Key Takeaways
- Texas Roadhouse executives report a “negative” trend with alcoholic beverage purchases.
- Restaurants like the profit lift booze can give to their customers’ checks. But some of the pullback may come from consumers looking to spend less without skipping a meal out.
- Texas Roadhouse said trends among diners buying entrees and soft drinks were more encouraging.
People bought less booze at Texas Roadhouse (TXRH) last quarter, and the steakhouse chain thinks that might be the case for a while.
The company on Thursday reported its latest quarterly results, turning in net income and revenue growth that recently had the stock up some 4%. On a conference call with analysts, executives reported “encouraging” trends among diners buying entrees, add-ons and soft drinks—but an ongoing “negative” mix with alcoholic beverages.
Restaurant chains like the margins alcohol can bring to their bottom lines; Texas Roadhouse itself has said its Bubba’s pizza-and-wings chain, with a bit more focus on alcohol than its steakhouses, has benefited. Beverage makers are expanding their nonalcoholic offerings, which may sway some diners, while others may be ordering less alcohol to save a few bucks without forgoing a meal out.
The comments come as some consumer-facing businesses have identified ways Americans, while perhaps not backing off spending completely, are looking for ways to save. A French-fry maker recently said that while people are still ordering fries with their meals, they’re eating out less often. Some staples makers say their brands are under pressure from white-label options.
But other companies see signs that the consumer is holding up. Executives at casual dining chain operator Darden Restaurants (DRI) last month said while reporting its own earnings that diners weren’t “managing their check” as much as in recent quarters.
It “would not surprise me to see some alcohol negative mix remain with us,” said Michael Bailen, Texas Roadhouse’s senior director of investor relations and financial analysis, on the call, a transcript of which was provided by AlphaSense. “That seems to be not a Roadhouse-specific issue, but more in the industry and societal at this point.”