Texas Roadhouse (NASDAQ: TXRH) reported Q3 EPS of $0.52, $0.06 better than the analyst estimate of $0.46. Revenue for the quarter came in at $650.49 million versus the consensus estimate of $648.8 million.

Results for the third quarter included the following highlights:

• Comparable restaurant sales increased 4.4% at company restaurants and 3.2% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant and other sales, increased 49 basis points to 16.7%, as lower cost of sales due to the benefit of a higher average check was partially offset by higher labor costs driven by wage rate and other inflation. Restaurant margin dollars increased 12.7% to $108.0 million from $95.8 million in the prior year;
• Diluted earnings per share increased 29.1% to $0.52 from $0.40 in the prior year as higher restaurant margin dollars and a decrease in certain general and administrative expenses were partially offset by higher depreciation and amortization expense;
• Four company restaurants, including one Bubba’s 33 restaurant, and two international franchise restaurants were opened; and
• The Company repurchased 358,381 shares of common stock for $18.9 million.

Results for the year-to-date period included the following highlights:

• Comparable restaurant sales increased 4.8% at company restaurants and 4.0% at domestic franchise restaurants;
• Restaurant margin, as a percentage of restaurant and other sales, decreased 46 basis points to 17.4%, as higher labor costs driven by wage rate and other inflation was partially offset by lower cost of sales due to the benefit of a higher average check. Restaurant margin dollars increased 6.9% to $351.3 million from $328.6 million in the prior year;
• Diluted earnings per share increased 3.9% to $1.85 from $1.78 in the prior year;
• 11 company restaurants, including one Bubba’s 33 restaurant, and six, primarily international, franchise restaurants were opened; and
• The Company repurchased 2,455,058 shares of common stock for $131.0 million.

Kent Taylor, Chief Executive Officer of Texas Roadhouse, Inc., commented, “We are pleased to deliver a solid quarter of results driven by improved restaurant margins and comparable restaurant sales growth of 4.4%. Our operators continue to execute on our core strategy of getting guests in the door and providing a legendary experience.”

Taylor continued, “On the development front, our restaurant pipeline is as strong as it has ever been. In 2020 we are targeting at least 30 company restaurant openings and our franchise partners are targeting an additional eight restaurant openings. As we head into 2020, we are excited about the growth opportunities and the strength of our business.”

2019 Outlook

Comparable restaurant sales at company restaurants for the first four weeks of our fourth quarter of fiscal 2019 increased 5.3% compared to the prior year period.

Management updated the following expectations for 2019:

• Approximately 22 company restaurant openings, including as many as three Bubba’s 33 restaurants;
• Commodity cost inflation of 1.5% to 2.0%;
• Growth in total labor dollars per store week of 6.0% to 7.0%; and
• Total capital expenditures of approximately $200 million.

Management reiterated the following expectations for 2019:

• Positive comparable restaurant sales growth; and
• An income tax rate of 14.0% to 15.0%.

2020 Outlook

Management provided the following initial expectations for 2020:

• Positive comparable restaurant sales growth;
• At least 30 company restaurant openings, including as many as eight Bubba’s 33 restaurants;
• Store week growth of 3.5% to 4.5%, including the negative impact of lapping the 53rd week from 2019;
• Commodity cost inflation of 1.0% to 2.0%;
• Mid-single digit growth in labor dollars per store week;
• An income tax rate of 14.0% to 15.0%; and
• Total capital expenditures of $190 million to $200 million.

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