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4127_Cover.indd 1
3/16/21 11:43 PM
--------------------Recent Highlights:Dear Shareholders and interested folks,Last year, I received a handwritten letter from a young man in Texas along with the book “Investing Between the Lines.” The premise of the book was to teach investors to decode CEO speak in annual reports. The author of the book writes that many CEOs don’t write their own letters or if they do, it’s often chock-full of fancy language and jargon that confuses current and potential investors. I never want to fall into the trap of adding any Wall Street jargon just to be more “professional sounding.” I appreciate the inspiration to be even a little more myself this year, so here goes. 22 company restaurant openingsRetail launch of Margarita Mixer260,000 app downloads from guests redeeming gift cards3Jaggers31Bubba’s 33572Domestic28INTERNATIONALRestaurant Locationsas of December 29, 2020---------------------------------------------To say last year was a challenge is a vast understatement. In fact, 2020 was without question the most challenging year for the restaurant business. But I learned in both track and my business career that hurdles and challenges are meant to be cleared. It doesn’t matter how high you jump and it doesn’t matter if you stumble on a few hurdles. What matters most, is that you keep on jumping them and run your race. Starting in March of 2020, we did a lot of jumping, as our company faced multiple hurdles on a daily basis. Our operators and Support Center team took these hurdles in stride and worked together to overcome them. From sourcing masks and thermometers to rolling out electronic symptom surveys and launching our Covid pay, they worked in partnership, never losing sight of the importance of keeping our employees and guests safe and our restaurants open in some form or capacity. In fact, despite the pandemic, we were able to open 22 company restaurants, including three Bubba’s 33 restaurants and one Jaggers, and our franchise partners opened four restaurants. This is a testament to our people’s spirit as they found ways to continue to grow but never without the safety of our employees and our guest as our top priority. Our development pipeline looks strong in 2021 as well, with a plan to open more than 20 Texas Roadhouse locations in the U.S. With the growth of our To-Go business along with the reopening of many of our dining rooms, we feel that there is some momentum building for 2021. Bubba’s 33 really found its footing as well. Being the “younger sibling” is never easy. But Bubba’s 33 had a breakout year and we are excited about the growth as we plan to open as many as five locations in 2021. The youngest member of our “family,” Jaggers, also created some positive news last year with the opening of Jaggers in Louisville. The restaurant, which is our third unit, opened to rave reviews and long lines. Not sure which came first… the reviews or lines, but the bottom line is the store is rockin’ and we are looking at two more Louisville locations. We are seriously exploring franchise development as a potential growth vehicle as well. International also provided some good vibes. While our franchise partners closed two locations, they opened a restaurant in Korea and one location in Taiwan. Our partners have signed new development agreements for Korea, Brazil, and Puerto Rico, which is a great pipeline for continuing to build our brand internationally. Another great lesson I learned in both track and in business is that there is always a silver lining in any challenge. It may take a while to identify these bright spots, but they’re always there. You just have to find them, which our operators and Support Center team did many times over in 2020.For example, when our dining rooms were first closed back in March, our operators quickly switched to a Curbside/To-Go model. They went from under 10% of sales for To-Go to 100% as our dining rooms closed. They figured out unique ways to safely serve our guests. The silver lining is that our To-Go sales have stayed above 20% in restaurants that have reopened in some capacity. The rollout of our new app and a number of new initiatives that made for contactless pick-up and pay are also silver linings. For example, BOARD OFDirectors CURTIS A. WARFIELDCEO and President Windham Advisors LLCGREGORY N. MOOREFormer Senior Vice President and Controller Yum! Brands, Inc.JAMES R. ZARLEYFormer Chairman and CEO Conversant, Inc.KATHLEEN M. WIDMERGroup Chairman, Consumer North America Johnson & JohnsonMichael A. CrawfordChairman, CEO, and PresidentHall of Fame Resort & Entertainment Co.W. KENT TAYLORFounder, Chairman, and CEO Texas Roadhouse, Inc.ShareholderInformationSUPPORT CENTER(Corporate Office) 6040 Dutchmans Lane, Louisville, KY 40205 (800) TEX-ROAD or (800) 839-7623ANNUAL MEETINGThursday, May 13, 20219:00 am EDT Texas Roadhouse Support Center 6040 Dutchmans Lane Louisville, KY 40205TRANSFER AGENTComputershare P.O. Box 505000, Louisville, KY 40233 Phone (877) 581-5548FINANCIAL INQUIRIESFor additional financial documents and information, please visit our website at texasroadhouse.com. Please contact us by phone at (502) 426-9984 or by sending us an email to investment@texasroadhouse.comINDEPENDENT AUDITORSKPMG LLP 400 W. Market Street, Suite 2400, Louisville, KY 40202 Phone (502) 587-0535MEDIA INQUIRIESFor all media requests, please contact Travis Doster at (502) 638-5457STOCK LISTINGTexas Roadhouse, Inc. Common Stock is listed on the NASDAQ Stock Exchange under the symbol TXRH4127_Cover.indd 23/24/21 5:18 PM ----------------------------------Jaggers opens in LouisvilleTR Butcher Shop launchesJerry Morgan named PresidentKEEP ON ROCKIN’--------------------“Only those who risk going too far… find out how far they can go.”T.S. Eliot Kent Taylor Founder, CEO and Chairman of the BoardText2Go, which allows for curbside pick-up without getting out of the car and Text2Page, a two-way communication between the guest and staff that allows us to page guests on their phone when their table is ready. These and many more features are allowing us to get faster and more efficient at both in-dining and To-Go sales. Our I.T. Department ensured that gift cards could be redeemed on our app, which was another silver lining. With the success of our gift cards, this new feature led to over 260,000 downloads of our app after the holiday season from gift card redemptions. We were also one of the first restaurants to join the Ecolab Science Certified© program, which is a rigorous science-based cleaning program based on passing an independent audit performed by Ecolab. As of today, over 600 of our restaurants can now display the official Ecolab Science Certified© seal, which will provide additional confidence to our guests and employees. A notable highlight for the year was Veterans Day. Despite the fact that the majority of our dining rooms were closed, our operators did not hesitate to leap this hurdle to make our 10th annual Veterans Day a success. They had every reason to pause this effort, but not surprisingly, they chose to press forward in their typical way. On Veterans Day, our restaurants turned their parking lots into drive-thru celebrations for veterans to pick up their meal vouchers, which allowed them to dine in later or choose To-Go at their convenience. Their willingness to make this celebration happen regardless of the situation speaks volumes about the character of our people and their ability to overcome challenges. We also launched several new low-risk initiatives that we believe have great potential. For example, with the success of selling ready-to-grill steaks during the grocery store shortages, we launched Texas Roadhouse Butcher Shop, which is an online mail order steak business. We bring the same great quality and value to the mail order business and we are excited about the early response. I suggest you check it out at TRButchershop.com and taste the difference for yourself. Another great opportunity is our Texas Roadhouse Margarita Mixer, which hit retail shelves in February. This is an exciting retail opportunity that we think will create brand awareness and could lead to more retail initiatives in the future. We are also launching a canned cocktail seltzer that will be offered in a variety of Texas Roadhouse branded margarita flavors. The seltzers are expected to be in retail locations sometime in 2021. We also made a number of people decisions that made us a stronger company. First, we added Mike Crawford to our Board of Directors. Mike’s business and hospitality experience with the Four Seasons Hotel and Resorts and the Walt Disney Company have been a silver lining during the pandemic, and he will be an asset for many more years to come.In December, we named Jerry Morgan as President of Texas Roadhouse. Jerry brings over 30 years of operational experience, amazing leadership skills, and a ton of energy and enthusiasm to the role. Having Jerry as President along with our COO, Doug Thompson, and our Regional Market Partners in place, will allow us to make Texas Roadhouse even stronger for the future. In addition, Mike Schmidt succeeded Jerry Morgan as Regional Market Partner. Mike, a former Managing Partner of the Year, started as a busser with Texas Roadhouse and now oversees more than 100 stores. What an inspiration to other Roadies who aspire to grow in their careers at Texas Roadhouse.I wish I could personally name each Roadie who helped us jump many hurdles last year, which allowed us to finish stronger than many could have ever imagined. I want to thank you for your passion, your partnership, and your commitment to our culture. I have no doubt that we will look back at 2020 as a pivotal year in the history of our company. A year in which a foundation with many silver linings was laid. Surprisingly, I am going to finish my letter with a quote from a famous poet. What I know about poets and poetry could fit in a thimble, but a quote by T.S. Eliot that was recently shared with me sums up the past year at Texas Roadhouse. Thanks to all who went far, and now we know how far we can go in 2021 and beyond. 4127_Frt_Insrt.indd 13/24/21 5:44 PM Dear Shareholders,This addendum is written with a heavy heart.As we were preparing to go to print on the 2020 Annual Report, we learned of the passing of our Founder, CEO and Chairman of the Board, Kent Taylor.After a battle with post-Covid related symptoms, including severe tinnitus, Kent Taylor took his own life on March 18, 2021. Kent battled and fought hard like the former track champion that he was, but the suffering became unbearable as it greatly intensified in the days leading up to his passing.Our company and the restaurant industry lost a visionary and legend and the Taylor family lost a wonderful son, father, and grandad. If you have not read his letter on the previous pages, I encourage you to do so as it was classic Kent Taylor. It was straight to the point and from his heart. His passion for Texas Roadhouse, our people, and our future is clear.As you will read in the letter, Kent left us well-positioned for the future. All three brands have momentum with his own hand-picked team in place to grow in 2021 and beyond. The new retail initiatives are also being well-received and we believe there is a bright future ahead on the retail front.Kent left us with a best-in-class Board of Directors, a pipeline of company leaders, over 600 Managing Partners, and tens of thousands of Roadies who are committed to carry on “the dance” Kent started back in 1993 with the opening of the first Texas Roadhouse.Continuing that dance includes staying committed to being a people-first company and being true to our mission of Legendary Food, Legendary Service®.Kent created a company built on partnership and providing operational and entrepreneurial freedom through the Managing Partner program. The MP model has taught hundreds of Managing Partners how to own a restaurant rather than just run a restaurant.He also made it safe for operators to try and fail since he often said he learned more from failures than successes. He spent many hours gathering ideas and feedback from operators as the Managing Partners were and always will be the center of our universe. All who knew him will miss him greatly and those who worked with him were truly blessed to have spent time learning from him. Like a true leader, he was always teaching and coaching.We will take those lessons with us as we continue to love our people, serve our guests, partner with our vendors, grow our company, and stay true to Kent’s vision and entrepreneurial spirit.As we continue to grieve, I have no doubt that we will heal together and become stronger as we work through the pain.We will also work to keep Kent’s legacy alive by pushing ourselves and others in order to win together! And together, we will stay committed to being Roadhouse Strong – no matter the obstacles or hurdles that lie ahead.Your partner, Jerry Morgan Chief Executive Officer and President4127_Frt_Insrt.indd 23/24/21 5:44 PM 4127_Frt_Insrt.indd 3
3/24/21 5:44 PM
4127_Frt_Insrt.indd 43/24/21 5:45 PM April 2, 2021
To our Shareholders:
You are cordially invited to attend the 2021 Annual Meeting of Shareholders of Texas Roadhouse, Inc. on
Thursday, May 13, 2021. The meeting will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans
Lane, Louisville, Kentucky at 9:00 a.m. eastern daylight time.
The official Notice of Annual Meeting, Proxy Statement, and Proxy Card are enclosed with this letter.
Please take the time to read carefully each of the proposals for shareholder action described in the accompanying
proxy materials. Whether or not you plan to attend, you can ensure that your shares are represented at the meeting by
promptly completing, signing and dating your proxy card and returning it in the enclosed postage - paid envelope.
Shareholders of record can also vote by touch - tone telephone from the United States, using the toll - free number on the
proxy card, or by the Internet, using the instructions on the proxy card. If you attend the meeting, then you may revoke
your proxy and vote your shares in person.
Your interest and participation in the affairs of the Company are greatly appreciated. Thank you for your
continued support.
Sincerely,
Gerald L. Morgan
Chief Executive Officer and President
TEXAS ROADHOUSE, INC.
6040 Dutchmans Lane
Louisville, Kentucky 40205
NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 2021
To our Shareholders:
The 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Texas Roadhouse, Inc. (the “Company”)
will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans Lane, Louisville, Kentucky on Thursday,
May 13, 2021 at 9:00 a.m. eastern daylight time.
At the Annual Meeting, you will be asked to:
•
•
•
•
•
elect five directors to the Board of Directors of the Company, each for a term of one year;
ratify the appointment of KPMG LLP as the Company’s independent auditors for the Company’s 2021 fiscal
year;
hold an advisory vote on executive compensation;
approve the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan; and
transact such other business as may properly come before the Annual Meeting.
A Proxy Statement describing matters to be considered at the Annual Meeting is attached to this notice. Only
shareholders of record at the close of business on March 15, 2021 are entitled to receive notice of and to vote at the Annual
Meeting.
By Order of the Board of Directors,
Christopher C. Colson
Corporate Secretary
Louisville, Kentucky
April 2, 2021
IMPORTANT:
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE SUBMIT
YOUR VOTE BY USING ONE OF THE VOTING METHODS DESCRIBED IN THE ATTACHED
MATERIALS. IF YOU ATTEND THE ANNUAL MEETING, THEN YOU MAY REVOKE YOUR PROXY
AND VOTE YOUR SHARES IN PERSON.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13, 2021: OUR ANNUAL REPORT
CONTAINING OUR PROXY STATEMENT RELATED TO OUR 2021 ANNUAL MEETING OF
SHAREHOLDERS AND FORM 10-K FOR THE FISCAL YEAR ENDED ON DECEMBER 29, 2020 IS
AVAILABLE ON OUR WEBSITE AT WWW.TEXASROADHOUSE.COM IN THE INVESTORS SECTION.
TABLE OF CONTENTS
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION
Proposal 1: Election of Directors ..............................................................................................................................
Proposal 2: Ratification of Independent Auditors .....................................................................................................
Proposal 3: Advisory Vote on Approval of Executive Compensation ......................................................................
Proposal 4: Approval of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan ...................................................
Other Matters
1
1
1
2
2
2
INFORMATION ABOUT PROXIES AND VOTING .............................................................................
3
Record Date and Voting Securities ............................................................................................................................
3
Revocability of Proxies ..............................................................................................................................................
3
Solicitation of Proxies ................................................................................................................................................
3
Other Voting Considerations ......................................................................................................................................
3
CORPORATE GOVERNANCE AND OUR BOARD .............................................................................
5
Director Summaries ...................................................................................................................................................
5
Meetings of the Board ................................................................................................................................................
7
Leadership Structure of the Board and the Role of the Board in Risk Oversight.......................................................
8
Committees of the Board ...........................................................................................................................................
9
Policy Regarding Consideration of Candidates for Director ...................................................................................... 11
Compensation of Directors ........................................................................................................................................ 12
Code of Conduct ........................................................................................................................................................ 14
Stock Ownership Guidelines ...................................................................................................................................... 14
Succession Planning ................................................................................................................................................... 14
Mandatory Retirement Age for Board Service ........................................................................................................... 14
STOCK OWNERSHIP INFORMATION ................................................................................................. 15
Delinquent Section 16(a) Reports .............................................................................................................................. 16
EXECUTIVE COMPENSATION .............................................................................................................. 17
2020 Executive Summary .......................................................................................................................................... 17
Compensation Discussion and Analysis .................................................................................................................... 19
Summary Compensation Table .................................................................................................................................. 34
Grants of Plan - Based Awards in Fiscal Year 2020 .................................................................................................... 36
Outstanding Equity Awards ....................................................................................................................................... 37
Stock Vested .............................................................................................................................................................. 39
Termination, Change of Control and Change of Responsibility Payments ................................................................ 40
CEO Pay Ratio ........................................................................................................................................................... 42
AUDIT COMMITTEE REPORT .............................................................................................................. 43
Related Party Transactions ......................................................................................................................................... 44
PRESENTATION OF PROPOSALS ......................................................................................................... 47
Proposal 1: Election of Directors .............................................................................................................................. 47
Proposal 2: Ratification of Independent Auditors ..................................................................................................... 48
Proposal 3: Advisory Vote on Approval of Executive Compensation ...................................................................... 50
Proposal 4: Approval of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan ................................................... 52
SHAREHOLDER PROPOSALS ................................................................................................................ 58
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD ........................................................ 58
FORM 10 - K .................................................................................................................................................. 58
OTHER BUSINESS ..................................................................................................................................... 59
APPENDIX A – TEXAS ROADHOUSE, INC. 2021 LONG-TERM INCENTIVE PLAN .................. 60
PROXY STATEMENT
2021 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 2021
TEXAS ROADHOUSE, INC.
6040 Dutchmans Lane
Louisville, Kentucky 40205
This proxy statement and accompanying proxy card are being furnished in connection with the solicitation of
proxies by the board of directors (the “Board”) of Texas Roadhouse, Inc., a Delaware corporation, to be voted at the 2021
Annual Meeting of Shareholders (the “Annual Meeting”) and any adjournments thereof. In this proxy statement,
references to the “Company,” “we,” “us”, or “our” refer to Texas Roadhouse, Inc. This proxy statement and accompanying
proxy card are first being mailed to shareholders on or about April 2, 2021.
The Annual Meeting will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans Lane,
Louisville, Kentucky on Thursday, May 13, 2021 at 9:00 a.m. eastern daylight time, for the purposes set forth in this proxy
statement and the accompanying notice of the Annual Meeting.
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION
Proposal 1: Election of Directors
The affirmative vote of a plurality of the votes entitled to be cast by the holders of the Company’s common stock
present in person or represented by proxy is required to elect each nominee. Election by a plurality means that the director
nominee with the most votes for the available slot is elected for that slot. You may vote “FOR” each nominee or you may
“WITHHOLD AUTHORITY” to vote for each nominee. Unless you “WITHHOLD AUTHORITY” to vote for a nominee,
your proxy will be voted “FOR” the election of the individuals nominated as directors.
Our Board has adopted a majority voting policy for uncontested director elections. Under this policy, any nominee
who receives fewer “FOR” votes than “WITHHOLD” votes is required to offer his or her resignation. Our nominating and
corporate governance committee would then consider the offer of resignation and make a recommendation to our
independent directors as to the action to be taken with respect to the offer.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES.
Proposal 2: Ratification of Independent Auditors
The proposal to ratify the appointment of KPMG LLP as the Company’s independent auditors for the fiscal year
ending December 28, 2021 must be approved by the affirmative vote of a majority of the shares present (in person or by
proxy) and entitled to vote. You may vote “FOR” or “AGAINST” the ratification, or you may “ABSTAIN” from voting
on this proposal. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
1
Proposal 3: Advisory Vote on Approval of Executive Compensation
The outcome of the advisory vote on whether to approve the executive compensation detailed in this proxy
statement (including the Compensation Discussion and Analysis, the Executive Compensation section and the other related
executive compensation tables and related discussions) will be determined by the affirmative vote of a majority of the
shares present (in person or by proxy) and entitled to vote. You may vote “FOR” or “AGAINST” approval of the executive
compensation, or you may “ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” will have the same effect as
a vote “AGAINST” approval of the executive compensation.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Proposal 4: Approval of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan
The proposal to approve the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan detailed in this proxy
statement will be determined by the affirmative vote of a majority of the shares present (in person or by proxy) and entitled
to vote. You may vote “FOR” or “AGAINST” approval of the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan, or
you may “ABSTAIN” from voting on this proposal. A vote to “ABSTAIN” will have the same effect as a vote
“AGAINST” approval of the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Other Matters
As of the date of this proxy statement, the Board knows of no matters that will be presented for consideration at
the Annual Meeting other than those matters discussed in this proxy statement. If any other matters should properly come
before the Annual Meeting and call for a vote of shareholders, then validly executed proxies in the enclosed form returned
to us will be voted in accordance with the recommendation of the Board, or, in the absence of such a recommendation, in
accordance with the judgment of the proxy holders. Any such additional matter must be approved by an affirmative vote
of a majority of the shares present (in person or by proxy) and entitled to vote at the Annual Meeting.
2
INFORMATION ABOUT PROXIES AND VOTING
Record Date and Voting Securities
The Board has fixed the record date (the “Record Date”) for the Annual Meeting as the close of business on
March 15, 2021. Only shareholders of record at the close of business on the Record Date will be entitled to vote at the
Annual Meeting and at any adjournment or postponement thereof. At the close of business on the Record Date, there were
outstanding 69,712,235 shares of common stock, each of which is entitled to one vote per share on all matters to be
considered at the Annual Meeting.
The presence in person or by proxy of the holders of a majority of the shares of common stock will constitute a
quorum for the transaction of business at the Annual Meeting. Shares of common stock represented by properly executed
proxies received before the close of voting at the Annual Meeting will be voted as directed by such shareholders, unless
revoked as described below.
Revocability of Proxies
A shareholder who completes and returns the proxy card that accompanies this proxy statement may revoke that
proxy at any time before the closing of the polls at the Annual Meeting. A shareholder may revoke a proxy by voting at a
later date by one of the methods described on the proxy card or by filing a written notice of revocation with, or by delivering
a duly executed proxy bearing a later date to, Christopher C. Colson, the Corporate Secretary of the Company, at the
Company’s main office address located at 6040 Dutchmans Lane, Louisville, Kentucky 40205 at any time before the
Annual Meeting. Shareholders may also revoke proxies by delivering a duly executed proxy bearing a later date to the
inspector of election at the Annual Meeting before the close of voting or by attending the Annual Meeting and voting in
person. You may attend the Annual Meeting even though you have executed a proxy, but your presence at the Annual
Meeting will not automatically revoke your proxy.
Solicitation of Proxies
The cost of solicitation of proxies being solicited on behalf of the Board will be borne by us. In addition to
solicitation by mail, proxies may be solicited personally, by telephone or by other means by our directors, officers or
employees, who receive no additional compensation for these solicitation activities. We will, upon request, reimburse
brokerage houses and persons holding common stock in the names of their nominees for their reasonable out - of - pocket
expenses in sending materials to their principals.
Other Voting Considerations
Broker Non - Votes. Under rules of the New York Stock Exchange, matters subject to shareholder vote are
classified as “routine” or “non - routine.” In the case of routine matters, brokers may vote shares held in “street name” in
their discretion if they have not received voting instructions from the beneficial owner. In the case of non - routine matters,
brokers may not vote shares unless they have received voting instructions from the beneficial owner (“broker non - votes”);
therefore, it is important that you complete and return your proxy early so that your vote may be recorded.
The election of directors (Proposal 1) is a non - routine matter under the applicable rules so broker non - votes may
occur. However, broker non - votes do not count as shares entitled to vote. Because the election is decided by a plurality of
shares present (in person or by proxy) and entitled to vote at the Annual Meeting, and because our majority voting policy
for directors only considers “FOR” votes and “WITHHOLD” votes, any broker non - votes will not affect the outcome of
this proposal.
The ratification of the appointment of the Company’s independent auditors (Proposal 2) is a routine matter under
the applicable rules so broker non - votes should not occur. In addition, because this matter is routine and brokers may vote
as stated above, the number of votes cast, plus the number of abstentions, on Proposal 2 will be used to establish whether
a quorum is present.
3
The advisory vote on the approval of executive compensation (Proposal 3), the approval of the Texas Roadhouse,
Inc. 2021 Long-Term Incentive Plan (Proposal 4), and any other matters that may properly come before the Annual
Meeting are also non - routine matters under the applicable rules so broker non - votes may occur. Because broker non - votes
do not count as shares entitled to vote, they do not affect the outcome of the vote on either Proposal 3 or Proposal 4.
Abstentions. Abstentions will be counted for purposes of calculating whether a quorum is present. The effect of
an abstention on each proposal where “ABSTAIN” is a voting choice is discussed above.
Executed but Unmarked Proxies. If no instructions are given, then shares represented by properly executed but
unmarked proxies will be voted in accordance with the recommendation of the Board, or, in the absence of such a
recommendation, in accordance with the judgment of the proxy holders.
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CORPORATE GOVERNANCE AND OUR BOARD
Director Summaries
Michael A. Crawford Business Experience:
Director Since: 2020
Age: 53
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating &
Corporate Governance
Committee
Public Boards:
Hall of Fame Resort &
Entertainment Company
(NASDAQ: HOFV)
Mr. Crawford is currently serving as Chairman of the Board, President and Chief
Executive Officer for Hall of Fame Resort & Entertainment Company (NASDAQ:
HOFV) and its subsidiaries, including Hall of Fame Village powered by Johnson
Controls, which he joined in December 2018. Hall of Fame Resort & Entertainment
Company is a sports, entertainment, and media enterprise headquartered in Canton,
Ohio which was established in 2020 as a result of a merger between HOF Village, LLC.,
a partnership between the Pro Football Hall of Fame and Industrial Realty Group (IRG)
which began in 2016 and Gordon Pointe (GPAQ) Acquisition Corp. From 2014 to 2018,
Mr. Crawford held numerous executive positions with the Four Seasons Hotels and
Resorts Company, starting as the President of Asia Pacific and subsequently becoming
Global President of Portfolio Management. While at Four Seasons, he was responsible
for business and capital planning, along with the design and construction of all new
Four Seasons Hotels and Resorts worldwide. Prior to Four Seasons, Mr. Crawford spent
almost 25 years at the Walt Disney Company (NYSE: DIS) where he rose to Senior
Vice President and General Manager of Shanghai Disney Resort and President of
Shanghai’s Walt Disney Holdings Company.
Reason for Nomination:
Mr. Crawford is being nominated as a non-employee director because of his chief
executive experience, his hospitality and international experience, and his strategic
planning experience. As a result of these and other professional experiences,
Mr. Crawford possesses particular knowledge and experience that strengthens the
Board’s collective qualifications, skills, and experience.
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Gregory N. Moore
Business Experience:
Director Since: 2005
Age: 71
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating &
Corporate Governance
Committee; Chairman of the
Board; International Liaison;
Chairperson of Audit
Committee
Mr. Moore served as the Senior Vice President and Controller of Yum! Brands, Inc.
until he retired in 2005. Yum! Brands is the worldwide parent company of Taco Bell,
KFC, and Pizza Hut. Prior to becoming Yum! Brands’ Controller, Mr. Moore was the
Vice President and General Auditor of Yum! Brands. Before that, he was with
PepsiCo, Inc. and held the position of Vice President, Controller of Taco Bell and
Controller of PepsiCo Wines & Spirits International, a division of PepsiCola
International. Before joining PepsiCo, he was an Audit Manager with Arthur Young &
Company in its New York, New York and Stamford, Connecticut offices. Mr. Moore is
a certified public accountant in the States of New York and California. In July 2011,
Mr. Moore joined the board of Newegg, Inc., a privately-held on - line retailer
specializing in computer and computer - related equipment, and serves as the chair of
both the audit and nominating and corporate governance committees, and serves on the
compensation committee. Mr. Moore also serves on the board of EF&TRH Restaurants
(HK) Holding Limited, a Texas Roadhouse, Inc. joint-venture in China.
Public Boards:
None.
Reason for Nomination:
Mr. Moore is being nominated as a non-employee director because of his extensive
financial, accounting, and international experience in the restaurant industry. As a result
of these and other professional experiences, Mr. Moore possesses particular knowledge
and experience that strengthens the Board’s collective qualifications, skills, and
experience.
Curtis A. Warfield
Business Experience:
Director Since: 2018
Age: 52
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating &
Corporate Governance
Committee; Chairperson of
Nominating & Corporate
Governance Committee
Public Boards:
None.
Mr. Warfield is a certified public accountant and is currently the President and Chief
Executive Officer of Windham Advisors LLC, a private equity and strategic advisory
firm that offers innovative business solutions for companies in the technology,
healthcare, and other industries. He served as part of the senior leadership team
of Anthem, Inc. one of the nation’s largest health insurers with over $100 billion in
revenues from 2017 to 2019. As a senior executive at HCA, the largest healthcare
provider in the country, from 1997 to 2016 he served in a variety of roles. He began as
the Chief Financial Officer of the Columbia Healthcare Network with a majority of his
tenure serving as the Chief Executive Officer of NPAS, a healthcare services company.
Reason for Nomination:
Mr. Warfield is being nominated as a non-employee director because of his extensive
financial and accounting experience, his executive management experience, and his
information technology experience. As a result of these and other professional
experiences, Mr. Warfield possesses particular knowledge and experience that
strengthens the Board’s collective qualifications, skills, and experience.
6
Kathleen M. Widmer Business Experience:
Director Since: 2013
Age: 59
Board Committees /
Leadership:
Compensation Committee
and Nominating &
Corporate Governance
Committee
Public Boards:
None.
Ms. Widmer is the Company Group Chair for Consumer North America and Latin
America with Johnson & Johnson Consumer Health, a position she has held since
December 2018. Prior to this position, she served as the President of the Johnson &
Johnson Consumer OTC division, which provides healthcare solutions through well-
known and trusted over-the-counter medicines and products, a position she held from
August 2015. She was previously with Johnson & Johnson for 21 years, until 2009,
where she held numerous positions, including serving as Vice President, Marketing,
McNeil Consumer Healthcare. Prior to re-joining Johnson & Johnson, she served as
Executive Vice President and Chief Marketing Officer at Elizabeth Arden, Inc., from
2009 to 2015, and was responsible for the global growth strategy and marketing
execution of the Elizabeth Arden Brand. In 2017, she was appointed to the board of
directors for the Wounded Warrior Project. She is a graduate of the U.S. Military
Academy in West Point, New York, and served for five years as a U.S. Army officer.
Reason for Nomination:
Ms. Widmer is being nominated as a non-employee director because of her executive
management experience, her extensive marketing experience in the retail sector, and her
knowledge of the global retail industry. As a result of these and other professional
experiences, Ms. Widmer possesses particular knowledge and experience that
strengthens the Board’s collective qualifications, skills, and experience.
James R. Zarley
Director Since: 2004
Age: 76
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating &
Corporate Governance
Committee; Chairperson of
Compensation Committee
Public Boards:
None.
Business Experience:
Mr. Zarley has served as Chairman, Chief Executive Officer and Chairman of the Board
of Conversant, a single-source provider of media, technology and services across major
interactive marketing channels which previously operated under the name ValueClick,
Inc., and was a member of Conversant’s board of directors from 1999 until his
retirement in 2014. Mr. Zarley shaped the company into a global leader in online
marketing solutions. Prior to joining Conversant, Mr. Zarley was chief operating officer
of Hiway Technologies, where he was a leading member of the management team that
closed the merger with Verio in 1999. Prior to that, Mr. Zarley was Chairman and Chief
Executive Officer of Best Internet until it merged with Hiway Technologies in 1998.
Mr. Zarley also founded and later sold Quantech Information Services, now an ADP
company. In addition, he spent 19 years at RCA in various senior management roles.
Currently, he serves on the board of directors of several private companies.
Reason for Nomination:
Mr. Zarley is being nominated as a non-employee director because of his chief executive
and information technology experience in a developing industry, his technology
experience, and his transactional experience. As a result of these and other professional
experiences, Mr. Zarley possesses particular knowledge and experience that strengthens
the Board’s collective qualifications, skills, and experience.
Meetings of the Board
The Board met on nine occasions and its standing committees (audit committee, compensation committee, and
nominating and corporate governance committee) met on 29 occasions during our fiscal year ended December 29, 2020.
Each incumbent director attended at least 75% of the aggregate number of meetings of the Board and its committees on
which such director served during his or her period of service. In addition, the Company expects all members of the Board
7
to attend the Annual Meeting. All incumbent directors attended the 2020 annual meeting. Four regular Board meetings are
currently scheduled for the 2021 fiscal year. Executive sessions of non - employee directors, without management directors
or employees present, are typically scheduled in conjunction with each regularly scheduled Board meeting. The role of
each standing committee is more fully described below.
Leadership Structure of the Board and Role of the Board in Risk Oversight
Leadership Structure. Following the passing in March 2021 of W. Kent Taylor, the Company’s founder,
Chairman of the Board and Chief Executive Officer at the time of his death, the Board consists of five independent
directors. On March 19, 2021, the Board named Gregory N. Moore as Chairman of the Board. Mr. Moore joined the Board
in 2005 following the Company’s initial public offering in 2004. Until his appointment as Chairman of the Board,
Mr. Moore had served as the Board’s Lead Director since the creation of that position in 2012. The responsibility and
authority of the Lead Independent director are delineated in our Corporate Governance Guidelines, which can be found on
the Company’s website at www.texasroadhouse.com. The Board determined that a separation of the duties and
responsibilities of the Chairman of the Board from those of the Chief Executive Officer was appropriate during the
transition following the death of the Company’s founder.
Risk Oversight. The Board is responsible for overseeing the Company’s risk management strategies, including
the Company’s implementation of appropriate processes to administer day - to - day risk management. The Board is
informed about risk management matters as part of its role in the general oversight and approval of corporate matters. The
Board gives clear guidance to the Company’s management on the risks it believes face the Company, such as the matters
disclosed as risk factors in the Company’s Annual Report on Form 10 - K. Furthermore, the Board has delegated certain
risk management responsibilities to its audit committee and compensation committee.
Through the audit committee’s charter, the Board has authorized the audit committee to oversee the Company’s
risk assessment and risk management policies. The audit committee, in fulfilling its oversight responsibilities, regularly
and comprehensively reviews specific risk matters which have been identified by management. The Company’s internal
auditors regularly report directly to the audit committee on the results of internal audits, the scope and frequency of which
are based on comprehensive risk assessments which have been approved by the audit committee. Additionally, a risk
committee comprised of Company management regularly updates the audit committee on the results of its risk
management activities, which are based on the Company’s prioritized risk overview that is updated at least annually and
reviewed with the audit committee. The audit committee is routinely advised of strategic, operational, financial, legal,
cybersecurity, and other business risks both during and outside of regularly scheduled meetings, and the audit committee
reviews and monitors specific activities to manage these risks, such as insurance plans and internal controls (as and if
applicable).
Through the compensation committee’s charter, the Board has authorized the compensation committee to oversee
the compensation programs for the Company’s executive officers and non-employee directors on the Board. The
compensation committee, in fulfilling its oversight responsibilities, designs the compensation packages applicable to the
Company’s executive officers and Board members. The compensation committee also periodically consults with
management on the payments of bonuses and grants of stock awards to key employees.
The audit committee and the compensation committee jointly perform an annual risk assessment of our
compensation programs for all employees to determine whether these programs encourage unnecessary or excessive risk
taking. In conducting this review, each of our compensation programs is evaluated on a number of criteria aimed at
identifying any incentive programs that deviate from our risk management objectives. Based on this review in 2020, both
the audit committee and the compensation committee concluded that we have the right combination of rewards and
incentives to drive company performance, without encouraging unnecessary or excessive risk taking by our employees.
Specifically, the audit and compensation committees identified the following components of our compensation programs
that mitigate the likelihood of excessive risk taking to meet performance targets: equity incentive compensation in the
form of restricted stock units; long term contracts and a financial buy - in requirement for restaurant management; a
guaranteed base salary within our support center management personnel; minimums and maximums on profit sharing
compensation within our support center management personnel; robust internal controls; operational focus on top line
8
sales growth; and, a business model which focuses on a strong balance sheet, relatively low debt, prudent growth, and
sustainable long-term profitability.
The Board’s oversight roles, including the roles of the audit committee and the compensation committee, allow
the Board to effectively administer risk management policies while also effectively and efficiently addressing Company
objectives. The Board expects to continue to involve Company management in its deliberations and decision-making in
order to administer risk management policies effectively.
Strategic Planning and Strategic Initiatives. The Board also plays an instrumental oversight role in the strategic
planning and initiatives of the Company. As a part of this role, the Board reviews annually the Company’s strategy with
management to ensure that the Company and the Board are aligned on the long-term goals and strategic initiatives of the
Company. Additionally, the Board conducts periodic review of the manner in which the Company is allocating its capital
to ensure that the Board and the management of the Company are in agreement on how the Company is managing its asset
portfolio. Finally, the Board provides direct oversight over certain other strategic initiatives or transactions implemented
by the Company, including franchise acquisitions, retail or other business development initiatives, and the Company’s
share repurchase activities (as applicable).
Corporate Sustainability. Both the Board and the Company take great pride in our environmental, social, and
governance efforts – specifically our corporate sustainability program and our appreciation for and commitment to our
employees and for the community. Our commitment is evident from our long history of dedication to corporate citizenship,
diversity, and the manner in which we often consider sustainability as part of our decision-making process. In furtherance
of the foregoing, the Board reviews the Company’s corporate sustainability initiatives as a part of their oversight role of
the Company’s business strategy and risk management. In particular, the Board receives periodic updates, at least annually,
of our corporate sustainability initiatives from management. Additionally, the Company includes an update on some of
these initiatives in the Company’s Annual Report.
Committees of the Board
The Board has three standing committees:
(i)
(ii)
the audit committee;
the compensation committee; and
(iii)
the nominating and corporate governance committee.
The Board has adopted a written charter for each of these committees, which sets out the functions and
responsibilities of each committee. The charters of these committees are available in their entirety on our website at
www.texasroadhouse.com. Please note, however, that the information contained on the website is not incorporated by
reference in, nor considered to be a part of, this proxy statement.
The Board has also designated one of its members as an International Liaison, which is elected annually by a
majority of the Board. Mr. Moore currently serves as the Board’s International Liaison. The duties and responsibilities of
International Liaison are delineated in our Corporate Governance Guidelines but include, without limitation, (i) overseeing
the Company’s efforts in international expansion and reporting to the Board on those efforts, (ii) traveling with certain
members of management to proposed international locations and markets (as needed) and to meet proposed international
business partners where appropriate, (iii) meeting with the Company’s compliance team regarding the required anti-bribery
and corruption due diligence review on any proposed international business partner, and (iv) reviewing on behalf of the
Board all new proposed international development or franchise agreements.
Audit Committee. As described in its charter, the primary purpose of the audit committee is to assist the Board
in fulfilling its oversight responsibility relating to:
(i)
the integrity of the Company’s consolidated financial statements;
9
(ii)
(iii)
(iv)
the Company’s compliance with legal and regulatory requirements;
the independence and performance of the Company’s internal and external auditors; and
the Company’s internal controls and financial reporting practices.
The audit committee is also directly responsible for the following: (a) pre-approving all audit and permitted
non - audit related services provided by our independent auditors, (b) the appointment, compensation, retention, and
oversight of the Company’s independent auditors, and (c) periodically evaluating whether the Company should rotate the
independent auditors utilized by the Company. In connection with the audit committee’s appointment of the Company’s
independent auditors, the audit committee evaluates the service level of the incumbent independent auditor on an annual
basis, which includes criteria such as prior year quality of service, industry and technical expertise, independence, resource
availability, and reasonableness and competitiveness of fees, as well as solicits the input of key management employees
during its evaluation. The audit committee reviews all of the Company’s earnings press releases and Quarterly and Annual
Reports on Form 10 - Q and Form 10 - K, respectively, prior to filing with the Securities and Exchange Commission (the
“SEC”). The audit committee is also responsible for producing an annual report on its activities for inclusion in this proxy
statement. All of the members of the audit committee are “independent,” as that term is defined in the listing standards
under NASDAQ Marketplace Rule 5605(a)(2) and meet the criteria for independence under the Sarbanes - Oxley Act of
2002 and the rules adopted by the SEC. The audit committee is currently comprised of Messrs. Crawford, Moore, Warfield,
and Zarley. Mr. Moore currently chairs the audit committee. The Board evaluated the credentials of and designated
Messrs. Moore and Warfield as audit committee financial experts. The audit committee met 16 times during fiscal year
2020, which were comprised of six regular meetings of the audit committee, two meetings per quarter relating to the audit
committee’s review of the Company’s filings with the SEC, and two special meetings to discuss emerging events which
occurred between regularly scheduled meetings.
Compensation Committee. As described in its charter, the compensation committee:
(i)
(ii)
assists the Board in fulfilling its responsibilities relating to the design, administration and oversight of
employee compensation programs and benefit plans of the Company’s executive officers;
discharges the Board’s duties relating to the compensation of the Company’s executive officers and non-
employee directors; and
(iii)
reviews the performance of the Company’s executive officers.
The compensation committee is also responsible for reviewing and discussing with management the
“Compensation Discussion and Analysis” in this proxy statement and recommending its inclusion in this proxy statement
to the Board. All of the members of the compensation committee are “independent” under all applicable rules, including
the listing standards under NASDAQ Marketplace Rule 5605(a)(2) and the requirements of the SEC. The current members
of the compensation committee are Ms. Widmer and Messrs. Crawford, Moore, Warfield, and Zarley. Mr. Zarley currently
chairs the compensation committee. The compensation committee met eight times during fiscal year 2020.
Nominating and Corporate Governance Committee. As described in its charter, the nominating and corporate
governance committee assists the Board in:
(i)
(ii)
identifying potential candidates for consideration in the event of vacancy on the Board and/or the Board
determines that a new director is necessary and screen individuals qualified to become members of the
Board consistent with the nominating and corporate governance committee’s screening guidelines and
criteria;
if a vacancy on the Board occurs, making recommendations to the Board regarding the selection and
approval of the candidate to fill such vacancy either by election by the Company’s shareholders or
appointment by the Board;
10
(iii)
reviewing the qualifications and independence of, approving the nominations of, and recommending to
the Board those persons to be nominated for membership on the Board and presented for shareholder
approval at the annual meeting; and
(iv)
developing and recommending to the Board a set of corporate governance principles.
The nominating and corporate governance committee routinely evaluates the size and composition of the Board
and the variety of professional expertise represented by the Board members in relation to the Company’s business. To
assist in this process, the nominating and corporate governance committee has identified certain interpersonal skills and
professional skills desirable for some and/or all of the directors on the Board. The interpersonal skills are personal attributes
that each director should possess and include ethics and integrity, leadership skills, negotiation skills, and crisis
management skills. The professional skills are an assessment of governance and industry based skill areas which should
be held collectively by the Board but not necessarily by each director and contain skills relating to (i) financial, risk, and
compliance skills, (ii) governance and management skills, and (iii) sector and industry specific skills. All of the members
of the nominating and corporate governance committee are “independent” under all applicable rules, including the listing
standards under NASDAQ Marketplace Rule 5605(a)(2) and the requirements of the SEC. The current members of the
nominating and corporate governance committee are Ms. Widmer and Messrs. Crawford, Moore, Warfield, and Zarley.
Mr. Warfield currently chairs the nominating and corporate governance committee, while Mr. Moore previously chaired
the nominating and corporate governance committee until transitioning the position to Mr. Warfield in August 2020. The
nominating and corporate governance committee met five times during fiscal year 2020.
Policy Regarding Consideration of Candidates for Director
Shareholder recommendations for Board membership should include, at a minimum, the name of the candidate,
age, contact information, present principal occupation or employment, qualifications and skills, background, last five
years’ employment and business experience, a description of current or previous service as director of any corporation or
organization, other relevant biographical information, and the nominee’s consent to service on the Board. A shareholder
nominee will be requested to complete a detailed questionnaire in the form that current non-employee directors and
executive officers of the Company complete.
The nominating and corporate governance committee may consider such other factors as it may deem are in the
best interest of the Company and its shareholders. The Board has adopted corporate governance guidelines which provide
that, if and when the Board determines that it is necessary or desirable to add or replace a director, the nominating and
corporate governance committee will seek diverse candidates, taking into account diversity in all respects (including
gender, race, age, board service, background, education, skill set, and financial acumen, along with knowledge and
experience in areas that are relevant to the Company’s business), when evaluating potential nominees. The manner in
which the nominating and corporate governance committee evaluates a potential nominee will not differ based on whether
the nominee is recommended by a shareholder of the Company.
The Company currently retains a corporate recruiter to assist in identifying candidates for open positions at the
Company. Upon request, this recruiter also assists in identifying and evaluating candidates for director, but the Company
does not pay an additional fee for this service.
On June 25, 2020, the nominating and corporate governance committee recommended to the Board that the
number of directors be increased by one and that Mr. Crawford be appointed to the Board as an independent director; the
Board approved this recommendation. Mr. Crawford was referred to the nominating and corporate governance committee
by our corporate recruiter. Following his initial referral for service as a director, Mr. Crawford met extensively with
management of the Company and our existing members of the Board prior to the nominating and corporate governance
committee’s decision to recommend his appointment. Mr. Crawford was nominated as a non-employee director because
of his chief executive experience, his hospitality and international experience, and his strategic planning experience.
11
Compensation of Directors
As further discussed in the “Compensation Discussion and Analysis,” the compensation committee engaged
Willis Towers Watson as an independent compensation consultant in 2017 to advise the compensation committee on the
compensation for our executive officers and non - employee directors. In order to supplement this analysis from our
compensation consultant, the compensation committee has subsequently used Equilar (the Company’s external executive
and director compensation database aggregator) to establish the compensation for our non-employee directors, most
recently in establishing the fixed dollar amount on service based restricted stock units granted to our non-employee
directors more particularly described below. Similar to our compensation philosophy for our executive officers, we believe
that issuing service based restricted stock units to our non-employee directors aligns their interests with those of our
shareholders. Specifically, since the bulk of each non-employee director’s compensation lies in the value of the service
based restricted stock units granted, the non-employee directors are motivated to continually improve the Company’s
performance in the hope that the performance will be reflected by the stock price on the vesting date of their service based
restricted stock units. Moreover, we believe that the service based restricted stock unit awards drive director alignment
with maximizing shareholder value because the value of the service based restricted stock units varies in response to
investor sentiment regarding overall Company performance at the time of vesting.
As described more fully below, the following table summarizes the total compensation earned for fiscal year 2020
for each of the non - employee directors.
2020 Director Compensation Table
Grant Date
Name
Michael A. Crawford
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Fees Earned Fair Value of
Stock Awards
or Paid in
Cash ($)(1)
($)(2)
0
43,250(4)
13,250(5)
9,750
15,250(6)
184,734
184,734
184,734
184,734
106,365(3)
Total ($)
106,365
227,984
197,984
194,484
199,984
(1)
(2)
On April 6, 2020, each non-employee director of the Board agreed to forgo 100% of their cash compensation
relating to their respective service on the Board and any Board committees for the period commencing April 1,
2020 and continuing thereafter for the remainder of the 2020 fiscal year. Additionally, upon Mr. Crawford’s
appointment to the Board on June 25, 2020, he similarly agreed to forgo 100% of his cash compensation relating
to his service on the Board and any Board committees for the remainder of the 2020 fiscal year.
In November 2019, the compensation committee and the Board elected to restructure the equity component for
each non-employee director’s total compensation. Accordingly, the compensation committee and the Board
agreed that with respect to each non-employee director’s 2020 fiscal year service, each shall receive an annual
grant of service based restricted stock units equal to $185,000 divided by the closing sales price of the Company’s
common stock on the Nasdaq Global Select Market on the trading day immediately preceding the date of the
grant, with such quotient rounded up or down to the nearest 100 shares.
For the service based restricted stock units described in this footnote (2), fair value is equal to the closing price
of the Company’s common stock on the trading day immediately preceding the date of the grant, which was
$55.98 for the grants to the non-employee directors on January 8, 2020. Using the formula described in the
immediately foregoing paragraph of this footnote (2), each non-employee director (other than Mr. Crawford) was
granted 3,300 service based restricted stock units for their respective 2020 fiscal year service. The amounts listed
above represent the grant date fair value determined in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718 (“ASC 718”) of restricted stock units granted under the Company’s
2013 Long-Term Incentive Plan. Detailed information under ASC 718 is set forth in Note 15 to the consolidated
financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended
12
December 29, 2020. No other equity awards were granted to the non-employee directors during the period of time
covered by this table nor were any outstanding at the end of the 2020 fiscal year. The Company cautions that the
amounts reported in the Director Compensation Table for these awards may not represent the amounts that the
non-employee directors will actually realize from the awards. Whether, and to what extent, a non-employee
director realizes value will depend on fluctuation in the Company’s stock price and the non-employee director’s
continued service on the Board.
Additionally, in January 2018, the compensation committee agreed that beginning with the 2018 fiscal year, the
total compensation for any non-employee director may not exceed $500,000, which amount shall be calculated
by adding (i) the total cash compensation to be paid for services rendered by a non-employee director in any
given fiscal year to (ii) the grant date value of any equity granted to such non-employee director in that fiscal
year.
Upon Mr. Crawford’s appointment to the Board on June 25, 2020, he was granted 1,900 service based restricted
stock units, which represents the prorated amount of service based restricted stock units granted to the other non-
employee directors on January 8, 2020 as described in footnote (2) above.
As described above, each non-employee director waived 100% of their cash compensation for service on the
Board and any Board committees for the period commencing April 1, 2020 and continuing thereafter for the
remainder of the 2020 fiscal year. This amount includes the paid portion of the $20,000 annual fee for serving as
the Lead Independent director, the $20,000 annual fee for serving as the chairperson of the audit committee, the
$70,000 annual fee for serving as the International Liaison, and the prorated $8,000 annual fee for his partial
service as the chairperson of the nominating and corporate governance committee.
As described above, each non-employee director waived 100% of their cash compensation for service on the
Board and any Board committees for the period commencing April 1, 2020 and continuing thereafter for the
remainder of the 2020 fiscal year. In August 2020, Mr. Warfield was appointed the chairperson of the nominating
and corporate governance committee. Since he had already elected to forgo his cash compensation, Mr. Warfield
did not receive any portion of the prorated $8,000 annual fee for his partial service as the chairperson of the
nominating and corporate governance committee.
As described above, each non-employee director waived 100% of their cash compensation for service on the
Board and any Board committees for the period commencing April 1, 2020 and continuing thereafter for the
remainder of the 2020 fiscal year. This amount includes the paid portion of the $10,000 annual fee for serving as
the chairperson of the compensation committee.
(3)
(4)
(5)
(6)
Prior to each non-employees director’s election to forego their respective cash compensation described in
footnote (1) above, the compensation committee established that all non-employee directors would have received the
following cash compensation relating to their 2020 fiscal year service:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
each non-employee director would have received a base fee of $25,000;
the Lead Independent director would have received a fee of $20,000;
the chairperson of the audit committee would have received a fee of $20,000;
the chairperson of the compensation committee would have received a fee of $10,000;
the International Liaison would have received a fee of $70,000;
the chairperson of the nominating and corporate governance committee would have received a fee of
$8,000;
13
(vii)
each non - employee director would have received $2,000 for each Board meeting he or she attended in
person and $500 for each Board meeting he or she participated in telephonically; and
(viii)
each non - employee director would have received $1,000 for each committee meeting he or she attended
in person and $500 for each committee meeting he or she participated in telephonically.
Following his appointment as Chairman of the Board in March 2021 and commencing effective as of March 31,
2021, Mr. Moore will no longer receive a fee as the Lead Independent director but will be compensated at an annual rate
of $45,000 for his service as Chairman of the Board.
Code of Conduct
The Board has approved and adopted a Code of Conduct that applies to all directors, officers and employees,
including the Company’s principal executive officer and the principal financial officer. The Code of Conduct is available
in its entirety on the Company’s website at www.texasroadhouse.com. The Company will post amendments to, or waivers
from, its Code of Conduct, if any, that apply to the principal executive officer and the principal financial officer on its
website.
Stock Ownership Guidelines
Our Board has adopted stock ownership guidelines to further align the financial interests of the Company’s
executive officers and non - employee directors with the interests of our shareholders. The guidelines provide that our Chief
Executive Officer should own, at a minimum, the lesser of 100,000 shares or $2,500,000 in then - current market value, our
President should own, at a minimum, the lesser of 40,000 shares or $1,000,000 in then - current market value, and our other
executive officers and non - employee directors should own, at a minimum, the lesser of 10,000 shares or $500,000 in
then - current market value. The executive officers and non-employee directors are expected to achieve the stock ownership
levels under these guidelines within five years of assuming their respective positions and the Company evaluates the
compliance with these stock ownership guidelines at the end of each fiscal year.
All executive officers and non - employee directors who have been in their role for five years are in compliance
with these stock ownership guidelines. We anticipate that any people who are new to their roles within the last five years
will, to the extent they are not currently in compliance, be in compliance with the guidelines within the required time
frame.
Succession Planning
The Board and the Company recognize the importance of continuity of leadership to ensure a smooth transition
for its employees, customers, and shareholders. In furtherance of the foregoing and as described in its charter, the
nominating and corporate governance committee is responsible for periodically reporting to the Board the status of
succession planning for senior management, including guidance regarding succession in the event of an emergency and/or
retirement and the evaluation of potential successors to the executive officers and other key members of senior
management. As a part of this process, both the Board and the nominating and corporate governance committee meet with
certain members of management to review the top and emerging talent internally, their level of readiness, and development
needs.
Mandatory Retirement Age for Board Service
In November 2019, the Board and the nominating and corporate governance committee determined that it is
advisable and in the best interest of the Company to establish a mandatory retirement age for the non-employee directors
on the Board. In furtherance of the foregoing, in no event shall any non-employee be elected, re-elected, and/or appointed
to the Board if such non-employee is 75 years or older at the time of such election, re-election, and/or appointment;
provided, however, any director who began serving on the Board prior to 2006 shall be permitted to be re-elected to the
Board so long as he is not 80 years or older at the time of such re-election.
14
STOCK OWNERSHIP INFORMATION
The following table sets forth as of March 1, 2021 certain information with respect to the beneficial ownership
of the Company’s common stock of (i) each executive officer named in the Summary Compensation Table (the “Named
Executive Officers”), (ii) each non-employee director or nominee for director of the Company, (iii) all directors and
current executive officers as a group, and (iv) each shareholder known by the Company to be the owner of 5% or more of
the Company’s common stock.
Name
Directors, Nominees and Named Executive Officers:
W. Kent Taylor(2)
Michael A. Crawford
S. Chris Jacobsen
Gregory N. Moore
Gerald L. Morgan
Tonya R. Robinson
Doug W. Thompson
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Directors and All Executive Officers as a Group (10 Persons)
Other 5% Beneficial Owners**
Blackrock, Inc.(3)
55 East 52nd Street
New York, New York 10022
The Vanguard Group(4)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Melvin Capital Management LP(5)
535 Madison Avenue, 22nd Floor
New York, New York 10022
Common Stock(1)
Common
Stock
Ownership Percent
3,106,295
1,900
17,781
76,850
64,269
11,476
50,694
6,875
13,220
126,943
3,476,303
4.46%
*
*
*
*
*
*
*
*
*
4.99%
12.1%
8.78%
5.3%
*
Represents beneficial ownership of less than 1.0% of the outstanding shares of class.
**
(1)
This information is based on stock ownership reports on Schedule 13G filed by each of these shareholders with
the SEC as of March 1, 2021.
Based upon information furnished to the Company by the named persons and information contained in filings
with the SEC. Under the rules of the SEC, a person is deemed to beneficially own shares over which the person
has or shares voting or investment power or has the right to acquire beneficial ownership within 60 days, and
such shares are deemed to be outstanding for the purpose of computing the percentage beneficially owned by
such person or group. However, we do not consider shares of which beneficial ownership can be acquired within
60 days to be outstanding when we calculate the percentage ownership of any other person. As of March 1, 2021,
no director or executive officer has the right to acquire any beneficial ownership within 60 days. “Common Stock
Ownership” includes (a) stock held in joint tenancy, (b) stock owned as tenants in common, (c) stock owned or
held by spouse or other members of the reporting person’s household, and (d) stock in which the reporting person
either has or shares voting and/or investment power, even though the reporting person disclaims any beneficial
interest in such stock.
