Texas Roadhouse, Inc. Announces Fourth Quarter 2008 Results

Texas Roadhouse, Inc. (NasdaqGS: TXRH), today announced financial results for the 14 and 53 week periods ended December 30, 2008.

Results for the quarter:

• Comparable restaurant sales decreased 4.7% at company restaurants and 5.5% at franchise restaurants;

• Six company restaurants opened;
• One restaurant was acquired from a franchisee;
• Restaurant operating costs, as a percentage of restaurant sales, increased 201 basis points;
• The Company recorded an impairment charge of $0.8 million, net of tax, on one under-performing restaurant in Q4 2008. The fourth quarter of 2007 included an impairment charge of $1.1 million, net of tax, on one under-performing restaurant;
• The Company repurchased 807,900 shares of its Class A common stock for a total purchase price of $4.4 million; and

• Diluted earnings per share decreased 8.0% compared to the prior year period. Diluted earnings per share were positively impacted by an estimated $0.02 to $0.03 as a result of the extra week in Q4 2008.

Results for the full year:

• Comparable restaurant sales decreased 2.3% at company restaurants and 3.6% at franchise restaurants;
• Twenty-nine company restaurants and one franchise restaurant opened while one company restaurant closed;
• Thirteen restaurants were acquired from franchisees;
• Restaurant operating costs, as a percentage of restaurant sales, increased 168 basis points;
• The Company repurchased 6,512,807 shares of its Class A common stock for a total purchase price of $56.8 million. As of the end of 2008, $18.2 million worth of Class A common stock remains authorized for repurchase; and
• Diluted earnings per share increased 1.0% to $0.52 from $0.51 in the prior year period. Diluted earnings per share were positively impacted by an estimated $0.02 to $0.03 as a result of the extra week discussed above.

G.J. Hart, President and Chief Executive Officer of Texas Roadhouse, commented, "The unprecedented economic environment affected our fourth quarter performance and has continued into early 2009. Although we believe these headwinds will continue, we remain committed to doing what we believe are the right things for the long-term success of the Texas Roadhouse brand. On the operational front, we are focused on providing legendary food and legendary service to each and every guest and remain committed to the overall guest experience by providing quality, fun and value. From a financial perspective, we are managing the business to the current environment and are committed to maintaining a conservative balance sheet and generating adequate returns on the capital we deploy. In addition, we look forward to 2009 as a turning point for us as we anticipate generating a significant amount of free cash flow for the first time in our history as a public company.”

Franchise Acquisitions

Effective September 24, 2008, the first day of the Company's fourth fiscal quarter of 2008, the Company acquired one franchise restaurant in Florida for a purchase price of $1.5 million. The purchase price was paid in cash, funded through borrowings under the Company's credit facility.

Outlook for 2009

The Company reported that comparable restaurant sales for the first seven weeks of fiscal 2009 decreased approximately 1.0% compared to the same period of the prior year although management estimates that these results include a benefit of an estimated 2.0-2.5% due to the timing of the New Year's holiday.

While the Company acknowledges the uncertain state of the economy, it also notes that it is targeting 2009 diluted earnings per share to be approximately flat with that of 2008 despite the fact that fiscal 2008 contained an extra week that positively impacted diluted earnings per share by approximately $0.02 to $0.03.

In addition, the Company provided the following details as they relate to 2009:

• Plans include approximately 15 company and two franchise restaurant openings;
• Total capital expenditures are estimated to be $50-60 million;
• Food cost deflation is estimated to be approximately 2.0% to 3.0% for 2009;
• Based on the lower number of openings in 2009 as compared to 2008, the Company anticipates much lower pre-opening costs over the prior periods; and
• As previously announced, the Company will incur an estimated $1.5 million in incremental expense in 2009 for enhancements made to the bonus plans for its Managing Partners.

Conference Call

The Company is hosting a conference call today, February 23, 2009, at 5:00 p.m. Eastern Time to discuss these results. The dial-in number is (888) 765-5554 or (913) 661-9178 for international calls. A replay of the call will be available for one week following the conference call. To access the replay, please dial (888) 203-1112 or (719) 457-0820 for international calls, and use 1447783 as the pass code.

There will be a simultaneous Web cast conducted at www.texasroadhouse.com.

About the Company

Texas Roadhouse is a casual dining concept that first opened in 1993 and today operates over 300 restaurants system-wide in 46 states. For more information, please visit the Company’s Web site at www.texasroadhouse.com.

Forward-looking Statements

Certain statements in this release that are not historical facts, including, without limitation, those relating to our anticipated financial performance, are forward-looking statements that involve risks and uncertainties. Such statements are based upon the current beliefs and expectations of the management of the Company. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, the actual number of restaurants opening, the sales at these and our other company and franchise restaurants, changes in restaurant operating costs, our ability to acquire franchise restaurants, our ability to integrate the franchise restaurants we acquire or other concepts we develop, strength of consumer spending and other factors disclosed from time to time in the Company's filings with the U.S. Securities and Exchange Commission. Investors should take such risks into account when making investment decisions. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update any forward-looking statements.

(1) Comparable restaurant sales growth includes sales from restaurants open 18 months as of the beginning of the measurement period.

(2) Average unit volume includes sales from restaurants open six months as of the beginning of the measurement period. Q4 2008 and 2008 YTD include 14 and 53 weeks, respectively, while Q4 2007 and 2007 YTD include 13 and 52 weeks. For comparative purposes, average unit volumes for Q4 2007 and 2007 YTD were adjusted to reflect restaurant sales of any acquired franchise stores as part of Company-owned restaurants average unit volume and were excluded from franchise-owned restaurants average unit volume.

(3) For comparative purposes, Q4 2007 and 2007 YTD were adjusted to include 14 and 53 weeks, respectively.

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Amounts may not foot due to rounding.