2021 Annual Report
ONE TEAM
ONE FAMILY
Dear
Shareholders,
As our 2021 financial results
showed, our operators once
again delivered strong sales
growth, which allowed us to
grow profits. These results
were despite the impact of
the pandemic, some
capacity restrictions at the
beginning of the year as well
as high inflation, continuation
of staffing shortages, and
increased supply chain
disruptions.
Last year was also a very difficult time
emotionally for our company as we dealt with
the tragic loss of our founder, partner and
friend, Kent Taylor on March 18, 2021.
Throughout our 29-year history, we have
faced many obstacles and short-term issues,
but the unexpected loss of our founder shook
us to our core.
Although his loss was a shock, Kent left us
very well prepared for the future. In fact, one
thing Kent taught us over the years is that
we are all “owners” in the business, and he
instilled an ownership mentality that runs
deep throughout the company. This mentality
has and will continue to serve us well going
forward.
Shortly before his death, Kent completed his
book, “Made from Scratch,” which tells the
Texas Roadhouse story. While he wrote the
book for the world to learn more about Texas
Roadhouse, I believe for Roadies, it’s our
playbook for success so we can continue our
winning ways for years to come.
As Kent spells out in his book, he taught
operators how to be owners rather than
managers. As a result of this ownership
mentality, after Kent’s death, our operators
rallied together to “Rock on for Kent” in
2021, delivering increases in traffic and sales,
including an average of over $1 million in
To-Go sales per restaurant.
But, like Kent said many times, airplanes
don’t have rearview mirrors because it’s more
important to look forward. To that end, we
think 2022 looks bright for all three brands as
well as our retail initiatives.
For 2022, we plan to open approximately
21 Texas Roadhouse company locations
and our franchise partners plan to open
as many as five restaurants. We continue
to have success opening restaurants in
smaller communities, such as Lufkin, Texas;
Vincennes, Indiana; and Georgetown,
Kentucky. As a result of this success, we have
several more small-market restaurants slated
for 2022.
Our international business continues to grow.
We ended 2021 with 31 international locations
in 10 countries and plan to add additional
restaurants in 2022.
We are also continuing to relocate a number
of older restaurants to new, larger locations
with additional parking. Many of these
locations were over 20 years old and were
conversions or smaller prototypes. We
continue to see a double-digit increase in
sales at relocated restaurants and have plans
to convert as many as six restaurants in 2022.
We are still making strides in technology
with Roadhouse Pay, which is our pay-at-
the-table system. Feedback from guests and
employees has been very positive so far. We
are seeing more efficient table turns and
increased tip percentages. We just started the
rollout of the system, and we expect to have
Roadhouse Pay systemwide by this time next
year. Just like with our app, the digital waitlist
and Roadhouse Pay, we will continue to
explore technology that enhances the
guest experience.
In addition, we are also excited about the
future of Bubba’s 33. We have new leadership
in place with a renewed focus on the basics
of food, service, and tightening up the menu.
We are also working to take some cost out of
the building, without impacting profitability.
We ended 2021 with 36 total restaurants,
and for 2022 we plan to open as many as four
additional restaurants.
“Made from Scratch” becomes
an instant WSJ bestseller
Pay-at-the-table launches
with Roadhouse Pay
Jaggers signs first
franchise partner
---------
2021 Highlights
-----------
Our newest concept, Jaggers, continued its
momentum in 2021 with the signing of our
first two franchise partners. Both are well
capitalized and have extensive franchising
experience with a variety of brands. Both
franchisees plan to open their first Jaggers
this year – one in North Carolina and one in
Texas – and we expect to open two additional
company restaurants later this year.
On the retail side, Texas Roadhouse Butcher
Shop, which ships a variety of our legendary
steaks directly to consumers’ homes gained
momentum this past year. We also expanded
our retail presence through two licensing
initiatives. Our signature Margarita Mixer
is available in over 6,500 grocery and liquor
stores across the country and our Margarita
Cocktail Seltzer began an initial launch in
select Colorado retailers. We will continue
to focus on the growth of these products.
Ask most Roadies why they love working for
Texas Roadhouse, and they will no doubt
talk about our culture. Culture means a lot
of things to different people, which is why
it’s so important that we continue to be laser
focused on being the best place to work and an
employer of choice. That is one of the reasons
we promoted Gina Tobin, a former Managing
Partner of the Year, to be the company’s first
Chief Learning and Culture Officer, where
she now oversees Training, the Food Team,
and our Diversity & Inclusion efforts. For the
past 25 years, Gina has lived and breathed our
culture as a Managing Partner, Market Partner,
and most recently as Vice President
of Training.
Following the retirement of our long-time
Vice President of Legendary People, we
promoted Patrick Sterling to VP of Legendary
People. Patrick has more than 30 years of
HR experience in the casual dining space,
including 18 years at Texas Roadhouse, and
I have no doubt he will do a great job leading
this team. I am pleased to announce that the
People Department will now report to
Chris Colson, our General Counsel.
a passion for his team, brand, and his
guests that is unmatched. I was proud
to present David his $30,000 check
and Managing Partner of the Year ring.
Congratulations, David!
In addition, Brian Bauscher was named
our 2019 Roadie of the Year. Brian is a
7-year Roadie and is a member of our Staff
Accounting Team. Brian is a role model for
the Texas Roadhouse core values of Passion,
Partnership, Integrity, and Fun... All with
Purpose. He also made one of the more
memorable acceptance speeches at our
Support Center Awards!
Since being named CEO, I have talked a lot
about continuing this dance Kent started
29 years ago. We did that in 2021 and I am
confident we will continue going forward
because Kent showed us what I call “The
Taylor Way,” which includes the guiding
principles that have shaped this company,
such as Kent’s Top 10; Kent’s Top 15 Things
Not to Screw Up; the Managing Partner Model;
our mission statement of Legendary Food,
Legendary Service®; and the Inverted Pyramid,
just to name a few.
We also know The Taylor Way includes
legendary people. In fact, as Kent so often
said, “We are a people-first company that just
happens to serve steak.”
With legendary people who are committed to
The Taylor Way, there are no limits to how far
we can go.
Let’s go Roadhouse!
Jerry Morgan
President and CEO
We also expanded our Board of Directors with
the addition of Donna Epps. Donna will serve
on the Audit, Compensation, and Nominating
and Corporate Governance committees.
Donna has extensive audit, risk, and financial
accounting experience as a result of her
30-plus years at Deloitte. Donna dove right in
and went through store training at our Texas
Roadhouse in Mesquite, Texas, and at Bubba’s
33 in The Colony, Texas. Apparently, Donna is
pretty good at measuring steaks!
I am honored to have also been appointed to
the Board in June, and I am proud to bring 24
years of Texas Roadhouse operational and
management experience to the boardroom.
Another significant part of what has made
Texas Roadhouse thrive is our culture of
recognition. While we were not able to host
our annual Managing Partner Conference in
early 2021, we were able to have a smaller
Managing Partner Awards program in August.
David Hollinger from Greenville, North
Carolina, (G-Vegas), was named our 2019
Managing Partner of the Year. David has
Retail launch of
Margarita Cocktail Seltzer
Gina Tobin named company’s first
Chief Learning and Culture Officer
Donna Epps joins our
Board of Directors
----------------------------------
“Legendary food,
Legendary Service®“
20MAR201813293995
April 1, 2022
To our Shareholders:
You are cordially invited to attend the 2022 Annual Meeting of Shareholders of Texas Roadhouse, Inc. (the
“Company”) on Thursday, May 12, 2022. 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 2022 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 2022
To our Shareholders:
The 2022 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 12, 2022 at 9:00 a.m. eastern daylight time.
At the Annual Meeting, you will be asked to:
•
•
•
•
elect seven 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 2022 fiscal
year;
hold an advisory vote on executive compensation; 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 14, 2022 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 1, 2022
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 2022
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 2022: OUR ANNUAL REPORT
CONTAINING OUR PROXY STATEMENT RELATED TO OUR 2022 ANNUAL MEETING OF
SHAREHOLDERS AND FORM 10-K FOR THE FISCAL YEAR ENDED ON DECEMBER 28, 2021 IS
AVAILABLE ON OUR WEBSITE AT WWW.TEXASROADHOUSE.COM IN THE INVESTORS SECTION.
TABLE OF CONTENTS
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION ...........................................
1
Proposal 1: Election of Directors ............................................................................................................................
1
Proposal 2: Ratification of Independent Auditors ..................................................................................................
1
Proposal 3: Advisory Vote on Approval of Executive Compensation....................................................................
2
Other Matters ...........................................................................................................................................................
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
5
2021 Corporate Governance Overview ...................................................................................................................
Director Summaries .................................................................................................................................................
6
Meetings of the Board .............................................................................................................................................
9
Leadership Structure of the Board and the Role of the Board in Risk Oversight ....................................................
9
Committees of the Board ......................................................................................................................................... 11
Policy Regarding Consideration of Candidates for Director ................................................................................... 13
Compensation of Directors ...................................................................................................................................... 14
Code of Conduct ...................................................................................................................................................... 17
Stock Ownership Guidelines ................................................................................................................................... 17
Succession Planning ................................................................................................................................................ 18
Mandatory Retirement Age for Board Service ........................................................................................................ 18
STOCK OWNERSHIP INFORMATION............................................................................................... 19
Delinquent Section 16(a) Reports ............................................................................................................................ 20
EXECUTIVE COMPENSATION ............................................................................................................ 21
2021 Executive Summary ........................................................................................................................................ 21
Compensation Discussion and Analysis .................................................................................................................. 23
Summary Compensation Table ................................................................................................................................ 39
Grants of Plan-Based Awards in Fiscal Year 2021.................................................................................................. 41
Outstanding Equity Awards ..................................................................................................................................... 45
Stock Vested ............................................................................................................................................................ 46
Termination, Change of Control and Change of Responsibility Payments ............................................................. 47
CEO Pay Ratio......................................................................................................................................................... 50
AUDIT COMMITTEE REPORT ............................................................................................................ 52
Related Party Transactions ...................................................................................................................................... 54
PRESENTATION OF PROPOSALS ...................................................................................................... 56
Proposal 1: Election of Directors ............................................................................................................................ 56
Proposal 2: Ratification of Independent Auditors .................................................................................................. 57
Proposal 3: Advisory Vote on Approval of Executive Compensation.................................................................... 59
SHAREHOLDER PROPOSALS ............................................................................................................. 61
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD...................................................... 61
FORM 10-K ................................................................................................................................................ 61
OTHER BUSINESS ................................................................................................................................... 62
PROXY STATEMENT
2022 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 12, 2022
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 2022
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 1, 2022.
The Annual Meeting will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans Lane,
Louisville, Kentucky on Thursday, May 12, 2022 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 27, 2022 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.
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 14, 2022. 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 69,119,769 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.
The advisory vote on the approval of executive compensation (Proposal 3) 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
3
occur. Because broker non-votes do not count as shares entitled to vote, they do not affect the outcome of the vote on
Proposal 3.
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.
4
CORPORATE GOVERNANCE AND OUR BOARD
2021 CORPORATE GOVERNANCE OVERVIEW
The following is an executive summary of our corporate governance activities for our 2021 fiscal year:
Meetings
We held 37 meetings of the Board and applicable committees comprised of (i) 8 meetings of the Board, (ii) 15
meetings of the audit committee, (iii) 8 meetings of the compensation committee, and (iv) 6 meetings of the nominating
and corporate governance committee.
New Board Members
We welcomed 2 new members to the Board during our 2021 fiscal year. Gerald L. Morgan, the Company’s
Chief Executive Officer and President, was appointed to the Board on June 15, 2021 and Donna E. Epps, an
independent director, was appointed to the Board on October 1, 2021.
Board Composition
The Board consists of seven directors – six of which 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 Securities and Exchange Commission. The following is a
breakdown of committee membership and leadership:
1)
2)
3)
4)
Chairman of the Board: Gregory N. Moore
Audit Committee: Gregory N. Moore (Chair); Michael A. Crawford; Donna E. Epps; Curtis
A. Warfield; Kathleen M. Widmer; and James R. Zarley
Compensation Committee: James R. Zarley (Chair); Michael A. Crawford; Donna E. Epps; Gregory
N. Moore; Curtis A. Warfield; and Kathleen M. Widmer
Nominating and Corporate Governance Committee: Curtis A. Warfield (Chair); Michael
A. Crawford; Donna E. Epps; Gregory N. Moore; Kathleen M. Widmer; and James R. Zarley
Compensation Philosophy
With respect to each non-employee director’s 2021 fiscal year service, each non-employee director received
a fixed cash amount for serving on the Board, together with additional compensation relating to leadership positions
on the Board and/or on any Board committee as well as meeting attendance. Additionally, each non-employee director
received 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.
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.
Cap on Total Compensation
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.
This cap on Board total compensation is included in the Company’s 2021 Long-Term Incentive Plan.
5
Director Summaries
Michael A. Crawford
Director Since: 2020
Age: 54
Board Committees /
Leadership:
Audit Committee,
Compensation Committee, and
Nominating & Corporate
Governance Committee
Public Boards:
Hall of Fame Resort &
Entertainment Company
(NASDAQ: HOFV)
Business Experience:
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.
Donna E. Epps
Director Since: 2020
Age: 57
Board Committees /
Leadership:
Audit Committee,
Compensation Committee, and
Nominating & Corporate
Governance Committee
Public Boards:
Saia, Inc.
(NASDAQ: SAIA)
Texas Pacific Land Corporation
(NYSE: TPL)
Business Experience:
Ms. Epps is a certified public accountant who previously served in various capacities at
Deloitte LLP for over 31 years, including over 17 years of focus on providing attest
services to private and public companies across industries including distribution,
commercial and industrial products, energy, technology, and telecommunications.
Following her retirement from Deloitte in 2017, Ms. Epps now serves as an independent
director for Saia, Inc. (NASDAQ: SAIA), a transportation company providing regional
and inter-regional, less than truckload services in 43 states, where she is a member of
the Audit Committee and Nominating and Corporate Governance Committee. Ms. Epps
also serves as an independent director for Texas Pacific Land Corporation (NYSE:
TPL), one of the largest landowners in the state of Texas with approximately 900,000
acres of land located in 19 counties of West Texas, where she serves as Audit Committee
Chairperson and is a member of the Nominating and Corporate Governance Committee.
Reason for Nomination:
Ms. Epps is being nominated as a non-employee director because of her extensive audit,
risk, financial and accounting experience and her extensive board experience. As a
result, Ms. Epps possesses particular knowledge and experience that strengthens the
Board’s collective qualifications, skills and experience.
6
Gregory N. Moore
Director Since: 2005
Age: 72
Board Committees /
Leadership:
Audit Committee,
Compensation Committee, and
Nominating & Corporate
Governance Committee;
Chairman of the Board;
Chairperson of Audit
Committee
Public Boards:
Newegg Commerce, Inc.
(NASDAQ: NEGG)
Business Experience:
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 Commerce, Inc. (NASDAQ: NEGG), an on-
line retailer specializing in computer and computer-related equipment and serves as the
Chair of the Audit Committee, and serves on both of the Nominating and Corporate
Governance and Compensation Committees.
Reason for Nomination:
Mr. Moore is being nominated as a non-employee director because of his extensive
financial, accounting, and international experience as well as his 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.
Gerald L. Morgan
Director Since: 2021
Age: 61
Board Committees /
Leadership:
Company’s Chief Executive
Officer and President
Public Boards:
None.
Business Experience:
Mr. Morgan is a 24-year veteran of Texas Roadhouse and has 35 years of total
foodservice experience, including with Bennigan’s and Burger King. His career with
Texas Roadhouse began in 1997 as Managing Partner in Grand Prairie, Texas, which
was store number 26 and the first in Texas. Mr. Morgan was named Managing Partner
of the Year in 2001, which is the company’s highest recognition. Mr. Morgan was
promoted to Market Partner in 2001, where he oversaw and grew operations in Texas
and Oklahoma. In 2014, Mr. Morgan was awarded the Texas Roadhouse Legends
Award at the Company’s Managing Partner Conference. The following year, he was
promoted to Regional Market Partner. Mr. Morgan was named President of Texas
Roadhouse in 2020 and Chief Executive Officer in 2021.
Reason for Nomination:
Mr. Morgan is being nominated as an executive director because of his role as Chief
Executive Officer of the Company, his knowledge of the restaurant industry and his in-
depth knowledge of the Company. As a result of these and other professional
experiences, Mr. Morgan possesses particular knowledge and experience
that
strengthens the Board’s collective qualifications, skills, and experience.
7
Curtis A. Warfield
Director Since: 2018
Age: 53
Board Committees /
Leadership:
Audit Committee,
Compensation Committee, and
Nominating & Corporate
Governance Committee;
Chairperson of Nominating &
Corporate Governance
Committee
Public Boards:
Talkspace, Inc.
(NASDAQ: TALK)
Business Experience:
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. (NYSE: ANTM), 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. In 2020, Mr. Warfield joined the board of Talkspace, Inc.
(NASDAQ: TALK), an online and mobile company which offers mental health
treatment services. Mr. Warfield also joined the board of OneOncology, a company that
invests in and collaborates with community oncology practices and serves as Chair of
the Audit Committee.
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.
Kathleen M. Widmer
Director Since: 2013
Age: 60
Board Committees /
Leadership:
Audit Committee,
Compensation Committee, and
Nominating & Corporate
Governance Committee
Public Boards:
None.
Business Experience:
Ms. Widmer is the Company Group Chairman for Consumer North America and Latin
America with Johnson & Johnson Consumer Health (NYSE: JNJ), 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. (NASDAQ: RDEN), 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.
8
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 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. (NASDAQ: CNVF), 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 developing industries, 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 eight 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 28, 2021.
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
to attend the Annual Meeting. All incumbent directors attended the 2021 annual meeting. Four regular Board meetings are
currently scheduled for the 2022 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. The Board consists of six independent directors and one executive director. Following the
passing of W. Kent Taylor, the Company’s founder, and then Chairman of the Board and Chief Executive Officer of the
Company, the Board named Gregory N. Moore as Chairman of the Board on March 19, 2021. 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 previously served as the Board’s Lead Independent 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. As more particularly described below, Mr. Morgan,
the Company’s Chief Executive Officer, was appointed to the Board on June 15, 2021.
Role of the Board and Management. As more particularly described in our Corporate Governance Guidelines, the
Company’s business is conducted by the officers and employees under the direction of the Chairman of the Company, and
if there is no Chairman, then the Chief Executive Officer of the Company, and under the oversight of the Board. In
connection with the same, the Board’s role is to enhance the long-term value of the Company for its shareholders. The
Board is elected annually by the shareholders to oversee management and to ensure that the long-term interests of the
shareholders are being served. In order to fulfill this obligation, the Board is responsible for helping establish broad
corporate policies, setting strategic direction and overseeing the management of the Company.
9
Risk Oversight. In addition to the broad responsibilities described in the immediately preceding paragraph, 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 executes its oversight responsibility
directly and through its committees, who regularly report back to the Board. 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 team 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).
As a part of our enterprise risk management process and under the oversight of the audit committee, the Company
has formed a series of subject matter risk committees, that specialize in specific areas of risk previously identified by the
Company, which regularly meet and report their activities to a risk committee team. The risk committee team, consisting
of our Chief Financial Officer, General Counsel and Corporate Secretary, Vice President of Legendary People and Risk,
and Vice President of Finance, meets regularly to identify key risk areas for the Company, including any new or emerging
risks, and serves as a liaison between the subject matter risk committees and the executive risk committee described below.
Additionally, the risk committee team conducts a periodic review of a risk register, including an in-depth focus on high
priority risks, and periodically reviews such register with the audit committee. Finally, the Company has an executive risk
committee consisting of members of the Company’s leadership team which meet throughout the year to determine risk
priorities and make decisions on key areas of risk.
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 2021, 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
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.
10
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 at least 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 reviews 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 new store development, franchise acquisitions, retail or other business
development initiatives, and the Company’s share repurchase activities and dividend program (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 communities in which we serve. Our commitment is evident from our long history of dedication to
corporate citizenship, diversity, and the manner in which we often consider corporate 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. The Company includes an
update on some of these initiatives in the Company’s Annual Report.
Additionally, the Company has established an internal risk committee to evaluate the Company’s environmental,
social and governance activities. This committee is comprised of members of management from the Company’s legal,
human resources, communications, procurement, finance and financial reporting functions. This committee works in
conjunction with the Company’s overall risk committee team.
In 2017, we released our initial corporate sustainability report which outlined our four core pillars of our corporate
sustainability efforts: food, community, employees, and conservation. We strive to update our corporate sustainability
report annually. The current report is available on the Company’s website at www.texasroadhouse.com. Unless specifically
referenced in this proxy statement, the contents posted on, or accessible through, our website are not incorporated by
referenced into this proxy statement or any of our filings with the Securities and Exchange Commission (the “SEC”) and
may be revised by us (in whole or in part) at any time and from time to time.
Committees of the Board
The Board has three standing committees:
(i)
the audit committee;
(ii)
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 previously designated one of its members as an International Liaison, which is elected
annually by a majority of the Board. Mr. Moore served as the Board’s International Liaison through the 2021 fiscal year;
however, the Board elected not to appoint an International Liaison for the 2022 fiscal year. The Board reserves the right
to designate one of its members as an International Liaison in the future pursuant to our Corporate Governance Guidelines.
