Texas Roadhouse sells steak dinners and other meals through its namesake chain, Bubba’s 33, and Jaggers. In its third quarter ended September 29, 2026, higher spending per guest helped its restaurants keep more of each sales dollar, but guest growth slowed to 0.7%. New locations and franchise purchases continued to expand the business, while the cost of supporting that expansion held overall profit growth below sales growth.
Research cutoff: November 9, 2026, New York time. The latest company disclosures used are the November 5 results release and November 6 Form 10-Q.
Source: Texas Roadhouse third-quarter 2026 Form 10-Q, pp. 4, 20, and 23–25.
1. Higher spending per guest is doing more of the work
Sales growth increasingly depends on the size of the check, with less help from additional guests. Third-quarter revenue rose 9.5% to $1.573 billion. The company operated more restaurants, and established locations sold more. But the balance between more visits and larger checks changed sharply.
“Comparable restaurant sales” measures sales at locations open long enough to make a useful year-over-year comparison. Texas Roadhouse includes restaurants open for at least 18 months before the measurement period. This removes much of the effect of new openings and helps show what is happening inside the existing business.
| Company-operated restaurants, all concepts | Third quarter 2024 | Third quarter 2025 | Third quarter 2026 |
|---|---|---|---|
| Comparable sales growth | 8.5% | 6.1% | 4.3% |
| Guest-count growth | 3.8% | 4.3% | 0.7% |
| Average spending per guest growth | 4.7% | 1.8% | 3.6% |
| Growth in total weeks restaurants operated | 5.8% | 6.8% | 5.1% |
Reporting basis: Each column covers 13 weeks and shows growth against the corresponding prior-year period. The quarters ended September 24, 2024, September 30, 2025, and September 29, 2026. The extra week in fiscal 2024 shifted subsequent fiscal dates. Restaurant-weeks include acquired locations and, under the company’s definition, temporary closures.
Sources: 2026 Form 10-Q, pp. 18 and 23–24; 2025 third-quarter Form 10-Q, Management’s Discussion and Analysis, “Restaurant and Other Sales.”
The larger check included the effect of menu increases, including approximately 1.9% in the second quarter of 2026 and 1.7% in the fourth quarter of 2025. What guests ordered also affects the average check, so its 3.6% increase should not be described entirely as a price increase. To-go orders represented 14.4% of restaurant sales, up from 13.6%, adding another change in the mix of business.
The slowdown continued into the next reporting period. In August, management reported 6.2% comparable sales growth for the first five weeks of the third quarter. The full quarter finished at 4.3%. On November 5, it reported just 1.5% growth for the first five weeks of the fourth quarter, even as a new approximately 1.0% menu increase took effect. Management said traffic softened late in the third quarter. It did not provide a separate guest-count figure for those first five weeks of the fourth quarter.
Sources: 2026 Form 10-Q, p. 24; August 6, 2026 earnings release, “2026 Outlook”; November 5, 2026 earnings release, management commentary and “2026 Outlook.”
Texas Roadhouse’s offer remains concrete: hand-cut steaks, meals that generally include two sides, and complimentary rolls. That gives customers several reasons to choose a visit beyond the price of the main dish. Yet competitors can also attract diners. LongHorn Steakhouse reported 6.2% comparable sales growth and 1.6% guest growth in Darden’s quarter ended August 30, 2026.
Those competitor figures cover an earlier period, use a 16-month eligibility rule, and contain a fiscal-calendar shift. They cannot establish a precise change in market share. They do show that another large steakhouse chain was still adding guests. Texas Roadhouse’s slower traffic therefore deserves attention alongside the broader pressures on household spending: the business needs customers to keep choosing its restaurants as prices rise.
Sources: Texas Roadhouse 2025 Form 10-K, Item 1, “Restaurant Concepts”; Darden quarter ended August 30, 2026 Form 10-Q, p. 22, “Sales,” including calendar and comparable-store definitions.