(2)
Mr. Taylor passed away on March 18, 2021.
15
(3)
(4)
(5)
As reported on the Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 27, 2021, it has sole voting
power with respect to 8,169,590 shares and sole dispositive power with respect to 8,426,459 shares.
As reported on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2021, it has
shared voting power with respect to 151,300 shares, sole dispositive power with respect to 5,897,691 shares, and
shared dispositive power with respect to 204,821 shares.
As reported on the Schedule 13G/A filed by Melvin Capital Management LP with the SEC on February 16, 2021,
it has shared voting power with respect to 3,700,000 shares and shared dispositive power with respect to
3,700,000 shares.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who
beneficially own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports
of stock ownership and reports of changes in stock ownership and to provide the Company with copies of all such filed
forms. Based solely on its review of such copies or written representations from reporting persons, the Company believes
that all reports were filed on a timely basis during the fiscal year ended December 29, 2020, with the exception of a Form 4
for Ms. Robinson that was filed on August 3, 2020 reporting the sale of 3,084 shares on July 29, 2020 pursuant to a written
non-discretionary Rule 10b5-1 plan.
16
EXECUTIVE COMPENSATION
2020 EXECUTIVE SUMMARY
The following is an executive summary of our compensation program for our 2020 fiscal year:
Compensation Philosophy
• We believe that our approach to the compensation program for our Named Executive Officers provides our
Named Executive Officers with a compensation package which promotes the sustained profitability of the
Company and aligns the interests of our Named Executive Officers with those of our shareholders. The
compensation packages also reflect a pragmatic response to external market conditions; that is, total
compensation that is competitive with comparable positions in similar industries, including the casual dining
sector of the restaurant industry, but which is reasonable and in the best interests of our shareholders.
Pay Objectives
• Our primary objective in setting and evaluating the compensation for our Named Executive Officers is to
promote the sustained profitability of the Company. Our compensation program is designed to achieve this
objective in the following manner:
• The creation of a more direct relationship between the compensation for our Named Executive Officers
and shareholder value since a significant portion of our Named Executive Officer’s performance based
restricted stock units and cash bonuses are based upon the achievement of defined performance goals to
be established by the compensation committee.
• The attraction and retention of top talent, while also encouraging our Named Executive Officers to keep
their focus on both long - term business development and short - term financial growth.
• The featuring of service based restricted stock unit awards, the value of which is dependent upon the
performance of the Company and the price of our common stock.
• The opportunity by the compensation committee to adjust a significant portion of the compensation for
the Named Executive Officers through the annual grant of service based restricted stock units and/or
performance based restricted stock units to more accurately reflect the overall performance of the
Company.
Key Pay Components
• The compensation packages for our Named Executive Officers are divided into the following three key
components:
• Base Salary: Designed to provide a secure base of compensation and serve to motivate and retain our
Named Executive Officers.
• Cash Bonus: Designed to reward our Named Executive Officers for the success of the Company as
measured by growth in the Company’s earnings per diluted share and its overall pre - tax profit, and for
each Named Executive Officer’s individual contribution to that success.
• Restricted Stock Unit Grants: Designed to offer the Named Executive Officers a financial interest in the
long - term success of the Company and align their interests with those of our shareholders.
• The compensation packages for our Named Executive Officers include the following types of restricted stock
units:
17
• Service Based Restricted Stock Units, which grant the Named Executive Officers the conditional right to
receive shares of our common stock that vest after a defined period of service;
•
“Retention” Restricted Stock Units, which vest upon the completion of the term of an individual Named
Executive Officer’s agreement or such longer date as determined by the compensation committee; and
• Performance Based Restricted Stock Units, which are calculated based on the achievement of certain
Company performance targets established by the compensation committee and vest over a period of
service.
• Our Board has adopted stock ownership guidelines to further align the financial interests of the Company’s
executive officers with the interests of our shareholders. The guidelines provide that our Chief Executive
Officer should own, at a minimum, the lesser of 100,000 shares or $2,500,000 in then - current market value,
our President should own, at a minimum, the lesser of 40,000 shares or $1,000,000 in then - current market
value, and our other executive officers should own, at a minimum, the lesser of 10,000 shares or $500,000 in
then - current market value. The executive officers are expected to achieve these levels within five years of
assuming their respective positions.
Setting Compensation
• The compensation program for our Named Executive Officers is determined by the compensation committee.
• The compensation committee evaluates the stock compensation for each Named Executive Officer on an
annual basis to determine the right combination of rewards and incentives through the issuance of service
based restricted stock units and/or performance based restricted stock units to drive company performance
without encouraging unnecessary or excessive risk taking by all of the Named Executive Officers as a whole.
2021 Employment Agreements
• As more particularly described below, the Named Executive Officers have recently entered into new 2021
Employment Agreements.
• Under the 2021 Employment Agreements, the compensation committee has established the following
compensation for our Named Executive Officers:
• Base Salary: Each 2021 Employment Agreement establishes an annual base salary for the term of the
respective 2021 Employment Agreements, with base salary increases being left to the discretion of the
compensation committee.
• Cash Bonus: Each 2021 Employment Agreement provides an annual short-term cash incentive opportunity
with a target bonus based on the achievement of defined goals to be established by the compensation
committee, with increases in the target bonus amount to be made at the discretion of the compensation
committee during the term of the 2021 Employment Agreement.
• Restricted Stock Units: Each 2021 Employment Agreement provides that the compensation committee
may grant stock awards to the Named Executive Officers during the term of the respective 2021
Employment Agreements, the types and amounts of which are subject to the compensation committee’s
discretion based on their annual review of the performance of the Company and of the individual Named
Executive Officers. While the Company previously granted retention grants for our Named Executive
Officers under the 2018 Employment Agreements, the compensation committee did not make any similar
retention grants for the Named Executive Officers under the 2021 Employment Agreements. The
compensation committee will evaluate whether or not to award retention grants in the future as a part of
its annual evaluation of the compensation packages for the Named Executive Officers.
18
Compensation Discussion and Analysis
The Company’s compensation committee reviews and establishes executive compensation in connection with
each executive officer’s employment agreement. As one purpose of this discussion is to present the compensation
committee’s overall program and philosophy for executive compensation, we have generally presented the discussion as
of the end of the prior fiscal year and as of the beginning of the current fiscal year without taking into account the
March 2021 death of Mr. Taylor.
We entered into new employment agreements with W. Kent Taylor, Doug W. Thompson, Tonya R. Robinson,
and S. Chris Jacobsen, each a Named Executive Officer, on December 30, 2020, each of which has an effective date of
January 8, 2021. As a part of Gerald L. Morgan’s appointment to President, we entered into a new employment agreement
with Mr. Morgan, a Named Executive Officer, on December 17, 2020, which has an effective date of January 8, 2021. In
connection with Mr. Morgan’s appointment to President, Mr. Taylor resigned as President while still remaining as
Chairman and Chief Executive Officer of the Company. Additionally, on March 18, 2021 and consistent with the Board’s
succession planning, Mr. Morgan was named Chief Executive Officer of the Corporation following Mr. Taylor’s death.
Mr. Morgan remains the President of the Corporation following his appointment to Chief Executive Officer. As used
herein, the employment agreements with Messrs. Taylor, Morgan, Jacobsen, and Thompson, and Ms. Robinson entered
into during December 2020 (as applicable) shall be referred to collectively as the “2021 Employment Agreements” and
with respect to any Named Executive Officer, as a “2021 Employment Agreement.” Each 2021 Employment Agreement
establishes an initial three-year term which automatically renews for successive one-year terms thereafter unless either
party elects not to renew by providing written notice to the other party at least 60 days before expiration.
Additionally, during fiscal year 2020, (i) each of Messrs. Taylor and Jacobsen were party to employment
agreements dated December 26, 2017, each of which expired on January 7, 2021, (ii) Ms. Robinson was party to an
employment agreement dated June 11, 2018, which expired on January 7, 2021, and (iii) Mr. Thompson was party to an
employment agreement dated August 23, 2018, which expired on January 7, 2021. As used herein, the employment
agreements with Messrs. Taylor, Jacobsen, and Thompson, and Ms. Robinson entered into during 2018 (as applicable)
shall be referred to collectively as the “2018 Employment Agreements” and with respect to any Named Executive Officer,
as a “2018 Employment Agreement.” The 2021 Employment Agreements supersede and replace the prior 2018
Employment Agreement with Messrs. Taylor, Thompson, and Jacobsen and Ms. Robinson, and the 2021 Employment
Agreement with Mr. Morgan supersedes and replaces his prior regional market partner agreement. Under Mr. Morgan’s
prior regional market partner agreement and as shown in the Summary Compensation Table below, Mr. Morgan received,
without limitation, a base salary and a performance bonus equal to a certain percentage of the pre-tax income of the
restaurants which were under the supervision of the market partners that he managed (which percentage varied based on
whether the restaurant was a Company restaurant or a franchise restaurant).
To assist in setting compensation under the 2018 Employment Agreements and pursuant to the authority granted
under its charter, the compensation committee engaged Willis Towers Watson as an independent compensation consultant
in 2017 to advise the compensation committee on compensation for the executive officers and the non-employee directors,
together with analysis and services related to such executive and director compensation. Specifically, the compensation
committee asked the consultant to provide market data, review the design of the executive and director compensation
packages, and provide guidance on cash and equity compensation for the Company’s executive officers and the non-
employee directors. In order to supplement this analysis from our compensation consultant, the compensation committee
has subsequently used Equilar (the Company’s external executive and director compensation database aggregator) to
establish the compensation for our Named Executive Officers under their respective 2021 Employment Agreements. In
connection with this process, the chairperson of the compensation committee and management of the Company agreed on
a list of the following 12 peer companies to evaluate their executive compensation: BJ’s Restaurants, Inc., Bloomin Brands,
Inc., Brinker International, Inc., Churchill Downs Incorporated, Cracker Barrel Old Country Store, Inc., Dave & Buster’s
Entertainment, Inc., Dine Brands Global, Inc., Dunkin’ Brands Group, Inc., Papa John’s International, Inc., Red Robin
Gourmet Burgers, Inc., The Cheesecake Factory Incorporated, and The Wendy’s Company. While the compensation
committee and management of the Company do not utilize specific market targets when establishing compensation for the
Company’s executive officers, the chairperson of the compensation committee and management of the Company used the
executive compensation from such peer companies as a part of the overall discussion when establishing executive
19
compensation for the Company’s executive officers. Both Willis Towers Watson and Equilar do not currently provide any
other services to the Company, and the compensation committee has determined that both Willis Towers Watson and
Equilar have sufficient independence from us and our executive officers to allow them to offer objective information
and/or advice.
Each 2018 Employment Agreement establishes a base salary throughout the term of the agreement, and a cash
incentive bonus amount based on the achievement of defined goals to be established by the compensation committee. In
addition to cash compensation, the 2018 Employment Agreements also provide the compensation committee with an
opportunity to make annual stock awards to the Named Executive Officers, the types and amounts of which are subject to
the compensation committee’s discretion based on their annual review of the performance of the Company and of the
individual Named Executive Officers. The types of stock awards contemplated by the 2018 Employment Agreements are
(i) service based restricted stock units, which grant the Named Executive Officers the conditional right to receive shares
of our common stock that vest after a defined period of service, (ii) “retention” restricted stock units, which vest upon the
completion of the term of an individual Named Executive Officer’s agreement or such later date as determined by the
compensation committee, and (iii) performance based restricted stock units, which are calculated based on the achievement
of certain Company performance targets established by the compensation committee and vest over a period of service. As
of the date of this proxy statement and as more particularly described below, each Named Executive Officer has received
an annual grant of service based restricted stock units relating to their 2018 year service (which were granted in 2017 or
2018 [as applicable]), their 2019 year service (which were granted in 2019), and their 2020 year service (which were
granted in 2020). Additionally, each of Messrs. Taylor, Thompson, and Jacobsen and Ms. Robinson have received grants
of performance based restricted stock units relating to their 2018, 2019 and/or 2020 year service (as applicable). Moreover,
each of Messrs. Thompson and Jacobsen, and Ms. Robinson have received “retention” grants of restricted stock units
under their respective 2018 Employment Agreements, which vest upon the completion of the term of the agreement on the
condition that the applicable Named Executive Officer is still serving the Company on the vesting date. Finally,
Mr. Taylor’s 2018 Employment Agreement also provides for a long-term “retention” grant of restricted stock units, which
vest on January 8, 2023 on the condition that Mr. Taylor is still serving the Company on the vesting date.
Additionally, each 2021 Employment Agreement establishes an annual base salary for the term of the respective
2021 Employment Agreement. During the term of the 2021 Employment Agreement, base salary increases are at the
discretion of the compensation committee; provided, however, none of the Named Executive Officer’s base salary may be
decreased during the term of the 2021 Employment Agreement except for decreases that are applied generally to the other
Named Executive Officers in an amount no greater than 10% over the prior year. Each 2021 Employment Agreement also
provides an annual short-term cash incentive opportunity with a target bonus based on the achievement of defined goals
to be established by the compensation committee, with increases in the target bonus amount to be made at the discretion
of the compensation committee during the term of the 2021 Employment Agreement. In addition to cash compensation,
each 2021 Employment Agreement provides that the compensation committee may grant certain stock awards to the
Named Executive Officers during the term of the respective 2021 Employment Agreements, the types and amounts of
which are subject to the compensation committee’s discretion based on their annual review of the performance of the
Company and of the individual Named Executive Officers. As of the date of this proxy statement and as more particularly
described below, each Named Executive Officer has received an annual grant of service based restricted stock units relating
to their 2021 year service. Additionally, each Named Executive Officers has received grants of performance based
restricted stock units relating to their 2021 year service. Finally, while the Company previously granted retention grants
for our Named Executive Officers under the 2018 Employment Agreements, the compensation committee has not made
any similar retention grants for the Named Executive Officers under the 2021 Employment Agreements. The compensation
committee will evaluate whether to grant additional retention grants in the future as a part of its annual evaluation of the
compensation packages for the Named Executive Officers.
Under both the 2018 Employment Agreements and the 2021 Employment Agreements, each Named Executive
Officer has agreed not to compete with us during the term of his or her employment and for a period of two years following
his or her termination of employment; provided, however, under the 2018 Employment Agreement only, if the Named
Executive Officer’s employment is terminated without cause following a change in control, then the Named Executive
Officer has agreed not to compete with us through the date of the last payment of the Named Executive Officer’s severance
payments. Additionally, both the 2018 Employment Agreements and the 2021 Employment Agreements include certain
confidentiality, non-solicitation, and non-disparagement provisions. Finally, the 2018 Employment Agreements contain a
20
“clawback” provision that enables the Company to seek reimbursement to the Company of any compensation paid to any
Named Executive Officer which is required to be recovered by any law, governmental regulation or order, or stock
exchange listing requirement. The 2021 Employment Agreement contains a similar “clawback” provision setting forth
that any compensation paid or payable to the 2021 Employment Agreement or any other agreement or arrangement with
the Company shall be subject to recovery or reduction in future payments in lieu of recovery pursuant to any Company
clawback policy in effect from time to time, whether adopted before or after the date of the 2021 Employment Agreement.
The compensation packages for our Named Executive Officers offer base salaries and target cash bonus amounts
and feature restricted stock unit awards, the value of which is dependent upon the performance of the Company and the
price of our common stock. The compensation committee evaluates the stock compensation for each specific Named
Executive Officer on an annual basis to determine the right combination of rewards and incentives through the issuance
of service based restricted stock units and/or performance based restricted stock units to drive company performance
without encouraging unnecessary or excessive risk taking by all of the Named Executive Officers as a whole. Under this
approach, the Named Executive Officers receive a combination of service based restricted stock units and performance
based restricted stock units, with a significant portion of some of the Named Executive Officer’s compensation being tied
to the grant of such performance based restricted stock units. By conditioning a significant portion of the Named Executive
Officer’s performance based restricted stock unit grants upon the achievement of defined performance goals to be
established by the compensation committee, combined with the stock ownership guidelines for our Named Executive
Officers more particularly described above, we have created a more direct relationship between compensation and
shareholder value. Additionally, by only providing one year’s worth of restricted stock units to our Named Executive
Officers in the 2018 Employment Agreements and by giving the compensation committee the discretion to grant certain
stock awards (if any) in its discretion to our Named Executive Officers under the 2021 Employment Agreements, the
compensation committee has the opportunity to adjust a significant portion of the total compensation for the Named
Executive Officers on an annual basis to more accurately reflect the overall performance of the Company, which may
include the issuance of service based restricted stock units and/or performance based restricted stock units. Overall, we
believe this approach provides the Named Executive Officers with a compensation package which promotes the sustained
profitability of the Company and aligns the interests of our Named Executive Officers with those of our shareholders. The
compensation packages also reflect a pragmatic response to external market conditions; that is, total compensation that is
competitive with comparable positions in similar industries, including the casual dining sector of the restaurant industry,
but which is reasonable and in the best interests of our shareholders.
We believe that the overall design of the compensation packages, along with the culture and values of our
Company, allows us to attract and retain top talent, while also keeping the Named Executive Officers focused on both
long - term business development and short - term financial growth.
In deciding to continue and modify many of our existing executive compensation practices, our compensation
committee considered that the holders of approximately 98% of the votes cast at our 2020 annual meeting on an advisory
basis approved the compensation of our Named Executive Officers as disclosed in the proxy statement for the 2020 annual
meeting. None of the Named Executive Officers, including Mr. Taylor, participated in the creation of their own
compensation packages.
Elements of Compensation
Base Salary. Base salaries for our Named Executive Officers are designed to provide a secure base of
compensation which will be effective in motivating and retaining key executives.
21
Each Named Executive Officer’s 2018 Employment Agreement establishes an annual salary for the years shown
in the table below.
W. Kent Taylor
525,000
Chairman, Chief Executive Officer, Former President(ii)
2018
2019
(through (through (through
January 7, January 7, January 7,
2020)
2020
($)
525,000
2021)
($)(i)
525,000
2019)
($)
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
450,000
450,000
450,000
275,000
300,000
325,000
300,000
315,000
325,000
(i)
(ii)
As further shown in the Summary Compensation Table below, the Named Executive Officers did not
realize the full amount of base salary described in the foregoing table with respect to their 2020 year
service. On March 24, 2020 and in light of the COVID-19 pandemic, Mr. Taylor entered into that certain
First Amendment to 2018 Employment Agreement whereby Mr. Taylor elected to forgo his base salary
and incentive bonus from the pay period beginning March 18, 2020 and continuing through January 7,
2021. Additionally, on April 6, 2020, Messrs. Thompson and Jacobsen and Ms. Robinson entered into
a First Amendment to the 2018 Employment Agreement, whereby (A) Mr. Thompson elected to forego
his base salary and incentive bonus from the pay period beginning April 1, 2020 and continuing through
January 7, 2021, and (B) Mr. Jacobsen and Ms. Robinson elected to forego their respective base salaries
for the second quarter of fiscal year 2020 and their respective bonus from the pay period beginning
April 1, 2020 and continuing through January 7, 2021.
As more particularly described above, prior to Mr. Morgan’s appointment to President on December 17,
2020, Mr. Taylor served as President of the Company while continuing to serve as Chairman and Chief
Executive Officer of the Company. The Board and the compensation committee did not decrease
Mr. Taylor’s compensation following his resignation as President of the Company because he continued
to serve as Chairman and Chief Executive Officer of the Company. As described in the Company’s 2020
proxy statement, Mr. Taylor did not receive an increase in his base salary upon his appointment to
President to 2019.
22
Each Named Executive Officer’s 2021 Employment Agreement provides that the compensation committee will
establish the annual base salary for the Named Executive Officers at the commencement of the term of their respective
2021 Employment Agreement. Pursuant to each Named Executive Officer’s 2021 Employment Agreement, the
compensation committee established an annual base salary for each Named Executive Officer as shown in the table below.
During the term of the respective 2021 Employment Agreement, base salary increases are at the discretion of the
compensation committee.
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Gerald L. Morgan(2)
President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
2021
(starting January 8, 2021)
($)(1)
525,000
350,000
450,000
325,000
325,000
(1)
After evaluating the impact that the on-going COVID-19 pandemic is having on the Company’s financial
performance for the remainder of fiscal year 2021, the compensation committee elected to move forward with
previously delayed increases in annual base salary for certain named executive officers in the following manner:
(i)
(ii)
effective as of March 31, 2021, Mr. Thompson’s annual base salary was increased to $500,000;
effective as of March 31, 2021, Ms. Robinson’s annual base salary was increased to $350,000; and
(iii)
effective as of March 31, 2021, Mr. Jacobsen’s annual base salary was increased to $350,000.
(2)
In consideration for Mr. Morgan’s increased duties and responsibilities following his appointment to Chief
Executive Officer of the Company, effective as of March 31, 2021, the compensation committee increased
Mr. Morgan’s base salary to $450,000.
Incentive Bonus. Incentive bonuses are designed to reward our Named Executive Officers for the success of the
Company, as measured by growth in the Company’s earnings per diluted share (“EPS”) and overall pre - tax profit, and for
each Named Executive Officer’s individual contribution to that success. It is our belief that a significant amount of each
Named Executive Officer’s compensation should be tied to the performance of the Company.
Pursuant to the terms of the Texas Roadhouse, Inc. Cash Bonus Plan (the “Cash Bonus Plan”), the compensation
committee may award an annual cash incentive to the Named Executive Officers, which is the grant of a right to receive a
payment of cash that is subject to targets and maximums, and that is contingent on achievement of performance objectives
during the Company’s fiscal year. These cash incentives are also subject to the terms and conditions of the 2018
Employment Agreements and the 2021 Employment Agreements (as applicable) and reflect each Named Executive
Officer’s job responsibilities and individual contribution to the success of the Company.
Under the Cash Bonus Plan, the compensation committee established a two - pronged approach to tying the
incentive compensation to the Company’s performance. Under this approach, 50% of the target incentive bonus is awarded
based on whether the Company achieves an annual EPS growth target of 10% (the “EPS Performance Goal”). The other
50% is based on a profit sharing pool (the “Profit Sharing Pool”) comprised of 1.5% of the Company’s pre - tax profits
(income before taxes minus income attributable to non - controlling interests, as reported in our audited consolidated
financial statements), which pool is distributed among our Named Executive Officers and certain other members of the
Company’s director - level management based on a pre - determined percentage interest in the pool and subject to certain
pre - determined maximum amounts. After the end of the fiscal year, the compensation committee determines whether and
23
to what extent the EPS Performance Goal has been met, and the portion of the Profit Sharing Pool to which each Named
Executive Officer is entitled. Depending on the level of achievement of the EPS Performance Goal each year, 50% of the
incentive bonus may be reduced to a minimum of $0 or increased to a maximum of two times the target amount. Each 1%
change from the EPS Performance Goal results in an increase or decrease of 10% of the portion of the target bonus amount
attributable to the achievement of the EPS Performance Goal. For example, if we achieve 11% EPS growth, the bonus
payable would be 110% of the portion of the target bonus attributable to the achievement of the EPS Performance Goal.
Conversely, if we achieve 9% EPS growth, the bonus payable would be 90% of the portion of the target bonus attributable
to the achievement of the EPS Performance Goal. The remaining 50% of the Named Executive Officers’ incentive bonus
will fluctuate directly with Company pre - tax profits at fixed participation percentages and maximum amounts which are
determined within 60 days following the commencement of the Company’s fiscal year. The annual profit sharing
component allows the Named Executive Officers to participate in a profit sharing pool with other members of the
Company’s director - level management team. By allowing this level of participation in the Company’s overall profits, the
compensation committee encourages responsible growth and aligns the interests of the Named Executive Officers with
those of other management employees of the Company. This portion of the incentive bonus may be reduced to a minimum
of $0 if the Company ceases to be profitable or for other reasons that the compensation committee determines, and may
be increased to a maximum of two times the target amount established for each individual participant. Both portions of
the incentive bonus can be adjusted downward (but not upward) by the compensation committee in its discretion. Cash
incentive bonuses with respect to fiscal year 2020 were paid at 6.58% of the total target amount for all or a portion of the
fiscal year in which a Named Executive Officer served in such role, based on a decrease in actual EPS of 81.8% and an
actual Profit Sharing Pool of $233,747 calculated on fiscal year 2020 pre-tax profit of $15,583,127.
The actual amounts earned by each Named Executive Officer for fiscal year 2020 are more fully described in
“Executive Compensation.” The target bonus amount, along with the minimum and maximum bonus amounts, are set
forth below:
Executive Incentive Compensation for Fiscal Year 2020
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Target Minimum Maximum
Bonus
($)(i)
525,000
($)
1,050,000
Bonus
Bonus
($)
0
480,000
200,000
200,000
0
0
0
960,000
400,000
400,000
(i)
As further shown in the Summary Compensation Table below, the Named Executive Officers did not
realize the full amount of bonus described in the foregoing table. On March 24, 2020 and in light of the
COVID-19 pandemic, Mr. Taylor entered into a First Amendment to 2018 Employment Agreement
whereby Mr. Taylor elected to forgo his base salary and incentive bonus from the pay period beginning
through January 7, 2021. Additionally, on April 6, 2020,
March 18, 2020 and continuing
Messrs. Jacobsen and Thompson and Ms. Robinson entered into a First Amendment to the 2018
Employment Agreement, whereby (A) Mr. Thompson elected to forego his base salary and incentive
bonus from the pay period beginning April 1, 2020 and continuing through January 7, 2021, and (B)
Mr. Jacobsen and Ms. Robinson elected to forego their respective base salaries for the second quarter of
fiscal year 2020 and their respective bonus from the pay period beginning April 1, 2020 and continuing
through January 7, 2021. Due to such amendments to the employment agreements, each of the foregoing
Named Executive Officers waived approximately 75% of their incentive bonus for the 2020 fiscal year.
Additionally, each 2021 Employment Agreement provides an annual short-term cash incentive opportunity with
a target bonus as set forth in the table below, with increases in the target bonus amount to be made at the discretion of the
24
compensation committee. During the term of each respective 2021 Employment Agreement, the performance criteria and
terms of bonus awards are at the discretion of the compensation committee as described above. Similar to the 2018
Employment Agreements and as further described above, depending on the level of achievement of the goals, the bonus
may be reduced to a minimum of $0 or increased to a maximum of two times the base target amount under the current
incentive compensation policy of the compensation committee of the Board.
Executive Incentive Compensation for Fiscal Year 2021
W. Kent Taylor
Target
Bonus
($)(1)
525,000
Minimum Maximum
Bonus
Bonus
($)
0
($)
1,050,000
Chairman, Chief Executive Officer, Former President
Gerald L. Morgan(2)
President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
350,000
480,000
200,000
200,000
0
0
0
0
700,000
960,000
400,000
400,000
(1)
After evaluating the impact that the on-going COVID-19 pandemic is having on the Company’s financial
performance for the remainder of fiscal year 2021, on March 31, 2021, the compensation committee elected to
move forward with previously delayed increases in target bonus amounts for certain named executive officers in
the following manner:
(i)
(ii)
(iii)
the target bonus for Mr. Thompson relating to the portion of his 2021 fiscal year service commencing
on March 31, 2021 and continuing to and through December 28, 2021 is increased to $500,000 and a
maximum bonus amount of $1,000,000;
the target bonus for Ms. Robinson relating to the portion of her 2021 fiscal year service commencing on
March 31, 2021 and continuing to and through December 28, 2021 is increased to $250,000 and a
maximum bonus amount of $500,000; and
the target bonus for Mr. Jacobsen relating to the portion of his 2021 fiscal year service commencing on
March 31, 2021 and continuing to and through December 28, 2021 is increased to $225,000 and a
maximum bonus amount of $450,000.
(2)
In consideration for Mr. Morgan’s increased duties and responsibilities following his appointment to Chief
Executive Officer of the Company, effective as of March 31, 2021, the compensation committee increased
Mr. Morgan’s target bonus amount to $450,000 and a maximum bonus amount of $900,000 for the portion of his
2021 fiscal year service commencing on March 31, 2021 and continuing to and through December 28, 2021.
Stock Awards. We make equity awards in the form of restricted stock units, which represent the conditional right
to receive one share of our common stock upon satisfaction of the vesting requirements. Restricted stock units offer the
Named Executive Officers a financial interest in the Company and align their interests with those of our shareholders. We
also believe that the market price of our publicly traded common stock represents the most appropriate metric for
determining the value of the equity portion of our Named Executive Officers’ compensation packages. The overall
compensation packages for our Named Executive Officers offer base salaries and target cash bonus amounts and feature
restricted stock unit awards, the value of which is dependent upon the performance of the Company and the price of our
common stock. The compensation committee evaluates the stock compensation for each specific Named Executive Officer
on an annual basis to determine the right combination of rewards and incentives through the issuance of service based
restricted stock units and/or performance based restricted stock units to drive company performance without encouraging
25
unnecessary or excessive risk taking by all of the Named Executive Officers as a whole. Under this approach, the Named
Executive Officers receive a combination of service based restricted stock units and/or performance based restricted stock
units, with a significant portion of some of the Named Executive Officer’s compensation being tied to the grant of such
performance based restricted stock units. We believe that the service based restricted stock awards are inherently
performance based since their value varies in response to investor sentiment regarding overall Company performance at
the time of vesting. Moreover, by only providing one year’s worth of restricted stock units to our Named Executive Officers
in the 2018 Employment Agreements and by giving the compensation committee the discretion to grant certain stock
awards (if any) in its discretion to our Named Executive Officers under the 2021 Employment Agreements, the
compensation committee has the opportunity to adjust a significant portion of the total compensation for the Named
Executive Officers on an annual basis to more accurately reflect the overall performance of the Company, which may
include the issuance of service based restricted stock units and/or restricted stock units based on the achievement of defined
goals to be established by the compensation committee for any and/or all of our Named Executive Officer. Additionally,
each 2018 Employment Agreement for Messrs. Thompson and Jacobsen, and Ms. Robinson provide for a “retention” grant
of restricted stock units, which vest upon completion of the term of their 2018 Employment Agreement on the condition
that the applicable Named Executive Officer is still serving the Company on the vesting date, and Mr. Taylor’s 2018
Employment Agreement provides for a long-term “retention” grant of restricted stock units, which vest on January 8, 2023
on the condition that Mr. Taylor is still serving the Company on the vesting date. While the Company previously granted
retention grants for our Named Executive Officers under the 2018 Employment Agreements, the 2021 Employment
Agreements do not include any similar retention grants. The compensation committee will evaluate whether to grant
additional retention grants in the future as a part of its annual evaluation of the compensation packages for the Named
Executive Officers.
In addition, the 2018 Employment Agreements for Messrs. Taylor, Thompson, and Jacobsen and Ms. Robinson
contain bifurcated awards of service based restricted stock units and performance based restricted stock units for all or a
portion of the term of their respective 2018 Employment Agreements, while the 2021 Employment Agreements for
Messrs. Taylor, Morgan, Thompson, and Jacobsen and Ms. Robinson permit the compensation committee to grant in its
discretion any combination of service based restricted stock units and/or performance based restricted stock units for any
portion of the term of the 2021 Employment Agreements. For the performance based awards that have or may be granted
to the Named Executive Officers, the compensation committee has established a two - pronged approach which mirrors the
approach used for annual cash incentive bonuses. Under this approach, a percentage of the target equity award is based on
whether the Company achieves the annual EPS Performance Goal, and a percentage is based on the Profit Sharing Pool
comprised of 1.5% of the Company’s pre - tax profits (income before taxes minus income attributable to non - controlling
interests, as reported in our audited financial statements). After the end of the fiscal year, the compensation committee
determines whether and to what extent the EPS Performance Goal has been met, and the portion of the Profit Sharing Pool
to which each officer is entitled. Each 1% change from the EPS Performance Goal results in an increase or decrease of
10% of the portion of the target amount attributable to the achievement of the EPS Performance Goal. For example, if we
achieve 11% EPS growth, the number of shares awarded would be 110% of the portion of the target amount attributable
to the achievement of the EPS Performance Goal. Conversely, if we achieve 9% EPS growth, the award would be 90% of
the portion of the target amount attributable to the achievement of the EPS Performance Goal. The remaining percentage
of the Named Executive Officers’ equity award will fluctuate directly with Company pre - tax profits at fixed participation
percentages and maximum amounts which are determined within 60 days following the commencement of the Company’s
fiscal year. Both portions of the performance based equity award may be reduced to a minimum of $0 or increased to a
maximum of two times the target amount for each individual participant. Both portions of the performance based equity
award can also be adjusted downward (but not upward) by the compensation committee in its discretion. Performance
based equity awards with respect to fiscal year 2020 were paid at 6.58% of the total target amount for all or a portion of
the fiscal year in which a Named Executive Officer served in such role, based on a decrease in actual EPS of 81.8% and
an actual Profit Sharing Pool of $233,747 calculated on fiscal year 2020 pre-tax profit of $15,583,127. For discussion of
the percentages assigned by the compensation committee to each component of the performance based equity awards for
Messrs. Taylor, Morgan, Thompson, and Jacobsen, and Ms. Robinson (as applicable), refer to the associated tables below.
The total number of service based restricted stock units and/or performance based restricted stock units granted
to each Named Executive Officer reflects each Named Executive Officer’s job responsibilities and individual contribution
to the success of the Company.
26
Service Based Restricted Stock Units. Except as noted below, the number of service based restricted stock units
granted under the 2018 Employment Agreements are shown in the table below and are subject to the Named Executive
Officer still serving the Company on the vesting date.
Service Based
Restricted Stock
Units vesting on
January 8, 2019
pursuant to
Service Based
Restricted Stock
Units vesting on
June 11, 2019
pursuant to
Service Based
Restricted Stock
Units vesting on
August 27, 2019
pursuant to
2018 Employment 2018 Employment 2018 Employment Employment
Agreements
Agreements
10,000
Agreements
—
Agreements
—
10,000
Service Based
Service Based
Restricted Stock Restricted Stock
Units vesting on Units vesting on
January 8, 2020 January 8, 2021
pursuant to 2018
Service Based
Restricted Stock
Units vesting on
January 8, 2023
pursuant to
2018 Employment 2018 Employment 2018 Employment
Agreements(2)
Agreements(1)
75,000
10,000
Total
Service Based
Restricted Stock
Units granted
pursuant to
Agreements
105,000
pursuant to
W. Kent Taylor
Chairman, Chief
Executive
Officer, Former
President
Doug W.
Thompson
Chief Operating
Officer
Tonya R.
Robinson
Chief Financial
Officer
S. Chris
Jacobsen
Chief
Marketing
Officer
—
—
—
2,000
10,000
22,500
7,000
—
—
10,000
20,000
5,000
15,000
—(3)
—
—
—
—
34,500
37,000
20,000
(1)
(2)
(3)
With respect to Messrs. Thompson and Jacobsen and Ms. Robinson, this number includes a retention grant of
restricted stock units which will vest on January 8, 2021, provided the applicable Named Executive Officer is
still serving the Company on the vesting date.
With respect to Mr. Taylor, this number represents a retention grant of restricted stock units which will vest on
January 8, 2023, provided Mr. Taylor is still serving the Company on the vesting date.
With respect to Mr. Jacobsen, because Mr. Jacobsen’s prior employment agreement included a grant of restricted
stock units relating to his 2018 year service, his 2018 Employment Agreement did not include an initial grant of
restricted stock units; provided, however, for his 2018 year service, Mr. Jacobsen received a grant of 10,000
service based restricted stock units, together with a retention grant of 5,000 restricted stock units, previously
granted under his prior employment agreement.
27
As described above, each 2021 Employment Agreement provides that the compensation committee may grant
certain stock awards to the Named Executive Officers during the term of the respective 2021 Employment Agreements.
In connection with the same, the compensation committee granted service based restricted stock units under the 2021
Employment Agreements as shown in the table below and are subject to the Named Executive Officer still serving the
Company on the vesting date.
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Gerald L. Morgan
President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Service Based
Total
Restricted Stock Service Based
Units vesting on Restricted Stock
January 8, 2022 Units granted
pursuant to
pursuant to
2021 Employment 2021 Employment
Agreements
Agreements
10,000
10,000
10,000(1)
1000
10,000
10,000
7,000
10,000
10,000
7,000
(1)
The 10,000 service based restricted stock units granted to Mr. Morgan for fiscal year 2021 are comprised of (i)
5,000 service based restricted stock units granted to Mr. Morgan on January 8, 2021, and (ii) 5,000 service based
restricted stock units granted to Mr. Morgan on March 31, 2021.
Performance Based Restricted Stock Units. The number of performance based restricted stock units granted to
Messrs. Taylor, Thompson, and Jacobsen and Ms. Robinson for the 2020 fiscal year under their 2018 Employment
Agreement, and the number of shares of common stock which actually vested based on the Company’s performance, are
shown in the table below:
Target Number of Minimum Number Maximum Number
Performance Based of Performance of Performance
Actual Number of
Restricted Stock Based Restricted Based Restricted Shares Issued for
2020 following
Units Granted for
Certification of
2020 pursuant to
2018 Employment 2018 Employment 2018 Employment 2020 Performance
Stock Units
pursuant to
Stock Units
pursuant to
W. Kent Taylor
Chairman, Chief Executive Officer,
Former President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Agreements
50,000
20,000
2,000
7,000
Agreements
Agreements
0
0
0
0
100,000
40,000
4,000
14,000
Goals(1)
3,290
1,316
132
461
(1)
The shares underlying the performance based restricted stock units attributable to the 2020 fiscal year were issued
on March 1, 2021. The compensation committee determined that 50% of the performance based restricted stock
unit award for the 2020 fiscal year would be based on an EPS growth target of 10%, which portion would be
reduced or increased by 10% for every 1% of annual growth in EPS less than or in excess of the 10% goal, and
that 50% of the performance based restricted stock unit award for the 2020 fiscal year would be based on a pre - tax
28
profit target opportunity equal to the percentage payout of 1.5% of pre - tax earnings divided by the bonus pool
target set by the compensation committee for the performance period. The amendments to the 2018 Employment
Agreements described above did not modify and/or impact the number of performance based restricted stock
units issued during the 2020 fiscal year.
As described above, each 2021 Employment Agreement provides that the compensation committee may grant
certain stock awards to the Named Executive Officers during the term of the respective 2021 Employment Agreements.
In connection with the same, the number of performance based restricted stock units granted by the compensation
committee in 2021 to Messrs. Taylor, Morgan, Thompson, and Jacobsen, and Ms. Robinson under their respective 2021
Employment Agreements for the 2021 fiscal year is shown in the table below. Unless set forth below, such performance
based restricted stock units were granted to each respective executive officer on January 8, 2021. The actual number of
shares that will be issued to each of Messrs. Taylor, Morgan, Thompson, and Jacobsen, and Ms. Robinson for fiscal year
2021 based on achievement of the performance goals assigned to these grants by the compensation committee will not be
calculated until the first quarter of 2022.
Target Number of
Performance
Stock
Based Restricted
Maximum
Minimum Number
Number of
of Performance
Performance
Based Restricted
Based Restricted
Stock
Stock
Units pursuant to
Units pursuant to
2021 Employment 2021 Employment 2021 Employment
Agreements(1)
Units vesting on
January 8, 2022
pursuant to
Agreements
0
0
0
0
0
Agreements
100,000
30,000
40,000
5,000
10,000
W. Kent Taylor
Gerald L. Morgan
Doug W. Thompson
Tonya R. Robinson
S. Chris Jacobsen
50,000
15,000(2)
20,000
2,500(3)
5,000
(1)
(2)
(3)
The compensation committee determined that 50% of the performance based restricted stock unit award for 2021
would be based on an EPS growth target of 10%, which portion would be reduced or increased by 10% for every
1% of annual growth in EPS less than or in excess of the 10% goal, and that 50% of the performance based
restricted stock unit award for 2021 would be based on a pre - tax profit target opportunity equal to the percentage
payout of 1.5% of pre - tax earnings divided by the bonus pool target set by the compensation committee for the
performance period. The performance based restricted stock unit award for Messrs. Taylor, Morgan, Thompson,
and Jacobsen and Ms. Robinson with respect to fiscal year 2021 will be certified in the first quarter of 2022.
The 15,000 performance based restricted stock units granted to Mr. Morgan for fiscal year 2021 are comprised
of (i) 2,500 performance based restricted stock units granted to Mr. Morgan on January 8, 2021, and (ii) 12,500
performance based restricted stock units granted to Mr. Morgan on March 31, 2021.
The 2,500 performance based restricted stock units granted to Ms. Robinson for fiscal year 2021 are comprised
of (i) 2,000 performance based restricted stock units granted to Ms. Robinson on January 8, 2021, and (ii) 500
performance based restricted stock units granted to Ms. Robinson on March 31, 2021.
Separation and Change in Control Arrangements
2018 Employment Agreements. Except in the event of a change in control, the 2018 Employment Agreement
with Mr. Taylor provides that no severance would be paid to him upon termination of employment, but he would be
entitled to receive a gift of a crisp $100 bill if his employment were to be terminated by the Company without cause before
the end of the term. The 2018 Employment Agreement for each of Messrs. Thompson and Jacobsen, and Ms. Robinson
provides that, except in the event of a change in control, if the Company terminates their employment without cause before
the end of the term and the applicable Named Executive Officer signs a release of all claims against the Company, then
the Company will pay a severance payment equal to any bonus for a year already ended (even if not yet paid at termination),
29
plus the Named Executive Officer’s base salary for a period of 180 days, and payment of a fixed sum ($225,000 for
Mr. Thompson, $100,000 for Mr. Jacobsen, and $100,000 for Ms. Robinson). Similar payments are due to the Named
Executive Officers under the 2018 Employment Agreements if employment was or is terminated by reason of death or
disability before the end of the term. The Company provides these severance payments to allow for a period of transition
and in exchange for a full release of claims against the Company. The salary component of the severance payments is
subject to deductions and withholdings and is to be paid to the Named Executive Officers in periodic installments in
accordance with our normal payroll practices. The fixed sum is paid in a single lump sum, and any bonus component of
the severance payments for a performance period that ended before termination is to be paid on the same date as the
payment would have been made had his or her employment not been terminated.
The 2018 Employment Agreements also provide that if the Named Executive Officer’s employment is terminated
other than for cause following a change in control, or if the Named Executive Officer resigns for good reason following a
change in control because he or she is required to relocate, and the Company’s successor does not agree to be bound by
the agreement, or the Named Executive Officer’s responsibilities, pay or total benefits are reduced, then in such an event
each such Named Executive Officer will receive severance payments in an amount equal to the Named Executive Officer’s
base salary and incentive bonus through the end of the term of the agreement but not less than one year. In addition, the
Named Executive Officer’s unvested stock awards, if any, will become vested as of the date of termination. Moreover,
with respect to each of the Named Executive Officers under their respective 2018 Employment Agreements, if his or her
employment is terminated under such circumstances and the Named Executive Officer has not yet been granted service
based restricted stock units or performance based restricted stock units, as applicable under the respective Named
Executive Officer’s 2018 Employment Agreements, for either or both of the second and third years of his or her
employment agreement, the Named Executive Officer will be issued the target number of service based restricted stock
units and/or performance based restricted stock units (as applicable) set forth above for each of these years. The payments
and acceleration of vesting of the stock awards are contingent upon the Named Executive Officer signing a full release of
claims against the Company. The salary component of the severance payments is subject to deductions and withholdings
and is to be paid to the Named Executive Officers in periodic installments in accordance with our normal payroll practices
or in a lump sum at the discretion of the compensation committee and in compliance with Section 409A of the Internal
Revenue Code. The bonus component of the severance payments to the Named Executive Officers is to be paid on the
same date as the payment would have been made had his or her employment not been terminated.
According to the terms of the 2018 Employment Agreements, a change in control means that one of the following
events has taken place: (1) the shareholders of the Company approve (a) a merger or statutory plan of exchange involving
the Company (the “Merger”) in which the Company is not the continuing or surviving corporation or pursuant to which
the Common Stock, $0.001 par value (“Common Stock”) would be converted into cash, securities or other property, other
than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have
substantially the same proportionate ownership of common stock of the surviving corporation after the Merger, or (b) a
sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of
the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution; (2) during any period
of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board cease for any
reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of
at least two - thirds of the directors then still in office who were directors at the beginning of such period; (3) a tender or
exchange offer (other than one made by (a) the Company, or (b) Mr. Taylor or any corporation, limited liability company,
partnership, or other entity in which Mr. Taylor owns a direct or indirect ownership of 50% or more, or controls 50% or
more of the voting power [collectively, the “Taylor Parties”]) is made for Common Stock (or securities convertible into
Common Stock) and such offer results in a portion of those securities being purchased and the offeror after the
consummation of the offer is the beneficial owner (as determined pursuant to Section 13(d) of the Securities Exchange
Act of 1934, as amended [the “Exchange Act”]), directly or indirectly, of securities representing in excess of the greater
of at least 20% of the voting power of outstanding securities of the Company or the percentage of the voting power of the
outstanding securities of the Company collectively held by all of the Taylor Parties; or (4) any person other than a Taylor
Party becomes the beneficial owner of securities representing in excess of the greater of 20% of the aggregate voting power
of the outstanding securities of the Company as disclosed in a report on Schedule 13D of the Exchange Act or the
percentage of the voting power of the outstanding securities of the Company collectively held by all of the Taylor Parties.
No change of control will be deemed to have occurred for purposes of an individual 2018 Employment Agreement by
virtue of any transaction which results in the affected Named Executive Officer, or a group of persons which includes the
30
affected Named Executive Officer, acquiring, directly or indirectly, securities representing 20% or more of the voting
power of outstanding securities of the Company.
The estimated amounts that would have been payable to a Named Executive Officer under the 2018 Employment
Agreements are more fully described in “Termination, Change of Control and Change of Responsibility Payments.”
2021 Employment Agreements. The 2021 Employment Agreements generally provide that if a Named Executive
Officer’s employment is terminated during the term of the 2021 Employment Agreement for a Qualifying Reason (as
defined below), the Company will pay the Named Executive Officer three months of base salary (except for Mr. Taylor,
who will receive a crisp $100 bill), unless the termination occurs within 12 months following a Change in Control (as
defined below), in which case the applicable Named Executive Officer’s current base salary remaining for the then existing
term of his or her respective 2021 Employment Agreement will be paid. In addition, if any Named Executive Officer’s
termination occurs for a Qualifying Reason within 12 months following a Change in Control, the applicable Named
Executive Officer shall be paid any incentive bonus earned but not yet paid for any fiscal year ended before the date of
termination, plus an incentive bonus for the year in which the date of termination occurs, equal to the applicable Named
Executive Officer’s target bonus for that year, prorated based on the number of days in the fiscal year elapsed before the
date of termination. For purposes of the 2021 Employment Agreements, termination for a “Qualifying Reason” is
generally defined to be attributable to one of the following: (i) the result of the applicable Named Executive Officer having
submitted to the Company the Named Executive Officer’s resignation in accordance with a request by the Board or the
Chief Executive Officer, provided that such request is not based on the Company’s finding that Cause (as defined below)
for termination exists, (ii) a termination by the Named Executive Officer for Good Reason (as defined below) within 12
months of a Change in Control, or (iii) a termination by the Company for any reason other than Cause or as a result of
death or disability which entitles the Named Executive Officer to benefits under the Company’s long-term disability plan.
Under the 2021 Employment Agreements, a termination by a Named Executive Officer (a separation, including a voluntary
retirement, initiated by a Named Executive Office other than per a request described above), other than for Good Reason
within 12 months following a Change in Control, shall not be a Qualifying Reason. Additionally, termination for “Cause”
means a termination by the Company for one or more of the following reasons: (a) a Named Executive Officer’s conviction
of, or being charged with having committed, a felony; (b) a Named Executive Officer’s acts of dishonesty or moral
turpitude that are detrimental to the business of the Company; (c) a Named Executive Officer’s acts or omissions that such
Named Executive Officer knew or should have reasonably known were likely to damage the business of the Company;
(d) a Named Executive Officer’s failure to obey the reasonable and lawful directions of the Company, including, without
limitation, the Company’s policies and procedures (including the Company’s policies prohibiting discrimination,
harassment, and retaliation), and the Texas Roadhouse, Inc. Code of Conduct; (e) a Named Executive Officer’s failure to
perform such Named Executive Officer’s obligations under his or her 2021 Employment Agreement; (f) a Named
Executive Officer’s willful breach of any agreement or covenant contained within his or her 2021 Employment Agreement
or any fiduciary duty owed to the Company; and/or (g) a Named Executive Officer’s unsatisfactory performance of such
Named Executive Officer’s duties after: (A) he or she has received written notice of the general nature of the unsatisfactory
performance, and (B) he or she has failed to cure the unsatisfactory performance within 30 days thereafter to the satisfaction
of the Company.
As used in the 2021 Employment Agreements, a “Change in Control” means that one of the following events
has taken place: (i) consummation of a merger or consolidation of the Company with any other entity, other than a merger
or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting
entity) more than 50% of the combined voting power of the surviving or resulting entity outstanding immediately after
such merger or consolidation; (ii) consummation of a sale or disposition of all or substantially all of the assets of the
Company (other than such a sale or disposition immediately after which such assets will be owned directly or indirectly
by the shareholders of the Company in substantially the same proportions as their ownership of the common stock of the
Company immediately before such sale or disposition); or (iii) any Person becomes the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act) of securities representing in excess of 50% of the aggregate voting power
of the outstanding securities of the Company as required to be disclosed in a report on Schedule 13D of the Exchange Act.
The Board has the full and final authority, in its sole discretion, to determine conclusively whether a Change in Control
has occurred pursuant to the above definition, the date of the occurrence of such Change in Control, and any incidental
matters relating thereto. The 2021 Employment Agreements also provide for the reduction of Change in Control payments
31
to the maximum amount that could be paid to the Named Executive Officers without giving rise to the excise tax imposed
by Section 4999 of the Internal Revenue Code. Additionally, as used in the 2021 Employment Agreements, “Good
Reason” given by a Named Executive Officer in a notice of termination must be based on: (a) the assignment to such
Named Executive Officer of a different title or job responsibilities that result in a substantial decrease in the level of
responsibility from those in effect immediately before the Change in Control; (b) a reduction by the Company or the
surviving company in such Named Executive Officer’s base pay as in effect immediately before the Change in Control;
(c) a significant reduction by the Company or the surviving company in total benefits available to such Named Executive
Officer under cash incentive, stock incentive and other employee benefit plans after the Change in Control compared to
the total package of such benefits as in effect before the Change in Control; (d) the requirement by the Company or the
surviving company that such Named Executive Officer be based more than 50 miles from where such Named Executive
Officer’s office is located immediately before the Change in Control, except for required travel on company business to
an extent substantially consistent with the business travel obligations which such Named Executive Officer undertook on
behalf of the Company before the Change in Control; or (e) the failure by the Company to obtain from any Successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company an agreement to assume obligations under the 2021 Employment Agreement.
While the individual 2021 Employment Agreements do not address the manner in which unvested stock awards,
if any, will be handled upon the termination of a Named Executive Officer, the specific restricted stock unit award
agreement and/or performance restricted stock unit award agreement entered into by the Named Executive Officers upon
the grant of service based restricted stock units and/or performance based restricted stock units provide that (A) if a Change
in Control occurs prior to the vesting date of such restricted stock units and the Named Executive Officer is terminated by
the Company without Cause, or (B) if the Named Executive Officer is terminated for Good Reason within 12 months
following a Change in Control, then such unvested service based restricted stock units and/or performance based restricted
stock units shall become vested as of the date of termination.
The Company provides these severance payments to allow for a period of transition and are generally contingent
upon the Named Executive Officer’s execution of a full release of claims against the Company, and continued compliance
with the non-competition, non-solicitation, confidentiality and other restrictive covenants. If the Named Executive
Officer’s employment is terminated for any reason other than a Qualifying Reason (such as the officer’s death, disability
or for Cause), then the Company will pay to the Named Executive Officer only the base salary accrued for the last period
of actual employment and any accrued paid time off in accordance with policies of the Company in effect from time to
time. The salary component of the severance payments is subject to deductions and withholdings and is to be paid to the
Named Executive Officers in periodic installments in accordance with our normal payroll practices. The fixed sum is paid
in a single lump sum, and any bonus component of the severance payments for a performance period that ended before
termination is to be paid on the same date as the payment would have been made had his or her employment not been
terminated.
Hedging and Pledging Policies
The Company has a stock trading policy that, among other things, prohibits all of our employees (including our
executive officers) and our directors from engaging in speculative trading in the Company’s shares, which prohibition
includes any arrangement by which a shareholder or option holder changes his or her economic exposure to changes in the
price of the stock. Prohibited arrangements include buying standardized put or call options, writing put or call options,
selling stock short, buying or selling securities convertible into other securities, or merely engaging in a private
arrangement where the value of the agreement varies in relation to the price of the underlying security. Such arrangements
are prohibited because these transactions may give the appearance of improper trades and look disloyal. In addition, our
stock trading policy strongly discourages employees (including our executive officers) and our directors from holding the
Company’s securities in a margin account or otherwise pledging these securities as collateral for a loan. As of the date of
this proxy statement, none of our Named Executive Officers and non-employee directors hold the Company’s securities
in a margin account or have otherwise pledged them as collateral for a loan.
32
Compensation Committee Report
The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” required
by Item 402(b) of Regulation S - K with management. Based on such review and discussions, the compensation committee
recommended to the Board that the “Compensation Discussion and Analysis” be included in this proxy statement and
incorporated by reference into the Company’s Annual Report on Form 10 - K for the year ended December 29, 2020.
All members of the compensation committee concur in this report.
James R. Zarley, Chair
Michael A. Crawford
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
33
Summary Compensation Table
The following table sets forth the total compensation earned with respect to the fiscal years 2020, 2019, and 2018
for those persons serving as our chief executive officer and chief financial officer during fiscal year 2020, along with such
information for each of our three other most highly compensated executive officers during fiscal year 2020, as and if
applicable.
Grant Date
Fair Value of Incentive Plan All Other
Non - equity
Name and Principal
Position
W. Kent Taylor
Chairman, Chief
Executive Officer, Former
President
Tonya R. Robinson
Chief Financial
Officer
Gerald L. Morgan
President
Doug W. Thompson
Chief Operating
Officer
S. Chris Jacobsen
Chief Marketing
Officer
Year Salary ($) ($)(1)
2020 121,154 —
2019 525,000 —
Bonus Stock Awards Compensation Compensation Total
($)
($)(3)
3,620,939
7,213
4,899,742
($)(2)(3)
3,358,800
3,711,600
($)(4)
133,772
654,181
8,961
—
2018 525,000 —
2020 245,482 200
671,760
2019 298,077 200 1,237,200
626,775
2018 250,633 200
291,726
2020 100,000 200
829,316
3,290
249,212
208,601
772,944
2020 122,960 200 1,679,400
2019 450,000 200 2,629,050
2018 450,000 200 1,271,240
671,760
2020 242,981 200
742,320
2019 314,481 200
—
2018 300,000 200
7,896
598,108
659,430
3,290
249,212
315,930
8,782
—
1,161
982
300
7,800
8,961
8,782
6,658
8,961
8,782
1,363,098
920,732
1,785,850
1,087,191
1,165,170
1,818,256
3,686,319
2,389,652
924,889
1,315,174
624,912
(1)
(2)
(3)
This column represents holiday bonus awards paid to the Named Executive Officers for the fiscal years ended
December 29, 2020, December 31, 2019, and December 25, 2018.
