Texas Roadhouse Down Most Since August on Outlook: Atlanta Mover

Shares of Texas Roadhouse Inc. (TXRH) fell the most in almost a year on investor concerns about slowing traffic and margin pressures at the restaurant chain.

The stock of the Louisville, Kentucky-based company fell as much as 7.2 percent to $16.65 in New York, the biggest intraday decline since Aug. 18. The shares had risen 20 percent this year before today.

Food costs for the year will rise about 7 percent, chief financial officer Price Cooper said yesterday during a conference call. Average check growth will slow to 2.5 percent in the fourth quarter after a 4 percent gain during the first half of the year, which may squeeze margins, he said.

”Investors are concerned about the slowing guest traffic trends and increased margin compression in the second half of the year as pricing wanes,” Larry Miller, an analyst at RBC Capital Markets Corp., said today in an e-mail. “The good news is food inflation has moderated. The bad news it still is forecast up 7% this year, which is among the highest inflation faced by our companies this year.”

Texas Roadhouse yesterday reported second-quarter per-share earnings of 28 cents, better than the 24-cent average of analyst estimates compiled by Bloomberg. Comparable restaurant sales grew 4.5 percent at company-owned locations and 4.8 percent at franchised outlets, the company said yesterday in a statement.

To contact the reporter on this story: Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Anita Sharpe at asharpe6@bloomberg.net

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