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;
(ii)
the Company’s compliance with legal and regulatory requirements;
11
(iii)
the independence and performance of the Company’s internal and external auditors; and
(iv)
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 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 Mss. Epps and Widmer and Messrs. Crawford, Moore, Warfield, and Zarley. Mr. Moore
currently serves as the chairperson of the audit committee. The Board evaluated the credentials of and designated Ms. Epps
and Messrs. Moore and Warfield as audit committee financial experts. The audit committee met 15 times during fiscal
year 2021, 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 quarterly earnings release and filings with the SEC, and one special meeting
to discuss emerging events which occurred between regularly scheduled meetings.
Compensation Committee. As described in its charter, the compensation committee:
(i)
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;
(ii)
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, as well as performing the other duties and responsibilities described in its charter. 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
Mss. Epps and Widmer and Messrs. Crawford, Moore, Warfield, and Zarley. Mr. Zarley currently serves as the
chairperson of the compensation committee. The compensation committee met eight times during fiscal year 2021.
Nominating and Corporate Governance Committee. As described in its charter, the nominating and corporate
governance committee assists the Board in:
(i)
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;
(ii)
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;
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
(iii)
12
meeting, and to be elected by the Board to fill vacancies, including vacancies created by an increase in the authorized
number of directors on the Board;
(iv)
developing and recommending to the Board a set of corporate governance principles; and
(v)
periodically reporting to the Board the status of succession planning for senior management, including
guidance regarding succession in the event of an emergency or the retirement of the executive officers and the identification
and evaluation of potential successors to the executive officers and other members of senior management.
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 Mss. Epps and Widmer and Messrs. Crawford, Moore, Warfield, and
Zarley. Mr. Warfield currently serves as the chairperson of the nominating and corporate governance committee. The
nominating and corporate governance committee met six times during fiscal year 2021.
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 15, 2021, the nominating and corporate governance committee recommended to the Board that the
number of directors be increased by one and that Mr. Morgan, the Company’s Chief Executive Officer and President, be
appointed to the Board; the Board approved this recommendation. Mr. Morgan was appointed to the Board because of his
role as Chief Executive Officer of the Company, his knowledge of the restaurant industry and his in-depth knowledge of
the Company.
Additionally, on September 30, 2021, the nominating and corporate governance committee recommended to the
Board that the number of directors be increased by one effective as of October 1, 2021 and that Ms. Epps be appointed to
the Board as an independent director; the Board approved this recommendation. Ms. Epps was referred to the nominating
and corporate governance committee by our corporate recruiter. Following her initial referral for service as a director,
Ms. Epps met extensively with management of the Company and our existing members of the Board prior to the
13
nominating and corporate governance committee’s decision to recommend her appointment. Ms. Epps was nominated as
a non-employee director because of her extensive audit, risk, financial and accounting experience arising from her over 31
years with Deloitte LLP and her extensive board experience.
As discussed above, the Board seeks 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 chart below
illustrates the composition of our Board nominees by gender, racial diversity, tenure, and core skills:
BOARD DIVERSITY MATRIX AS OF MARCH 1, 2022
Female
Male
7
Non-
Binary
Did Not Disclose
Total Number of Directors
Part 1: Gender Identity
Directors
Part 2: Demographic Background
African American or Black
Alaskan Native or Native American
Asian
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White
Two or More Races or Ethnicities
LGBTQ+
Did Not Disclose Demographics
Part 3: Tenure
Directors
Part 4: Core Skills
Directors
Compensation of Directors
2
--
--
--
--
--
2
--
1 – 5
Years
--
--
--
--
--
--
--
--
5
1
--
--
--
--
4
--
--
--
6 – 10
Years
--
--
--
--
--
--
--
--
>10
Years
2
Technology
Restaurant
4
Hospitality /
Retail
1
Finance /
Risk
2
4
3
2
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.
14
As described more fully below, the following table summarizes the total compensation earned for fiscal year 2021
for each of the non-employee directors.
2021 Director Compensation Table
Name
Michael A. Crawford
Donna E. Epps
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Fees Earned
or Paid in Cash
($)
50,500
13,250
183,750(3)
55,000(4)
38,000
62,000(5)
Grant Date Fair
Value of
Stock Awards
($)(1)
182,206
45,665(2)
182,206
182,206
182,206
182,206
Total
($)
232,706
58,915
365,956
237,206
220,206
244,206
(1)
In November 2019, the compensation committee and the Board elected to restructure the equity
component for each non-employee director’s total compensation by shifting from a fixed number of
service based restricted stock units to a fixed dollar amount of service based restricted stock units.
Accordingly, the compensation committee and the Board agreed that with respect to each non-employee
director’s 2021 fiscal year service, each received 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 (1), 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 $79.22 for the grants to the non-employee directors on January 8, 2021. Using the formula
described in the immediately foregoing paragraph of this footnote (1), each non-employee director (other
than Ms. Epps) was granted 2,300 service based restricted stock units for their respective 2021 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 14 to the consolidated financial statements included in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2021. 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 2021 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, 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. This cap on Board total compensation is included in the
Company’s 2021 Long-Term Incentive Plan.
(2)
Upon Ms. Epps’s appointment to the Board on September 30, 2021 with an effective date of October 1,
2021, she was granted 500 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, 2021 as
described in footnote (1) above. The fair value is equal to the closing price of the Company’s common
stock on the trading day immediately preceding the grant, which was $91.33 for the grant to Ms. Epps
on October 1, 2021.
15
(3)
(4)
(5)
This amount includes the prorated portion of the $20,000 annual fee for serving as the Lead Independent
director until March 31, 2021, the prorated portion of the $45,000 annual fee for serving as the Chairman
of the Board commencing on March 31, 2021, the $20,000 annual fee for serving as the chairperson of
the audit committee, and the $70,000 annual fee for serving as the International Liaison.
This amount includes the $8,000 annual fee for serving as the chairperson of the nominating and
corporate governance committee.
This amount includes the $10,000 annual fee for serving as the chairperson of the compensation
committee.
The compensation committee established that all non-employee directors would receive the following cash
compensation relating to their 2021 fiscal year service:
(i)
(ii)
each non-employee director received a base fee of $25,000;
the Chairman of the Board (if an independent director) received a fee of $45,000;
(iii)
the Lead Independent director received a fee of $20,000;
(iv)
the chairperson of the audit committee received a fee of $20,000;
(v)
the chairperson of the compensation committee received a fee of $10,000;
(vi)
the International Liaison received a fee of $70,000;
(vii)
the chairperson of the nominating and corporate governance committee received a fee of $8,000;
(viii)
each non-employee director 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
(ix)
each non-employee director 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.
Additionally, on November 11, 2021, the compensation committee established that all non-employee directors
will receive the following cash and stock compensation relating to their 2022 fiscal year service:
(i)
(ii)
each non-employee director will receive a base fee of $35,000;
the Chairman of the Board will receive a fee of $50,000;
(iii)
the chairperson of the audit committee will receive a fee of $25,000;
(iv)
the chairperson of the compensation committee will receive a fee of $10,000;
(v)
the chairperson of nominating and corporate governance committee will receive a fee of $10,000;
(vi)
each member of the audit committee will receive a fee of $10,000;
(vii)
each member of the compensation committee will receive a fee of $7,000;
(viii)
each member of the nominating and corporate governance committee will receive a fee of $7,000;
(ix)
the non-employee directors will no longer receive a fee for meeting attendance;
16
(x)
(xi)
the Chairman of the Board will receive an annual grant of restricted stock units equal to $290,000 divided
by the closing sales price on January 7, 2022 on the Nasdaq Global Select Market, with such quotient
rounded up or down to the nearest 100 shares. These restricted stock units were granted on January 8,
2022 and will vest on January 8, 2023; and
each remaining non-employee director will receive an annual grant of restricted stock units equal to
$200,000 divided by the closing sales price on January 7, 2022 on the Nasdaq Global Select Market,
with such quotient rounded up or down to the nearest 100 shares. These restricted stock units were
granted on January 8, 2022 and will vest on January 8, 2023.
Code of Conduct
Company 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. We are
committed to Passion, Partnership, Integrity and Fun… All with Purpose! The Code of Conduct is our guide as we apply
these core values in our treatment of our fellow employees and how we run our business. Our Code of Conduct also
encompasses our principles and practices relating to the ethical conduct of the Company’s business and commitment to
complying with all laws affecting the Company’s business.
We take all reported concerns or possible violations of our Code of Conduct seriously and will promptly and
thoroughly investigate each reported concern as confidentially as possible. The Code of Conduct establishes three separate
ways in which any person may submit confidential and anonymous reports of suspected or actual violations of the Code
of Conduct. If an individual files a report, then the concerns will be directed to the appropriate personnel for investigation.
We do not retaliate against any person who raises questions, reports concerns, or who participates in an investigation
related to the Code of Conduct.
The Code of Conduct is available in its entirety on the Company’s website at www.texasroadhouse.com. The
Company will post on its website any amendments to, or waivers from, its Code of Conduct, if any, that apply to the
principal executive officer, the principal financial officer, principal accounting officer or controller, or persons performing
similar functions.
Vendor Expectations. In addition to the Company’s Code of Conduct, the Company has established vendor
expectations outling our standards regarding our relationship with our vendors, including the manner in which our vendors
conduct their business, the manner in which they treat their employees, and our expectation that our vendors will comply
with all applicable laws and regulations relating to their business operations. Our Vendor Expectations are available in
their entirety on the Company’s website at www.texasroadhouse.com.
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 established time
frame.
17
Succession Planning
The Board and the Company recognize the importance of continuity of leadership to ensure a smooth transition for its
employees, guests, 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 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 they are not 80 years or older at the time of such re-election.
18
STOCK OWNERSHIP INFORMATION
The following table sets forth as of March 8, 2022 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
Christopher C. Colson
Donna E. Epps
S. Chris Jacobsen
Gregory N. Moore
Gerald L. Morgan
Hernan E. Mujica
Tonya R. Robinson
Doug W. Thompson(3)
Gina A. Tobin
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Directors and All Executive Officers as a Group (14 Persons)
Other 5% Beneficial Owners**
Blackrock, Inc.(4)
55 East 52nd Street
New York, New York 10022
The Vanguard Group(5)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Melvin Capital Management LP(6)
535 Madison Avenue, 22nd Floor
New York, New York 10022
Common Stock(1)
Common
Stock
Ownership Percent
12,352
4,200
3,745
500
23,449
66,850
91,174
15,704
13,696
51,802
7,588
12,300
15,520
98,243
417,123
*
*
*
*
*
*
*
*
*
*
*
*
*
*
0.6%
10.8%
9.76%
9.9%
*
**
(1)
Represents beneficial ownership of less than 1.0% of the outstanding shares of class.
This information is based on stock ownership reports on Schedule 13G filed by each of these
shareholders with the SEC as of March 1, 2022.
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, 2022, 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
19
(2)
(3)
(4)
(5)
(6)
has or shares voting and/or investment power, even though the reporting person disclaims any beneficial
interest in such stock.
Mr. Taylor passed away on March 18, 2021. The stock ownership information listed above was provided
to the Company by the Estate of Mr. Taylor.
Doug W. Thompson retired as Chief Operating Officer of the Company effective as of November 29,
2021. The stock ownership information listed above was provided to the Company by Mr. Thompson.
As reported on the Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 28, 2022, it has
sole voting power with respect to 7,429,831 shares and sole dispositive power with respect to 7,541,591
shares.
As reported on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2022,
it has shared voting power with respect to 131,643 shares, sole dispositive power with respect to
6,602,114 shares, and shared dispositive power with respect to 193,244 shares.
As reported on the Schedule 13G/A filed by Melvin Capital Management LP with the SEC on February
14, 2022 it has shared voting power with respect to 6,900,000 shares and shared dispositive power with
respect to 6,900,000 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 28, 2021, with the exception of a Form
4 for Mr. Morgan that was filed on March 11, 2021 relating to the acquisition of 1,250 service based restricted stock units
received by Mr. Morgan on February 24, 2021 relating to his Q4 2020 service prior to his appointment to President.
20
EXECUTIVE COMPENSATION
2021 EXECUTIVE SUMMARY
The following is an executive summary of our compensation program for our 2021 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:
o 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.
o 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.
o 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.
o 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:
o Base Salary: Designed to provide a secure base of compensation and serve to motivate and retain our
Named Executive Officers.
o 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.
o 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.
21
The compensation packages for our Named Executive Officers may include the following types of restricted
stock units:
o 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;
o
“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
o 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. 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 established time frame.
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. Pursuant to its charter, the compensation
committee may, in its sole discretion, retain or obtain advice from a compensation consultant to assist in the
establishment of executive compensation for each Named Executive Officer.
2021 Employment Agreements
As more particularly described below, the Company and the Named Executive Officers have entered into new
2021 Employment Agreements at the beginning of fiscal year 2021. Under the 2021 Employment Agreements, the
compensation committee has established the following compensation for our Named Executive Officers:
o 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.
o 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.
o 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.
22
2022 Executive Compensation
During 2021 and pursuant to the authority granted under its charter, the compensation committee engaged
FW Cook as an independent compensation consultant to advise the compensation committee on compensation for the
executive officers beginning with the 2022 fiscal year, together with analysis and services related to such executive
compensation. Specifically, the compensation committee asked the consultant to provide market data, review the
design of the executive compensation packages, and provide guidance on cash and equity compensation for the
Company’s executive officers. Based in part on the recommendation of our third party compensation consultant and
the review of the market data provided to the compensation committee, the total compensation package established for
each Named Executive Officer for their respective 2022 fiscal year service reflected a shift in the compensation
breakdown among the base salary, bonus and equity components to a more weighted emphasis on non-equity
compensation as well as a shift from a fixed number of service based restricted stock units and/or performance based
restricted stock units to a fixed dollar amount with respect to such service based restricted stock units. FW Cook does
not currently provide any other services to the Company, and the compensation committee has determined that FW
Cook has sufficient independence from us and our executive officers to allow FW Cook to offer objective information
and/or advice.
Clawback Policy
The Company has established a clawback policy whereby the Company may recover excess Incentive
Compensation (as hereinafter defined) following any of the following: (i) a restatement of the Company’s financial
statements for the fiscal year in which the Incentive Compensation is paid due to material noncompliance with any
financial reporting requirement under applicable securities laws; (ii) in the absence of a restatement of the Company’s
financial statements described in clause (i) above, the prior financial results which formed the basis for the calculation
of such Incentive Compensation are corrected or adjusted for the relevant fiscal year; or (iii) the compensation
committee determines that a Named Executive Officer inadvertently received an excess amount of Incentive
Compensation for the relevant fiscal year. In such an event, the compensation committee may seek recovery of such
excess Incentive Compensation from the applicable Named Executive Officer through a credit against prior Incentive
Compensation payments, a credit from future payments of Incentive Compensation, cancellation of outstanding equity
awards, withholding from future equity awards, and/or direct repayment by the applicable Named Executive Officer.
If requested by the compensation committee, the applicable Named Executive Officer shall be required to reimburse
the Company for such excess Incentive Compensation within sixty (60) days following written demand from the
compensation committee.
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.
Initial Executive Compensation Under 2021 Employment Agreements.
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 passing.
Mr. Morgan remains the President of the Corporation following his appointment to Chief Executive Officer. In order to
memorialize Mr. Morgan’s appointment to Chief Executive Officer, the Company entered into an amendment to
Mr. Morgan’s 2021 employment agreement on March 31, 2021 and having a retroactive effective date of March 18, 2021.
We also entered into an employment agreement with Christopher C. Colson, a Named Executive Officer, on March 31,
2021 in connection with his appointment to General Counsel. Additionally, on June 15, 2021, we entered into employment
23
agreements with Gina A. Tobin and Hernan E. Mujica, each a Named Executive Officer, upon Ms. Tobin’s appointment
to Chief Learning and Culture Officer and Mr. Mujica’s designation as a named executive officer, respectively. As used
herein, the employment agreements, as amended (as and if applicable), with Messrs. Taylor, Morgan, Jacobsen, Thompson,
Colson, and Mujica and Mss. Robinson and Tobin 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 has an initial term expiring on January 7, 2024 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. As more particularly described below, on December 3, 2021, the Company entered into a Separation
Agreement and Release of Claims (the “Thompson Separation Agreement”) with Mr. Thompson relating to
Mr. Thompson’s retirement as Chief Operating Officer of the Company effective as of November 29, 2021.
To assist in setting compensation under the prior employment agreements for the applicable Named Executive
Officers 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:
PEER COMPANIES
BJ’s Restaurants, Inc.
Churchill Downs Incorporated
Dine Brands Global, Inc.
Red Robin Gourmet Burgers, Inc.
Bloomin Brands, Inc.
Cracker Barrel Old Country Store, Inc. Dave & Buster’s Entertainment, Inc.
Dunkin’ Brands Group, Inc.
The Cheesecake Factory Incorporated The Wendy’s Company
Papa John’s International, Inc.
Brinker International, Inc.
While the compensation committee and management of the Company do not utilize specific market targets when
establishing compensation for the Company’s executive officers for their respective 2021 fiscal year service, 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 the initial executive 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 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 and 2022 year service, respectively. Additionally, certain Named Executive Officers have received
grants of performance based restricted stock units relating to their 2021 year service and 2022 year service, respectively.
Finally, while the Company previously granted retention grants for our Named Executive Officers under their 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
24
retention grants in the future as a part of its annual evaluation of the compensation packages for the Named Executive
Officers.
Under 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.
Additionally, the 2021 Employment Agreements include certain confidentiality, non-solicitation, and non-disparagement
provisions. Finally, 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 Company has established a clawback policy whereby the Company may recover excess Incentive
Compensation following any of the following: (i) a restatement of the Company’s financial statements for the fiscal year
in which the Incentive Compensation is paid due to material noncompliance with any financial reporting requirement
under applicable securities laws; (ii) in the absence of a restatement of the Company’s financial statements described in
clause (i) above, the prior financial results which formed the basis for the calculation of such Incentive Compensation are
corrected or adjusted for the relevant fiscal year; or (iii) the compensation committee determines that a Named Executive
Officer inadvertently received an excess amount of Incentive Compensation for the relevant fiscal year. In such an event,
the compensation committee may seek recovery of such excess Incentive Compensation from the applicable Named
Executive Officer through a credit against prior Incentive Compensation payments, a credit from future payments of
Incentive Compensation, cancellation of outstanding equity awards, withholding from future equity awards, and/or direct
repayment by the applicable Named Executive Officer. If requested by the compensation committee, the applicable
Named Executive Officer shall be required to reimburse the Company for such excess Incentive Compensation within
sixty (60) days following written demand from the compensation committee. For the purposes of the clawback policy, the
term “Incentive Compensation” means (a) the amount of (or payment or value received with respect to) a Named
Executive Officer’s annual incentive awards under the Company’s cash bonus plan (as the same may be amended); (ii) the
amount of performance based restricted stock units granted (or vested) to a Named Executive Officer pursuant to the
Company’s 2021 Long-Term Incentive Plan (or any successor equity plan); and (iii) any other incentive-based
compensation paid or payable to a Named Executive Officer with respect to any Company plan or agreement (as and if
applicable).
Executive Compensation Starting With 2022 Fiscal Year.
During 2021 and pursuant to the authority granted under its charter, the compensation committee engaged FW
Cook as an independent compensation consultant to advise the compensation committee on compensation for the executive
officers beginning with the 2022 fiscal year, together with analysis and services related to such executive compensation.
Specifically, the compensation committee asked the consultant to provide market data, review the design of the executive
compensation packages, and provide guidance on cash and equity compensation for the Company’s executive officers. As
a part of this review, the chairperson of the compensation committee, the independent compensation consultant and
management of the Company agreed on a list of the following 15 peer companies to evaluate their executive compensation:
PEER COMPANIES
BJ’s Restaurants, Inc.
Chipotle Mexican Grill, Inc.
Dave & Buster’s Entertainment, Inc. Denny’s Corporation
Jack in the Box Inc.
Ruth’s Hospitality Group, Inc.
Bloomin Brands, Inc.
Brinker International, Inc.
Cracker Barrel Old Country Store, Inc. Darden Restaurants, Inc.
Dine Brands Global, Inc.
Red Robin Gourmet Burgers, Inc.
Papa John’s International, Inc.
The Cheesecake Factory Incorporated The Wendy’s Company
Based in part on the recommendation of our third party compensation consultant and the review of the market
data provided to the compensation committee, the total compensation package established for each Named Executive
Officer for their respective 2022 fiscal year service reflected a shift in the compensation breakdown among the base salary,
bonus and equity components to a more weighted emphasis on non-equity compensation as well as a shift from a fixed
number of service based restricted stock units and/or performance based restricted stock units to a fixed dollar amount
with respect to such service based restricted stock units. FW Cook does not currently provide any other services to the
Company, and the compensation committee has determined that FW Cook has sufficient independence from us and our
executive officers to allow FW Cook to offer objective information and/or advice.
25
As relevant, the chart below illustrates the difference in target compensation breakdown by Named Executive
Officer for the 2021 fiscal year compared with the 2022 fiscal year:
TARGET COMPENSATION BREAKDOWN
Named Executive Officer
W. Kent Taylor
Late Chairman, Late Chief Executive Officer
Gerald L. Morgan
Chief Executive Officer, President
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Base
Salary
8%
2021
Bonus
8%
2022
Equity
(1)
84%
Base
Salary
--
Bonus
--
Equity
--
15%
11%
74%
24%
24%
52%
14%
14%
72%
--
--
--
20%
14%
66%
28%
22%
50%
21%
14%
65%
29%
24%
47%
26%
15%
59%
36%
28%
36%
25%
14%
61%
36%
28%
36%
31%
10%
59%
36%
28%
36%
(1)
For the purposes of calculating the percentage compensation relating to the equity components for the
2021 fiscal year, a $90 share price was utilized for shares of service based restricted stock units and/or
performance based restricted stock units granted to each Named Executive Officer for their respective
2021 fiscal year service.
