Earnings Call Transcript
Texas Roadhouse, Inc. (TXRH)
Earnings Call Transcript - TXRH Q1 2024
Operator, Operator
Good evening, and welcome to the Texas Roadhouse First Quarter Earnings Conference Call. Today's call is being recorded. I would now like to introduce Michael Bailen, Head of Investor Relations for Texas Roadhouse. You may begin your conference.
Michael Bailen, Head of Investor Relations
Thank you, Breanna, and good evening. By now, you should have access to our earnings release for the first quarter ended March 26, 2024. It may also be found on our website at texasroadhouse.com in the Investors section. I would like to remind everyone that part of our discussion today will include forward-looking statements. These statements are not guarantees of future performance, and therefore, undue reliance should not be placed upon them. We refer all of you to our earnings release and our recent filings with the SEC. These documents provide a more detailed discussion of the relevant factors that could cause actual results to differ materially from those forward-looking statements. In addition, we may refer to non-GAAP measures. If applicable, reconciliations of the non-GAAP measures to the GAAP information can be found in our earnings release. On the call with me today is Jerry Morgan, Chief Executive Officer of Texas Roadhouse; and Chris Monroe, our Chief Financial Officer. Following the prepared remarks, we will be available to answer your questions. In order to accommodate everyone that would like to ask a question, we kindly ask analysts to please limit yourself to one question. Now I'd like to turn the call over to Jerry.
Jerry Morgan, CEO
Thanks, Michael, and good evening, everyone. There is no doubt that 2024 is off to a great start with first quarter revenue over $1.3 billion and same-store sales growth of 8.4%. Our strong results continue to reflect our operators' commitment to the consistency and quality of the food, the hospitality they provide, and our everyday value. The benefit of our long-term approach to the business and our focus on always prioritizing the guest experience is evident in the record sales, margin dollars, and net income for the first quarter. While the Texas Roadhouse brand generated average weekly sales of over $163,000 in the first quarter, I want to also highlight the progress our operators are making at Bubba's 33 and Jaggers. Bubba's 33 averaged over $120,000 in weekly sales during the first quarter. With four locations scheduled to open this year and a growing pipeline for the coming years, we remain confident in the future for Bubba's 33. Jaggers, our quick-service brand, is also experiencing momentum and delivered nearly $68,000 in average weekly sales. We continue to expect a mix of company and franchise Jaggers over the coming years, and the first international franchise in South Korea is scheduled to open later this year. Our investment and commitment to opening new restaurants at a more even pace has been successful. In the first quarter, we opened nine company-owned Texas Roadhouses. We currently expect to open an additional six company-owned restaurants during the second quarter. For the full year, we remain on track to open approximately 30 company-owned restaurants across the three brands. Our franchise partners opened two international Texas Roadhouse locations and a domestic Jaggers during the first quarter. We continue to expect as many as 14 franchise openings this year, including four Jaggers. On the technology front, our conversion to digital kitchens is going as planned with 30% of the approximate 200 scheduled conversions completed so far. The feedback from our operators remains highly positive. In addition to kitchen efficiencies, our operators also appreciate the calmer kitchen and less stressful execution during peak hours. Also on the technology front, we are preparing to go live during the second quarter with a new people system, which we call Roadie First technology. The system will provide our employees with a more user-friendly platform for easier access to their data and records. It should also improve the recruiting and employee management processes for our managers. The Roadie First technology name reflects our commitment to enhancing the Roadie experience at all levels, which will allow us to continue hiring, training, and retaining the best people in the industry. Finally, we just returned home from our annual managing partner conference in Austin, Texas. It was a great week celebrating our operators' success in 2023, planning for the future, recognizing our top talent, and having a little fun. We also unveiled our first purpose statement, which is, 'Serving communities across America and the world.' We believe our purpose builds clarity for our Roadies and will inspire them for our journey ahead. Speaking of inspiration, I want to congratulate Casey Cohen from Turnersville, New Jersey, as she was named our Texas Roadhouse Managing Partner of the Year. I also want to congratulate Vanessa Blanco-Quezada from Albuquerque, New Mexico, for being named our Bubba's 33 Managing Partner of the Year. Additionally, I want to recognize Benito Galindo of Covington, Louisiana, for being named our national meat-cutting champion and Frank Fernandez for being named our support center Roadie of the Year. And lastly, I would like to congratulate and thank our award finalists for their contributions and accomplishments. Now Chris will provide some thoughts.
