Menu Price
Increases
Q4 2019 ....................................................... 1.9%
Q2 2019 ....................................................... 1.5%
Q4 2018 ....................................................... 1.7%
Q1 2018 ....................................................... 0.8%
Q4 2017 ....................................................... 0.3%
Q2 2017 ....................................................... 0.5%
Q4 2016 ....................................................... 1.0%
In all periods presented, average guest check may not have changed in line with the menu price increases
implemented as guests shifted to other menu price items and/or purchased more or less beverages. We may take
additional pricing in 2020 if needed.
In 2020, we plan to open at least 30 company restaurants, including as many as seven Bubba’s 33 restaurants. We
have either begun construction or have sites under contract for purchase or lease for the majority of our expected 2020
openings.
Franchise Royalties and Fees
Franchise royalties and fees increased $1.7 million or 8.1% in 2019 compared to 2018 and increased $3.8 million or
23.1% in 2018 compared to 2017. The increases in both 2019 and 2018 were attributable to an increase in average unit
volume at domestic restaurants, driven by comparable restaurant sales growth of 3.8%, and the opening of new
restaurants. The increase in 2019 was also impacted by the addition of the 53rd week. The increases were partially offset
by a decrease in average unit volume at international restaurants, driven by a decrease in comparable restaurant sales at
those locations. Also included in the increase in 2018 were reclassifications of $2.6 million in conjunction with the
implementation of new revenue recognition accounting guidance as previously described.
We anticipate our existing franchise partners will open as many as eight Texas Roadhouse restaurants, primarily
international, in 2020.
Restaurant Cost of Sales
Restaurant cost of sales, as a percentage of restaurant and other sales, decreased to 32.3% in 2019 from 32.6% in
2018 and from 32.8% in 2017. These decreases were primarily due to the benefit of menu pricing actions partially offset
by commodity inflation of 1.9% and 1.4% in 2019 and 2018, respectively. The decrease in 2018 was also due to the
reclassification of $5.4 million in conjunction with the implementation of new revenue recognition accounting guidance
as previously described.
For 2020, we currently expect commodity cost inflation of 1.0% to 2.0% with fixed price contracts for just over
50% of our overall food costs and the remainder subject to fluctuating market prices.
Restaurant Labor Expenses
Restaurant labor expense, as a percentage of restaurant and other sales, increased to 33.1% in 2019 compared to
32.6% in 2018. This increase was primarily attributed to higher average wage rates and prior staffing initiatives
intended to increase sales partially offset by the benefit from an increase in average unit volume.
Restaurant labor expense, as a percentage of restaurant and other sales, increased to 32.6% in 2018 compared to
31.2% in 2017. The increase was primarily attributed to higher average wage rates and staffing initiatives to increase
sales along with higher costs associated with health insurance and workers’ compensation expense partially offset by the
benefit from an increase in average unit volume.
In 2020, we anticipate our labor costs will be pressured by mid-single digit inflation due to ongoing labor market
pressures and increases in state-mandated wage rates. These increases may or may not be offset by additional menu
price adjustments.