Reflects the grant date fair value computed in accordance with FASB ASC Topic 718 of performance based
restricted stock units and service based restricted stock units granted pursuant to the Company’s long term
incentive plan using the closing price of the Company’s common stock on the last trading day immediately
preceding the grant date. These are not amounts paid to or received by the Named Executive Officers.
The Company cautions that the amounts reported in the Summary Compensation Table for these awards may not
represent the amounts that the Named Executive Officers will actually realize from the awards. Whether, and to
what extent, a Named Executive Officer realizes value will depend on the Company’s actual operating
performance, stock price fluctuations and the Named Executive Officer’s continued service with the Company.
Additional information on all outstanding stock awards is reflected in the “Grants of Plan - Based Awards Table”
and the “Outstanding Equity Awards at Fiscal Year End Table.”
With respect to Mr. Taylor, (i) amounts for the 2020 fiscal year include the performance based restricted stock
units and service based restricted stock units granted to Mr. Taylor during the 2020 fiscal year relating to his 2020
year service, and (ii) amounts for the 2019 fiscal year include the performance based restricted stock units and
service based restricted stock units granted to Mr. Taylor during the 2019 fiscal year relating to his 2019 year
service.
With respect to Ms. Robinson, (i) amounts for the 2020 fiscal year include the performance based restricted stock
units and service based restricted stock units granted to Ms. Robinson during the 2020 fiscal year relating to her
2020 year service, (ii) amounts for the 2019 fiscal year include (a) the service based restricted stock units granted
to Ms. Robinson during the 2019 fiscal year relating to her 2019 year service, and (b) the “retention” restricted
stock units granted to Ms. Robinson during the 2019 fiscal year, and (iii) amounts for the 2018 fiscal year include
the service based restricted stock units granted to Ms. Robinson during the 2018 fiscal year relating to her 2018
year service.
34
With respect to Mr. Morgan, amounts for the 2020 fiscal year include the service based restricted stock units
granted to Mr. Morgan during the 2020 fiscal year relating to his 2020 year service and granted prior to his
appointment to President.
With respect to Mr. Thompson, (i) amounts for the 2020 fiscal year include the performance based restricted
stock units and service based restricted stock units granted to Mr. Thompson during the 2020 fiscal year relating
to his 2020 year service, (ii) amounts for the 2019 fiscal year include (a) the performance based restricted stock
units and service based restricted stock units granted to Mr. Thompson during the 2019 fiscal year relating to his
2019 year service, and (b) the “retention” restricted stock units granted to Mr. Thompson during the 2019 fiscal
year, and (iii) amounts for the 2018 fiscal year include the service based restricted stock units granted to
Mr. Thompson during the 2018 fiscal year relating to his 2018 year service.
With respect to Mr. Jacobsen, (i) amounts for the 2020 fiscal year include the performance based restricted stock
units and service based restricted stock units granted to Mr. Jacobsen during the 2020 fiscal year relating to his
2020 year service, and (ii) amounts for the 2019 fiscal year include the performance based restricted stock units
and service based restricted stock units granted to Mr. Jacobsen during the 2019 fiscal year relating to his 2019
year service.
(4)
We believe that the personal safety and security of our senior executives is of the utmost importance to the
Company and its shareholders. In connection with the same, we may from time to time provide personal security
services to certain executives. Security services include home security systems and monitoring and, in some cases,
personal security services. For fiscal year 2020, the Company paid $130,155 toward Mr. Taylor’s personal
security.
35
Grants of Plan - Based Awards in Fiscal Year 2020
The following table presents information with respect to grants of stock awards to the applicable Named
Executive Officers during fiscal year 2020.
Grants of Plan - Based Awards Table
Estimated Future Payouts Under
Equity Incentive Plan Awards(1)
Name
W. Kent Taylor
Grant Date
Minimum Target
Grant Date
All Other Stock
Awards: Number Fair Value of
of Shares of Stock
or Units
(2)
Stock and
Option Awards
($)(3)
Maximum
Service Based RSUs vesting on
January 8, 2021
Performance Based RSUs vesting
on January 8, 2021
Gerald L. Morgan
Service Based RSUs vesting on
February 28, 2021
Service Based RSUs vesting on
May 8, 2021
Service Based RSUs vesting on
August 7, 2021
Service Based RSUs vesting on
November 3, 2021
Doug W. Thompson
Service Based RSUs vesting on
January 8, 2021
Performance Based RSUs vesting
on January 8, 2021
Tonya R. Robinson
Service Based RSUs vesting on
January 8, 2021
Performance Based RSUs vesting
on January 8, 2021
S. Chris Jacobsen
Service Based RSUs vesting on
January 8, 2021
Performance Based RSUs vesting
on January 8, 2021
January 8, 2020
January 8, 2020
—
—
—
10,000
559,800
—
50,000(4) 100,000
—
2,799,000
February 28, 2020 —
—
—
May 8, 2020
August 7, 2020
—
—
—
—
—
—
November 3, 2020 —
—
—
1,250
1,250
1,250
1,250
72,475
57,425
74,988
86,838
January 8, 2020
January 8, 2020
January 8, 2020
January 8, 2020
January 8, 2020
January 8, 2020
—
—
—
10,000
559,800
—
20,000(4) 40,000
—
1,119,600
—
—
—
10,000
559,800
—
2,000(4) 4,000
—
111,960
—
—
—
5,000
279,900
—
7,000(4) 14,000
—
391,860
(1)
(2)
These amounts reflect the minimum, target, and maximum number of shares issuable under performance awards.
The related performance targets and certain results are described in detail in the “Compensation Discussion and
Analysis.”
Each stock award consists of service based restricted stock units, where each unit represents the conditional right
to receive one share of our common stock upon satisfaction of vesting requirements. See the “Compensation
Discussion and Analysis” for the conditions of accelerated vesting upon termination of employment other than
for cause.
(3)
Reflects the grant date fair value computed in accordance with ASC 718 of the target number of performance
based restricted stock units and service based restricted stock units granted to the Named Executive Officers using
36
the closing price of the Company’s common stock on the last trading day immediately preceding the grant date,
which was based on the following:
(i)
(ii)
With respect to Mr. Taylor, 10,000 service based restricted stock units and 50,000 performance based
restricted stock units granted on January 8, 2020 at $55.98.
With respect to Mr. Morgan, 1,250 service based restricted stock units granted on February 28, 2020 at
$57.98, 1,250 service based restricted stock units granted on May 8, 2020 at $45.94, 1,250 service based
restricted stock units granted on August 7, 2020 at $59.99, and 1,250 service based restricted stock units
granted on November 3, 2020 at $69.47.
(iii) With respect to Mr. Thompson, 10,000 service based restricted stock units and 20,000 performance
based restricted stock units granted on January 8, 2020 at $55.98.
(iv)
(v)
With respect to Ms. Robinson, 10,000 service based restricted stock units and 2,000 performance based
restricted stock units granted on January 8, 2020 at $55.98.
With respect to Mr. Jacobsen, 5,000 service based restricted stock units and 7,000 performance based
restricted stock units granted on January 8, 2020 at $55.98.
These are not amounts paid to or received by the Named Executive Officers. For discussion of the assumptions
used in determining these values, see Note 15 to the consolidated financial statements in the Company’s Annual
Report on Form 10 - K for the fiscal year ended December 29, 2020.
(4)
The amount included in the table above represents the target award opportunity. Performance based equity awards
with respect to fiscal year 2020 were paid at 6.58% of the total target amount for all or a portion of the fiscal year
in which a Named Executive Officer served in such role, based on a decrease in actual EPS of 81.8% and an
actual Profit Sharing Pool of $233,747 calculated on fiscal year 2020 pre-tax profit of $15,583,127.
Outstanding Equity Awards
The following table presents information with respect to outstanding stock option awards, stock awards, and
equity incentive plan awards as of December 29, 2020 by the Named Executive Officers.
37
Outstanding Equity Awards at Fiscal Year End Table
Stock Awards
Number of Market Value Number of
Shares or of Shares or Shares or
Units of
Units of
Units of
Stock That
Stock That Stock That
Have Not
Have Not Have Not
Vested
Vested
(#)
Vested
($)(1)
Equity Incentive Plan Awards
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
3,948,000
50,000(3)
(#)
85,000(2) 6,711,600
5,000(4)
394,800
—
—
22,500(5) 1,776,600
20,000(6)
1,579,200
20,000(7) 1,579,200
2,000(8)
157,920
15,000(9) 1,184,400
7,000(10)
552,720
Name
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Gerald L. Morgan
President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Market value was computed using the Company’s closing stock price on the last trading day of our fiscal year
ended December 29, 2020, which was $78.96.
The vesting schedule is as follows: 10,000 service based restricted stock units on January 8, 2021, and 75,000
“retention” restricted stock units on January 8, 2023.
Consists of performance awards which will vest and be earned, if at all, at the time of a determination by our
compensation committee that certain Company performance measures have been satisfied. If and to the extent
earned, the vesting schedule is as follows: 50,000 performance based restricted stock units on January 8, 2021.
The vesting schedule is as follows: 1,250 service based restricted stock units on February 28, 2021, 1,250 service
based restricted stock units on May 8, 2021, 1,250 service based restricted stock units on August 7, 2021, and
1,250 service based restricted stock units on November 3, 2021.
The vesting schedule is as follows: 10,000 service based restricted stock units on January 8, 2021, and 12,500
“retention” restricted sock units on January 8, 2021.
Consists of performance awards which will vest and be earned, if at all, at the time of a determination by our
compensation committee that certain Company performance measures have been satisfied. If and to the extent
earned, the vesting schedule is as follows: 20,000 performance based restricted stock units on January 8, 2021.
The vesting schedule is as follows: 10,000 service based restricted stock units on January 8, 2021, and 10,000
“retention” restricted stock units on January 8, 2021.
Consists of performance awards which will vest and be earned, if at all, at the time of a determination by our
compensation committee that certain Company performance measures have been satisfied. If and to the extent
earned, the vesting schedule is as follows: 2,000 performance based restricted stock units on January 8, 2021.
The vesting schedule is as follows: 5,000 service based restricted stock units on January 8, 2021, and 10,000
“retention” restricted stock units on January 8, 2021.
38
(10)
Consists of performance awards which will vest and be earned, if at all, at the time of a determination by our
compensation committee that certain Company performance measures have been satisfied. If and to the extent
earned, the vesting schedule is as follows: 7,000 performance based restricted stock units on January 8, 2021.
See the “Compensation Discussion and Analysis” for the conditions of accelerated vesting upon termination of
employment other than for cause.
Stock Vested
The following table presents information with respect to stock awards vested during the fiscal year ended
December 29, 2020 by the Named Executive Officers.
Stock Vested Table
Name
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Gerald L. Morgan
President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Number of
Shares Acquired Value Realized
on Vesting
(#)
72,303
on Vesting
($)(1)
4,047,522(i)
22,500
1,103,638(ii)
34,921
1,954,878(iii)
10,000
559,800(iv)
13,722
768,158(v)
(1)
The value realized upon vesting of restricted stock units represents the fair value of the underlying shares
based on the closing price of the Company’s common stock on the trading day immediately preceding
the vesting date, which is in accordance with the following:
(i)
(ii)
(iii)
(iv)
(v)
$55.98 with respect to the 10,000 service based restricted stock units which vested on January 8,
2020, and $55.98 with respect to the 62,303 performance based restricted stock units which
vested on January 8, 2020 but became reportable on February 28, 2020.
$68.67 with respect to the 1,250 service based restricted stock units which vested on
February 25, 2020, $44.86 with respect to the 1,250 service based restricted stock units which
vested on May 3, 2020, $45.94 with respect to the 17,500 service based restricted stock units
which vested on May 8, 2020, $56.19 with respect to the 1,250 service based restricted stock
units which vested on August 2, 2020, and $70.03 with respect to the 1,250 service based
restricted stock units which vested on November 1, 2020.
$55.98 with respect to the 10,000 service based restricted stock units which vested on January 8,
2020, and $55.98 with respect to the 24,921 performance based restricted stock units which
vested on January 8, 2020 but became reportable on February 28, 2020.
$55.98 with respect to 10,000 service based restricted stock units which vested on January 8,
2020.
$55.98 with respect to the 5,000 service based restricted stock units which vested on January 8,
2020, and $55.98 with respect to the 8,722 performance based restricted stock units which
vested on January 8, 2020 but became reportable on February 28, 2020.
39
Termination, Change of Control and Change of Responsibility Payments
2018 Employment Agreements. If a Named Executive Officer had resigned or been terminated for cause prior to
the expiration of the term of his or her 2018 Employment Agreement, the Named Executive Officer would have received
payment of his or her annual base salary then in effect through the date of resignation or termination.
If a Named Executive Officer had been terminated prior to the expiration of the term of his or her 2018
Employment Agreement as a result of death or disability, such Named Executive Officer’s beneficiary or estate would
have been entitled to receive an amount equal to such officer’s annual base salary then in effect through the date of
termination due to death or disability, plus any earned but unpaid bonus, plus the amount of such Named Executive
Officer’s annual base salary then in effect for 180 days following the termination, plus a fixed bonus amount as follows:
for Mr. Taylor, $262,500; for Mr. Thompson, $225,000; for Ms. Robinson, $100,000; and for Mr. Jacobsen, $100,000.
The following table lists the estimated amounts payable to a Named Executive Officer pursuant to the 2018
Employment Agreements if his or her employment had been terminated without cause unrelated to a change of control on
December 29, 2020, the last day of our fiscal year, provided that each Named Executive Officer signed a full release of all
claims against us.
Termination Payments Table
Name
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Total
Estimated
Cash
Payments
($)(1)
100
478,502
273,434
273,434
(1)
Mr. Taylor is entitled to a crisp $100 bill upon the termination of his employment without cause. If the
employment of Mr. Thompson had been terminated under those circumstances, he would have received
any bonus for a year already ended (even if not yet paid at termination), plus the proportionate share of
his annual base salary then in effect ($450,000) for 180 days, plus $225,000. If the employment of
Ms. Robinson had been terminated under those circumstances, she would have received any bonus for a
year already ended (even if not yet paid at termination), plus the proportionate share of her annual base
salary then in effect ($325,000) for 180 days, plus $100,000. If the employment of Mr. Jacobsen had
been terminated under those circumstances, he would have received any bonus for a year already ended
(even if not yet paid at termination), plus the proportionate share of his annual base salary then in effect
($325,000) for 180 days, plus $100,000.
The following table lists the estimated amounts payable to a Named Executive Officer pursuant to the 2018
Employment Agreements and applicable equity incentive agreements if his or her employment had been terminated
without cause following a change of control, or if any of the officers had resigned his or her position for good reason
following a change of control, on December 29, 2020, the last day of our fiscal year, provided that each Named Executive
Officer signed a full release of claims against us.
40
Change in Control, Change in Responsibilities Payments Table
Name
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Estimated Estimated Value of
Cash
Newly Vested
Payments Stock Awards
($)(1)
1,084,545
($)(2)
10,659,600
Total
($)
11,744,145
961,584
3,355,800
4,317,384
538,160
1,737,120
2,275,280
538,160
1,737,120
2,275,280
(1)
If the employment of any of the Named Executive Officers listed above had been terminated without cause
following a change of control, or if any of the Named Executive Officers listed above had resigned his or her
position for good reason following a change of control, the Named Executive Officer would have received the
amount of his or her then current base salary and target incentive bonus through the end of the term of the Named
Executive Officer’s employment agreement, but not less than one year. Had a Named Executive Officer’s
employment been so terminated on December 29, 2020, each of Messrs. Taylor, Thompson, and Jacobsen, and
Ms. Robinson would have received payment through January 7, 2021.
For the purposes of this footnote (1), the table below details the estimated payment for each Named Executive
Officer.
Name
W. Kent Taylor
Chairman, Chief Executive Officer, Former President
Doug W. Thompson
Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Salary ($) Bonus ($)
525,000
559,545
Total
Estimated
Payments
($)
1,084,545
450,000
511,584
961,584
325,000
213,160
538,160
325,000
213,160
538,160
(2)
Each Named Executive Officer’s service based restricted stock units and performance based restricted stock units
would have become immediately vested upon a termination of his or her employment without cause following a
change of control, or if any of the Named Executive Officers had resigned his or her position for good reason
following a change of control. In addition, if any of Messrs. Taylor, Thompson, and Jacobsen, and Ms. Robinson
had not yet been granted performance based restricted stock units for the third year of their respective employment
agreement, they would be issued the target number of units set forth in their respective 2018 Employment
Agreements and as more particularly identified in the Grants of Plan-Based Awards Table above for each such
year. The amounts shown in this column represent the value of the restricted stock units at the closing price of
our common stock on the last trading day of our fiscal year ended December 29, 2020, which was $78.96. The
number of service based restricted stock units and performance based restricted stock units which would have
vested on that date are shown in “Outstanding Equity Awards.”
41
CEO Pay Ratio
Under Section 953(b) of the Dodd Frank Wall Street Reform and Consumer Protection Act, a U.S. publicly traded
corporation is required to disclose the ratio between their Chief Executive Officer’s annual total compensation to the total
compensation of such corporation’s median employee after excluding the Chief Executive Officer’s compensation. To
identify our median employee, we used the 2020 total cash compensation for all individuals (other than Mr. Taylor, our
CEO) who were employed by us as of December 29, 2020, the last day of our 2020 fiscal year. For the purposes of
calculating our employee’s total cash compensation, we used our employee’s base wages identified on our employees’
W- 2 forms. As a part of our calculation, we included all employees, whether employed by us on a full-time or part-time
basis, and we annualized the compensation of any employee whom we hired during our 2020 fiscal year and who was
working for us at the end of our fiscal year. As of December 29, 2020, approximately 78% of our employees were part-
time employees and our average employee worked approximately 22 hours per week.
We identified our median employee as a part-time host in Pensacola, Florida who worked an average of 22 hours
per week. After identifying our median employee, we calculated the annual total compensation for such employee as
$13,164, which is determined using the same methodology we used for our Named Executive Officers as set forth in the
2020 Summary Compensation Table described above.
As more particularly described in the 2020 Summary Compensation Table, the annual total compensation for
Mr. Taylor, our CEO, for our 2020 fiscal year is $3,620,939 and the ratio between the compensation for our CEO and the
compensation for our median employee is 275 to 1. Note that since the SEC rules allow companies to use various
methodologies and assumptions, apply certain exclusions, and make reasonable estimates relating to a specific company’s
employee base when identifying the median employee, the CEO pay ratio disclosed by other companies may not be
comparable with the CEO pay ratio disclosed in this paragraph. Additionally, the pay ratio between our CEO and our
median employee may vary year to year based, in part, on the grant date value of any restricted stock units granted to our
CEO in any given year.
42
AUDIT COMMITTEE REPORT
The audit committee of the Board (the “Committee”) is currently composed of four directors, all of whom meet
the criteria for independence under the applicable NASDAQ and Securities & Exchange Commission (the “SEC”) rules
and the Sarbanes - Oxley Act. The Committee acts under a written charter adopted by the Board, a copy of which is available
on the Company’s website at www.texasroadhouse.com.
The Committee has prepared the following report on its activities and with respect to the Company’s audited
consolidated financial statements for the fiscal year ended December 29, 2020 (the “Audited Financial Statements”).
• The Committee met 16 times during fiscal year 2020, which were comprised of six regular meetings of the
Committee, two meetings per quarter relating to the Committee’s review of the Company’s filings with the
SEC, and two special meetings to discuss emerging events which occurred between regularly scheduled
meetings. The Committee’s meetings included private sessions with the Company’s independent auditors
and internal auditors (as needed), as well as executive sessions consisting of only Committee members. The
Committee also met periodically in private sessions with management, including Named Executive Officers
(as needed);
• The Committee reviewed the acknowledgement process for the Company’s Code of Conduct and the
corresponding results;
• The Committee reviewed the scope, plans, and results of the testing performed by the Company’s internal
auditors and independent auditors in their assessments of internal control over financial reporting and the
consolidated financial statements;
• The Committee reviewed matters submitted to it via the Company’s whistleblower hotline and/or other
reporting mechanisms regarding concerns about allegedly questionable financial, accounting, and/or auditing
matters (if any);
• The Committee reviewed with management, including the internal auditors and the Company’s Vice
President of Legal, and the independent auditors, the Company’s practices with respect to risk assessment
and risk management. The overall adequacy and effectiveness of the Company’s legal, regulatory, and ethical
compliance programs were also reviewed, as well as the Company’s cybersecurity controls and system
standards;
• The Committee reviewed with the Company’s Vice President of Legal the Company’s disclosures with
respect to current lawsuits (as and if applicable);
• The Committee reviewed comment letters received from the SEC, if any, together with management’s
response to such letters;
• The Committee pre - approved all audit, audit-related, and permissible non - audit services provided to the
Company by KPMG LLP, the Company’s independent auditors, for the 2020 fiscal year, before management
engaged the independent auditors for those purposes, pursuant to and in accordance with the Texas
Roadhouse, Inc. Policy for Pre-Approval of Services Provided by External Audit Firm (which is available
on the Company’s website at www.texasroadhouse.com);
• On a quarterly basis, the Committee discussed with KPMG LLP the matters required to be discussed by the
Public Company Accounting Oversight Board’s Auditing Standard No. 1301, Communications with
Committees;
43
• The Committee discussed with KPMG LLP their written disclosures and letter required by the Public
Company Accounting Oversight Board regarding the independent auditor’s communications with the
Committee concerning independence;
• The Committee reviewed the selection, application, and disclosure of critical accounting policies;
• The Committee reviewed with KPMG LLP the selection and disclosure of the critical audit matters set forth
in the independent auditor’s report of the Company’s Form 10-K;
• The Committee reviewed the Company’s quarterly earnings press releases prior to issuance;
• The Committee reviewed and discussed the Company’s Audited Financial Statements for the 2020 fiscal
year with management and the independent auditors;
• As mentioned above, the Committee reviewed the Company’s Quarterly and Annual Reports on Form 10 - Q
and Form 10 - K prior to filing with the SEC;
• The Committee reviewed with management the manner in which the COVID-19 pandemic has impacted the
Company’s financial controls and processes and the steps being taken by the Company to mitigate such
impact;
• The Committee evaluated the appointment, compensation, retention and oversight of KPMG LLP. In
connection with such appointment, the Committee evaluated the service level of the incumbent independent
auditor, which included criteria such as prior year quality of service, industry and technical expertise,
independence, resource availability, and reasonableness and competitiveness of fees, as well as solicited the
input of key management employees during its evaluation; and
• Based on the review and discussion referred to above, and in reliance thereon, the Committee recommended
to the Board that the Audited Financial Statements be included in the Company’s Annual Report on
Form 10 - K for the fiscal year ended December 29, 2020, for filing with the SEC.
All members of the Committee concur in this report.
Gregory N. Moore, Chair
Michael A. Crawford
Curtis A. Warfield
James R. Zarley
Related Party Transactions
The Committee’s charter provides that the Committee will review and approve any transactions between us and
any of our executive officers, non-employee directors, and 5% shareholders, or any members of their immediate families,
in which the amount involved exceeds the threshold limits established by the regulations of the SEC. In reviewing a
related - party transaction, the Committee considers the material terms of the transaction, including whether the terms are
generally available to an unaffiliated third party under similar circumstances. Unless specifically noted, the transactions
described below were entered into before our initial public offering and the subsequent formation of the Committee.
Grants of Franchise or License Rights
We have licensed or franchised restaurants to companies owned in part by certain Named Executive Officers.
The licensing or franchise fees paid by these companies to us range from 0.0% to 4.0% of restaurant sales, which is the
amount we typically charge to franchisees. We believe that allowing certain Named Executive Officers with ownership
interests in our restaurants that pre - dated our initial public offering to continue to maintain those ownership interests adds
44
an ongoing benefit to the Company by making those Named Executive Officers more invested in the overall success of
the brand.
Ownership of franchised restaurants by our current Named Executive Officers as of the end of the 2020 fiscal
year is listed below.
Royalties
Paid to
Us in
Management,
Supervision, or
Accounting Fees
Paid to Us
Initial
Franchise Royalty Fiscal Year 2020 in Fiscal Year 2020
Restaurant
Billings, MT
Everett, MA
McKinney, TX
Muncie, IN
Brownsville, TX
Port Arthur, TX
Wichita, KS
Name and Ownership
Fee
W. Kent Taylor (27.5%)
—
W. Kent Taylor (28.75%) —
—
Gerald L. Morgan (2.0%)
W. Kent Taylor (4.91%)
—
Gerald L. Morgan (3.07%) —
—
W. Kent Taylor (15.0%)
W. Kent Taylor (24.05%) —
Rate
4.0%
4.0%
4.0%
—
4.0%
4.0%
4.0%
($)
181,951
193,674
257,036
50,000
259,995
213,013
303,770
($)
22,744
24,209
32,129
—
32,499
26,627
37,971
For the 2020 fiscal year, the total amount of distributions received by Mr. Taylor and Mr. Morgan relating to their
ownership interests in the above-referenced franchised restaurants were $679,820 and $25,907, respectively. These
amounts do not reflect compensation paid by the Company to Mr. Taylor and/or Mr. Morgan during the 2020 fiscal year;
rather, these amounts were paid by the applicable franchise entity and reflect a return on investment in these separate
restaurant locations.
On March 19, 2004, we entered into a preliminary franchise agreement with a company which is 95% owned by
Mr. Taylor to develop a restaurant at a location which is to be determined. The terms of the preliminary franchise
agreement provide for no initial franchise fees and royalties of 3.5% of restaurant sales. During fiscal year 2020, we
received no payment from this franchise restaurant, as none was due.
The franchise agreements and preliminary franchise agreement that we have entered into with our Named
Executive Officers contain the same terms and conditions as those agreements that we enter into with our other domestic
franchisees except, in some instances, the initial franchise fees and the royalty rates, which are currently $40,000 and
4.0%, respectively, for our other domestic franchisees. We have the contractual right, but not the obligation, to acquire the
restaurants owned by our Named Executive Officers based on a pre - determined valuation formula which is the same as
the formula contained in the domestic franchise agreements that we have entered into with other franchisees with whom
we have such rights. A preliminary agreement for a franchise may be terminated if the franchisee does not identify and
obtain our approval of its restaurant management personnel, locate and obtain our approval of a suitable site for the
restaurant or does not demonstrate to us that it has secured necessary capital and financing to develop the restaurant. Once
a franchise agreement has been entered into, it may be terminated if the franchisee defaults in the performance of any of
its obligations under the agreement, including its obligations to operate the restaurant in strict accordance with our
standards and specifications. A franchise agreement may also be terminated if a franchisee becomes insolvent, fails to
make its required payments, creates a threat to the public health or safety, ceases to operate the restaurant or misuses the
Texas Roadhouse trademarks.
Ownership Interest in Majority-Owned Joint Venture Entities
We have Named Executive Officers that have ownership interest in certain Texas Roadhouse restaurants that are
owned by an entity that the Company controls and in which the Company holds a 52.5% ownership interest. We believe
that allowing certain Named Executive Officers to have ownership interests in restaurants provides an ongoing benefit to
the Company by making these persons more invested in the overall success of the brand.
45
Ownership of such Texas Roadhouse restaurants by our current Named Executive Officers as of the end of the
2020 fiscal year is listed below.
Restaurant
Gilbert-East, AZ
Mansfield, TX
Management or
Supervision Fees
Paid to Us
in Fiscal Year 2020
($)
218,015
231,811
Name and Ownership
Doug W. Thompson (35.5%)
Gerald L. Morgan (34.5%)
For the 2020 fiscal year, the total amount of distributions received by Mr. Thompson and Mr. Morgan relating to
their ownership interests in the above-referenced restaurants were $297,313 and $179,690, respectively. These amounts
do not reflect compensation paid by the Company to Mr. Thompson and/or Mr. Morgan during the 2020 fiscal year; rather,
these amounts were paid by the applicable entity and reflect a return on investment in these separate restaurant locations.
Prior to Mr. Morgan’s appointment to President, the entity operating the Texas Roadhouse restaurant in
Mansfield, Texas in which Mr. Morgan holds an ownership interest had indebtedness to the Company. For the 2020 fiscal
year, the table below sets forth certain information related to the indebtedness to the Company, which bore interest at an
annual rate of 2%:
Largest Aggregate
Amount of Principal Amount of Principal Aggregate Principal Aggregate Interest
Repaid for Fiscal
Outstanding during Outstanding as of
December 10, 2020
Year, 2020
Fiscal Year 2020
($)
($)
15,027
—
Year 2020
($)
228,315
Repaid for Fiscal
($)
518,899
(1)
Restaurant
Mansfield, TX
(1)
On December 10, 2020, the outstanding principal balance of $280,206 was repaid to the Company and the entity
did not have any outstanding indebtedness to the Company upon Mr. Morgan’s promotion to President.
Other Related Transactions
We entered into a real estate lease agreement for the franchise restaurant located in Everett, MA, of which
Mr. Taylor beneficially owns 28.75%, before our granting franchise rights for that restaurant. We have subsequently
assigned the lease to the franchisee, but we remain contingently liable if a franchisee defaults under the terms of the lease
agreement. The Everett lease expires in February 2023.
We previously entered into a real estate lease agreement for the Company restaurant located in Gilbert-East, AZ.
We subsequently assigned the lease to a joint venture operating entity, but we remain contingently liable if the entity
defaults under the terms of the lease agreement. The Gilbert-East lease expires in July 2023.
46
PRESENTATION OF PROPOSALS
PROPOSAL 1
ELECTION OF DIRECTORS
The Company’s bylaws provide for not less than one and not more than 15 directors. Our Board currently consists
of five directors. At the Annual Meeting, we are electing five directors to hold office until the Annual Meeting of
Shareholders in 2022 and until a successor is elected and qualified. Although it is not anticipated that any of the nominees
listed below will decline or be unable to serve, if that should occur, the proxy holders may, in their discretion, vote for a
substitute nominee.
Nominees for Election as Directors
Set forth below are the Board members who will stand for re - election at the Annual Meeting, together with their
age, all Company positions and offices they currently hold, and the year in which they joined the Board.
Name
Michael A. Crawford
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Recommendation
Age
53
71
52
59
76
Position or
Office
Director
Director
Director
Director
Director
Director
Since
2020
2005
2018
2013
2004
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF THE
NOMINEES FOR THE DIRECTORS OF THE COMPANY SET FORTH ABOVE.
47
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
As more particularly described in this proxy statement, the audit committee is directly responsible for managing
the Company’s independent auditors, which includes, without limitation, (i) pre-approving all audit and permitted
non - audit services provided by our independent auditors, and (ii) the appointment, compensation, retention and oversight
of the Company’s independent auditors. In connection with the audit committee’s appointment of the Company’s
independent auditors, the audit committee evaluates the service level of the incumbent independent auditor on an annual
basis, which includes criteria such as prior year quality of service, industry and technical expertise, independence, resource
availability, and reasonableness and competitiveness of fees, as well as solicits the input of key management employees
during its evaluation.
In connection with the same and pursuant to its charter, the audit committee has appointed the firm of KPMG LLP
to serve as the independent auditors to audit the consolidated financial statements and the internal control over financial
reporting of the Company for the fiscal year which ends on December 28, 2021. The Board and the audit committee jointly
agree that the continued retention of KPMG LLP is in the best interest of the Company and its shareholders. Accordingly,
a resolution will be presented at the Annual Meeting to ratify the appointment of KPMG LLP. If the shareholders fail to
ratify the appointment of KPMG LLP, the audit committee will take this result into account when appointing an
independent auditor for the 2021 fiscal year. Even if the appointment is ratified, the audit committee in its discretion may
direct the appointment of a different independent registered public accounting firm as the Company’s independent auditors
at any time during the year if the audit committee believes that such a change would be in the best interests of the Company
and its shareholders. One or more representatives of KPMG LLP are expected to be present at the Annual Meeting, will
have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
Fees Paid to the Independent Auditors
We incurred the following fees to KPMG LLP for fiscal years 2020 and 2019:
Audit Fees
Audit - related Fees
Tax Fees
All Other Fees
2019($)
2020($)
763,978 761,380
7,500
15,424
1,780
—
24,938
1,500
788,682 787,818
Audit Fees. KPMG LLP charged $763,978 in fiscal year 2020 and $761,380 in fiscal year 2019 for audit fees.
These include professional services in connection with the audit of the Company’s annual consolidated financial statements
and its internal control over financial reporting. They also include reviews of the Company’s consolidated financial
statements included in the Company’s Quarterly and Annual Reports on Form 10 - Q and Form 10 - K and for services that
are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal
years shown. Additionally, the fees for fiscal years 2020 and 2019 contain approximately $18,478 and $41,380,
respectively, related to statutory audits. Finally, the fees for fiscal years 2020 and 2019 contain approximately $0 and
$20,000, respectively, related to the adoption of new accounting pronouncements.
Audit-related Fees. KPMG LLP charged $7,500 in fiscal year 2020 for their consent to include the Company’s
annual consolidated financial statements in a franchise disclosure document.
Tax Fees. KPMG LLP charged $15,424 in fiscal year 2020 and $24,938 in fiscal year 2019 for consulting and
compliance services.
All Other Fees. KPMG LLP charged $1,780 in fiscal year 2020 and $1,500 in fiscal year 2019 for access to their
Accounting Research Online tool.
48
Pre - approval Policies and Procedures
The audit committee pre - approved all audit, audit - related, and permissible non - audit services provided to the
Company by KPMG LLP before management engaged the auditors for those purposes. The policy of the audit committee
is to review all engagement letters for accounting firms for non - audit services.
Recommendation
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF KPMG LLP AS THE
COMPANY’S INDEPENDENT AUDITORS FOR THE 2021 FISCAL YEAR.
49
PROPOSAL 3
ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION
The Board requests shareholder approval of the compensation of the Company’s Named Executive Officers as
described in the “Compensation Discussion and Analysis,” the Executive Compensation section and the other related
executive compensation tables and related discussions in this proxy statement. As an advisory vote, the outcome of the
voting on this proposal is not binding upon the Company; however, the compensation committee, which is responsible for
establishing and administering the Company’s executive compensation program, values the opinions expressed by
shareholders on this proposal and will consider the outcome of the vote when making future compensation decisions for
the Company’s executive officers. Additionally, the compensation committee invites shareholders to express any questions
or concerns regarding the Company’s compensation philosophy for our executive officers by correspondence addressed
to Texas Roadhouse, Inc. Compensation Committee, 6040 Dutchmans Lane, Louisville, Kentucky 40205.
The objective of the compensation committee in setting and evaluating the compensation of our executive officers
is to promote the sustained profitability of the Company. Compensation for the Named Executive Officers is divided into
three key components: (1) base salary, which provides a secure base of compensation and serves to motivate and retain
our Named Executive Officers; (2) a cash bonus, which rewards our Named Executive Officers for the success of the
Company as measured by growth in the Company’s earnings per diluted share and its overall pre - tax profit, and for each
Named Executive Officer’s individual contribution to that success; and (3) grants of restricted stock units, which offer the
Named Executive Officers a financial interest in the long - term success of the Company and align their interests with those
of our shareholders. The types of restricted stock units that may be granted by the compensation committee in its discretion
are (i) service based restricted stock units, which grant the Named Executive Officers the conditional right to receive shares
of our common stock that vest after a defined period of service, (ii) “retention” restricted stock units, which vest upon the
completion of the term of an individual Named Executive Officer’s agreement or such later date as determined by the
compensation committee, and (iii) performance based restricted stock units, which are calculated based on the achievement
of certain Company performance targets established by the compensation committee and vest over a period of service.
While “retention” restricted stock units were granted by the compensation committee under the prior employment
agreements, the compensation committee has not made any similar retention grants for the Named Executive Officers
under the 2021 Employment Agreements. The compensation committee will evaluate whether to grant additional retention
grants in the future as a part of its annual evaluation of the compensation packages for the Named Executive Officers.
The compensation packages for our Named Executive Officers offer base salaries and target cash bonus amounts
and feature restricted stock unit awards, the value of which is dependent upon the performance of the Company and the
price of our common stock. Under the 2021 Employment Agreements, the compensation committee has been granted
greater flexibility in establishing the compensation for our Named Executive Officers. Specifically, each 2021
Employment Agreement establishes an annual base salary for the term of the respective 2021 Employment Agreements,
with base salary increases being left to the discretion of the compensation committee. Additionally, each 2021 Employment
Agreement provides an annual short-term cash incentive opportunity with a target bonus based on the achievement of
defined goals to be established by the compensation committee, with increases in the target bonus amount to be made at
the discretion of the compensation committee during the term of the 2021 Employment Agreement. Finally and in addition
to cash compensation, each 2021 Employment Agreement provides that the compensation committee may grant certain
stock awards to the Named Executive Officers during the term of the respective 2021 Employment Agreements, the types
and amounts of which are subject to the compensation committee’s discretion based on their annual review of the
performance of the Company and of the individual Named Executive Officers
The compensation committee evaluates the stock compensation for each specific Named Executive Officer on an
annual basis to determine the right combination of rewards and incentives through the issuance of service based restricted
stock units and/or performance based restricted stock units to drive company performance without encouraging
unnecessary or excessive risk taking by all of the Named Executive Officers as a whole. Under this approach, the Named
Executive Officers receive a combination of service based restricted stock units and/or performance based restricted stock
units, with a significant portion of some of the Named Executive Officers’ compensation being tied to the grant of such
performance based restricted stock units. By conditioning a significant portion of certain Named Executive Officer’s
performance based restricted stock unit grants upon the achievement of defined performance goals to be established by
50
the compensation committee, combined with the stock ownership guidelines for our Named Executive Officers more
particularly described above, we have created a more direct relationship between compensation and shareholder value.
Additionally, by only providing one year’s worth of restricted stock units to our Named Executive Officers in their 2018
Employment Agreements and by giving the compensation committee the discretion to grant certain stock awards (if any)
in its discretion to our Named Executive Officers under their 2021 Employment Agreements, the compensation committee
has the opportunity to adjust a significant portion of the total compensation for the Named Executive Officers on an annual
basis to more accurately reflect the overall performance of the Company, which may include the issuance of service based
restricted stock units and/or performance based restricted stock units. Overall, we believe this approach provides the
Named Executive Officers with a compensation package which promotes the sustained profitability of the Company and
aligns the interests of our Named Executive Officers with those of our shareholders. The compensation packages also
reflect a pragmatic response to external market conditions; that is, total compensation that is competitive with comparable
positions in similar industries, including the casual dining sector of the restaurant industry, but which is reasonable and in
the best interests of our shareholders.
This structure, along with the culture and values of our Company, allows the Company to attract and retain top
talent, while also encouraging our Named Executive Officers to keep their focus on both long - term business development
and short - term financial growth. The Board was pleased to receive shareholder approval of the compensation packages of
our Named Executive Officers in the advisory vote at the 2020 annual meeting and again requests approval of the
compensation packages of our Named Executive Officers.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE EXECUTIVE
COMPENSATION DETAILED IN THIS PROXY STATEMENT.
51
PROPOSAL 4
APPROVAL OF THE TEXAS ROADHOUSE, INC. 2021 LONG-TERM INCENTIVE PLAN
The Company currently maintains the Texas Roadhouse, Inc. 2013 Equity Incentive Plan (the “Current Plan”).
On February 11, 2021, the Board approved the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan (the “Plan”),
subject to shareholder approval at the Annual Meeting. The purpose of the Plan is to allow us to retain the services of the
group of Eligible Persons (as hereinafter defined), to secure and retain the services of new Eligible Persons, and to provide
incentives for Eligible Persons to exert maximum efforts for the success of us and our affiliates and the Company’s
shareholders. The Plan was adopted to extend the term of our long-term incentive plan, increase the number of shares
available for awards to Eligible Persons, and to include current market-based provisions in the Plan.
If the Plan is approved by the Company’s shareholders, it will become effective as of the date on which the
shareholders approve it (the “Effective Date”) and, thereafter, no future awards will be made under the Current Plan.
A copy of the Plan is attached to this proxy statement as Appendix A. The principal features of the Plan are
described below, but such description is qualified in its entirety by reference to the complete text of the Plan. The Plan
will not become effective unless shareholder approval is obtained at the Annual Meeting.
Types of Awards
The types of awards that may be granted under the Plan are incentive stock options (“Incentive Stock Options”),
non-qualified stock options (“Non-Qualified Stock Options”, which together with Incentive Stock Options, are referred
to collectively as “Options”), stock appreciation rights (“SARs”), and Full Value Awards (including restricted stock,
restricted stock units, deferred stock units, performance stock and performance stock units), each as described in more
detail below. Substitute Awards, which are shares of our Common Stock (as hereinafter defined) issued in assumption of,
or in substitution or exchange for, an award previously granted, or the right or obligation to make a future award, in all
cases by a company acquired by us or our affiliates (or with which we or our affiliates combines), may also be granted
under the Plan.
Administration
The Plan is administered by a “Committee” which generally will be the compensation committee of the Board.
In addition, the Committee generally will be comprised of not fewer than two directors (or a greater number if required
for compliance with applicable securities laws) who are “independent” under all applicable rules, including the listing
standards under NASDAQ Marketplace Rule 5605(a)(2) and the requirements of the SEC. The Committee selects the
Eligible Persons who are to be granted awards under the Plan, the types of awards to be granted and the applicable terms,
conditions, restrictions and other provisions of such awards. If the Committee does not exist or for any other reason
determined by the Board, the Board may take any action under the Plan that would otherwise be the responsibility of the
Committee. The Committee also has the authority to conclusively interpret the Plan. Subject to stock exchange rules, the
Committee may delegate all or any portion of its responsibilities or powers under the Plan to persons selected by it.
Eligibility and Participation
The Committee will select from among the Eligible Persons those persons who will receive an award under the
Plan and thereby become a “Participant”. For purposes of the Plan, “Eligible Persons” are non-employee directors of the
Company, employees of the Company or any of its affiliates and other persons who are engaged to provide consulting
services to the Company or any of its affiliates or who serve as compensated members of the board of directors of any of
the Company’s affiliates. No awards will be made under the Plan unless the Plan is approved by the Company’s
shareholders. Only employees of the Company and its eligible corporate subsidiaries may be awarded Incentive Stock
Options under the Plan.
52
As of December 29, 2020, there were five non-employee directors, and approximately 2,962 employees
(including executive officers), expected to be eligible to participate in the Plan. As of December 29, 2020, no other persons
are expected to be eligible to participate in the Plan. To date, no awards have been made under the Plan. Because future
awards are made at the discretion of the Committee, the recipients and grants of future awards are not determinable at this
time.
Shares Available for Issuance Under the Plan; Limitations on Awards
Shares of Common Stock reserved for issuance under the Plan may be currently authorized but unissued shares
currently held or shares reacquired by us or shares purchased in the open market or private transactions.
The number of shares of Common Stock that may be issued with respect to awards under the Plan will be equal
to 5,000,000 plus the aggregate number of shares of Common Stock available for issuance (and not subject to outstanding
awards) under the Current Plan as of the Effective Date. Any shares of Common Stock subject to an award under the Plan
or any award that is outstanding under the Current Plan as of the Effective Date (and, in any case, other than Substitute
Awards) which for any reason is forfeited, expires or is terminated without issuance of shares of Common Stock (including
shares that are attributable to awards that are settled in cash) and shares subject to such awards that are tendered or withheld
in payment of the taxes with respect to the grant, vesting or payment of an award that is a Full Value Award (whether
granted under the Plan or the Current Plan) (collectively, “Recycled Shares”) will thereafter be available for further grants
under the Plan. Shares of Common Stock that are withheld to pay the exercise price of an Option (including by means of
a net exercise) or the taxes payable upon exercise of an Option or SAR (whether granted under the Plan or the Current
Plan) will not be Recycled Shares for purpose of the Plan. Upon stock settlement of SARs, the gross number of shares of
Common Stock subject to the SARs originally granted will be counted as issued for purposes of determining the number
of shares available for issuance under the Plan regardless of the number of shares of Common Stock actually issued upon
such Common Stock settlement. Shares of Common Stock covered by an award will only be counted as used to the extent
that they are actually used. Shares subject to Substitute Awards will not reduce the number of shares of Common Stock
that may be issued under the Plan or that may be covered by awards granted to any individual Participant during an
applicable period as described below.
The maximum number of shares of Common Stock that may delivered pursuant to the exercise of Incentive Stock
Options under the Plan cannot exceed the Plan limit of 500,000. The Plan also provides that the maximum number of
shares that may be delivered to any one Participant during any one calendar-year period pursuant to Options, SARs or Full
Value Awards is 500,000 for each type of award. The Plan also provides that the total compensation which a non-employee
director may receive in any one of our fiscal years will not exceed $500,000, calculated by adding (i) the total cash
compensation to be otherwise paid for services rendered in the fiscal year to (ii) the grant date value of any Common Stock
granted pursuant to an award in that fiscal year. In the event the aggregate compensation of such non-employee director,
including the grant date value of any award, reaches $500,000.00 in any given fiscal year, then no additional cash
compensation will be due or paid to such non-employee director, and no additional awards will be made to such director,
during the remainder of such fiscal year.
In each case, the number of shares (as well as the exercise price of Options and SARs and the limits on individual
awards) is subject to adjustment in the event of a reorganization, stock split, merger or similar change in our corporate
structure or the outstanding shares of Common Stock.
Except for (a) awards granted under the Plan with respect to shares of Common Stock which do not exceed, in
the aggregate, 5% of the total number of shares of Common Stock reserved for issuance pursuant to the Plan, (b) awards
granted in lieu of other compensation, (c) awards that are a form of payment of earned performance awards or other
incentive compensation, (d) new hire awards, or (e) awards granted to Employees who have completed a minimum period
of service with us and our affiliates of at least three years, if a Participant’s right to become vested in an award is
conditioned on the completion of a specified period of service with the us or our affiliates being required, then the required
period of service will be at least one year, except if accelerated in the event of the Participant’s death or disability,
retirement, involuntary termination, or change in control.
53
As of December 29, 2020 and as more particularly shown in the table found in the “Equity Compensation Plan
Information Under Current Plan” section below, there were 2,340,630 shares of the Company’s Common Stock
(“Common Stock”) available for future awards under the Current Plan.
Options and SARs
Under the Plan, the Committee may award Incentive Stock Options (which are Options that conform to the
provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or Non-Qualified Stock Options
which do not conform to the requirements of Section 422 of the Code and SARs. Incentive Stock Options may only be
awarded to employees of the Company and its eligible corporate subsidiaries.
The Committee will determine the exercise price of any Option and SAR in its discretion; provided, however,
that the exercise price of any Option or SAR may not be less than 100% of the fair market value of a share of Common
Stock on the date of grant.
The expiration date with respect to an Option or SAR will be established by the Committee at the time of the
grant, but will not be later than the earliest to occur of the ten-year anniversary of the date on which the Option or SAR is
granted or the following dates (unless otherwise determined otherwise by the Committee): (a) if the Participant’s
termination of service with us and our affiliates occurs other than by reason of death or disability, the date that is three
months after the Participant’s termination date and (b) if the Participant’s termination of service with us and our affiliates
occurs by reason of death or disability (or if the participant dies after termination but prior to the expiration date of the
Option or SAR) the date that is 12 months following termination.
Options and SARs may be subject to such other terms and conditions, not inconsistent with the Plan, as
determined by the Committee, including the method of exercise of Options and SARs.
No Repricing of Options and SARs
Except for adjustments in connection with a corporate transaction or restructuring or reductions approved by the
Company’s shareholders, the exercise price of an Option or SAR may not be decreased after the date of grant nor may an
outstanding Option or SAR be surrendered to the Company as consideration for the grant of a replacement Option or SAR
with a lower exercise price or a Full Value Award. In addition, unless approved by the Company’s shareholders, in no
event will any Option or SAR be surrendered to the Company in consideration for a cash payment if, at the time of such
surrender, the exercise price of the Option or SAR is less than the then current fair market value of a share of Common
Stock.
Full Value Awards
Under the Plan, the Committee may award “Full Value Awards” which is the grant of a right to receive one or
more shares of Common Stock in the future (including restricted stock, restricted stock units, deferred stock units,
performance stock and performance stock units). Full Value Awards may be subject to certain terms and conditions,
including that they may be in consideration of previously performed services or surrender of other compensation,
contingent on achievement of performance or other objectives during a specified time (including completion of a period
of service), or subject to a substantial risk of forfeiture or other restrictions. The Committee may determine other terms
and conditions applicable to Full Value Awards.
Change in Control
In the event of a Change in Control (as defined in the Plan), an award held by any Participant whose employment
or service has not terminated prior to the effective time of the Change in Control may be subject to acceleration of vesting
and exercisability upon or after such event as may be provided in the award agreement for such award or as may be
provided in any other written agreement between us or any of our affiliates and the Participant or otherwise pursuant to
such award.
54
Withholding Taxes and Transferability of Awards
All awards and other payments under the Plan are subject to withholding of all applicable taxes or to require the
Participant, through payroll withholding, cash payment, or otherwise, to made adequate provision for, the U.S. federal,
state, and local, and/or foreign taxes, if any, required by law to be withheld by us or an affiliate with respect to an award
or the shares or cash acquired pursuant thereto.
Awards under the Plan are not transferable except as designated by the Participant by will or by the laws of
descent and distribution or as provided by the Committee. To the extent that a Participant has the right to exercise an
award, the award may be exercised during the lifetime of the Participant only by the Participant.
Non-U.S. Participants
The Committee may grant awards to Eligible Persons who are foreign nationals on such terms and conditions
different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster
and promote achievement of the purposes of the Plan. In furtherance of such purposes, the Committee may make such
modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws
in other countries or jurisdictions in which the Company or any Affiliate operates or has employees.
Amendment and Termination of the Plan and Awards
The Board may, at any time, amend or terminate the Plan, and the Committee may amend any award; provided,
however that no amendment or termination (other than adjustments in connection with a corporate transaction or
restructuring) may, in the absence of written consent to the change by the affected Participant (or, if the Participant is not
then living, the Participant’s affected beneficiary), adversely affect the rights of any Participant or beneficiary under any
award granted under the Plan prior to the date such amendment is adopted by the Board (or the Committee, if applicable)
and no amendment may be made to the anti-repricing provisions of the Plan relating to Options and SARs unless the
amendment is approved by the Company’s shareholders. Shareholder approval of any Plan amendment is also required if
shareholder approval is required by law or the rules of any stock exchange on which the Common Stock is listed.
Federal Income Tax Consequences
The following is a brief summary of the U.S. federal income tax rules relevant to awards under the Plan based
upon the Code as currently in effect. These rules are highly technical and subject to change in the future, and the discussion
does not purport to be a complete description of the tax aspects of the Plan.
Non-Qualified Stock Options
Generally, the grant of a Non-Qualified Stock Option will not result in taxable income to the Participant. Except
as described below, the Participant will realize ordinary income at the time of exercise in an amount equal to the excess of
the fair market value of the shares of Common Stock acquired over the exercise price for those shares of Common Stock,
and we will be entitled to a corresponding deduction. Gains or losses realized by the Participant upon disposition of such
shares of Common Stock will be treated as capital gains and losses, with the basis in such shares of Common Stock equal
to the fair market value of the shares of Common Stock at the time of exercise. Certain additional rules may apply if the
exercise price is paid in shares of Common Stock previously owned by the Participant.
Incentive Stock Options
Generally, the grant of an Incentive Stock Option will not result in taxable income to the Participant. The exercise
of an Incentive Stock Option will not result in taxable income to the Participant provided that the Participant was, without
a break in service, an employee of us or our eligible corporate subsidiaries during the period beginning on the date of the
grant of the Option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise
if the Participant is disabled, as that term is defined in the Code).
55
The excess of the fair market value of the shares of Common Stock at the time of the exercise of an Incentive
Stock Option over the exercise price is an adjustment that is included in the calculation of the Participant’s alternative
minimum taxable income for the tax year in which the Incentive Stock Option is exercised. For purposes of determining
the Participant’s alternative minimum tax liability for the year of disposition of the shares of Common Stock acquired
pursuant to the Incentive Stock Option exercise, the Participant will have a basis in those shares of Common Stock equal
to the fair market value of the shares of Common Stock at the time of exercise.
If the Participant does not sell or otherwise dispose of the shares of Common Stock within two years from the
date of the grant of the Incentive Stock Option or within one year after receiving the transfer of such shares of Common
Stock, then, upon disposition of such shares of Common Stock, any amount realized in excess of the exercise price will
be taxed to the Participant as capital gain, and we will not be entitled to any deduction for Federal income tax purposes.
The Participant will recognize a capital loss to the extent that the amount realized is less than the exercise price. Certain
additional rules may apply if the exercise price is paid in shares of Common Stock previously owned by the Participant.
If the foregoing holding period requirements are not met, the Participant will generally realize ordinary income,
and we will be entitled to a corresponding deduction , at the time of the disposition of the shares of Common Stock, in an
amount equal to the lesser of (a) the excess of the fair market value of the shares of Common Stock on the date of exercise
over the exercise price, or (b) the excess, if any, of the amount realized upon disposition of the shares of Common Stock
over the exercise price. If the amount realized exceeds the value of the shares of Common Stock on the date of exercise,
any additional amount will be capital gain. If the amount realized is less than the exercise price, the Participant will
recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized
upon the disposition of the shares of Common Stock.
SARs
Generally, a Participant will not realize any taxable income upon the grant of a SAR. Upon the exercise of the
SAR, the Participant will recognize ordinary income in an amount equal to the amount of cash and/or the fair market value,
at the date of such exercise, of the shares of Common Stock received by the Participant as a result of such exercise. The
Company will generally be entitled to a deduction in the same amount as the ordinary income realized by the Participant.
Full Value Awards
The federal income tax consequences of a Full Value Award will depend on the type of award. The tax treatment
of the grant of shares of Common Stock depends on whether the shares are subject to a substantial risk of forfeiture
(determined under Code rules) at the time of the grant. If the shares are subject to a substantial risk of forfeiture, the
Participant will not recognize taxable income at the time of the grant and when the restrictions on the shares lapse (that is,
when the shares are no longer subject to a substantial risk of forfeiture), the Participant will recognize ordinary taxable
income in an amount equal to the fair market value of the shares at that time. If the shares are not subject to a substantial
risk of forfeiture or if the Participant elects to be taxed at the time of the grant of such shares under Section 83(b) of the
Code, the Participant will recognize taxable income at the time of the grant of shares in an amount equal to the fair market
value of such shares at that time, determined without regard to any of the restrictions. If the shares are forfeited before the
restrictions lapse, the Participant will be entitled to no deduction on account thereof. The Participant’s tax basis in the
shares is the amount recognized by him or her as income attributable to such shares. Gain or loss recognized by the
Participant on a subsequent disposition of any such shares is capital gain or loss if the shares are otherwise capital assets.