Chris Monroe, CFO
Thanks, Jerry. I want to echo your comments regarding what an impactful time we shared with our managing partners in Austin. They are doing a fantastic job, and it was great to be a part of celebrating the best of the best. Having an operator mentality and focus on the guest experience continues to pay financial dividends for us. While it's only been five weeks since we implemented a 2.2% menu price increase, we are encouraged by the traffic and mix trends we've seen so far. In fact, our mix trends improved as we moved through the first quarter and into the beginning of the second quarter. We've always taken a long-term approach to pricing with the goal of driving sustainable traffic growth. We believe our guests continue to reward us for this approach by choosing to come to our restaurants more often. Commodities, more particularly beef, have performed better than we'd expected. We're benefiting from the improved cost environment as only a small portion of this year's beef purchases have been made through fixed-price contracts. While we still expect beef inflation to increase as we move through the year, we now expect full year 2024 commodity inflation will be approximately 3%. Currently, we expect to be above the full year inflation forecast in the back half of the year. Labor is benefiting from improved productivity as our hiring efforts have resulted in well-staffed restaurants with longer-tenured Roadies. This is allowing our managers to staff their restaurants more efficiently and focus on the employee experience. So far this year, wage and other labor inflation has played out as anticipated. As such, we continue to expect 4% to 5% inflation for the full year. Our cash flow from operations continues to support our balanced approach to capital allocation. We're pleased with the returns we are generating from our ongoing investments in the business, including new store openings, bump outs, kitchen expansions, and digital kitchen conversions. During the first quarter, we generated over $240 million of operating cash flow, which was used to fund over $125 million of capital expenditures, dividend payments, and share repurchases. As we've done throughout our history, we will continue to return capital to shareholders and invest in growth projects. And now Michael will walk us through the first quarter results.
Michael Bailen, Head of Investor Relations
Thanks, Chris. For the first quarter of 2024, we reported revenue growth of 12.5%, driven by a 7.7% increase in average unit volume and 4.9% store week growth. We also reported a restaurant margin dollar increase of 23% to $228 million and a diluted earnings per share increase of 31.4% to $1.69. Average weekly sales in the first quarter were over $159,000 with To-Go representing approximately $21,000 or 13.1% of these total weekly sales. Comparable sales increased 8.4% in the first quarter, driven by 4.3% traffic growth and a 4.1% increase in average check. By month, comparable sales grew 4.2%, 10.4%, and 10.2% for our January, February, and March periods, respectively. And comparable sales for the first five weeks of the second quarter were up 9.3% with our restaurants averaging sales of approximately $158,000 per week during that period. In the first quarter, restaurant margin dollars per store week increased 17.3% to over $27,500. Restaurant margin as a percentage of total sales increased 148 basis points year-over-year to 17.4%. Food and beverage costs as a percentage of total sales were 33.9% for the first quarter. The 131 basis point year-over-year improvement was driven by the benefit of a 4.1% check increase offsetting the 0.9% commodity inflation for the quarter. Labor as a percentage of total sales decreased 51 basis points to 32.5% as compared to the first quarter of 2023. Labor dollars per store week increased 5.7% due to wage and other labor inflation of 4.3% and growth in hours of 1%. The remaining 0.3% increase in labor dollars per store week was primarily driven by a $0.7 million net unfavorable adjustment to our quarterly insurance reserve. Other operating costs were 14.7% of sales, which was 39 basis points higher than the first quarter of 2023. Higher operator bonuses as a percentage of sales, resulting from increased year-over-year restaurant-level profitability, drove 23 basis points of the increase. Also included in the year-over-year change is an approximately 35 basis point negative impact from adjustments to our quarterly reserve for general liability insurance. These adjustments include $3.5 million of additional expense this year and a $0.8 million credit last year. Moving below restaurant margin, G&A dollars grew 5.5% year-over-year and came in at 4% of revenue for the first quarter. G&A dollar growth benefited from lapping an approximately $2.6 million one-time cost related to an executive retirement. Our effective tax rate for the quarter was 13.9%. Our expectation for the full year 2024 income tax rate remains unchanged at approximately 14%. Finally, as a reminder, 2024 is a 53-week year for us. As such, the fourth quarter will have 14 weeks versus our normal 13 weeks. We estimate that the additional week could benefit full year 2024 earnings per share growth by approximately 4%. Now I will turn the call back over to Jerry for final comments.