2. Restaurant profits improved, but expansion absorbed much of the gain
The restaurants kept more of each sales dollar, while the company as a whole kept slightly less. Reported operating profit rose 6.2% in the quarter, below the 9.5% revenue increase. Operating profit is what remains after restaurant costs, headquarters expenses, opening costs, and charges for using or writing down assets, before interest and income taxes.
| Consolidated results; USD millions except percentages and EPS | Third quarter 2025 | Third quarter 2026 | First 39 weeks 2025 | First 39 weeks 2026 |
|---|---|---|---|---|
| Revenue | 1,436.342 | 1,573.074 | 4,396.044 | 4,886.216 |
| Operating profit | 96.949 | 102.988 | 378.023 | 392.117 |
| Operating profit / revenue, calculated | 6.75% | 6.55% | 8.60% | 8.02% |
| Profit attributable to Texas Roadhouse | 83.172 | 89.361 | 320.919 | 334.727 |
| Attributable profit / revenue, calculated | 5.79% | 5.68% | 7.30% | 6.85% |
| Diluted earnings per share, USD | 1.25 | 1.36 | 4.82 | 5.08 |
Source: 2026 Form 10-Q, p. 4. Quarterly and cumulative results are shown separately; profit excludes the portion belonging to minority owners of consolidated restaurants.
Inside the restaurants, food costs became easier to absorb. Commodity prices paid by the company rose 2.0%, compared with 7.9% in the prior-year quarter. Larger checks spread those food costs across more revenue. Food and beverage expense fell to 35.5% of restaurant and other sales from 35.8%, despite unfavorable changes in what guests ordered.
Labor moved in the other direction. Wage and other labor inflation reached 4.1%, and labor expense edged up to 33.7% of restaurant sales from 33.6%. The benefit from larger checks did not fully absorb that increase. Other restaurant expenses took a slightly smaller share of sales, helping the company’s restaurant margin rise to 14.6% from 14.3%.
Across the first 39 weeks, the improvement was less favorable: revenue rose 11.2%, but operating profit rose only 3.7%. Commodity inflation of 5.0% pushed food costs up to 35.4% of restaurant sales from 34.6%. Higher checks and better labor productivity provided partial relief. The quarter’s lower food-cost pressure had not yet reversed the cumulative margin decline.
Restaurant margin is management’s measure of sales left after food, labor, rent, and other restaurant operating costs. It excludes several real costs, including depreciation and headquarters support. Its improvement is useful evidence of better restaurant operations, but it does not describe the company’s full profitability.
Sources: 2026 Form 10-Q, pp. 18 and 24–26; 2025 third-quarter Form 10-Q, “Q3 2025 Financial Highlights” and “Food and Beverage Costs.” The complete restaurant-margin reconciliation appears in the calculation notes below.
The expansion program explains much of the gap between restaurant gains and company profit. New stores and work on existing locations increased depreciation—the expense that spreads asset costs over their useful lives. Preparing restaurants to open also required more spending, principally on hiring and training. Headquarters costs increased as well, including stock compensation. These costs consumed much of the extra $24.4 million of restaurant margin; only $6.0 million reached operating profit after all operating items.
There was also a specific setback. Texas Roadhouse reduced the recorded value of assets at one underperforming Bubba’s 33 restaurant from approximately $4.1 million to $0.6 million. The resulting $3.519 million pretax impairment reflects weaker expected cash generation at that location. The charge is included in reported operating profit.
The longer comparison shows how incomplete the recovery is. Third-quarter 2024 operating profit was $102.023 million on $1,272.999 million of revenue. Two years later, sales were 23.6% higher, but operating profit was only 0.9% higher. Restaurant margin was still below its 16.0% level in the 2024 quarter. The latest improvement is meaningful, but the larger business has not recovered its earlier profit per sales dollar.
Sources: 2026 Form 10-Q, Note 10, pp. 13–14, and pp. 22 and 25; 2025 third-quarter Form 10-Q, pp. 19–21.
