Texas, Bill Man, Ken Taylor discussed on MarketFoolery



Thanks for being here. Hey, you know, there are multiple Bill man's, but I do appreciate not to me. I love just one gospel singer name Bill man. Really? Yeah, basketball player. But for West Virginia university named Bill man. But I'm the one who's here. You know what? Maybe next time I'll get one of them. That's right. We'll do. They might have better takes to compare contrast who knows. We've got some real estate news. We've got some restaurant news who, let's start with the restaurant news and it's it's Texas roadhouse and AAA, and they're both falling. But for different reasons, unless start with Texas roadhouse second quarter results. You tell me, why is this stock down? When it's I get that there are results that they posted that are below expectations, but I see a restaurant in the middle of two thousand eighteen posting same store, sales growth of nearly six percent. Yeah, company owned location. Now most every restaurant that is publicly traded would kill for those kind of numbers. They may be so ultimately, and you started by saying that the two restaurant chains are down for different reasons. It's a little bit true, but there is something that they both have in common and that's labor costs. And so can't Taylor came out in the conference call. I said, look, everything is going great. At the restaurants. We've been putting investments into a lot of things including training our staff, and we're paying their more. And some of that is coming from us choosing to pay more, which is great. That's the Costco model. And some of it is the reality that labor, the labor market is tight. And so when. The market sees that they'll say, okay, this isn't a cost. It's one time in nature. That's probably a sustained pressure on the business, and that's okay. Me really is Texas roadhouse both as a stock. And as you mentioned as a company that has had a fantastic few years, and so, yeah, labor costs have gone up, and I think that that's that's really primarily the issue there because the results were fantastic. One thing on the same store sales because they've got company on locations. They've got franchise locations. The franchise comps were about two percentage points lower than the company owned ones is that like when you see something like that, they're all all the good stuff for themselves. I mean, does that, I think for someone who might be new to restaurants, they might look at that and just, you know, he's that a cause for concern, or is that just sort of or is that an opportunity for Ken Taylor and his team to go to the franchisees and say, hey, look. If we look at us. Well, we've got some tips if you're looking to boost your comps a little bit, you know, it's a really good question. One of the really interesting things about how Texas roadhouse is managed is that they do a really, really good job of taking ideas that come from franchisees and then rolling them out across their stores and then back out to the franchisees. So I don't know. I mean, maybe there's an Easter egg in there and some franchisees told them something amazing that's in the process of being rolled out to everyone else. But generally speaking, it is it's it's a pretty sustainable gap that you'll see a little bit better performance at their company owned stores. And you see the franchisees. I don't think that there's anything. It's not a huge gap, so you know, it would be it would be great to say, I guess they can pull this lever and it'll be it'll be flat, but I don't think that's the case before we move on lashes. Say later in the podcast, we'll be dipping into the full mailbag. I just got an Email the other day from rich Smith. Say the word Smith, I think it might be the rich Smith. It was a writer here at the full, but it was a different Email address. So maybe a different Richmond, just a listener race. There was basically Richmond saying, hey, I'm traveling and I'm close to a bubbas thirty three because Texas roadhouse has a sports bar model called bubbas thirty three. And as I've mentioned before in this podcast, there's not one within a couple hundred miles of here, so so rich is going to do a little boots on the ground research and send his sent his thought. I am very excited to hear what he has to say about bubbas. Third, do you remember when Ken Taylor was here? It was at last year for full fast..

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