In the case of other Full Value Awards, such as restricted stock units or performance stock units, the Participant
generally will not have taxable income and us will not be entitled to a deduction upon the grant of the award. Participants
will generally recognize ordinary income and us will be entitled to a corresponding deduction when the award is settled.
At that time, the Participant will recognize taxable income equal to the cash or the then fair market value of the shares
issuable in payment of such award, and such amount will be the tax basis for any shares received.
The Company generally will be entitled to a tax deduction in the same amount, and at the same time, as the
income is recognized by the Participant.
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Section 409A and Section 162(m).
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the amount that a publicly-traded
corporation may deduct for compensation paid to the principal executive officer, the principal financial officer or one of
the company’s other three most highly compensated executives. The Tax Reform and Jobs Act of 2017 (the “Act”)
eliminated the ability of companies to rely on the “Performance-Based“ Compensation exception and the $1,000,000
limitation on deductibility generally was expanded to include all named executive officers (including the principal financial
officer).
Certain awards under the Plan may be considered a deferral of compensation for purposes of Code Section 409A,
which imposes additional requirements on a nonqualified deferred compensation plan. Generally, if a nonqualified
deferred compensation plan fails to meet the requirements of Code Section 409A, or is not operated in accordance with
those requirements, the Participant may be subject to significant tax penalties. Awards under the 2020 LTIP that are subject
to Code Section 409A are intended to comply with the requirements of Code Section 409A. We intend to grant awards
that are either exempt from or in compliance with Code Section 409A. However, we can provide no assurance that such
an award will be exempt or comply with Code Section 409A or that the tax consequences described above will not apply.
Neither the Company nor the Committee is under any obligation to make any changes to any award to cause such
compliance and neither we nor our affiliates will be liable for any penalties that may be imposed on a Participant relating
to Code Section 409A.
Equity Compensation Plan Information Under Current Plan
As of December 29, 2020, shares of Common Stock authorized for issuance under the Current Plan are
summarized in the following table:
Plan Category
Plans Approved by Shareholders
Plans Not Approved by Shareholders
Total
Shares to Be
Issued Upon Vest
Date (1)
872,563
—
872,563
Shares
Available for
Future Grants
2,340,630
—
2,340,630
(1)
Total number of shares consists of 793,653 restricted stock units and 79,000 performance based restricted stock
units. Shares in this column are excluded from the “Shares Available for Future Grants” column. No stock options
were outstanding as of December 29, 2020.
Recommendation
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE TEXAS ROADHOUSE, INC.
2021 LONG-TERM INCENTIVE PLAN.
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SHAREHOLDER PROPOSALS
Under Rule 14a - 8 promulgated under the Exchange Act, shareholders may present proposals to be included in
the Company proxy statement for consideration at the next annual meeting of its shareholders by submitting their proposals
to the Company in a timely manner. Any such proposal must comply with Rule 14a - 8.
The Company’s bylaws, a copy of which is available on the Company’s website at www.texasroadhouse.com,
require shareholders who intend to propose business for consideration by shareholders at the 2022 annual meeting, other
than shareholder proposals that are included in the proxy statement, to deliver written notice to the principal executive
offices of the Company on or before December 3, 2021 (reflecting 120 calendar days prior to the one year anniversary of
the date of the Company’s proxy statement issued in connection with the prior year’s annual meeting). This notice must
include a description of the business desired to be brought before the annual meeting, the name and address of the
shareholder proposing such business and of the beneficial owner, if any, on whose behalf the business is being brought,
the class, series and number of shares of the Company which are beneficially owned by the shareholder and such other
beneficial owner and any material interest of the shareholder and such other beneficial owner in such business. Similar
requirements are set forth in the Company’s bylaws with respect to shareholders desiring to nominate candidates for
election as director. Exchange Act rules permit management to vote proxies in its discretion in certain cases if the
shareholder does not comply with these deadlines, and in certain other cases notwithstanding the shareholder’s compliance
with these deadlines. If a shareholder submitting a matter to be raised at the Company’s next annual meeting desires that
such matter be included in the Company’s proxy statement for that meeting, such matter must be submitted to the Company
no later than December 3, 2021.
The rules of the SEC set forth standards for what shareholder proposals the Company is required to include in a
proxy statement for an annual meeting.
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD
Shareholders that want to communicate in writing with the Board, or specific directors individually, may send
proposed communications to the Company’s Corporate Secretary, Christopher C. Colson, at 6040 Dutchmans Lane,
Louisville, Kentucky 40205. The proposed communication will be reviewed by Mr. Colson and by the audit committee.
If the communication is appropriate and serves to advance or improve the Company or its performance, then it will be
forwarded to the Board or the appropriate director.
FORM 10 - K
The Company’s Annual Report on Form 10 - K for the fiscal year ended December 29, 2020, accompanies this
proxy statement. The Company’s Annual Report does not form any part of the material for solicitation of proxies.
Any shareholder who wishes to obtain, without charge, a copy of the Company’s Annual Report on
Form 10 - K for the fiscal year ended December 29, 2020, which includes financial statements, and is required to be
filed with the SEC, may access it at www.texasroadhouse.com in the Investors section or may send a written request
to Christopher C. Colson, Corporate Secretary, Texas Roadhouse, Inc., 6040 Dutchmans Lane, Louisville,
Kentucky 40205.
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OTHER BUSINESS
The Board is not aware of any other matters to be presented at the Annual Meeting other than those set forth
herein and routine matters incident to the conduct of the meeting. If any other matters should properly come before the
Annual Meeting or any adjournment or postponement thereof, the persons named in the proxy, or their substitutes, intend
to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors,
Christopher C. Colson
Corporate Secretary
Louisville, Kentucky
April 2, 2021
Please vote your shares through any of the methods described on the proxy card as promptly as possible, whether you
plan to attend the Annual Meeting in person. If you do attend the Annual Meeting, you may still vote in person, since the
proxy may be revoked at any time before its exercise by delivering a written revocation of the proxy to the Company’s
Corporate Secretary.
59
APPENDIX A
TEXAS ROADHOUSE, INC.
2021 LONG-TERM INCENTIVE PLAN
1. GENERAL.
1.1
Defined Terms. The meaning of capitalized terms used in the Plan are set forth in Section 2.
1.2
Purpose. The Company, by means of the Plan, seeks to retain the services of the group of persons
eligible to receive Awards, to secure and retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its Affiliates and the Company’s shareholders.
1.3
Available Awards. The following types of Awards may be granted under the Plan: (i) Options (including
both Incentive Stock Options and Non-Qualified Stock Options), (ii) Stock Appreciation Rights, and (iii) Full Value
Awards.
1.4
Eligibility. Subject to the terms and conditions of the Plan, the Committee shall determine and designate,
from time to time, from among Eligible Persons those persons who will be granted one or more Awards under the Plan.
Notwithstanding the foregoing, Incentive Stock Options may be granted only to Employees. Awards other than Incentive
Stock Options, including Full Value Awards, may be granted to any Eligible Person.
2. DEFINITIONS.
2.1
“Affiliate” means a corporation or other entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with the Company. For purposes of the Plan, an
ownership interest of at least fifty percent (50%) shall be deemed to be a controlling interest.
2.2
“Award” means any Option, Stock Appreciation Right Full Value Award, or any other right granted
under the Plan.
2.3
“Award Agreement” means an agreement between the Company and a Participant (which agreement
may be in writing, electronic or such other form determined by the Committee) evidencing the terms and conditions of an
individual Award grant. Each Award Agreement shall include such terms and conditions, not inconsistent with the Plan,
as determined by the Committee.
2.4
2.5
“Board” means the Board of Directors of the Company.
“Change in Control” means that one (1) of the following events has taken place:
(a)
consummation of a merger or consolidation of the Company with any other entity, other than a merger
or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting securities of the surviving or resulting
entity) more than fifty percent (50%) of the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation;
(b)
consummation of a sale or disposition of all or substantially all of the assets of the Company (other than
such a sale or disposition immediately after which such assets will be owned directly or indirectly by the shareholders of
the Company in substantially the same proportions as their ownership of the common stock of the Company immediately
before such sale or disposition); or
(c)
any Person becomes the beneficial owner (as determined pursuant to Section 13(d) of the Exchange Act)
of securities representing in excess of fifty percent (50%) of the aggregate voting power of the outstanding securities of
the Company as required to be disclosed in a report on Schedule 13D of the Exchange Act.
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2.6
“Code” means the Internal Revenue Code of 1986, as amended.
2.7
“Committee” means the Compensation Committee of the Board. Notwithstanding the foregoing, so long
as the Company is subject to Section 16 of the Exchange Act, the Committee shall consist of not fewer than two (2)
members of the Board or such greater number as may be required for compliance with Rule 16b-3 issued under the
Exchange Act and shall be comprised of persons who are independent for purposes of applicable stock exchange listing
requirements.
2.8
2.9
“Common Stock” means the Common Stock, $0.001 par value, of the Company.
“Company” means Texas Roadhouse, Inc., a Delaware corporation.
2.10
“Consultant” means any person, including an advisor, (a) engaged by the Company or an Affiliate to
render consulting or advisory services and who is compensated for such services, or (b) serving as a member of the board
of directors of an Affiliate and who is compensated for such services. The term “Consultant” shall not include Directors.
2.11
“Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether
as an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or Director, or a change in the entity for which
the Participant renders such service, provided that there is no interruption or termination of the Participant’s service with
the Company or an Affiliate, shall not terminate a Participant’s Continuous Service. For example, a change in status from
an Employee of the Company to a Consultant of an Affiliate or a Director shall not constitute an interruption of Continuous
Service. The Board or the Chairman of the Company (the “Chairman”) or if there is no Chairman, then the Chief
Executive Officer of the Company (the “CEO”), in that party’s sole discretion (other than the Chairman or CEO [as
applicable] as to his or her own absence), may determine whether Continuous Service shall be considered interrupted in
the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave.
Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in an
Award only to such extent as may be provided in the Company’s leave of absence policy or in the written terms of the
Participant’s leave of absence. If any Award under the Plan is subject to Section 409A of the Code, a Participant’s
Continuous Service shall terminate on the date the Participant has a separation from service or termination of employment
within the meaning of Section 409A of the Code.
2.12
“Director” means a member of the Board who is not an Employee.
2.13
of the Code.
“Disability” means the permanent and total disability of a person within the meaning of Section 22(e)(3)
2.14
“Effective Date” is defined in Subsection 7.1.
2.15
“Eligible Persons” means Employees, Directors and Consultants.
2.16
“Employee” means any person employed by the Company or an Affiliate; provided, however, that for
purposes of the grant of an Incentive Stock Option, an Employee means any person who is employed by the Company or
an Affiliate that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code. Service as a Director or
payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the
Company or an Affiliate.
2.17
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
2.18
“Exercise Price” is defined in Subsection 5.2.
2.19
“Expiration Date” is defined in Subsection 5.5.
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2.20
“Fair Market Value” means, as of any date, the value of a share of Common Stock determined in
accordance with the following rules:
(a)
If the Common Stock is at the time listed or admitted to trading on any stock exchange, then the Fair
Market Value shall be the closing price per share of Common Stock on the principal exchange on which the Common
Stock is then listed or admitted to trading on the last trading day preceding the date on which Fair Market Value is to be
determined, or if no such sale is reported on that date, on the last preceding date on which a sale was so reported, all as
reported in the Wall Street Journal or such other source as the Committee deems reliable.
(b)
If the Common Stock is not at the time listed or admitted to trading on a stock exchange, then the Fair
Market Value shall be the value determined in good faith by the Committee by reasonable application of a reasonable
valuation method, considering all information that the Committee determines to be relevant, consistent with Section 409A
of the Code and other applicable law.
2.21
“Full Value Award” is defined in Subsection 6.1.
2.22
“Incentive Stock Option” means an Option that is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code and the regulations promulgated thereunder.
2.23
“Non-Qualified Stock Option” means an Option that is not intended to qualify as an Incentive Stock
Option.
2.24
“Option” means an Award that entitles the Participant to purchase shares of Common Stock at an
Exercise Price established by the Committee at the time the Option is granted. An Option may be an Incentive Stock
Option or a Non-Qualified Stock Option.
2.25
“Participant” means any person to whom an Award is granted under the Plan.
2.26
“Person” has the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in
Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
2.27
“Plan” means this Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan.
2.28
“Prior Plan” means the Texas Roadhouse, Inc. 2013 Equity Incentive Plan.
2.29
“Recycled Shares” is defined in Subsection 4.1(b).
2.30
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.
2.31
“Securities Act” means the Securities Act of 1933, as amended.
2.32
“Stock Appreciation Right” or “SAR” means an Award that entitles the Participant to receive, in cash
or shares of Common Stock (as determined in accordance with the terms of the Plan) value equal to the excess of: (a) the
Fair Market Value of a specified number of shares of Common Stock at the time of exercise; over (b) the Exercise Price
established by the Committee at the time of grant.
2.33
“Substitute Award” means an Award granted or shares of Common Stock issued by the Company in
assumption of, or in substitution or exchange for, an award previously granted, or the right or obligation to make a future
award, in all cases by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate
combines. In no event shall the issuance of Substitute Awards change the terms of such previously granted awards such
that the change, if applied to a current Award, would be prohibited under Subsection 5.6.
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3. ADMINISTRATION.
3.1
Administration by Committee. The authority to control and manage the operation and administration
of the Plan shall be vested in the Committee. If the Committee does not exist, or for any other reason determined by the
Board, then the Board may take any action under the Plan that would otherwise be the responsibility of the Committee.
3.2
Powers of Committee. The power, authority and discretion to manage and control the operation and
administration of the Plan shall be vested in the Committee, subject to the following and the express limitations of the
Plan:
(a)
The Committee will have the power, authority and discretion to (i) determine from time to time which
of the Eligible Persons shall be granted Awards; when and how each Award shall be granted and the number of shares of
Common Stock subject to any Award; what type or combination of types of Award shall be granted; the provisions of each
Award granted (which need not be identical), including the time or times when a person shall be permitted to receive
Common Stock or cash pursuant to an Award and any restrictions, performance targets and other terms and conditions of
Awards; and the number of shares of Common Stock with respect to which an Award shall be granted to each such person;
(ii) modify the terms of, cancel or suspend Awards; (iii) reissue or repurchase Awards; and (iv) accelerate the exercisability
or vesting of all or any portion of an Award.
(b)
The Committee shall have the power, authority and discretion to conclusively construe and interpret the
Plan and Awards granted under it, to establish, amend, rescind, and revoke rules and regulations for its administration, to
determine the terms and provisions of any agreements made pursuant to the Plan and otherwise to make all other
determinations that may be necessary or advisable for the administration of the Plan. The Committee, in the exercise of
this power, authority and discretion, may correct any defect, omission or inconsistency in the Plan or in any Award
Agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.
(c)
The Committee shall have the authority to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions
of the Plan.
3.3
Delegation of Committee Duties. Except to the extent prohibited by applicable law or the rules of any
stock exchange on which the Common Stock is listed, the Committee may allocate all or any portion of its responsibilities
and powers to any one (1) or more of its members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time.
3.4
Effect of Committee’s Decision. All determinations, interpretations and constructions made by the
Committee in good faith shall not be subject to review by any person and shall be final, binding and conclusive on all
persons.
3.5
Information to be Furnished to the Committee. The Company and its Affiliates shall furnish the
Committee such data and information as may be required or requested for it to discharge its duties under the Plan. The
records of the Company and its Affiliates as to an Eligible Person’s or Participant’s employment or provision of services,
termination of employment or cessation of the provision of services, leave of absence, reemployment and compensation
shall be conclusive on all persons unless determined to be incorrect. Upon written request from the Committee, the
Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or
information as the Committee consider desirable to carry out the terms of the Plan.
3.6
Liability and Indemnification of Committee. No member or authorized delegate of the Committee shall
be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable
to his or her own fraud or willful misconduct; nor shall the Company or any Affiliate be liable to any person for any such
action unless attributable to fraud or willful misconduct on the part of a director or employee of the Company or Affiliate.
The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under
the Plan, shall be indemnified by the Company against any and all liabilities, losses, costs and expenses (including legal
fees and expenses) of whatsoever kind and nature that may be imposed on, incurred by or asserted against the Committee
63
or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its
members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such
liability, loss, cost or expense arises. This indemnification shall not duplicate but may supplement any coverage available
under any applicable insurance.
3.7
Special Vesting Rules. Notwithstanding the provisions of Subsection 3.2 or any other provision of the
Plan, except for (a) Awards granted under the Plan with respect to shares of Common Stock which do not exceed, in the
aggregate, five percent (5%) of the total number of shares of Common Stock reserved for issuance pursuant to Subsection
4.1(b), (b) Awards granted in lieu of other compensation, (c) Awards that are a form of payment of earned performance
awards or other incentive compensation, (d) new hire awards, or (e) Awards granted to Employees who have completed a
minimum period of service with the Company and its Affiliates of at least three (3) years, any Award granted under the
Plan shall condition a Participant’s right to become vested in the Award on completion of a minimum period of service
with the Company or any of its Affiliates of at least one (1) year in the case of a service-based award and a minimum
performance period of at least one (1) year in the case of a performance-based award, except if accelerated in the event of
the Participant’s death or Disability, retirement, involuntary termination, or Change in Control.
4. SHARES SUBJECT TO THE PLAN; LIMITATIONS.
4.1
Shares Subject to the Plan. Subject to the provisions of Subsection 4.2 (relating to adjustments to shares
and limitations) and the other terms and conditions of the Plan, the shares of Common Stock that may be issued pursuant
to Awards granted under the Plan shall be subject to the following:
(a)
The shares of Common Stock subject to the Plan may be currently authorized but unissued shares,
currently held or shares reacquired by the Company, or shares purchased in the open market or private transactions.
(b)
Subject to the provisions of Subsection 4.2 (relating to the adjustment to shares and limitations) the
number of shares of Common Stock that may be issued with respect to Awards under the Plan shall be equal to Five
Million (5,000,000) plus the aggregate number of shares of Common Stock available for issuance (and not subject to
outstanding awards) under the Prior Plan as of the Effective Date. Except as otherwise provided herein, any shares of
Common Stock subject to an Award under the Plan or any award that is outstanding under the Prior Plan as of the Effective
Date (other than, in any case Substitute Awards) which for any reason is forfeited, expires or is terminated without issuance
of shares of Common Stock (including shares that are attributable to Awards that are settled in cash) and shares subject to
such awards that are tendered or withheld in payment of the taxes with respect to the grant, vesting or payment of an award
that is a Full Value Award (whether granted under the Plan or the Prior Plan) (collectively, “Recycled Shares”) shall
thereafter be available for further grants under the Plan. Shares of Common Stock that are withheld to pay the exercise
price of an Option (including by means of a net exercise) or the taxes payable upon exercise of an Option or SAR (whether
granted under the Plan or the Prior Plan) shall not be Recycled Shares for purpose of the Plan. Upon stock settlement of
SARs, the gross number of shares of Common Stock subject to the SARs originally granted shall be counted as issued for
purposes of the limitations of this Subsection 4.1(b), regardless of the number of shares of Common Stock actually issued
upon such Common Stock settlement. Shares of Common Stock covered by an Award shall only be counted as used to
the extent that they are actually used. Shares subject to Substitute Awards shall not reduce the number of shares of
Common Stock that may be issued under the Plan or that may be covered by Awards granted to any one (1) Participant
during any period pursuant to Subsections 4.1(d) or 4.1(e).
(c)
The maximum number of shares of Common Stock that may be delivered pursuant to Incentive Stock
Options granted under the Plan shall be Five Million (5,000,000); provided, however, that to the extent that shares not
delivered must be counted against this limit as a condition of satisfying the rules applicable to Incentive Stock Options,
such rules shall apply to the limit on Incentive Stock Options under the Plan.
(d)
The maximum number of shares of Common Stock granted to any one (1) Participant during any one
(1) calendar-year period pursuant to Section 5 (relating to Options and SARs) shall be Five Hundred Thousand (500,000)
shares. For purposes of this Subsection 4.1(d), if an Option is in tandem with an SAR, such that the exercise of the Option
or SAR with respect to a share of Common Stock cancels the tandem SAR or Option, respectively, with respect to such
64
share, the tandem Option and SAR with respect to each share of Common Stock shall be counted as covering only one (1)
share of Common Stock for purposes of applying the limitations of this Subsection 4.1(d).
(e)
For Full Value Awards, no more than Five Hundred Thousand (500,000) shares of Common Stock may
be delivered pursuant to such Awards granted to any one (1) Participant during any one (1) calendar-year period (regardless
of whether settlement of the Award is to occur prior to, at the time of, or after the time of vesting); provided that Awards
described in this Subsection 4.1(e) shall be subject to the following:
(i)
If the Awards are denominated in Common Stock but an equivalent amount of cash is delivered
in lieu of delivery of shares of Common Stock, the foregoing limit shall be applied based on the methodology
used by the Committee to convert the number of shares of Common Stock into cash.
(ii)
If delivery of Common Stock or cash is deferred until after the Common Stock has been earned,
any adjustment in the amount delivered to reflect actual or deemed investment experience after the date the
Common Stock is earned shall be disregarded.
(f)
The total compensation which a Director may receive in any one (1) fiscal year of the Company shall
not exceed Five Hundred Thousand and 00/100 Dollars ($500,000.00), calculated by adding (i) the total cash compensation
to be otherwise paid for services rendered in the fiscal year to (ii) the grant date value of any Common Stock granted
pursuant to an Award in that fiscal year. In the event the aggregate compensation of such Director, including the grant
date value of any Award, reaches Five Hundred Thousand and 00/100 Dollars ($500,000.00) in any given fiscal year, then
no additional cash compensation shall be due or paid to such Director, and no additional Awards shall be made to such
Director, during the remainder of such fiscal year.
4.2
Adjustment to Shares and Limits. In the event of a stock dividend, stock split, reverse stock split,
extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, exchange of shares,
sale of assets or subsidiaries, combination, or other corporate transaction that affects the Common Stock such that the
Committee determines, in its sole discretion, that an adjustment is warranted in order to preserve the benefits or prevent
the enlargement of benefits of Awards under the Plan, the Committee shall, in the manner it determines equitable in its
sole discretion, (a) adjust the number and kind of shares that may be delivered under the Plan (including adjustments to
the number and kind of shares that may be granted to an individual during any specified time as described in Subsection
4.1); (b) adjust the number and kind of shares subject to outstanding Awards; (c) adjust the Exercise Price of outstanding
Options and SARs; and (d) make any other adjustments that the Committee determines to be equitable (which may include,
without limitation, (i) replacement of Awards with other awards that the Committee determines have comparable value
and that are based on stock of a company resulting from the transaction, and (ii) cancellation of the Award in return for
cash payment of the current value of the Award, determined as though the Award is fully vested at the time of payment,
provided that in the case of an Option or SAR, the amount of such payment may be the excess of value of the shares of
Common Stock subject to the Option or SAR at the time of the transaction over the Exercise Price).
5. OPTIONS AND STOCK APPRECIATION RIGHTS.
5.1
Eligibility. The Committee shall designate the Participants to whom Options or SARs are to be granted
under the Plan and shall determine the number of shares of Common Stock subject to each such Option or SAR and the
other terms and conditions thereof, not inconsistent with the Plan. Without limiting the generality of the foregoing, the
Committee may not grant dividend equivalent rights (current or deferred) with respect to any Option or SAR granted under
the Plan. Options may be either Incentive Stock Options or Non-Qualified Stock Options, as determined in the discretion
of the Committee; provided, however, that Incentive Stock Options may only be granted to Employees. An Option will
be deemed to be a Non-Qualified Stock Option unless it is specifically designated by the Committee as an Incentive Stock
Option. Any Option that is intended to constitute an Incentive Stock Option shall satisfy any other requirements of Section
422 of the Code and, to the extent such Option does not satisfy such requirements, the Option shall be treated as a Non-
Qualified Stock Option.
Exercise Price. The “Exercise Price” of each Option or SAR shall be established by the Committee at
the time of grant; provided, however, that in no event shall such price be less than one hundred percent (100%) of the Fair
5.2
65
Market Value of a share of Common Stock on the date the Option or SAR is granted (or, if greater, the par value of a share
of Common Stock on that date).
5.3
Vesting and Exercisability. The terms and conditions relating to exercise and vesting of an Option or
SAR shall be established by the Committee to the extent not inconsistent with the Plan and may include, without limitation,
conditions relating to Continuous Service, achievement of performance standards prior to exercise or achievement of
Common Stock ownership guidelines by the Participant. No Option or SAR may be exercised by a Participant prior to the
date on which it is vested (or exercisable) or after the Expiration Date applicable thereto.
5.4
Payment of Exercise Price of Options. The Exercise Price of an Option shall be paid, to the extent
permitted by applicable statutes and regulations and except as otherwise limited in the Award Agreement, either at the
time the Option is exercised (except that, in the case of an exercise through the use of cash equivalents, payment may be
made as soon as practicable after exercise) by any of the following forms (a) cash or cash equivalents, (b) tender to the
Company, by actual delivery or by attestation, shares of Common Stock valued at Fair Market Value as of the day of
exercise, (c) in any other form of legal consideration that may be acceptable to the Committee, or (d) any combination
thereof as determined by the Committee; provided, however, that shares of Common Stock may not be used to pay any
portion of the Exercise Price unless the holder thereof has good title, free and clear of all liens and encumbrances. Unless
otherwise determined by the Committee, any portion of the Exercise Price that is paid by delivery to the Company of other
Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of
the Company that have been held for more than six (6) months (or such longer or shorter period of time required to avoid
the treatment of the Option as a variable award for financial accounting purposes).
5.5
Expiration Date. The “Expiration Date” with respect to an Option or SAR means the date established
as the Expiration Date by the Committee at the time of the grant (as the same may be modified in accordance with the
terms of the Plan). An Option or SAR shall not be exercisable after the Expiration Date and, as of any date, an Option or
SAR shall only be exercisable with respect to the portion thereof that is otherwise exercisable (or vested). Unless otherwise
determined by the Committee, the Expiration Date of an Option or SAR shall be determined in accordance with the
following:
(a)
In the event that a Participant’s Continuous Service terminates (other than upon the Participant’s death
or Disability), the Expiration Date shall be the date that is three (3) months following the termination of the Participant’s
Continuous Service.
(b)
In the event that a Participant’s Continuous Service terminates as a result of the Participant’s Disability,
the Expiration Date shall be the date that is twelve (12) months following such termination.
(c)
In the event that (i) a Participant’s Continuous Service terminates as a result of the Participant’s death
or (ii) the Participant’s Continuous Service terminates for a reason other than death but the Participant dies after termination
but prior to the Expiration Date of the Option or SAR, the Expiration Date shall be the date that is twelve (12) months
following the date of termination.
Notwithstanding any provision of the Plan or any Award Agreement, in no event shall the Expiration Date of an
Option or SAR be later than the tenth (10th) anniversary of the date on which it was granted. Any Option or SAR that is
not exercised prior to the Expiration Date shall immediately terminate.
5.6
No Repricing. Except for either adjustments pursuant to Subsection 4.2 (relating to the adjustment of
shares), or reductions of the Exercise Price approved by the Company’s shareholders, the Exercise Price of any outstanding
Option or SAR may not be decreased after the date of grant nor may an outstanding Option or SAR granted under the Plan
be surrendered to the Company as consideration for the grant of a replacement Option or SAR with a lower Exercise Price
or a Full Value Award. Except as approved by the Company’s shareholders, in no event shall any Option or SAR granted
under the Plan be surrendered to the Company in consideration for a cash payment if, at the time of such surrender, the
Exercise Price of the Option or SAR is greater than the then current Fair Market Value of a share of Common Stock. In
addition, no repricing of an Option or SAR shall be permitted without the approval of the Company’s shareholders if such
approval is required under the rules of any stock exchange on which Common Stock is listed.
66
5.7
Post-Exercise Limitations. The Committee, in its discretion, may impose such restrictions on shares of
Common Stock acquired pursuant to the exercise of an Option as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance,
Common Stock ownership by the Participant, conformity with the Company’s recoupment or clawback policies and such
other factors as the Committee determines to be appropriate.
6. FULL VALUE AWARDS.
A “Full Value Award” is a grant of one or more shares of Common Stock or a right to receive one or more shares
of Common Stock (or cash based on the value of Common Stock) in the future (including restricted stock, restricted stock
units, performance shares, and performance units) which is contingent on continuing service, the achievement of
performance objectives during a specified period performance, or other restrictions as determined by the Committee or in
consideration of a Participant’s previously performed services or surrender or other compensation that may be due. The
grant of Full Value Awards may also be subject to such other conditions, restrictions and contingencies, as determined by
the Committee, including provisions relating to dividend or dividend equivalent rights and deferred payment or settlement.
Notwithstanding the foregoing, no dividends or dividend equivalent rights will be paid or settled on Full Value Awards
that have not been earned or vested.
7. MISCELLANEOUS.
7.1
Effective Date. The Plan will be effective as of the date it is adopted by the Board and approved by a
majority of the shareholders of the Company (the “Effective Date”). The Plan shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards granted under it are outstanding and not fully vested
or paid, as applicable; provided, however, that no new Awards shall be made under the Plan on or after the tenth (10th)
anniversary of the Effective Date. Any awards made under the Prior Plan shall continue to be subject to the terms and
conditions of the Prior Plan.
7.2
Limits on Distribution. Distribution of Common Stock or other amounts under the Plan shall be subject
to the following:
(a)
Notwithstanding any other provision of the Plan, the Company shall have no liability to deliver any
Common Stock under the Plan or make any other distribution of benefits under the Plan unless such delivery or distribution
would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity.
(b)
In the case of a Participant who is subject to Sections 16(a) and 16(b) of the Exchange Act, the
Committee may, at any time, add such conditions and limitations to any Award to such Participant, or any feature of any
such Award, as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b)
and the rules and regulations thereunder or to obtain any exemption therefrom.
(c)
To the extent that the Plan provides for issuance of certificates to reflect the transfer of Common Stock,
the transfer of such Common Stock may be effected on a non-certificated basis, to the extent not prohibited by applicable
law or the rules of any stock exchange on which the Common Stock is listed.
7.3
Liability for Cash Payments. Subject to the provisions of this Section 7, each Affiliate shall be liable
for payment of cash due under the Plan with respect to any Participant to the extent that such payment is attributable to
the services rendered for that Affiliate by the Participant. Any disputes relating to liability of an Affiliate for cash payments
shall be resolved by the Committee.
7.4
Shareholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of
a holder with respect to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied
all requirements for exercise of the Award pursuant to its terms.
No Employment or Other Service Rights. Nothing in the Plan or any instrument executed or Award
granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in
7.5
67
the capacity in effect at the time the Award was granted or shall affect the right of the Company or an Affiliate to terminate
(a) the employment of an Employee with or without notice and with or without cause, (b) the service of a Consultant
pursuant to the terms of such Consultant’s agreement with the Company or an Affiliate, or (c) the service of a director
pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or an Affiliate is incorporated, as the case may be.
7.6
Withholding Obligations. To the extent provided by the terms of an Award Agreement, the Participant
may satisfy any federal, state or local tax withholding obligation relating to the exercise or acquisition of Common Stock
under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such means: (a) tendering a cash payment; (b) authorizing
the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant
as a result of the exercise or acquisition of Common Stock under the Award; provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law (or such lesser
amount as may be necessary to avoid variable award accounting); or (c) delivering to the Company owned and
unencumbered shares of Common Stock. For purposes of tax withholding, the fair market value of the shares will be
determined at the time the withholding is required.
7.7
Transferability. Awards under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution. To the extent that a Participant has the right to exercise an Award, the
Award may be exercised during the lifetime of the Participant only by the Participant. Notwithstanding the foregoing
provisions of this Subsection 7.7, the Committee may provide that, Awards may be transferred to or for the benefit of the
Participant’s family (including, without limitation, to a trust or partnership for the benefit of a Participant’s family), subject
to such procedures as the Committee may establish; provided, however, that in no event shall an Incentive Stock Option
be transferable to the extent that such transferability would violate the requirements applicable to such option under Section
422 of the Code.
7.8
Choice of Law. The laws of the Commonwealth of Kentucky shall govern all questions concerning the
construction, validity and interpretation of the Plan, without regard to such state’s conflict of laws rules except to the extent
that the laws of the State of Delaware apply to corporate actions or the issuance of equity.
7.9
Notices. Any notice or document required to be filed with the Committee under the Plan will be properly
filed if delivered or mailed by registered mail, postage prepaid, to the Committee, in care of the Company, as applicable,
at its principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice
procedure from time to time. Any notice required under the Plan (other than a notice of election) may be waived by the
person entitled to notice.
7.10
Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to
be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation
thereof, shall be in writing filed with the applicable Committee at such times, in such form, and subject to such restrictions
and limitations, not inconsistent with the terms of the Plan, as the Committee shall require.
7.11
Action by the Company or Affiliate. Any action required or permitted to be taken by the Company or
any Affiliate shall be by resolution of its board of directors or governing body or by action of one or more members of the
board or governing body (including a committee of the board or governing body) who are duly authorized to act for the
board or by a duly authorized officer of the Company.
7.12
Gender and Number. Where the context admits, words in any gender shall include any other gender,
words in the singular shall include the plural and the plural shall include the singular.
7.13
Non-U.S. Individuals. Notwithstanding any other provision of the Plan to the contrary, the Committee
may grant Awards to Eligible Persons who are foreign nationals on such terms and conditions different from those specified
in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the
purposes of the Plan. In furtherance of such purposes, the Committee may make such modifications, amendments,
procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or
68
jurisdictions in which the Company or any Affiliate operates or has employees. The foregoing provisions of this
Subsection 7.13 shall not be applied to increase the share limitations of Section 4 or to otherwise change any provision of
the Plan that would otherwise require the approval of the Company’s shareholders.
8. CHANGE IN CONTROL.
An Award held by any Participant whose Continuous Service has not terminated prior to the effective time of a
Change in Control may be subject to acceleration of vesting and exercisability upon or after such event as may be provided
in the Award Agreement for such Award or as may be provided in any other written agreement between the Company or
any Affiliate and the Participant or otherwise pursuant to such Award.
9. AMENDMENT AND TERMINATION.
The Board may, at any time, amend or terminate the Plan, and the Committee may amend any Award Agreement;
provided, however that (a) no amendment or termination may, in the absence of written consent to the change by the
affected Participant (or, if the Participant is not then living, the Participant’s affected beneficiary), adversely affect the
rights of any Participant or beneficiary under any Award granted under the Plan prior to the date such amendment is
adopted by the Board (or the Committee, if applicable); (b) adjustments pursuant to Subsection 4.2 (relating to adjustment
to shares) shall not be subject to the foregoing limitations of this Section 9; (c) the provisions of Subsection 5.6 (relating
to Option and SAR repricing) cannot be amended unless the amendment is approved by the Company’s shareholders; and
(d) no other amendment shall be made to the Plan without the approval of the Company’s shareholders if such approval is
required by law or the rules of any stock exchange on which the Common Stock is listed. It is the intention of the Company
that, to the extent that any provisions of the Plan or any Awards granted hereunder are subject to Section 409A of the
Code, the Plan and the Awards comply with the requirements of Section 409A of the Code. The Plan and all Awards
granted under the Plan will be administered in accordance with the requirements of Section 409A of the Code to the extent
applicable and the Board or the Committee shall have the authority to amend the Plan or any Award Agreement as it deems
necessary to conform to Section 409A of the Code. Notwithstanding the foregoing, the Company does not guarantee that
Awards under the Plan will comply with Section 409A of the Code and the Committee is under no obligation to make any
changes to any Award to cause such compliance.
69
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 2020
OR
For the transition period from to
Commission File Number 000 - 50972
Texas Roadhouse, Inc.
(Exact name of registrant specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
20 - 1083890
(IRS Employer
Identification Number)
6040 Dutchmans Lane
Louisville, Kentucky 40205
(Address of principal executive offices) (Zip Code)
(502) 426 - 9984
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $0.001 per share
Trading Symbol(s) Name of each exchange on which registered
TXRH
NASDAQ Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well - known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No .
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
No .
Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S - T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit such files). Yes ☒ No ☐.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non - accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b - 2 of the Exchange Act.
Large accelerated filer
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
Non - accelerated filer
Accelerated filer
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered accounting firm
that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b - 2 of the Exchange Act). Yes ☐ No .
The aggregate market value of the voting stock held by non - affiliates of the registrant as of the last day of the second fiscal quarter ended
June 30, 2020 was $3,425,613,443 based on the closing stock price of $52.57. Shares of voting stock held by each officer and director have been
excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination
for other purposes. The market value calculation was determined using the closing stock price of our common stock on the Nasdaq Global Select
Market.
The number of shares of common stock outstanding were 69,619,435 on February 17, 2021.
Portions of the registrant’s definitive Proxy Statement for the registrant’s 2021 Annual Meeting of Stockholders, which is expected to be
filed pursuant to Regulation 14A within 120 days of the registrant’s fiscal year ended December 29, 2020, are incorporated by reference into
Part III of the Form 10 - K. With the exception of the portions of the Proxy Statement expressly incorporated by reference, such document shall not
be deemed filed with this Form 10 - K.
TABLE OF CONTENTS
Page
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 39
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . 56
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . 58
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Signatures
2
SPECIAL NOTE REGARDING FORWARD - LOOKING STATEMENTS
From time to time, in periodic reports and oral statements and in this Annual Report on Form 10 - K, we present
statements about future events and expectations that constitute forward - looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward - looking statements are based on our beliefs, assumptions and expectations of our future financial
and operating performance and growth plans, taking into account the information currently available to us. These
statements are not statements of historical fact. Forward - looking statements involve risks and uncertainties that may
cause our actual results to differ materially from the expectations of future results we express or imply in any
forward - looking statements. In addition to the other factors discussed under “Risk Factors” elsewhere in this report,
factors that could contribute to these differences include, but are not limited to:
•
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•
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•
•
•
•
•
•
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•
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•
our ability to successfully execute our growth strategies;
our ability to successfully open new restaurants, acquire franchise restaurants and/or execute other strategic
initiatives;
our ability to increase and/or maintain sales and profits at our existing restaurants;
our ability to integrate the franchise or other restaurants which we acquire or develop;
the continued service of key management personnel;
the continued impact of the COVID-19 pandemic, or subsequent pandemics, on our business including
government restrictions on dining room capacity, or any labor or supply chain shortages;
health concerns about our food products;
our ability to attract, motivate and retain qualified employees;
the impact of federal, state or local government laws and regulations relating to our employees and the sale of
food and alcoholic beverages;
the impact of litigation, including remedial actions, payment of damages and expenses and negative publicity;
the cost of our principal food products;
labor shortages or increased labor costs, such as federal or state minimum wage changes, market wage levels,
health care, and workers’ compensation insurance costs;
inflationary increases in the costs of construction and/or real estate;
changes in consumer preferences and demographic trends;
the impact of initiatives by competitors and increased competition generally;
our ability to successfully expand into new and existing domestic and international markets;
risks associated with partnering in markets with franchisees or other investment partners with whom we have
no prior history and whose interests may not align with ours;
risks associated with developing and successfully operating new concepts or strategic initiatives;
security breaches of confidential guest information in connection with our electronic processing of credit and
debit card transactions or the failure of our information technology systems;
the rate of growth of general and administrative expenses associated with building a strengthened corporate
infrastructure to support our initiatives;
3
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negative publicity regarding food safety, health concerns and other food or beverage related matters, including
the integrity of our or our suppliers’ food processing;
our franchisees’ adherence to the terms of the franchise agreement;
potential fluctuation in our quarterly operating results due to seasonality and other factors;
supply and delivery shortages or interruptions;
our ability to adequately protect our intellectual property;
our ability to raise capital in the future;
volatility of actuarially determined self-insurance losses and loss estimates;
adoption of new, or changes in existing, accounting policies and practices;
changes in and/or interpretations of federal and state tax laws;
adverse weather conditions which impact guest traffic at our restaurants; and
unfavorable general economic conditions in the markets in which we operate that adversely affect consumer
spending.
The words “believe,” “may,” “should,” “anticipate,” “estimate,” “expect,” “intend,” “objective,” “seek,” “plan,”
“strive,” “goal,” “projects,” “forecasts,” “will” or similar words or, in each case, their negative or other variations or
comparable terminology, identify forward - looking statements. We qualify any forward - looking statements entirely by
these cautionary factors.
Other risks, uncertainties and factors, including those discussed under “Risk Factors,” or those currently deemed
immaterial or unknown, could cause our actual results to differ materially from those projected in any forward - looking
statements we make.
We assume no obligation to publicly update or revise these forward - looking statements for any reason or to update
the reasons actual results could differ materially from those anticipated in these forward - looking statements, even if new
information becomes available in the future, except as required by applicable law.
4
ITEM 1—BUSINESS
PART I
Texas Roadhouse, Inc. (the “Company”) was incorporated under the laws of the state of Delaware in 2004. The
principal executive office is located in Louisville, Kentucky.
General Development of Business
The Company is a growing restaurant company operating predominately in the casual dining segment. Our founder,
chairman and chief executive officer, W. Kent Taylor, started the business in 1993 with the opening of the first Texas
Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to 634 restaurants in 49 states and ten foreign
countries. Our mission statement is “Legendary Food, Legendary Service®.” Our operating strategy is designed to
position each of our restaurants as the local hometown favorite for a broad segment of consumers seeking high quality,
affordable meals served with friendly, attentive service. As of December 29, 2020, we owned and operated
537 restaurants and franchised an additional 69 domestic restaurants and 28 international restaurants.
Narrative Description of Business
Of the 537 restaurants we owned and operated at the end of 2020, we operated 503 as Texas Roadhouse restaurants,
31 as Bubba’s 33 restaurants and three as Jaggers restaurants. Throughout this report, we use the term “restaurants” to
include Texas Roadhouse and Bubba’s 33, unless otherwise noted.
Texas Roadhouse is a moderately priced, full - service, casual dining restaurant concept offering an assortment of
specially seasoned and aged steaks hand - cut daily on the premises and cooked to order over open grills. In addition to
steaks, we also offer our guests a selection of ribs, seafood, chicken, pork chops, pulled pork and vegetable plates, and
an assortment of hamburgers, salads and sandwiches. The majority of our entrées include two made - from - scratch side
items, and we offer all our guests a free unlimited supply of roasted in - shell peanuts and fresh baked yeast rolls.
Bubba’s 33 is a family-friendly, sports restaurant concept featuring scratch-made food, ice cold beer and signature
drinks. Our menu features burgers, pizza and wings as well as a wide variety of appetizers, sandwiches and dinner
entrées. Our first Bubba’s 33 restaurant opened in May 2013 in Fayetteville, North Carolina.
Jaggers is a fast-casual restaurant concept offering burgers, hand-breaded chicken tenders and chicken sandwiches
served with scratch-made sauces. In addition, we offer fresh salads that are chopped and tossed when ordered and
served with homemade dressings. Jaggers offers drive-thru, carry-out, and dine-in service options. Our first Jaggers
restaurant opened in December 2014 in Noblesville, Indiana.
Financial Information about Operating Segments
We consider our restaurant and franchising operations as similar and have aggregated them into a single reportable
segment. The majority of the restaurants operate in the U.S. within the casual dining segment of the restaurant industry,
providing similar products to similar customers, and possessing similar pricing structures, resulting in similar long - term
expected financial performance characteristics. Each of our 537 company restaurants is considered an operating
segment.
COVID-19 Impact
On March 13, 2020, the novel coronavirus (“COVID-19”) pandemic (the “pandemic”) was declared a National
Public Health Emergency. Shortly after the national emergency declaration, state and local officials began placing
restrictions on restaurants, some of which allowed To-Go or curbside service only while others limited capacity in the
dining room. By late March, all of our domestic company and franchise restaurants were under state or local order
which only allowed for To-Go or curbside service. Beginning in early May 2020, state and local guidelines began to
allow dining rooms to re-open, typically at a limited capacity. While all of our dining rooms were able to open in some
capacity, many were required to close again in areas more severely impacted by the pandemic. As of December 29,
2020, 82% of our company restaurants had their dining rooms operating under various limited capacity restrictions. Our
remaining restaurants were limited to outdoor and/or To-Go or curbside service only.
5
In response to the impact of the pandemic on our restaurant operations, we have developed a hybrid operating
model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside
and/or drive-up operating model, as permitted by local guidelines. This includes design changes to our building to better
accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed. We also have
installed booth partitions in all of our restaurants as an added safety measure for our guests. In addition, we have
increased our already strict sanitation requirements, are conducting daily health and temperature checks for all
employees before they begin their shift and are requiring personal protective equipment to be worn by all restaurant
employees at all times. As we work through the local regulations at each of our locations, the safety of our employees
and guests remains our top priority.
As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in
traffic which has impacted our operating results. While the majority of our dining rooms have re-opened, a significant
portion continue to operate under capacity restrictions that severely limit the number of guests we can serve. In addition,
while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do
not expect these sales will generate a similar profit margin and cash flows to our normal operating model. We expect
our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and
our dining rooms can operate at full capacity. We cannot predict how long the pandemic will last, how long it will take
until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again. In
addition, we cannot predict the overall impact on the economy or consumer spending habits. The impact on our
operating results as well as the operational and financial measures we have implemented in response to the pandemic
have been included throughout this report.
In response to the pandemic, the Company and our Board of Directors implemented the following measures in
2020 to enhance financial flexibility:
• Decreased the number of planned new restaurants for 2020;
• Suspended all quarterly cash dividends occurring after March 27, 2020;
• Suspended all share repurchase activity;
• Expanded the capacity of the revolving credit facility and increased the borrowings by $240 million; and
• Decreased compensation including voluntary reductions of salary and bonus for the executive and leadership
teams to make relief grants available for restaurant employees. Each non-employee member of the Board of
Directors also volunteered to forgo their director and committee fees along with any cash retainers effective
April 1, 2020 and continuing throughout fiscal 2020.
Effective March 27, 2020, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the
“CARES Act”) was passed to benefit companies that were significantly impacted by the pandemic. This legislation
allowed for the deferral of the social security portion of the employer portion of FICA payroll taxes from the date of
enactment through the end of 2020. Amounts are required to be repaid in equal installments at the end of 2021 and
2022. As of December 29, 2020, the Company had deferred $47.3 million in payroll taxes with the amount due in 2021
included in accrued wages and payroll taxes and the amount due in 2022 included in other liabilities in our consolidated
balance sheets.
The CARES Act also allowed for an Employee Retention Credit for companies severely impacted by the pandemic
to encourage the retention of full-time employees. This refundable payroll tax credit was available for any company that
had fully or partially suspended operations due to government order or experienced a significant decline in gross receipts
and had employees who were paid but did not actually work. The Company provided various forms of relief pay for
hourly restaurant employees throughout the year, a significant portion of which qualified for this tax credit. For the year
ended December 29, 2020, we recorded $7.0 million related to this credit which is included in labor expense in our
consolidated statements of income and comprehensive income.
Finally, the CARES Act provided for small business loans that were forgivable if certain criteria were met. The
Company did not pursue any of these loans on behalf of company restaurants as we believe we have sufficient
alternatives for raising capital if needed.
6
Operating Strategy
Although a significant portion of 2020 required us to focus on adapting our business to account for the impacts of
the pandemic, we remain committed to our core operating strategy that has defined and grown our brand. The operating
strategy that underlies this growth is built on the following key components:
• Offering high quality, freshly prepared food. We place a great deal of emphasis on providing our guests with
high quality, freshly prepared food. As part of our process, we have developed proprietary recipes to provide
consistency in quality and taste throughout all restaurants. We expect a management level employee to inspect
every entrée before it leaves the kitchen to confirm it matches the guest’s order and meets our standards for
quality, appearance and presentation. In addition, we employ a team of product coaches whose function is to
provide continual, hands - on training and education to our kitchen staff for the purpose of promoting consistent
adherence to recipes, food preparation procedures, food safety standards, food appearance, freshness and
portion size. At our Texas Roadhouse restaurants, we hand - cut all but one of our assortment of steaks and
make our sides from scratch.
• Offering performance - based manager compensation. We offer a performance - based compensation program to
our individual restaurant managers and multi - restaurant operators, who are called “managing partners” and
“market partners,” respectively. Each of these partners earns a base salary plus a performance bonus, which
represents a percentage of each of their respective restaurant’s pre - tax income. As a result of the pandemic and
the impact on restaurant operating results, we guaranteed a portion of these performance bonuses in the periods
that were the most significantly impacted. By providing our partners with a significant stake in the success of
our restaurants and underscoring our long-term commitment to them during the pandemic with guaranteed
bonuses, we believe that we are able to attract and retain talented, experienced and highly motivated managing
and market partners.
• Focusing on dinner. In a high percentage of our restaurants, we limit our operating hours to dinner only during
the weekdays with approximately one half of our restaurants offering lunch on Friday. By focusing on dinner,
our restaurant teams have to prepare for and manage only one shift per day during the week. We believe this
allows our restaurant teams to offer higher quality, more consistent food and service to our guests.
• Offering attractive price points. We offer our food and beverages at moderate price points that we believe are
as low as or lower than those offered by many of our competitors in any given market. Within each menu
category, we offer a choice of several price points with the goal of fulfilling each guest’s budget and value
expectations. For example, at our Texas Roadhouse restaurants, our steak entrées, which include the choice of
two side items, generally range from $10.99 for our 6-ounce Sirloin to $26.99 for our 23 - ounce Porterhouse
T - Bone. The per guest average check for the Texas Roadhouse restaurants we owned and operated in 2020 was
$17.86. Per guest average check represents restaurant sales divided by the number of guests served. We
consider each sale of an entrée to be a single guest served. Our per guest average check is higher as a result of
our weekday dinner only focus. At our Bubba’s 33 restaurants, our entrées range from $9.99 for our Classic
Cheeseburger to $19.99 for our 16-inch Meaty Meaty pizza.
• Creating a fun and comfortable atmosphere with a focus on high quality service. We believe the service
quality and atmosphere we establish in our restaurants is a key component for fostering repeat business. We
focus on keeping our table - to - server ratios low to allow our servers to truly focus on their guests and serve
their needs in a personal, individualized manner. Our Texas Roadhouse restaurants feature a rustic
southwestern lodge décor accentuated with hand - painted murals, neon signs, and southwestern prints, rugs and
artifacts. Additionally, our restaurants continuously play upbeat country hits. Our Bubba’s 33 restaurants
feature walls lined with televisions playing sporting events and music videos and are decorated with sports
jerseys, neon signs and other local flair.
Unit Prototype and Economics
We design our restaurant prototypes to provide a relaxed atmosphere for our guests, while also focusing on
restaurant - level returns over time. Our current prototypical Texas Roadhouse restaurants consist of a freestanding
building with approximately 7,600 square feet of space constructed on sites of approximately 1.5 to 2.2 acres or retail
pad sites, with seating of approximately 58 to 68 tables for a total of 270 to 300 guests, including 18 bar seats, and
7
parking for approximately 160 vehicles either on - site or in combination with some form of off - site cross parking
arrangement. Our current prototypes are adaptable to in - line and end - cap locations and/or spaces within an enclosed
mall or a shopping center. Our current prototypical Bubba’s 33 restaurants consist of a freestanding building with
approximately 7,500 square feet of space with seating for approximately 270 guests.
In response to the pandemic, we made building modifications to a number of existing restaurants. These changes
were made to better accommodate the increase in our To-Go sales and/or expand our outdoor dining arrangements. We
are currently evaluating the possibility of integrating these changes into our prototypical Texas Roadhouse and Bubba’s
33 restaurant designs.
As of December 29, 2020, we leased 389 properties and owned 148 properties. Our 2020 average unit volume for
all Texas Roadhouse company restaurants open before June 25, 2019 was $4.6 million. The time required for a new
Texas Roadhouse restaurant to reach a steady level of cash flow is approximately three to six months. For 2020, the
average capital investment, including pre - opening expenses and a capitalized rent factor, for the 18 Texas Roadhouse
company restaurants opened during the year was $6.2 million, broken down as follows:
Average Cost
Low
High
Land(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,515,000 $ 1,100,000 $ 1,950,000
2,570,000
4,055,000
Building(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,320,000
1,440,000
Furniture and Equipment . . . . . . . . . . . . . . . . . . . .
1,000,000
790,000
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . .
350,000
Other(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,225,000
1,875,000
1,220,000
560,000
—
(1) Represents 10x’s initial base rent in the event the land is leased or the average cost for land acquisitions.
(2) Includes site work costs.
(3) Primarily liquor licensing costs, where applicable. This cost varies based on the licensing requirements in each state.
For 2020 and 2019, our average capital investment for the Texas Roadhouse restaurants was $6.2 million and
$5.6 million, respectively. The increase in our 2020 average capital investment was primarily due to higher land and
building costs. The higher land costs were due to increased rent amounts at several sites. The higher building costs were
due to higher material costs and construction delays related to the pandemic. We expect our average capital investment
for restaurants to be opened in 2021 to be approximately $5.5 million.
Our average capital investment for the Bubba’s 33 restaurants opened in 2020 and 2019 was $7.3 million and
$6.9 million, respectively. The increase in our 2020 average capital investment for our Bubba’s 33 restaurants was
primarily due to higher building costs, in particular at one site in a more expensive area. We expect our average capital
investment for restaurants to be opened in 2021 to be approximately $6.9 million.
We remain focused on driving sales and managing restaurant investment costs in order to maintain our restaurant
development in the future. Our capital investment (including cash and non - cash costs) for new restaurants varies
significantly depending on a number of factors including, but not limited to: the square footage, layout, scope of required
site work, geographical location, type of construction labor (union or non - union), local permitting requirements, our
ability to negotiate with landowners and/or landlords, cost of liquor and other licenses and hook - up fees.
Site Selection
We continue to refine our site selection process. In analyzing each prospective site, our real estate team, as well as
our restaurant market partners, devotes significant time and resources to the evaluation of local market demographics,
population density, household income levels and site - specific characteristics such as visibility, accessibility, traffic
generators, proximity of other retail activities and competitors, traffic counts and parking. We work actively with
experienced real estate brokers in target markets to select high quality sites and to maintain and regularly update our
database of potential sites. We typically require three to six months to locate, approve and control a restaurant site and
typically six to 12 additional months to obtain necessary permits. Upon receipt of permits, we require approximately five
months to construct, equip and open a restaurant.
8
Existing Restaurant Locations
As of December 29, 2020, we had 537 company restaurants and 97 franchise restaurants in 49 states and ten foreign
countries as shown in the chart below.
