Citi cuts Texas Roadhouse stock rating on traffic slowdown, beef cost pressure

Investing.com -- Citi downgraded Texas Roadhouse (NASDAQ:TXRH) Inc to “Neutral” from “Buy,” warning of a traffic slowdown, rising beef costs, and increasing reliance on less-proven concepts that could weigh on investor sentiment.

The brokerage said the steakhouse chain remains a high-quality operator with strong brand relevance, but noted "a soft patch for traffic," that is the same store sales excluding-weather without upcoming catalysts to point to.

It added that competitors like Chili’s appear to be gaining share while the brand’s core customer base, which includes about 31% Hispanic consumers, may face ongoing pressure.

Citi pointed to a sharp deceleration in foot traffic growth, with the first quarter showing just a 0.5% year-over-year increase, down from 5.9% in the fourth quarter.

Data from Second Measure showed some strength early in the year but also signs of fading momentum.

“Beef risks are magnified without ongoing beats on traffic/flow-thru to buffer estimates,” analysts wrote, adding that past cycles were offset by strong traffic and unit growth, which may not recur this time.

The firm also flagged that new unit growth is shifting away from the core Texas Roadhouse brand to less-established, lower-volume concepts, which may reduce investor support for the stock during this period of softness.

Citi lowered its 2025 and 2026 EPS estimates to $6.46 and $6.80, respectively, from $6.93 and $7.93, and cut its price target to $164 from $175, reflecting lower expectations for same-store sales and margins.

The company is scheduled to report earnings on May 8 after market close.