Summary of Executive Compensation
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. Additionally and 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.
Moreover, 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.
26
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 93% of the votes cast at our 2021 annual meeting on an advisory
basis approved the compensation of our Named Executive Officers as disclosed in the proxy statement for the 2021 annual
meeting. None of the Named Executive Officers, including Mr. Morgan, 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.
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
for 2021. During the term of the respective 2021 Employment Agreement, base salary increases are at the discretion of the
compensation committee. In furtherance of the foregoing and effective as of January 8, 2022 and continuing thereafter
until such time as a Named Executive Officer’s annual base salary is adjusted by the compensation committee in
accordance with the applicable 2021 Employment Agreement, the compensation committee adjusted the annual base salary
for each Named Executive Officer as shown in the table below.
Named Executive Officer Base Salary Under 2021 Employment Agreement
W. Kent Taylor
Late Chairman, Late Chief Executive Officer
Gerald L. Morgan
Chief Executive Officer, President(3)
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
2021
(starting January 8, 2021)
($)(1)
525,000
2022
(starting January 8, 2022)
($)
--(2)
350,000
450,000
325,000
325,000
350,000
350,000
350,000
1,000,000
--(4)
500,000
500,000
500,000
500,000
500,000
(1)
After evaluating the anticipated impact that the COVID-19 pandemic may have 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)
effective as of March 31, 2021, Mr. Thompson’s annual base salary was increased to $500,000;
27
(ii)
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)
(3)
(4)
As described above, Mr. Taylor passed away on March 18, 2021 so no changes were made to
Mr. Taylor’s base salary.
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.
As described above, Mr. Thompson retired as the Chief Operating Officer for the Company on
November 29, 2021 so no changes were made to Mr. Thompson’s base salary.
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 2021
Employment Agreements 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 1.75% 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
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 2021 were paid at 187.9% 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 an increase in actual EPS of 682.5% and an
actual Profit Sharing Pool of $4,273,076 calculated on fiscal year 2021 pre-tax profit of $284,871,733. Note that due
28
primarily to the adverse impact of the pandemic, cash incentive bonuses with respect to fiscal year 2020 were paid at
6.58% of the total target amounts.
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 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. As further described above, depending
on the level of achievement of the goals, the bonus may be reduced to a minimum of $0 or increased to a maximum of two
times the base target amount under the current incentive compensation policy of the compensation committee of the
Board. The actual amounts earned by each Named Executive Officer for fiscal year 2021 are more fully described in
“Executive Compensation.”
Executive Incentive Compensation for Fiscal Year 2021
W. Kent Taylor
Late Chairman, Late Chief Executive Officer
Gerald L. Morgan(2)
Chief Executive Officer, President
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson(3)
General Counsel, Corporate Secretary
Hernan E. Mujica(3)
Chief Information Officer
Gina A. Tobin(3)
Chief Learning and Culture Officer
Target
Bonus
($)(1)
525,000
350,000
480,000
200,000
200,000
200,000
200,000
120,000
Minimum
Bonus
($)
0
Maximum
Bonus
($)
1,050,000
0
0
0
0
0
0
0
700,000
960,000
400,000
400,000
400,000
400,000
240,000
(1)
After evaluating the anticipated impact that the COVID-19 pandemic may have 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 was
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 was
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 was
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
29
for the portion of his 2021 fiscal year service commencing on March 31, 2021 and continuing to and
through December 28, 2021.
(3)
With respect to Messrs. Colson and Mujica and Ms. Tobin, the target bonus amounts and maximum
bonus amounts listed in the table above relate to the portion of their respective 2021 fiscal year service
in which each served as a named executive officer.
Additionally, on December 6, 2021, the compensation committee established an annual short-term cash incentive
opportunity with a target bonus as set forth in the table below relating to each Named Executive Officer’s 2022 fiscal year
service. The performance criteria and terms of bonus awards are at the discretion of the compensation committee. As
more particularly described above, the compensation committee continued its two pronged approach with 50% of the target
incentive bonus being based on whether the Company achieves an annual EPS growth target of 10% and the remaining
50% being based on a profit sharing pool comprised of 1.75% 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). As
further described above, depending on the level of achievement of the goals, the bonus may be reduced to a minimum of
$0 or increased to a maximum of two times the base target amount under the current incentive compensation policy of the
compensation committee of the Board.
Executive Incentive Compensation for Fiscal Year 2022
Gerald L. Morgan
Chief Executive Officer, President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Target
Bonus
($)
1,000,000
Minimum
Bonus
($)
0
Maximum
Bonus
($)
2,000,000
400,000
400,000
400,000
400,000
400,000
0
0
0
0
0
800,000
800,000
800,000
800,000
800,000
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. While the initial grant of restricted stock unit awards is based on a fixed dollar amount starting
with the 2022 fiscal year, as opposed to a fixed number of restricted stock units for prior year service, the ultimate value
of the restricted stock unit awards is dependent upon the performance of the Company and the price of our common stock
at the time such restricted stock units vest. 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 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 giving the compensation committee the
discretion to grant certain stock awards (if any) in its discretion to our Named Executive Officers under the 2021
30
Employment Agreements, the compensation committee has the opportunity to adjust a large 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. While the Company previously granted retention grants for our Named Executive Officers under their
respective prior 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 2021 Employment Agreements for Messrs. Taylor, Morgan, Thompson, Jacobsen, Colson, and
Mujica and Mss. Robinson and Tobin 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 1.75% 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 2021 were paid at 187.9% 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 an increase in actual EPS of 682.5% and an actual Profit
Sharing Pool of $4,273,076 calculated on fiscal year 2021 pre-tax profit of $284,871,733. 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.
Service Based Restricted Stock Units. 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 with respect to each Named Executive Officer’s
2021 fiscal year service and are subject to the Named Executive Officer still serving the Company on the vesting date.
31
Service Based Restricted Stock Units for 2021 Fiscal Year
W. Kent Taylor
Late Chairman, Late Chief Executive Officer
Gerald L. Morgan
Chief Executive Officer, President
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Number of Service Based
Restricted Stock
Units vesting on
January 8, 2022
pursuant to
2021 Employment
Agreements
10,000
10,000(1)
10,000(2)
10,000
7,000
7,500(3)
4,750(4)
4,500(5)
(1)
(2)
(3)
(4)
(5)
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. These shares are in
addition to 1,250 service based restricted stock units granted to Mr. Morgan on February 24, 2021 and
scheduled to vest on February 24, 2022 relating to his Q4 2020 service.
As previously described, Mr. Thompson retired as Chief Operating Officer of the Company on
November 29, 2021. Upon his retirement, Mr. Thompson forfeited his right to receive the 10,000 service
based restricted stock units relating to his 2021 fiscal year service vesting on January 8, 2022.
These service restricted stock units granted to Mr. Colson are in addition to (i) the 1,125 service based
restricted stock units granted on February 24, 2021 and scheduled to vest on February 24, 2022 relating
to his Q4 2020 service, and (ii) the 1,125 service based restricted stock units granted on May 5, 2021
and scheduled to vest on May 5, 2022 relating to his Q1 2021 service.
These service restricted stock units granted to Mr. Mujica are in addition to (i) the 2,375 service based
restricted stock units granted on February 24, 2021 and scheduled to vest on February 24, 2022 relating
to his Q4 2020 service, (ii) the 2,375 service based restricted stock units granted on May 5, 2021 and
scheduled to vest on May 5, 2022 relating to his Q1 2021 service, and (iii) the 2,375 service based
restricted stock units granted on August 4, 2021 and scheduled to vest on August 4, 2022 relating to his
Q2 2021 service.
These service restricted stock units granted to Ms. Tobin are in addition to (i) the 1,000 service based
restricted stock units granted on February 24, 2021 and scheduled to vest on February 24, 2022 relating
to her Q4 2020 service, (ii) the 1,500 service based restricted stock units granted on May 5, 2021 and
scheduled to vest on May 5, 2022 relating to her Q1 2021 service, and (iii) the 1,500 service based
restricted stock units granted on August 4, 2021 and scheduled to vest on August 4, 2022 relating to her
Q2 2021 service.
32
Additionally, on December 6, 2021, the compensation committee authorized the grant of service based restricted
stock units under each 2021 Employment Agreement equal to the dollar amount described in the table below for each
Named Executive Officer with respect to their 2022 fiscal year service. These service based restricted stock units were
calculated by dividing the dollar amount described in the table below by the per share 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, which
such quotient rounded up or down to the nearest 100 shares. Additionally, these shares were granted on January 8, 2022
and will vest on January 8, 2023, provided the Named Executive Officer is still employed by the Company as of the vesting
date.
Service Based Restricted Stock Units for 2022 Fiscal Year
Service Based
Restricted Stock Units
vesting on January 8, 2023
pursuant to 2021
Employment Agreements ($)
1,100,000
Number of Service Based
Restricted Stock Units
vesting on January 8, 2023
pursuant to 2021
Employment Agreements(1)
12,200
500,000
400,000
500,000
500,000
500,000
5,500
4,400
5,500
5,500
5,500
Gerald L. Morgan
Chief Executive Officer, President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
(1)
For the service based restricted stock units described in this footnote (1), 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 $90.22 for these grants. Using the formula described in the immediately foregoing paragraph
prior to this table, each Named Executive Officer was granted the number of service based restricted
stock units described in the table above for their respective 2022 fiscal year service. These are not
amounts paid to or received by the Named Executive Officers. The amounts listed above represent the
grant date fair value determined in accordance with ASC 718 of restricted stock units granted under the
Company’s 2021 Long-Term Incentive Plan. Detailed information under ASC 718 is set forth in Note
14 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for
the fiscal year ended December 28, 2021. The Company cautions that the amounts reported in the table
above 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.
33
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 2021 fiscal year under their 2021 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:
Performance Based Restricted Stock Units for 2021 Fiscal Year
Target Number
of Performance
Based Restricted
Stock Units
Granted for
2021 pursuant to
2021
Employment
Agreements
50,000
Minimum
Number
of Performance
Based Restricted
Stock Units
pursuant to
2021
Employment
Agreements
0
Maximum
Number
of Performance
Based Restricted
Stock Units
pursuant to
2021
Employment
Agreements
100,000
Actual Number
of Shares
Issued for
2021 following
Certification of
2021
Performance
Goals(1)
17,757(2)
15,000(3)
20,000
2,500(5)
5,000
0
0
0
0
30,000
28,179
40,000
0(4)
5,000
10,000
4,697
9,393
W. Kent Taylor
Late Chairman, Late Chief
Executive Officer
Gerald L. Morgan
Chief Executive Officer,
President
Doug W. Thompson
Former Chief Operating
Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
(1)
(2)
(3)
(4)
(5)
The shares underlying the performance based restricted stock units attributable to the 2021 fiscal year
were issued on February 25, 2022. The compensation committee determined that 50% of the
performance based restricted stock unit award for the 2021 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 2021 fiscal year 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.
As described above, Mr. Taylor passed away on March 18, 2021. The shares listed above reflect a
prorated portion of the 50,000 performance based restricted stock units previously granted relating to
this 2021 fiscal year service.
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.
As described above, Mr. Thompson retired as Chief Operating Officer of the Company on November 29,
2021. Upon his retirement, Mr. Thompson forfeited his right to receive any performance based restricted
stock units relating to his 2021 fiscal year service.
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.
34
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, on December 6, 2021, the compensation committee authorized the grant of performance
based restricted stock units as described in the table below to Messrs. Morgan and Jacobsen and Ms. Robinson under their
respective 2021 Employment Agreements for their respective 2022 fiscal year service. These performance based restricted
stock units will be calculated by dividing the target dollar amount described in the table below by the per share 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, which such quotient rounded up or down to the nearest 100 shares. Additionally, these performance
based restricted stock units were granted to each respective executive officer on January 8, 2022 and will vest on January
8, 2023, subject to the achievement of defined goals established by the compensation committee of the Board. The actual
number of shares that will be issued to each of Messrs. Morgan and Jacobsen, and Ms. Robinson for fiscal year 2022 based
on achievement of the performance goals assigned to these grants by the compensation committee will not be calculated
until the first quarter of 2023.
Performance Based Restricted Stock Units for 2022 Fiscal Year
Target
Performance
Based Restricted
Stock Units
vesting on
January 8, 2023
pursuant to
2021
Employment
Agreements($)(1)
1,100,000
400,000
400,000
Minimum
Performance
Based Restricted
Stock Units
pursuant to
2021
Employment
Agreements($)
Maximum
Performance
Based Restricted
Stock Units
pursuant to
2021
Employment
Agreements($)
Target Number
of Performance
Based Restricted
Stock Units
vesting on
January 8, 2023
pursuant to
2021
Employment
Agreements(2)
0
0
0
2,200,000
800,000
800,000
12,200
4,400
4,400
Gerald L. Morgan
Tonya R. Robinson
S. Chris Jacobsen
(1)
(2)
The compensation committee determined that 50% of the performance based restricted stock unit award
for 2022 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 1.75% 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. Morgan and Jacobsen and Ms. Robinson with respect to fiscal year 2022 will be
certified in the first quarter of 2023.
For the performance 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 $90.22 for these grants. Using the formula described in the immediately foregoing
paragraph prior to this table, each Named Executive Officer was granted the target number of
performance based restricted stock units described in the table above for their respective 2022 fiscal year
service. These are not amounts paid to or received by these Named Executive Officers. The amounts
listed above represent the grant date fair value determined in accordance with ASC 718 of restricted
stock units granted under the Company’s 2021 Long-Term Incentive Plan. Detailed information under
ASC 718 is set forth in Note 14 to the consolidated financial statements included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 28, 2021. The Company cautions that
the amounts reported in the table above for these awards may not represent the amounts that these Named
Executive Officers will actually realize from the awards.
35
Separation and Change in Control Arrangements
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
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
36
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. Additionally, such specific restricted stock unit award
agreement and/or performance restricted stock unit award agreement entered into by the Named Executive Officers provide
that if any Named Executive Officer’s continuous service is terminated because of death or disability prior to the vesting
date for the applicable grant of service based restricted stock units and/or performance based restricted stock units (as and
if applicable), then such applicable restricted stock units become immediately vested in an amount equal to the total number
of granted restricted stock units multiplied by a fraction, the numerator of which is the number of calendar months or
portions thereof from grant date of such restricted stock units through the date on which such Named Executive Officer’s
continuous service is terminated due to death or disability and the denominator of which is the total number of calendar
months or portion thereof in the vesting period for such restricted stock unit grants.
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.
The estimated amounts that would have been payable to a Named Executive Officer under the 2021 Employment
Agreements are more fully described in “Termination, Change of Control and Change of Responsibility Payments.”
Additionally, on November 30, 2021, Mr. Thompson and the Company announced that Mr. Thompson would be
retiring as Chief Operating Officer of the Company effective as of November 29, 2021. On December 3, 2021, the
Company entered into the Thompson Separation Agreement with Mr. Thompson. Under the Thompson Separation
Agreement, the Company agreed to pay to Mr. Thompson an aggregate sum of $4,745,000 (less any applicable
withholdings and/or deductions), which will be paid in three installments in accordance with the following schedule:
(i) $1,581,667 due and payable no later than December 27, 2021; (ii) $1,581,666 due and payable on January 31, 2022;
and (iii) $1,581,666 due and payable on March 14, 2022. These amounts reflect a monetized amount of incentive bonus,
service based restricted stock units and performance based restricted stock units that Mr. Thompson would have otherwise
received for his 2021 fiscal year service to the extent Mr. Thompson had remained with the Company through the end of
the fiscal year. The Thompson Separation Agreement also provided a general release of claims by Mr. Thompson and
affirmed certain obligations under his 2021 Employment Agreement, including, without limitation, obligations pertaining
to confidentiality, non-competition, non-hire, and non-solicitation.
37
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.
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 28, 2021.
All members of the compensation committee concur in this report.
James R. Zarley, Chair
Michael A. Crawford
Donna E. Epps
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
38
Summary Compensation Table
The following table sets forth the total compensation earned with respect to the fiscal years 2021, 2020, and 2019
for Mr. Morgan, our Chief Executive Officer, Mr. Taylor, our late Chairman and Chief Executive Officer, and
Ms. Robinson, our Chief Financial Officer. It also includes such information for at least three of our other most highly
compensated executive officers during fiscal year 2021, as and if applicable.
Salary
($)
Year
2021 411,269
2020 100,000
Bonus
($)(1)
—
200
2021 100,962
2020 121,154
2019 525,000
2021 343,269
2020 245,482
2019 298,077
2021 435,122
2020 122,960
2019 450,000
2021 343,269
2020 242,981
2019 314,481
2021 323,077
—
—
—
200
200
200
—
200
200
200
200
200
200
Grant Date
Fair Value
of Stock
Awards
($)(2)(3)
Non-equity
Incentive Plan
Compensation
($)(4)
2,394,513
291,726
4,753,200
3,358,800
3,711,600
998,855
671,760
1,237,200
2,376,600
1,679,400
2,629,050
950,640
671,760
742,320
945,109
880,832
772,944
112,500
7,213
654,181
446,168
3,290
249,212
—
7,896
598,108
410,944
3,290
249,212
319,290
All Other
Compensation
($)(5)
Total
($)(3)
83,151 3,769,765
300 1,165,170
19,502 4,986,164
133,772 3,620,939
8,961 4,899,742
— 1,788,492
920,732
—
1,161 1,785,850
4,745,000 7,556,722
7,800 1,818,256
8,961 3,686,319
7,800 1,712,853
924,889
6,658
8,961 1,315,174
1,497 1,589,173
2021 337,707
200
1,142,042
284,783
— 1,764,732
2021 334,423
200
822,315
238,141
— 1,395,079
Name and Principal
Position
Gerald L. Morgan
Chief Executive Officer,
President
W. Kent Taylor
Late Chairman, Late
Chief Executive Officer
Tonya R. Robinson
Chief Financial
Officer
Doug W. Thompson
Former Chief Operating
Officer
S. Chris Jacobsen
Chief Marketing
Officer
Christopher C. Colson
General Counsel,
Corporate Secretary
Hernan E. Mujica
Chief Information
Officer
Gina A. Tobin
Chief Learning and
Culture Officer
(1)
(2)
This column represents holiday bonus awards paid to the Named Executive Officers for the fiscal years
ended December 28, 2021, December 29, 2020, and December 31, 2019.
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.”
39
(3)
With respect to Mr. Morgan, (i) amounts for the 2021 fiscal year include (a) the performance based
restricted stock units and service based restricted stock units granted to Mr. Morgan during the 2021
fiscal year relating to his 2021 year service, and (b) the service based restricted stock units granted to
Mr. Morgan during the 2021 fiscal year relating to his Q4 2020 service, and (ii) 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. Taylor, (i) amounts for the 2021 fiscal year include the performance based restricted
stock units and service based restricted stock units granted to Mr. Taylor during the 2021 fiscal year
relating to his 2021 year service (ii) 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 (iii) 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 2021 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Ms. Robinson during the 2021
fiscal year relating to her 2021 year service, (ii) 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, and (iii) 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.
With respect to Mr. Thompson, (i) amounts for the 2021 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Thompson during the 2021
fiscal year relating to his 2021 year service, (ii) 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, and (iii) 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.
With respect to Mr. Jacobsen, (i) amounts for the 2021 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Jacobsen during the 2021
fiscal year relating to his 2021 year service, (ii) 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 (iii) 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.
With respect to Mr. Colson, amounts for the 2021 fiscal year include (a) the service based restricted
stock units granted to Mr. Colson during the 2021 fiscal year relating to his 2021 year service including
certain grants made prior to his appointment to General Counsel, and (b) the service based restricted
stock units granted to Mr. Colson during the 2021 fiscal year relating to his Q4 2020 service.
With respect to Mr. Mujica, amounts for the 2021 fiscal year include (a) the service based restricted
stock units granted to Mr. Mujica during the 2021 fiscal year relating to his 2021 year service including
certain grants made prior to his designation of an executive officer as Chief Information Officer, and
(b) the service based restricted stock units granted to Mr. Mujica during the 2021 fiscal year relating to
his Q4 2020 service.
With respect to Ms. Tobin, amounts for the 2021 fiscal year include (a) the service based restricted stock
units granted to Ms. Tobin during the 2021 fiscal year relating to her 2021 year service including certain
grants made prior to her appointment to Chief Learning and Culture Officer, and (b) the service based
restricted stock units granted to Ms. Tobin during the 2021 fiscal year relating to her Q4 2020 service.
40
(4)
(5)
As described above, Mr. Thompson retired as Chief Operating Officer of the Company on November 29,
2021. Upon his retirement, Mr. Thompson forfeited his right to receive any bonus relating to his 2021
fiscal year service.
The amount included for Mr. Morgan with respect to fiscal year 2021 includes $81,654 paid by the
Company toward to Mr. Morgan’s relocation expenses to Louisville, Kentucky.
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 2021, the Company paid
$17,941 toward Mr. Taylor’s personal security prior to his passing, and for fiscal year 2020, the
Company paid $130,155 toward Mr. Taylor’s personal security.
The amount included for Mr. Thompson with respect to fiscal year 2021 includes the total amount paid
to Mr. Thompson by the Company under the Thompson Separation Agreement.
Grants of Plan-Based Awards in Fiscal Year 2021
The following table presents information with respect to grants of stock awards to the applicable Named
Executive Officers during fiscal year 2021.
Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
Name
Grant Date Minimum Target Maximum
All Other Stock
Awards:
Number of
Shares of Stock
or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
W. Kent Taylor
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
Gerald L. Morgan
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
Service Based RSUs vesting
on February 24, 2022
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
January 8,
2021
January 8,
2021
January 8,
2021
January 8,
2021
February 24,
2021
March 31,
2021
March 31,
2021
—
—
—
—
—
—
—
—
—
10,000
792,200
50,000(4)
100,000
—
3,961,000
—
—
5,000
396,100
2,500(4)
5,000
—
198,050
—
—
—
—
1,250
5,000
112,838
482,150
12,500(4)
25,000
—
1,205,375
41
Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
Name
Grant Date Minimum Target Maximum
All Other Stock
Awards:
Number of
Shares of Stock
or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
Doug W. Thompson
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
Tonya R. Robinson
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
Performance Based RSUs
vesting on January 8,
2022
S. Chris Jacobsen
Service Based RSUs vesting
on January 8, 2022
Performance Based RSUs
vesting on January 8,
2022
Christopher C. Colson
January 8,
2021
January 8,
2021
January 8,
2021
January 8,
2021
March 31,
2021
January 8,
2021
January 8,
2021
Service Based RSUs vesting
on February 24, 2022
Service Based RSUs vesting
on January 8, 2022
Service Based RSUs vesting
February 24,
2021
March 31,
2021
May 5, 2021
on May 5, 2022
Hernan E. Mujica
Service Based RSUs vesting
on February 24, 2022
Service Based RSUs vesting
February 24,
2021
May 5, 2021
on May 5, 2022
Service Based RSUs vesting
June 15, 2021
on January 8, 2022
Service Based RSUs vesting
on August 4, 2022
August 4,
2021
—
—
—
—
—
—
10,000
792,200
20,000(4)
40,000
—
1,584,400
—
—
10,000
792,200
2,000(4)
4,000
—
500(4)
1,000
—
—
158,440
48,215
—
—
7,000
554,540
5,000(4)
10,000
—
396,100
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,125
7,500
1,125
2,375
2,375
4,750
2,375
101,554
723,225
120,330
214,391
254,030
462,840
210,781
—
—
—
—
—
—
—
—
—
42
Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
Grant Date Minimum Target Maximum
All Other Stock
Awards:
Number of
Shares of Stock
or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
Name
Gina A. Tobin
Service Based RSUs vesting
on February 24, 2022
Service Based RSUs vesting
February 24,
2021
May 5, 2021
on May 5, 2022
Service Based RSUs vesting
June 15, 2021
on January 8, 2022
Service Based RSUs vesting
on August 4, 2022
August 4,
2021
—
—
—
—
—
—
—
—
—
—
—
—
1,000
1,500
4,500
1,500
90,270
160,440
438,480
133,125
(1)
(2)
(3)
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.
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 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, 2021 at $79.22.
With respect to Mr. Morgan, 5,000 service based restricted stock units and 2,500 performance
based restricted stock units granted on January 8, 2021 at $79.22, 1,250 service based restricted
stock units granted on February 24, 2021 at $90.27, and 5,000 service based restricted stock
units and 12,500 performance based restricted stock units granted on March 31, 2021 at $96.43.
(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, 2021 at $79.22.
(iv) With respect to Ms. Robinson, 10,000 service based restricted stock units and 2,000
performance based restricted stock units granted on January 8, 2021 at $79.22 and 500
performance based restricted stock units granted on March 31, 2021 at $96.43.
(v)
With respect to Mr. Jacobsen, 7,000 service based restricted stock units and 5,000 performance
based restricted stock units granted on January 8, 2021 at $79.22.
(vi) With respect to Mr. Colson, 1,125 service based restricted stock units granted on February 24,
2021 at $90.27, 7,500 service based restricted stock units granted on March 31, 2021 at $96.43,
and 1,125 service based restricted stock units granted on May 5, 2021 at $106.96.
43
(vii) With respect to Mr. Mujica, 2,375 service based restricted stock units granted on February 24,
2021 at $90.27, 2,375 service based restricted stock units granted on May 5, 2021 at $106.96,
4,750 service based restricted stock units granted on June 15, 2021 at $97.44, and 2,375 service
based restricted stock units granted on August 4, 2021 at $88.75.
(viii) With respect to Ms. Tobin, 1,000 service based restricted stock units granted on February 24,
2021 at $90.27, 1,500 restricted stock units granted on May 5, 2021 at $106.96, 4,500 service
based restricted stock units granted on June 15, 2021 at $97.44, and 1,500 service based
restricted stock units granted on August 4, 2021 at $88.75.
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 14 to the consolidated financial statements in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2021.
(4)
The amount included in the table above represents the target award opportunity. Performance based
equity awards with respect to fiscal year 2021 were paid at 187.9% 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 an increase
in actual EPS of 682.5% and an actual Profit Sharing Pool of $4,273,076 calculated on fiscal year 2021
pre-tax profit of $284,871,733.
44
Outstanding Equity Awards
The following table presents information with respect to outstanding stock option awards, stock awards, and
equity incentive plan awards as of December 28, 2021 by the Named Executive Officers (other than Messrs. Taylor and
Thompson).
Outstanding Equity Awards at Fiscal Year End Table
Stock Awards
Equity Incentive Plan Awards
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
11,250(2)
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
1,008,225
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
15,000(3)
Market
Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
1,344,300
10,000(4)
896,200
2,500(5)
224,050
7,000(6)
627,340
5,000(7)
448,100
9,750(8)
873,795
11,875(9)
1,064,238
8,500(10)
761,770
—
—
—
—
—
—
Name
Gerald L. Morgan
Chief Executive Officer, President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Market value was computed using the Company’s closing stock price on the last trading day of our fiscal
year ended December 28, 2021, which was $89.62.
The vesting schedule is as follows: 10,000 service based restricted stock units on January 8, 2022 and
1,250 service based restricted stock units on February 24, 2022.
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: 15,000 performance based restricted stock units
on January 8, 2022.
The vesting schedule is as follows: 10,000 service based restricted stock units on January 8, 2022.
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: 2,500 performance based restricted stock units
on January 8, 2022.
The vesting schedule is as follows: 7,000 service based restricted stock units on January 8, 2022.
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: 5,000 performance based restricted stock units
on January 8, 2022.
45
(8)
(9)
(10)
The vesting schedule is as follows: 7,500 service based restricted stock units on January 8, 2022, 1,125
service based restricted stock units on February 24, 2022 and 1,125 service based restricted stock units
on May 5, 2022.
The vesting schedule is as follows: 4,750 service based restricted stock units on January 8, 2022, 2,375
service based restricted stock units on February 24, 2022, 2,375 service based restricted stock units on
May 5, 2022, and 2,375 service based restricted stock units on August 4, 2022.
The vesting schedule is as follows: 4,500 service based restricted stock units on January 8, 2022, 1,000
service based restricted stock units on February 24, 2022, 1,500 service based restricted stock units on
May 5, 2022, and 1,500 service based restricted stock units on August 4, 2022.
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 28, 2021 by the Named Executive Officers.
Stock Vested Table
Name
W. Kent Taylor
Late Chairman, Late Chief Executive Officer
Gerald L. Morgan
Chief Executive Officer, President
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Number of
Shares Acquired
on Vesting
(#)
80,979
5,000
23,816
20,132
15,461
4,500
9,500
3,750
Value Realized
on Vesting
($)(1)
7,632,882(i)
468,763(ii)
1,886,704(iii)
1,594,857(iv)
1,224,820(v)
421,886(vi)
890,649(vii)
352,290(viii)
(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)
$79.22 with respect to the 10,000 service based restricted stock units which vested on January 8,
2021, $79.22 with respect to the 3,290 performance based restricted stock units which vested
on January 8, 2021 but became reportable on February 26, 2021, $97.21 with respect to 1,890
service based restricted stock units which vested on March 18, 2021 (which reflects a prorated
portion of 10,000 service based restricted stock units that vested upon Mr. Taylor’s death),
$97.21 with respect to 48,042 “retention” restricted stock units which vested on March 18, 2021
(which reflects a prorated portion of 75,000 “retention” restricted stock units that vested upon
Mr. Taylor’s death), and $97.21 with respect to 17,757 performance based restricted stock units
46
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
which vested on March 18, 2021 but became reportable on February 25, 2022 (which reflect a
prorated portion of 50,000 performance based restricted stock units that vested upon
Mr. Taylor’s death but were determined after certain Company performance measures have
been satisfied during the 2021 fiscal year).
$90.88 with respect to the 1,250 service based restricted stock units which vested on March 1,
2021, $104.63 with respect to the 1,250 service based restricted stock units which vested on
May 10, 2021, $91.71 with respect to the 1,250 service based restricted stock units which vested
on August 9, 2021, and $87.79 with respect to the 1,250 service based restricted stock units
which vested on November 3, 2021.
$79.22 with respect to the 22,500 service based restricted stock units which vested on January 8,
2021 and $79.22 with respect to the 1,316 performance based restricted stock units which
vested on January 8, 2021 but became reportable on February 26, 2021.
$79.22 with respect to the 20,000 service based restricted stock units which vested on January 8,
2021 and $79.22 with respect to the 132 performance based restricted stock units which vested
on January 8, 2021 but became reportable on February 26, 2021.
$79.22 with respect to the 15,000 service based restricted stock units which vested on January 8,
2021 and $79.22 with respect to the 461 performance based restricted stock units which vested
on January 8, 2021 but became reportable on February 26, 2021.
$90.88 with respect to the 1,125 service based restricted stock units which vested on March 1,
2021, $104.63 with respect to the 1,125 service based restricted stock units which vested on
May 10, 2021, $91.71 with respect to the 1,125 service based restricted stock units which vested
on August 9, 2021, and $87.79 with respect to the 1,125 service based restricted stock units
which vested on November 3, 2021.
$90.88 with respect to the 2,375 service based restricted stock units which vested on March 1,
2021, $104.63 with respect to the 2,375 service based restricted stock units which vested on
May 10, 2021, $91.71 with respect to the 2,375 service based restricted stock units which vested
on August 9, 2021, and $87.79 with respect to the 2,375 service based restricted stock units
which vested on November 3, 2021.
$90.88 with respect to the 750 service based restricted stock units which vested on March 1,
2021, $104.63 with respect to the 1,000 service based restricted stock units which vested on
May 10, 2021, $91.71 with respect to the 1,000 service based restricted stock units which vested
on August 9, 2021, and $87.79 with respect to the 1,000 service based restricted stock units
which vested on November 3, 2021.
Termination, Change of Control and Change of Responsibility Payments
If a Named Executive Officer had resigned or been terminated any reason or for cause other than a Qualifying
Reason (as defined above) prior to the expiration of the term of his or her 2021 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 as well as any accrued paid time off that might be due at such termination in accordance with
policies of the Company in effect from time to time, and the Company shall have no other severance obligations under
such 2021 Employment Agreement.
If a Named Executive Officer had been terminated prior to the expiration of the term of his or her 2021
Employment Agreement for a Qualifying Reason, the Company will pay the Named Executive Officer three months of
base salary, unless the termination occurs within 12 months following a Change in Control (as defined above), 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.
47
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.
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. Additionally, such specific restricted stock unit award
agreement and/or performance restricted stock unit award agreement entered into by the Named Executive Officers provide
that if any Named Executive Officer’s continuous service is terminated because of death or disability prior to the vesting
date for the applicable grant of service based restricted stock units and/or performance based restricted stock units (as and
if applicable), then such applicable restricted stock units become immediately vested in an amount equal to the total number
of granted restricted stock units multiplied by a fraction, the numerator of which is the number of calendar months or
portions thereof from grant date of such restricted stock units through the date on which such Named Executive Officer’s
continuous service is terminated due to death or disability and the denominator of which is the total number of calendar
months or portion thereof in the vesting period for such restricted stock unit grants.
The following table lists the estimated amounts payable to a Named Executive Officer pursuant to the 2021
Employment Agreements if his or her employment had been terminated for a Qualifying Reason unrelated to a change of
control or death or disability on December 28, 2021, 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
Gerald L. Morgan
Chief Executive Officer, President
Doug W. Thompson
Former Chief Operating Officer
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning & Culture Officer
Total
Estimated
Cash
Payments
($)(1)
112,500
4,745,000(2)
87,500
87,500
87,500
87,500
87,500
(1)
(2)
If the employment of any of Mss. Robinson and Tobin and Messrs. Morgan, Jacobsen, Colson, and
Mujica is terminated under those circumstances, then the Company will pay him or her three months of
their applicable base salary.
As more particularly described above, this amount includes the actual amount paid by the Company to
Mr. Thompson pursuant to the Thompson Separation Agreement and is comprised of three installments
48
in accordance with the following schedule: (i) $1,581,667 due and payable no later than December 27,
2021; (ii) $1,581,666 due and payable on January 31, 2022; and (iii) $1,581,666 due and payable on
March 14, 2022. As previously discussed, upon his retirement, Mr. Thompson forfeited his right to all
outstanding equity awards and he reaffirmed certain obligations under his 2021 Employment Agreement,
including, without limitation, obligations pertaining to non-competition, non-hire, and non-solicitation
The following table lists the estimated amounts payable to a Named Executive Officer pursuant to the 2021
Employment Agreements and applicable equity incentive agreements if his or her employment had been terminated
without Cause following a Change in Control or if any Named Executive Officer resigns for Good Reason within 12
months following a Change of Control, on December 28, 2021, the last day of our fiscal year, provided that each Named
Executive Officer signed a full release of claims against us.
Change in Control, Change in Responsibilities Payments Table
Name
Gerald L. Morgan
Chief Executive Officer, President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Estimated
Cash
Payments
($)(1)
2,155,405
Estimated Value of
Newly Vested
Stock Awards
($)(2)
2,352,525
Total
($)
4,507,930
1,403,049
1,120,250
2,523,299
1,343,114
1,075,440
2,418,554
1,227,214
873,795
2,101,009
1,192,990
1,064,238
2,257,228
1,011,514
761,770
1,773,284
(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 within 12 months following a Change of Control, the
Named Executive Officer would have received the amount of his or her then current base salary through
the end of the term of the Named Executive Officer’s employment agreement, together 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. Had a Named Executive Officer’s employment been so terminated on
December 28, 2021, each of Messrs. Morgan, Jacobsen, Colson, and Mujica, and Mss. Robinson and
Tobin would have received payment through January 7, 2024.
49
For the purposes of this footnote (1), the table below details the estimated payment for each Named
Executive Officer.
Name
Gerald L. Morgan
Chief Executive Officer, President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
General Counsel, Corporate Secretary
Hernan E. Mujica
Chief Information Officer
Gina A. Tobin
Chief Learning and Culture Officer
Salary
($)
913,562
Bonus
($)
1,241,844
Total
Estimated
Payments
($)
2,155,405
710,548
692,501
1,403,049
710,548
632,566
1,343,114
710,548
516,666
1,227,214
710,548
482,442
1,192,990
710,548
300,966
1,011,514
(2)
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 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 (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. 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 28, 2021,
which was $89.62. 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.”
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 2021 total cash compensation for all individuals (other than Mr. Morgan, our
CEO) who were employed by us as of December 28, 2021, the last day of our 2021 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 2021 fiscal year and who was working
for us at the end of our fiscal year. As of December 28, 2021, approximately 71% of our employees were part-time
employees and our average employee worked approximately 19 hours per week.
We identified our median employee as a server in Zanesville, Ohio who worked an average of 20 hours per week.
After identifying our median employee, we calculated the annual total compensation for such employee as $16,234, which
is determined using the same methodology we used for our Named Executive Officers as set forth in the 2021 Summary
Compensation Table described above.
50
As more particularly described in the 2021 Summary Compensation Table, the annual total compensation for
Mr. Morgan, our CEO, for our 2021 fiscal year is $3,769,765 and the ratio between the compensation for our CEO and
the compensation for our median employee is 232 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.
51
AUDIT COMMITTEE REPORT
The audit committee of the Board (the “Committee”) is currently composed of six 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 is currently comprised of Mss. Epps and Widmer
and Messrs. Crawford, Moore, Warfield, and Zarley. Mr. Moore currently serves as the chairperson of the Committee. The
Board evaluated the credentials of and designated Ms. Epps and Messrs. Moore and Warfield as audit committee financial
experts.
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 28, 2021 (the “Audited Financial Statements”).
• The Committee met 15 times during fiscal year 2021, which were comprised of six regular meetings of the
Committee, two meetings per quarter relating to the Committee’s review of the Company’s quarterly
earnings release and filings with the SEC, and one special meeting 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 evaluated and reviewed the Company’s internal audit function, including, without limitation,
the independence, competence, staffing adequacy and authority of the function; the ability of the internal
audit function to raise issues to the appropriate level of authority; and the reporting relationships among the
Company’s internal auditors, financial management, and the Committee;
• 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, the Company’s General Counsel,
the independent auditors, and the Company’s risk committee team consisting of the Company’s Chief
Financial Officer, General Counsel and Corporate Secretary, Vice President of Legendary People and Risk,
and Vice President of Finance, 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. Additionally and as a part of the Committee’s oversight responsibilities, the Committee received
reports on risks relating to certain business functions within the Company, including cybersecurity, together
with reports from the Company’s information security and governance risk committee and the environmental,
social, and governance risk committee;
• The Committee reviewed with the Company’s General Counsel 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 2021 fiscal year, before management
52
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;
• 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 matter(s) 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 2021 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 and acknowledged that the Committee did not have any
objections to the filing of the same;
• 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 28, 2021, for filing with the SEC.
All members of the Committee concur in this report.
Gregory N. Moore, Chair
Michael A. Crawford
Donna E. Epps
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
53
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 either entered into before our initial public offering in 2004 and the subsequent formation of the
Committee or before the individual listed below became a Named Executive Officer.
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
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 and/or former Named Executive Officers as of the end of the
2021 fiscal year is listed below.
Restaurant
Billings, MT
El Cajon, CA
Everett, MA
McKinney, TX
Muncie, IN
Brownsville, TX
Port Arthur, TX
Wichita, KS
Oceanside, CA
Name and Ownership
W. Kent Taylor(2) (27.5%)
Gerald L. Morgan (2.0%)
W. Kent Taylor(2) (28.75%)
Gerald L. Morgan (2.0%)
W. Kent Taylor(2) (4.91%)
Gerald L. Morgan (3.06%)
W. Kent Taylor(2) (15.0%)
W. Kent Taylor (24.05%)
Gerald L. Morgan (2.0%)
Initial
Franchise
Fee
—
—
—
—
—
—
—
—
—
Royalty
Rate
4.0%
4.0%
4.0%
4.0%
—
4.0%
4.0%
4.0%
4.0%
Management,
Supervision,
and/or
Accounting
Fees
Paid to Us
in Fiscal Year
2021
($)(1)
33,885
28,266
35,178
45,256
—
48,038
32,701
46,805
25,911
Royalties
Paid to
Us in
Fiscal Year
2021
($)
237,192
370,374
246,245
316,551
50,000
336,276
228,910
327,633
322,454
(1)
(2)
The management, supervision and/or accounting fees described in this table are fees paid by the
operating entity of the applicable franchise location to the Company pursuant to a separate management
agreement.
As discussed above, Mr. Taylor passed away on March 18, 2021. Mr. Taylor’s interest in the franchise
restaurants listed above are now in the Estate of W. Kent Taylor.
For the 2021 fiscal year, the total amount of distributions received by Mr. Taylor (or the Estate of W. Kent Taylor)
and Mr. Morgan relating to their ownership interests in the above-referenced franchised restaurants were $1,418,535 and
$116,453, respectively. These amounts do not reflect compensation paid by the Company to Mr. Taylor and/or Mr.
Morgan during the 2021 fiscal year; rather, these amounts were paid by the applicable franchise entity and reflect a return
on investment in these separate restaurant locations. None of the beneficiaries of the Estate of W. Kent Taylor are current
and/or former Named Executive Officers.
54
On March 19, 2004, we entered into a preliminary franchise agreement with a company which was 95% owned
by Mr. Taylor to develop a restaurant at a location which was to be determined. The terms of the preliminary franchise
agreement provided for no initial franchise fees and royalties of 3.5% of restaurant sales. During fiscal year 2021, we
received no payment from this franchise restaurant, as none was due because such franchise restaurant was never built
prior to Mr. Taylor’s passing. This preliminary franchise agreement is of no further force and effect following Mr. Taylor’s
passing on March 18, 2021.
The franchise agreements that we have entered into with these current and/or former Named Executive Officers
contain the same terms and conditions as those agreements that we enter into with our other Texas Roadhouse domestic
franchisees except, in some instances, the initial franchise fees and the royalty rates, which are currently $40,000 and
4.0%, respectively, for our other domestic franchisees. We have the contractual right, but not the obligation, to acquire the
restaurants owned by such Named Executive Officers based on a pre-determined valuation formula which is the same as
the formula contained in the Texas Roadhouse domestic franchise agreements that we have entered into with other
franchisees with whom we have such rights. Once a franchise agreement has been entered into, it may be terminated if the
franchisee defaults in the performance of any of its obligations under the agreement, including its obligations to operate
the restaurant in strict accordance with our standards and specifications. A franchise agreement may also be terminated if
a franchisee becomes insolvent, fails to make its required payments, creates a threat to the public health or safety, ceases
to operate the restaurant or misuses the Texas Roadhouse trademarks.