Number of Restaurants
Company Franchise Total
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vermont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total domestic restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bahrain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mexico. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Qatar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total international restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total system-wide restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
2
19
6
4
17
5
2
41
12
5
17
21
10
6
15
10
3
8
10
16
5
3
17
—
3
2
3
10
6
21
20
2
33
8
2
25
3
3
2
15
71
9
1
19
2
3
10
2
537
—
—
—
—
—
—
—
—
—
—
—
537
—
—
—
—
9
1
—
2
—
4
—
—
8
—
1
2
1
—
6
1
3
—
—
—
1
1
—
—
—
—
—
—
1
2
—
—
6
—
6
—
1
5
1
—
—
1
3
3
—
69
1
1
2
3
1
5
1
5
4
5
28
97
8
2
19
6
13
18
5
4
41
16
5
17
29
10
7
17
11
3
14
11
19
5
3
17
1
4
2
3
10
6
21
20
3
35
8
2
31
3
9
2
16
76
10
1
19
3
6
13
2
606
1
1
2
3
1
5
1
5
4
5
28
634
9
Food
Menu. Our restaurants offer a wide variety of menu items at attractive prices that are designed to appeal to a broad
range of consumer tastes. At Texas Roadhouse restaurants, our dinner entrée prices generally range from $9.99 to
$26.99. We offer a broad assortment of specially seasoned and aged steaks, all cooked over open grills and all but one
hand - cut daily on the premises. We also offer our guests a selection of ribs, seafood, chicken, pork chops, pulled pork
and vegetable plates, and an assortment of hamburgers, salads and sandwiches. Entrée prices include unlimited peanuts,
fresh baked yeast rolls and most include the choice of two made - from - scratch sides. Other menu items include specialty
appetizers such as the “Cactus Blossom®” and “Rattlesnake Bites®”. We also provide a “12 & Under” menu for children
that includes a selection of smaller-sized entrées served with one side item and a beverage at prices generally between
$3.99 and $9.99. At Bubba’s 33 restaurants, our menu prices, excluding appetizers, generally range from $9.99 to
$19.99. We offer a broad assortment of wings, burgers, pizzas, salads and sandwiches. In addition, we also offer our
guests a selection of pasta, chicken, beef and seafood entrées. Our Bubba’s 33 restaurants also offer an extensive
selection of draft beer and signature cocktails. We provide a “12 & Under” menu for children at our Bubba’s
33 restaurants that includes a selection of items, including a beverage, at prices generally between $3.99 and $5.99. In
addition, our full menu is available through our mobile apps or on-line which allows for To-Go pickup.
Most of our restaurants feature a full bar that offers an extensive selection of draft and bottled beer, major brands of
liquor and wine as well as made in-house margaritas. Managing partners are encouraged to tailor their beer selection to
include regional and local brands. Alcoholic beverages at our Texas Roadhouse restaurants accounted for 8.6% of
restaurant sales in fiscal 2020. As a result of the significant increase in To-Go sales due to the pandemic, we sold fewer
alcoholic beverages compared to fiscal 2019.
We always strive to maintain a consistent menu at our restaurants. We continually review our menu to consider
enhancements to existing menu items or the introduction of new items. We change our menu only after guest feedback
and an extensive study of the operational and economic implications. To maintain our high levels of food quality and
service, we generally remove one menu item for every new menu item introduced to facilitate our ability to execute high
quality meals on a focused range of menu items.
Food Quality and Safety. We are committed to serving a varied menu of high quality, great tasting food items with
an emphasis on freshness. We have developed proprietary recipes to promote consistency in quality and taste throughout
all restaurants and provide a unique flavor experience to our guests. At each domestic Texas Roadhouse restaurant, a
trained meat cutter hand cuts our steaks and other restaurant employees prepare our side items and yeast rolls from
scratch in the restaurants daily. At both Texas Roadhouse and Bubba’s 33 restaurants, we assign individual kitchen
employees to the preparation of designated food items in order to focus on quality, consistency, speed and food safety.
Additionally, we expect a management level employee to inspect every entrée before it leaves the kitchen to confirm it
matches the guest’s order and meets our standards for quality, appearance and presentation.
We employ a team of product coaches whose function is to provide continual, hands - on training and education to
the kitchen staff in our restaurants for the purpose of reinforcing food quality, recipe consistency, food preparation
procedures, food safety and sanitation standards, food appearance, freshness and portion size. The product coach team
supports substantially all restaurants system - wide.
Food safety and sanitation is of utmost importance to us. We currently utilize several programs to help facilitate
adherence to proper food preparation procedures and food safety standards including our daily taste and temperature
procedures. We have a food team whose function, in conjunction with our product coaches, is to develop, enforce and
maintain programs designed to promote compliance with food safety guidelines. As a requirement of our quality
assurance process, primary food items are purchased from qualified vendors who are regularly audited by reputable,
outside inspection services confirming that the vendor is compliant with United States Food and Drug Administration
and United States Department of Agriculture guidelines.
We perform food safety and sanitation audits on our restaurants each year and these results are reviewed by various
members of operations and management. To maximize adherence to food safety protocols, we have incorporated Hazard
Analysis Critical Control Points principles and critical procedures (such as hand washing) in each recipe. All restaurant
managers are required to complete the American National Standards Institute Certified Food Manager training. In
addition, most of our product coaches and food team members have obtained or are in the process of obtaining their
Certified Professional-Food Safety designation from the National Environmental Health Association.
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We also implemented additional sanitation requirements in the current year in response to the pandemic. This
included adding a sanitation coordinator position at each location who is responsible for cleaning high touch areas,
adding hand sanitizer stations at each restaurant, and supplying each restaurant with a chemical sanitation sprayer.
These requirements are in addition to the daily health and temperature checks for all employees before they begin their
shift as well as the requirement for personal protective equipment to be worn by all restaurant employees at all times.
During 2020, we began participating in the Ecolab Science Certified Inspection program. This program evaluates
our restaurants on COVID-19 cleaning procedures as well as food safety, general cleanliness and safety procedures. As
of December 29, 2020, over 75% of our domestic system-wide stores had been certified under this program with the
remainder expected to be certified in early 2021.
Purchasing. Our purchasing philosophy is designed to supply fresh, quality products to the restaurants at
competitive prices while maximizing operating efficiencies. We negotiate directly with suppliers for substantially all
food and beverage products to maximize quality and freshness and obtain competitive prices.
Food and supplies are ordered by and shipped directly to the domestic restaurants. Most food products used in the
operation of our restaurants are distributed to individual restaurants through an independent national distribution
company. We strive to qualify more than one supplier for all key food items and believe that beef of comparable quality
as well as all other essential food and beverage products are available, upon short notice, from alternative qualified
suppliers.
Service
Service Quality. We believe that guest satisfaction and our ability to continually evaluate and improve the guest
experience at each of our restaurants is important to our success. We employ a team of service coaches whose function is
to provide consistent, hands - on training and education to our managers and service staff in our restaurants for the
purpose of reinforcing service quality and consistency, team work and staff attentiveness and manage interaction in the
dining room. The service coach team supports substantially all restaurants system-wide.
Guest Satisfaction. Through the use of guest surveys, our websites, “texasroadhouse.com,” “bubbas33.com,” or
“eatjaggers.com,” a toll - free guest response telephone line, emails, letters, social media, and personal interaction in the
restaurant, we receive valuable feedback from guests. Additionally, we employ an outside service to administer a “Secret
Shopper” program whereby trained individuals periodically dine and comprehensively evaluate the guest experience at
each of our domestic restaurants. Particular attention is given to food, beverage and service quality, cleanliness, staff
attitude and teamwork, and manager visibility and interaction. The resulting reports are used for follow up training and
providing feedback to both staff and management. We continue to evaluate and implement processes relating to guest
satisfaction, including reducing guest wait times, improving host interaction with the guest, and improving the To-Go
experience for our guests.
Atmosphere. The atmosphere of our restaurants is intended to appeal to broad segments of the population including
children, families, couples, adults and business persons. Substantially all Texas Roadhouse restaurants are of our
prototype design, reflecting a rustic southwestern lodge atmosphere. The interiors feature wood walls and stained
concrete floors and are decorated with hand - painted murals, neon signs, southwestern prints, rugs and artifacts. The
restaurants continuously play upbeat country hits. Guests may also view a display - baking area, where our fresh baked
yeast rolls are prepared, and a meat cooler displaying fresh cut steaks. While waiting for a table, guests can enjoy
complimentary roasted in - shell peanuts and upon being seated at a table, guests can enjoy fresh baked yeast rolls along
with roasted in - shell peanuts. As a result of the pandemic, our peanuts are currently served in individual bags and
provided upon request. Our Bubba’s 33 restaurants feature walls lined with televisions playing a variety of sports events
and music videos and are decorated with sports jerseys, neon signs and other local flair.
People
Management Personnel. Each of our restaurants is generally staffed with one managing partner, one kitchen
manager, one service manager and one or more additional assistant managers. Managing partners are single restaurant
operators who have primary responsibility for the day - to - day operations of the entire restaurant. Kitchen managers have
primary responsibility for managing the kitchen staff and overall kitchen operations including food preparation and food
quality. Service managers have primary responsibility for managing the front of house staff and overall dining room
operations including service quality and the guest experience. The assistant managers support our managing partners,
kitchen, and service managers. All managers are responsible for maintaining our standards of quality and performance.
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We use market partners to oversee the operation of our restaurants. Each market partner oversees a group of varying
sizes of managing partners and their respective management teams. Market partners are also responsible for the hiring
and development of each restaurant’s management team and assisting in the site selection process. Through regular
visits to the restaurants, the market partners facilitate adherence to all aspects of our concepts, strategies and standards of
quality. To further facilitate adherence to our standards of quality and to maximize uniform execution throughout the
system, we employ product coaches and service coaches who regularly visit the restaurants to assist in training of both
new and existing employees and to grade food and service quality. The attentive service and high quality food, which
results from each restaurant having a managing partner, at least two to three managers and the hands - on assistance of a
product coach and a service coach, are critical to our success.
Training and Development. All restaurant employees are required to complete varying degrees of training before
and during employment. Our comprehensive training program emphasizes our operating strategy, procedures and
standards, including responsible alcohol service, and is typically conducted individually at our restaurants or in groups in
Louisville, Kentucky. As a result of the pandemic, this training is currently being done virtually.
Our managing and market partners are generally required to have significant experience in the full - service
restaurant industry and are generally hired at a minimum of nine to 12 months before their placement in a new or
existing restaurant to allow time to fully train in all aspects of restaurant operations. All managing partners, kitchen and
service managers and other management employees are required to complete an extensive training program of up to
20 weeks, which includes training for every position in the restaurant. Trainees are validated at pre - determined points
during their training by a market partner, managing partner, product coach and service coach.
A number of our restaurants have been certified as training centers by our training department. This certification
confirms that the training center adheres to established operating procedures and guidelines. Additionally, most
restaurants are staffed with training coordinators responsible for ongoing daily training needs.
For new restaurant openings, a full team of designated trainers, each specializing in a specific restaurant position, is
deployed to the restaurant at least ten days before opening. Formal employee training begins seven days before opening
and follows a uniform, comprehensive training course as directed by a service coach.
Marketing
Our marketing strategy aims to promote our brands while retaining a localized focus. We strive to increase
comparable restaurant sales by increasing the frequency of visits by our current guests and attracting new guests to our
restaurants and also by communicating and promoting our brands’ food quality, the guest experience and value. We
accomplish these objectives through three major initiatives.
Local Restaurant Marketing. Given our strategy to be a neighborhood destination, local restaurant marketing is
integral in developing brand awareness in each market. Managing partners are encouraged to participate in creative
community - based marketing. We also engage in a variety of promotional activities, such as contributing time, money
and complimentary meals to charitable, civic and cultural programs. We employ marketing coordinators at the restaurant
and market level to develop and execute the majority of the local marketing strategies.
In - restaurant Marketing. A significant portion of our marketing fund is spent communicating with our guests
inside our restaurants through point of purchase materials. We believe special promotions such as Valentine’s Day and
Mother’s Day drive notable repeat business. Our eight - week holiday gift card campaign is one of our most impactful
promotions.
Advertising. Our restaurants do not rely on national television or print advertising to promote our brands. Earned
local media is a critical part of our strategy that features our products and people. Our restaurants use a permission - based
email loyalty program, as well as social media and digital marketing, to promote the brand and engage with our guests.
Our approach to media aligns with our focus on local store marketing and community involvement.
Restaurant Franchise Arrangements
Franchise Restaurants. As of December 29, 2020, we had 25 franchisees that operated 97 Texas Roadhouse
restaurants in 23 states and ten foreign countries. Domestically, franchise rights are granted for specific restaurants only,
as we have not granted any rights to develop a territory in the United States. We are currently not accepting new
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domestic franchisees. Approximately 75% of our franchise restaurants are operated by ten franchisees and no franchisee
operates more than 15 restaurants.
Our standard domestic franchise agreement has a term of ten years with two renewal options for an additional five
years each if certain conditions are satisfied. Our current form of domestic franchise agreement generally requires the
franchisee to pay a royalty fee of 4.0% of gross sales. We may, at our discretion, waive or reduce the royalty fee on a
temporary or permanent basis. In 2020, we waived royalties of $0.4 million for international franchisees in countries that
were significantly impacted by the pandemic. We also made royalty deferral arrangements for many of our domestic
and international franchisees. The majority of these royalty waivers and deferral arrangements were provided in the
periods most significantly impacted by the pandemic. “Gross sales” means the total selling price of all services and
products related to the restaurant. Gross sales do not include:
•
•
•
•
employee discounts or other discounts;
tips or gratuities paid directly to employees by guests;
any federal, state, municipal or other sales, value added or retailer’s excise taxes; or
adjustments for net returns on salable goods and discounts allowed to guests on sales.
Domestic franchisees are currently required to pay 0.3% of gross sales to a national marketing fund for
system - wide promotions and related marketing efforts. We have the ability under our agreements to increase the
required marketing fund contribution up to 2.5% of gross sales. We may also charge a marketing fee of 0.5% of gross
sales, which we may use for market research and to develop system - wide promotional and marketing materials. A
franchisee’s total required marketing contribution or spending will not be more than 3.0% of gross sales.
Our standard domestic franchise agreement gives us the right, but not the obligation, to compel a franchisee to
transfer its assets to us in exchange for shares of our stock, or to convert its equity interests into shares of our stock. The
amount of shares that a franchisee would receive is based on a formula that is included in the franchise agreement.
We have entered into area development and franchise agreements for the development and operation of Texas
Roadhouse restaurants in several foreign countries and one U.S. territory. We currently have signed franchise and/or
development agreements in nine countries in the Middle East as well as Taiwan, the Philippines, Mexico, China, South
Korea, Brazil and Puerto Rico. As of December 29, 2020, we had 15 restaurants open in five countries in the Middle
East, four restaurants open in Taiwan, five in the Philippines, two in South Korea and one each in Mexico and China for
a total of 28 restaurants in ten foreign countries. For the existing international agreements, the franchisee is generally
required to pay us a franchise fee for each restaurant to be opened, royalties on the gross sales of each restaurant and a
development fee for our grant of development rights in the named countries. We anticipate that the specific business
terms of any future franchise agreement for international restaurants might vary significantly from the standard terms of
our domestic agreements and from the terms of existing international agreements, depending on the territory to be
franchised and the extent of franchisor - provided services to each franchisee.
Any of our franchise agreements, whether domestic or international, may be terminated if the franchisee defaults in
the performance of any of its obligations under the development or franchise agreement, including its obligations to
develop the territory or operate its restaurants in accordance with our standards and specifications. A franchise
agreement may also be terminated if a franchisee becomes insolvent, fails to make its required payments, creates a threat
to the public health or safety, ceases to operate the restaurant, or misuses the Texas Roadhouse trademarks.
Franchise Compliance Assurance. We have various systems in place to promote compliance with our systems and
standards, both during the development and operation of franchise restaurants. We actively work with our franchisees to
support successful franchise operations as well as compliance with the Texas Roadhouse standards and procedures.
During the restaurant development phase, we consent to the selection of restaurant sites and make available copies of our
prototype building plans to franchisees. In addition, we ensure that the building design is in compliance with our
standards. We provide training to the managing partner and up to three other managers of a franchisee’s first restaurant.
We also provide trainers to assist in the opening of every domestic franchise restaurant and we provide trainers to assist
our international franchisees in the opening of their restaurants until such time as they develop an approved restaurant
opening training program. Finally, on an ongoing basis, we conduct reviews on all franchise restaurants to determine
their level of effectiveness in executing our concept at a variety of operational levels. Our franchisees are required to
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follow the same standards and procedures regarding equipment and food purchases, preparation and safety procedures as
we maintain in our company restaurants. Reviews are conducted by seasoned operations teams and focus on key areas
including health, safety and execution proficiency.
Management Services. We provide management services to 24 of the franchise restaurants in which we and/or our
founder have an ownership interest and five additional franchise restaurants in which neither we nor our founder have an
ownership interest. Such management services may include accounting, operational supervision, human resources,
training, and food, beverage and equipment consulting for which we receive monthly fees of up to 2.5% of gross sales.
We also make available to these restaurants certain legal services, restaurant employees and employee benefits on a
pass - through cost basis.
Information Technology
All of our company restaurants utilize computerized management information systems, which are designed to
improve operating efficiencies, provide restaurant and Support Center management with timely access to financial and
operating data and reduce administrative time and expense. With our current information systems, we have the ability to
query, report and analyze this intelligent data on a daily, weekly, monthly, quarterly and year - to - date basis and beyond,
on a company - wide, regional, market, or individual restaurant basis. Together, this enables us to closely monitor sales,
food and beverage costs and labor and operating expenses at each of our restaurants. We have a number of systems and
reports that provide comparative information that enables both restaurant and Support Center management to supervise
the financial and operational performance of our restaurants and to recognize and understand trends in the business. Our
accounting department uses a standard, integrated system to prepare monthly profit and loss statements, which provides
a detailed analysis of sales and costs. These monthly profit and loss statements are compared both to the
restaurant - prepared reports and to prior periods. Restaurant hardware and software support for all of our restaurants is
provided and coordinated from the restaurant Support Center in Louisville, Kentucky. Currently, we utilize cable, digital
subscriber lines (DSL) or T - 1 technology at the restaurant level, which serves as a high - speed, secure communication
link between the restaurants and our Support Center as well as our credit and gift card processors. We guard against
business interruption by maintaining a disaster recovery plan, which includes storing critical business information
off - site, maintaining a redundant data center, testing the disaster recovery plan and providing on - site power backup.
We accept credit cards and gift cards as payment at our restaurants. We have systems and processes in place that
focus on the protection of our guests’ credit card information and other private information that we are required to
protect, such as our employees’ personal information. Our systems have been carefully designed and configured to
safeguard against data loss or compromise. We submit our systems to regular audit and review, including the
requirements of Payment Card Industry Data Security Standards. We also periodically scan our networks to assess
vulnerability. See Risk Factors in Item 1A of this Form 10-K for a discussion of risks associated with breaches of
security related to confidential guest and/or employee information.
As a result of the significant increase in To-Go and curbside service, we made several digital enhancements to
improve the guest experience and better support our increased volumes. These enhancements include a new, fully
customized digital experience that allows our guests to get on the waitlist or order pickup or curbside service. The new
digital experience also has added gift card and payment functionality. We have also implemented texting systems which
allow our dine-in guests to wait outside or in their cars and improved the To-Go experience for our To-Go guests.
Finally, we have implemented systems for touchless menus and contactless payments for enhanced guest safety.
We believe that our current systems and practice of implementing regular updates will position us well to support
current needs and future growth. Information systems projects are prioritized based on strategic, financial, regulatory and
other business advantage criteria.
Competition
Competition in the restaurant industry is intense. We compete with well-established food service companies on the
basis of taste, quality and price of the food offered, service, atmosphere, location, take-out and delivery options and
overall dining experience. Our competitors include a large and diverse group of restaurant chains and individual
restaurants that range from independent local operators that have opened restaurants in various markets to
well - capitalized national restaurant companies. We also face competition from meal kit delivery services as well as the
supermarket industry. In addition, improving product offerings of fast casual and quick - service restaurants and better
execution of off-premise sales, together with negative economic conditions could cause consumers to choose less
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expensive alternatives. Although we believe that we compete favorably with respect to each of the above factors, other
restaurants and retail establishments compete for the same casual dining guests, quality site locations and
restaurant - level employees as we do. We expect intense competition to continue in all of these areas.
Trademarks
Our registered trademarks and service marks include, among others, our trade names and our logo and proprietary
rights related to certain core menu offerings. We have registered all of our significant marks for our restaurants with the
United States Patent and Trademark Office. We have registered or have registrations pending for our most significant
trademarks and service marks in 50 foreign jurisdictions. To better protect our brands, we have also registered various
Internet domain names. We believe that our trademarks, service marks and other proprietary rights have significant value
and are important to our brand - building efforts and the marketing of our restaurant concepts.
Government Regulation
We are subject to a variety of federal, state, local and international laws affecting our business. For a discussion of
the risks and potential impact on our business of a failure by us to comply with applicable laws and regulations, see
Item 1A, Risk Factors.
Each of our restaurants is subject to permitting and licensing requirements and regulations by a number of
government authorities, which may include, among others, alcoholic beverage control, health and safety, sanitation,
labor, zoning and public safety agencies in the state and/or municipality in which each restaurant is located. The
development and operation of restaurants depends on selecting and acquiring suitable sites, which are subject to zoning,
land use, environmental, traffic and other regulations. In addition to domestic regulations, our international business
exposes us to additional regulations, including antitrust and tax requirements, anti-boycott legislation, import/export and
customs regulations and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act.
We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding
product safety, nutritional content and menu labeling. In 2018, federal regulations went into effect under the Patient
Protection and Affordable Care Act of 2010 (“PPACA”) requiring new menu nutritional labeling requirements. As a
result, we include calorie information on our menus and make additional nutritional information available at our
restaurants and on our websites. Future regulatory action may occur which could result in further changes in the federal
nutritional disclosure requirements.
In order to serve alcoholic beverages in our restaurants, we must comply with alcoholic beverage control
regulations which require each of our restaurants to apply to a state authority, and, in certain locations, county or
municipal authorities, for a license or permit to sell alcoholic beverages on the premises. These licenses or permits must
be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations
affect numerous aspects of restaurant operations, including minimum age of patrons and employees, hours of operation,
advertising, training, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic
beverages. State and local authorities in many jurisdictions routinely monitor compliance with alcoholic beverage laws.
The failure of a restaurant to obtain or retain these licenses or permits would have a material adverse effect on the
restaurant’s operations. We are also subject in certain states to “dram shop” statutes, which generally provide a person
injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic
beverages to the intoxicated person. Consistent with industry standards, we carry liquor liability coverage as part of our
existing comprehensive general liability insurance as well as excess umbrella coverage. In fiscal 2020, the sale of
alcoholic beverages accounted for 8.6% of our Texas Roadhouse restaurant sales. As a result of the significant increase
in To-Go sales due to the pandemic, we sold fewer alcoholic beverages compared to fiscal 2019.
Our restaurant operations are also subject to federal and state labor laws governing such matters as minimum and
tipped wage requirements, overtime pay, health benefits, unemployment taxes, workers’ compensation, work eligibility
requirements, working conditions, safety standards, and hiring and employment practices. We have many restaurants
located in states or municipalities where the minimum and/or tipped wage is greater than the federal minimum and/or
tipped wage. We anticipate that additional federal and state legislation significantly increasing minimum and/or tipped
wage standards will be enacted in future periods and in other jurisdictions. Further regulatory action may occur which
could result in changes to healthcare eligibility, design and cost structure.
A significant number of our hourly restaurant personnel receive tips as part of their compensation and are paid at or
15
above a minimum wage rate after giving effect to applicable tips. We rely on our employees to accurately disclose the
full amount of their tip income. We base our FICA tax reporting on the disclosures provided to us by such tipped
employees.
Our facilities must comply with the applicable requirements of the Americans with Disabilities Act of 1990
(“ADA”) and related state accessibility statutes. Under the ADA and related state laws, we must provide equivalent
service to disabled persons and make reasonable accommodation for their employment. In addition, when constructing
or undertaking remodeling of our restaurants, we must make those facilities accessible.
As a result of the pandemic, certain state and local jurisdictions have enacted various health, safety and other
regulations that have impacted our restaurants. Compliance with these regulations has led to decreased sales, increased
costs, and operational complexity. We expect our operating results to continue to be impacted until at least such time
that these regulations are lifted.
We are subject to laws relating to information security, privacy, cashless payments and consumer credit protection
and fraud. An increasing number of governments and industry groups worldwide have established data privacy laws and
standards for the protection of personal information, including social security numbers, financial information (including
credit card numbers), and health information.
Seasonality
Our business is also subject to minor seasonal fluctuations. Historically, sales in most of our restaurants have been
higher during the winter months of each year. Holidays, changes in weather, severe weather and similar conditions may
impact sales volumes seasonally in some operating regions. As a result, our quarterly operating results and comparable
restaurant sales may fluctuate due to seasonality. Accordingly, results for any one quarter are not necessarily indicative
of results to be expected for any other quarter or for any year and comparable restaurant sales for any particular future
period may decrease.
Beginning in March 2020, our quarterly operating results were severely impacted by the pandemic which resulted
in significant fluctuations between quarters. We expect that our quarterly operating results will continue to fluctuate
until such time that all dining room restrictions related to the pandemic are lifted.
Human Capital Management
As of December 29, 2020, we employed approximately 61,600 people. These employees include 681 executive and
administrative personnel and 2,666 restaurant management personnel, while the remainder were hourly restaurant
personnel. Many of our hourly restaurant employees work part-time. None of our employees are covered by a collective
bargaining agreement. We consider our employee relations to be good.
Our business relies on our ability to attract and retain talented employees. To attract and retain talent, we strive to
maintain our culture through shared core values, a performance-based compensation program supported by competitive
benefits and health programs, and a diverse, inclusive and supportive workplace, with opportunities for our employees to
grow and develop in their careers.
Maintaining our Culture and Core Values. In our restaurants and at our Support Center, we are committed to our
shared Core Values of Passion, Partnership, Integrity, and Fun…all with Purpose. These Core Values form the
foundation of who we are as a company and how we interact with respect, appreciation, and fairness towards one another
every day. We also believe that diversity and inclusion are vital parts of our culture. We value and welcome employees
of all walks of life to share their gifts and strengths while working in our restaurants and the Support Center, as we strive
to reflect the communities we are proud to serve. As a result, we are committed to attracting, retaining, engaging and
developing a workforce that mirrors the diversity of our guests and is committed to upholding our shared values.
Performance-based Compensation and Benefits. We support our employees by offering competitive wages and
benefits for eligible employees. We also offer a performance - based compensation program to our managing partners
and market partners. Each of these positions earns a base salary plus a performance bonus, which represents a percentage
of each of their respective restaurant’s pre - tax income. As a result of the pandemic and the impact on restaurant
operating results, we guaranteed a portion of these performance bonuses in the periods that were the most significantly
impacted. By providing our partners with a significant stake in the success of our restaurants, we believe that we are
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able to attract and retain talented, experienced and highly motivated managing and market partners.
In addition to salaries, these programs (which vary by employee level) include, among other items, bonuses, stock
awards, retirement savings plans, healthcare and insurance benefits, health savings and flexible spending accounts, paid
time off, paid parental leave and various employee assistance programs. As a result of the pandemic, we provided
increased benefits to our employees in the form of enhanced sick pay and accrued vacation benefits and also provided a
premium holiday on health insurance.
Development. We motivate and develop our employees by providing them with opportunities for increased
responsibilities and advancement. We provide numerous training opportunities for our employees, with a focus on
continuous learning and development. With thousands of leadership positions across our restaurants, we provide a
pathway and training for thousands of individuals across the country to advance from entry-level jobs into management
roles. In addition, our geographic footprint often allows us to offer our restaurant team members relocation options at
similar roles when personal circumstances require it.
Health and Safety. The health and safety of our employees is a top priority. In response to the pandemic, we
implemented changes at our restaurants to help protect our employees and guests. This included providing personal
protective equipment for our employees, adding a sanitation coordinator position at each restaurant who is responsible
for cleaning high touch areas, adding hand sanitizer stations at each restaurant, and supplying each restaurant with a
chemical sanitation sprayer. In addition, the majority of our Support Center employees continue to work remotely. For
the employees that continue to work on-site in our Support Center, we have implemented additional measures to ensure
their safety including enhanced sanitation efforts and daily health and temperature checks. We believe we have been
able to preserve our business continuity without sacrificing our commitment to keeping our employees safe during the
pandemic.
Website Access to Reports
We make our Annual Report on Form 10 - K, Quarterly Reports on Form 10 - Q, Current Reports on Form 8 - K, and
amendments to those reports, filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of
1934, available, free of charge on or through our Internet website, www.texasroadhouse.com, as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission
(“SEC”). The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
Information about our Executive Officers
Set forth below are the name, age, position and a brief account of the business experience of each of our executive
officers. Executive officers are appointed by our Board of Directors and serve until their successors are elected or until
resignation or removal, in accordance with their employment agreements. There are no family relationships among any
of our executive officers.
Name
W. Kent Taylor . . . . . . . . . . . . . . . . . . . . . . . . .
Gerald L. Morgan . . . . . . . . . . . . . . . . . . . . . . .
S. Chris Jacobsen . . . . . . . . . . . . . . . . . . . . . . . .
Tonya R. Robinson . . . . . . . . . . . . . . . . . . . . . .
Douglas W. Thompson . . . . . . . . . . . . . . . . . . .
Age
65
60
55
52
57
Chairman and Chief Executive Officer
Position
President
Chief Marketing Officer
Chief Financial Officer
Chief Operations Officer
W. Kent Taylor. Mr. Taylor founded Texas Roadhouse in 1993. He resumed his role as Chief Executive Officer in
August 2011, a position he held between May 2000 and October 2004. He was named Chairman of the Company and
Board in October 2004. Before his founding of our concept, Mr. Taylor founded and co - owned Buckhead Bar and Grill
in Louisville, Kentucky. Mr. Taylor has over 35 years of experience in the restaurant industry.
Gerald L. Morgan. Mr. Morgan was appointed President in December 2020. He assumed this role from Mr.
Taylor. He joined Texas Roadhouse in 1997 and has held a number of positions, including Managing Partner, Market
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Partner and Regional Market Partner. Mr. Morgan has more than 35 years of restaurant management experience with
Texas Roadhouse, Bennigan’s Restaurants, and Burger King.
S. Chris Jacobsen. Mr. Jacobsen was appointed Chief Marketing Officer in February 2016. Mr. Jacobsen joined
Texas Roadhouse in January 2003 and has served as Vice President of Marketing since 2011. Prior to joining us,
Mr. Jacobsen was employed by Papa John’s International and Waffle House, Inc. where he held various senior level
marketing positions. He has over 25 years of restaurant industry experience.
Tonya R. Robinson. Ms. Robinson was appointed Chief Financial Officer in May 2018. She joined Texas
Roadhouse in December 1998, during which time she has held the positions of Controller, Director of Financial
Reporting and Vice President of Finance and Investor Relations. Ms. Robinson has over 20 years of restaurant industry
experience.
Douglas W. Thompson. Mr. Thompson was appointed Chief Operating Officer in August 2018. He joined Texas
Roadhouse in 2002 as a Market Partner and has served as our Vice President of Operations since 2015. Before joining
the Company, Mr. Thompson was a single and multi-unit operator with both Outback Steakhouse, Inc. and Bennigan’s
Restaurants. Mr. Thompson has over 30 years of restaurant industry experience.
ITEM 1A. RISK FACTORS
Careful consideration should be given to the risks described below. If any of the risks and uncertainties described in
the cautionary factors described below actually occurs, our business, financial condition and results of operations, and
the trading price of our common stock could be materially and adversely affected. Moreover, we operate in a very
competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict
the impact of all these factors on our business, financial condition or results of operations.
Risks Related to our Growth and Operating Strategy
The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which has and could
continue to materially affect our business, financial condition, and results of operations, for an extended period of
time.
On March 13, 2020, the COVID-19 pandemic was declared a National Public Health Emergency. Shortly after the
national emergency declaration, state and local officials began placing restrictions on restaurants, some of which allowed
To-Go or curbside service only while others limited capacity in the dining room. By late March all of our domestic
company and franchise restaurants were under state or local order which only allowed for To-Go or curbside service.
Beginning in early May 2020, state and local guidelines began to allow dining rooms to re-open, typically at a limited
capacity. While all of our dining rooms were able to re-open in some capacity, many were required to close again in
areas more severely impacted by the pandemic. As of December 29, 2020, 82% of our company restaurants had their
dining rooms operating under various limited capacity restrictions. Our remaining restaurants were limited to outdoor
and/or To-Go or curbside service only.
As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in
traffic which has impacted our operating results. While the majority of our dining rooms have re-opened, a significant
portion continue to operate under capacity restrictions that severely limit the number of guests we can serve. In addition,
while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do
not expect these sales will generate a similar profit margin and cash flows to our normal operating model. We expect
our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and
our dining rooms can operate at full capacity. We cannot predict how long the pandemic will last, how long it will take
until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again. In
addition, we cannot predict the overall impact on the economy or consumer spending habits. The impact on our
operating results as well as the operational and financial measures we have implemented in response to the pandemic
have been included throughout this report.
The pandemic has also adversely impacted our ability to open new restaurants. At the onset of the pandemic, we
delayed construction on all restaurants that were not substantially complete. As a result, we only opened 22 restaurants
in 2020 across all concepts. As of December 29, 2020, 10 restaurants were under construction. Our ability to grow our
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business could be further impacted, particularly if we have to delay construction on these sites in future periods.
In March 2020, we borrowed $190.0 million under our Amended Credit Agreement in order to enhance our
financial flexibility. The Amended Credit Agreement also provides us the option to increase the credit facility by
$200.0 million subject to certain limitations, including approval by the syndicate of lenders, set forth in the Amended
Credit Agreement. On May 11, 2020, as a precautionary measure to further enhance financial flexibility, we amended
the revolving credit facility to increase the amount available under the facility by $82.5 million and drew down
$50.0 million of this amount. If the pandemic continues to adversely impact our business for a significant period of
time, we may need to further increase the credit facility and/or seek other sources of liquidity. There is no guarantee that
we can increase the credit facility or that additional liquidity will be readily available or available at favorable terms.
Our suppliers could be adversely impacted by the pandemic. If our supplier’s employees are unable to work,
whether because of illness, quarantine, limitations on travel or other government restrictions in connection with the
pandemic, we could face shortages of food items or other supplies at our restaurants and our operations and sales could
be adversely impacted by such interruptions.
The capacity restrictions and temporary closures of our dining rooms have resulted in decreased staffing levels at
our restaurants. We have taken compensation actions to support certain restaurant employees during the pandemic, but
those actions may not be enough to compensate them until such time that our dining rooms can re-open at full capacity.
Those restaurant employees might seek and find other employment during the interruption, which could have a material
adverse effect on our ability to properly staff our restaurants with experienced team members once we resume our
normal operations.
Our restaurant operations could be further disrupted if a significant number of restaurants have employees
diagnosed with COVID-19 resulting in some or all of the restaurant’s employees being quarantined and our restaurant
facilities having to be disinfected. If a significant percentage of our workforce is unable to work, whether because of
illness or required quarantine, our operations may be negatively impacted which could have a material adverse effect on
our business.
If we fail to manage our growth effectively, it could harm our business.
Failure to manage our growth effectively could harm our business. We have grown significantly since our
inception and intend to continue growing in the future. Our objective is to grow our business and increase shareholder
value by (1) expanding our base of company restaurants that are profitable, (2) increasing sales and profits at existing
restaurants, and (3) pursuing other strategic initiatives or business opportunities. While these methods of achieving our
objective are important to us, historically the most significant means of achieving our objective has been through
opening new restaurants and operating these restaurants on a profitable basis. As we open and operate more restaurants,
our rate of expansion relative to the size of our existing restaurant base will likely decline, which may make it
increasingly difficult to achieve levels of sales and profitability growth that we have seen in the past. In addition, our
existing restaurant management systems, field support systems, financial and management controls and information
systems may not be adequate to support our planned expansion. Our ability to manage our growth effectively will
require us to continue to enhance these systems, procedures and controls and to locate, hire, train and retain management
and operating personnel. We also place a lot of importance on our culture, which we believe has been an important
contributor to our success. In addition to challenges relating to the COVID-19 pandemic, as we grow, we may have
difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations, or finding new
employees (including new employees arising from strategic initiatives) to assimilate to our culture and brand standards.
We cannot assure you that we will be able to respond on a timely basis to all of the changing demands that our planned
expansion will impose on management and on our existing infrastructure. If we were unable to manage our growth
effectively, our business and operating results could be materially adversely impacted.
Our growth strategy, which primarily depends on our ability to open new restaurants that are profitable, is subject to
many factors, some of which are beyond our control.
We cannot assure you that we will be able to open new restaurants that are profitable in accordance with our
expansion plans. We have experienced delays in opening some of our restaurants in the past, including significant delays
in 2020 due to the pandemic, and may experience delays in the future. Delays or failures in opening new restaurants
could adversely affect our growth strategy. One of our biggest challenges in executing our growth strategy is locating
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and securing an adequate supply of suitable new restaurant sites. Competition for suitable restaurant sites in our target
markets is intense.
In addition, we have generally been able to fund the construction of new restaurants from cash provided by our
operations. If our operations continue to be significantly impacted by the pandemic, our ability to open new restaurants
could also be impacted.
Once opened, we anticipate that our new restaurants will generally take several months to reach planned operating
levels due to start - up inefficiencies typically associated with new restaurants. We cannot assure you that any restaurant
we open will be profitable or obtain operating results similar to those of our existing restaurants. Some of our new
restaurants will be located in areas where we have little or no meaningful experience. Those new markets may have
smaller trade areas and different competitive conditions, consumer tastes and discretionary spending patterns than our
traditional, existing markets, which may cause our new store locations to be less successful than restaurants in our
existing market areas. Restaurants opened in new markets may open at lower average weekly sales volume than
restaurants opened in existing markets and may have higher restaurant - level operating expense ratios than in existing
markets. Sales at restaurants opened in new markets may take longer to reach average unit volume, if at all, thereby
affecting our overall profitability. Additionally, the opening of a new restaurant could negatively impact sales at one or
more of our existing nearby restaurants, which could adversely affect our financial performance.
Our ability to open new restaurants that are profitable will also depend on numerous other factors, many of which
are beyond our control, including, but not limited to, the following:
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our ability to hire, train and retain qualified operating personnel, especially market partners and managing
partners who can execute our business strategy;
our ability to negotiate suitable purchase or lease terms;
the availability of construction materials and labor;
our ability to control construction and development costs of new restaurants;
our ability to secure required governmental approvals and permits in a timely manner, or at all;
road construction and other factors limiting access to the restaurant;
delays by our landlord or other developers in constructing other parts of a development adjacent to our
premises in a timely manner;
redevelopment of other parts of a development adjacent to our premises that affect the parking available for our
restaurant;
our ability to secure liquor licenses;
general economic conditions, including an economic recession;
changes in federal and state tax laws;
the cost and availability of capital to fund construction costs and pre - opening expenses; and
the impact of inclement weather, natural disasters and other calamities.
You should not rely on past changes in our average unit volume or our comparable restaurant sales as an indication
of our future results of operations because they may fluctuate significantly.
A number of factors have historically affected, and will continue to affect, our average unit volume and comparable
restaurant sales, including, among other factors:
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consumer awareness and understanding of our brands;
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our ability to execute our business strategy effectively;
competition, either from our competitors in the restaurant industry or our own restaurants;
the impact of inclement weather, natural disasters and other calamities;
consumer trends and seasonality;
our ability to increase menu prices without adversely impacting guest traffic counts or per person average
check growth;
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introduction of new menu items;
• mandated dining room closures and/or dining rooms operating at limited capacity;
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negative publicity regarding food safety, health concerns, quality of service, and other food or beverage related
matters, including the integrity of our or our suppliers’ food processing;
general economic conditions, including an economic recession, which can affect restaurant traffic, local labor
costs and prices we pay for the food products and other supplies we use; and
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effects of actual or threatened terrorist attacks.
Our average unit volume and comparable restaurant sales may not increase at rates achieved in the past, which may
affect our sales growth and will continue to be a critical factor affecting our profitability. In addition, changes in our
average unit volume and comparable restaurant sales could cause the price of our common stock to fluctuate
substantially.
The development of new restaurant concepts may not contribute to our growth.
The development of new restaurant concepts may not be as successful as our experience in the development of the
Texas Roadhouse concept. In May 2013, we launched a new casual dining concept, Bubba’s 33, a family-friendly,
sports restaurant that has expanded to 31 restaurants as of December 29, 2020. In December 2014, we launched a new
fast-casual concept, Jaggers, which offers drive-thru service, that has expanded to three restaurants as of December 29,
2020.
Bubba’s 33 and Jaggers each have lower brand awareness and less operating experience than most Texas
Roadhouse restaurants. In addition, Bubba’s 33 restaurants have a higher initial investment cost and Jaggers has a lower
per person average check amount. As a result, the development of these concepts may not contribute to our average unit
volume growth and/or profitability in an incremental way. We can provide no assurance that new units will be accepted
in the markets targeted for the expansion of these concepts or that we will be able to achieve our targeted returns when
opening new locations. In the future, we may determine not to move forward with any further expansion of these
concepts. These decisions could limit our overall long-term growth. Additionally, expansion of these concepts might
divert our management’s attention from other business concerns and could have an adverse impact on our core Texas
Roadhouse business.
Our expansion into international markets presents increased economic, political, regulatory and other risks.
As of December 29, 2020, our operations include 28 Texas Roadhouse franchise restaurants in ten countries outside
the United States, and we expect to have further international expansion in the future. The entrance into international
markets may not be as successful as our experience in the development of the Texas Roadhouse concept domestically or
any success we have had in other international markets. In addition, operating in international markets may require
significant resources and management attention and will subject us to economic, political and regulatory risks that are
different from and incremental to those in the United States. In addition to the risks that we face in the United States, our
international operations involve risks that could adversely affect our business, including:
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the need to adapt our brands for specific cultural and language differences;
new and different sources of competition;
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the ability to identify appropriate business partners;
difficulties and costs associated with staffing and managing foreign operations;
difficulties in adapting and sourcing product specifications for international restaurant locations;
fluctuations in currency exchange rates, which could impact revenues and expenses of our international
operations and expose us to foreign currency exchange rate risk;
difficulties in complying with local laws, regulations, and customs in foreign jurisdictions;
unexpected changes in regulatory requirements or tariffs on goods needed to construct and/or operate our
restaurants;
political or social unrest, economic instability and destabilization of a region;
effects of actual or threatened terrorist attacks;
health concerns from global pandemics;
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions;
differences in enforceability and registration of intellectual property and contract rights;
adverse tax consequences;
profit repatriation and other restrictions on the transfer of funds; and
different and more stringent user protection, data protection, privacy and other laws.
Our failure to manage any of these risks successfully could harm our future international operations and our overall
business and results of our operations.
We are also subject to governmental regulations throughout the world impacting the way we do business with our
international franchisees. These include antitrust and tax requirements, anti - boycott regulations, import/export/customs,
tariffs and other international trade regulations, the USA Patriot Act and the Foreign Corrupt Practices Act. Failure to
comply with any such legal requirements could subject us to monetary liabilities and other sanctions, which could
adversely impact our business and financial performance.
Acquisition of existing restaurants from our domestic franchisees and other strategic initiatives may have
unanticipated consequences that could harm our business and our financial condition.
We plan to continue to opportunistically acquire existing restaurants from our domestic franchisees over time.
Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives
(including retail initiatives utilizing our intellectual property) to acquire or develop additional business channels or
concepts, and/or change the business strategy regarding an existing concept. To successfully execute any acquisition or
development strategy, we will need to identify suitable acquisition or development candidates, negotiate acceptable
acquisition or development terms and possibly obtain appropriate financing.
Any acquisition or future development that we pursue, including the on-going development of new concepts or
retail initiatives utilizing our intellectual property, whether or not successfully completed, may involve risks, including:
• material adverse effects on our operating results, particularly in the fiscal quarters immediately following the
acquisition or development as the restaurants are integrated into our operations;
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risks associated with entering into new domestic markets or conducting operations where we have no or limited
prior experience;
risks associated with successfully integrating new employees, processes and systems;
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risks inherent in accurately assessing the value, future growth potential, strengths, weaknesses, contingent and
other liabilities and potential profitability of acquisition candidates, and our ability to achieve projected
economic and operating synergies, without impacting our underlying business; and
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the diversion of management’s attention from other business concerns.
Future acquisitions of existing restaurants from our franchisees or other strategic partners, which may be
accomplished through a cash purchase transaction, the issuance of shares of common stock or a combination of both,
could have a dilutive impact on holders of our common stock, and result in the incurrence of debt and contingent
liabilities and impairment charges related to goodwill and other tangible and intangible assets, any of which could harm
our business and financial condition.
Additionally, we may evaluate other means to leverage our competitive strengths, including the expansion of our
products across other strategic initiatives or business opportunities (including retail initiatives utilizing our intellectual
property). The expansion of our products may damage our reputation if products bearing our brands are not of the same
quality or value that guests associate with our brands. In addition, we may experience dilution of the goodwill
associated with our brands as it becomes more common and increasingly accessible.
We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases, as well as
risks related to renewal.
The majority of our company restaurants are located on leased premises. Payments under our operating leases
account for a significant portion of our operating expenses. Additional sites that we lease are likely to be subject to
similar long-term non-cancelable leases. In connection with the relocation, other operational changes, or closure of any
restaurant, we may nonetheless be committed to perform on our obligations under the applicable lease including, among
other things, paying the base rent for the balance of the lease term.
In addition, as each of our leases expires, there can be no assurance we will be able to renew our expiring leases
after the expiration of all remaining renewal options, either on commercially acceptable terms or at all. As a result, at the
end of the lease term and expiration of all renewal periods, we may be unable to renew the lease without substantial
additional cost, if at all. As a result, we may be required to relocate or close a restaurant, which could subject us to
construction and other costs and risks, and may have an adverse effect on our operating performance.
Approximately 21% of our company restaurants are located in Texas and Florida and, as a result, we are sensitive to
economic and other trends and developments in those states.
As of December 29, 2020, we operated a total of 71 company restaurants in Texas and 41 company restaurants in
Florida. As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including
declines in oil prices that may increase levels of unemployment and cause other economic pressures that may result in
lower sales and profits at our restaurants in oil regions of Texas and surrounding areas. In addition, given our geographic
concentration in these states, negative publicity regarding any of our restaurants in either Texas or Florida could have a
material adverse effect on our business and operations, as could other occurrences in either Texas or Florida such as
health epidemics or pandemics (such as COVID-19), local strikes, energy shortages or extreme fluctuations in energy
prices, droughts, earthquakes, hurricanes, fires or other natural disasters.
Changes in consumer preferences and discretionary spending could adversely affect our business.
Our success depends, in part, upon the popularity of our food products. Continued social concerns or shifts in
consumer preferences away from our restaurants or cuisine, particularly beef, would harm our business. In response to
the pandemic, many consumers have preferred to order food To-Go or by delivery rather than dining in at full-service
restaurants, and if these preferences continue and consumers continue to avoid gathering in public places in large groups,
we may need to further adapt our offerings to accommodate these changes. Also, our success depends to a significant
extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of
discretionary income. Accordingly, we may experience declines in sales during economic downturns or during periods
of uncertainty. This includes any downturns that result from the pandemic. Any material decline in the amount of
discretionary spending could have a material adverse effect on our business, results of operations, financial condition or
liquidity.
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Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts
and investors due to a number of factors, some of which are beyond our control, resulting in a decline in our stock
price.
Our quarterly operating results may fluctuate significantly because of several factors, including:
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restaurant operating costs for our newly - opened restaurants, which are often materially greater during the first
several months of operation than thereafter;
labor availability and costs for hourly and management personnel including mandated changes in federal and/or
state minimum and tipped wage rates, overtime regulations, state unemployment taxes, or health benefits;
profitability of our restaurants, particularly in new markets;
changes in interest rates;
the impact of litigation, including negative publicity;
increases and decreases in average unit volume and comparable restaurant sales;
impairment of long - lived assets, including goodwill, and any loss on restaurant relocations or closures;
general economic conditions, including an economic recession, which can affect restaurant traffic, local labor
costs, and prices we pay for the food products and other supplies we use;
• mandated restaurant closures and/or dining rooms operating at limited capacity;
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negative publicity regarding food safety and other food and beverage related matters, including the integrity of
our, or our suppliers’, food processing;
negative publicity regarding health concerns and/or global pandemics;
negative publicity relating to the consumption of beef or other products we serve;
changes in consumer preferences and competitive conditions;
expansion to new domestic and/or international markets;
adverse weather conditions which impact guest traffic at our restaurants;
increases in infrastructure costs;
adoption of new, or changes in existing, accounting policies or practices;
changes in and/or interpretations of federal and state tax laws;
actual self-insurance claims varying from actuarial estimates;
fluctuations in commodity prices;
competitive actions; and
the impact of inclement weather, natural disasters and other calamities.
Our business is also subject to minor seasonal fluctuations. Historically, sales in most of our restaurants have been
higher during the winter months of each year. Holidays, changes in weather, severe weather and similar conditions may
impact sales volumes seasonally in some operating regions. As a result, our quarterly operating results and comparable
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restaurant sales may fluctuate as a result of seasonality. Accordingly, results for any one quarter are not necessarily
indicative of results to be expected for any other quarter or for any year and comparable restaurant sales for any
particular future period may decrease. In the future, operating results may fall below the expectations of securities
analysts and investors. In that event, the price of our common stock could decrease.
Beginning in March 2020, our quarterly operating results were severely impacted by the pandemic which resulted
in significant fluctuations between quarters. We expect that our quarterly operating results will continue to fluctuate
until at least such time that all dining room restrictions related to the pandemic are lifted.
We rely heavily on information technology, and any material failure, weakness or interruption could prevent us from
effectively operating our business.
We rely heavily on information systems in all aspects of our operations, including point - of - sale systems, financial
systems, marketing programs, e-commerce, cyber-security and various other processes and transactions. Our point-of-
sale processing in our restaurants includes payment of obligations, collection of cash, credit and debit card transactions
and other processes and procedures. Our ability to efficiently and effectively manage our business depends significantly
on the reliability, security and capacity of these systems. As our business needs continue to evolve, these systems will
require upgrading and maintenance over time, consequently requiring significant future commitments of resources and
capital. The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new
platforms or a material breach in the security of these systems could result in delays in guest service and reduce
efficiency in our operations.
Additionally, our corporate systems and processes and corporate support for our restaurant operations are handled
primarily at our Support Center. As a result of the pandemic, a significant portion of our Support Center staff continue
to work remotely. We have disaster recovery procedures and business continuity plans in place to address most events
of a crisis nature, including tornadoes and other natural disasters, and back up off-site locations for recovery of
electronic and other forms of data information. However, if we are unable to fully implement our disaster recovery
plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required
reporting and compliance, failures to adequately support field operations and other breakdowns in normal
communication and operating procedures that could have a material adverse effect on our financial condition, results of
operations and exposure to administrative and other legal claims.
We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in
business and increased costs.
Some business processes are currently outsourced to third parties. Such processes include information technology
processes, gift card tracking, credit card authorization and processing, insurance claims processing, unemployment
claims processing, payroll tax filings, check payment processing, and other accounting processes. We also continue to
evaluate our other business processes to determine if additional outsourcing is a viable option to accomplish our goals.
We make a diligent effort to validate that all providers of outsourced services maintain customary internal controls, such
as redundant processing facilities and adequate security frameworks to guard against breaches or data loss; however,
there are no guarantees that failures will not occur. Failure of third parties to provide adequate services or internal
controls over their processes could have an adverse effect on our results of operations, financial condition or ability to
accomplish our financial and management reporting.
We may incur costs and adverse revenue consequences resulting from breaches of security related to confidential
guest and/or employee information or the fraudulent use of credit cards.
The nature of our business involves the receipt and storage of information about our guests and employees. Hardware,
software or other applications we develop and procure from third parties may contain defects in design or manufacture or
other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain
access to our systems and facilities through fraud, trickery or other forms of deceiving our employees or vendors. In
addition, we accept electronic payment cards for payment in our restaurants. During 2020, approximately 80% of our
transactions were by credit or debit cards, and such card usage could increase. Other retailers have experienced actual or
potential security breaches in which credit and debit card along with employee information may have been stolen. We may
in the future become subject to claims for purportedly fraudulent transactions arising out of alleged theft of guest and/or
employee information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. Any
such claim or proceeding could cause us to incur significant unplanned expenses in excess of our insurance coverage,
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which could have a material adverse impact on our financial condition and results of operations. If we fail to adequately
control fraudulent credit card and debit card transactions to comply with the Payment Card Industry Data Security
Standards, we may face diminished public perception of our security measures, fines and assessments from the card
brands and significantly higher credit card and debit card related costs. In addition, if there are malfunctions or other
problems with our processing vendors, billing software or payment processing systems, our guest satisfaction may be
adversely affected and one or more of the major payment networks could disallow our continued use of their payment
methods. The termination of our ability to process payments through any major payment network would significantly
impact our ability to operate our business.
We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance
with governmental laws and regulations could adversely affect our operating results.
The restaurant industry is subject to various federal, state and local government regulations, including those relating
to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time, sometimes without
notice to us. The failure to obtain and maintain these licenses, permits and approvals, including liquor licenses, could
adversely affect our operating results. Difficulties or failure to obtain the required licenses and approvals could delay or
result in our decision to cancel the opening of new restaurants. Local authorities may revoke, suspend or deny renewal of
our liquor licenses if they determine that our conduct violates applicable regulations.
In addition to our having to comply with these licensing requirements, various federal and state labor laws govern
our relationship with our employees and affect operating costs. These laws include minimum and tipped wage
requirements, overtime pay, health benefits, unemployment taxes, workers’ compensation, work eligibility requirements
and working conditions. A number of factors could adversely affect our operating results, including:
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additional government - imposed increases in minimum and/or tipped wages, hour and overtime pay, paid leaves
of absence, sick leave, and mandated health benefits;
increased tax reporting and tax payment requirements for employees who receive gratuities;
any failure of our employees to comply with laws and regulations governing work authorization or residency
requirements resulting in disruption of our work force and adverse publicity;
a reduction in the number of states that allow gratuities to be credited toward minimum wage requirements; and
increased litigation including claims under federal and/or state wage and hour laws.
The federal Americans with Disabilities Act prohibits discrimination on the basis of disability in public
accommodations and employment. Although our restaurants and other places of accommodation are designed to be
accessible to the disabled, we could be required to make unexpected modifications to provide service to, or make
reasonable accommodations, for disabled persons.
In addition, as a result of the COVID-19 pandemic, certain state and local jurisdictions have enacted various health,
safety and other regulations that have impacted our restaurants. Compliance with these regulations has led to decreased
sales, increased costs, and operational complexity. We cannot predict when these regulations may be lifted or the impact
on our business, results of operations, financial condition or liquidity.
Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive
position or the value of our brand.
We own certain common law trademark rights and a number of federal and international trademark and service
mark registrations, including our trade names and logos, and proprietary rights relating to certain of our core menu
offerings. We believe that our trademarks and other proprietary rights are important to our success and our competitive
position. Therefore, we devote appropriate resources to the protection of our trademarks and proprietary rights.
However, the protective actions that we take may not be enough to prevent unauthorized usage or imitation by others,
which could harm our image, brand or competitive position and, if we commence litigation to enforce our rights, cause
us to incur significant legal fees. Our inability to register or protect our marks and other propriety rights in foreign
jurisdictions could adversely affect our competitive position in international markets.