Jerry Morgan, CEO
Thanks, Michael. The theme of our managing partner conference was Buckle Up. It is a fitting message as we prepare for our journey ahead. At the conference, I encouraged our operators to buckle up and double down on our mission, our core values, and our purpose of serving our communities across America and the world. Last but certainly not least, we are honored to have Casey and Vanessa, our Managing Partners of the Year, with us for the call today. Congratulations again to both of you.
Michael Bailen, Head of Investor Relations
That concludes our prepared remarks. Breanna, please open the line for questions.
Operator, Operator
Our first question today comes from David Palmer with Evercore ISI.
David Palmer, Analyst
I'll try to squeeze in just two quick ones. First, on other operating expenses, up 9% per store in the quarter. That was a similar type of growth rate in all of '23. Could you remind me what's driving that growth in that line item? And as you look ahead, is it reasonable to assume that that growth rate might slow and you'd be able to leverage that line a little bit more? And then just any comments or details you can give about the digital kitchen initiative. It obviously has great uptake. Any quantification about the benefits you're seeing, table turns, order accuracy, anything that could help the business?
Michael Bailen, Head of Investor Relations
David, thanks for the question. It's Michael. I'll start with the question about the other operating. Yes, as we mentioned, we did have a general liability adjustment on that line of $3.5 million. So that is driving some of that increase. Obviously, as we're doing higher sales volumes, that also was driving those dollars per store week as there are items in there that are directly correlated with sales. And we also mentioned the higher profitability of the restaurants is leading to more compensation expense. So it is certainly possible and likely that dollar per store week growth for other operating will not increase at that high of a level throughout the remainder of the year. But obviously, we don't know what other adjustments we may have to make. But all things being equal, that should come down. And I can start off on the digital kitchen, and then I'll probably turn it over to Jerry. It's a little early for us to give any comments, actual throughput, or any kind of numerical quantitative information on it, but we are very happy with the qualitative feedback that we're getting so far and encouraged by what we're seeing.
Jerry Morgan, CEO
Yes. David, on the digital kitchen, I think as we are still early into it, we are very excited about the positive feedback we're getting from our operators. We are being able to see and track our cook times a little bit, the timing of our food, and really the calmness in the organization that the digital kitchen brings to our back of the house. So I believe that there is just a quality of life or experience of the job that will benefit us as we move forward. So we are definitely excited about getting more done as we move through the year and getting some more feedback. But so far, we are receiving really positive feedback.
Operator, Operator
Your next question comes from David Tarantino with Baird.
David Tarantino, Analyst
Congrats on a good start to the year. My question is on the margin outlook. I think you've talked in the past about the potential to get long-term restaurant margins back to 17%, 18%. I know that's a long-term target, but my question is related to how much progress towards that target you might be able to make this year in light of the easing inflation environment, the productivity gains you're making. So just wondering if you could frame up this year in the context of progress towards that long-term target.
Chris Monroe, CFO
Sure, David. This is Chris, and thanks for the question. Well, clearly, we've had solid margin expansion in Q1 reaching 17.4%. So we're in the zone of our goal of 17% to 18%, and that's where we'd like to be. And honestly, we feel like we have an opportunity to expand it similarly on a year-over-year basis in Q2. But in the second half, there's the commodity pressure that we're expecting. And so it will be more difficult to do that. But when you get to the full year after you've added all that up, we should see some modestly higher than we were in 2023. It is still a long-term goal of consistently delivering between 17% and 18%.
David Tarantino, Analyst
Great. And then if I could ask a follow-up. You did mention labor productivity gains. So could you just maybe elaborate on what you're doing there? And is that just a matter of more stable staffing in the current environment? Or are you actually making progress in other ways? So any help there?
Chris Monroe, CFO
Yes, David. This is Chris again. I think it is a reflection of more stable staffing and having our longer-tenured Roadies, as I talked about in my prepared remarks. It just allows our operators to have a team that's together, that's working together, that gets reps together. And they're just more efficient, and we're far away from the situations that we were in during the pandemic where it was difficult to get people to come in and we were having difficulty in staffing. So now that we have our staff in place and our turnover is certainly lower than it was before, that's driving some of the benefit on that line.
Operator, Operator
Your next question comes from Brian Harbour with Morgan Stanley.
Brian Harbour, Analyst
Yes. I think you commented on just some improvement in mix sequentially. Could you talk about kind of what drove that? Or any kind of customer behavior shift that you observed as you went through the quarter?
