Aggressive Expansion and Market Entry Strategy in Texas and Sunbelt Markets
Portillo's plans to open 12 new restaurants in H2 2025, including in-line and airport formats.
Slow start of Texas restaurants due to industry-wide development and market saturation, with ongoing efforts to build awareness through marketing and grassroots initiatives.
Arizona and Florida markets performing better, with Arizona showing improved awareness and margins after initial openings.
Texas market's slower growth attributed to high competition and market saturation, with expectations of improvement as demand catches up.
Top 4 DMAs (Los Angeles, San Francisco, Houston, Phoenix) experienced outsized macroeconomic pressures in Q2, contributing to a 30 basis point reduction in system-wide same-restaurant sales.
Markets affected by macro pressures saw a significant downturn starting mid-June, punctuated by headlines and macroeconomic news.
Management remains optimistic that consumer sentiment volatility will moderate over time, which could stabilize sales.
Effective tax rate for the quarter was 14.9%, with full year 2025 guidance updated to approximately 15%.
Food and beverage costs increased by 131 basis points to 34% of sales due to 5.2% commodity inflation and entree mix shifts.
G&A expenses grew 7.9% year-over-year, representing 4.2% of revenue.
Labor costs as a percentage of sales increased slightly by 6 basis points to 32.9%, with labor dollars per store week up 5.4%.
Other operating costs improved by 32 basis points to 14.5% of sales, driven by leverage on operator bonuses and insurance reserve changes.
Restaurant margin dollars per store week decreased 1% to over $28,500, with restaurant margin as a percentage of sales declining 108 basis points to 17.1%.
Same-store sales increased by 5.8%, supported by 4% traffic growth and a 1.8% increase in average check.
Texas Roadhouse reported a 12.7% revenue growth in Q2 2025, driven by a 5.3% increase in average weekly sales and 7.2% store week growth.
The inflationary pressures are partly driven by retail retail beef prices remaining high, with retail demand remaining strong despite higher prices.
Management noted that retail beef prices are not being used as loss leaders, and consumer willingness to pay high prices is contributing to sustained demand.
The company expects beef inflation to be a primary driver of overall commodity inflation, affecting margins and pricing strategies in the near term.
Dafinchi