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We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their
proprietary rights. Any such claim, whether or not it has merit, could be time - consuming, result in costly litigation, cause
delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements. As a
result, any such claim could have a material adverse effect on our business, results of operations, financial condition or
liquidity.
We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.
Increasing legal complexity will continue to affect our operations and results. We could be subject to legal
proceedings that may adversely affect our business, including class actions, administrative proceedings, government
investigations, employment and personal injury claims, claims alleging violations of federal and state laws regarding
consumer, workplace and employment matters, wage and hour claims, discrimination and similar matters,
landlord/tenant disputes, disputes with current and former suppliers, claims by current and former franchisees, and
intellectual property claims (including claims that we infringed upon another party’s trademarks, copyrights or patents).
Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure
to litigation which could result in significant judgments, including punitive and liquidated damages, and injunctive relief.
Occasionally, our guests file complaints or lawsuits against us alleging that we are responsible for an illness or
injury they suffered as a result of a visit to our restaurants, or that we have problems with food quality or operations. As
a Company, we take responsible alcohol service seriously. However, we are subject to “dram shop” statutes. These
statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that
wrongfully served alcoholic beverages to the intoxicated person. Some litigation against restaurant chains has resulted in
significant judgments, including punitive damages, under dram shop statutes. Because a plaintiff may seek punitive
damages, which may not be covered by insurance, this type of action could have an adverse impact on our financial
condition and results of operations. It is also possible that employees, guests or others could make claims against us as a
result of the pandemic, and the nature and scope of such matters, if any, is unknown.
Litigation involving our relationship with franchisees and the legal distinction between our franchisees and us for
employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our
franchisees and subject us to incremental liability for their actions. We are also subject to the legal and compliance risks
associated with privacy, data collection, protection and management, in particular as it relates to information we collect
when we provide optional technology-related services to franchisees.
Our operating results could also be affected by the following:
• The relative level of our defense costs and nature and procedural status of pending proceedings;
• The cost and other effects of settlements, judgments or consent decrees, which may require us to make
disclosures or to take other actions that may affect perceptions of our brands and products;
• Adverse results of pending or future litigation, including litigation challenging the composition and preparation
of our products, or the appropriateness or accuracy of our marketing or other communication practices; and
• The scope and terms of insurance or indemnification protections that we may have.
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend
and may divert time, attention and money away from our operations and hurt our performance. A judgment significantly
in excess of any applicable insurance coverage could materially adversely affect our financial condition or results of
operations. Further, adverse publicity resulting from these claims may hurt our business.
Our current insurance may not provide adequate levels of coverage against claims.
We currently maintain insurance customary for businesses of our size and type. However, there are types of losses
we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such damages
could have a material adverse effect on our business, results of operations and/or liquidity. In addition, we self - insure a
significant portion of expected losses under our health, workers’ compensation, general liability, employment practices
liability and property insurance programs. Unanticipated changes in the actuarial assumptions and management
estimates underlying our reserves for these losses could result in materially different amounts of expense under these
programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.
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Decreased cash flow from operations, or an inability to access credit could negatively affect our business initiatives or
may result in our inability to execute our revenue, expense, and capital allocation strategies.
Our ability to fund our operating plans and to implement our capital allocation strategies depends on sufficient cash
flow from operations and/or other financing, including the use of funding under our amended revolving credit facility.
We also may seek access to the debt and/or equity capital markets. There can be no assurance, however, that these
sources of financing will be available on terms favorable to us, or at all. Our capital allocation strategies include, but are
not limited to, new restaurant development, payment of dividends (even though the dividend program was suspended
due to the on-going COVID-19 pandemic), refurbishment or relocation of existing restaurants, repurchases of our
common stock and franchise acquisitions. If we experience decreased cash flow from operations, similar to what we
experienced in the current year, our ability to fund our operations and planned initiatives, and to take advantage of
growth opportunities, may be delayed or negatively affected. In addition, these disruptions or a negative effect on our
revenues could affect our ability to borrow or comply with our covenants under our amended revolving credit facility. If
we are unable to raise additional capital, our growth could be impeded.
Our existing credit facility limits our ability to incur additional debt.
The lenders’ obligation to extend credit under our amended revolving credit facility depends on our maintaining
certain financial covenants. If we are unable to maintain these covenants, we would be unable to obtain additional
financing under this amended revolving credit facility. The amended revolving credit facility permits us to incur
additional secured or unsecured indebtedness outside the revolving credit facility, except for the incurrence of secured
indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net
worth or circumstances where the incurrence of secured or unsecured indebtedness would prevent us from complying
with our financial covenants. If we are unable to borrow additional capital or have sufficient liquidity to either repay or
refinance the then outstanding balance at the expiration of our amended revolving credit facility, or upon violation of the
covenants, our growth could be impeded and our financial performance could be materially adversely affected.
We may be required to record additional impairment charges in the future.
In accordance with accounting guidance as it relates to the impairment of long - lived assets, we make certain
estimates and projections with regard to company restaurant operations, as well as our overall performance in connection
with our impairment analyses for long - lived assets. When impairment triggers are deemed to exist for any company
restaurant, the estimated undiscounted future cash flows for the restaurant are compared to its carrying value. If the
carrying value exceeds the undiscounted cash flows, an impairment charge would be recorded equal to the difference
between the carrying value and the estimated fair value.
We also review the value of our goodwill on an annual basis and when events or changes in circumstances indicate
that the carrying value of goodwill or other intangible assets may exceed the fair value of such assets. The estimates of
fair value are based upon the best information available as of the date of the assessment and incorporate management
assumptions about expected future cash flows and contemplate other valuation measurements and techniques.
The estimates of fair value used in these analyses require the use of judgment, certain assumptions and estimates of
future operating results. If actual results differ from our estimates or assumptions, additional impairment charges may be
required in the future. If impairment charges are significant, our results of operations could be adversely affected.
Failure to retain the services of our key management personnel, or to successfully execute succession planning and
attract additional qualified personnel could harm our business.
Our future success depends on the continued services and performance of our key management personnel. Our
future performance will depend on our ability to motivate and retain these and other key officers and managers,
particularly regional market partners, market partners and managing partners. Competition for these employees is
intense. The loss of the services of members of our senior management team or other key officers or managers or the
inability to attract additional qualified personnel as needed could materially harm our business. In addition, our business
could suffer from the misconduct of any of our key personnel.
Our franchisees could take actions that could harm our business.
Both our domestic and international franchisees are contractually obligated to operate their restaurants in
accordance with Texas Roadhouse standards. We also provide training and support to franchisees. However, most
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franchisees are independent third parties that we do not control, and these franchisees own, operate and oversee the daily
operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant rests with the
franchisee. If franchisees do not successfully operate restaurants in a manner consistent with our standards, the Texas
Roadhouse image and reputation could be harmed, which in turn could adversely affect our business and operating
results.
Changes in food and supply costs could adversely affect our results of operations.
Risks Related to the Restaurant Industry
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. Any
increase in food prices, particularly proteins, could adversely affect our operating results. In addition, we are susceptible
to increases in food costs as a result of factors beyond our control, such as food supply constrictions, weather conditions,
food safety concerns, global pandemics, product recalls, global market and trade conditions, and government regulations.
We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing
practices and menu prices, and a failure to do so could adversely affect our operating results. Extreme and/or long term
increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to
competitive reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity
prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and
we choose not to pass on the cost increases, our short-term results could be negatively affected. Also, if we adjust pricing
there is no assurance that we will realize the full benefit of any adjustment due to changes in our guests’ menu item
selections and guest traffic.
We currently purchase the majority of our beef from three beef suppliers under annual contracts. While we maintain
relationships with additional suppliers, if any of these vendors were unable to fulfill its obligations under its contracts,
we could encounter supply shortages and incur higher costs to secure adequate supplies, either of which would harm our
business.
Our business could be adversely affected by increased labor costs or labor shortages.
Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting
and training our restaurant managers and hourly employees. Increased labor costs due to competition, unionization,
increased minimum and tipped wages, changes in hour and overtime pay, state unemployment rates or employee benefits
costs (including workers’ compensation and health insurance), company staffing initiatives, or otherwise would
adversely impact our operating expenses.
Increased competition for qualified employees caused by a shortage in the labor pool exerts upward pressure on
wages paid to attract and retain such personnel, resulting in higher labor costs, together with greater recruitment and
training expense. We could suffer from significant indirect costs, including restaurant disruptions due to management or
hourly labor turnover and potential delays in new restaurant openings. A shortage in the labor pool could also cause our
restaurants to be required to operate with reduced staff which could negatively impact our ability to provide adequate
service levels to our guests resulting in adverse guest reactions and a possible reduction in guest traffic counts.
Additionally, so long as the COVID-19 pandemic continues, personal or public health concerns related to the pandemic
might make some existing personnel or potential candidates reluctant to work in enclosed restaurant environments.
We have many restaurants located in states or municipalities where the minimum and/or tipped wage is greater than
the federal minimum and/or tipped wage. We anticipate that additional legislation significantly increasing minimum
and/or tipped wage standards will be enacted in future periods and in other jurisdictions. Any government actions
related to employee compensation or employer liability in response to the pandemic, whether temporary or permanent,
could increase our labor costs. In addition, regulatory actions which result in changes to healthcare eligibility, design
and cost structure could occur. Any increases in minimum and/or tipped wages or increases in employee benefits costs
will result in higher labor costs.
In addition, the pandemic resulted in a number of staffing challenges at our restaurants in the current year. To
address these challenges, we provided relief pay and enhanced benefits for our hourly employees. The relief pay
included pay for employees who received significantly less or no hours at locations where dining rooms were required to
close. The benefits included certain sick pay and accrued vacation enhancements as well as a premium holiday on health
insurance. These actions were performed to retain employees and ensure that we maintained adequate staffing levels as
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our dining rooms re-opened.
Our operating margin will be adversely affected to the extent that we are unable or are unwilling to offset any
increase in these labor costs through higher prices on our products. Our distributors and suppliers also may be affected
by higher minimum wage and benefit standards which could result in higher costs for goods and services supplied to us.
Our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our growth
strategy. If we are unable to do so, our results of operations may also be adversely affected.
Our objective to increase sales and profits at existing restaurants could be adversely affected by macroeconomic
conditions.
The pandemic has significantly impacted our business as well as the global economy. During 2021 and beyond, the
U.S. and global economies could further suffer from a downturn in economic activity. Recessionary economic cycles,
higher interest rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher levels of
unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors
that may affect consumer spending or buying habits could adversely affect the demand for our products. In addition,
there is no assurance that any governmental plans to stimulate the economy will foster growth in consumer spending or
buying habits. As in the past, we could experience reduced guest traffic or we may be unable or unwilling to increase
the prices we charge for our products to offset higher costs or fewer transactions, either of which could reduce our sales
and profit margins. Also, landlords or other tenants in the shopping centers in which some of our restaurants are located
may experience difficulty as a result of macroeconomic trends or cease to operate, which could in turn negatively affect
guest traffic at our restaurants. All of these factors could have a material adverse impact on our business, results of
operations, financial condition or liquidity.
Our success depends on our ability to compete with many food service businesses.
The restaurant industry is intensely competitive. We compete with many well - established food service companies
on the basis of taste, quality and price of products offered, guest service, atmosphere, location, take-out and delivery
options and overall guest experience. Our competitors include a large and diverse group of restaurant chains and
individual restaurants that range from independent local operators that have opened restaurants in various markets to
well - capitalized national restaurant companies. We also face competition from meal kit delivery services as well as the
supermarket industry. In addition, improving product offerings of fast casual and quick - service restaurants, together with
negative economic conditions could cause consumers to choose less expensive alternatives. As our competitors expand
their operations, we expect competition to intensify. We also compete with other restaurant chains and other retail
establishments for quality site locations and employees. Additionally, our competitors may generate or better implement
business strategies that improve the value and the relevance of their brands and reputation, relative to ours. This could
include the testing of delivery via internal or third-party methods or better execution around guests’ To-Go experience in
response to dine-in capacity restrictions.
The food service industry is affected by litigation and publicity concerning food quality, health and other issues,
which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.
Food service businesses can be adversely affected by litigation and complaints from guests, consumer groups or
government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming
from one restaurant or a limited number of restaurants. Adverse publicity about these allegations may negatively affect
us, regardless of whether the allegations are true, by discouraging guests from eating at our restaurants. We could also
incur significant liabilities if a lawsuit or claim results in a decision against us or litigation costs regardless of the result.
Our business could be adversely affected by our inability to respond to or effectively manage social media.
As part of our marketing strategy, we utilize social media platforms to promote our brands and attract and retain
guests. Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand
relevance. In addition, a variety of risks are associated with the use of social media, including improper disclosure of
proprietary information, negative comments about us, exposure of personally identifiable information, fraud, or
dissemination of false information. The inappropriate use of social media vehicles by our guests or employees could
increase our costs, lead to litigation or result in negative publicity that could damage our reputation and adversely affect
our results of operations.
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Given the marked increase in the use of social media platforms along with smart phones in recent years, individuals
have access to a broad audience of consumers and other interested persons. The availability of information on social
media platforms is virtually immediate as is its impact. Many social media platforms immediately publish the content
their subscribers and participants post, often without filters or checks on the accuracy of the content posted. Information
concerning our Company may be posted on such platforms at any time. Additionally, social media has increasingly been
utilized to target specific companies or brands as a result of a variety of actions or inactions, or perceived actions or
inactions, that are disfavored by interest groups and such campaigns can rapidly accelerate and impact consumer
behavior. If we are unable to quickly and effectively respond to such reports, we may suffer declines in guest traffic.
The impact may be immediate without affording us an opportunity for redress or correction. These factors could have a
material adverse effect on our business.
Health and social concerns relating to the consumption of beef or other food products could affect consumer
preferences and could negatively impact our results of operations.
Like other restaurant chains, consumer preferences could be affected by health concerns about the consumption of
beef, the key ingredient in many of our menu items, or negative publicity concerning food quality and food safety,
including food-borne illnesses. In addition, consumer preferences may be impacted by current and future menu-labeling
requirements. In 2018, federal disclosure requirements went into effect under the Patient Protection and Affordable Care
Act of 2010 requiring new menu nutritional labeling requirements. As a result, we include calorie information on our
menus and make additional nutritional information available at our restaurants and on our websites. However, future
regulatory action may occur which could result in further changes in the nutritional disclosure requirements. We cannot
make any assurances regarding our ability to effectively respond to changes in consumer health perceptions and to adapt
our menu offerings to trends in eating habits. The imposition of menu - labeling laws could have an adverse effect on our
results of operations and financial position, as well as the restaurant industry in general. The labeling requirements and
any negative publicity concerning any of the food products we serve may adversely affect demand for our food and
could result in a decrease in guest traffic to our restaurants. If we react to the labeling requirements or negative publicity
by changing our concepts or our menu offerings or their ingredients, we may lose guests who do not prefer the new
concept or products, and we may not be able to attract sufficient new guests to produce the revenue needed to make our
restaurants profitable. In addition, we may have different or additional competitors for our intended guests as a result of
a change in our concept and may not be able to compete successfully against those competitors. A decrease in guest
traffic to our restaurants as a result of these health concerns or negative publicity or as a result of a change in our menu
or concept could materially harm our business.
Food safety and sanitation, food - borne illness and health concerns may have an adverse effect on our business by
reducing demand and increasing costs.
Food safety and sanitation is a top priority, and we dedicate substantial resources to help our guests enjoy safe,
quality food products. However, food - borne illnesses and food safety issues occur in the food industry from time to time.
Any report or publicity, whether true or not, linking us to instances of food - borne illness or other food safety issues,
including food tampering or contamination, could adversely affect our brands and reputation as well as our revenue and
profits. In addition, instances of food - borne illness, food tampering or food contamination occurring solely at restaurants
of our competitors could result in negative publicity about the food service industry generally and adversely impact our
revenue and profits. Heightened concern regarding restaurant safety caused by the COVID-19 pandemic would likely
magnify such adverse impact.
Furthermore, our reliance on third - party food suppliers and distributors increases the risk that food - borne illness
incidents could be caused by factors outside of our control and that multiple locations would be affected rather than a
single restaurant. We cannot assure that all food items are properly maintained during transport throughout the supply
chain and that our employees will identify all products that may be spoiled and should not be used in our restaurants. If
our guests become ill from food - borne illnesses, we could be forced to temporarily close some restaurants. Furthermore,
any instances of food contamination, whether or not at our restaurants, could subject us or our suppliers to a food recall.
In addition to the novel coronavirus that causes COVID-19, the United States and other countries have experienced,
or may experience in the future, outbreaks of viruses, such as Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and
H1N1. To the extent that a virus is food - borne, future outbreaks may adversely affect the price and availability of certain
food products and cause our guests to eat less of a product which may materially adversely affect our business.
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Risks Related to Our Corporate Structure, Our Stock Ownership and Our Common Stock
Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party.
Our certificate of incorporation and by - laws contain several provisions that may make it more difficult for a third
party to acquire control of us without the approval of our Board of Directors. These provisions include, among other
things, advance notice for raising business or making nominations at meetings and “blank check” preferred stock. Blank
check preferred stock enables our Board of Directors, without approval of the shareholders, to designate and issue
additional series of preferred stock with such dividend, liquidation, conversion, voting or other rights, including the right
to issue convertible securities with no limitations on conversion, as our Board of Directors may determine. The issuance
of blank check preferred stock may adversely affect the voting and other rights of the holders of our common stock as
our Board of Directors may designate and issue preferred stock with terms that are senior to our common stock. These
provisions may make it more difficult or expensive for a third party to acquire a majority of our outstanding common
stock. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other
transaction that might otherwise result in our stockholders receiving a premium over the market price for their common
stock. If we issue preferred shares in the future that have a preference over our common stock with respect to dividends
or upon liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting
power of our common stock, the rights of our common stockholders or the market price of our common stock may be
adversely affected.
The Delaware General Corporation Law prohibits us from engaging in “business combinations” with “interested
shareholders” (with some exceptions) unless such transaction is approved in a prescribed manner. The existence of this
provision could have an anti - takeover effect with respect to transactions not approved in advance by the Board of
Directors, including discouraging attempts that might result in a premium over the market price for our common stock.
There can be no assurance that we will continue to pay dividends on our common stock or repurchase our common
stock up to the maximum amounts permitted under our previously announced repurchase program.
Payment of cash dividends on our common stock or repurchases of our common stock are subject to compliance
with applicable laws and depends on, among other things, our results of operations, financial condition, level of
indebtedness, capital requirements, business prospects and other factors that our Board of Directors may deem relevant.
We temporarily suspended all cash dividends and share repurchases to enhance our financial flexibility as a result of the
pandemic. Once this suspension has been lifted, there can be no assurance that we will continue to pay dividends or
repurchase our common stock at the same levels we have historically.
Our business could be negatively affected as a result of actions of activist shareholders, and such activism could
impact the trading value of our common stock.
We value constructive input from our shareholders and the investment community. Our Board of Directors and
management team are committed to acting in the best interests of all of our shareholders. There is no assurance that the
actions taken by our Board of Directors and management in seeking to maintain constructive engagement with our
shareholders will be successful.
Responding to actions by activist shareholders can be costly and time-consuming, disrupting our operations and
diverting the attention of management and our employees. Such activities could interfere with our ability to execute our
strategic plan. The perceived uncertainties as to our future direction also resulting from activist strategies could also
affect the market price and volatility of our common stock.
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ITEM 1B—UNRESOLVED STAFF COMMENTS
None.
ITEM 2—PROPERTIES
Properties
Our Support Center is located in Louisville, Kentucky. We occupy this facility under a master lease with Paragon
Centre Holdings, LLC, a limited liability company in which we have a minority ownership position. As of December 29,
2020, we leased 133,023 square feet. Our lease expires on October 31, 2048, including all applicable extensions. Of the
537 company restaurants in operation as of December 29, 2020, we owned 148 locations and leased 389 locations, as
shown in the following table.
State
Alabama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alaska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arizona . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Arkansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Colorado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Connecticut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Florida . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Idaho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Illinois . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Iowa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kansas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kentucky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Louisiana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Michigan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minnesota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mississippi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Missouri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nebraska . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nevada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Hampshire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Jersey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New York . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ohio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oklahoma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rhode Island . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Carolina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Dakota . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tennessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vermont . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Washington . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wisconsin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Wyoming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Owned Leased Total
8
2
19
6
4
17
5
2
41
12
5
17
21
10
6
15
10
3
8
10
16
5
3
17
3
2
3
10
6
21
20
2
33
8
2
25
3
3
2
15
71
9
1
19
2
3
10
2
537
5
2
14
5
3
10
5
1
34
8
4
14
8
8
4
11
8
3
8
9
11
4
2
15
2
2
1
10
5
18
16
2
21
6
2
22
3
3
1
15
32
8
1
13
2
2
6
—
389
3
—
5
1
1
7
—
1
7
4
1
3
13
2
2
4
2
—
—
1
5
1
1
2
1
—
2
—
1
3
4
—
12
2
—
3
—
—
1
—
39
1
—
6
—
1
4
2
148
33
Additional information concerning our properties and leasing arrangements is included in note 2(g) and note 8 to
the Consolidated Financial Statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.
ITEM 3—LEGAL PROCEEDINGS
Occasionally, we are a defendant in litigation arising in the ordinary course of our business, including “slip and
fall” accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees
alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which
are covered by insurance, has had a material effect on us during the periods covered by this report and, as of the date of
this report, we are not party to any litigation that we believe could have a material adverse effect on our business.
ITEM 4—MINE SAFETY DISCLOSURES
Not applicable.
34
PART II
ITEM 5—MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Nasdaq Global Select Market under the symbol TXRH.
The number of holders of record of our common stock as of February 17, 2021 was 179.
In 2011, our Board of Directors declared our first quarterly dividend of $0.08 per share of common stock. On
February 20, 2020, our Board of Directors declared a quarterly dividend of $0.36 per share of common stock which was
paid on March 27, 2020. On March 24, 2020, the Board of Directors voted to suspend the payment of quarterly cash
dividends of the Company’s common stock, effective with respect to dividends occurring after March 27, 2020. This
was done to preserve cash flow during the pandemic. The declaration and payment of cash dividends on our common
stock is at the discretion of our Board of Directors, and any decision to declare a dividend will be based on a number of
factors including, but not limited to, earnings, financial condition, applicable covenants under our amended credit facility
and other contractual restrictions, or other factors deemed relevant. We are currently evaluating when we will resume
the payment of cash dividends.
Unregistered Sales of Equity Securities
There were no equity securities sold by the Company during the period covered by this Annual Report on
Form 10 - K that were not registered under the Securities Act of 1933, as amended.
Issuer Repurchases of Securities
In 2008, our Board of Directors approved our first stock repurchase program. From inception through
December 29, 2020, we have paid $369.0 million through our authorized stock repurchase programs to repurchase
17,722,505 shares of our common stock at an average price per share of $20.82. On May 31, 2019, our Board of
Directors approved a stock repurchase program under which we may repurchase up to $250.0 million of our common
stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which
was approved on May 22, 2014. All repurchases to date have been made through open market transactions. In 2020, we
paid $12.6 million to repurchase 252,409 shares of our common stock. The Company suspended all share repurchase
activity on March 17, 2020 in order to preserve cash flow due to the pandemic. As of December 29, 2020,
$147.8 million remains authorized for stock repurchases. We are currently evaluating when we will resume the
repurchase of shares.
35
Stock Performance Graph
The following graph sets forth the cumulative total return experienced by holders of the Company’s common stock
compared to the cumulative total return of the Russell 3000 Restaurant Index and the Russell 3000 Index for the five
year period ended December 29, 2020, the last trading day of our fiscal year. The graph assumes the values of the
investment in our common stock and each index was $100 on December 29, 2015 and the reinvestment of all dividends
paid during the period of the securities comprising the indices.
Note: The stock price performance shown on the graph below does not indicate future performance.
Comparison of Cumulative Total Return Since December 29, 2015
Among Texas Roadhouse, Inc., the Russell 3000 Index and the Russell 3000 Restaurant Index
240
220
200
180
160
140
120
100
80
60
40
20
0
TXRH
Russell 3000
Russell 3000 Restaurant
12/29/2015 12/27/2016 12/26/2017 12/24/2018 12/31/2019 12/29/2020
Texas Roadhouse, Inc. . . . . . . . . . . . . . . . . . . . . $ 100.00 $ 137.44 $ 149.97 $ 157.54 $ 156.18 $ 218.97
Russell 3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100.00 $ 110.05 $ 129.40 $ 115.63 $ 154.29 $ 182.00
Russell 3000 Restaurant . . . . . . . . . . . . . . . . . . . $ 100.00 $ 103.97 $ 123.69 $ 123.89 $ 158.36 $ 183.33
36
ITEM 6—SELECTED FINANCIAL DATA
We derived the selected consolidated financial data as of and for the years 2020, 2019, 2018, 2017 and 2016 from
our audited consolidated financial statements.
The Company utilizes a 52 or 53 week accounting period that typically ends on the last Tuesday in December. The
Company utilizes a 13 or 14 week accounting period for quarterly reporting purposes. Fiscal years 2020, 2018, 2017 and
2016 were 52 weeks in length while fiscal year 2019 was 53 weeks in length. Our historical results are not necessarily
indicative of our results for any future period.
2020
Fiscal Year
2019
2017
2018
(in thousands, except per share data)
2016
Consolidated Statements of Income:
Revenue:
Restaurant sales and other . . . . . . . . . . . . . . . . . . . . . . $ 2,380,177 $ 2,734,177 $ 2,437,115 $ 2,203,017 $ 1,974,261
17,946
20,334
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . .
16,453
2,398,123
2,457,449
1,990,714
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,844
187,789
171,900
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . .
19,253
188,551
171,756
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . .
51,183
24,257
(15,672)
34,925 $ 181,518 $ 164,294 $ 137,536 $ 120,573
Net income including noncontrolling interests . . . . . . . . . $
Less: Net income attributable to noncontrolling interests .
4,975
6,069
Net income attributable to Texas Roadhouse, Inc. and
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income per common share:
16,514
2,219,531
186,206
186,117
48,581
21,986
2,756,163
212,023
213,915
32,397
31,255 $ 174,452 $ 158,225 $ 131,526 $ 115,598
6,010
3,670
7,066
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.45 $
0.45 $
2.47 $
2.46 $
2.21 $
2.20 $
1.85 $
1.84 $
1.64
1.63
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,438
69,893
70,509
70,916
71,467
71,964
70,989
71,527
70,396
71,052
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . $
0.36 $
1.20 $
1.00 $
0.84 $
0.76
37
2020
2019
Fiscal Year
2018
($ in thousands)
2017
2016
Consolidated Balance Sheet Data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 363,155
2,325,161
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities . . . . . . .
19,271
50,000
Current maturities of long-term debt . . . . . . . . . . . . .
572,171
Operating lease liabilities, net of current portion . . . .
190,000
Long-term debt, net of current maturities . . . . . . . . .
1,382,110
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,546
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . .
Texas Roadhouse, Inc. and subsidiaries
stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . $ 927,505
Selected Operating Data (unaudited):
Restaurants:
$ 107,879
1,983,565
17,263
-
538,710
-
1,052,396
15,175
$ 210,125
1,469,276
-
-
-
-
508,568
15,139
$ 150,918
1,330,623
-
9
-
50,000
479,232
12,312
$ 112,944
1,179,971
-
159
-
50,550
421,729
8,016
$ 915,994
$ 945,569
$ 839,079
$ 750,226
Company - Texas Roadhouse . . . . . . . . . . . . . . . .
Company - Bubba’s 33 . . . . . . . . . . . . . . . . . . . . .
Company - Jaggers . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Domestic . . . . . . . . . . . . . . . . . . . . . .
Franchise - International . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company restaurant information:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales (1) . . . . . . . . . . . . . .
Texas Roadhouse restaurants only:
503
31
3
69
28
634
484
28
2
69
28
611
464
25
2
69
22
582
440
20
2
70
17
549
413
16
2
73
13
517
27,181
26,473
24,693
23,274
(14.2)%
4.7 %
5.4 %
4.5 %
21,583
3.5 %
Comparable restaurant sales (1) . . . . . . . . . . . . .
Average unit volume (2) . . . . . . . . . . . . . . . . . . $
(14.1)%
$
5,555
4,649
$ 374,298
Net cash provided by operating activities . . . . . . . . . $ 230,438
$ (214,820)
Net cash used in investing activities . . . . . . . . . . . . . $ (161,105)
$ (261,724)
Net cash provided by (used in) financing activities . . $ 185,943
4.6 %
$
5,209
$ 352,868
$ (158,145)
$ (135,516)
5.4 %
$
4,973
$ 286,373
$ (178,156)
$ (70,243)
4.5 %
$
4,805
$ 257,065
$ (164,738)
$ (38,717)
3.6 %
(1) Comparable restaurant sales reflects the change in sales over the same period of the prior year for the comparable
restaurant base. We define the comparable restaurant base to include those restaurants open for a full 18 months
before the beginning of the period measured, excluding sales from restaurants permanently closed during the period.
(2) Average unit volume represents the average annual restaurant sales from Texas Roadhouse company restaurants
open for a full six months before the beginning of the period measured, excluding sales from restaurants
permanently closed during the period. Additionally, average unit volume of company restaurants in the table above
was adjusted to reflect the restaurant sales of any acquired franchise restaurants. In addition, average unit volume
for 2019 includes 53 weeks compared to 52 weeks for all other periods presented.
38
ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion and analysis below for the Company should be read in conjunction with the consolidated financial
statements and the notes to such financial statements (pages F - 1 to F - 29), “Forward - looking Statements” (page 3) and
Risk Factors set forth in Item 1A.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on
discussion of 2020 results as compared to 2019 results. For discussion of 2019 results as compared to 2018 results, see
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our
Form 10- K for the year ended December 31, 2019 filed with the SEC on February 28, 2020.
Our Company
Texas Roadhouse, Inc. is a growing restaurant company operating predominately in the casual dining segment. Our
founder, chairman and chief executive officer, W. Kent Taylor, started the business in 1993 with the opening of the first
Texas Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to 634 restaurants in 49 states and ten
foreign countries. Our mission statement is “Legendary Food, Legendary Service®.” Our operating strategy is designed
to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking
high - quality, affordable meals served with friendly, attentive service. As of December 29, 2020, our 634 restaurants
included:
•
•
537 “company restaurants,” of which 517 were wholly - owned and 20 were majority - owned. The results of
operations of company restaurants are included in our consolidated statements of income and comprehensive
income. The portion of income attributable to noncontrolling interests in company restaurants that are not
wholly - owned is reflected in the line item entitled “Net income attributable to noncontrolling interests” in our
consolidated statements of income and comprehensive income. Of the 537 restaurants we owned and operated
at the end of 2020, we operated 503 as Texas Roadhouse restaurants, 31 as Bubba’s 33 restaurants and three as
Jaggers restaurants.
97 “franchise restaurants,” 24 of which we have a 5.0% to 10.0% ownership interest. The income derived from
our minority interests in these franchise restaurants is reported in the line item entitled “Equity income from
investments in unconsolidated affiliates” in our consolidated statements of income and comprehensive income.
Additionally, we provide various management services to these 24 franchise restaurants, as well as five
additional franchise restaurants in which we have no ownership interest. All of the franchise restaurants
operated as Texas Roadhouse restaurants. Of the 97 franchise restaurants, 69 were domestic restaurants and 28
were international restaurants.
We have contractual arrangements which grant us the right to acquire at pre - determined formulas (i) the remaining
equity interests in 18 of the 20 majority - owned company restaurants and (ii) 65 of the 69 domestic franchise restaurants.
Throughout this report, we use the term “restaurants” to include Texas Roadhouse and Bubba’s 33, unless
otherwise noted.
Presentation of Financial and Operating Data
We operate on a fiscal year that typically ends on the last Tuesday in December. Fiscal year 2020 was 52 weeks in
length, while the fourth quarter was 13 weeks in length. Fiscal year 2019 was 53 weeks in length and, as such, the fourth
quarter was 14 weeks in length.
COVID-19 Impact
On March 13, 2020, the novel coronavirus (“COVID-19”) pandemic (the “pandemic”) was declared a National
Public Health Emergency. Shortly after the national emergency declaration, state and local officials began placing
restrictions on restaurants, some of which allowed To-Go or curbside service only while others limited capacity in the
dining room. By late March, all of our domestic company and franchise restaurants were under state or local order
which only allowed for To-Go or curbside service. Beginning in early May 2020, state and local guidelines began to
allow dining rooms to re-open, typically at a limited capacity. While all of our dining rooms were able to open in some
39
capacity, many were required to close again in areas more severely impacted by the pandemic. As of December 29,
2020, 82% of our company restaurants had their dining rooms operating under various limited capacity restrictions. Our
remaining restaurants were limited to outdoor and/or To-Go or curbside service only.
In response to the impact of the pandemic on our restaurant operations, we have developed a hybrid operating
model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside
and/or drive-up operating model, as permitted by local guidelines. This includes design changes to our building to better
accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed. We also have
installed booth partitions in all of our restaurants as an added safety measure for our guests. In addition, we have
increased our already strict sanitation requirements, are conducting daily health and temperature checks for all
employees before they begin their shift and are requiring personal protective equipment to be worn by all restaurant
employees at all times. As we work through the local regulations at each of our locations, the safety of our employees
and guests remains our top priority.
As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in
traffic which has impacted our operating results. While the majority of our dining rooms have re-opened, a significant
portion continue to operate under capacity restrictions that severely limit the number of guests we can serve. In addition,
while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do
not expect these sales will generate a similar profit margin and cash flows to our normal operating model. We expect
our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and
our dining rooms can operate at full capacity. We cannot predict how long the pandemic will last, how long it will take
until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again. In
addition, we cannot predict the overall impact on the economy or consumer spending habits. The impact on our
operating results as well as the operational and financial measures we have implemented in response to the pandemic
have been included throughout this report.
In response to the pandemic, the Company and our Board of Directors implemented the following measures in
2020 to enhance financial flexibility:
• Decreased the number of planned new restaurants for 2020;
• Suspended all quarterly cash dividends occurring after March 27, 2020;
• Suspended all share repurchase activity;
• Expanded the capacity of the revolving credit facility and increased the borrowings by $240 million; and
• Decreased compensation including voluntary reductions of salary and bonus for the executive and leadership
teams to make relief grants available for restaurant employees. Each non-employee member of the Board of
Directors also volunteered to forgo their director and committee fees along with any cash retainers effective
April 1, 2020 and continuing throughout fiscal 2020.
Effective March 27, 2020, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the
“CARES Act”) was passed to benefit companies that were significantly impacted by the pandemic. This legislation
allowed for the deferral of the social security portion of the employer portion of FICA payroll taxes from the date of
enactment through the end of 2020. Amounts are required to be repaid in equal installments at the end of 2021 and
2022. As of December 29, 2020, the Company had deferred $47.3 million in payroll taxes with the amount due in 2021
included in accrued wages and payroll taxes and the amount due in 2022 included in other liabilities in our consolidated
balance sheets.
The CARES Act also allowed for an Employee Retention Credit for companies severely impacted by the pandemic
to encourage the retention of full-time employees. This refundable payroll tax credit was available for any company that
had fully or partially suspended operations due to government order or experienced a significant decline in gross receipts
and had employees who were paid but did not actually work. The Company provided various forms of relief pay for
hourly restaurant employees throughout the year, as significant portion of which qualified for this tax credit. For the
year ended December 29, 2020, we recorded $7.0 million related to this credit which is included in labor expense in our
40
consolidated statements of income and comprehensive income.
Finally, the CARES Act provided for small business loans that were forgivable if certain criteria were met. The
Company did not pursue any of these loans on behalf of company restaurants as we believe we have sufficient
alternatives for raising capital if needed.
Long - term Strategies to Grow Earnings Per Share
Although a significant portion of 2020 required us to focus on adapting our business to account for the impacts of
the pandemic, we remain committed to our core operating strategy that has defined and grown our brand. Our long - term
strategies with respect to increasing net income and earnings per share, along with creating shareholder value, include
the following:
Expanding Our Restaurant Base. We continue to evaluate opportunities to develop restaurants in existing markets
and in new domestic and international markets. Domestically, we remain focused primarily on markets where we believe
a significant demand for our restaurants exists because of population size, income levels and the presence of shopping
and entertainment centers and a significant employment base. In recent years, we have relocated several existing Texas
Roadhouse locations once the associated lease expired or as a result of eminent domain which allows us to move to a
better site, update them to a current prototypical design, and/or obtain more favorable lease terms. We continue to
evaluate these opportunities particularly as it relates to older locations with strong sales. Our ability to expand our
restaurant base is influenced by many factors beyond our control and, therefore, we may not be able to achieve our
anticipated growth.
In 2020, we opened 22 company restaurants while our franchise partners opened four restaurants. This included 18
Texas Roadhouse restaurants, three Bubba’s 33 restaurants, and one Jaggers restaurant. At the onset of the pandemic,
we delayed construction on all restaurants that were not substantially complete which decreased our planned store
openings for the year. We currently plan to open 25 to 30 company restaurants across all concepts in 2021. To the
extent that state and local guidelines begin to further reduce capacity at our restaurants, we could pull back on
development and reduce capital expenditures accordingly. In addition, we anticipate our existing franchise partners will
open as many as six Texas Roadhouse restaurants, primarily international, in 2021.
Our average capital investment for the 18 Texas Roadhouse restaurants opened during 2020, including pre - opening
expenses and a capitalized rent factor, was $6.2 million. We expect our average capital investment for Texas Roadhouse
restaurants opening in 2021 to be approximately $5.5 million. Our average capital investment for the three Bubba’s
33 restaurants opened during 2020, including pre - opening expenses and a capitalized rent factor, was $7.3 million. We
expect our average capital investment for Bubba’s 33 restaurants opening in 2021 to be approximately $6.9 million.
We remain focused on driving sales and managing restaurant investment costs in order to maintain our restaurant
development in the future. Our capital investment (including cash and non - cash costs) for new restaurants varies
significantly depending on a number of factors including, but not limited to: the square footage, layout, scope of any
required site work, type of construction labor, local permitting requirements, our ability to negotiate with landlords, cost
of liquor and other licenses and hook - up fees and geographical location. In addition, we have seen increased building
costs as a result of the pandemic.
We have entered into area development and franchise agreements for the development and operation of Texas
Roadhouse restaurants in several foreign countries and one U.S territory. We currently have signed franchise and/or
development agreements in nine countries in the Middle East as well as Taiwan, the Philippines, Mexico, China, South
Korea, Brazil and Puerto Rico. As of December 29, 2020, we had 15 restaurants open in five countries in the Middle
East, four restaurants open in Taiwan, five in the Philippines, two in South Korea, and one each in Mexico and China for
a total of 28 restaurants in ten foreign countries. For the existing international agreements, the franchisee is generally
required to pay us a franchise fee for each restaurant to be opened, royalties on the gross sales of each restaurant and a
development fee for our grant of development rights in the named countries. We anticipate that the specific business
terms of any future franchise agreement for international restaurants might vary significantly from the standard terms of
our domestic agreements and from the terms of existing international agreements, depending on the territory to be
franchised and the extent of franchisor - provided services to each franchisee.
Maintaining and/or Improving Restaurant Level Profitability. We continue to balance the impacts of inflationary
pressures with our value positioning as we remain focused on our long-term success. This may create a challenge in
41
terms of maintaining and/or increasing restaurant-level profitability (restaurant margin), in any given year, depending on
the level of inflation we experience. Restaurant margin is not a U.S. generally accepted accounting principle (“GAAP”)
measure and should not be considered in isolation, or as an alternative from income from operations. See further
discussion of restaurant margin below. In addition to restaurant margin, as a percentage of restaurant and other sales, we
also focus on the growth of restaurant margin dollars per store week as a measure of restaurant level-profitability. In
terms of driving higher comparable restaurant sales, we remain focused on encouraging repeat visits by our guests and
attracting new guests through our continued commitment to operational standards relating to food and service quality. To
attract new guests and increase the frequency of visits of our existing guests, we also continue to drive various localized
marketing programs, focus on speed of service and increase throughput by adding seats and parking at certain
restaurants. In addition, with the increase in To-Go sales in prior years and the significant increase in the current year
due to the pandemic, we are currently testing changes to our building layout to help better accommodate higher To-Go
volumes at our restaurants.
In addition, we continue to look for ways through various strategic initiatives to drive awareness of our brands and
increase profitability. At the onset of the pandemic, we began selling ready-to-grill steaks and pork for customers to
prepare at home. While we reduced our store-level offerings around ready-to-grill products once our dining rooms
began to re-open, based on the success of this program we have developed Texas Roadhouse Butcher Shop. This on-line
platform allows for the purchase and delivery hand-cut quality steaks that are available in our restaurants. This platform
launched in our Q4 2020 fiscal quarter.
Leveraging Our Scalable Infrastructure. To support our growth, we have made significant investments in our
infrastructure over the past several years, including information and accounting systems, real estate, human resources,
legal, marketing, international and restaurant operations, including the development of new concepts. In addition, in Q4
2018 we increased our number of regional market partners, market partners and regional support teams. Whether we are
able to leverage our infrastructure in future years by growing our general and administrative costs at a slower rate than
our revenue will depend, in part, on our new restaurant openings, our comparable restaurant sales growth rate going
forward and the level of investment we continue to make in our infrastructure.
Returning Capital to Shareholders. We continue to evaluate opportunities to return capital to our shareholders,
including the payment of dividends and repurchase of common stock. In 2011, our Board of Directors declared our first
quarterly dividend of $0.08 per share of common stock. On February 20, 2020, our Board of Directors declared a
quarterly dividend of $0.36 per share of common stock which was paid on March 27, 2020. On March 24, 2020, the
Board of Directors voted to suspend the payment of quarterly cash dividends on the Company’s common stock, effective
with respect to dividends occurring after March 27, 2020. This was done to preserve cash flow due to the pandemic. The
declaration and payment of cash dividends on our common stock is at the discretion of our Board of Directors, and any
decision to declare a dividend will be based on a number of factors, including, but not limited to, earnings, financial
condition, applicable covenants under our amended credit facility, other contractual restrictions and other factors deemed
relevant. We are currently evaluating when we will resume the payment of cash dividends.
In 2008, our Board of Directors approved our first stock repurchase program. From inception through
December 29, 2020, we have paid $369.0 million through our authorized stock repurchase programs to repurchase
17,722,505 shares of our common stock at an average price per share of $20.82. On May 31, 2019, our Board of
Directors approved a stock repurchase program under which we may repurchase up to $250.0 million of our common
stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which
was approved on May 22, 2014. All repurchases to date have been made through open market transactions. For the year
ended December 29, 2020, we paid $12.6 million to repurchase 252,409 shares of our common stock. The Company
suspended all share repurchase activity on March 17, 2020 in order to preserve cash flow due to the pandemic. As of
December 29, 2020, $147.8 million remains authorized for stock repurchases. We are currently evaluating when we will
resume the repurchase of shares.
Key Operating Personnel
Key management personnel who have a significant impact on the performance of our restaurants include market
partners, managing partners, kitchen managers, service managers and assistant managers. Managing partners are single
restaurant operators who have primary responsibility for the day - to - day operations of the entire restaurant. Kitchen
managers have primary responsibility for managing the kitchen staff and overall kitchen operations including food
preparation and food quality. Service managers have primary responsibility for managing the front of house staff and
42
overall dining room operations including service quality and the guest experience. The assistant managers support our
managing partners, kitchen, and service managers. All managers are responsible for maintaining our standards of quality
and performance. We use market partners to oversee the operation of our restaurants. Each market partner oversees a
group of varying sizes of managing partners and their respective management teams. Market partners are also
responsible for the hiring and development of each restaurant’s management team and assisting in the site selection
process. Through regular visits to the restaurants, the market partners facilitate adherence to all aspects of our concepts,
strategies and standards of quality.
Managing partners and market partners are required, as a condition of employment, to sign a multi - year
employment agreement. The annual compensation of our managing partners and market partners includes a base salary
plus a percentage of the pre - tax income of the restaurant(s) they operate or supervise. Managing partners and market
partners are eligible to participate in our equity incentive plan and are generally required to make refundable deposits of
$25,000 and $50,000, respectively. Generally, the deposits are refunded after five years of service.
Key Measures We Use To Evaluate Our Company
Key measures we use to evaluate and assess our business include the following:
Number of Restaurant Openings. Number of restaurant openings reflects the number of restaurants opened during a
particular fiscal period. For company restaurant openings, we incur pre - opening costs, which are defined below, before
the restaurant opens. Typically, new Texas Roadhouse restaurants open with an initial start - up period of higher than
normalized sales volumes, which decrease to a steady level approximately three to six months after opening. However,
although sales volumes are generally higher, so are initial costs, resulting in restaurant margins that are generally lower
during the start - up period of operation and increase to a steady level approximately three to six months after opening.
Comparable Restaurant Sales. Comparable restaurant sales reflects the change in sales for company restaurants
over the same period of the prior year for the comparable restaurant base. We define the comparable restaurant base to
include those restaurants open for a full 18 months before the beginning of the period measured excluding restaurants
permanently closed during the period. Comparable restaurant sales can be impacted by changes in guest traffic counts or
by changes in the per person average check amount. Menu price changes and the mix of menu items sold can affect the
per person average check amount.
Average Unit Volume. Average unit volume represents the average annual restaurant sales for company restaurants
open for a full six months before the beginning of the period measured excluding sales of restaurants permanently closed
during the period. Historically, average unit volume growth is less than comparable restaurant sales growth which
indicates that newer restaurants are operating with sales levels lower than the company average. At times, average unit
volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are
operating with sales levels higher than the company average.
Store Weeks. Store weeks represent the number of weeks that our company restaurants were open during the
reporting period. Store weeks include weeks in which a restaurant is temporarily closed.
Restaurant Margin. Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents
restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other
operating costs. Restaurant margin is not a measurement determined in accordance with GAAP and should not be
considered in isolation, or as an alternative, to income from operations. This non-GAAP measure is not indicative of
overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders
due to the nature of the costs excluded. Restaurant margin is widely regarded as a useful metric by which to evaluate
restaurant-level operating efficiency and performance. In calculating restaurant margin, we exclude certain non-
restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not
have a direct impact on restaurant-level operational efficiency and performance. We also exclude depreciation and
amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for
the investment in our restaurants. We also exclude impairment and closure expense as we believe this provides a clearer
perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results.
Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our
industry. A reconciliation of income from operations to restaurant margin is included in the Results of Operations
section below.
43
Other Key Definitions
Restaurant and Other Sales. Restaurant sales include gross food and beverage sales, net of promotions and
discounts, for all company restaurants. Sales taxes collected from customers and remitted to governmental authorities are
accounted for on a net basis and therefore are excluded from restaurant sales in the consolidated statements of income
and comprehensive income. Other sales include the amortization of fees associated with our third party gift card sales
net of the amortization of gift card breakage income. These amounts are amortized consistent with the historic
redemption pattern of the associated gift card or on actual redemptions in periods where redemptions do not align with
historic redemption patterns.
Franchise Royalties and Fees. Franchise royalties consist of royalties, as defined in our franchise agreement, paid
to us by our domestic and international franchisees. Domestic and/or international franchisees also typically pay an
initial franchise fee and/or development fee for each new restaurant or territory. The terms of the international
agreements may vary significantly from our domestic agreements. These include advertising fees paid by domestic
franchisees to our system-wide marketing and advertising fund and management fees paid by certain domestic
franchisees for supervisory and administrative services that we perform.
Food and Beverage Costs. Food and beverage costs consists of the costs of raw materials and ingredients used in
the preparation of food and beverage products sold in our company restaurants. Approximately half of our food and
beverage costs relates to beef costs.
Restaurant Labor Expenses. Restaurant labor expenses include all direct and indirect labor costs incurred in
operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners and
market partners. These profit sharing expenses are reflected in restaurant other operating expenses. Restaurant labor
expenses also include share - based compensation expense related to restaurant - level employees.
Restaurant Rent Expense. Restaurant rent expense includes all rent, except pre - opening rent, associated with the
leasing of real estate and includes base, percentage and straight - line rent expense.
Restaurant Other Operating Expenses. Restaurant other operating expenses consist of all other restaurant - level
operating costs, the major components of which are utilities, dining room and To-Go supplies, local store advertising,
repairs and maintenance, equipment rent, property taxes, credit card fees, and general liability insurance. Profit sharing
incentive compensation expenses earned by our restaurant managing partners and market partners are also included in
restaurant other operating expenses.
Pre - opening Expenses. Pre - opening expenses, which are charged to operations as incurred, consist of expenses
incurred before the opening of a new or relocated restaurant and are comprised principally of opening team and training
compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. On average,
over 70% of total pre - opening costs incurred per restaurant opening relate to the hiring and training of employees.
Pre - opening costs vary by location depending on a number of factors, including the size and physical layout of each
location; the number of management and hourly employees required to operate each restaurant; the availability of
qualified restaurant staff members; the cost of travel and lodging for different geographic areas; the timing of the
restaurant opening; and the extent of unexpected delays, if any, in obtaining final licenses and permits to open the
restaurants.
Depreciation and Amortization Expenses. Depreciation and amortization expenses (“D&A”) include the
depreciation of fixed assets and amortization of intangibles with definite lives, substantially all of which relates to
restaurant - level assets.
Impairment and Closure Costs, Net. Impairment and closure costs, net include any impairment of long - lived assets,
including property and equipment, operating lease right-of-use assets and goodwill, and expenses associated with the
closure of a restaurant. Closure costs also include any gains or losses associated with a relocated restaurant or the sale of
a closed restaurant and/or assets held for sale as well as lease costs associated with closed or relocated restaurants.
General and Administrative Expenses. General and administrative expenses (“G&A”) are comprised of expenses
associated with corporate and administrative functions that support development and restaurant operations and provide
an infrastructure to support future growth including advertising costs incurred. G&A also includes legal fees, settlement
charges and share - based compensation expense related to executive officers, Support Center employees and market
44
partners and the realized and unrealized holding gains and losses related to the investments in our deferred compensation
plan.
Interest Expense (Income), Net. Interest expense (income), net includes interest expense on our debt or financing
obligations including the amortization of loan fees reduced by earnings on cash and cash equivalents.
Equity Income (Loss) from Unconsolidated Affiliates. Equity income (loss) includes our percentage share of net
income earned by unconsolidated affiliates. This includes our 5.0% to 10.0% equity interest in 24 franchise restaurants.
Additionally, we own a 40% equity interest in four non - Texas Roadhouse restaurants as part of a joint venture
agreement with a casual dining restaurant operator in China.
Net Income Attributable to Noncontrolling Interests. Net income attributable to noncontrolling interests represents
the portion of income attributable to the other owners of the majority - owned restaurants. Our consolidated subsidiaries
include 20 majority-owned restaurants for all periods presented.
2020 Financial Highlights
Total revenue decreased $358.0 million or 13.0% to $2.4 billion in 2020 compared to $2.8 billion in 2019. The
decrease was primarily due to a decrease in average unit volumes driven by a decrease in comparable restaurant sales.
While store weeks increased 2.7% in 2020, comparable restaurant sales decreased 14.2%. The decrease in average unit
volumes is primarily due to our dining rooms operating under various limited capacity restrictions due to the pandemic.
Also, the addition of the 53rd week in 2019 resulted in $59.0 million in restaurant and other sales.
Restaurant margin decreased $208.6 million or 44.0% to $265.6 million in 2020 compared to $474.2 million in
2019 and restaurant margin, as a percentage of restaurant and other sales, decreased to 11.2% in 2020 compared to
17.3% in 2019. The decrease in restaurant margin, as a percentage of restaurant and other sales, was due to lower sales
along with higher costs due to the pandemic. In addition, restaurant margin was pressured by an increase in To-Go sales
which typically result in a less profitable transaction. See further discussion of specific drivers included below.
Net income decreased $143.2 million or 82.1% to $31.3 million in 2020 compared to $174.5 million in 2019
primarily due to lower restaurant margin dollars partially offset by lower general and administrative expenses and an
income tax benefit. Diluted earnings per share decreased 81.8% to $0.45 from $2.46 in the prior year. Also, the addition
of the 53rd week in 2019 resulted in additional diluted earnings per share of $0.10 to $0.11.
45
Consolidated Statements of Income:
Revenue:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and expenses:
(As a percentage of restaurant and other sales)
Restaurant operating costs (excluding depreciation
and amortization shown separately below):
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(As a percentage of total revenue)
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense (income), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity (loss) income from investments in unconsolidated affiliates . .
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . . . . . . . .
Net income attributable to Texas Roadhouse, Inc. and subsidiaries . .
NM – Not meaningful
2020
$
Results of Operations
Fiscal Year
%
$
(In thousands)
2019
%
2,380,177
17,946
2,398,123
99.3
0.7
100.0
2,734,177
21,986
2,756,163
99.2
0.8
100.0
780,646
875,764
54,401
403,726
20,099
117,877
2,263
119,503
2,374,279
23,844
4,091
(500)
19,253
(15,672)
34,925
3,670
31,255
32.8
36.8
2.3
17.0
0.8
4.9
NM
5.0
99.0
1.0
0.2
(0.0)
0.8
(0.7)
1.5
0.2
1.3
883,357
905,614
52,531
418,448
20,156
115,544
(899)
149,389
2,544,140
212,023
(1,514)
378
213,915
32,397
181,518
7,066
174,452
32.3
33.1
1.9
15.3
0.7
4.2
NM
5.4
92.3
7.7
(0.1)
0.0
7.8
1.2
6.6
0.3
6.3
Reconciliation of Income from Operations to Restaurant Margin
Fiscal Year Ended
2020
2019
(In thousands, except per store week)
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 23,844
$ 212,023
Less:
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add:
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin $/store week . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin (as a percentage of restaurant and other
sales) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,946
21,986
20,099
117,877
2,263
119,503
$ 265,640
$ 9,773
11.2%
20,156
115,544
(899)
149,389
$ 474,227
$ 17,914
17.3%
46
Restaurant Unit Activity
Balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company openings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - International . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise closings - International . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
611
22
(1)
2
2
(2)
634
Texas
Roadhouse
581
18
(1)
2
2
(2)
600
Bubba’s 33 Jaggers
28
3
—
—
—
—
31
2
1
—
—
—
—
3
December 29, 2020 December 31, 2019
Company - Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Bubba’s 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Jaggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
503
31
3
69
28
634
484
28
2
69
28
611
47
Restaurant and Other Sales
Restaurant and other sales decreased 12.9% in 2020 compared to 2019. The following table summarizes certain key
drivers and/or attributes of restaurant sales at company restaurants for the periods presented. Company restaurant count
activity is shown in the restaurant unit activity table above.