Michael Bailen, Head of Investor Relations
Yes, I can address that, Brian. We’re not observing any significant changes in consumer behavior. We've noticed a decrease in alcohol consumption, although the trend has started to stabilize over the past few months. We're still slightly negative regarding alcohol sales. However, items such as entrees, appetizers, and add-ons, which were never significantly negative, have flattened out. This is encouraging, as it indicates that consumers continue to recognize the everyday value we offer.
Operator, Operator
Your next question comes from Jeffrey Bernstein with Barclays.
Jeffrey Bernstein, Analyst
Great. I have two questions. First, you mentioned the Texas Roadhouse brand compared to the Bubba's brand. Both are strong within the industry, but when comparing them, Texas Roadhouse shows two-year comparable sales growth of 22% and average unit volumes of $8.5 million, while Bubba's has a two-year comparable sales growth of 12% and an average unit volume in the low $6 million range. I'm curious what you believe is the main reason for the difference between the two. Do you think that over time, the gap will decrease in both comparable sales and average unit volume, leading to a situation where it doesn't matter much which brand is opened? I also have one follow-up.
Michael Bailen, Head of Investor Relations
Yes, it's Michael. Thank you for the question. Some of this leads into speculation, making it difficult for me to answer. Clearly, the Texas Roadhouse brand has been established for much longer than Bubba's. We are pleased with the performance of both brands. It’s challenging for anyone to match what Texas Roadhouse has achieved. However, Bubba’s strong performance at $120,000 is notable for us. With fewer than 50 Bubba's locations, it's easier for the numbers to be impacted by a small number of stores. We are optimistic about what we are seeing there, and we generate comparable returns from both concepts. We're looking forward to future developments.
Jeffrey Bernstein, Analyst
I guess that's the issue when your big brother is Texas Roadhouse. My follow-up question is just to clarify on the unit openings. I think you mentioned still being confident in the 30 company operated this year. I know you mentioned 10 year-to-date and 18 under construction. Maybe these things open pretty quickly. But can units start construction in coming months and still open before year-end? Or might you come in closer to that 28 number for the full year '24 just for modeling purposes?
Jerry Morgan, CEO
Yes. We can get them under construction now and get them into this year. So we're still approximately 30 between the three brands. And obviously, the pipeline for '25 is being worked hard, too. So I believe that we'll hit that number. We have a lot of confidence in it right now. Everything kind of is working well for us. So we'll stay right there for the moment.
Operator, Operator
Your next question comes from Peter Saleh with BTIG.
Peter Saleh, Analyst
Great. Just maybe two quick ones for me. On the ZIOSK, can you just remind us maybe what percentage of the sales are now going through that platform? And aside from maybe the table turns, which I'm assuming that's benefiting on table turns, what else are you learning about the customer given that so much of the sales are going through that platform? Any other data that you're able to collect? And what are you learning about the customer? And then I have a follow-up as well.
Jerry Morgan, CEO
Yes. I mean it's the pay-at-the-table. So I believe approximately 80% of our guests use the Roadhouse Pay, as we call it, as the pay-at-the-table feature. I don't know if there's a lot to learn there other than it just helps with when they're ready to go, they can swipe their cards and be on their way. So I think from that, it's a convenience factor, more importantly, and it's a transaction that allows them to leave when they're ready. And it's obviously been very well liked and utilized within our guests.
Peter Saleh, Analyst
Great. You mentioned that you're expecting commodity inflation to be higher in the second half of the year, reaching a full 3% for the year. Can you provide some insight into how much of your costs are secured for the second half and what kind of variability we can expect around that figure?
Michael Bailen, Head of Investor Relations
Peter, it's Michael. Like in previous quarters, we won't provide detailed information about what is secured for competitive reasons. Currently, we haven't committed to many fixed-price contracts due to the volatility on both our part and the packers' part, making it difficult to agree on a fixed price. However, we have entered into supply contracts for most of the beef we will be using for the rest of the year. There is potential for fluctuations in that inflation figure as we progress through the year, whether it goes higher or lower, depending on how the market behaves.
Operator, Operator
Your next question comes from Sara Senatore with Bank of America.
Sara Senatore, Analyst
I guess two questions. One, just on the mix and pricing, the comp. Could you just remind us how much price you had? I think you said last time we spoke was like 5% price. So just trying to calculate the mix. It sounds like it's less than a percentage point headwind at this point.
Michael Bailen, Head of Investor Relations
Sara, it's Michael. In the first quarter, we had 4.9% pricing. And you are correct, we had about 80 basis points of negative mix. But that did come down quite a bit in the first five weeks of our second quarter to only about 20 basis points of negative mix as we continue to have about 4.9% pricing in the menu for both the second quarter and the third quarter.