Income taxes and share repurchases helped earnings per share grow faster than operating profit. The quarterly effective tax rate fell to 12.2% from 13.1%, mainly because the credit associated with employees’ tips had a larger effect. Diluted average shares fell about 1.0%, spreading profit across fewer shares. Thus attributable profit rose 7.4%, while diluted EPS rose approximately 8.6% on unrounded calculations. Neither benefit changes the restaurant-level challenge of covering rising costs.
Source: 2026 Form 10-Q, Notes 5 and 9 and p. 26. The filing’s EPS growth uses underlying amounts; dividing the displayed, rounded EPS figures produces a slightly different percentage.
3. Most growth still comes from the steakhouse, while Bubba’s needs better economics
The namesake chain supplies nearly all the additional restaurant profit. It contributed $23.3 million of the quarter’s $24.4 million increase in restaurant margin. Bubba’s 33 grew sales faster, but kept less of each sales dollar.
The business remains centered on company-operated restaurants in the United States. At September 29, Texas Roadhouse controlled 737 restaurants and franchised another 103. International locations, including those in a U.S. territory, accounted for 66 of the franchises. Their contribution principally comes through fees and royalties, rather than recording the full value of meals sold overseas.
| Company restaurant and other sales by segment; USD millions except percentages | Sales, third quarter 2025 | Sales, third quarter 2026 | Restaurant margin, third quarter 2025 | Restaurant margin, third quarter 2026 |
|---|---|---|---|---|
| Texas Roadhouse | 1,336.660 | 1,458.434 | 14.4% | 14.8% |
| Bubba’s 33 | 82.922 | 96.217 | 13.3% | 12.4% |
| Other | 9.529 | 11.252 | 13.7% | 12.5% |
Reporting basis: These sales exclude separately reported royalties and franchise fees. “Other” includes Jaggers and retail initiatives. Restaurant margins exclude the costs reconciled in the end notes and are not segment net profits.
Source: 2026 Form 10-Q, Notes 1 and 12, pp. 8 and 14–16, and pp. 26–27.
Bubba’s restaurant sales rose 16.0%, while restaurant margin dollars rose only 8.2%. More operating weeks accounted for much of the expansion: they increased 12.7%, compared with comparable sales growth of 2.8%. Labor and rent took larger shares of sales. This matters because Bubba’s received $55.5 million of capital spending in the first 39 weeks, up from $36.7 million. It accounted for about 17.7% of company capital spending but only 5.9% of restaurant and other sales.
A developing chain must build restaurants before they can earn a full year of sales. The falling margin and the individual store write-down nevertheless show why counting openings is insufficient. Bubba’s must turn its growing footprint into stronger profit from each location.
The core Texas Roadhouse concept offers more encouraging evidence. Its 11 company restaurants open less than six months generated average weekly sales of $184,127 in the quarter, compared with $158,932 for the 13 restaurants in the corresponding prior-year group. These are different groups of new stores, and opening-period sales do not establish mature profitability. They do provide evidence that newly opened steakhouses can attract substantial business.
Source: 2026 Form 10-Q, Notes 10 and 12 and pp. 23 and 27.
Management’s investment serves two purposes: adding restaurants and improving the existing estate. Spending shifted toward new construction during 2026, rather than rising evenly across all categories.
| Cash capital spending; USD millions | First 39 weeks 2025 | First 39 weeks 2026 |
|---|---|---|
| New company restaurants | 123.681 | 180.712 |
| Refurbishing or expanding existing restaurants | 110.580 | 94.992 |
| Relocating existing restaurants | 39.327 | 20.710 |
| Support Center offices | 25.220 | 17.994 |
| Total | 298.808 | 314.408 |
Source: 2026 Form 10-Q, p. 27. These disclosed purposes are used directly; refurbishment is not assumed to be entirely maintenance spending.
The company opened 18 restaurants during the first 39 weeks: 11 Texas Roadhouse, five Bubba’s, and two Jaggers. It also bought five existing domestic franchise steakhouses. Those acquisitions move the restaurants’ full sales and expenses into the consolidated accounts; previously, Texas Roadhouse mainly recognized royalties and, where applicable, a minority share of profit. Buying a franchise restaurant therefore expands company-operated revenue without adding a new location to the overall system.