Company Restaurants:
Increase in store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) increase in average unit volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (decrease) increase in restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other sales(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total (decrease) increase in restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2020
2019
2.7 %
(16.3)%
0.6 %
(13.0)%
0.1 %
(12.9)%
7.2 %
4.1 %
1.0 %
12.3 %
(0.1)%
12.2 %
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,181
26,473
(14.2)%
4.7 %
Texas Roadhouse restaurants only:
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,649
Average unit volume (in thousands), 2019 adjusted (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,649
(14.1)%
$ 5,555
$ 5,427
4.6 %
Weekly sales by group:
Comparable restaurants (453 and 430 units, respectively) . . . . . . . . . . . . . . . . . . . . . . . . 89,621
Average unit volume restaurants (20 and 22 units, respectively)(4) . . . . . . . . . . . . . . . . 84,485
Restaurants less than six months old (30 and 32 units, respectively) . . . . . . . . . . . . . . . 81,546
105,336
94,437
105,732
(1) Includes the impact of the year - over - year change in sales volume of all non - Texas Roadhouse restaurants, along
with Texas Roadhouse restaurants open less than six months before the beginning of the period measured, and, if
applicable, the impact of restaurants permanently closed or acquired during the period.
(2) Other sales, for 2020, represent $16.9 million related to the amortization of third-party gift card fees net of
$10.1 million related to the amortization of gift card breakage income. Other sales, for 2019, represent
$19.8 million related to the amortization of third-party gift card fees net of $10.7 million related to the amortization
of gift card breakage income. The decrease in amounts for 2020 is primarily due to a decrease in gift card sales and
redemptions.
(3) As 2019 contained 53 weeks, for comparative purposes, 2019 average unit volumes were adjusted to a 52-week
basis.
(4) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period
measured.
The decrease in restaurant sales for 2020 was primarily attributable to the decrease in average unit volumes, driven
by a decline in comparable restaurant sales, partially offset by an increase in store weeks. The decrease in comparable
restaurant sales was driven by the dining room closures and capacity restrictions due to the pandemic. In late March, all
of our domestic company and franchise restaurants were required to temporarily close their dining rooms and shifted to a
To-Go only model. Our expanded To-Go model, which includes a curbside and/or drive-up operating model, allows
guests to order via phone, through our mobile app, on-line, or once on site. As the dining rooms were allowed to re-
open, we implemented a hybrid operating model with limited capacity dining rooms together with enhanced To-Go,
which includes a curbside and/or drive-up operating model, as permitted by local guidelines. As of December 29, 2020,
82% of our company restaurants had their dining rooms operating under various limited capacity restrictions.
Our expanded To-Go model helped to offset the loss of dining room sales particularly at the onset of the pandemic
when all of our dining rooms were closed. In addition, we continued to see significant To-Go sales once our dining
rooms began to re-open. To-Go sales as a percentage of total restaurant sales were 27.0% in 2020 compared to 7.2% in
2019.
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In addition to our expanded To-Go model, we also added family value packs which include four entrées with an
assortment of sides, and ready-to-grill steaks and pork that allow customers to order their preferred cut of meat to
prepare at home. The majority of the sales around the family value packs and ready-to-grill occurred in the first half of
2020, when all of our dining rooms were closed. In total, these items represented less than 3% of restaurant sales for the
year.
As a result of the significant change in our operating model in the first half of 2020, including the offering of these
items, we do not believe that our per person average check and guest traffic counts provide a meaningful comparison to
the prior year period. As such, these amounts have not been disclosed for 2020.
In addition, in late October 2020 we implemented a menu price increase of approximately 1.0% which was the
only increase taken for 2020. We may take additional pricing in 2021 if needed.
We opened 22 company restaurants across all concepts in 2020. At the onset of the pandemic, we delayed
construction on all restaurants that were not substantially complete which decreased our planned store openings for the
year. We currently plan to open 25 to 30 company restaurants across all concepts in 2021. To the extent that state and
local guidelines begin to further reduce capacity at our restaurants, we could pull back on development and reduce
capital expenditures accordingly.
Franchise Royalties and Fees
Franchise royalties and fees decreased by $4.0 million or 18.4% compared to 2019 due to lower average unit
volume driven by comparable restaurant sales decreases at domestic and international franchise stores as well as the
impact of the 53rd week in 2019. Comparable restaurant sales at domestic and international franchise stores decreased
17.3% in 2020. These comparable restaurant sales decreases include the impact of international locations that were
temporarily closed during the year.
Additionally, in 2020, we waived royalties of $0.4 million for international franchisees in countries that were
significantly impacted by the pandemic. We also made royalty deferral arrangements for many of our domestic and
international franchisees. The majority of these royalty waiver and deferral arrangements were through the end of our
Q2 2020 fiscal quarter.
Our existing domestic franchise partners opened two Texas Roadhouse restaurants in 2020. In addition, our
existing international franchise restaurant partners opened two restaurants and closed two restaurants in 2020. We also
acquired two domestic franchise restaurants in the fourth quarter of 2020. We anticipate our existing franchise partners
will open as many as six Texas Roadhouse restaurants, primarily international, in 2021.
Food and Beverage Costs
Food and beverage costs, as a percentage of restaurant and other sales, increased to 32.8% in 2020 from 32.3% in
2019 primarily due to higher commodity inflation partially offset by a change in mix of items sold, including fewer
alcoholic beverages. Commodity inflation was 2.1% in 2020, primarily driven by higher beef costs.
For 2021, we expect commodity cost inflation of approximately 3.0%.
Restaurant Labor Expenses
Restaurant labor expense, as a percentage of restaurant and other sales, increased to 36.8% in 2020 compared to
33.1% in 2019. This increase was primarily due to higher wage rates, increased benefits provided to our employees
related to the pandemic, higher costs associated with health insurance, and a decrease in average unit volume. These
increases were partially offset by employee retention payroll tax credits of $7.0 million related to relief pay paid to our
hourly restaurant employees as well as a decrease in worker’s compensation costs.
Higher wage rates were due to a significant number of employees moving from a tipped wage rate to a non-tipped
wage rate due to the significant increase in To-Go sales. In addition, we incurred costs of $20.2 million for relief pay
and enhanced benefits for our hourly employees. The relief pay was based on their level of hours worked prior to the
pandemic and indexed for tenure. In addition, we enhanced certain sick pay and accrued vacation benefits and also
provided a premium holiday on health insurance. Higher health insurance costs were due to higher claim costs as well as
49
rate and enrollment increases. The increased claim costs, driven by unfavorable claims experience, resulted in
$3.8 million of unfavorable adjustments to our actuarial reserve estimate in 2020.
The employee retention payroll tax credit of $7.0 million was a credit made available through the CARES Act and
related to relief pay for our hourly employees that was paid throughout 2020. The decrease in workers’ compensation
expense was due to changes in our claims development history included in our Q3 2020 actuarial reserve estimate that
resulted in a favorable adjustment of $1.8 million.
Restaurant Rent Expense
Restaurant rent expense, as a percentage of restaurant and other sales, increased to 2.3% in 2020 compared to 1.9%
in 2019 due to the decrease in average unit volume and the benefit of the 53rd week in 2019 along with higher rent
expense, as a percentage of restaurant and other sales, at our newer restaurants.
Restaurant Other Operating Expenses
Restaurant other operating expenses, as a percentage of restaurant and other sales, increased to 17.0% in 2020 from
15.3% in 2019. This increase was due to a decrease in average unit volume, higher supplies expense and higher general
liability insurance expense partially offset by lower losses on remodeling projects, laundry and linen and advertising
expenses. Higher supplies expense was due to an increase in To-Go supplies, personal protective equipment, and other
costs to support our hybrid operating model throughout the year. The increase in general liability insurance expense was
due to changes in our claims development history included in our Q3 2020 actuarial reserve estimate that resulted in an
unfavorable adjustment of $1.4 million. This compared to a favorable adjustment of $1.1 million in 2019. In addition,
due to the significant decrease in our average unit volumes, expenses that are largely fixed, including utilities, property
taxes, and other outside services increased as a percentage of restaurant and other sales.
Restaurant Pre - opening Expenses
Pre-opening expenses decreased to $20.1 million in 2020 from $20.2 million in 2019. The change in pre-opening
expense is primarily driven by the number and timing of restaurant openings in a given year. Pre - opening costs will
typically fluctuate from period to period based on the specific pre - opening costs incurred for each restaurant, the number
and timing of restaurant openings and the number and timing of restaurant managers hired.
Depreciation and Amortization Expenses (“D&A”)
D&A, as a percentage of revenue, increased to 4.9% in 2020 compared to 4.2% in 2019. The increase was
primarily due to a decrease in average unit volume and higher depreciation at new restaurants partially offset by lower
accelerated depreciation. In 2019, our accelerated depreciation was higher due to the planned relocation of several
restaurants.
Impairment and Closure Costs, Net
Impairment and closure costs, net were $2.3 million and ($0.9) million in 2020 and 2019, respectively. In 2020,
impairment and closure costs, net included $1.2 million related to the impairment of the fixed assets and operating lease
right-of-use assets at four restaurants, all of which have relocated or are scheduled to be relocated. In addition, we
recorded goodwill impairment of $1.1 million related to two restaurants. In 2019, impairment and closure costs, net
included a gain of $2.6 million related to the forced relocation of one restaurant and $1.1 million related to the
impairment of the operating lease right-of-use asset at an underperforming restaurant.
General and Administrative Expenses (“G&A”)
G&A, as a percentage of total revenue, decreased to 5.0% in 2020 compared to 5.4% in 2019. The decrease was
primarily driven by lower incentive and performance-based compensation costs, lower managing partner conference
costs and lower travel costs partially offset by a decrease in average unit volume. Managing partner conference costs
were lower in 2020 due to the cancellation of our annual conference.
As a result of the pandemic, our executive and leadership teams voluntarily agreed to reductions of salary and bonus
for a portion of our 2020 fiscal year. Also, each non-employee member of our Board of Directors volunteered to forgo
their director and committee fees and any cash retainers for a portion of our 2020 fiscal year.
50
We are currently subject to various claims and contingencies that arise from time to time in the ordinary course of
business, including those related to litigation, business transactions, employee-related matters and taxes, among others.
See note 13 to the consolidated financial statements for further discussion of these matters.
Interest Expense (Income) Expense, Net
Interest expense was $4.1 million compared to interest income of $1.5 million in 2019. The increase in interest
expense was primarily driven by additional borrowings on our credit facility due to the pandemic along with reduced
earnings on our cash and cash equivalents.
Income Taxes
Our effective tax rate was a benefit of 81.4% in 2020 compared to expense of 15.1% in 2019. The benefit was
primarily due to the impact of FICA tip and Work opportunity tax credits on lower pre-tax income. Additionally, these
credits exceeded our federal tax liability in 2020 but we expect to utilize these credits in the future years or by carrying
back to our 2019 tax year.
Liquidity and Capital Resources
The following table presents a summary of our net cash provided by (used in) operating, investing and financing
activities (in thousands):
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . $ 230,438 $ 374,298
(214,820)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . . .
(261,724)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . $ 255,276 $ (102,246)
(161,105)
185,943
Fiscal Year
2020
2019
Net cash provided by operating activities was $230.4 million in 2020 compared to $374.3 million in 2019. This
decrease was primarily due to a decrease in net income and a decrease in deferred income taxes partially offset by
favorable changes in working capital. Working capital changes included the benefit of deferred payroll taxes related to
the CARES Act.
Our operations have not required significant working capital and like many restaurant companies we can operate
with negative working capital. Sales are primarily for cash, and restaurant operations do not require significant
inventories or receivables. In addition, we receive trade credit for the purchase of food, beverages and supplies, thereby
reducing the need for incremental working capital to support growth.
Net cash used in investing activities was $161.1 million in 2020 compared to $214.8 million in 2019. The decrease
is primarily due to a decrease in capital expenditures partially offset by the purchase of two franchise restaurants in
2020. The decrease in capital expenditures is primarily due to a delay in our development schedule due to the pandemic
and decreased expenditures due to the completion of the remodel of our Support Center office.
We require capital principally for the development of new company restaurants, the refurbishment or relocation of
existing restaurants and the acquisition of franchise restaurants, if any. We either lease our restaurant site locations under
operating leases for periods of five to 30 years (including renewal periods) or purchase the land when appropriate. As of
December 29, 2020, 148 of the 537 company restaurants have been developed on land which we own.
51
The following table presents a summary of capital expenditures (in thousands):
New company restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Refurbishment of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Relocation of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures related to Support Center office . . . . . . . . . . . . . . . . . . . . . . . . .
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2020
78,941 $
47,735
17,917
9,808
154,401 $
2019
99,957
63,548
25,131
25,704
214,340
At the onset of the pandemic, we delayed construction on all restaurants that were not substantially complete which
decreased our planned restaurant openings for the year. In addition, we delayed any projects on existing restaurants that
were not critical to their operations. In 2021, we expect our capital expenditures to be $210.0 million to $220.0 million
and we currently plan to open 25 to 30 company restaurants across all concepts. To the extent that state and local
guidelines begin to significantly reduce capacity and/or re-close dining rooms, we could pull back on development and
reduce capital expenditure spend accordingly.
Net cash provided by financing activities was $185.9 million in 2020 compared to net cash used in financing
activities of $261.7 million in 2019. The increase is primarily due to increased borrowings under our revolving credit
facility offset by a decrease in share repurchases and dividends paid.
In March 2020, we increased our borrowings by $190.0 million as a precautionary measure in order to bolster our
cash position and enhance financial flexibility. On May 11, 2020, we amended the revolving credit facility to increase
the amount available under the facility by $82.5 million and drew down $50.0 million of the increased amount. The
proceeds from these borrowings, which totaled $240.0 million, are being used for general corporate purposes, including,
without limitation, working capital, capital expenditures in the ordinary course of business, or other lawful corporate
purposes, all in accordance with and subject to the terms and conditions of the facility. If the pandemic continues to
adversely impact our business for a significant period of time, we may need to further increase the credit facility and/or
seek other sources of liquidity. There is no guarantee that we can increase the credit facility or that additional liquidity
will be readily available or available at favorable terms.
On May 31, 2019, our Board of Directors approved a stock repurchase program under which we may repurchase
up to $250.0 million of our common stock. This stock repurchase program has no expiration date and replaced a
previous stock repurchase program which was approved on May 22, 2014. All repurchases to date under our stock
repurchase programs have been made through open market transactions. The timing and the amount of any repurchases
will be determined by management under parameters established by the Board of Directors, based on an evaluation
of our stock price, market conditions and other corporate considerations. During 2020, we paid $12.6 million to
repurchase 252,409 shares of our common stock. On March 17, 2020, we suspended all share repurchase activity. As of
December 29, 2020, $147.8 million remains authorized for stock repurchases. We are currently evaluating when we will
resume the repurchase of shares.
On February 20, 2020, our Board of Directors authorized the payment of a cash dividend of $0.36 per share of
common stock. The payment of this dividend totaling $25.0 million was distributed on March 27, 2020 to shareholders
of record at the close of business on March 11, 2020. On March 24, 2020, the Board of Directors voted to suspend the
payment of quarterly cash dividends of the Company’s common stock, effective with respect to dividends occurring after
March 27, 2020. We are currently evaluating when we will resume the payment of cash dividends.
We paid distributions of $3.4 million and $6.4 million to equity holders of all of our 20 majority-owned company
restaurants in 2020 and 2019, respectively.
On August 7, 2017, we entered into the Amended and Restated Credit Agreement (the “Amended Credit
Agreement”) with respect to our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase
Bank, N.A., PNC Bank, N.A., and Wells Fargo Bank, N.A. The revolving credit facility remains an unsecured, revolving
credit agreement under which we may borrow up to $200.0 million with the option to increase the revolving credit
facility by an additional $200.0 million subject to certain limitations, including approval by the syndicate of lenders. On
May 11, 2020, we amended the revolving credit facility to provide for an incremental revolving credit facility of up to
$82.5 million. This amount reduced the additional $200.0 million that was available under the revolving credit facility.
The maturity date for the incremental revolving credit facility is May 10, 2021. The maturity date for the original
52
revolving credit facility remains August 5, 2022.
The terms of the amendment require us to pay interest on outstanding borrowings of the original revolving credit
facility at LIBOR plus a margin of 1.50% and to pay a commitment fee of 0.25% per year on any unused portion of the
revolving credit facility through the end of our Q1 2021 fiscal quarter. The amendment also provides an Alternate Base
Rate that may be substituted for LIBOR. As of December 29, 2020, we had $190.0 million outstanding on the original
revolving credit facility and $1.8 million of availability, net of $8.2 million of outstanding letters of credit. This
outstanding amount is included as long-term debt on our consolidated balance sheet.
The terms of the amendment also require us to pay interest on outstanding borrowings of the incremental revolving
credit facility at LIBOR, which is subject to a floor of 1.0%, plus a margin of 2.25% and to pay a commitment fee of
0.50% per year on any unused portion of the incremental revolving credit facility through the maturity date. As of
December 29, 2020, we had $50.0 million outstanding and $32.5 million of availability on the incremental revolving
credit facility. This outstanding amount is included as current maturities of long-term debt on our consolidated balance
sheet.
The weighted-average interest rate for the revolving credit facility as of December 29, 2020 was 1.98%.
The lenders’ obligation to extend credit pursuant to the Amended Credit Agreement depends on us maintaining
certain financial covenants. The amendment to the revolving credit facility also modified the financial covenants
through the end of our Q1 2021 fiscal quarter. We were in compliance with all financial covenants as of December 29,
2020.
Contractual Obligations
The following table summarizes the amount of payments due under specified contractual obligations as of
December 29, 2020 (in thousands):
Payments Due by Period
Less than
More than
Total
1 year
1 - 3 Years 3 - 5 Years
5 years
Long-term debt obligation, including current
—
maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,122
Obligation under finance lease . . . . . . . . . . . . . . . .
3,244
Interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
762,744
Operating lease obligations . . . . . . . . . . . . . . . . . . .
—
Capital obligations. . . . . . . . . . . . . . . . . . . . . . . . . .
Total contractual obligations(2) . . . . . . . . . . . . . . . $ 1,394,552 $ 206,154 $ 306,873 $ 113,415 $ 768,110
— $
—
571
112,844
—
240,000
2,122
10,287
1,046,273
95,870
190,000
—
2,389
114,484
—
—
4,083
56,201
95,870
50,000
$
$
(1) Includes interest on our revolving credit facility and interest on a finance lease. Uses interest rates on our revolving
credit facility as of December 29, 2020 for our variable rate debt. We assumed $240.0 million remains outstanding
on our revolving credit facility through the respective maturity for all borrowings. We assumed a constant interest
rate until maturity on our finance lease.
(2) Unrecognized tax benefits under ASC 740, Income Taxes, are not significant and excluded from this amount.
We have no material minimum purchase commitments with our vendors that extend beyond a year. See notes 5 and
8 to the consolidated financial statements for details of contractual obligations.
Off - Balance Sheet Arrangements
We do not have any off - balance sheet arrangements.
53
Guarantees
As of December 29, 2020 and December 31, 2019, we were contingently liable for $13.0 million and $13.9 million,
respectively, for seven leases, listed in the table below. These amounts represent the maximum potential liability of
future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment
agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of
December 29, 2020 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
Term Expiration
Everett, Massachusetts (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . September 2002 February 2023
Longmont, Colorado (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 2003 May 2029
Montgomeryville, Pennsylvania (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 2004 March 2026
Fargo, North Dakota (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 2006
July 2026
January 2009 August 2024
Logan, Utah (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Irving, Texas (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 December 2024
Louisville, Kentucky (3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 November 2023
Lease
Assignment Date
Current Lease
(1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those
restaurants. We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the
terms of the lease, if the franchisee defaults.
(2) As discussed in note 17 to the accompanying consolidated financial statements, this restaurant is owned in part by
our founder.
(3) Leases associated with non-Texas Roadhouse restaurants which were sold. The leases were assigned to the
acquirer, but we remain contingently liable under the terms of the lease if the acquirer defaults.
(4) We may be released from liability after the initial lease term expiration contingent upon certain conditions being
met by the acquirer.
Critical Accounting Policies and Estimates
The above discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses, and disclosures of contingent assets and liabilities. Our significant accounting policies are
described in note 2 to the accompanying consolidated financial statements. Critical accounting policies are those that we
believe are most important to portraying our financial condition and results of operations and also require the greatest
amount of subjective or complex judgments by management. Judgments or uncertainties regarding the application of
these policies may result in materially different amounts being reported under different conditions or using different
assumptions. We consider the following policies to be the most critical in understanding the judgments that are involved
in preparing the consolidated financial statements.
Impairment of Long - lived Assets. We evaluate long - lived assets related to each restaurant to be held and used in
the business, such as property and equipment, operating lease right-of-use assets and intangible assets subject to
amortization, for impairment whenever events and circumstances indicate that the carrying amount of a restaurant may
not be recoverable. For the purposes of this evaluation, we define the asset group at the individual restaurant level.
When we evaluate the restaurants, cash flows are the primary indicator of impairment. Recoverability of assets to be
held and used is measured by comparison of the carrying amount of the restaurant to estimated undiscounted future cash
flows expected to be generated by the restaurant. Under our policies, trailing 12 - month cash flow results under a
predetermined amount at the individual restaurant level signals a potential impairment. In our evaluation of restaurants
that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over
its estimated useful life, which can be a period of over 20 years. In the estimation of future cash flows, we consider the
period of time the restaurant has been open, the trend of operations over such period and future periods and expectations
for future sales growth. We limit assumptions about important factors such as trend of future operations and sales growth
to those that are supportable based upon our plans for the restaurant and actual results at comparable restaurants. Both
qualitative and quantitative information are considered when evaluating for potential impairments. As we assess the
ongoing expected cash flows and carrying amounts of our long - lived assets, these factors could cause us to realize a
material impairment charge.
54
If assets are determined to be impaired, we measure the impairment charge by calculating the amount by which the
asset carrying amount exceeds its estimated fair value. The determination of asset fair value is also subject to significant
judgment. We generally measure estimated fair value by discounting estimated future cash flows. When fair value is
measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe
hypothetical market participants would use. We also use a discount rate that is commensurate with the risk inherent in
the projected cash flows. If these assumptions change in the future, we may be required to record impairment charges for
these assets.
In 2020, as a result of our quarterly impairment analysis, we recorded a total charge of $1.2 million related to the
impairment of the fixed assets and operating lease right-of-use assets at four restaurants, all of which have relocated or
are scheduled to be relocated. See note 16 in the consolidated financial statements for further discussion regarding
closures and impairments recorded in 2020, 2019 and 2018.
Goodwill. Goodwill is tested annually for impairment and is tested more frequently if events and circumstances
indicate that the asset might be impaired. We have assigned goodwill to our reporting units, which we consider to be the
individual restaurant level. An impairment loss is recognized to the extent that the carrying amount exceeds the fair
value of the reporting unit. The determination of impairment consists of two steps. First, we determine the fair value of
the reporting unit and compare it to its carrying amount. The fair value of the reporting unit may be based on several
valuation approaches including capitalization of earnings, discounted cash flows, comparable public company market
multiples and comparable acquisition market multiples. Second, if the carrying amount of the reporting unit exceeds its
fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over
the fair value of the reporting unit.
The valuation approaches used to determine fair value are subject to key judgments and assumptions that are
sensitive to change such as judgments and assumptions about appropriate revenue growth rates, operating margins,
weighted average cost of capital, and comparable company and acquisition market multiples. In estimating the fair value
using the capitalization of earnings or discounted cash flows methods we consider the period of time the restaurant has
been open, the trend of operations over such period and future periods, expectations of future sales growth and terminal
value. Assumptions about important factors such as the trend of future operations and sales growth are limited to those
that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. When
developing these key judgments and assumptions, we consider economic, operational and market conditions that could
impact fair value. The judgments and assumptions used are consistent with what we believe hypothetical market
participants would use. However, estimates are inherently uncertain and represent only our reasonable expectations
regarding future developments. If the estimates used in performing the impairment test prove inaccurate, the fair value of
the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value
and indicating impairment has occurred.
At December 29, 2020, we had 73 reporting units, primarily at the restaurant level, with allocated goodwill of
$127.0 million. The average amount of goodwill associated with each reporting unit is $1.7 million with six reporting
units having goodwill in excess of $4.0 million. In connection with our annual impairment analysis, we recorded an
impairment charge of $1.1 million related to two restaurant reporting units. Since we determine the fair value of
goodwill at the restaurant level, any significant decreases in cash flows at these restaurants or others could further trigger
impairment charges in the future. The fair value of each of our reporting units, excluding the two in which we recorded
impairment charges in the current year, was substantially in excess of their respective carrying values as of the 2020
goodwill impairment test. See note 16 in the consolidated financial statements for further discussion regarding closures
and impairments recorded in 2020, 2019 and 2018.
Effects of Inflation
We have not operated in a period of high commodity inflation for the last several years; however, we have
experienced material increases in certain commodity costs, specifically beef, in the past. In addition, a significant
number of our employees are paid at rates related to the federal and/or state minimum or tipped wages and, accordingly,
increases in minimum or tipped wages have increased our labor costs for the last several years. We have increased menu
prices and made other adjustments over the past few years, in an effort to offset increases in our restaurant and operating
costs resulting from inflation. Whether we are able and/or choose to continue to offset the effects of inflation will
determine to what extent, if any, inflation affects our restaurant profitability in future periods.
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ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates on variable rate debt and changes in commodity
prices. Our exposure to interest rate fluctuations is limited to our outstanding bank debt. On May 11, 2020, we amended
the revolving credit facility to provide for an incremental revolving credit facility of up to $82.5 million and to modify
the financial covenants through the end of our Q1 2021 fiscal quarter. The terms of the amended revolving credit facility
require us to pay interest on outstanding borrowings at London Interbank Offering Rate (“LIBOR”) plus a margin of
1.50% and to pay a commitment fee of 0.25% per year on any unused portion of the revolving credit facility through the
end of our Q1 2021 fiscal quarter. The amendment also provides an Alternate Base Rate that may be substituted for
LIBOR. Subsequent to our Q1 2021 fiscal quarter, we are required to pay interest on outstanding borrowings at LIBOR
plus a margin of 0.875% to 2.25% and to pay a commitment fee of 0.125% to 0.40% depending on our consolidated net
leverage ratio. As of December 29, 2020, we had $190.0 million outstanding on our amended credit agreement. This
outstanding amount is included as long-term debt on our consolidated balance sheet.
The terms of the amendment also require us to pay interest on outstanding borrowings of the incremental revolving
credit facility at LIBOR, which is subject to a floor of 1.0%, plus a margin of 2.25% and to pay a commitment fee of
0.50% per year on any unused portion of the incremental revolving credit facility through the maturity date. As of
December 29, 2020, we had $50.0 million outstanding and $32.5 million of availability on the incremental revolving
credit facility. This outstanding amount is included as current maturities of long-term debt on our consolidated balance
sheet.
The weighted-average interest rate for the $240.0 million of combined borrowings on our revolving credit facility
as of December 29, 2020 was 1.98%. Should interest rates based on these variable rate borrowings increase by one
percentage point, our estimated annual interest expense would increase by $2.4 million.
In an effort to secure high quality, low cost ingredients used in the products sold in our restaurants, we employ
various purchasing and pricing contract techniques. When purchasing certain types of commodities, we may be subject
to prevailing market conditions resulting in unpredictable price volatility. For certain commodities, we may also enter
into contracts for terms of one year or less that are either fixed price agreements or fixed volume agreements where the
price is negotiated with reference to fluctuating market prices. We currently do not use financial instruments to hedge
commodity prices, but we will continue to evaluate their effectiveness. Extreme and/or long term increases in
commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive
reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our
ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not
to pass on the cost increases, our short - term financial results could be negatively affected.
We are subject to business risk as our beef supply is highly dependent upon three vendors. If these vendors were
unable to fulfill their obligations under their contracts, we may encounter supply shortages and incur higher costs to
secure adequate supplies, any of which would harm our business.
ITEM 8—FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
See Index to Consolidated Financial Statements at Item 15.
ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
56
ITEM 9A—CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant
to, and as defined in, Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended, as of the
end of the period covered by this report. Based on the evaluation, performed under the supervision and with the
participation of our management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the
“CFO”), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were
effective as of December 29, 2020.
Changes in internal control
There were no significant changes to the Company’s internal control over financial reporting that occurred during
the quarter ended December 29, 2020 that materially affected or are reasonably likely to materially affect, our internal
control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Under Section 404 of the Sarbanes - Oxley Act of 2002, our management is required to assess the effectiveness of
the Company’s internal control over financial reporting as of the end of each fiscal year and report, based on that
assessment, whether the Company’s internal control over financial reporting is effective.
Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting. As defined in Exchange Act Rule 13a - 15(f), internal control over financial reporting is a process
designed by, or under the supervision of, our principal executive and principal financial officers and effected by our
Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. Therefore, internal control over financial reporting determined to be effective can
provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all
misstatements.
Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the
effectiveness of the Company’s internal control over financial reporting as of the end of the period covered by this
report. In this assessment, the Company applied criteria based on the “Internal Control—Integrated Framework (2013)”
issued by the Committee of Sponsoring Organizations of the Treadway Commission. These criteria are in the areas of
control environment, risk assessment, control activities, information and communication, and monitoring. The
Company’s assessment included documenting, evaluating and testing the design and operating effectiveness of its
internal control over financial reporting. Based upon this evaluation, our management concluded that our internal control
over financial reporting was effective as of December 29, 2020.
KPMG LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements
included in the Annual Report on Form 10 - K, has also audited the effectiveness of the Company’s internal control over
financial reporting as of December 29, 2020 as stated in their report at F - 3.
ITEM 9B—OTHER INFORMATION
None.
57
PART III
ITEM 10—DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors is incorporated herein by reference to the information set forth under “Election
of Directors” in our Definitive Proxy Statement to be dated on or about April 2, 2021.
Information regarding our executive officers has been included in Part I of this Annual Report under the caption
“Executive Officers of the Company.”
Information regarding our corporate governance is incorporated herein by reference to the information set forth in
our Definitive Proxy Statement to be dated on or about April 2, 2021.
ITEM 11—EXECUTIVE COMPENSATION
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 2, 2021.
ITEM 12—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 2, 2021.
Equity Compensation Plan Information
As of December 29, 2020, shares of common stock authorized for issuance under our equity compensation plans are
summarized in the following table. See note 14 to the Consolidated Financial Statements for a description of the plans.
Plan Category
Plans approved by stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plans not approved by stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Shares to Be
Issued Upon
Available for
Vest Date (1) Future Grants
2,340,630
—
2,340,630
872,563
—
872,563
(1) Total number of shares consists of 793,563 restricted stock units and 79,000 performance stock units. Shares in this
column are excluded from the Shares Available for Future Grants column. No stock options were outstanding as of
December 29, 2020.
ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 2, 2021.
ITEM 14—PRINCIPAL ACCOUNTING FEES AND SERVICES
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 2, 2021.
58
ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1. Consolidated Financial Statements
PART IV
Description
Reports of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 29, 2020 and December 31, 2019 . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Comprehensive Income for the years ended December 29,
2020, December 31, 2019 and December 25, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the years ended December 29, 2020,
December 31, 2019 and December 25, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 29, 2020, December 31, 2019
and December 25, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page Number
in Report
F-1
F - 5
F - 6
F - 7
F - 8
F - 9
2. Financial Statement Schedules
Omitted due to inapplicability or because required information is shown in our Consolidated Financial Statements
or notes thereto.
3. Exhibits
Exhibit
No.
3.1
Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1
of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 28, 2016)
(File No. 000- 50972)
Description
3.2
Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S - 1 of
Registrant (File No. 333 - 115259))
4.1
4.2
Registration Rights Agreement, dated as of May 7, 2004, among Registrant and others (incorporated by
reference to Exhibit 4.3 to the Registration Statement on Form S - 1 of Registrant (File No. 333 - 115259))
Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on
Form 10-K for the year ended December 31, 2019 (File No. 000-50972))
10.1
Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to
Exhibit 10.9 to the Registration Statement on Form S - 1 of Registrant (File No. 333 - 115259))
10.2
Form of Limited Partnership Agreement and Operating Agreement for certain company - managed Texas
10.3
10.4
Roadhouse restaurants, including schedule of the owners of such restaurants and the aggregate interests held
by directors, executive officers and 5% stockholders who are parties to such an agreement (incorporated by
reference to Exhibit 10.10 to the Registration Statement on Form S - 1 of Registrant (File No. 333 - 115259))
Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse restaurant franchise,
including schedule of directors, executive officers and 5% stockholders which have entered into either
agreement (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S - 1 of
Registrant (File No. 333 - 115259))
Schedule of the owners of company - managed Texas Roadhouse restaurants and the aggregate interests held
by directors, executive officers and 5% stockholders who are parties to Limited Partnership Agreements and
Operating Agreements as of December 29, 2020 the form of which is set forth in Exhibit 10.2 of this
Form 10 - K
10.5
Schedule of the directors, executive officers and 5% stockholders which have entered into Franchise
Agreements or Preliminary Agreements for a Texas Roadhouse Franchise as of December 29, 2020 the
form of which is set forth in Exhibit 10.3 of this Form 10 - K
10.6*
Texas Roadhouse, Inc. 2013 Long - Term Incentive Plan (incorporated by reference from Appendix A to the
Texas Roadhouse, Inc. Proxy Statement on Schedule 14A filed with the Securities and Exchange
Commission on April 5, 2013 (File No. 000 - 50972))
59
Exhibit
No.
10.7*
Form of Restricted Stock Unit Award under the Texas Roadhouse, Inc. 2013 Long - Term Incentive Plan
(incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10 - Q for the quarter
ended June 25, 2013 (File No. 000 - 50972))
Description
10.8*
Texas Roadhouse, Inc. Cash Bonus Plan for cash incentive awards granted pursuant to the Texas
Roadhouse, Inc. 2013 Long - Term Incentive Plan (incorporated by reference to Exhibit 10.3 of Registrant’s
Quarterly Report on Form 10 - Q for the quarter ended June 25, 2013 (File No. 000 - 50972))
10.9*
Employment Agreement between the Registrant and W. Kent Taylor entered into as of December 26, 2017
(incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year
ended December 25, 2018 (File No. 000-50972))
10.10* Employment Agreement between the Registrant and S. Chris Jacobsen entered into as of December 26,
2017 (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the
year ended December 26, 2017 (File No. 000-50972))
10.11* Form of Performance Stock Unit Award Agreement under the Texas Roadhouse, Inc. 2013 Long - Term
Incentive Plan (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K
for the year ended December 29, 2015 (File No. 000-50972))
10.12* Employment Agreement between Texas Roadhouse Management Corp. and Tonya Robinson entered into as
of May 18, 2018 (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended June 26, 2018 (File No. 000-50972))
10.13* Employment Agreement between Texas Roadhouse Management Corp. and Doug Thompson entered into
as of August 23, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended September 25, 2018 (File No. 000-50972))
10.14* Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc.
2013 Long - Term Incentive Plan for officers (incorporated by reference to Exhibit 10.40 to the Registrant’s
Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972))
10.15* Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc.
2013 Long - Term Incentive Plan for non - officers (incorporated by reference to Exhibit 10.41 to the
Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972))
10.16* Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as
amended December 19, 2007 and December 31, 2008 (incorporated by reference to Exhibit 10.42 to the
Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972))
10.17* Third Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp.,
effective January 1, 2010 (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on
Form 10-K for the year ended December 30, 2014 (File No. 000-50972))
10.18* Form of Nonqualified Stock Option Agreement under Texas Roadhouse, Inc. 2013 Long-Term Incentive
Plan (incorporated by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the
year ended December 29, 2015 (File No. 000-50972))
10.19
Master Lease Agreement dated October 26, 2018 between Paragon Centre Holdings, LLC and Texas
10.20
10.23
Roadhouse Holdings LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report
on Form 10-Q for the quarter ended September 25, 2018 (File No. 000-50972))
Consent Decree dated March 31, 2017, among Texas Roadhouse, Inc., Texas Roadhouse Holdings LLC,
Texas Roadhouse Management Corp. and the EEOC (incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K dated March 31, 2017 (File No. 000-50972))
Amended and Restated Credit Agreement dated as of August 7, 2017, by and among Texas Roadhouse Inc.,
and the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 7, 2017
(File No. 000-50972))
10.24* Consulting Agreement and General Release of Claims between Scott M. Colosi and Texas Roadhouse, Inc.,
Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp. entered into July 3, 2019
(incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated July 3, 2019
(File No. 000-50972))
60
Exhibit
No.
Description
10.25* Executive Transition and Consulting Agreement between Celia Catlett and Texas Roadhouse, Inc., Texas
Roadhouse Holdings LLC and Texas Roadhouse Management Corp. entered into on August 21, 2019
(incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated August 21,
2019 (File No. 000-50972))
10.26
Assignment and Assumption Agreement between Texas Roadhouse Holdings LLC and Texas Roadhouse,
Inc. dated October 26, 2018 (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2019 (File No. 000-50972))
10.27
First Amendment to Paragon Centre Master Lease Agreement between Paragon Centre Holdings, LLC and
Texas Roadhouse, Inc. dated December 13, 2019 (incorporated by reference to Exhibit 10.28 to the
Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 000-50972))
10.28* First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and
W. Kent Taylor dated March 24, 2020 (incorporated by reference to Exhibit 10.1 the Registrant’s Current
Report on 8-K dated March 24, 2020 (File No. 000-50972))
10.29* First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and
Doug Thompson dated April 6, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current
Report on 8-K dated April 6, 2020 (File No. 000-50972))
10.30* First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and
S. Chris Jacobsen dated April 6, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current
Report on 8-K dated April 6, 2020 (File No. 000-50972))
10.31* First Amendment to 2018 Employment Agreement between Texas Roadhouse Management Corp. and
Tonya Robinson dated April 6, 2020 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current
Report on 8-K dated April 6, 2020 (File No. 000-50972))
10.32
First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020, by and among
Texas Roadhouse, Inc., and the lenders named therein and JPMorgan Chase Bank, N.A. as Administrative
Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on 8-K dated May 11,
2020 (File No. 000-50972))
10.33* Employment Agreement between Registrant and Gerald L. Morgan entered into as of December 17, 2020
10.34* Employment Agreement between Registrant and W. Kent Taylor entered into as of December 30, 2020
10.35* Employment Agreement between Registrant and Doug Thompson entered into as of December 30, 2020
10.36* Employment Agreement between Registrant and S. Chris Jacobsen entered into as of December 30, 2020
10.37* Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020
21.1
23.1
31.1
31.2
32.1
List of Subsidiaries
Consent of KPMG LLP, Independent Registered Public Accounting Firm
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes - Oxley Act of 2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002
101
The following financial statements from the Texas Roadhouse, Inc. Annual Report on Form 10 - K for the
year ended December 29, 2020, filed February 26, 2021, formatted in inline eXtensible Business Reporting
Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and
Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated
Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
104
Cover page, formatted in iXBRL and contained in Exhibit 101.
61
* Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10 - K.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
62
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
TEXAS ROADHOUSE, INC.
By:
/s/ W. KENT TAYLOR
W. Kent Taylor
Chairman of the Company, Chief Executive
Officer, Director
Date: February 26, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ W. KENT TAYLOR
W. Kent Taylor
/s/ TONYA R. ROBINSON
Tonya R. Robinson
/s/ MICHAEL A. CRAWFORD
Michael A. Crawford
/s/ GREGORY N. MOORE
Gregory N. Moore
/s/ CURTIS A. WARFIELD
Curtis A. Warfield
/s/ KATHLEEN M. WIDMER
Kathleen M. Widmer
/s/ JAMES R. ZARLEY
James R. Zarley
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
February 26, 2021
Chairman of the Company, Chief
Executive Officer, Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
Director
Director
Director
Director
Director
63
(This page has been left blank intentionally.)
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Texas Roadhouse, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Texas Roadhouse, Inc. and subsidiaries (the
Company) as of December 29, 2020 and December 31, 2019, the related consolidated statements of income and
comprehensive income, stockholders’ equity, and cash flows for each of the years in the three - year period ended
December 29, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 29, 2020 and December 31, 2019, and the results of its operations and its cash flows for each of the years in
the three - year period ended December 29, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 29, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated February 26, 2021 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, effective December 26, 2018, the Company changed
its method of accounting for leases due to the adoption of Financial Accounting Standards Board Accounting
Standard Codification Topic 842, Leases.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Potential indicators of impairment of long-lived assets
As discussed in Notes 2 and 16 to the consolidated financial statements, the Company assesses long-lived
assets, primarily related to restaurants held and used in the business, including property and equipment and
F-1
right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the
carrying amount of a restaurant, or asset group, may not be recoverable. Trailing 12-month cash flows under
predetermined amounts at the individual restaurant level are the Company’s primary indicator that the carrying
amount of a restaurant may not be recoverable. Property and equipment, net of accumulated depreciation, and
the operating lease right-of-use asset, net as of December 29, 2020 were $1,088.6 million and $530.6 million,
respectively.
We identified the assessment of the Company’s determination of potential indicators of impairment of long-
lived assets as a critical audit matter. Subjective auditor judgement was required to evaluate the events or
circumstances indicating the carrying amount of an asset group may not be recoverable, including the
determination of the cash flow thresholds, the utilization of the trailing 12-month cash flows to identify a
potential impairment trigger, and the consideration of the impact of the pandemic on the Company’s cash flows.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls over the Company’s long-lived asset
impairment process, including controls relating to determination and identification of potential indicators of
impairment. We evaluated the Company’s methodology of using trailing 12-month cash flow results under
predetermined thresholds at the individual restaurant level as a potential indicator of impairment. Specifically,
we evaluated the Company’s assessment of the factors considered, including the cash flows at the individual
restaurant level and the cash flow thresholds used in the Company’s analysis, as well as the impact of the
pandemic. We tested that those restaurants with trailing 12-month cash flows were evaluated for potential
impairment triggers and we compared the trailing 12-month cash flows to historical financial data. We also
assessed other events and circumstances that could have been indicative of a potential impairment trigger by
reviewing management’s development reports and related meeting minutes and the board of directors meeting
minutes.
/s/ KPMG LLP
We have served as the Company’s auditor since 1998.
Louisville, Kentucky
February 26, 2021
F-2
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Texas Roadhouse, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Texas Roadhouse, Inc. and subsidiaries (the Company) internal control over financial reporting as of
December 29, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 29, 2020, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 29, 2020 and December 31, 2019, the
related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of
the years in the three-year period ended December 29, 2020, and the related notes (collectively, the consolidated
financial statements), and our report dated February 26, 2021 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
F-3
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ KPMG LLP
Louisville, Kentucky
February 26, 2021
F-4
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 29, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Receivables, net of allowance for doubtful accounts of $11 at December 29, 2020 and
$12 at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $763,700 at December 29, 2020
and $678,988 at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of accumulated amortization of $14,341 at December 29, 2020 and
$14,141 at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue-gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued wages and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock and other deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:
Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or
outstanding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock ($0.001 par value, 100,000,000 shares authorized, 69,561,861 and
69,400,252 shares issued and outstanding at December 29, 2020 and December 31, 2019,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
363,155 $
107,879
98,418
22,364
4,502
22,212
510,651
99,305
20,267
2,015
18,433
247,899
1,088,623
530,625
127,001
1,056,563
499,801
124,748
2,271
65,990
2,325,161 $
1,234
53,320
1,983,565
19,271 $
50,000
66,977
232,812
51,982
2,859
24,751
57,666
506,318
572,171
190,000
7,481
2,802
103,338
1,382,110
17,263
—
61,653
209,258
39,699
—
30,433
58,914
417,220
538,710
—
8,249
22,695
65,522
1,052,396
—
—
70
145,626
781,915
(106)
927,505
15,546
943,051
2,325,161 $
69
140,501
775,649
(225)
915,994
15,175
931,169
1,983,565
See accompanying notes to Consolidated Financial Statements.
F-5
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share data)
Fiscal Year Ended
December 29, December 31, December 25,
2019
2018
2020
Revenue:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,380,177 $ 2,734,177 $ 2,437,115
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,334
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,457,449
Costs and expenses:
21,986
2,756,163
17,946
2,398,123
Restaurant operating costs (excluding depreciation and
amortization shown separately below):
Food and beverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense (income), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity (loss) income from investments in unconsolidated affiliates . . . . . . .
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to noncontrolling interests . . . . . . . . . . . . . . .
Net income attributable to Texas Roadhouse, Inc. and subsidiaries . . . . . . . $
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of ($40), ($1) and $53,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net income per common share attributable to Texas Roadhouse, Inc. and
subsidiaries:
780,646
875,764
54,401
403,726
20,099
117,877
2,263
119,503
2,374,279
23,844
4,091
(500)
19,253
(15,672)
34,925
3,670
795,300
883,357
793,384
905,614
48,791
52,531
375,477
418,448
19,051
20,156
101,216
115,544
278
(899)
136,163
149,389
2,269,660
2,544,140
187,789
212,023
591
(1,514)
1,353
378
188,551
213,915
24,257
32,397
164,294
181,518
6,069
7,066
31,255 $ 174,452 $ 158,225
119
(189)
31,374 $ 174,455 $ 158,036
3
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.45 $
0.45 $
2.47 $
2.46 $
2.21
2.20
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
69,438
69,893
70,509
70,916
0.36 $
1.20 $
71,467
71,964
1.00
See accompanying notes to Consolidated Financial Statements.
F-6
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
(tabular amounts in thousands, except share data)
Accumulated Total Texas
Additional
Par
Paid-in-
Value Capital
Retained
Earnings
Other
Comprehensive
Loss
Roadhouse, Inc.
and
Subsidiaries
Noncontrolling
Interests
Total
Shares
Balance, December 26, 2017 . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax . . . . . . .
Noncontrolling interests contribution . . . . . . .
Distributions to noncontrolling interest holders
Acquisition of noncontrolling interest . . . . . .
Contribution from executive officer . . . . . . . .
Dividends declared ($1.00 per share) . . . . . . .
Shares issued under share-based compensation
plans including tax effects . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of adoption of ASC 606,
Revenue from Contracts with Customers, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . .
Balance, December 25, 2018 . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax . . . . .
Distributions to noncontrolling interest holders
Acquisition of noncontrolling interest and other
Dividends declared ($1.20 per share) . . . . . . .
Shares issued under share-based compensation
plans including tax effects . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . .
Cumulative effect of adoption of ASC 842,
Leases, net of tax . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . .
Balance, December 31, 2019 . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax . . . . .
Noncontrolling interests contribution . . . . . . .
Distributions to noncontrolling interest holders
Dividends declared ($0.36 per share) . . . . . . .
Shares issued under share-based compensation
plans including tax effects . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . .
Share-based compensation . . . . . . . . . . . . . .
Balance, December 29, 2020 . . . . . . . . . . . . .
71,168,897 $ 71 $ 236,548 $ 602,499 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(75)
1,000
—
158,225
—
—
—
(71,509)
684,804
1
(1)
(236,191)
—
(14,067)
—
—
(39) $
—
(189)
—
—
—
—
—
839,079 $
158,225
(189)
—
—
(75)
1,000
(71,509)
12,312 $ 851,391
164,294
6,069
(189)
—
2,551
2,551
(5,746)
(5,746)
(122)
(47)
1,000
—
(71,509)
—
—
—
—
(14,067)
—
(14,067)
—
—
—
—
—
33,983
(878)
—
71,617,510 $ 72 $ 257,388 $ 688,337 $
—
—
—
—
—
—
—
—
—
—
617,395
—
—
—
—
(70)
—
—
(209,408)
(2,625,245)
—
(3)
(12,471)
(139,846)
174,452
—
—
—
(84,462)
—
—
—
—
—
—
—
—
35,500
(2,678)
—
69,400,252 $ 69 $ 140,501 $ 775,649 $
—
—
—
—
—
—
—
—
—
—
615,181
1
—
—
—
—
—
(1)
(201,163)
(252,409)
—
—
—
—
(11,684)
(12,621)
29,431
31,255
—
—
—
(24,989)
—
—
—
—
69,561,861 $ 70 $ 145,626 $ 781,915 $
—
—
(228) $
—
3
—
—
—
(878)
33,983
945,569 $
174,452
3
—
(70)
(84,462)
—
—
—
—
(12,471)
(139,849)
—
—
(225) $
—
119
—
—
—
(2,678)
35,500
915,994 $
31,255
119
—
—
(24,989)
—
—
(878)
33,983
15,139 $ 960,708
181,518
7,066
3
—
(6,357)
(6,357)
(743)
(673)
(84,462)
—
—
—
—
—
(12,471)
(139,849)
—
—
(2,678)
35,500
15,175 $ 931,169
34,925
3,670
119
—
133
133
(3,432)
(3,432)
(24,989)
—
—
—
—
—
—
—
—
(106) $
(11,684)
(12,621)
29,431
927,505 $
—
—
—
(11,684)
(12,621)
29,431
15,546 $ 943,051
See accompanying notes to Consolidated Financial Statements.
F-7
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
December 29, December 31, December 25,
2019
2020
2018
$
34,925 $
181,518 $
164,294
Cash flows from operating activities:
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposition of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contribution from executive officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity loss (income) from investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . .
Distributions of income received from investments in unconsolidated affiliates . . . . . . . . . . . .
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating working capital:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue—gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued wages and payroll taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes and income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets and lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
117,877
(19,932)
3,144
2,290
—
500
329
(1)
29,431
1,058
(2,017)
(2,133)
(12,698)
490
23,458
12,283
372
(5,700)
4,099
4,635
—
38,028
230,438
115,544
6,335
5,885
(1,283)
—
(378)
1,837
(22)
35,500
(5,774)
(1,414)
(2,049)
(12,823)
407
16,991
5,540
5,554
5,802
(3,773)
5,826
—
15,075
374,298
Cash flows from investing activities:
Capital expenditures—property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of franchise restaurants, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale leaseback transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(154,401)
(10,580)
1,709
2,167
(161,105)
(214,340)
(1,536)
1,056
—
(214,820)
Cash flows from financing activities:
Proceeds from revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from noncontrolling interest contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interest holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Repayments) proceeds from restricted stock and other deposits, net . . . . . . . . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents—beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents—end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures included in current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
240,000
(641)
133
(3,432)
—
(823)
(11,684)
(12,621)
—
(24,989)
185,943
255,276
107,879
363,155 $
—
—
—
(6,357)
(743)
62
(12,471)
(139,849)
—
(102,366)
(261,724)
(102,246)
210,125
107,879 $
3,890 $
3,776 $
14,808 $
738 $
20,440 $
15,416 $
896
20,519
7,332
101,216
12,319
6,008
105
1,000
(1,353)
656
(9)
33,983
(15,597)
(2,495)
(3,023)
(4,290)
8,882
35,519
4,481
(8,581)
2,634
7,569
—
5,938
3,612
352,868
(155,980)
(2,165)
—
—
(158,145)
—
—
2,551
(5,746)
(122)
418
(14,067)
—
(50,000)
(68,550)
(135,516)
59,207
150,918
210,125
See accompanying notes to Consolidated Financial Statements.
F-8
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(1) Description of Business
The accompanying Consolidated Financial Statements include the accounts of Texas Roadhouse, Inc. (“TRI”), our
wholly - owned subsidiaries and subsidiaries in which we have a controlling interest (collectively, the “Company,” “we,”
“our” and/or “us”) as of December 29, 2020 and December 31, 2019 and for each of the years in the three-year period
ended December 29, 2020.
As of December 29, 2020, we owned and operated 537 restaurants and franchised an additional 97 restaurants in
49 states and ten foreign countries. Of the 537 company restaurants that were operating at December 29, 2020, 517 were
wholly - owned and 20 were majority - owned. Of the 97 franchise restaurants, 69 were domestic and 28 were international
restaurants.
As of December 31, 2019, we owned and operated 514 restaurants and franchised an additional 97 restaurants in
49 states and ten foreign countries. Of the 514 company restaurants that were operating at December 31, 2019, 494 were
wholly - owned and 20 were majority - owned. Of the 97 franchise restaurants, 69 were domestic and 28 were international
restaurants.
Risks and Uncertainties
The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic (the “pandemic”). On
March 13, 2020, the pandemic was declared a National Public Health Emergency. Shortly after the national emergency
declaration, state and local officials began placing restrictions on restaurants, some of which allowed To-Go or curbside
service only while others limited capacity in the dining room. By late March all of our domestic company and franchise
restaurants were under state or local order which only allowed for To-Go or curbside service. Beginning in early May
2020, state and local guidelines began to allow dining rooms to re-open, typically at a limited capacity. While all of our
dining rooms were able to re-open in some capacity, many were required to close again in areas more severely impacted
by the pandemic. As of December 29, 2020, 82% of our company restaurants had their dining rooms operating under
various limited capacity restrictions. Our remaining restaurants were limited to outdoor and/or To-Go or curbside
service only.
In response to the impact of the pandemic on our restaurant operations, we have developed a hybrid operating
model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside
and/or drive-up operating model, as permitted by local guidelines. This includes design changes to our building to better
accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed. We also have
installed booth partitions in all of our restaurants as an added safety measure for our guests. In addition, we have
increased our already strict sanitation requirements, are conducting daily health and temperature checks for all
employees before they begin their shift and are requiring personal protective equipment to be worn by all restaurant
employees at all times. As we work through the local regulations at each of our locations, the safety of our employees
and guests remains our top priority.
As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in
traffic which has impacted our operating results. While the majority of our dining rooms have re-opened, a significant
portion continue to operate under capacity restrictions that severely limit the number of guests we can serve. In addition,
while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do
not expect these sales will generate a similar profit margin and cash flows to our normal operating model. We expect
our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and
our dining rooms can operate at full capacity. We cannot predict how long the pandemic will last, how long it will take
until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again. In
addition, we cannot predict the overall impact on the economy or consumer spending habits. The extent of these dining
room restrictions and temporary closures will determine the significance of the impact to our financial condition,
financial results, and liquidity in future periods. In addition, significant items subject to estimates and assumptions
including the carrying amount of property and equipment, goodwill, and lease related assets could be impacted.
F-9
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation
As of December 29, 2020 and December 31, 2019, we owned a 5.0% to 10.0% equity interest in 24 restaurants.
Additionally, as of December 29, 2020 and December 31, 2019, we owned a 40% equity interest in four non-Texas
Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China. The
unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates
are included in other assets in our consolidated balance sheets, and we record our percentage share of net income earned
by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under equity
(loss) income from investments in unconsolidated affiliates. All significant intercompany balances and transactions for
these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.
(b) Fiscal Year
We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December. We utilize a
13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter
contains 14 weeks. Fiscal years 2020 and 2018 were 52 weeks in length and fiscal year 2019 was 53 weeks in length. In
fiscal year 2019, the 53rd week added $59.0 million to restaurant and other sales and $0.10 to $0.11 to diluted earnings
per share in our consolidated statements of income and comprehensive income.
(c) Cash and Cash Equivalents
We consider all highly liquid debt instruments with original maturities of three months or less to be cash
equivalents. Cash and cash equivalents also included receivables from credit card companies, which amounted to
$18.1 million and $22.4 million at December 29, 2020 and December 31, 2019, respectively, because the balances are
settled within two to three business days.
(d) Receivables
Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for
reimbursement of labor costs, pre - opening and other expenses, and franchise restaurants for royalty fees.
Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is
our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the
allowance based on historical write - off experience. We review our allowance for doubtful accounts quarterly. Past due
balances over 120 days are reviewed individually for collectability. Account balances are charged off against the
allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
(e) Inventories
Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first - in,
first - out) or net realizable value.
