Texas Roadhouse Outperformed in Same-Store Sales Growth

Ralph Nathan
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Casual Dining Restaurants in 4Q15: What You Should Know

(Continued from Prior Part)

Same-store sales growth

Same-store sales growth (or SSSG), expressed as a percentage, is a measure of the increase in revenue from existing restaurants over a certain period of time. SSSG is driven by ticket size and traffic. It’s an important matrix that investors monitor, as it increases a company’s revenue without increasing capital investment. It’s also a direct reflection on how much traffic each location is driving without simply adding more stores.

Higher SSSG also indicates a company’s value proposition in attracting customers. For 4Q15, the median SSSG for the six casual dining restaurants that are part of this series was 1.5%. During the same period, fast food and pizza restaurants McDonald’s (MCD) and Domino’s Pizza (DPZ) recorded SSSG of 5% and 9.6%, respectively.

4Q15 performance

Texas Roadhouse (TXRH) posted the highest SSSG among casual dining restaurants with 4.4% SSSG. Traffic growth contributed 2.8% toward SSSG, while the average check contributed 1.6%. Following TXRH was Darden Restaurants (DRI) with 2.9% and Buffalo Wild Wings with 1.8%. DRI’s combined SSSG was boosted by the following SSSG for specific restaurants:

  • Bahama Breeze: 5.8%

  • Seasons 52: 3.8%

  • LongHorn Steakhouse: 3.6%

  • Eddie V’s: 3.2%

  • Olive Garden: 2.8%

  • Yard House: 2.4%

  • Capital House: 0.09%

Buffalo Wild Wings forms 0.19% of the holdings in the iShares Russell 2000 ETF (IWM). Through increased menu prices and its Guest Experience Business Model, the company was able to attain systemwide SSSG of 1.8%.

The lowest SSSGs

In 4Q15, Bloomin’ Brands (BLMN) posted the lowest SSSG among its peers with a combined SSSG of -2.8%. Below is how BLMN brands performed in SSSG.

  • Outback Steakhouse: -2.2%

  • Carrabba’s Italian Grill: -4%

  • Bonefish Grill: -5.4%

  • Fleming’s Prime Steakhouse & Wine Bar: -0.3%

Brinker International (EAT) posted SSSG of -2.6%. Chili’s Grill & Bar and Maggiano’s Little Italy reported SSSG of -2.8% and -1.8%, respectively. Less traffic caused SSSG to decline by 3.9%. But increased menu prices and a better product mix offset some of the declines. Another company that posted SSSG below the median value was The Cheesecake Factory (CAKE) with 1.1%.

In the next part, we’ll take a look at Buffalo Wild Wings, which outpaced our other casual dining restaurants in unit growth.

Continue to Next Part

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