Management says these purchases are intended to increase net income and EPS. The preliminary purchase allocation was $71.692 million, including $32.730 million of goodwill and $13.090 million of reacquired franchise rights. Goodwill represents benefits such as the acquired workforce and sales opportunities beyond the separately identified assets. The filing does not provide standalone acquired-store earnings sufficient to calculate the return on these purchases.
By September, net property and equipment had risen $159.6 million from year-end to $1.963 billion. Goodwill increased $32.8 million, while net intangible assets increased $6.8 million after amortization. Together, construction, improvements, and acquisitions are putting more resources into the restaurant base. Their business payoff depends on earning more from those locations after opening and ownership costs.
Source: 2026 Form 10-Q, pp. 3 and 22 and Note 7, pp. 10–12. The cash-flow statement reports $71.778 million of acquisition payments; the preliminary allocation is a different disclosed measure. Two acquired restaurants each had a 2% ownership interest held by a current company officer.
4. Cash generation strengthened, but it did not fund every use of cash
Operations funded investment in restaurants, while investment plus shareholder payments required additional funding. Operating cash flow rose 15.0% to $585.9 million in the first 39 weeks, faster than the 4.3% increase in attributable net profit. Some of that improvement came from payment timing and expenses that did not require current cash.
Depreciation and amortization increased $23.3 million, and stock compensation increased $5.3 million. Both reduce reported profit without the same immediate cash payment. Changes in operating balances added $5.5 million of cash in 2026, compared with using $11.2 million in 2025. The detailed profit-to-cash reconciliation is in the notes.
Cash income taxes paid fell to $25.9 million from $61.8 million, although the tax expense in the income statement declined by only $1.9 million. Tax expenses recognized for payment in other periods, together with movements in tax prepayments and amounts owed, explain why the cash improvement was much larger than the earnings benefit. This gave the company more cash to use during the period; it is not evidence of an equivalent permanent reduction in annual taxes.
Source: 2026 Form 10-Q, p. 7 and Note 5. Cash-tax payments are a separate view of amounts already captured in the cash-flow reconciliation and are not added to it again.
Gift cards also create a large gap between when customers pay and when the company records a meal sale. Receivables fell from $214.5 million at year-end to $57.4 million in September, and collections supplied $157.1 million of operating cash. Receivables include money owed by retail gift-card sellers, alongside rebates and franchise-related amounts. The filing does not split the collection benefit among those categories.
At the same time, the company served meals against previously sold gift cards. Its obligation to honor outstanding cards fell from $448.7 million to $273.3 million. In the cash-flow statement, that decline used $176.3 million after acquisition effects: sales were being recognized without an equivalent new payment at the restaurant. Collection of receivables and the use of gift-card balances must therefore be considered together. Their combined cash effect was a $19.2 million use, rather than a $157.1 million windfall.
Sources: 2026 Form 10-Q, pp. 3 and 7 and Note 4; 2025 Form 10-K, Note 2, “Receivables.”
The cash left after investment increased substantially, but shareholder payments still exceeded that remainder.
| Cash allocation; USD millions | First 39 weeks 2025 | First 39 weeks 2026 |
|---|---|---|
| Cash from operations | 509.602 | 585.889 |
| Capital spending paid | 298.808 | 314.408 |
| Cash remaining after capital spending, calculated | 210.794 | 271.481 |
| Franchise acquisitions paid, net of acquired cash | 94.230 | 71.778 |
| Dividends paid | 135.367 | 147.886 |
| Public-program share repurchases paid, including excise taxes | 100.414 | 84.209 |
| Remainder after the above uses, calculated | −119.217 | −32.392 |
Calculation notes: “Cash remaining after capital spending” is free cash flow as defined here: operating cash flow less cash purchases of property and equipment. The final row also deducts acquisitions, dividends, and public-program repurchases. It excludes other investing and financing items, which are reconciled below. Capital spending is shown as a positive use of cash, without netting sale-leaseback proceeds against it.