Sara Senatore, Analyst
Thank you for that information. I have a question regarding your business in comparison to others, particularly concerning check management. Do you have any insights into what might be driving this trend? It might be speculative, but are you observing that people are switching from other options where the relative value remains strong, encouraging them to invest more? I'm trying to grasp the dynamics that appear to be favorably contrasting with the broader industry.
Jerry Morgan, CEO
Well, thank you very much for that kindness. We believe that our offerings and the value that's built into our menu is really what is allowing people to be very happy when they do trade in from wherever. And our focus on our food, our service, and the experience that we provide with the value built into our menu is really what we see happening. I don't really see anything else in the mix to tell me anything different than keep doing what we're doing: legendary food and legendary service, and keep making sure that guests have great experiences in all of our businesses.
Operator, Operator
Your next question comes from Dennis Geiger with UBS.
Dennis Geiger, Analyst
Jerry, wondering if you could just talk a little more looking ahead to later in the year and thinking about pricing. I know you spoke to it at a high level earlier, but anything philosophically there given where traffic is, given you've underpriced competitors in recent years but given cost inflation that you've seen over the years. Any kind of high-level as you look to that next pricing increase that you can share today, or just how you're thinking about it and how the operators are thinking about it?
Jerry Morgan, CEO
Well, Dennis, we'll follow the same procedure we always have. We're just five, six weeks into this last round. We'll gather our feedback from all of our managing partners and our market partners probably in August, September and talk about what we would or wouldn't do in October. So still a little early. We'll take the approach of being conservative. We'll see what happens in the industry going forward. And then we'll absolutely partner up with our operators and decide what is best for each and every one of their stores or their market or their region. And then as a company, we'll help them make that decision that will also be very good for our consumer and our shareholder.
Dennis Geiger, Analyst
Makes good sense. Jerry, just one more maybe if I could. Just on staffing hours as it relates to that traffic, we've seen some really good relationship there in recent quarters. Anything additional on the go forward there as we think about that relationship relative to last year? Kind of the recent quarter is a good way to think about the go forward, would you say?
Chris Monroe, CFO
Chris, thanks for your question. I'll begin, and Michael can add anything I might miss. We've previously mentioned maintaining a historical average of about 50% growth in our hours relative to traffic growth. In the fourth quarter of last year, we achieved that benchmark. Furthermore, in the first quarter, we exceeded that with growth closer to 25%. While our aim is to keep striving towards 50%, I can't guarantee we will sustain the 25%. However, significant efforts have been made to enhance our labor situation, thanks to our operators’ effective hiring and staffing, which has led to improved teamwork. As a result, we've seen positive outcomes over the past few quarters and are certainly back on track.
Michael Bailen, Head of Investor Relations
Yes, Chris, I'll echo what you said there. I think last year, all that hard work of the operators to get their stores staffed the way they needed to be is now paying off in that percentage for the first quarter. And we'll see where the next several quarters come out, but there certainly feels like there is strong potential for that to remain at or below that 50% level over the next several quarters.
Operator, Operator
Your next question comes from Jeff Farmer with Gordon Haskett.
Jeffrey Farmer, Analyst
I have a quick follow-up on commodities and then just one more on capital investment. So on commodities, I understand there's some black box nature of what's going on. But based on what you know now, can you share expected quarterly commodity inflation over the next couple of quarters?
Michael Bailen, Head of Investor Relations
Jeff, it's Michael. I'm not going to give specific numbers, but I'll help guide you all. The expectation is the second quarter will be above where we were in the first quarter, but probably still below the full year average. And then Q3 and Q4 are looking fairly similar and are going to be a little bit above that 3% full year number.
Jeffrey Farmer, Analyst
Okay. That's helpful. And then on the average capital investment for a new Roadhouse, at least according to the K, it's expected to be roughly $8 million in 2024, which is flat versus last year. But it looks like it's up more than 40% versus '19. I appreciate that a lot of your peers are in the same sort of inflationary boat there, but do you see any opportunities to reduce that $8 million cost for a new Roadhouse?
Jerry Morgan, CEO
I think we're going to be pretty close to it. We have expanded the new store openings at the beginning of 2023, so we have incurred that expense. We feel really good about the size of our building, the expanded coolers, and having more space to execute our operations. Looking ahead, I would assume we will be very close to that figure. I don't anticipate a lot of changes.