Ownership Interest in Majority-Owned Joint Venture Entities
We have current and/or former Named Executive Officers that have ownership interest in certain Texas
Roadhouse restaurants that are owned by an entity that the Company controls and in which the Company holds a 52.5%
ownership interest. We believe that allowing certain Named Executive Officers to have ownership interests in restaurants
provides an ongoing benefit to the Company by making these persons more invested in the overall success of the brand.
Ownership of such Texas Roadhouse restaurants by our current and/or former Named Executive Officers as of
the end of the 2021 fiscal year is listed below.
Restaurant
Gilbert-East, AZ
Mansfield, TX
Name and Ownership
Doug W. Thompson(i)(41.5%)
Gerald L. Morgan (34.5%)
Management or
Supervision Fees
Paid to Us
in Fiscal Year 2021
($)
304,270
305,431
(i)
As previously described, Mr. Thompson retired as Chief Operating Officer of the Company on
November 29, 2021.
For the 2021 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 $519,888 and $478,948, respectively. These amounts
do not reflect compensation paid by the Company to Mr. Thompson and/or Mr. Morgan during the 2021 fiscal year; rather,
these amounts were paid by the applicable entity and reflect a return on investment in these separate restaurant locations.
Other Related Transactions
We entered into a real estate lease agreement for the franchise restaurant located in Everett, MA, of which the
Estate of W. Kent Taylor beneficially owns 28.75%, before our granting franchise restaurants in the Everett, MA restaurant
location. We have subsequently assigned the lease to the franchisee, but we remain contingently liable if the 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
55
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 seven directors. At the Annual Meeting, we are electing seven directors to hold office until the Annual Meeting of
Shareholders in 2023 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
Donna E. Epps
Gregory N. Moore
Gerald L. Morgan
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Recommendation
Age
54
57
72
61
53
60
77
Position or Office
Director
Director
Chairman of the Board; Director
Chief Executive Officer; President; Director
Director
Director
Director
Director
Since
2020
2021
2005
2021
2018
2013
2004
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE ELECTION OF THE
NOMINEES FOR THE DIRECTORS OF THE COMPANY SET FORTH ABOVE.
56
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 27, 2022. 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 2022 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
KPMG LLP Fees for Fiscal Years 2021 and 2020
Audit Fees
Audit-related Fees
Tax Fees
All Other Fees
2021($)
748,400
20,000
15,751
—
784,551
2020($)
756,478
15,000
15,424
1,780
788,682
Audit Fees. KPMG LLP charged $748,400 in fiscal year 2021 and $756,478 in fiscal year 2020 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 2021 and 2020 contain approximately $18,400 and $18,478,
respectively, related to statutory audits.
Audit-related Fees. KPMG LLP charged $15,000 in both fiscal year 2021 and fiscal year 2020 for their consent
to include the Company’s annual consolidated financial statements in both of our franchise disclosure documents. KPMG
LLP also charged $5,000 in fiscal year 2021 for their review of our 2021 long-term incentive plan and the issuance of their
consent related to the form S-8 filing.
Tax Fees. KPMG LLP charged $15,751 in fiscal year 2021 and $15,424 in fiscal year 2020 for consulting and
compliance services.
All Other Fees. KPMG LLP charged $1,780 in fiscal year 2020 for access to their Accounting Research Online
tool.
57
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 2022 FISCAL YEAR.
58
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 longer 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. While the initial grant of restricted stock unit awards is based on a fixed dollar
amount starting with the 2022 fiscal year, as opposed to a fixed number of restricted stock units for prior year service, the
ultimate value of the restricted stock unit awards is dependent upon the performance of the Company and the price of our
common stock at the time such restricted stock units vest. 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
59
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 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 2021 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.
60
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 2023 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 2, 2022 (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 2, 2022.
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/or by the audit committee
(as appropriate). 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 28, 2021, 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 28, 2021, 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.
61
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 1, 2022
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.
62
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 28, 2021
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)
TXRH
Name of each exchange on which registered
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
Accelerated filer
Non-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 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 business day of the second fiscal quarter ended June 29, 2021
was $6,575,905,380 based on the closing stock price of $94.64. 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 69,124,686 on February 16, 2022.
Portions of the registrant’s definitive Proxy Statement for the registrant’s 2022 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 28, 2021, 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.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . 38
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . 54
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . . . . . . . 56
Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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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•
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 new or
reinstated restrictions or regulations on our operations, any labor or supply chain shortages or limited
availability of staff to meet our business standards;
health and dietary 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 and/or availability of our principal food and beverage products;
labor shortages or increased labor costs, such as federal or state minimum wage changes, market wage levels,
health care, sick pay 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;
security breaches of confidential guest information in connection with our electronic processing of credit and
debit card transactions, ransomware attacks 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 late
founder, 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 667 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 28, 2021, we owned and operated 566 restaurants and
franchised an additional 70 domestic restaurants and 31 international restaurants.
Narrative Description of Business
Of the 566 restaurants we owned and operated at the end of 2021, we operated 526 as Texas Roadhouse restaurants,
36 as Bubba’s 33 restaurants and four as Jaggers restaurants.
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 dine-in 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 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.
Throughout this report, we use the term "restaurants" to include Texas Roadhouse and Bubba’s 33, unless otherwise
noted.
Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba’s 33, Jaggers and our retail initiatives (including our online store and royalty-based licensing arrangements) as
separate operating segments. In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments.
COVID-19 and Related Impacts
The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the “pandemic”).
These include federal, state and local restrictions on restaurants, some of which have limited capacity or seating in
dining rooms while others have allowed to-go or curbside service only. As of December 28, 2021, all of our domestic
company and franchise locations were operating without restriction. As of December 29, 2020, all of our domestic
company and franchise locations were operating their dining rooms under various limited capacity restrictions or were
limited to outdoor and/or to-go or curbside service only.
As a result of these restrictions, we developed a hybrid operating model to accommodate our dining room
restrictions together with enhanced to-go. We continue to see sales in our to-go program higher than pre-pandemic
levels, even with dining rooms operating without restriction. We cannot predict how long we will continue to be
impacted by the pandemic, the extent to which our dining rooms will have to close again or otherwise have limited
5
seating, or if the increased sales in our to-go program will continue. The extent to which the pandemic impacts our
business, results of operations, or financial condition will depend on future developments which are outside of our
control. This includes, without limitation, the efficacy and public acceptance of vaccination programs and/or testing
mandates in curbing the spread of the virus, the introduction and spread of new variants of the virus, which may prove
resistant to currently approved vaccines, and new or reinstated restrictions or regulations on our operations.
As a result of a significant increase in sales, the lingering impact of the pandemic, and other supply constraints, we
have experienced and expect to continue to experience commodity cost inflation and certain food and supply shortages.
The commodity cost inflation, which primarily relates to beef, is due to increased costs incurred by our vendors related
to higher labor, transportation, packaging, and raw material costs. To date, we have been able to properly manage any
food or supply shortages but have experienced increased costs. If our vendors are unable to fulfill their obligations
under their contracts, we may encounter further shortages and/or higher costs to secure adequate supply and a possible
loss of sales, any of which would harm our business.
In addition, as our dining rooms have returned to operating without restriction, our ability to attract and retain
restaurant-level employees has become more challenging due to an increasingly competitive job market throughout the
country. We have also experienced periodic staffing shortages due to employees testing positive or having to quarantine
due to exposure to the virus. To the extent these challenges persist, we could continue to experience increased labor
costs and/or decreased sales.
As a result of the pandemic, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") was passed in 2020 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. In total, we deferred $47.3 million in payroll taxes, of which $24.3 million
was repaid in 2021 and $23.0 million is required to be repaid by the end of 2022. The amount due in 2022 is included in
accrued wages and payroll taxes 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. Since the onset of the pandemic, the Company has
provided various forms of relief pay for hourly restaurant employees, a significant portion of which qualified for this tax
credit. For the years ended December 28, 2021 and December 29, 2020, we recorded $1.2 million and $7.0 million,
respectively, related to this credit which is included as a reduction to labor expense in our consolidated statements of
income and comprehensive income.
Operating Strategy
The operating strategy that underlies the growth of our concepts 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.
6
• 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 nearly all of our Texas Roadhouse 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 $11.99 for our 6-ounce Sirloin to $29.99 for our 23-ounce Porterhouse
T-Bone. The per guest average check for the Texas Roadhouse restaurants we owned and operated in 2021
was $19.68. 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 $21.49 for our 16-inch Meaty Meaty pizza. The per guest average check for the Bubba’s 33
restaurants we owned and operated in 2021 was $18.94.
• 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 to 8,400 square feet of space constructed on sites of approximately 1.5 to 2.5 acres or
retail pad sites, with seating of approximately 58 to 68 tables for a total of 270 to 325 guests, including 18 bar seats, and
parking for approximately 180 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 7,200 to
8,800 square feet of space constructed on sites of approximately 1.5 to 2.5 acres or retail pad sites. This includes seating
of approximately 55 to 59 tables for a total of 270 to 330 guests, including 26 to 46 bar seats. Some locations include
patio seating with an additional 10 tables and up to 60 seats. Parking is targeted for approximately 180 vehicles either
on-site or in combination with some form of off-site cross parking arrangement.
In response to the pandemic, we made building modifications and/or expansions to a number of existing restaurants.
These changes were made to better accommodate the increase in our to-go sales and/or alternative dining arrangements.
We also installed booth partitions in all of our restaurants as an added safety measure for our guests.
7
As of December 28, 2021, we leased 418 properties and owned 148 properties. For 2021, the average capital
investment, including pre-opening expenses and a capitalized rent factor, for the 23 Texas Roadhouse company
restaurants opened during the year was $5.7 million, broken down as follows:
Land(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and Equipment . . . . . . . . . . . . . . . . . . . .
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Cost
$ 1,250,000
2,330,000
1,385,000
710,000
15,000
$ 5,690,000
Low
High
$ 900,000 $ 1,550,000
2,740,000
1,500,000
1,220,000
240,000
1,780,000
1,275,000
480,000
—
(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 2021, the average capital investment, including pre-opening expenses and a capitalized rent factor, for the five
Bubba's 33 company restaurants opened during the year was $7.4 million, broken down as follows:
Land(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture and Equipment . . . . . . . . . . . . . . . . . . . . .
Pre-opening costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average Cost
$ 1,735,000
2,680,000
1,885,000
1,145,000
$ 7,445,000
Low
High
$ 1,500,000 $ 2,040,000
3,125,000
1,945,000
1,490,000
2,460,000
1,740,000
740,000
(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.
For 2021 and 2020, our average capital investment for the Texas Roadhouse restaurants was $5.7 million and $6.3
million, respectively. The decrease in our 2021 average capital investment was primarily due to lower land and building
costs. The higher land costs in 2020 were due to increased rent amounts at several sites. The higher building costs in
2020 were due to higher material costs and construction delays related to the pandemic as well as sites located in more
expensive areas. We expect our average capital investment for restaurants to be opened in 2022 to be approximately
$6.3 million due to increased supply costs.
Our average capital investment for the Bubba’s 33 restaurants opened in 2021 and 2020 was $7.4 million and $7.3
million, respectively. The increase in our 2021 average capital investment for our Bubba’s 33 restaurants was primarily
due to higher rent costs. We expect our average capital investment for restaurants to be opened in 2022 to be
approximately $7.3 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, supply chain costs, 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.
8
Site Selection
We continue to refine our site selection process. In analyzing each prospective site, our real estate team and our
restaurant market partners devote 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 14 additional months to obtain necessary permits. Upon receipt of permits, we require
approximately five months to construct, equip and open a restaurant.
9
Existing Restaurant Locations
As of December 28, 2021, we had 566 company restaurants and 101 franchise restaurants in 49 states and ten
foreign countries as shown in the chart below.
Number of Restaurants
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10
Company Franchise Total
9
2
20
8
14
18
5
5
43
18
6
19
31
10
7
19
11
3
14
11
20
6
3
17
1
4
3
3
10
6
21
21
3
37
8
2
31
3
9
2
17
81
10
1
20
3
6
13
2
636
1
1
4
3
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101
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76
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566
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566
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
$29.99. 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 burgers, 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
$4.99 and $9.99. At Bubba’s 33 restaurants, our menu prices, excluding appetizers, generally range from $9.99 to
$21.49. 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 $4.49 and $6.99. In
addition, our full menu is available through our mobile apps or online which allows for to-go pickup.
Most of our restaurants feature a full bar that offers a 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 all company restaurants accounted for 10.8% of restaurant sales in
fiscal 2021.
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.
During 2021, we began working with a third-party vendor to help customers identify known allergens in each of
our menu items. This information is currently available for Texas Roadhouse restaurants and we plan to implement it
for Bubba’s 33 and Jaggers restaurants in 2022.
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 domestic system-wide stores.
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
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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.
We also implemented additional sanitation requirements in response to the pandemic. This included adding a
sanitation coordinator position responsible for cleaning high touch areas, adding hand sanitizer stations at each restaurant
and supplying each restaurant with chemical sanitation sprayers.
We also participate 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 28,
2021, all of our domestic system-wide stores had been certified under this program.
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 domestic system-wide stores.
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 and a combination
of operations, kitchen and service managers, as well as assistant managers. Managing partners are single restaurant
operators who have primary responsibility for the day-to-day operations of the entire restaurant. Operations managers
support the managing partner in overall operations including both departments for kitchen and service. Kitchen
managers have primary responsibility for managing the kitchen staff and overall kitchen operations including food
production, preparation, execution and quality standards. Service managers have primary responsibility for managing
the front of house staff and overall dining room, bar and to-go operations including service quality and the guest
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experience. Assistant managers support our managing partners, operations managers, 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. 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 was completed virtually in 2021 and resumed to in-
person training in 2022.
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,
Mother’s Day and Veterans 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.
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Restaurant Franchise Arrangements
Franchise Restaurants. As of December 28, 2021, we had 25 franchisees that operated 101 Texas Roadhouse
restaurants in 23 states and ten foreign countries. Domestically, franchise rights for our Texas Roadhouse restaurants 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 domestic Texas Roadhouse franchisees. Approximately 75% of our franchise
restaurants are operated by ten franchisees and no franchisee operates more than 16 restaurants.
Our standard Texas Roadhouse 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 2021 and 2020, we waived royalties of $0.2 million and $0.4
million, respectively, for international franchisees in countries that were significantly impacted by the pandemic and 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, without
limitation, 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 Texas Roadhouse 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 Texas Roadhouse 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 28, 2021, we had 15 restaurants in five countries in the Middle East,
five restaurants open in the Philippines, four in Taiwan, four in South Korea, two in Mexico and one in China for a total
of 31 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.
In 2021, we entered into our first area development agreements for Jaggers, our fast-casual concept. These
agreements allow for the development and operation of restaurants in specific territories in Texas, Oklahoma, and North
Carolina. As part of these agreements, the franchisees are 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 territories. No franchise agreements have been entered into and no corresponding restaurants have been opened
yet related to these area development agreements.
Any of our area development or 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
14
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 our 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 our 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 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 have an
ownership interest and five additional domestic franchise restaurants in which we have no 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, concept, 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 have 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.
15
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
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 45 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 that satisfy our financial
targets, 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. Federal regulations under the Patient Protection and Affordable
Care Act of 2010 require that 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
16
existing comprehensive general liability insurance as well as excess umbrella coverage. Alcoholic beverages at all
company restaurants accounted for 10.8% of restaurant sales in fiscal 2021.
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
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, during the periods in which they
were effective, led to decreased sales, increased costs, and operational complexity. All capacity restrictions had lapsed
by July 2021.
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.
Human Capital Management
As of December 28, 2021, we employed approximately 73,300 people. These employees include 724 executive and
administrative personnel and 2,833 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
17
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 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,
tuition reimbursement, 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 responsible for
cleaning high touch areas, adding hand sanitizer stations at each restaurant, and supplying each restaurant with chemical
sanitation sprayers. In addition, we have allowed our Support Center employees to maintain a work schedule that allows
for working remotely on a periodic or full-time basis depending on the prevalence of the virus. 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. 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.
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Name
Gerald L. Morgan . . . . . . . . . . . . . . . . . . . . . . .
S. Chris Jacobsen . . . . . . . . . . . . . . . . . . . . . . . .
Tonya R. Robinson . . . . . . . . . . . . . . . . . . . . . .
Christopher C. Colson . . . . . . . . . . . . . . . . . . . .
Regina A. Tobin . . . . . . . . . . . . . . . . . . . . . . . .
Hernan E. Mujica . . . . . . . . . . . . . . . . . . . . . . .
Age
61
56
53
45
58
60
Position
President and Chief Executive Officer
Chief Marketing Officer
Chief Financial Officer
General Counsel and Corporate Secretary
Chief Learning and Culture Officer
Chief Information Officer
Gerald L. Morgan. Mr. Morgan was appointed Chief Executive Officer in March 2021 and President in December
2020. Mr. Morgan joined Texas Roadhouse in 1997, during which time he has held the positions of Managing Partner,
Market 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. Mr. Jacobsen has more
than 30 years of restaurant marketing experience with Texas Roadhouse, Papa John’s International and Waffle
House, Inc.
Tonya R. Robinson. Ms. Robinson was appointed Chief Financial Officer in May 2018. Ms. Robinson 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.
Christopher C. Colson. Mr. Colson was appointed General Counsel in March 2021 and Corporate Secretary in
August 2019. Mr. Colson joined Texas Roadhouse in 2005, during which time he has held the positions of Senior
Counsel, Associate General Counsel and Executive Director of the Global Development Group. Mr. Colson has over
20 years of restaurant industry experience with Texas Roadhouse, Frost Brown Todd LLC (serving as outside counsel to
Texas Roadhouse), YUM! Brands, Inc. and as assurance staff at KPMG LLP.
Regina A. Tobin. Ms. Tobin was appointed Chief Learning and Culture Officer in June 2021. Ms. Tobin joined
Texas Roadhouse in 1996, during which time she has held the positions of Managing Partner, Market Partner, and Vice
President of Training. Ms. Tobin has over 25 years of restaurant industry experience.
Hernan E. Mujica. Mr. Mujica was designated as Chief Information Officer in June 2021. Mr. Mujica joined
Texas Roadhouse in January 2012 as Vice President of Information Technology and was subsequently promoted to
Chief Information Officer. Prior to joining Texas Roadhouse, Mr. Mujica held senior management positions at The
Home Depot and Arthur Andersen. Mr. Mujica has over 30 years of experience in both industry and consulting roles.
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.
The COVID-19 pandemic has disrupted and could continue to disrupt our business.
Risks Related to our Growth and Operating Strategy
The Company has been subject to risks and uncertainties as a result of the pandemic. These include federal, state
and local restrictions on restaurants, some of which have limited capacity or seating in the dining rooms while others
have allowed to-go or curbside service only. As of December 28, 2021, all of our domestic company and franchise
locations were operating without restriction.
As a result of a number of factors, including a significant increase in sales, the lingering impact of the pandemic,
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and other supply constraints, we have experienced and expect to continue to experience commodity cost inflation and
certain food and supply shortages. The commodity cost inflation, which primarily relates to beef, is due to increased
costs incurred by our vendors related to higher labor, transportation, packaging, and raw materials costs. To date, we
have been able to properly manage any food or supply shortages but have experienced increased costs. If our vendors
are unable to fulfill their obligations under their contracts, we may encounter further shortages and/or higher costs to
secure adequate supply and a possible loss of sales, any of which would harm our business.
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.
The extent to which COVID-19 impacts our business, results of operations, or financial condition will depend on
future developments which are outside of our control. This includes, without limitation, the efficacy and public
acceptance of vaccination programs and/or testing mandates in curbing the spread of the virus, the introduction and
spread of new variants of the virus, which may prove resistant to currently approved vaccines, and new or reinstated
restrictions or regulations on our operations.
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, (2) increasing sales and profits at existing restaurants, and
(3) pursuing other strategic initiatives or business opportunities. While all 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. 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 delays 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 and securing an adequate
supply of suitable new restaurant sites that satisfy our financial targets. Competition for suitable restaurant sites in our
target markets is intense.
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
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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, managing partners,
and/or other restaurant management personnel who can execute our business strategy;
our ability to negotiate suitable purchase or lease terms;
the availability of construction materials, equipment and labor;
our ability to control construction and development costs of new restaurants (including increased site, supply
chain and distribution costs);
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 (if at all);
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;
our ability to execute our business strategy effectively;
our ability to maintain and manage the increased levels of to-go sales at our restaurants;
competition, from our competitors in the restaurant industry, our own restaurants, and/or other food service
providers (such as delivery services and grocery stores);
the impact of permanent changes in weather patterns that can cause 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;
loss of parking and/or access rights due to government action (such as eminent domain actions) or through
private transactions;
• 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 and beverage products and other supplies we use;
legislation that impacts our suppliers’ ability to maintain compliance with laws and regulations and impacts our
ability to source product; and
effects of actual or threatened terrorist attacks (including cyber and/or ransomware 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, Bubba’s 33 and Jaggers, may not be as successful as our experience
in the development of the Texas Roadhouse concept. These restaurants 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 or our franchisees 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 28, 2021, our operations include 31 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;
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;
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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 the registration and/or enforceability 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 or other brand extensions) 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;
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
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
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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 28, 2021, we operated a total of 76 company restaurants in Texas and 43 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.
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, sick pay or health
benefits;
profitability of our restaurants, particularly in new markets;
changes in interest rates;
the impact of litigation, including negative publicity;
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;
closures and/or dining rooms operating at limited capacity due to mandated restaurant closures and/or limited
availability of staff to meet our business standards;
negative publicity regarding food safety and other food and beverage related matters, including the integrity of
our, and/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 including changes related to environmental, social
and/or governance practices;
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
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.