Source: 2026 Form 10-Q, p. 7.
Texas Roadhouse borrowed $70 million and repaid $20 million, leaving $50 million outstanding. It also received $16.5 million by selling property and leasing it back, compared with $6.3 million a year earlier. Such transactions release cash now while committing the company to future rent. After all investing and financing movements, cash increased just $6.7 million to $141.4 million.
The smaller funding gap reflects better operating cash flow, lower acquisition spending, and fewer public-program buybacks. It gives management more room to continue construction. But the full allocation program still used more than internally generated cash, so buyback pacing remains an important source of flexibility.
Source: 2026 Form 10-Q, p. 7 and pp. 27–28.
5. Bank borrowing is manageable; leases are the larger long-term commitment
The company has substantial borrowing capacity, but its expanding restaurant estate carries continuing payment obligations. At September 29, cash of $141.4 million exceeded the $50 million drawn on its revolving credit line. Another $397.6 million was available under that line after letters of credit. The facility matures on April 24, 2030, so the disclosed bank borrowing does not present a near-term refinancing concentration.
Interest rises or falls with a market benchmark called SOFR. The contract adds 0.10 percentage points, plus a further 1.00–1.75 points depending on the company’s debt level. The rate at quarter-end was 4.79%. Keeping $50 million outstanding at that rate for a year would produce approximately $2.4 million of interest before fees. That is an illustration, not a forecast of actual interest expense.
The company complied with its lending rules, called covenants, at quarter-end. Continued access depends on meeting limits concerning debt and the ability to cover fixed payments. The optional additional $250 million facility increase requires lender approval and is not included in the available amount above.
Source: 2026 Form 10-Q, Note 3, p. 9.
The recorded obligation to pay rent under operating leases was much larger: $1.066 billion, up from $974.0 million at year-end. These balances adjust future payments to their value today. The corresponding rights to use leased property and equipment increased to $965.5 million from $879.5 million. These are obligations attached to operating the restaurants, distinct from the bank loan.
The latest annual real-estate lease schedule showed $1.712 billion of future payments before adjusting for their timing, including $92.9 million in 2027 and $94.4 million in 2028. That schedule was measured at December 30, 2025 and has not been updated for subsequent lease activity. It shows that the restaurant base requires rent payments for many years; it is not the exact remaining September commitment.
Sources: 2026 Form 10-Q, p. 3; 2025 Form 10-K, Note 8, real-estate lease maturity analysis. The annual real-estate schedule excludes equipment leases; its discounted amount therefore differs from total operating lease liabilities.
Short-term liabilities exceeded current assets by $460.3 million, but a large part was the gift-card obligation discussed above. The restaurant business normally receives payment promptly and carries limited inventory, reducing its need to finance customers. Inventory increased moderately to $49.2 million from $45.6 million, while accounts payable fell to $155.5 million from $163.4 million. The cash statement shows that supplier payments used $10.0 million after acquisition effects. These balances do not suggest that cash growth depended on delaying more supplier bills.
The company also holds assets to fund compensation paid to employees in future years. Those plan assets rose to $159.6 million from $134.3 million, closely matched by plan liabilities of $160.2 million versus $134.2 million. These assets support amounts owed to employees and should not be treated as spare operating cash. Net deferred tax liabilities also rose to $30.0 million from $14.7 million, consistent with more tax expense being recognized for future payment.
Source: 2026 Form 10-Q, pp. 3 and 7, Note 10, and p. 27.
Shareholders’ equity, including minority interests, increased $128.7 million to $1.610 billion. Profits retained after dividends and repurchases drove the increase. Stock compensation was a meaningful $41.1 million expense and also added to equity before deductions for withholding and repurchases.
The share count shows both sides of that compensation policy. During the first 39 weeks, the company issued 234,940 shares under compensation plans, withheld 75,243 shares for employee taxes, and repurchased 478,052 shares through its public program. Issued and outstanding shares consequently fell by 318,355 to 65,625,375. Repurchases more than offset issuance over those 39 weeks, although shares outstanding increased during the third quarter alone. The equity statement reduces issued shares for repurchases and presents no separate treasury-stock balance.
