The popular chain of steakhouses says stores remain open amidst the COVID-19 outbreak.
Shares of Texas Roadhouse (NASDAQ:TXRH) fell by 26% in March, according to data from S&P Global Market Intelligence.
The steakhouse chain remains one of my favorite restaurant stocks during this COVID-19 outbreak, having reported no full restaurant closures thus far.
Though many states in the USA have implemented limited or no in-restaurant dine-ins, Texas Roadhouse had announced in mid-March that it hasn’t closed any domestic restaurants because of the outbreak. These restaurants continue to operate in a full, limited, or to-go (i.e., take-out) capacity even if their dining room areas may be closed.
The company has even ramped up its to-go, family pack, and curbside services, providing food for families as they hunker down to contain the spread of the pathogen. Texas Roadhouse is not just doing its part for the community, but it has also adapted its business operations to this new reality.
However, because of the fluid situation around COVID-19, the company is withdrawing its financial guidance for fiscal 2020. It has also increased its cash position by drawing down on its $190 million revolving credit facility, with an option to increase this facility by another $200 million.
CEO Kent Taylor will also forgo his base salary and incentive bonus from March 18 until Jan 7, 2021. That money will be used to assist his employees during these challenging times. This is a great example of a CEO who’s willing to make personal sacrifices to ensure that workers are taken care of.
Investors need to brace for more bad news should the pandemic worsen in the USA. Texas Roadhouse may even have to completely shut some of its stores in certain states if state governments mandate so.
However, with its strong cash kitty and no debt, I believe the restaurant chain should be able to survive and even come out stronger after this crisis.
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