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We rely heavily on information technology, and any material failure, weakness, ransomware 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, digital
apps, financial systems, marketing programs, e-commerce, cyber-security and various other processes and transactions.
This reliance has significantly increased since the onset of the pandemic as we have had to rely to a greater extent on
systems such as online ordering, contactless payments, online waitlists, and systems supporting a more remote
workforce. 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. In addition, as we implement new technology platforms to improve
the overall guest experience, there can be no guarantees that these platforms will operate as reliably or be as
operationally impactful as intended.
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 increased costs to comply with privacy and data protection laws and, if we fail to comply or our systems
are compromised by a security breach, we could be subject to government enforcement actions, private litigation and
adverse publicity.
We receive and maintain certain personal, financial or other information about our guests and employees. During
2021, approximately 84% of our transactions were by credit or debit cards. In addition, certain of our vendors receive
and/or maintain certain personal, financial and other information about our employees and guests on our behalf. The use
and handling, including security, of this information is regulated by evolving and increasingly demanding data privacy
laws and regulations in various jurisdictions, as well as by certain third-party contracts, frameworks and industry
standards, such as the Payment Card Industry Data Security Standard. 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, if our security and information systems are compromised as a result of data corruption or loss, cyber-
attack or a network security incident, or if our employees or vendors fail to comply with these laws and regulations or
fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could
result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance,
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cause us to incur substantial costs and result in a loss of guest confidence, which could adversely affect our results of
operations and financial condition. Additionally, we could be subject to litigation and government enforcement actions
as a result of any such failure. Any such claim or proceeding could cause us to incur significant unplanned expenses in
excess of our insurance coverage, which could have a material impact on our financial condition and results of
operations. In addition, if there are malfunctions or other problems with our processing vendors, billing software or
payment processing systems, it may cause interruption of normal business performance.
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 pandemic, certain state and local jurisdictions have enacted various health, safety and
other regulations that have impacted our restaurants. Compliance with these regulations during the periods in which
they were effective led to decreased sales, increased costs, and operational complexity. The capacity restrictions had
lapsed by July 2021.
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 proprietary rights in foreign
jurisdictions could adversely affect our competitive position in international markets.
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
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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, data
privacy claims 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.
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 (if any).
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, 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 prior year due to the pandemic, 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.
Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results.
We are primarily subject to income and other taxes in the United States. Our effective income tax rate and other
taxes in the future could be affected by a number of factors, including changes in the valuation of deferred tax assets and
liabilities, changes in tax laws or other legislative changes and the outcome of income tax audits. Any significant
increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material
adverse impact on our financial results.
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 analysis 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
29
inability to attract additional qualified personnel as needed could materially harm our business. In addition, our business
could suffer from any actual or alleged 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 our applicable restaurant operating standards. We also provide training and support to franchisees.
However, most 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, our image and reputation could be harmed, which in turn could adversely affect our business and operating
results.
Risks Related to the Restaurant Industry
Changes in food and supply costs and/or availability of products could adversely affect our results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs and/or the
availability of products necessary to operate our business. Any increase in food prices or loss of supply, 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 and/or loss of supply by adjusting our purchasing practices,
menu prices or menu offerings, 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. 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 hourly and overtime pay, state unemployment rates, sick pay or other
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
30
will result in higher labor costs.
In addition, the pandemic resulted in a number of staffing challenges at our restaurants. To address these
challenges, we provided relief pay and enhanced benefits for our hourly employees and also completed two national
hiring day events. 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 and tuition reimbursement. These actions were performed to retain
employees and ensure that we maintained adequate staffing levels as 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.
Despite the impact of the pandemic, the U.S. and other global economies continue to be strong. In future periods,
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, financial market volatility,
social unrest, government spending, a low or stagnant pace of economic recovery and growth, 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. We continue to see elevated levels of to-go sales even without capacity restrictions in our dining room.
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.
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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.
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. Federal disclosure requirements under the Patient Protection and Affordable Care Act of 2010 require that
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 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 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.
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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.
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.
As a result of the pandemic, we temporarily suspended all cash dividends and share repurchases to enhance our financial
flexibility. Payment of cash dividends and share purchases resumed in 2021, however 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 28,
2021, we leased 133,023 square feet. Our lease expires on October 31, 2048, including all applicable extensions. Of the
566 company restaurants in operation as of December 28, 2021, we owned 148 locations and leased 418 locations, as
shown in the following table.
Owned Leased Total
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
6
2
15
7
3
10
5
2
36
10
5
16
10
8
4
13
8
3
8
9
12
5
2
15
2
3
1
10
5
18
17
2
23
6
2
22
3
3
1
16
37
8
1
14
2
2
6
—
418
9
2
20
8
4
17
5
3
43
14
6
19
23
10
6
17
10
3
8
10
17
6
3
17
3
3
3
10
6
21
21
2
35
8
2
25
3
3
2
16
76
9
1
20
2
3
10
2
566
34
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.
35
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 16, 2022 was 166.
On February 17, 2022, our Board of Directors declared a quarterly dividend of $0.46 per share of common stock
which will be distributed on March 25, 2022 to shareholders of record at the close of business on March 9, 2022. In
2011, our Board of Directors declared our first quarterly dividend of $0.08 per share of common stock which we
consistently grew over time. 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 the quarterly cash
dividend of $0.36 paid on March 27, 2020. This was done to preserve cash flow due to the pandemic. On April 28,
2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of common stock.
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.
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 28, 2021, we have paid $420.7 million through our authorized stock repurchase programs to repurchase
18,307,437 shares of our common stock at an average price per share of $22.98. 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 2021, we
paid $51.6 million to repurchase 584,932 shares of our common stock. As of December 28, 2021, $96.1 million remains
authorized for stock repurchases.
The following table includes information regarding purchases of our common stock made by us during the quarter
ended December 28, 2021:
Total Number Average
of Shares
Total Number Maximum Number
(or Approximate
Purchased as
Dollar Value) of
Part of Publicly Shares that May
Yet Be Purchased
Announced
Under the Plans
or Programs
Plans or
Programs
85,304 $ 125,332,008
89,227 $ 117,266,491
249,367 $ 96,123,569
423,898
Price Paid
per Share
$ 90.76
$ 90.39
$ 84.79
Period
September 29 to October 26 . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 27 to November 23 . . . . . . . . . . . . . . . . . . . . . . . . . . .
November 24 to December 28 . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of Shares
Purchased
85,304
89,227
249,367
423,898
36
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 28, 2021, 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 27, 2016 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 27, 2016
Among Texas Roadhouse, Inc., the Russell 3000 Index and the Russell 3000 Restaurant Index
220
200
180
160
140
120
100
80
60
40
20
0
TXRH
Russell 3000
Russell 3000 Restaurant
Texas Roadhouse, Inc. . . . . . . . . . . . . . . . . . . . .
Russell 3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Russell 3000 Restaurant . . . . . . . . . . . . . . . . . . .
$ 100.00
$ 100.00
$ 100.00
$ 109.12
$ 117.59
$ 118.96
$ 114.63
$ 105.07
$ 119.16
$ 113.64 $ 159.32
$ 140.21 $ 165.38
$ 152.31 $ 176.33
$ 180.83
$ 207.34
$ 207.87
12/27/2016 12/26/2017 12/24/2018 12/31/2019 12/29/2020 12/28/2021
ITEM 6—RESERVED
Removed and reserved.
37
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 2021 results as compared to 2020 results. For discussion of 2020 results as compared to 2019 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 29, 2020 filed with the SEC on February 26, 2021.
Our Company
Texas Roadhouse, Inc. is a growing restaurant company operating predominately in the casual dining segment. Our
late founder, 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 667 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 28, 2021, our 667 restaurants included:
•
•
566 "company restaurants," of which 546 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 566 restaurants we owned and operated
at the end of 2021, we operated 526 as Texas Roadhouse restaurants, 36 as Bubba’s 33 restaurants and four as
Jaggers restaurants.
101 "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 (loss)
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 101 franchise restaurants, 70 were
domestic restaurants and 31 were international restaurants.
We have contractual arrangements that grant us the right to acquire at pre-determined formulas the remaining
equity interests in 18 of the 20 majority-owned company restaurants and 66 of the 70 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 2021 and fiscal year
2020 were both 52 weeks in length, while the fourth quarters were both 13 weeks in length.
COVID-19 and Related Impacts
The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the “pandemic”).
These include federal, state and local restrictions on restaurants, some of which have limited capacity or seating in
dining rooms while others have allowed to-go or curbside service only. As of December 28, 2021, all of our domestic
company and franchise locations were operating without restriction. As of December 29, 2020, all of our domestic
company and franchise locations were operating their dining rooms under various limited capacity restrictions or were
limited to outdoor and/or to-go or curbside service only.
38
As a result of these restrictions, we developed a hybrid operating model to accommodate our dining room
restrictions together with enhanced to-go. We continue to see sales in our to-go program higher than pre-pandemic
levels, even with dining rooms operating without restriction. We cannot predict how long we will continue to be
impacted by the pandemic, the extent to which our dining rooms will have to close again or otherwise have limited
seating, or if the increased sales in our to-go program will continue. The extent to which the pandemic impacts our
business, results of operations, or financial condition will depend on future developments which are outside of our
control. This includes, without limitation, the efficacy and public acceptance of vaccination programs and/or testing
mandates in curbing the spread of the virus, the introduction and spread of new variants of the virus, which may prove
resistant to currently approved vaccines, and new or reinstated restrictions or regulations on our operations.
As a result of a significant increase in sales, the lingering impact of the pandemic, and other supply constraints, we
have experienced and expect to continue to experience commodity cost inflation and certain food and supply shortages.
The commodity cost inflation, which primarily relates to beef, is due to increased costs incurred by our vendors related
to higher labor, transportation, packaging, and raw material costs. To date, we have been able to properly manage any
food or supply shortages but have experienced increased costs. If our vendors are unable to fulfill their obligations
under their contracts, we may encounter further shortages and/or higher costs to secure adequate supply and a possible
loss of sales, any of which would harm our business.
In addition, as our dining rooms have returned to operating without restriction, our ability to attract and retain
restaurant-level employees has become more challenging due to an increasingly competitive job market throughout the
country. We have also experienced periodic staffing shortages due to employees testing positive for the virus or having
to quarantine. To the extent these challenges persist, we could continue to experience increased labor costs and/or
decreased sales.
As a result of the pandemic, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") was passed in 2020 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. In total, we deferred $47.3 million in payroll taxes, of which $24.3 million
was repaid in 2021 and $23.0 million is required to be repaid by the end of 2022. The amount due in 2022 is included in
accrued wages and payroll taxes 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. Since the onset of the pandemic, the Company has
provided various forms of relief pay for hourly restaurant employees, a significant portion of which qualified for this tax
credit. For the years ended December 28, 2021 and December 29, 2020, we recorded $1.2 million and $7.0 million,
respectively, related to this credit which is included as a reduction to labor expense in our consolidated statements of
income and comprehensive income.
Long-term Strategies to Grow Earnings Per Share and Create Shareholder Value
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 at or near the end of the associated lease or as a result of eminent domain which
allowed us to move to a better site, update them to a current prototypical design, construct a larger building with more
seats and greater number of available parking spaces, accommodate increased to-go sales and/or obtain more favorable
lease terms. We continue to evaluate these opportunities particularly as it relates to older locations with strong sales. At
our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by adding on to
our existing building and/or to increase our parking capacity by leasing or purchasing property that adjoins our site. In
addition, we continue to pursue opportunities to acquire domestic franchise locations to expand our company restaurant
base.
39
In 2021, we opened 29 company restaurants while our franchise partners opened four total restaurants domestic and
internationally. This included 23 Texas Roadhouse restaurants, five Bubba’s 33 restaurants, and one Jaggers restaurant.
In 2022, we plan to open approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants. In addition, we
anticipate our existing franchise partners will open as many as five Texas Roadhouse restaurants in 2022.
Our average capital investment for the 23 Texas Roadhouse restaurants opened during 2021, including pre-opening
expenses and a capitalized rent factor, was $5.7 million. We expect our average capital investment for Texas Roadhouse
restaurants opening in 2022 to be approximately $6.3 million. Our average capital investment for the five Bubba’s 33
restaurants opened during 2021, including pre-opening expenses and a capitalized rent factor, was $7.4 million. We
expect our average capital investment for Bubba’s 33 restaurants opening in 2022 to be approximately $7.3 million.
We remain focused on driving sales and managing restaurant investment costs 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, cost of materials, type of construction labor, local permitting requirements,
hook-up fees, our ability to negotiate with landlords, and cost of liquor and other licenses.
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 28, 2021, we had 15 restaurants in five countries in the Middle East,
five restaurants open in the Philippines, four in Taiwan, four in South Korea, two in Mexico and one in China for a total
of 31 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.
In 2021, we entered into our first area development agreements for Jaggers, our fast-casual concept. These
agreements allow for the development and operation of restaurants in specific territories in Texas, Oklahoma, and North
Carolina. As part of these agreements, the franchisees are 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 territories. No franchise agreements have been entered into and no corresponding restaurants have been opened
yet related to these area development agreements.
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
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 to 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 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, we have made changes to our building layout to better accommodate higher to-
go volumes at our restaurants. We have also made investments in technology to allow for a better guest experience.
We also continue to look for ways through various strategic initiatives to drive awareness of our brands and
increase sales and profitability. At the onset of the pandemic, we began selling ready-to-grill steaks for customers to
prepare at home. While we reduced our store-level offerings around ready-to-grill once our dining rooms began to re-
open in mid-2020, based on the success of this program we developed Texas Roadhouse Butcher Shop. This online
retail store allows for the purchase and delivery of quality steaks that are similar to those available in our restaurants.
This non-royalty-based product launched in late 2020.
40
We also further expanded our retail business in 2021 with the introduction of our non-alcoholic Margarita Mixer,
and our canned cocktail Margarita Seltzer, which rolled out in test markets. These Texas Roadhouse-branded products
are subject to royalty-based license agreements.
Leveraging Our Scalable Infrastructure. To support our growth, we have made 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 strategic initiatives. 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 which we consistently grew over time. 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. On
April 28, 2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of common
stock. On February 17, 2022, our Board of Directors declared a quarterly cash dividend of $0.46 per share of common
stock.
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.
In 2008, our Board of Directors approved our first stock repurchase program. From inception through
December 28, 2021, we have paid $420.7 million through our authorized stock repurchase programs to repurchase
18,307,437 shares of our common stock at an average price per share of $22.98. 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 2021, we
paid $51.6 million to repurchase 584,932 shares of our common stock. As of December 28, 2021, $96.1 million remains
authorized for stock repurchases.
Key Operating Personnel
Key management personnel who have a significant impact on the performance of our restaurants include market
partners, managing partners, operations managers, 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. Operations managers support the managing partner in overall operations including both departments
for kitchen and service. Kitchen managers have primary responsibility for managing the kitchen staff and overall
kitchen operations including food production, preparation, execution and quality standards. Service managers have
primary responsibility for managing the front of house staff and overall dining room, bar and to-go operations including
service quality and the guest experience. Assistant managers support our managing partners, operations managers,
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 required to make refundable deposits of $25,000
and $50,000, respectively. Generally, the deposits are refunded after five years of continuous service.
41
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 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 all 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, the mix of menu items sold and the mix of
dine-in versus to-go sales can affect the per person average check amount.
Average Unit Volume. Average unit volume represents the average annual restaurant sales for Texas Roadhouse
and Bubba’s 33 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 all company restaurants, unless otherwise noted,
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.
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. Other sales also include sales related to our non-royalty-based retail products.
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
42
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
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 (Loss) Income from Unconsolidated Affiliates. Equity (loss) income 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 had 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. We fully impaired our equity investment related to this joint venture
in 2021 as these restaurants closed during the year.
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.
43
2021 Financial Highlights
Total revenue increased $1.1 billion or 44.4% to $3.5 billion in 2021 compared to $2.4 billion in 2020 primarily
due to an increase in average unit volumes driven by an increase in comparable restaurant sales, along with an increase
in store weeks. Store weeks and comparable restaurant sales increased 5.0% and 37.8%, respectively, at company
restaurants in 2021. The increase in comparable restaurant sales was driven by the re-opening of our dining rooms, the
continued easing of dining room capacity and seating restrictions throughout 2021 and continued strong to-go sales.
Restaurant margin increased $316.1 million or 119.0% to $581.7 million in 2021 compared to $265.6 million in
2020 and restaurant margin, as a percentage of restaurant and other sales, increased to 16.9% in 2021 compared to 11.2%
in 2020. The increase in restaurant margin was due to higher sales partially offset by commodity inflation.
Net income increased $214.0 million or 684.8% to $245.3 million in 2021 compared to $31.3 million in 2020
primarily due to higher restaurant margin dollars partially offset by higher general and administrative expenses and
higher income tax expense. Diluted earnings per share increased 682.5% to $3.50 from $0.45 in the prior year.
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 expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . . . . . .
Net income attributable to noncontrolling interests . . . . . . . . .
Net income attributable to Texas Roadhouse, Inc. and
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NM – Not meaningful
Results of Operations
Fiscal Year Ended
2021
2020
$
%
$
%
(In thousands)
3,439,176
24,770
3,463,946
99.3
0.7
100.0
2,380,177
17,946
2,398,123
99.3
0.7
100.0
1,156,628
1,123,003
60,005
517,808
24,335
126,761
734
157,480
3,166,754
297,192
3,663
(637)
292,892
39,578
253,314
8,020
245,294
33.6
32.7
1.7
15.1
0.7
3.7
NM
4.5
91.4
8.6
0.1
(0.0)
8.5
1.1
7.3
0.2
7.1
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
44
Reconciliation of Income from Operations to Restaurant Margin
Fiscal Year Ended
2021
2020
(In thousands, except per store week)
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
297,192
$
23,844
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant Unit Activity
24,770
24,335
126,761
734
157,480
581,732
20,389
16.9%
$
$
Balance at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company openings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - International . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
634
29
—
1
3
—
667
Texas
Roadhouse
600
23
—
1
3
—
627
Bubba's 33
31
5
—
—
—
—
36
17,946
20,099
117,877
2,263
119,503
265,640
9,773
11.2%
Jaggers
3
1
—
—
—
—
4
Company - Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Bubba's 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Jaggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 28, 2021 December 29, 2020
503
31
3
69
28
634
526
36
4
70
31
667
45
Restaurant and Other Sales
Restaurant and other sales increased 44.5% in 2021 compared to 2020. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in average unit volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase (decrease) in restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase (decrease) in restaurant and other sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021
2020
5.0 %
36.7 %
2.6 %
44.3 %
0.2 %
44.5 %
2.7 %
(14.5)%
(1.2)%
(13.0)%
0.1 %
(12.9)%
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,531
27,181
37.8 %
(14.2)%
Texas Roadhouse restaurants only:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
26,622
25,531
37.6 %
(14.1)%
6,364
$ 4,649
Weekly sales by group:
Comparable restaurants (473 and 453 units, respectively) . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume restaurants (18 and 20 units, respectively)(2) . . . . . . . . . . . . . . . . .
Restaurants less than six months old (35 and 30 units, respectively) . . . . . . . . . . . . . . . .
123,064
104,545
124,142
89,621
84,485
81,546
Bubba's 33 restaurants:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,747
43.0 %
5,090
1,544
(17.4)%
3,678
Weekly sales by group:
Comparable restaurants (25 and 24 units, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume restaurants (5 and 1 units, respectively)(2). . . . . . . . . . . . . . . . . . . . .
Restaurants less than six months old (6 and 6 units, respectively) . . . . . . . . . . . . . . . . . . . .
101,097
81,813
115,554
70,768
69,612
61,595
(1) Includes the impact of the year-over-year change in sales volume of all Jaggers restaurants, along with Texas
Roadhouse and Bubba’s 33 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) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period
measured.
The increase in restaurant sales for 2021 was primarily attributable to an increase in average unit volumes, driven
by an increase in comparable restaurant sales along with an increase in store weeks. The increase in comparable
restaurant sales was driven by the re-opening of our dining rooms, the continued easing of dining room capacity and
seating restrictions throughout 2021 and continued strong to-go sales. Comparable restaurant sales increased 37.8% in
2021, which included guest traffic count growth of 27.6% and per person average check growth of 10.2%.
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
reopened. To-go sales as a percentage of total restaurant sales were 17.1% in 2021 compared to 27.0% in 2020.
46
Comparable restaurant sales include the benefit of menu price increases of approximately 1.75% and 4.2%
implemented in April 2021 and October 2021, respectively, as well as an increase of 1.0% in October 2020.
In 2021, we opened 29 company restaurants, including five Bubba’s 33 and one Jaggers restaurant. In 2022, we
plan to open approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants. On December 29, 2021, the first
day of our 2022 fiscal year, we completed the acquisition of seven franchise restaurants for an aggregate purchase price
of approximately $27 million. In total, we expect store week growth of approximately 6.5% in 2022, including the
impact of the seven franchise restaurants acquired.
Other sales primarily represent the net impact of amortization of third party gift card fees and gift card breakage
income. The net impact was ($6.1) million and ($6.8) million for 2021 and 2020, respectively. The increase was
primarily related to a favorable breakage adjustment of $4.8 million recorded in 2021. This adjustment primarily related
to a shift in our historic redemption pattern which indicated that the percentage of gift cards sold that are not expected to
be redeemed had shifted from 4.0% to 4.5%. As a result, we adjusted the breakage recognized for all gift cards that had
not been fully amortized. The impact of this adjustment was offset by increased amortization of third party fees due to
the increase in sales through our third party gift card program.