Management describes repurchases as one part of returning cash to shareholders. Their demonstrated effects are a cash outflow and fewer shares over the cumulative period. The remaining $296.8 million authorization has no expiration date and is permission to spend, not a payment obligation. That distinction matters while construction competes for cash.
Sources: 2026 Form 10-Q, pp. 5–7, Note 11, and p. 28; November 5 results release, management’s capital-allocation commentary.
6. The next stage requires demand to keep pace with new capacity and costs
The expansion pipeline supports more sales, but weaker guest demand makes its profit contribution less certain. Management reported more than 30 company restaurants under construction in early November. It raised expected 2026 capital spending to approximately $440 million from $400 million in August. Against $314.4 million paid through September, that implies about $125.6 million of further spending if the annual plan is met.
The company also approved a $0.75-per-share dividend payable December 29. That future payment is separate from the $147.9 million already paid in the first 39 weeks. With construction continuing and early fourth-quarter comparable sales growth at 1.5%, the ability to adjust discretionary buybacks is more useful than treating every authorized dollar as already committed.
Sources: November 5 results release, management commentary, outlook, and dividend; August 6 results release, outlook; 2026 Form 10-Q, pp. 27–28.
For 2027, management’s initial plan calls for 5%–6% growth in restaurant-weeks, positive comparable sales, and about $425 million of capital spending. That would add selling capacity while reducing capital spending modestly from the updated 2026 plan.
Management also expects commodity inflation to ease from about 5% for full-year 2026 to about 4% in 2027. Wage and other labor inflation is expected to slow from 3.5%–4.0% to about 3%. These forecasts offer a path to better margins, provided customer spending grows enough to cover the cost increases and the expenses of new restaurants.
Beef remains the most important supply risk because it represents approximately half of food and beverage costs. The company bought primarily from four suppliers. Prices were locked for about 80% of remaining forecast 2026 commodity costs, which improves near-term visibility but does not establish protection for 2027.
External supply evidence supports continued caution on beef costs. USDA’s October 16 outlook expected a slow cattle-slaughter pace to continue through 2027 and reduced its beef-production forecasts for both years. This supports treating Texas Roadhouse’s low 2% third-quarter commodity inflation as one quarter’s result, rather than assuming that beef pressure has ended.
Sources: 2026 Form 10-Q, Note 6 and pp. 19, 24, and 28; USDA Livestock, Dairy, and Poultry Outlook, October 16, 2026, pp. 1–3.
A smaller but increasing exposure sits outside ordinary restaurant costs. Maximum potential payments under five lease guarantees and a franchise partner’s debt guarantee reached $18.5 million, compared with $7.8 million at year-end. No liability was recorded because payment was not considered probable and the guarantees’ fair value was not significant. That accounting conclusion leaves a possible cash obligation if the partner defaults.
The filing also describes ordinary-course claims involving employment, guest injuries, alcohol service, and food or health concerns. Management did not identify litigation expected to have a material adverse effect, and the quarterly note did not quantify a material reasonably possible loss range. On the disclosed evidence, demand, food costs, and restaurant execution are more immediate threats to the growth plan than a specified legal payment.
Source: 2026 Form 10-Q, Note 6, p. 10, and “Guarantees,” p. 28.
7. The business can fund growth, but must earn more from its larger footprint
Texas Roadhouse has the funding capacity to expand; the harder task is turning that expansion into faster profit growth. Its namesake restaurants continue to produce most of the incremental restaurant profit, and new steakhouses show encouraging early sales. Stronger operating cash flow and available credit support the construction program.
The evidence is less favorable on profit per sales dollar and customer momentum. Company operating margins remain below both last year and the 2024 third quarter, Bubba’s is absorbing investment while its restaurant margin falls, and guest growth has slowed. The next improvement must come from customers continuing to visit and new locations earning enough to cover their full costs. Stronger traffic and better Bubba’s performance would strengthen the business outlook; persistent weak demand alongside food inflation would leave more of the expansion’s cost to be absorbed by cash flow and borrowing.