(f) Property and Equipment
Property and equipment are stated at cost. Expenditures for major renewals and betterments are capitalized while
expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed on property and
equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related
assets or the underlying lease term using the straight - line method. In most cases, assets on leased properties are
depreciated over a period of time which includes both the initial term of the lease and one or more option periods. See
note 2(g) for further discussion of leases.
F-10
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
The estimated useful lives are:
Land improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 25 years
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 - 25 years
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 10 years
The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of
authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net.
Repairs and maintenance expense amounted to $25.2 million, $27.9 million and $29.7 million for the years ended
December 29, 2020, December 31, 2019 and December 25, 2018, respectively. These costs are included in other
operating costs in our consolidated statements of income and comprehensive income.
(g) Leases
We lease land and/or buildings for the majority of our restaurants under non-cancelable lease agreements which
have initial terms and one or more option periods. In addition, certain of these leases contain pre-determined fixed
escalations of the minimum rent over the lease term.
Beginning in 2019 with the adoption of ASC 842, Leases, we recognize operating lease right-of-use assets and
operating lease liabilities for these leases based on the present value of the lease payments over the lease term. In
addition, for those leases with fixed escalations, we recognize the related rent expense on a straight-line basis over the
lease term. See note 8 for further discussion of leases.
(h) Goodwill
Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with the
provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350,
Intangibles—Goodwill and Other (“ASC 350”), we perform tests to assess potential impairments at the reporting unit
level, which we define as the individual restaurant level. These tests are performed on an annual basis, or sooner if an
event or other circumstance indicates that goodwill may be impaired. Prior to 2019, this annual assessment occurred at
the end of each fiscal year. In 2019, we changed the annual assessment date to the beginning of our fourth quarter. As
our primary indicator of impairment is a decrease in cash flows and because we have a significant number of reporting
units with goodwill, an earlier evaluation date allows us to more timely identify potential impairments. This change was
not due to any goodwill impairment concerns within any of our reporting units. In addition, we determined this did not
represent a material change to a method of applying an accounting principle.
The determination of impairment consists of two steps. First, we determine the fair value of the reporting unit and
compare it to its carrying amount. The fair value of the reporting unit may be based on several valuation approaches
including capitalization of earnings, discounted cash flows, comparable public company market multiples and
comparable acquisition market multiples. Second, if the carrying amount of the reporting unit exceeds its fair value, an
impairment loss is recognized for any excess of the carrying amount over the fair value of the reporting unit.
The valuation approaches used to determine fair value are subject to key judgments and assumptions that are
sensitive to change such as judgments and assumptions about appropriate revenue growth rates, operating margins,
weighted average cost of capital and comparable company and acquisition market multiples. In estimating the fair value
using the capitalization of earnings method or discounted cash flows, we consider the period of time the restaurant has
been open, the trend of operations over such period and future periods, expectations of future sales growth and terminal
value. Assumptions about important factors such as the trend of future operations and sales growth are limited to those
that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. When
developing these key judgments and assumptions, we consider economic, operational and market conditions that could
impact fair value. The judgments and assumptions used are consistent with what we believe hypothetical market
F-11
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
participants would use. However, estimates are inherently uncertain and represent only our reasonable expectations
regarding future developments. If the estimates used in performing the impairment test prove inaccurate, the fair value
of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair
value and resulting in an impairment.
In 2020, as a result of our annual goodwill impairment analysis, we recorded goodwill impairment of $1.1 million
related to two reporting units. In 2019 and 2018, we determined that there was no goodwill impairment. Refer to note 7
for additional information related to goodwill and intangible assets.
(i) Other Assets
Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates and
deposits. For further discussion of the deferred compensation plan, see note 15.
(j) Impairment or Disposal of Long - lived Assets
In accordance with ASC 360, Property, Plant and Equipment, long-lived assets related to each restaurant to be held
and used in the business, such as property and equipment, operating lease right-of-use assets and intangible assets
subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of a restaurant may not be recoverable. For the purposes of this evaluation, we define the asset group at
the individual restaurant level. When we evaluate the restaurants, cash flows are the primary indicator of impairment.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant to
estimated undiscounted future cash flows expected to be generated by the restaurant. Under our policies, trailing
12- month cash flow results under a predetermined amount at the individual restaurant level signals potential impairment.
In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows
from operating the restaurant over its estimated useful life, which can be for a period of over 20 years. In the estimation
of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such
period and future periods and expectations of future sales growth. Assumptions about important factors such as the trend
of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and
actual results at comparable restaurants. If the carrying amount of the restaurant exceeds its estimated undiscounted
future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the
estimated fair value of the assets. We generally measure fair value by discounting estimated future cash flows. When
fair value is measured by discounting estimated future cash flows, the assumptions used are consistent with what we
believe hypothetical market participants would use. We also use a discount rate that is commensurate with the risk
inherent in the projected cash flows. The adjusted carrying amounts of assets to be held and used are depreciated over
their remaining useful life. See note 16 for further discussion of amounts recorded as part of our impairment analysis.
(k) Insurance Reserves
We self - insure a significant portion of expected losses under our health, workers’ compensation, general liability,
employment practices liability, and property insurance programs. We purchase insurance for individual claims that
exceed the retention amounts listed below:
Employment practices liability/Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers’ compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$500,000 / $2,500,000
$350,000
$1,000,000
$250,000
$350,000
We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on
historical experience. The estimated liability is based on a number of assumptions and factors regarding economic
F-12
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
conditions, the frequency and severity of claims and claim development history and settlement practices. Our
assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances.
(l) Segment Reporting
We consider our restaurant and franchising operations as similar and have aggregated them into a single
reportable segment. The majority of the restaurants operate in the U.S. within the casual dining segment of the restaurant
industry, providing similar products to similar customers. The restaurants also possess similar pricing structures,
resulting in similar long - term expected financial performance characteristics. As of December 29, 2020, we operated
537 restaurants, each as a single operating segment, and franchised an additional 97 restaurants. Revenue from external
customers is derived principally from food and beverage sales. We do not rely on any major customers as a source of
revenue.
(m) Revenue Recognition
We recognize revenue from restaurant sales when food and beverage products are sold. Deferred revenue primarily
represents our liability for gift cards that have been sold, but not yet redeemed. When the gift cards are redeemed, we
recognize restaurant sales and reduce deferred revenue. We also recognize revenue from our franchising of Texas
Roadhouse restaurants. This includes franchise royalties, initial and upfront franchise fees, fees paid to our domestic
marketing and advertising fund, and fees for supervisory and administrative services.
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers. This ASC requires
an entity to allocate the transaction price received from customers to each separate and distinct performance obligation
and recognize revenue as these performance obligations are satisfied. We recognize sales-based royalties as franchise
restaurant sales occur. For initial and upfront franchise fees from international development agreements, because the
services we provide related to these fees do not contain separate and distinct performance obligations from the franchise
right, these fees are recognized on a straight-line basis over the term of the associated franchise agreement. For further
discussion of revenue, see note 3.
(n) Income Taxes
We account for income taxes in accordance with ASC 740, Income Taxes, under which deferred assets and
liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial
statement carrying values of assets and liabilities and their respective tax bases. We recognize both interest and penalties
on unrecognized tax benefits as part of income tax expense. A valuation allowance is established to reduce the carrying
value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in
the valuation allowance would be charged to income in the period such determination was made. For all years presented,
no valuation allowances have been recorded.
(o) Advertising
We have a domestic system - wide marketing and advertising fund. We maintain control of the marketing and
advertising fund and, as such, have consolidated the fund’s activity for all the years presented. Domestic company and
franchise restaurants are required to remit a designated portion of sales, currently 0.3%, to the advertising fund.
Advertising contributions related to company restaurants are recorded as a component of other operating costs.
Advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in
our consolidated statements of income and comprehensive income.
Other costs related to local restaurant area marketing initiatives are included in other operating costs in our
consolidated statements of income and comprehensive income. These costs and the company restaurant contribution
amounted to $13.8 million, $18.3 million and $17.1 million for the years ended December 29, 2020, December 31, 2019
and December 25, 2018, respectively.
F-13
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(p) Pre - opening Expenses
Pre - opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening
of a new or relocated restaurant and are comprised principally of opening team and training team compensation and
benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.
(q) Use of Estimates
We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of
revenue and expenses during the period to prepare these consolidated financial statements in conformity with GAAP.
Significant items subject to such estimates and assumptions include the carrying amount of property and equipment,
goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card breakage
and third party fees and income taxes. Actual results could differ from those estimates.
(r) Comprehensive Income
ASC 220, Comprehensive Income, establishes standards for reporting and the presentation of comprehensive
income and its components in a full set of financial statements. Comprehensive income consists of net income and
foreign currency translation adjustments which are excluded from net income under GAAP. Foreign currency
translation adjustment represents the unrealized impact of translating the financial statements of our foreign investment.
This amount is not included in net income and would only be realized upon the disposition of our investment.
(s) Fair Value of Financial Instruments
Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly
transaction between market participants on the measurement date. We use a three-tier fair value hierarchy based upon
observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair
value. Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to note 15 for
further discussion of fair value measurement.
(t) Recent Accounting Pronouncements
Financial Instruments
(Accounting Standards Update 2016-13, “ASU 2016-13”)
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments, which requires measurement and recognition of expected versus incurred losses
for financial assets held. We adopted ASU 2016-13 as of the beginning of our 2020 fiscal year. The adoption of this
standard did not have a significant impact on our consolidated financial statements.
F-14
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Goodwill
(Accounting Standards Update 2017-04, “ASU 2017-04”)
In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the
Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment and is expected to reduce the
cost and complexity of accounting for goodwill. ASU 2017-04 removes Step 2 of the goodwill impairment test,
which requires a hypothetical purchase price allocation. Instead, goodwill impairment will be the amount by which a
reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. We adopted
ASU 2017- 04 as of the beginning of our 2020 fiscal year. The adoption of this standard did not have a significant
impact on our consolidated financial statements.
Fair Value Measurement
(Accounting Standards Update 2018-13, “ASU 2018-13”)
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework –
Changes to the Disclosure Requirements for Fair Value Measurement, which changes disclosure requirements for fair
value measurements. We adopted ASU 2018-13 as of the beginning of our 2020 fiscal year. The adoption of this
standard did not have a significant impact on our consolidated financial statements.
Income Taxes
(Accounting Standards Update 2019-12, “ASU 2019-12”)
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes, which removes certain exceptions related to the approach for intraperiod tax allocations, the calculation
of income taxes in interim periods, and the recognition of deferred taxes for investments. This guidance also simplifies
aspects of accounting for recognizing deferred taxes for taxable goodwill. ASU 2019-12 is effective for fiscal years
beginning after December 15, 2020 (our 2021 fiscal year) and for interim periods within those years, with early adoption
permitted. We are currently assessing the impact of this new standard on our consolidated financial statements.
Reference Rate Reform
(Accounting Standards Update 2020-04, “ASU 2020-04”)
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the
current guidance on contract modifications and hedge accounting. These changes are intended to simplify the market
transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference
rates. This guidance is effective upon issuance to modifications made as early as the beginning of the interim period
through December 31, 2022. We are currently assessing the impact of this new standard on our consolidated financial
statements.
(3) Revenue
The following table disaggregates our revenue by major source (in thousands):
December 29,
2020
Fiscal Year Ended
December 31,
2019
December 25,
2018
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,380,177 $ 2,734,177 $ 2,437,115
Franchise royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,443
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,891
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,398,123 $ 2,756,163 $ 2,457,449
19,445
2,541
15,542
2,404
F-15
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Restaurant sales include the sale of food and beverage products to our customers. We recognize this revenue when
the products are sold. All sales taxes collected from customers and remitted to governmental authorities are accounted
for on a net basis and therefore are excluded from revenue in the consolidated statements of income and comprehensive
income.
Other sales include the amortization of gift card breakage and fees associated with third party gift card sales. We
record deferred revenue for gift cards that have been sold but not yet redeemed. When the gift cards are redeemed, we
recognize restaurant sales and reduce deferred revenue. For some of the gift cards that are sold, the likelihood of
redemption is remote. When the likelihood of a gift card’s redemption is determined to be remote, we record a breakage
adjustment and reduce deferred revenue by the amount never expected to be redeemed. We use historic gift card
redemption patterns to determine when the likelihood of a gift card’s redemption becomes remote and have determined
that 4% of the value of the gift cards sold by the Company and our third party retailers will never be redeemed. This
breakage adjustment is recorded consistent with the historic redemption pattern of the associated gift card or on actual
redemptions in periods where redemptions do not align with historic redemption patterns. In addition, we incur fees on
all gift cards that are sold through third party retailers. These fees are also deferred and recorded consistent with the
historic redemption pattern of the associated gift cards or on actual redemptions in periods where redemptions do not
align with historic redemption patterns. For the years ended December 29, 2020 and December 31, 2019, we recognized
gift card fees, net of gift card breakage income, of $6.8 million and $9.1 million, respectively. Total deferred revenue
related to our gift cards is included in deferred revenue-gift cards in our consolidated balance sheets and includes the full
value of unredeemed gift cards less the amortized portion of the breakage rates and the unamortized portion of third
party fees. As of December 29, 2020 and December 31, 2019, our deferred revenue balance related to gift cards was
$232.8 million and $209.3 million, respectively. This change was primarily due to the sale of additional gift cards
partially offset by the redemption of gift cards. We recognized restaurant sales of $115.5 million for the year ended
December 29, 2020 related to the amount in deferred revenue as of December 31, 2019. We recognized restaurant sales
of $135.2 million for the year ended December 31, 2019 related to the amount in deferred revenue as of December 25,
2018.
Franchise royalties include continuing fees received from our franchising of Texas Roadhouse restaurants. We
execute franchise agreements for each franchise restaurant which sets out the terms of our arrangement with the
franchisee. These agreements require the franchisee to pay ongoing royalties of generally 4.0% of gross sales from our
domestic franchisees, along with royalties paid to us by our international franchisees. Franchise royalties are recognized
as revenue as the corresponding franchise restaurant sales occur.
Franchise fees are all remaining fees from our franchisees including initial fees, upfront fees from international
agreements, fees paid to our domestic marketing and advertising fund, and fees for supervisory and administrative
services. Our franchise agreements typically require the franchisee to pay an initial, non-refundable fee. Subject to our
approval and payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration.
These initial fees and renewal fees are deferred and recognized over the term of the agreement. We also enter into area
development agreements for the development of international Texas Roadhouse restaurants. Upfront fees from
development agreements are deferred and recognized on a pro-rata basis over the term of the individual restaurant
franchise agreement as restaurants under the development agreement are opened. Our domestic franchise agreement
also requires our franchisees to remit 0.3% of sales to our system-wide marketing and advertising fund. These amounts
are recognized as revenue as the corresponding franchise restaurant sales occur. Finally, we perform supervisory and
administrative services for certain franchise restaurants for which we receive management fees, which are recognized as
the services are performed. Total deferred revenue related to our franchise agreements is included in other liabilities in
our consolidated balance sheets and was $1.9 million as of December 29, 2020 and December 31, 2019. We recognized
revenue of $0.4 million and $0.3 million for the years ended December 29, 2020 and December 31, 2019, respectively,
related to the amounts in deferred revenue as of December 31, 2019 and December 25, 2018, respectively.
F-16
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(4) Acquisitions
In late 2020, we separately acquired two franchise restaurants. Pursuant to the terms of the acquisition agreements,
we paid a total purchase price of $10.6 million. These transactions were accounted for using the purchase method as
defined in ASC 805, Business Combinations (“ASC 805”). These acquisitions generated goodwill of $3.3 million,
which is not amortizable for book purposes, but is deductible for tax purposes. We also acquired an intangible
reacquired franchise right asset of $1.6 million which will be amortized over 3.4 years based on the remaining term of
the franchise agreement.
In late 2019, we acquired one franchise restaurant which was subsequently relocated. Pursuant to the terms of the
acquisition agreement, we paid a total purchase price of $1.5 million and accounted for this transaction using the
purchase method as defined in ASC 805. This acquisition generated goodwill of $1.5 million, which is not amortizable
for book purposes, but is deductible for tax purposes.
These acquisitions are consistent with our long-term strategy to increase net income and earnings per share. Pro
forma results of operations and revenue and earnings for the years ended December 29, 2020 and December 31, 2019
have not been presented because the effect of the acquisitions was not material to our consolidated financial position,
results of operations or cash flows.
(5) Long - term Debt
On August 7, 2017, we entered into the Amended and Restated Credit Agreement (the “Amended Credit
Agreement”) with respect to our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase
Bank, N.A., PNC Bank, N.A., and Wells Fargo Bank, N.A. The amended revolving credit facility remains an unsecured,
revolving credit agreement under which we may borrow up to $200.0 million with the option to increase the amended
revolving credit facility by an additional $200.0 million subject to certain limitations, including approval by the
syndicate of lenders. On May 11, 2020, we amended the revolving credit facility to provide for an incremental revolving
credit facility of up to $82.5 million. This amount reduced the additional $200.0 million that was available under the
revolving credit facility. The maturity date for the incremental revolving credit facility is May 10, 2021. The maturity
date for the original revolving credit facility remains August 5, 2022.
The terms of the amendment require us to pay interest on outstanding borrowings of the original revolving credit
facility at the London Interbank Offered Rate (“LIBOR”) plus a margin of 1.50% and to pay a commitment fee of 0.25%
per year on any unused portion of the amended revolving credit facility through the end of our Q1 2021 fiscal quarter.
The amendment also provides an Alternate Base Rate that may be substituted for LIBOR. Subsequent to our Q1 2021
fiscal quarter, we are required to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875% to 2.25%
and to pay a commitment fee of 0.125% to 0.40% depending on our consolidated net leverage ratio. As of December 29,
2020, we had $190.0 million outstanding on the original revolving credit facility and $1.8 million of availability, net of
$8.2 million of outstanding letters of credit. This outstanding amount is included as long-term debt on our consolidated
balance sheet.
The terms of the amendment also require us to pay interest on outstanding borrowings of the incremental revolving
credit facility at LIBOR, which is subject to a floor of 1.0%, plus a margin of 2.25% and to pay a commitment fee of
0.50% per year on any unused portion of the incremental revolving credit facility through the maturity date. As of
December 29, 2020, we had $50.0 million outstanding and $32.5 million of availability on the incremental revolving
credit facility. This outstanding amount is included as current maturities of long-term debt on our consolidated balance
sheet.
The weighted-average interest rate for the $240.0 million of combined borrowings on our revolving credit facility as
of December 29, 2020 was 1.98%. The weighted-average interest rate for the amended revolving credit facility as of
December 31, 2019 was 2.64%.
F-17
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
The lenders’ obligation to extend credit pursuant to the Amended Credit Agreement depends on us maintaining
certain financial covenants. The amendment to the revolving credit facility also modified the financial covenants
through the end of our Q1 2021 fiscal quarter. We were in compliance with all financial covenants as of December 29,
2020.
(6) Property and Equipment, Net
Property and equipment were as follows:
December 29, December 31,
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquor licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization . . . . . . . . . . . . . . . . . .
2020
143,482 $
2019
135,708
922,036
614,920
51,924
10,963
1,735,551
(678,988)
$ 1,088,623 $ 1,056,563
1,003,014
661,878
32,362
11,587
1,852,323
(763,700)
For the year ended December 29, 2020, the amount of interest capitalized in connection with restaurant construction
was $0.3 million. There was no interest capitalized in connection with restaurant construction for the year ended
December 31, 2019. For the year ended December 25, 2018, the amount of interest capitalized in connection with
restaurant construction was $0.1 million.
(7) Goodwill and Intangible Assets
The changes in the carrying amount of goodwill and intangible assets are as follows:
Goodwill
Balance as of December 25, 2018 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 123,220
1,528
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,748
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,329
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,076)
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,001
$
Intangible Assets
1,959
—
(725)
—
—
1,234
1,600
(563)
—
—
2,271
$
—
—
—
$
—
—
(1) Net of $4.8 million of accumulated goodwill impairment losses.
Intangible assets consist of reacquired franchise rights. The gross carrying amount and accumulated amortization of
the intangible assets at December 29, 2020 were $16.6 million and $14.3 million, respectively. As of December 31,
2019, the gross carrying amount and accumulated amortization of the intangible assets was $15.4 million and
$14.1 million, respectively. We amortize reacquired franchise rights on a straight-line basis over the remaining term of
the franchise operating agreements, which varies by restaurant. Amortization expense for the next five years is expected
to range from $0.1 million to $0.8 million. As further discussed in note 16, as a result of our 2020 goodwill impairment
analysis, we determined that goodwill related to two restaurants was impaired. Refer to note 4 for discussion of the
F-18
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
acquisitions completed for the years ended December 29, 2020 and December 31, 2019.
(8) Leases
We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in
excess of one year. As of December 29, 2020 and December 31, 2019, these amounts were as follows:
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
526,746
$
3,879
$
Real estate
As of December 29, 2020
Equipment
Total
530,625
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
17,850
569,713
587,563
$
1,421
2,458
3,879
$
19,271
572,171
591,442
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
495,903
$
3,898
$
Real estate
As of December 31, 2019
Equipment
Total
499,801
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
15,966
536,109
552,075
$
1,297
2,601
3,898
$
17,263
538,710
555,973
F-19
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Information related to our real estate leases as of and for the fiscal year ended December 29, 2020 and
December 31, 2019 was as follows (in thousands):
Fiscal Year Ended
Real estate costs
Operating lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Variable lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
December 29, 2020 December 31, 2019
Real estate lease liability maturity analysis
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total discounted operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,425 $
1,479
90
59,994 $
54,844
1,590
120
56,554
As of December 29, 2020
56,201
57,225
57,259
57,353
55,491
762,744
1,046,273
458,710
587,563
$
$
Fiscal Year Ended
52,904 $
50,322 $
17.78
6.71
49,018
51,220
17.82
6.77
Real estate leases other information
Cash paid for amounts included in measurement of operating lease liabilities . $
Right-of-use assets obtained in exchange for new operating lease liabilities . . . $
Weighted-average remaining lease term (years) . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 29, 2020
December 31, 2019
Operating lease payments exclude $15.1 million of minimum lease payments for executed real estate leases that we
have not yet taken possession. In addition to the above operating leases, as of December 29, 2020 we had one finance
lease with a right-of-use asset balance and lease liability balance of $1.7 million and $2.1 million, respectively. The
right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of
other liabilities in the consolidated balance sheets.
In 2020, we entered into a sale leaseback transaction involving land that had recently been acquired. The sale
generated proceeds of $2.2 million and no gain or loss was recognized on the transaction. The resulting operating lease
is included in the operating lease right-of-use assets and lease liabilities noted above.
We recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our
restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of
the lease payments over the lease term. We estimate the present value based on our incremental borrowing rate which
corresponds to the underlying lease term. In addition, operating lease right-of-use assets are reduced for accrued rent
F-20
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
and increased for any initial direct costs recognized at lease inception. For leases commencing in 2019 and later, we
account for lease and non-lease components as a single lease component.
Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term.
For these leases, we recognize the related rent expense on a straight-line basis over the lease term. We may receive rent
concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider
when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession
date and end when the store opens, during which no cash rent payments are typically due under the terms of the lease.
Rent holidays are included in the lease term when determining straight-line rent expense. In recognizing straight-line
rent expense, we record the difference between amounts charged to operations and amounts paid as accrued rent.
Straight-line rent expense is included as an operating lease cost in the table above.
Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of
sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the
specified target that triggers the contingent rent, provided achievement of the target is considered probable. In addition,
certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate. For these
leases, we recognize operating lease right-of-use assets and operating lease liabilities based on the index or rate at the
commencement date. Any subsequent changes to the index or rate are recognized as variable rent expense when the
escalation is determinable. Contingent rent and variable rent expense are included as variable lease costs in the table
above.
Rent expense for operating leases for the fiscal year ended December 25, 2018 consisted of the following:
Minimum rent—occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Contingent rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent expense, occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minimum rent—equipment and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
47,741
1,050
48,791
6,176
54,967
(9) Income Taxes
Components of our income tax (benefit) expense for the years ended December 29, 2020, December 31, 2019 and
December 25, 2018 are as follows:
December 29, 2020 December 31, 2019 December 25, 2018
Fiscal Year Ended
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . .
(648) $
4,505
403
4,260
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . .
Income tax (benefit) expense . . . . . . . . . . $
(16,859)
(3,073)
(19,932)
(15,672) $
15,643 $
10,050
369
26,062
4,396
1,939
6,335
32,397 $
2,934
8,794
210
11,938
11,909
410
12,319
24,257
Our pre-tax income is substantially derived from domestic restaurants.
F-21
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
A reconciliation of the statutory federal income tax rate to our effective tax rate for December 29, 2020,
December 31, 2019 and December 25, 2018 is as follows:
December 29, 2020
Fiscal Year Ended
December 31, 2019
December 25, 2018
Tax at statutory federal rate . . . . . . . . .
State and local tax, net of federal
benefit . . . . . . . . . . . . . . . . . . . . . . . . . .
FICA tip tax credit . . . . . . . . . . . . . . . .
Work opportunity tax credit . . . . . . . . .
Stock compensation . . . . . . . . . . . . . . .
Net income attributable to
noncontrolling interests . . . . . . . . . . . .
Officers compensation . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.0 %
21.0 %
21.0 %
3.6
(92.5)
(12.4)
(2.3)
(3.0)
2.6
1.6
(81.4) %
3.8
(9.4)
(1.5)
(0.1)
(0.6)
1.2
0.7
15.1 %
3.6
(9.6)
(1.5)
(1.4)
(0.8)
1.7
(0.1)
12.9 %
Our effective tax rate was a benefit of 81.4% in 2020 compared to expense of 15.1% in 2019. This was primarily
due to the impact of FICA tip and Work opportunity tax credits on lower pre-tax income. Additionally, these credits
exceeded our federal tax liability in 2020 but we expect to utilize these credits in future years or by carrying back to our
2019 tax year.
Our effective tax rate increased to 15.1% in 2019 compared to 12.9% in 2018 primarily due to lower excess tax
benefits related to our share-based compensation program partially offset by lower non-deductible officer compensation.
In addition, the prior year tax rate benefitted from an adjustment related to tax reform that we recorded in conjunction
with the filing of our 2017 tax return.
Components of deferred tax liabilities, net are as follows:
December 29, 2020 December 31, 2019
Deferred tax assets:
Deferred revenue—gift cards . . . . . . . . . . . . . . . . . . . . . . $
Insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred payroll taxes . . . . . . . . . . . . . . . . . . .
Other reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill and intangibles . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use asset . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
26,692 $
5,998
5,995
705
5,621
146,803
12,778
10,360
2,119
217,071
(71,263)
(6,896)
(131,718)
(9,996)
(219,873)
(2,802) $
16,122
4,774
—
601
5,510
137,744
10,503
1,710
2,482
179,446
(63,777)
(6,241)
(123,813)
(8,310)
(202,141)
(22,695)
F-22
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
As of December 29, 2020, we have federal tax credit carryforwards of $10.2 million expiring in 2040 and state tax
credit carryforwards of $0.2 million expiring in 2023. The federal tax credits include FICA tip and Work opportunity
tax credits that exceeded credit limitations in the current year. We expect to generate sufficient earnings in future
periods and/or may implement tax planning strategies that would allow us to fully utilize these credits. As such, we have
not provided any valuation allowances for these credits, or any of our other deferred tax assets, as their realization is
more likely than not.
A reconciliation of the beginning and ending liability for unrecognized tax benefits, all of which would impact the
effective tax rate if recognized, is as follows:
Balance at December 25, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions to tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to statute expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to exam settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to prior years . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to tax positions related to current year . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to statute expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions due to exam settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,482
16
362
(314)
—
1,546
148
389
(421)
—
1,662
As of December 29, 2020 and December 31, 2019, the total amount of accrued penalties and interest related to
uncertain tax provisions was not material.
All entities for which unrecognized tax benefits exist as of December 29, 2020 possess a December tax year-end.
As a result, as of December 29, 2020, the tax years ended December 26, 2017, December 25, 2018 and December 31,
2019 remain subject to examination by all tax jurisdictions. As of December 29, 2020, no audits were in process by a tax
jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our
unrecognized tax benefits. Additionally, as of December 29, 2020, no event occurred that is likely to result in a
significant increase or decrease in the unrecognized tax benefits through December 28, 2021.
(10) Preferred Stock
Our Board of Directors is authorized, without further vote or action by the holders of common stock, to issue from
time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. Each series of preferred
stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative
rights or privileges as shall be determined by the Board of Directors, which may include, but are not limited to, dividend
rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive
rights. There were no shares of preferred stock outstanding at December 29, 2020 and December 31, 2019.
(11) Stockholders’ Equity
On May 31, 2019, our Board of Directors approved a stock repurchase program under which we may repurchase up
to $250.0 million of our common stock. This stock repurchase program has no expiration date and replaced a previous
stock repurchase program which was approved on May 22, 2014. All repurchases to date under our stock repurchase
programs have been made through open market transactions. The timing and the amount of any repurchases are
determined by management under parameters established by our Board of Directors, based on an evaluation of our stock
price, market conditions and other corporate considerations.
For the year ended December 29, 2020, we paid $12.6 million to repurchase 252,409 shares of our common stock. On
March 17, 2020, we suspended all share repurchase activity. For the year ended December 31, 2019, we paid $139.8 million
to repurchase 2,625,245 shares of our common stock. This includes repurchases of $89.6 million under the new
F-23
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
repurchase program and repurchases of $50.2 million under the previous stock repurchase program. We did not
repurchase any shares of common stock during the year ended December 25, 2018. As of December 29, 2020, we had
$147.8 million remaining under our authorized stock repurchase program.
(12) Earnings Per Share
The share and net income per share data for all periods presented are based on the historical weighted - average
shares outstanding. The diluted earnings per share calculations show the effect of the weighted - average restricted stock
units outstanding from our equity incentive plans. Performance stock units are not included in the diluted earnings per
share calculation until the performance-based criteria have been met. See note 14 for further discussion of our equity
incentive plans. For the years ended December 29, 2020, December 31, 2019, and December 25, 2018, the shares of
non-vested stock that were not included because they would have had an anti-dilutive effect were not significant.
The following table sets forth the calculation of earnings per share and weighted average shares outstanding
(in thousands) as presented in the accompanying consolidated statements of income and comprehensive income:
Fiscal Year Ended
December 29, December 31, December 25,
2019
2018
2020
Net income attributable to Texas Roadhouse, Inc.
and subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Basic EPS:
Weighted-average common shares outstanding . .
Basic EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted EPS:
Weighted-average common shares outstanding . .
Dilutive effect of nonvested stock . . . . . . . . . . . . .
Shares-diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,255 $
174,452 $
158,225
69,438
70,509
0.45 $
2.47 $
71,467
2.21
69,438
455
69,893
70,509
407
70,916
0.45 $
2.46 $
71,467
497
71,964
2.20
(13) Commitments and Contingencies
The estimated cost of completing capital project commitments at December 29, 2020 and December 31, 2019 was
$95.9 million and $119.0 million, respectively.
As of December 29, 2020 and December 31, 2019, we are contingently liable for $13.0 million and $13.9 million,
respectively, for seven leases listed in the table below. These amounts represent the maximum potential liability of
future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment
agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of
December 29, 2020 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
F-24
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Current Lease
Term Expiration
Everett, Massachusetts (1)(2) . . . . . . . . . . . . . . . . . . . . . . . . . September 2002 February 2023
Longmont, Colorado (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . October 2003 May 2029
Montgomeryville, Pennsylvania (1) . . . . . . . . . . . . . . . . . . . . October 2004 March 2026
Fargo, North Dakota (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 2006
July 2026
Logan, Utah (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2009 August 2024
Irving, Texas (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 December 2024
Louisville, Kentucky (3)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 November 2023
Assignment Date
Lease
(1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those
restaurants. We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the
terms of the lease, if the franchisee defaults.
(2) As discussed in note 17, this restaurant is owned in part by our founder.
(3) Leases associated with restaurants which were sold. The leases were assigned to the acquirer, but we remain
contingently liable under the terms of the lease if the acquirer defaults.
(4) We may be released from liability after the initial contractual lease term expiration contingent upon certain
conditions being met by the acquirer.
During the year ended December 29, 2020, we bought most of our beef from three suppliers. Although there are a
limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. A
change in suppliers, however, could cause supply shortages, higher costs to secure adequate supplies and a possible loss
of sales, which would affect operating results adversely. We have no material minimum purchase commitments with our
vendors that extend beyond a year.
Occasionally, we are a defendant in litigation arising in the ordinary course of business, including “slip and fall”
accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees
alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which
are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to any
litigation that we believe could have a material adverse effect on our business.
(14) Share - based Compensation
On May 16, 2013, our stockholders approved the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (the
“Plan”). The Plan provides for the granting of various forms of equity awards including options, stock appreciation
rights, full value awards, and performance based awards. This plan replaced the Texas Roadhouse, Inc. 2004 Equity
Incentive Plan. The Company provides restricted stock units (“RSUs”) to employees as a form of share-based
compensation. An RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting
requirement. In addition to RSUs, the Company provides performance stock units (“PSUs”) to executives as a form of
share-based compensation. A PSU is the conditional right to receive one share of common stock upon meeting a
performance obligation along with the satisfaction of the vesting requirement. The following table summarizes the
share - based compensation recorded in the accompanying consolidated statements of income and comprehensive income:
F-25
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Labor expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expense . . . . . . . . . . . . . . .
Total share-based compensation expense . . . . . . . . . . .
Fiscal Year Ended
December 29, December 31, December 25,
2019
9,032 $
26,468
35,500 $
2020
10,081 $
19,350
29,431 $
2018
8,463
25,520
33,983
$
$
Share - based compensation activity by type of grant as of December 29, 2020 and changes during the period then
ended are presented below. For both RSUs and PSUs, we do not estimate forfeitures as we record them as they occur.
Summary Details for RSUs
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
Shares
Value
Term (years)
Intrinsic Value
836,427 $
Outstanding at December 31, 2019 . . . . . . . . . . . . . .
501,575
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(25,204)
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (519,235)
Outstanding at December 29, 2020 . . . . . . . . . . . . . .
793,563 $
55.20
57.43
54.76
55.60
56.37
0.9
$
62,667
As of December 29, 2020, with respect to unvested RSUs, there was $19.2 million of unrecognized compensation
cost that is expected to be recognized over a weighted-average period of 0.9 years. The vesting terms of the RSUs range
from 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the years ended December 29, 2020,
December 31, 2019 and December 25, 2018 was $30.5 million, $27.8 million and $32.1 million, respectively. The
excess tax benefit associated with vested RSUs for the years ended December 29, 2020, December 31, 2019 and
December 25, 2018 was $0.4 million, $0.3 million and $1.9 million, respectively, which was recognized in the income
tax provision.
Summary Details for PSUs
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
Shares
Value
Term (years)
Intrinsic Value
77,000 $
Outstanding at December 31, 2019 . . . . . . . . . . . . . . . .
79,000
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,946
Incremental Performance Shares (1) . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (95,946)
Outstanding at December 29, 2020 . . . . . . . . . . . . . . . .
79,000 $
61.86
55.98
61.86
—
61.86
55.98
0.1
$
6,238
(1) Additional shares from the January 2019 PSU grant that vested in January 2020 due to exceeding the initial 100%
target.
We grant PSUs to certain of our executives subject to a one-year vesting and the achievement of certain earnings
targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation expense
is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant
date and through the performance period. For each grant, PSUs vest after meeting the performance and service
conditions. The total intrinsic value of PSUs vested during the years ended December 29, 2020, December 31, 2019 and
December 25, 2018 was $5.4 million, $8.8 million and $8.9 million, respectively.
On January 8, 2021, 5,199 shares vested related to the January 2020 PSU grant and are expected to be distributed
during the 13 weeks ending March 30, 2021. As of December 29, 2020, with respect to unvested PSUs, the amount of
unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1 year was not
F-26
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
significant. There was no allowable excess tax benefit associated with vested PSUs for the years ended December 29,
2020 and December 31, 2019. The excess tax benefit associated with vested PSUs for the year ended December 25, 2018
was $0.7 million which was recognized within the income tax provision.
(15) Fair Value Measurement
ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a framework for measuring fair
value and expands disclosures about fair value measurements. ASC 820 establishes a three - level hierarchy, which
requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring
fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the
measurement date.
Level 1
Level 2
Level 3
Inputs based on quoted prices in active markets for identical assets.
Inputs other than quoted prices included within Level 1 that are observable for the
assets, either directly or indirectly.
Inputs that are unobservable for the asset.
There were no transfers among levels within the fair value hierarchy during the year ended December 29, 2020.
The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:
Deferred compensation plan—assets . . . . . . . . . . . . . 1 $
Deferred compensation plan—liabilities . . . . . . . . . . 1 $
Level December 29, 2020 December 31, 2019
44,623
55,633 $
(44,679)
(55,614) $
Fair Value Measurements
The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as
amended, (the “Deferred Compensation Plan”) is a nonqualified deferred compensation plan which allows highly
compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one or more
investment funds held in a rabbi trust. We report the accounts of the rabbi trust in other assets and the corresponding
liability in other liabilities in our consolidated financial statements. These investments are considered trading securities
and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related
to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense
in the consolidated statements of income and comprehensive income.
The following table presents the fair value of our assets measured on a nonrecurring basis:
Fair Value Measurements
Total gain (loss)
Fiscal Year Ended
December 29, December 31, December 29, December 31,
Long-lived assets held for sale . . . . . . . . . . . . . . . . . . . . . . . .
3 $
Long-lived assets held for use . . . . . . . . . . . . . . . . . . . . . . . . 1 $
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . 3 $
3 $
Goodwill . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 $
Investments in unconsolidated affiliates . . . . . . . . . . . . . . . .
Level
2020
1,645 $
— $
— $
2,625 $
1,531 $
2019
2020
— $
1,684 $
611 $
— $
— $
(432) $
(364) $
(413) $
(1,076) $
(1,091) $
2019
—
1,190
(1,144)
—
—
Long-lived assets held for sale include land and building at a site that was relocated. These assets are included in
prepaid expenses and other current assets in our consolidated balance sheets. These assets are valued using a Level 3
input, i.e., information from broker listings discounted for estimated selling costs. This resulted in a loss of $0.4 million
which is included in impairment and closure, net in our consolidated statements of income and comprehensive income.
Long-lived assets held for use as of December 29, 2020 include leasehold improvements for one restaurant
F-27
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
scheduled to be relocated in 2021. These assets were reduced to a fair value of zero in 2020. This resulted in a loss of
$0.4 million which is included in impairment and closure, net in our consolidated statements of income and
comprehensive income. Long-lived assets held for use as of December 31, 2019 include leasehold improvements for
one restaurant that was subject to a forced relocation. This restaurant was relocated in February 2020 at which time the
contractually negotiated amount for these assets was received.
Operating lease right-of-use assets as of December 29, 2020 include the lease related assets for one restaurant that
relocated in February 2020 and one restaurant scheduled to be relocated in 2021. These assets were reduced to a fair
value of zero in 2020. This resulted in a loss of $0.4 million which is included in impairment and closure, net in our
consolidated statements of income and comprehensive income. Operating lease right-of-use assets as of December 31,
2019, include the lease related assets for one store that was permanently closed in April 2020.
Goodwill includes two restaurants whose carrying values were determined to be in excess of their fair values as
part of our annual goodwill impairment assessment. In determining the fair value, multiple valuation approaches were
utilized which considered the historical results and anticipated future trends of operations for these restaurants. We
consider this a Level 3 input. This resulted in a loss of $1.1 million which is included in impairment and closure, net in
our consolidated statements of income and comprehensive income.
Investments in unconsolidated affiliates include a 40% equity interest in a China joint venture. This asset is valued
using a Level 3 input, i.e., the amount we expect to receive upon the sale of this investment. This resulted in a loss of
$1.1 million which is included in equity (loss) income from investments in unconsolidated affiliates in our consolidated
statements of income and comprehensive income.
At December 29, 2020 and December 31, 2019, the fair values of cash and cash equivalents, accounts receivable
and accounts payable approximated their carrying values based on the short-term nature of these instruments. At
December 29, 2020, the fair value of our revolving credit facility approximated its carrying value since it is a variable
rate credit facility (Level 2).
(16) Impairment and Closure Costs
We recorded impairment and closure costs of $2.3 million, ($0.9) million and $0.3 million for the years ended
December 29, 2020, December 31, 2019 and December 25, 2018.
Impairment and closure costs in 2020 included $1.2 million related to the impairment of the fixed assets and
operating lease right-of-use assets at four restaurants, all of which have relocated or are scheduled to be relocated. In
addition, in 2020, we recorded goodwill impairment of $1.1 million related to two restaurants.
Impairment and closure costs in 2019 included a gain of $2.6 million related to the forced relocation of one
restaurant. This included a gain of $1.2 million related to the leasehold improvements and a gain of $1.4 million to settle
a favorable operating lease. Also, in 2019, we recorded a charge of $1.1 million related to the impairment of the
operating lease right-of-use asset at an underperforming restaurant. The remaining costs of $0.6 million related to costs
associated with the relocation of restaurants.
Impairment and closure costs in 2018 were related to costs associated with the relocation of restaurants.
(17) Related Party Transactions
As of December 29, 2020, we had seven franchise restaurants and two majority-owned company restaurants owned
in part by certain of our officers. These franchise entities paid us fees of $1.6 million for the year ended December 29,
2020. As of December 31, 2019 and December 25, 2018, we had six franchise restaurants and one majority-owned
company restaurant owned in part by certain of our officers. These franchise entities paid us fees of $1.4 million and
$1.3 million for the years ended December 31, 2019 and December 25, 2018, respectively. As discussed in note 13, we
F-28
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
are contingently liable on a lease related to one of these franchise restaurants.
On December 3, 2018, we acquired one franchise restaurant owned in part by our founder. This entity paid us fees
of $0.1 million for the year ended December 25, 2018.
In addition, in 2018, our founder made a personal contribution of $1.0 million to cover a portion of the planned
expenses incurred as part of the annual managing partner conference which marked our 25th anniversary. This amount
was recorded as general and administrative expense on the consolidated statements of income and comprehensive
income and as additional paid-in-capital on the consolidated statements of stockholders’ equity.
(18) Selected Quarterly Financial Data (unaudited)
First
Second
Quarter
2020
Third
Fourth
Quarter
Quarter
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 652,524 $ 476,425 $ 631,185 $ 637,989 $ 2,398,123
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . $ 636,734 $ 523,743 $ 596,209 $ 617,593 $ 2,374,279
Income (loss) from operations . . . . . . . . . . . . . . . . . . . $ 15,790 $ (47,318) $ 34,976 $ 20,396 $
23,844
Net income (loss) attributable to Texas
Roadhouse, Inc. and subsidiaries . . . . . . . . . . . . . . . . . $ 16,029 $ (33,553) $ 29,230 $ 19,549 $
0.28 $
Basic earnings (loss) per common share . . . . . . . . . . . $
0.28 $
Diluted earnings (loss) per common share . . . . . . . . . $
- $
Cash dividends declared per share . . . . . . . . . . . . . . . . $
31,255
0.45
0.45
0.36
(0.48) $
(0.48) $
- $
0.23 $
0.23 $
0.36 $
0.42 $
0.42 $
- $
Quarter
Total
First
Second
Quarter
2019
Third
Fourth
Quarter
Quarter
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 690,608 $ 689,828 $ 650,489 $ 725,238 $ 2,756,163
Total costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . $ 630,163 $ 636,545 $ 605,605 $ 671,827 $ 2,544,140
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . $ 60,445 $ 53,283 $ 44,884 $ 53,411 $
212,023
Net income attributable to Texas Roadhouse, Inc.
and subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,390 $ 44,845 $ 36,531 $ 42,686 $
0.61 $
Basic earnings per common share . . . . . . . . . . . . . . . . $
0.61 $
Diluted earnings per common share . . . . . . . . . . . . . . . $
0.30 $
Cash dividends declared per share . . . . . . . . . . . . . . . . $
174,452
2.47
2.46
1.20
0.70 $
0.70 $
0.30 $
0.53 $
0.52 $
0.30 $
0.63 $
0.63 $
0.30 $
Quarter
Total
The fourth quarter of 2019 includes an estimated impact of $0.10 to $0.11 per diluted share for the 53rd week.
F-29
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2020
SUSTAINABILITY
Update
of how we were able to take care of our
employees included Kent donating his salary
and contributing $5 million to our employee
assistance fund, Andy’s Outreach, showing
true servant leadership and inspiring us all.
Also, in 2020, our Diversity and Inclusion
Committee provided employee engagement
opportunities for our Roadies through
a number of virtual meetings. Nearly
600 Roadies participated in learning and
education during the year, totaling more than
2,000 hours.
While continuing to meet the needs of our
communities with legendary food, our stores
still made community outreach a priority.
Some examples included donating meals
to frontline workers, feeding those in need,
and finding other creative ways to give back.
Despite many of our dining rooms being
closed, we found a way to honor our nation’s
heroes on Veterans Day with drive-thru
celebrations, giving out over 350,000 free
meal vouchers. Last year we were also proud
to raise $78,400 to benefit Homes For Our
Troops and $52,000 for Camp Sunshine, two
long-time non-profit partners we are honored
to support.
In 2020, our conservation efforts also
remained in place to positively impact the
communities we serve. We continued our
commitment to the Arbor Day Foundation’s
Community Tree Recovery campaign and
hosted tree distribution events at locations
across the country. These events make
it possible for both our employees and
our guests to get involved. Through our
partnership with the Bee Conservancy, we
were excited to support their Sponsor-a-Hive
program, which places native bee homes
and honey bee hives across the country. Last
year, we also purchased a Water-On-Wheels
system from our partners at WaterStep,
which we will use to operate our restaurants
following natural disasters. We have
partnered with WaterStep since 2019 and
together we are committed to making safe,
clean drinking water more accessible around
the world.
Additionally, we found creative ways to
integrate sustainability into our stores.
A new partnership was formed through
BAC-D®, a vendor we partnered with to get
more sustainable hand sanitizer stations
in our stores. Nearly 100 stores across
the country have these hand sanitizer
stations, and a percentage of the proceeds
are donated back to Ocearch, a non-profit
organization committed to oceanic research
and restoration. At Bubba’s 33, we were able
to add another more sustainable option in our
stores when we rolled out a paper gift card
and plan to make these cards an option for
Texas Roadhouse in the future.
We’ve also focused on growing sustainability
champions for our brand through social
media and internal communications.
Starting last year, we made it a point to
integrate our sustainability efforts into our
communications strategy with both our
employees and guests. The feedback was
extremely positive as we highlighted farmers,
bees, the Arbor Day Foundation, and more.
The education of sharing our efforts and
providing opportunities for people to get
involved inspires others to raise their hands
and join us in this journey.
As we continued to grow our efforts and build
champions, we did face many challenges in
2020. Our plans to test a uniform shirt made
from recycled materials and composting at
the Support Center café were put on hold
due to other initiatives taking priority as we
supported day-to-day operations through
the pandemic. We look forward to revisiting
these projects next year.
In 2021, we will continue to focus on
opportunities for employees and guests to
get involved in our conservation initiatives
through tree distribution and other
events, in-store promotions, and featuring
sustainable items in our stores (ie., waterless
toilets, recycled employee shirts, Ocearch
hand sanitizer stations, etc). We are also
eager to kick off our internal Environmental
Social Governance (ESG) Committee with
members from departments throughout the
company. The goal of this committee is to
learn, benchmark, and capture more of our
wins as a company.
We are excited to continue to grow our
sustainability efforts through building
champions, providing opportunities, and
learning more about current and future
possibilities. To review our full 2020
Sustainability Report, visit our website at
texasroadhouse.com/sustainability.
Travis Doster
Vice President of Communications
Dear
Shareholders,
Our Corporate Sustainability
mission is to make every community
we serve better than we found it.
Food, Community, Employees, and
Conservation are the four pillars we
focus on to make a difference in our
local communities across the
country every day.
While it’s been three years since we first
started highlighting our sustainability
initiatives in the Annual Report, our
Managing Partner model, which provides
our Managing Partners with 10% of their
restaurant profits, has been around since
the beginning. This ownership mentality
encourages our Managing Partners to reduce
waste and conserve energy. Both of these
efforts are better for the environment and
also incentivize our Managing Partners to be
sustainability champions
(less waste = more money in their pockets).
In addition to the information shared in
the Annual Report, we have continued our
commitment to updating our Corporate
Sustainability Report and meeting with the
Board annually. Our Corporate Sustainability
Report provides a more in-depth overview
of our sustainability wins and shortfalls
each year, which also holds us accountable.
We last shared updates with our Board of
Directors and Executive Team at the February
2021 Board Meeting. Having interest and
support throughout our entire company –
from the Board Room to our restaurants and
throughout the Support Center – is what
really makes the difference in growing our
sustainability efforts for years to come.
As you know, 2020 brought many challenges
to our industry with closed or limited-
capacity dining rooms, PPE, and increased To-
Go sales. A lot of things were turned upside
down last year, but we remained focused on
our sustainability pillars through taking care
of our people, serving our communities, and
upholding our commitments to our national
sustainability partners.
Our Employee pillar remained strong last
year as we came together as one family. We
were able to keep our restaurants opened
in some capacity and our Roadies working
while focusing on safety protocols to keep
guests and employees safe. Some examples
4127_Bck_Insrt.indd 1
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68,38434,186MTCO2E39.89MGAL19.21MKWSUSTAINABILITYTrees SavedGHG Emissions SavedMTCO2EWater SavedGALElectricity SavedKWWe make it our mission to leave every community better than we found it.We’re proud to support oceanic restoration and research through the purchase of BAC-D® hand sanitizer stations for Texas Roadhouse locations across the country and at our Support Center.Preserving Resources ThroughRecyclingLEDlightingBees are responsible for pollinating one-third of the food we eat. We partner with the Bee Conservancy and support the Sponsor-a-Hive Program, which places native bee homes and honey bee hives in communities across the country to help bolster bee populations.In 2020, we opened 22 company restaurants with LED lighting and energy-efficient equipment, helping to reduce our electric, gas, and water usage.4127_Bck_Insrt.indd 23/24/21 5:55 PM --------------------Recent Highlights:Dear Shareholders and interested folks,Last year, I received a handwritten letter from a young man in Texas along with the book “Investing Between the Lines.” The premise of the book was to teach investors to decode CEO speak in annual reports. The author of the book writes that many CEOs don’t write their own letters or if they do, it’s often chock-full of fancy language and jargon that confuses current and potential investors. I never want to fall into the trap of adding any Wall Street jargon just to be more “professional sounding.” I appreciate the inspiration to be even a little more myself this year, so here goes. 22 company restaurant openingsRetail launch of Margarita Mixer260,000 app downloads from guests redeeming gift cards3Jaggers31Bubba’s 33572Domestic28INTERNATIONALRestaurant Locationsas of December 29, 2020---------------------------------------------To say last year was a challenge is a vast understatement. In fact, 2020 was without question the most challenging year for the restaurant business. But I learned in both track and my business career that hurdles and challenges are meant to be cleared. It doesn’t matter how high you jump and it doesn’t matter if you stumble on a few hurdles. What matters most, is that you keep on jumping them and run your race. Starting in March of 2020, we did a lot of jumping, as our company faced multiple hurdles on a daily basis. Our operators and Support Center team took these hurdles in stride and worked together to overcome them. From sourcing masks and thermometers to rolling out electronic symptom surveys and launching our Covid pay, they worked in partnership, never losing sight of the importance of keeping our employees and guests safe and our restaurants open in some form or capacity. In fact, despite the pandemic, we were able to open 22 company restaurants, including three Bubba’s 33 restaurants and one Jaggers, and our franchise partners opened four restaurants. This is a testament to our people’s spirit as they found ways to continue to grow but never without the safety of our employees and our guest as our top priority. Our development pipeline looks strong in 2021 as well, with a plan to open more than 20 Texas Roadhouse locations in the U.S. With the growth of our To-Go business along with the reopening of many of our dining rooms, we feel that there is some momentum building for 2021. Bubba’s 33 really found its footing as well. Being the “younger sibling” is never easy. But Bubba’s 33 had a breakout year and we are excited about the growth as we plan to open as many as five locations in 2021. The youngest member of our “family,” Jaggers, also created some positive news last year with the opening of Jaggers in Louisville. The restaurant, which is our third unit, opened to rave reviews and long lines. Not sure which came first… the reviews or lines, but the bottom line is the store is rockin’ and we are looking at two more Louisville locations. We are seriously exploring franchise development as a potential growth vehicle as well. International also provided some good vibes. While our franchise partners closed two locations, they opened a restaurant in Korea and one location in Taiwan. Our partners have signed new development agreements for Korea, Brazil, and Puerto Rico, which is a great pipeline for continuing to build our brand internationally. Another great lesson I learned in both track and in business is that there is always a silver lining in any challenge. It may take a while to identify these bright spots, but they’re always there. You just have to find them, which our operators and Support Center team did many times over in 2020.For example, when our dining rooms were first closed back in March, our operators quickly switched to a Curbside/To-Go model. They went from under 10% of sales for To-Go to 100% as our dining rooms closed. They figured out unique ways to safely serve our guests. The silver lining is that our To-Go sales have stayed above 20% in restaurants that have reopened in some capacity. The rollout of our new app and a number of new initiatives that made for contactless pick-up and pay are also silver linings. For example, BOARD OFDirectors CURTIS A. WARFIELDCEO and President Windham Advisors LLCGREGORY N. MOOREFormer Senior Vice President and Controller Yum! Brands, Inc.JAMES R. ZARLEYFormer Chairman and CEO Conversant, Inc.KATHLEEN M. WIDMERGroup Chairman, Consumer North America Johnson & JohnsonMichael A. CrawfordChairman, CEO, and PresidentHall of Fame Resort & Entertainment Co.W. KENT TAYLORFounder, Chairman, and CEO Texas Roadhouse, Inc.ShareholderInformationSUPPORT CENTER(Corporate Office) 6040 Dutchmans Lane, Louisville, KY 40205 (800) TEX-ROAD or (800) 839-7623ANNUAL MEETINGThursday, May 13, 20219:00 am EDT Texas Roadhouse Support Center 6040 Dutchmans Lane Louisville, KY 40205TRANSFER AGENTComputershare P.O. Box 505000, Louisville, KY 40233 Phone (877) 581-5548FINANCIAL INQUIRIESFor additional financial documents and information, please visit our website at texasroadhouse.com. Please contact us by phone at (502) 426-9984 or by sending us an email to investment@texasroadhouse.comINDEPENDENT AUDITORSKPMG LLP 400 W. Market Street, Suite 2400, Louisville, KY 40202 Phone (502) 587-0535MEDIA INQUIRIESFor all media requests, please contact Travis Doster at (502) 638-5457STOCK LISTINGTexas Roadhouse, Inc. Common Stock is listed on the NASDAQ Stock Exchange under the symbol TXRH4127_Cover.indd 23/24/21 5:18 PM T
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