Franchise Royalties and Fees
Franchise royalties and fees increased by $6.8 million or 38.0% compared to 2020 due to higher average unit
volumes, driven by comparable restaurant sales increases at domestic stores. Comparable restaurant sales at domestic
franchise stores increased 37.5% in 2021.
We anticipate our existing franchise partners will open as many as five Texas Roadhouse restaurants in 2022.
Food and Beverage Costs
Food and beverage costs, as a percentage of restaurant and other sales, increased to 33.6% in 2021 from 32.8% in
2020 primarily due to higher commodity inflation partially offset by the benefit of a higher guest check. Commodity
inflation was 10.0% in 2021, primarily driven by higher beef costs.
For 2022, we currently expect commodity cost inflation of approximately 17% for the first half of the year and 12%
to 14% for the year with prices locked for approximately 30% of our forecasted costs and the remainder subject to
floating market prices.
Restaurant Labor Expenses
Restaurant labor expense, as a percentage of restaurant and other sales, decreased to 32.7% in 2021 compared to
36.8% in 2020. This decrease was primarily due to an increase in average unit volumes as well as several items related
to 2020 including labor inefficiencies as we converted to our hybrid operating model, relief payments and increased
benefits provided to our hourly employees. In 2021, the benefit of a higher guest check amount also contributed to the
decrease. These decreases were partially offset by higher wage rates primarily due to labor market pressures along with
increases in state-mandated minimum and tipped wage rates, the impact of higher employee retention payroll tax credits
in the prior year and an increase in workers’ compensation expense.
In 2021, we incurred costs of $4.0 million for relief pay and enhanced benefits to our restaurant-level managers and
hourly employees compared to $20.2 million in 2020.
In 2021, we recognized employee retention payroll tax credits of $1.2 million compared to $7.0 million in 2020. No
employee retention credits were recognized in the second half of 2021 as we no longer qualified for these credits.
The increase in workers’ compensation expense was due to changes in our claims development history included in
our quarterly actuarial reserve estimate that resulted in an unfavorable adjustment of $1.8 million in 2021. This
compared to a favorable adjustment of $1.8 million in 2020.
In 2022, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of
approximately 7% driven by labor market pressures, increases in state-mandated minimum and tipped wages and
increased investment in our people.
47
Restaurant Rent Expense
Restaurant rent expense, as a percentage of restaurant and other sales, decreased to 1.7% in 2021 compared to 2.3%
in 2020 due to the increase in average unit volumes partially offset by 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, decreased to 15.1% in 2021
compared to 17.0% in 2020. The decrease was primarily due to the increase in average unit volumes, lower to-go
supplies, and lower general liability insurance expense. The lower supplies expense was due to the prior year period
having significantly higher to-go sales due to the closure of our dining rooms. The decrease in general liability
insurance expense was due to changes in our claims development history included in our quarterly actuarial reserve
estimate that resulted in favorable adjustments totaling $3.9 million in 2021 compared to unfavorable adjustments
totaling $3.1 million in 2020. In addition, due to the significant increase in our average unit volumes, expenses that are
largely fixed, including utilities, property taxes and other outside services decreased as a percentage of restaurant and
other sales.
Restaurant Pre-opening Expenses
Pre-opening expenses increased to $24.3 million in 2021 from $20.1 million in 2020. The increase was primarily
due to the timing and number of restaurant openings as well as a slight increase in average pre-opening expenses
incurred. 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, decreased to 3.7% in 2021 compared to 4.9% in 2020. The decrease was
primarily due to an increase in average unit volumes partially offset by higher depreciation at newer restaurants.
Impairment and Closure Costs, Net
Impairment and closure costs, net was $0.7 million and $2.3 million in 2021 and 2020, respectively. In 2021,
impairment and closure costs, net included the impairment of the fixed assets and operating lease right-of-use assets at
two restaurants, both of which have relocated or are scheduled to be relocated. 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 were relocated. In addition, we recorded goodwill impairment of $1.1 million related to two
restaurants.
General and Administrative Expenses ("G&A")
G&A, as a percentage of total revenue, decreased to 4.5% in 2021 compared to 5.0% in 2020. The decrease was
primarily due to the increase in average unit volumes partially offset by higher incentive and performance-based
compensation costs, the prior year favorable impact of the sale of a legal claim for $3.0 million and higher managing
partner conference costs. In 2021, we incurred costs of $3.0 million for our annual managing partner conference which
was not held in 2020.
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.
48
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, Net
Interest expense was $3.7 million compared to $4.1 million in 2020. The decrease in interest expense was
primarily driven by lower interest rates and the repayment of our incremental revolving credit facility partially offset by
reduced earnings on our cash and cash equivalents.
Income Taxes
Our effective tax rate increased to 13.5% compared to an effective tax rate benefit of 81.4% in 2020. The increase
was primarily due to the significant increase in pre-tax income. In 2020, our FICA tip and Work opportunity tax credits
exceeded our federal tax liability which resulted in a tax rate benefit. For 2022, we expect our effective tax rate to be
approximately 15%, excluding the impact of any legislative changes enacted.
Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba's 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas
Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our domestic company
Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33
reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating
segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives,
are included in Other.
Management uses restaurant margin as the measure for assessing performance of our segments. 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 also
includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our
chief operating decision maker (“CODM”) to evaluate restaurant-level operating efficiency and performance. A
reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.
The following table presents a summary of restaurant margin by segment (in thousands):
Fiscal Year Ended
2021
2020
Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bubba's 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
552,039
28,862
831
581,732
16.9 % $
16.6
7.6
16.9 % $
256,298
8,416
926
265,640
11.3 %
7.9
17.2
11.2 %
The increase in Texas Roadhouse and Bubba’s 33 restaurant margin is driven by the increase in restaurant sales
partially offset by commodity inflation. The increase in restaurant sales for 2021 was primarily attributable to an
increase in average unit volumes, driven by an increase in comparable restaurant sales along with an increase in store
weeks. The increase in comparable restaurant sales was driven by the re-opening of our dining rooms, the continued
easing of dining room capacity and seating restrictions throughout 2021 and continued strong to-go sales. In addition,
restaurant margin at Bubba’s 33 was negatively impacted in 2020 by the impact of increased to-go sales resulting in
decreased alcoholic beverage sales.
49
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 . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . .
Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . . .
$ 468,826 $ 230,438
(161,105)
185,943
$ (27,510) $ 255,276
(195,104)
(301,232)
Fiscal Year Ended
2021
2020
Net cash provided by operating activities was $468.8 million in 2021 compared to $230.4 million in 2020. This
increase was primarily due to an increase in net income. The increase was partially offset by our working capital being
negatively impacted by the remittance of a portion of our deferred payroll tax liability of $24.3 million related to the
CARES Act.
Our operations have not required significant working capital and, like many restaurant companies, we have been
able to 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 $195.1 million in 2021 compared to $161.1 million in 2020. The increase
was due to an increase in capital expenditures, primarily driven by an increase in new company restaurants and an
increase in refurbishments of existing restaurants. This was due to the delay in our development schedule in 2020 due to
the pandemic. This increase was partially offset by fewer expenditures related to relocation sites.
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 generally of five to 30 years (including renewal periods) or purchase the land when
appropriate. As of December 28, 2021, 148 of the 566 company restaurants have been developed on land which we
own.
The following table presents a summary of capital expenditures (in thousands):
New company restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refurbishment or expansion of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . .
Relocation of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures related to Support Center office . . . . . . . . . . . . . . . . . . . . . . . . .
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
2021
123,044 $
64,146
8,374
5,128
200,692 $
2020
78,941
47,735
17,917
9,808
154,401
Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the
timing of those openings and the restaurant prototype developed in a given fiscal year. These requirements will include
costs directly related to opening new restaurants or relocating existing restaurants and may also include costs necessary
to ensure that our infrastructure is able to support a larger restaurant base. In 2022, we expect our capital expenditures to
be approximately $230 million as we currently plan to open approximately 25 Texas Roadhouse and Bubba’s 33
company restaurants. We also expect to have as many as six relocations in 2022. In addition, on the first day of our
2022 fiscal year, we completed the acquisition of seven franchise restaurants for an aggregate purchase price of
approximately $27 million. We intend to satisfy our capital requirements over the next 12 months with cash on hand,
net cash provided by operating activities, and if needed, funds available under our amended credit facility.
Net cash used in financing activities was $301.2 million in 2021 compared to net cash provided by financing
activities of $185.9 million in 2020. The decrease is primarily due to repayments on our amended revolving credit
facility, an increase in dividends paid due to the reinstatement of our quarterly dividend payment and an increase in
share repurchases.
In 2021, we repaid $140.0 million that was previously outstanding on our amended revolving credit facility. In
50
2020, we increased our borrowings by $240.0 million as a precautionary measure in order to bolster our cash position
and enhance financial flexibility in response to the pandemic.
On April 28, 2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of
common stock which was distributed on June 4, 2021. This was the first dividend since the Board of Directors voted to
suspend the payment of quarterly cash dividends at the onset of the pandemic. In 2021 and 2020, the Company paid
$83.7 million and $25.0 million, respectively, in dividends to shareholders. On February 17, 2022, our Board of
Directors declared a quarterly cash dividend of $0.46 per share of common stock.
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. On August 2, 2021, the Company resumed the share
repurchase program that was suspended in 2020 at the onset of the pandemic. During 2021 and 2020, we paid $51.6
million and $12.6 million to repurchase 584,932 shares and 252,409 shares of our common stock, respectively. As of
December 28, 2021, $96.1 million remains authorized for stock repurchases.
We paid distributions of $8.2 million and $3.4 million in 2021 and 2020, respectively, to noncontrolling interest
holders of our 20 majority-owned company restaurants.
On May 4, 2021, we entered into an agreement to amend our revolving credit facility with a syndicate of
commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The amended revolving credit facility
remains an unsecured, revolving credit agreement and has a borrowing capacity of up to $300.0 million with the option
to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate of lenders.
The amendment also extended the maturity date to May 1, 2026.
Prior to the amendment, our original revolving credit facility had a borrowing capacity of up to $200.0 million with
the option to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate
of lenders. On May 11, 2020, we amended the original 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
original revolving credit facility.
The terms of the amended revolving credit facility require us to pay interest on outstanding borrowings at LIBOR
plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of
the amended revolving credit facility, in each case depending on our leverage ratio. The agreement also provides an
Alternate Base Rate that may be substituted for LIBOR.
As of December 28, 2021, we had $100.0 million outstanding on the amended revolving credit facility and $189.1
million of availability, net of $10.9 million of outstanding letters of credit. This outstanding amount is included as long-
term debt on our consolidated balance sheet.
As of December 29, 2020, we had $190.0 million outstanding on the amended revolving credit facility which is
included as long-term debt on our consolidated balance sheet. In addition, we had $50.0 million outstanding on the
incremental revolving credit facility which is included as current maturities of long-term debt on our consolidated
balance sheet.
The weighted-average interest rate for the amended revolving credit facility as of December 28, 2021 and
December 29, 2020 was 0.98% and 1.98%, respectively.
The lenders’ obligation to extend credit pursuant to the amended revolving credit facility depends on us maintaining
certain financial covenants. We were in compliance with all financial covenants as of December 28, 2021 and
December 29, 2020.
51
Contractual Obligations
The following table summarizes the amount of payments due under specified contractual obligations as of
December 28, 2021 (in thousands):
Payments Due by Period
Total
Less than
1 year
1 - 3 Years 3 - 5 Years
More than
5 years
Long-term debt obligation, including current
maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Obligations under finance leases . . . . . . . . . . . . . .
Interest(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . .
Capital obligations. . . . . . . . . . . . . . . . . . . . . . . . . .
Total contractual obligations(2) . . . . . . . . . . . . . . .
$
100,000
2,743
9,067
1,112,481
135,028
$ 1,359,319
$
—
—
1,288
60,958
135,028
$ 197,274
— $ 100,000 $
—
2,582
122,548
—
—
2,743
3,271
810,475
—
$ 125,130 $ 220,426 $ 816,489
—
1,926
118,500
—
(1) Includes interest on our revolving credit facility and interest on our financing leases. We used the interest rate on
our amended revolving credit facility as of December 28, 2021 for our variable rate debt and assumed $100.0
million remains outstanding on our amended revolving credit facility through the respective maturity for all
borrowings. We assumed a constant interest rate until maturity on our financing leases.
(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.
Guarantees
As of December 28, 2021 and December 29, 2020, we were contingently liable for $12.2 million and $13.0 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 liabilities have been recorded as of
December 28, 2021 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
Everett, Massachusetts (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Longmont, Colorado (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montgomeryville, Pennsylvania (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fargo, North Dakota (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Logan, Utah (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Irving, Texas (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 December 2024
Louisville, Kentucky (2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 November 2023
Lease
Assignment Date
September 2002 February 2023
October 2003 May 2029
October 2004 March 2026
February 2006
July 2026
January 2009 August 2024
Current Lease
Term Expiration
(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) 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.
(3) 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 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
52
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.
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 2021, as a result of our quarterly impairment analysis, we recorded a total charge of $0.7 million related to the
impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both 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 2021, 2020 and 2019.
Goodwill. Goodwill is tested annually for impairment and is tested more frequently if events and circumstances
indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount
exceeds the fair value of the reporting unit. Goodwill is required to be tested for impairment at the reporting unit level,
or the level of internal reporting that reflects the way in which an entity manages its businesses. A reporting unit is
defined as an operating segment, or one level below an operating segment. An entity may first assess qualitative factors
in order to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying
amount. The entity may also elect to bypass the qualitative assessment and 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. 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.
At December 28, 2021, our Texas Roadhouse reporting unit had allocated goodwill of $127.0 million. No other
reporting units had goodwill balances. Historically, we designated our operating segment and reporting unit to be at the
same level which we defined to be the individual restaurant. In 2021, due to a change in our management reporting
structure, we changed the designation of our operating segment and reporting unit to be at the concept level. As a result
of this change, we performed the goodwill impairment analysis at both the individual restaurant and concept level to
substantiate that our goodwill was not impaired under either reporting unit definition.
In performing the qualitative assessment, we reviewed factors such as results of prior impairment tests, impacts of
the pandemic, macroeconomic conditions, industry and market considerations, cost factors of materials, labor, and other
53
items, financial performance, operational stability, competitive environment, and share price performance. Based on the
financial performance of the Texas Roadhouse concept, as well as the improved operating environment in 2021, no
indicators of impairment were identified. Changes in circumstances existing at the measurement date or at other times in
the future could result in an impairment loss. See note 16 in the consolidated financial statements for further discussion
regarding closures and impairments recorded in 2021, 2020 and 2019.
Effects of Inflation
We are currently operating in a period of high inflation, led by commodity cost inflation which primarily relates to
beef. This is due to increased costs incurred by our vendors related to high labor, transportation, packaging, and raw
materials costs. Some of the impacts of the inflation have been offset by menu price increases and other adjustments
made during the year. 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.
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. 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 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused
portion of the amended revolving credit facility, in each case depending on our leverage ratio. The amended revolving
credit facility also provides an Alternate Base Rate that may be substituted for LIBOR. As of December 28, 2021, we
had $100.0 million outstanding on our amended credit agreement. This outstanding amount is included as long-term
debt on our consolidated balance sheet.
The weighted-average interest rate for the $100.0 million outstanding on our amended revolving credit facility as of
December 28, 2021 was 0.98%. Should interest rates based on these variable rate borrowings increase by one
percentage point, our estimated annual interest expense would increase by $1.0 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. To date, we have been
able to properly manage any supply shortages but have experienced increased costs. If these vendors are unable to fulfill
their obligations under their contracts, we may encounter further supply shortages and/or higher costs to secure adequate
supply and a possible loss of sales, 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.
54
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 28, 2021.
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 28, 2021 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 28, 2021.
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 28, 2021 as stated in their report at F-3.
ITEM 9B—OTHER INFORMATION
None.
ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
55
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 1, 2022.
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 1, 2022.
ITEM 11—EXECUTIVE COMPENSATION
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 1, 2022.
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 1, 2022.
Equity Compensation Plan Information
As of December 28, 2021, 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 to Be
Issued Upon
Vest Date (1)
590,135
—
590,135
Shares
Available for
Future Grants
6,840,041
—
6,840,041
(1) Total number of shares consist of 558,183 restricted stock units and 31,952 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 28, 2021.
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 1, 2022.
ITEM 14—PRINCIPAL ACCOUNTING FEES AND SERVICES
Incorporated by reference from our Definitive Proxy Statement to be dated on or about April 1, 2022.
56
ITEM 15—EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1. Consolidated Financial Statements
PART IV
Description
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185) . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 28, 2021 and December 29, 2020 . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Comprehensive Income for the years ended December 28,
2021, December 29, 2020 and December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the years ended December 28, 2021,
December 29, 2020 and December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 28, 2021,
December 29, 2020 and December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
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*
10.2
Form of Indemnification Agreement for Director and Executive Officer
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 28, 2021 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 28, 2021 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))
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))
57
Exhibit
No.
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))
Description
10.9*
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))
10.10* 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))
10.11* 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))
10.12* 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))
10.13* 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))
10.14* 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))
10.15
Master Lease Agreement dated October 26, 2018 between Paragon Centre Holdings, LLC and Texas
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))
10.16
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))
10.17
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))
10.18
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))
First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020, by and among
10.19
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))
10.20* Employment Agreement between Registrant and Gerald L. Morgan entered into as of December 17, 2020
(incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020 (File No. 000-50972))
10.21* Employment Agreement between Registrant and W. Kent Taylor entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020 (File No. 000-50972))
10.22* Employment Agreement between Registrant and Doug Thompson entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020 (File No. 000-50972))
10.23* Employment Agreement between Registrant and S. Chris Jacobsen entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020 (File No. 000-50972))
58
Exhibit
No.
Description
10.24* Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020
(incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the year
ended December 29, 2020 (File No. 000-50972))
10.25* Employment Agreement between Registrant and Christopher C. Colson entered into as of March 31, 2021
(incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the period
ended March 30, 2021 (File No. 000- 50972))
10.26* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald
L. Morgan dated March 31, 2021, with a retroactive effective date of March 18, 2021 (incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 31, 2021 (File
No. 000-50972))
10.27* Employment Agreement between Registrant and Regina A. Tobin entered into as of June 15, 2021 with an
effective date of June 30, 2021 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly
Report on Form 10-Q for the period ended June 29, 2021 (File No. 000- 50972))
10.28* Employment Agreement between Registrant and Hernan E. Mujica entered into as of June 15, 2021 with an
effective date of June 30, 2021 (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly
Report on Form 10-Q for the period ended June 29, 2021 (File No. 000- 50972))
10.29
Second Amendment to Amended and Restated Credit Agreement dated as of May 4, 2021 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
May 4, 2021 (File No. 000-50972)
10.30* Texas Roadhouse, Inc. 2021 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 2, 2021 (File No. 000-50972))
10.31* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Performance Stock Unit Award Agreement
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021
(File No. 000-50972))
10.32* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement
(Officers) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated
June 15, 2021 (File No. 000-50972))
10.33* Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement
(Member of Board of Directors) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report
on Form 8-K dated June 15, 2021 (File No. 000-50972))
10.34* Separation Agreement between Registrant and Douglas W. Thompson entered into as of December 3, 2021
(incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated December 3,
2021(File No. 000-50972))
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 28, 2021, filed February 25, 2022, 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.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K.
59
ITEM 16. FORM 10-K SUMMARY
Not applicable.
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/ GERALD L. MORGAN
President, Chief Executive
Officer, Director
Date: February 25, 2022
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/ GERALD L. MORGAN
W. Gerald L. Morgan
/s/ TONYA R. ROBINSON
Tonya R. Robinson
/s/ GREGORY N. MOORE
Gregory N. Moore
/s/ MICHAEL A. CRAWFORD
Michael A. Crawford
/s/ DONNA E. EPPS
Donna E. Epps
/s/ CURTIS A. WARFIELD
Curtis A. Warfield
/s/ KATHLEEN M. WIDMER
Kathleen M. Widmer
/s/ JAMES R. ZARLEY
James R. Zarley
President, Chief Executive
Officer, Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
February 25, 2022
February 25, 2022
Chairman of the Board, Director
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
Director
Director
Director
Director
Director
60
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 28, 2021 and December 29, 2020, 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 28, 2021, 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 28, 2021 and December 29, 2020, and the results of its operations and its cash flows for each of the years in
the three-year period ended December 28, 2021, 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 28, 2021, 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 25, 2022 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.
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
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 28, 2021 were $1,162.4 million and $578.4 million,
respectively.
F-1
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 and the utilization of the trailing 12-month cash flows to identify a
potential impairment trigger.