Reporting basis and calculation notes
Reporting basis: This report analyzes Texas Roadhouse, Inc. and its consolidated subsidiaries, CIK 0001289460, ticker TXRH. The selected Form 10-Q was filed November 6, 2026, accession 0001628280-26-071362, for the quarter ended September 29, 2026. Company identity, form, filing date, accession, and period were checked against the SEC submissions record.
Reporting basis: Quarterly comparisons cover July 1–September 29, 2026 and July 2–September 30, 2025, each 13 weeks. Cumulative comparisons cover the 39 weeks beginning December 31, 2025 and January 1, 2025, respectively. Balance-sheet comparisons use September 29, 2026 and December 30, 2025. Controlled restaurants are consolidated; minority franchise investments use the company’s share of their earnings. Franchisees’ full sales are not added to consolidated revenue.
Reporting basis: The research cutoff is November 9, 2026, New York time. Company evidence extends through the November 6 filing; external evidence includes Darden’s August-quarter filing and USDA’s October 16 outlook. These are the dates of the documents used, not a claim that every possible development through November 9 was independently checked. Figures are reported under U.S. GAAP unless explicitly identified as management’s restaurant-margin measure, a calculation, or a forecast. Monetary tables use USD millions unless stated otherwise.
Calculation notes: The SEC company-facts dataset was used to cross-check the selected filing’s revenue, operating profit, consolidated profit, assets, liabilities, cash, operating cash flow, capital spending, share compensation, and share/EPS data. Facts were matched by accession, start/end dates, and units. In particular, consolidated profit includes minority owners’ income and is larger than profit attributable to Texas Roadhouse.
Calculation notes: Restaurant margin removes costs that still matter to company profit. The following bridge starts with reported operating profit and applies management’s exact adjustments. All amounts are pretax; no adjusted net profit or adjusted EPS is inferred.
| Restaurant-margin reconciliation; USD millions | Third quarter 2025 | Third quarter 2026 | First 39 weeks 2025 | First 39 weeks 2026 |
|---|---|---|---|---|
| Reported operating profit | 96.949 | 102.988 | 378.023 | 392.117 |
| Subtract royalties and franchise fees | −7.231 | −7.171 | −22.617 | −20.711 |
| Add opening expenses | 7.419 | 9.626 | 19.695 | 24.754 |
| Add depreciation and amortization | 52.628 | 60.317 | 152.172 | 175.501 |
| Add impairment and closure expense, net | 0.140 | 3.596 | 0.279 | 3.749 |
| Add general and administrative expense | 54.376 | 59.282 | 173.356 | 192.777 |
| Management’s restaurant margin | 204.281 | 228.638 | 700.908 | 768.187 |
Source: 2026 Form 10-Q, Note 12, p. 16. Restaurant margin percentages divide this measure by restaurant and other sales, excluding royalties and franchise fees. Operating and attributable-profit margins instead divide by total consolidated revenue.
Calculation notes: The cash reconciliation includes both accounting expenses and payment timing. It begins with profit including minority interests because the cash-flow statement includes the controlled restaurants in full.
| Profit to operating cash; USD millions | First 39 weeks 2025 | First 39 weeks 2026 |
|---|---|---|
| Consolidated net income including minority interests | 327.652 | 341.763 |
| Depreciation and amortization | 152.172 | 175.501 |
| Stock compensation | 35.829 | 41.091 |
| Deferred income tax expense | 2.011 | 15.559 |
| Other reconciliation items, net | 3.158 | 6.427 |
| Changes in operating balances, net of acquisitions | −11.220 | 5.548 |
| Operating cash flow | 509.602 | 585.889 |
Source: 2026 Form 10-Q, p. 7. Other reconciliation items combine asset-disposal losses, impairment and closure adjustments, the removal of affiliate earnings, affiliate distributions received, and doubtful-account provisions. The operating-balance row combines all changes listed in the filing, including receivables, gift cards, taxes, and lease balances.