Operator, Operator
Your next question comes from Lauren Silberman with Deutsche Bank.
Lauren Silberman, Analyst
Congrats on a great quarter.
Jerry Morgan, CEO
Thanks, Lauren.
Lauren Silberman, Analyst
Two questions. One, it looks like off-premise grew at a faster rate than on-premise for the first time in a few years. Was that a function of weather earlier in the quarter? Is there anything else you're seeing? And can you talk about how that trended during the quarter?
Jerry Morgan, CEO
I think it's just about our ability to execute in our dining rooms and again, getting used to the adjustment of what our To-Go volume is, and that's the average volume. We obviously have stores that are doing much higher than that. So I think it's really about our operators settling in and running a full house and being able to execute our off-premise and our To-Go processes of how we make that experience for the To-Go, our food. We're putting a lot more effort into executing our To-Go food at a higher level. And I think it's paying off for us as well as getting settled into full dining rooms for longer hours of the day. So a good problem to have.
Michael Bailen, Head of Investor Relations
Yes. And Lauren, this is Michael, just to add on. It was actually not in the first period during that colder or more winter weather. We saw the stronger growth in the guests and the sales of the To-Go business in the second and third periods of our first quarter. So strong throughout, but it goes to everything Jerry talked about. Just we've made it, the ease of that To-Go process. We really made that as easy as possible. And the guests, again, continue to reward us for that and are using that To-Go on a regular basis.
Operator, Operator
Your next question comes from Andrew Strelzik with BMO Capital Markets.
Andrew Strelzik, Analyst
I have a two-part question regarding new store performance. I saw in the release that Texas Roadhouse stores opened less than six months ago saw an 8% drop in average weekly sales. This marks the third consecutive quarter of declines, and they seem to have accelerated during this time. I'm interested to know what factors are contributing to this trend. Any insights would be appreciated. Additionally, I'd like more information on new store performance overall.
Michael Bailen, Head of Investor Relations
Thanks for the question, Andrew. Yes, this is reflected in the numbers. There are some timing and regional factors at play. Looking back to the first quarter of last year, we opened 15 new stores, three of which were in California, which are high-volume locations generating some of the highest sales in the country. This significantly boosted that number. I would describe the unusually high figure from that first quarter as an anomaly. Currently, we don't have those California stores accounted for in the 25-store number from the first quarter. We are very pleased with the performance of our new stores and their results. We don’t expect every restaurant to achieve $150,000 to $160,000 in weekly sales right from the start. However, we have no concerns regarding their performance or our ability to continue opening more locations. There will always be slight timing differences and regional variations based on where they are launched.
Operator, Operator
Your next question comes from Jim Salera with Stephens.
James Salera, Analyst
I wanted to ask if we could get an update on the butcher house initiative. And maybe at a high level, do you really think of it as a way to build brand awareness or more of a frequency increaser or a way to get more customer data? And maybe one tag on to that as well. Does it help you guys with new site selection as you can start to get some frequency and data information on where people are ordering from?
Jerry Morgan, CEO
No. I think mostly what any of that retail segment of our business is about brand awareness, and we've done some really creative things. We've had a lot of fun with it, and I think that's the real focus on our retail. It's just really brand awareness and having some fun. We're continuing to look at every aspect of the business and see what we do with it in the future. But right now, we're uncertain.
James Salera, Analyst
Okay. If I consider the performance of your brand, it's clear that foot traffic has been very strong, which sets you apart from many of your competitors. Is there a possibility that as the economy becomes more challenging, the value proposition at Texas Roadhouse allows you to attract more customers from competitors, making your trends more resilient due to your competitive pricing?
Jerry Morgan, CEO
Well, we certainly believe that, and we continue to do what we do. We can't really control what they do. We believe in our value that's built into our menu. We continue to try to be very conservative and take care of our business, but also take care of our guests and really understand the dynamic of where we're at today. And so I just believe that we focus on our food being smoking hot, picture-perfect recipe, right, fast, fun, and friendly in our dining rooms. It is rewarding us, and all three of our brands have excellent food that we're proud of. We love the hustle to help people and serve. And that's what gives us the advantage, I believe. And we're really proud of everything that our operators are doing out there, and they play this game at a very high level.
Operator, Operator
Your next question comes from Gregory Francfort with Guggenheim Securities.
