the majority of the increase flowing through. This is helping to offset some of the inflationary pressure. In addition, our operators are focused on evaluating their restaurant operations to make sure they're doing everything possible to properly manage labor inflation without compromising our service levels.