Calculation notes: Cash and cash equivalents reconcile as $134.709 million opening cash + $585.889 million operating inflow − $375.059 million investing outflow − $204.127 million financing outflow = $141.412 million closing cash. The statement does not add a separate restricted-cash balance. The company’s cash-equivalent policy includes quickly settled credit-card receivables; insurance investment securities are reported separately in other assets.
Calculation notes: To connect the cash-allocation table to the cash increase, start with its negative $32.392 million remainder. Add $11.127 million of other net investing inflows, subtract $22.032 million of other net financing payments, and add $50.000 million of net borrowing. The result is the $6.703 million increase in cash. Other financing payments include employee-share tax withholding, payments to minority owners, and the purchase of a minority interest, net of deposits received. The cash-flow repurchase amount of $84.209 million includes excise taxes; the equity-statement entry is $83.655 million, and management’s $83.1 million headline excludes excise taxes. Each is used only on its stated basis.
Sources: 2026 Form 10-Q, pp. 6–7 and Note 10; 2025 Form 10-K, Note 2, “Cash and Cash Equivalents.”
Calculation notes: Gift-card obligations reconcile as $448.744 million opening balance + $215.689 million of activations net of third-party fees − $391.128 million of redemptions and breakage = $273.305 million closing balance. “Breakage” is revenue recognized for balances expected not to be redeemed. The balance-sheet decrease is $175.439 million; the cash-flow decrease is $176.255 million because the latter excludes the $0.816 million gift-card obligation assumed in acquisitions.
Source: 2026 Form 10-Q, Notes 4 and 7 and p. 7.
Calculation notes: The balance sheet balances, and equity growth comes from retained profit. At September 29, assets of $3,694.925 million equal liabilities of $2,084.558 million plus equity of $1,610.367 million. At December 30, the corresponding amounts are $3,549.472 million = $2,067.770 million + $1,481.702 million.
Calculation notes: Retained earnings are accumulated profits left after distributions and amounts charged against them for share repurchases. Additional paid-in capital records other share-related capital, including stock awards. The table explains why retained earnings rose while additional paid-in capital ended at zero.
| Equity-account reconciliation; USD millions, first 39 weeks 2026 | Retained earnings | Additional paid-in capital |
|---|---|---|
| Opening balance | 1,460.754 | 0.000 |
| Profit attributable to Texas Roadhouse | 334.727 | 0.000 |
| Dividends declared | −147.886 | 0.000 |
| Public-program repurchases, equity-statement basis | −57.480 | −26.175 |
| Employee-share tax withholding | 0.000 | −14.058 |
| Stock compensation | 0.000 | 41.091 |
| Purchase of a minority ownership interest | 0.000 | −0.858 |
| Closing balance | 1,590.115 | 0.000 |
Calculation notes: Add $0.066 million of common-stock capital to closing retained earnings, then subtract the $0.233 million after-tax unrealized loss on insurance investment securities. This gives $1,589.948 million of parent shareholders’ equity. The loss records a change in the securities’ market value outside net income. Adding $20.419 million belonging to minority owners gives total consolidated equity of $1,610.367 million.
Source: 2026 Form 10-Q, pp. 3 and 6 and Note 10.
Calculation notes: Growth rates use the current amount divided by the comparable prior amount, less one. Percentage-point changes subtract percentages directly. The two-year revenue comparison is $1,573.074 million ÷ $1,272.999 million − 1 = 23.6%; the operating-profit comparison is $102.988 million ÷ $102.023 million − 1 = 0.9%. These are two-year cumulative changes, not annual growth rates. Quarterly EPS growth based on $89.361 million ÷ 65.785 million diluted shares versus $83.172 million ÷ 66.476 million shares is approximately 8.6%.
Sources: 2026 Form 10-Q, pp. 4 and 12; 2025 third-quarter Form 10-Q, consolidated income statement and Management’s Discussion and Analysis.
This analysis is for general information and is not investment advice. Management forecasts are identified as forecasts and may differ from actual results.