Expectations called for roughly $1.86 of EPS and $1.71 billion of revenue; the filing came in just below both. Diluted EPS was $1.85 versus the published consensus of approximately $1.86, while revenue reached $1.680 billion versus approximately $1.71 billion expected.
| Metric | Q2 2026 | Q2 2025 | Change | Published expectation |
|---|---|---|---|---|
| Total revenue | $1.680B (Financial Highlights) | $1.512B | +11.1% | ~$1.71B |
| Income from operations | $142.8M (Income Statement) | $146.3M | -2.4% | — |
| Net income | $121.9M (Income Statement) | $124.1M | -1.7% | — |
| Diluted EPS | $1.85 (Income Statement) | $1.86 | -0.7% | ~$1.86 |
| Company comparable sales | +6.2% (Supplemental Operating Information) | +5.8% | +40 bps | ~+6.5% |
| Restaurant margin | 16.4% (Restaurant Margin Reconciliation) | 17.1% | -66 bps | — |
The core demand picture remained healthy, but it did not clearly exceed the already elevated bar. Company comparable sales rose 6.2%, supported by a 5.0% increase in store weeks, while Texas Roadhouse-branded restaurants posted a stronger 6.5% comparable-sales increase (Supplemental Operating Information). That is solid growth, but it trails the roughly 6.5% expectation and the 6.5% early-quarter pace management had previously disclosed.
Inflation turned strong sales growth into weaker quarterly profitability. Restaurant margin dollars increased 6.9%, but margin fell 66 basis points to 16.4% as commodity inflation reached 7.0% and wage and other labor inflation reached 3.9% (Restaurant Margin Reconciliation; Financial Highlights). General and administrative expense rose to $72.4 million from $62.8 million, and depreciation and amortization also increased, helping drive operating income and EPS lower despite double-digit revenue growth (Income Statement).
The outlook contains one modest cost improvement but no meaningful growth upgrade. Management lowered expected 2026 commodity inflation to approximately 5% from the prior 6%-7% range and set an approximately 14% effective tax rate, while reiterating positive comparable sales, 5%-6% store-week growth, 3%-4% wage and labor inflation, and roughly $400 million of capital expenditures (2026 Outlook). The better commodity assumption is supportive, but unchanged sales and expansion targets leave the broader outlook essentially intact rather than resetting expectations higher.
Cash generation and capital returns were constructive, but secondary to the operating miss. First-half operating cash flow was $439.2 million, versus $366.0 million a year earlier; the company spent $178.8 million on capital expenditures, repurchased $71.8 million of stock, and paid $98.7 million in dividends (Cash Flow Statement). The quarterly dividend was raised to $0.75 from $0.68 a year earlier (Income Statement; Cash Dividend Payment), reinforcing capital-allocation strength without changing the quarter's main read: demand held up, but results landed modestly below an already strong expectation and margins deteriorated.
Read the original 8-K on SEC EDGAR ↗