Gregory Francfort, Analyst
I appreciate the update on Bubba's and Jaggers. I'm just curious how you're thinking about balancing the capital priorities across the three brands in the next couple of years. And then for Jaggers maybe specifically, it seems like you're accelerating the franchise development. What's the plan long-term on how you're thinking about the company operator versus franchise development there and maybe what your pitch to prospective franchisees looks like?
Jerry Morgan, CEO
Thank you for the question. I believe that we're going to stay focused on Roadhouse in that mid-20 growth. Bubba's, we've talked a little bit about how we're building the pipeline. It is absolutely our second brand, and we're very invested and excited about what it's doing. Jaggers is exciting for me in a lot of different ways. We've got eight company stores and three franchise stores, and we've got people interested. The food is incredible. Our service model is really working from a speed of service standpoint. So we are building our very first international restaurant with Jaggers. So the thing about franchising is you can go a little bit faster, and you actually learn a lot. We're really good at casual dining, and to really get our head around Jaggers and what it needs to be highly successful, we wanted to bring some partners in that could help us grow. And that's what we're doing with our franchise partners. We're learning. We're partnering up. It's going to help us grow on the company side and on the franchise side. It's hard to tell you what percentage right now going forward, but we're definitely leaning into both and learning a lot. And we really appreciate our franchise interest in the Jaggers concept.
Operator, Operator
Your next question comes from Jim Sanderson with Northcoast Research.
James Sanderson, Analyst
I wanted to go back to a little bit more insight on Bubba's 33. I think the comp was a little bit weaker than Texas Roadhouse. But can you walk through the same-store sales breakdown, traffic, price/mix for Bubba's?
Michael Bailen, Head of Investor Relations
Jim, it's Michael. We don't delve into that level of detail at this time. You are correct that it did not compare to the same level as Roadhouse, but Roadhouse is somewhat different from the others. With only 45 restaurants, if a few are not growing, it can affect the overall numbers. However, we have seen strong performance at Bubba's early this year and are quite encouraged by the margins we are observing there and what that business can achieve in the future.
Jerry Morgan, CEO
Yes. I'll add a bit to that. If we focus on Bubba's without comparing it to Roadhouse, we're very happy with the performance, especially regarding sales. We're focused on increasing sales while managing our costs. We've made some improvements to the building that will benefit us in the long run and have done some menu enhancements. We've introduced a combo appetizer that has been very successful and reorganized how we serve wings. We're also excited about a new sandwich we're offering. There’s a lot of momentum. Looking at the first quarter for Bubba's 33, it confirms that we’re in the right business. With burgers, pizzas, cold beer, and rock and roll, we're going to be just fine.
James Sanderson, Analyst
Okay. Can I assume from that, that you had positive traffic in 2024 at Bubba's? Is that fair?
Michael Bailen, Head of Investor Relations
Yes, I think that's fair to say.
James Sanderson, Analyst
All right. I just want to ask a follow-up question also on same-store sales in April. Is there any issue related to the Easter calendar shift that impacted performance?
Michael Bailen, Head of Investor Relations
With Easter, no. Easter still fell within our April period. So no impact from Easter.
James Sanderson, Analyst
No shift between, okay. Very, very good. And then last question for me. How does Texas Roadhouse usually do for Mother's Day? Is that an important event or not so much?
Jerry Morgan, CEO
Yes. It's an incredible event. It's all part of Valentine's Day, Mother's Day, Father's Day. We kind of call it the triple crown. And speaking of that, the first leg of the triple crown is here in Kentucky over the next couple of days, and we're excited about that. But yes, Mother's Day is huge for Texas Roadhouse and the restaurant industry overall. And we have some dominant players out there. We're excited about Mother's Day and Father's Day.
David Monroe, CFO
And Jim, this is Chris. I'll just throw in there's also Mexican Mother's Day that is celebrated as well. So we have that as a part of our repertoire as well.
Operator, Operator
Your next question comes from Jake Bartlett with Truist Securities.
Jake Bartlett, Analyst
I just have a clarification or modeling question. Do you expect to open any company-owned Jaggers among the 30 stores you're planning, and I believe you mentioned four Bubba's? Is there any Jaggers included? My bigger question concerns general and administrative expenses. Is there anything we should consider for the second quarter? I know you usually don't reveal your conference expenses, but if there's any significant change we should know about as we model G&A. After making adjustments for the first quarter, I see about 10 basis points of leverage for that period, considering last year's one-time factors. Is that the level of leverage you expect for the entire year?
