Texas Roadhouse Navigates Beef Inflation Turbulence

• Texas Roadhouse missed Q4 estimates due to high beef prices, but strong comparable sales in early 2026 boosted investor confidence.
• Strategic menu pricing below competitors is building customer loyalty despite squeezing margins.
• The company reiterates commodity inflation of about 7% and plans for continued expansion with 35 new company-owned restaurants in 2026.
• Jim Cramer's Charitable Trust maintains a hold-equivalent rating, citing patience with the beef cycle, while increasing the price target to $195.

Fourth Quarter Blues

Alright, people, Agent J here, reporting from the front lines of the…restaurant business? Yeah, even *I* didn't see that coming. Texas Roadhouse, the place where steak meets comfort, apparently hit a bit of a snag. They missed their targets in the fourth quarter. Revenue was up, sure, but not as much as the number crunchers wanted. And profits? Let's just say they took a nosedive, landing somewhere near the bottom of a gravy boat. The culprit? Beef. That's right, those delicious slabs of cow are costing everyone a fortune. As I always say, "A party without cake is just a meeting," and in this case, a restaurant without affordable beef is just…well, a sad place.

The Steakhouse Strikes Back

But hold your horses, because this story has a twist. Despite the financial hiccups, Texas Roadhouse shares are doing alright. Why? Because people still love their steaks. Sales are up, and management is playing it cool, not changing their inflation outlook. It seems like even when facing cosmic challenges, some things, like a good steak, remain timeless. Maybe we should give Neuralyzer to the cows to fix prices? Speaking of timeless, ever notice how time flies when you are having fun? It's just like that with this US Job Market's Mixed Signals: A Ronaldo Perspective, one minute you are reviewing earnings, the next you are contemplating the complexities of beef inflation.

The Comp Sales Conundrum

Now, let's talk numbers, because even in the MIB, we have to deal with those pesky things. Comparable restaurant sales grew by 4.2%, which sounds decent, but analysts were expecting more. Apparently, October was the life of the party, with sales up 6.1%, but December? Not so much, slowing to a mere 2.2%. Blame it on the weather, blame it on Christmas, blame it on the little green men stealing all the holiday cheer – whatever the reason, sales cooled off. But here's the kicker: in the first seven weeks of the first quarter of 2026, sales jumped by 8.2%. Talk about a comeback. As I've learned, "If you don't know, I'm gonna tell you.", and I'm telling you, Texas Roadhouse knows how to bounce back.

The Price is Right…Or Is It?

Texas Roadhouse is doing something smart. They are keeping their menu prices low, much lower than their competitors. This might squeeze their profits a bit, but it's building customer loyalty. People love a good deal, especially when that deal involves a juicy steak. Too many restaurants are jacking up prices, alienating customers faster than I can say "Neuralyzer." The gamble is that when beef prices eventually drop, Texas Roadhouse will be sitting pretty, with a loyal customer base and fatter profit margins. They are betting that people want a quality product at a reasonable price. And who am I to argue? As I always say, “Better to have it and not need it than to need it and not have it."

Beef Price Blues: A 2027 Prediction

The big question hanging over everything is: when will beef prices fall? Texas Roadhouse isn't making any predictions for 2027, and frankly, neither am I. The cattle supply is tight, and some folks are worried that inflation will stick around like a bad toupee. Jim Cramer's Charitable Trust has even sold off some of its Texas Roadhouse stock, citing impatience with the beef cycle. But they are still holding onto some shares, believing that the company's strong sales will eventually pay off. It is a waiting game.

Looking Ahead: Expansion and Dividends

Texas Roadhouse is not just sitting around waiting for beef prices to drop. They are expanding, planning to open 35 new restaurants in 2026. They are also raising their prices slightly, but nothing too drastic. And for those who own stock, they are increasing the quarterly dividend by 10%. So, while there are challenges, Texas Roadhouse is making moves. They are adapting, expanding, and rewarding their shareholders. So, there you have it. Texas Roadhouse is navigating the choppy waters of beef inflation, and so far, they are staying afloat. The road ahead may be bumpy, but with strong sales, smart pricing, and a little bit of luck, they just might make it. As they say "Our way is not the only way" so lets see where it takes them. Agent J, signing off.