Jerry Morgan, CEO
I'll let Michael answer that second part. On the Jaggers growth, yes, we only have one, maybe two this year as far as we can look at. But I'm building the pipeline. I do expect that to grow in the future. We're working on some deals right now that are looking really positive. I believe we had three last year. And so we'll continue to look at the ramp-up on that because it is now hitting the goals and the targets that we're looking for.
Michael Bailen, Head of Investor Relations
This is Michael. Regarding the G&A question, in the first quarter, we did see some leverage on an adjusted basis. Looking ahead to the next few quarters, achieving leverage on G&A may be more challenging, particularly in the second and third quarters, depending on your forecasts for top line revenue. We're making significant investments in Roadhouse technology and other internal initiatives. Additionally, since we have a 53-week year, we might see strong performance, but we will likely need to take extra accruals for bonuses and compensation throughout the year. Therefore, it's reasonable to expect that G&A for the year will remain relatively flat, though the second and third quarters might present more difficulties in achieving leverage.
David Monroe, CFO
I want to emphasize that the second half of the year might be affected by the timing changes in our equity grants that we previously discussed, and this is likely what you were alluding to regarding the second and third quarters.
Jake Bartlett, Analyst
Great. If I could ask a quick question about the impact of the extra operating week on EPS, it's more significant than just a proportional effect. In 2019, the extra operating week contributed a 60 basis point benefit to restaurant level margins. Is there any reason to believe that would change this time?
Jerry Morgan, CEO
Yes. I mean, I think in the prepared remarks, we said we're expecting about a 4% benefit to EPS from that extra week. And whether that's 60 basis points or somewhere, it would obviously benefit some parts of margin. It's going to benefit some items outside of margin. But we estimate about a 4% benefit to EPS.
Operator, Operator
Your next question comes from Brian Vaccaro with Raymond James.
Brian Vaccaro, Analyst
Just regarding the commodity outlook, I'm curious to just get your perspective on the supply and demand dynamics in the beef market. Just what you might be hearing that's driving the near-term favorability and then kind of what informs your view that beef costs could move higher later in the year. And then is there anything worth noting on the non-beef side and you kind of maybe level set what level of inflation you're expecting on that other 50% of your basket?
Michael Bailen, Head of Investor Relations
Brian, it's Michael. I'll start with the easier part. The other half of the basket is either flat or showing slight deflation, and there's really nothing significant to mention. It continues to perform as we expected, remaining flat to deflationary and somewhat offsetting the beef inflation. Supply has improved more than anticipated across the industry, which helped beef in the first part of the year, and we expect this to continue over the next several months. Retail demand has been somewhat weaker, and what has been marketed has likely benefited us. We noticed that grocery stores seem to be marketing fewer rib eyes and more strips. Since rib eye is a more critical item for us, this shift has provided some benefits. We expect that the supply constraints will become more pronounced and have a greater financial impact on us and the industry as we progress into the latter half of the year.
Brian Vaccaro, Analyst
All right. And then just one quick follow-up on Bubba's, if I could. I understand the strong sales that you're seeing. And I think store margins, at least in 2023, were a little bit below 14%, if my notes are right. I guess I'm just curious, where would you like to see that over time as part of your unit economic model? And then what's the path towards driving higher margins at the Bubba's brand?
Michael Bailen, Head of Investor Relations
Yes. I mean Bubba's has actually seen quite a bit of improvement early this year, and I think you'll see that in some of our documents that will get filed in the coming days. So I think a margin, again, in the 17% to 18% range for Bubba's is kind of what we're looking for, just like what we're looking for on the Roadhouse side. And again, that Bubba's team has been working hard and has made great strides, and I think you're going to see the fruit of that labor coming through here.
David Monroe, CFO
Yes. And I'll just add to that. What you're seeing is, and we're recognizing it here today with Vanessa here with us, that you have local Bubba's that are doing fantastic work with their local store marketing in places like Albuquerque and others, where the sales are growing. And that's really what it's going to take. And again, to Michael's earlier point, there's only 45 Bubba's out there. And they're working really hard on expanding their sales, and now that's beginning to come through. And I think that Michael's comment about the 17% to 18% makes a lot of sense.
Operator, Operator
Seeing no further questions at this time, I will now turn the call back to Jerry Morgan for any closing remarks.
Jerry Morgan, CEO
I just wanted to close and say thank you all very much for your support and time. And I know here in our hometown at Louisville, Kentucky, hosting the Kentucky Derby, it's going to be a fantastic weekend. Hope you all have a great one. Let's go.
Operator, Operator
This concludes today's conference call. Thank you for your participation. You may now disconnect.