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. 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 25, 2022
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 28, 2021, 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 28, 2021, 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 28, 2021 and December 29, 2020, 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 28, 2021, and the related notes (collectively, the consolidated
financial statements), and our report dated February 25, 2022 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. 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 25, 2022
F-4
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables, net of allowance for doubtful accounts of $17 at December 28, 2021 and
$11 at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $869,375 at December 28,
2021 and $763,700 at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of accumulated amortization of $15,092 at December 28, 2021
and $14,341 at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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, 69,382,418 and
69,561,861 shares issued and outstanding at December 28, 2021 and December 29,
2020, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 28, 2021 December 29, 2020
$
335,645 $
363,155
161,358
31,595
10,701
24,226
563,525
1,162,441
578,413
127,001
1,520
79,052
2,511,952 $
21,952 $
—
95,234
300,657
64,716
85
33,375
86,125
602,144
622,892
100,000
8,027
11,734
93,671
1,438,468
98,418
22,364
4,502
22,212
510,651
1,088,623
530,625
127,001
2,271
65,990
2,325,161
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
—
—
69
114,504
943,551
—
1,058,124
15,360
1,073,484
2,511,952 $
70
145,626
781,915
(106)
927,505
15,546
943,051
2,325,161
$
$
$
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 28, December 29, December 31,
2020
2019
2021
Revenue:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and expenses:
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 expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . . . . . . . . . . . . . . . . .
Less: Net income attributable to noncontrolling interests . . . . . . . . . . . . .
Net income attributable to Texas Roadhouse, Inc. and subsidiaries . . . . .
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of ($36), ($40)
and ($1), respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per common share attributable to Texas
Roadhouse, Inc. and subsidiaries:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends declared per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,439,176
24,770
3,463,946
$ 2,380,177 $ 2,734,177
21,986
2,756,163
17,946
2,398,123
1,156,628
1,123,003
60,005
517,808
24,335
126,761
734
157,480
3,166,754
297,192
3,663
(637)
292,892
39,578
253,314
8,020
245,294
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 $
$
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
106
245,400
3.52
3.50
69,709
70,098
1.20
119
31,374 $
3
174,455
0.45 $
0.45 $
2.47
2.46
$
$
$
69,438
69,893
$
0.36 $
70,509
70,916
1.20
$
$
$
$
$
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
Shares
Balance, December 25, 2018 . . . . . . . . . . . . . . . . . . 71,617,510
—
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
Par
Value
$ 72
—
—
—
—
—
Additional
Paid-in-
Capital
$ 257,388
Other
$
Loss
Retained Comprehensive
Earnings
$ 688,337
— 174,452
—
—
—
—
(70)
— (84,462)
(228) $
—
3
—
—
Roadhouse, Inc.
and
Subsidiaries
Noncontrolling
Interests
945,569 $
174,452
3
—
(70)
(84,462)
15,139 $
7,066
—
(6,357)
(673)
—
Total
960,708
181,518
3
(6,357)
(743)
(84,462)
plans including tax effects . . . . . . . . . . . . . . . . . .
617,395
—
—
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . . . . . . . (2,625,245)
Cumulative effect of adoption of ASC 842, Leases,
(209,408) —
(3)
(12,471)
(139,846)
—
—
—
net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Share-based compensation . . . . . . . . . . . . . . . . . . .
—
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . 69,400,252
—
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
—
—
$ 69
—
—
—
—
—
(2,678)
—
—
35,500
$ 775,649
$ 140,501
31,255
—
—
—
—
—
—
—
— (24,989)
$
—
—
—
—
—
(225) $
—
119
—
—
—
—
—
—
(12,471)
(139,849)
(2,678)
35,500
915,994 $
31,255
119
—
—
(24,989)
—
(12,471)
— (139,849)
—
—
15,175 $
3,670
—
133
(3,432)
—
(2,678)
35,500
931,169
34,925
119
133
(3,432)
(24,989)
plans including tax effects . . . . . . . . . . . . . . . . . .
615,181
1
(1)
—
—
—
—
—
Indirect repurchase of shares for minimum
(201,163) —
tax withholdings . . . . . . . . . . . . . . . . . . . . . . . .
(252,409) —
Repurchase of shares of common stock . . . . . . . . . .
—
Share-based compensation . . . . . . . . . . . . . . . . . . .
—
$ 70
Balance, December 29, 2020 . . . . . . . . . . . . . . . . . . 69,561,861
—
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
Other comprehensive income, net of tax . . . . . . . . . .
—
—
Distributions to noncontrolling interest holders . . . . .
Dividends declared ($1.20 per share) . . . . . . . . . . . .
—
—
Shares issued under share-based compensation
(11,684)
(12,621)
29,431
$ 145,626
—
—
—
$ 781,915
— 245,294
—
—
—
—
— (83,658)
plans including tax effects . . . . . . . . . . . . . . . . . .
595,534
—
—
—
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . . . . .
(190,045) —
(1)
(584,932)
Repurchase of shares of common stock . . . . . . . . . .
—
Share-based compensation . . . . . . . . . . . . . . . . . . .
—
$ 69
Balance, December 28, 2021 . . . . . . . . . . . . . . . . . . 69,382,418
(17,628)
(51,633)
38,139
$ 114,504
—
—
—
$ 943,551
$
$
—
—
—
(106) $
—
106
—
—
—
—
—
—
— $
(11,684)
(12,621)
29,431
927,505 $
245,294
106
—
(83,658)
—
—
—
15,546 $
8,020
—
(8,206)
—
(11,684)
(12,621)
29,431
943,051
253,314
106
(8,206)
(83,658)
—
—
—
(17,628)
(51,634)
38,139
1,058,124 $
—
—
—
(17,628)
(51,634)
38,139
15,360 $ 1,073,484
See accompanying notes to Consolidated Financial Statements.
F-7
Texas Roadhouse, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities:
(Payments on) proceeds from revolving credit facility, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from noncontrolling interest contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interest holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from (payments on) restricted stock and other deposits, net . . . . . . . . . . . . . . . . . . . . .
Indirect repurchase of shares for minimum tax withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (used in) provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 28, December 29, December 31,
2021
2020
2019
$
253,314 $
34,925
$
181,518
126,761
8,896
3,167
673
637
1,071
7
38,139
(62,399)
(9,231)
(2,485)
(13,918)
27,730
67,845
12,734
(8,973)
8,624
20,352
5,553
(9,671)
468,826
(200,692)
—
—
5,588
(195,104)
(140,000)
(708)
—
(8,206)
—
602
(17,628)
(51,634)
(83,658)
(301,232)
(27,510)
363,155
335,645 $
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
(154,401)
(10,580)
1,709
2,167
(161,105)
240,000
(641)
133
(3,432)
—
(823)
(11,684)
(12,621)
(24,989)
185,943
255,276
107,879
363,155
3,186 $
39,789 $
23,087 $
3,890
3,776
14,808
$
$
$
$
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
(214,340)
(1,536)
1,056
—
(214,820)
—
—
—
(6,357)
(743)
62
(12,471)
(139,849)
(102,366)
(261,724)
(102,246)
210,125
107,879
738
20,440
15,416
$
$
$
$
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 28, 2021 and December 29, 2020 and for each of the years in the three-year period
ended December 28, 2021.
As of December 28, 2021, we owned and operated 566 restaurants and franchised an additional 101 restaurants in
49 states and ten foreign countries. Of the 566 company restaurants that were operating at December 28, 2021, 546 were
wholly-owned and 20 were majority-owned. Of the 101 franchise restaurants, 70 were domestic and 31 were
international restaurants.
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.
Risks and Uncertainties
The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the "pandemic").
These include federal, state and local restrictions on restaurants, some of which have limited capacity or seating in the
dining rooms while others have allowed to-go or curbside service only. As of December 28, 2021, all of our domestic
company and franchise locations were operating without restriction. As of December 29, 2020, all of our domestic
company and franchise locations were operating their dining rooms under various limited capacity restrictions or were
limited to outdoor and/or to-go or curbside service only.
As a result of these restrictions, we developed a hybrid operating model to accommodate our dining room
restrictions together with enhanced to-go. We continue to see sales in our to-go program higher than pre-pandemic
levels, even with dining rooms operating without restriction. We cannot predict how long we will continue to be
impacted by the pandemic, the extent to which our dining rooms will have to close again or otherwise have limited
seating, or if the increased sales in our to-go program will continue. The extent to which COVID-19 impacts our
business, results of operations, or financial condition will depend on future developments which are outside of our
control. This includes, without limitation, the efficacy and public acceptance of vaccination programs and/or testing
mandates in curbing the spread of the virus, the introduction and spread of new variants of the virus, which may prove
resistant to currently approved vaccines, and new or reinstated restrictions or regulations on our operations. 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.
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation
As of December 28, 2021 and December 29, 2020, we owned a 5.0% to 10.0% equity interest in 24 restaurants.
Additionally, 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 were 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. The investment
balance related to our joint venture agreement in China was fully impaired in 2021 as the related restaurants closed
during the year. All significant intercompany balances and transactions for these unconsolidated restaurants as well as
the entities whose accounts have been consolidated have been eliminated.
F-9
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(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 2021 and 2020 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) Segment Reporting
Operating segments are defined as components of a company that engage in business activities from which it may
earn revenues and incur expenses, and for which separate financial information is available and is regularly reviewed by
the chief operating decision maker (“CODM”), to assess the performance of the individual segments and make decisions
about resources to be allocated to the segments. The Company’s operating segments have been identified in accordance
with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
ASC 280, Segment Reporting.
Historically, the Company identified each restaurant as an operating segment and aggregated them into a single
reportable segment. In 2021, due to a change in our management reporting structure, we have identified our concepts as
separate operating segments. These operating segments include Texas Roadhouse, Bubba’s 33, Jaggers and our retail
initiatives. In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments. This change did
not have an impact on our consolidated operating results. For further discussion of segment reporting, see note 18.
(d) 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 $26.4
million and $18.1 million at December 28, 2021 and December 29, 2020, respectively, because the balances are settled
within two to three business days.
(e) 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.
(f) Inventories
Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first-in, first-out)
or net realizable value.
(g) 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
F-10
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
depreciated over a period of time which includes both the initial term of the lease and one or more option periods. See
note 2(h) for further discussion of leases.
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 $31.7 million, $25.2 million and $27.9 million for the years ended
December 28, 2021, December 29, 2020 and December 31, 2019, respectively. These costs are included in other
operating costs in our consolidated statements of income and comprehensive income.
(h) 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.
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. The present value is based on our incremental borrowing rate which
considers our credit rating for a secured or collateralized instrument. 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.
(i) Goodwill
Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with
ASC 350, Intangibles—Goodwill and Other ("ASC 350"), goodwill is not subject to amortization and is evaluated for
impairment on an annual basis, or sooner if an event or other circumstance indicates that goodwill may be impaired. The
annual assessment date is the first day of our fourth quarter.
ASC 350 requires that goodwill be tested for impairment at the reporting unit level, or the level of internal reporting
that reflects the way in which an entity manages its businesses. A reporting unit is defined as an operating segment, or
one level below an operating segment. Historically, we designated our operating segment and reporting unit to be at the
same level which we defined to be the individual restaurant. In 2021, we changed the designation of our operating
segment and reporting unit to be at the concept level. As a result of this change, we performed the goodwill impairment
analysis at both the individual restaurant and concept level to substantiate that our goodwill was not impaired under
either reporting unit definition.
As stated in ASC 350, an entity may first assess qualitative factors in order to determine if it is necessary to perform
the quantitative test. In 2021, we elected to perform a qualitative assessment for our annual review of goodwill. This
review included evaluating factors such as macroeconomic conditions, industry and market considerations, cost factors,
changes in management or key personnel, sustained decreases in share price and the overall financial performance of the
Company’s reporting units at both the individual restaurant and concept level. As a result of the qualitative assessment,
no indicators of impairment were identified, and no additional indicators of impairment were identified through the end
of the fourth quarter that would require additional testing.
F-11
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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, we determined that there was no goodwill impairment. Refer to note 7 for
additional information related to goodwill and intangible assets.
(j) 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.
(k) 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.
(l) 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
$400,000
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
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.
F-12
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(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 $21.1 million, $13.8 million and $18.3 million for the years ended December 28, 2021, December 29, 2020
and December 31, 2019, respectively.
(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 U.S.
generally accepted accounting principle (“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
F-13
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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.
In 2021, we fully impaired our foreign investment and recognized the corresponding foreign currency translation
adjustment of $0.1 million in net income.
(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
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 removed 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 simplified
aspects of accounting for recognizing deferred taxes for taxable goodwill. We adopted ASU 2019-12 as of the beginning
of our 2021 fiscal year. The adoption of this standard did not have a significant impact 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.
F-14
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(3) Revenue
The following table disaggregates our revenue by major source:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 28,
2021
$ 3,439,176
21,770
3,000
$ 3,463,946
Fiscal Year Ended
December 29,
2020
December 31,
2019
$ 2,380,177 $ 2,734,177
19,445
2,541
$ 2,398,123 $ 2,756,163
15,542
2,404
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. In the current year, a
shift in our historic redemption pattern indicated that the percentage of gift cards sold that are not expected to be
redeemed had changed from 4.0% to 4.5%. As a result, we adjusted the breakage recognized for all gift cards that had
not been fully amortized and recorded a favorable breakage adjustment of $4.8 million.
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 28, 2021,
December 29, 2020 and December 31, 2019, we recognized gift card fees, net of gift card breakage income, of $6.1
million, $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 28, 2021
and December 29, 2020, our deferred revenue balance related to gift cards was $300.7 million and $232.8 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 $140.1 million for the year ended December 28, 2021 related to the amount in
deferred revenue as of December 29, 2020. 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.
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
F-15
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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 28, 2021 and December 29, 2020. We recognized
revenue of $0.3 million and $0.4 million for the years ended December 28, 2021 and December 29, 2020, respectively,
related to the amounts in deferred revenue as of December 29, 2020 and December 31, 2019, respectively.
(4) Acquisitions
In 2021, we did not acquire any franchise restaurants. In 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. These acquisitions
generated goodwill of $3.3 million, which is not amortizable for book purposes, but is deductible for tax purposes. The
goodwill was assigned to the Texas Roadhouse reportable segment. 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.
(5) Long-term Debt
On May 4, 2021, we entered into an agreement to amend our revolving credit facility with a syndicate of
commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The amended revolving credit facility
remains an unsecured, revolving credit agreement and has a borrowing capacity of up to $300.0 million with the option
to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate of lenders.
The amendment also extended the maturity date to May 1, 2026.
Prior to the amendment, our original revolving credit facility had a borrowing capacity of up to $200.0 million with
the option to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate
of lenders. On May 11, 2020, we amended the original 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
original revolving credit facility.
The terms of the amended revolving credit facility require us to pay interest on outstanding borrowings at LIBOR
plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of
the amended revolving credit facility, in each case depending on our leverage ratio. The agreement also provides an
Alternate Base Rate that may be substituted for LIBOR.
As of December 28, 2021, we had $100.0 million outstanding on the amended revolving credit facility and
$189.1 million of availability, net of $10.9 million of outstanding letters of credit. This outstanding amount is included
as long-term debt on our consolidated balance sheet.
As of December 29, 2020, we had $190.0 million outstanding on the original revolving credit facility which is
included as long-term debt on our consolidated balance sheet. In addition, we had $50.0 million outstanding on the
incremental revolving credit facility which is included as current maturities of long-term debt on our consolidated
balance sheet.
The weighted-average interest rate for the $100.0 million outstanding as of December 28, 2021 was 0.98%. The
weighted-average interest rate for the $240.0 million of combined borrowings as of December 29, 2020 was 1.98%.
F-16
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 revolving credit facility depends on us maintaining
certain financial covenants. We were in compliance with all financial covenants as of December 28, 2021 and
December 29, 2020.
(6) Property and Equipment, Net
Property and equipment were as follows:
December 28, December 29,
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquor licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization. . . . . . . . . . . . . . . . . .
$
2021
144,182 $
2020
143,482
1,003,014
661,878
32,362
11,587
1,852,323
(763,700)
$ 1,162,441 $ 1,088,623
1,092,776
732,160
50,809
11,889
2,031,816
(869,375)
For the years ended December 28, 2021 and December 29, 2020, the amount of interest capitalized in connection
with restaurant construction was $0.2 million and $0.3 million, respectively. There was no interest capitalized in
connection with restaurant construction for the year ended December 31, 2019.
(7) Goodwill and Intangible Assets
All of our goodwill and intangible assets reside within the Texas Roadhouse reportable segment. The changes in
the carrying amount of goodwill and intangible assets are as follows:
Goodwill
Balance as of December 31, 2019 (1) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 124,748 $
3,329
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,076)
Balance as of December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,001 $
—
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Balance as of December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,001 $
Intangible Assets
1,234
1,600
(563)
—
—
2,271
—
(751)
—
—
1,520
(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 28, 2021 were $16.6 million and $15.1 million, respectively. As of December 29,
2020, the gross carrying amount and accumulated amortization of the intangible assets was $16.6 million and
$14.3 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 $0.7 million. Refer to note 4 for discussion of the acquisitions completed for the year
ended December 29, 2020.
F-17
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(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 28, 2021 and December 29, 2020, these amounts were as follows:
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
574,356
$
4,057 $
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
20,577
620,210
640,787
$
1,375
2,682
4,057 $
Real estate
As of December 28, 2021
Equipment
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
526,746
$
3,879 $
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 $
Real estate
As of December 29, 2020
Equipment
Total
578,413
21,952
622,892
644,844
Total
530,625
19,271
572,171
591,442
F-18
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 operating leases as of and for the fiscal year ended December 28, 2021 and
December 29, 2020 was as follows:
Real estate costs
Operating lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate lease liabilities maturity analysis
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total discounted operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . .
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 28, 2021
December 29, 2020
Fiscal Year Ended
$
$
$
$
62,430 $
3,767
—
66,197 $
58,425
1,479
90
59,994
As of December 28,
2021
$
$
$
60,958
61,235
61,313
59,313
59,187
810,475
1,112,481
471,694
640,787
Fiscal Year Ended
December 28, 2021
December 29, 2020
57,040 $
68,921 $
17.88
6.46 %
52,904
50,322
17.78
6.71 %
Operating lease payments exclude $13.7 million of future minimum lease payments for executed real estate leases
of which we have not yet taken possession. In addition to the above operating leases, as of December 28, 2021, we had
two finance leases with a right-of-use asset balance and lease liability balance of $2.2 million and $2.7 million,
respectively. 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 2021, we entered into three sale leaseback transactions involving land that had recently been acquired. These
sales generated proceeds of $5.6 million and no gain or loss was recognized on the transactions. The resulting operating
leases are included in the operating lease right-of-use assets and lease liabilities noted above.
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.
F-19
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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
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 total 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.
(9) Income Taxes
Components of our income tax expense (benefit) for the years ended December 28, 2021, December 29, 2020 and
December 31, 2019 are as follows:
December 28, 2021 December 29, 2020 December 31, 2019
Fiscal Year Ended
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . .
$
$
16,700
13,539
443
30,682
7,391
1,505
8,896
39,578
$
$
(648) $
4,505
403
4,260
(16,859)
(3,073)
(19,932)
(15,672) $
15,643
10,050
369
26,062
4,396
1,939
6,335
32,397
Our pre-tax income is substantially derived from domestic restaurants.
F-20
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 28, 2021,
December 29, 2020 and December 31, 2019 is as follows:
December 28, 2021
Fiscal Year Ended
December 29, 2020
December 31, 2019
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 %
3.8
(9.3)
(1.2)
(1.5)
(0.5)
1.1
0.1
13.5 %
21.0 %
3.6
(92.5)
(12.4)
(2.3)
(3.0)
2.6
1.6
(81.4)%
21.0 %
3.8
(9.4)
(1.5)
(0.1)
(0.6)
1.2
0.7
15.1 %
Our effective tax rate increased to 13.5% compared to an effective tax rate benefit of 81.4% in 2020. The increase
was primarily due to the significant increase in pre-tax income. In 2020, our FICA tip and Work opportunity tax credits
exceeded our federal tax liability which resulted in a tax rate benefit.
Our effective tax rate was a benefit 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. Although these credits exceeded
our federal tax liability in 2020, we expect to utilize these credits in future years.
Components of deferred tax liabilities, net are as follows:
December 28, 2021 December 29, 2020
Deferred tax assets:
Deferred revenue—gift cards . . . . . . . . . . . . . . . . . . . . . .
Insurance reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
24,056
6,407
5,995
1,077
6,040
160,638
16,233
3,618
2,801
226,865
26,692
5,998
5,995
705
5,621
146,803
12,778
10,360
2,119
217,071
(75,022)
(7,742)
(144,153)
(11,682)
(238,599)
(11,734) $
(71,263)
(6,896)
(131,718)
(9,996)
(219,873)
(2,802)
As of December 28, 2021 and December 29, 2020, we had tax credit carryforwards of $3.6 million and $10.4
million, respectively, primarily related to FICA tip and Work opportunity tax credit carryforwards that exceeded credit
limitations. These federal carryforwards expire in 2041. 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
F-21
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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 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 settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1,546
148
389
(421)
—
1,662
49
413
(160)
(436)
1,528
As of December 28, 2021 and December 29, 2020, the total amount of accrued penalties and interest related to
uncertain tax provisions was recognized as a part of income tax expense and these amounts were not material.
All entities for which unrecognized tax benefits exist as of December 28, 2021 possess a December tax year-end.
As a result, as of December 28, 2021, the tax years ended December 29, 2020, December 31, 2019 and December 25,
2018 remain subject to examination by all tax jurisdictions. As of December 28, 2021, 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 28, 2021, no event occurred that is likely to result in a
significant increase or decrease in the unrecognized tax benefits through December 27, 2022.
(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 28, 2021 and December 29, 2020.
(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.
In response to the impact of the pandemic on our restaurant operations, on March 17, 2020, we suspended all share
repurchase activity. We resumed share repurchases on August 2, 2021. For the year ended December 28, 2021, we paid
$51.6 million to repurchase 584,932 shares of our common stock. For the year ended December 29, 2020, we paid $12.6
million to repurchase 252,409 shares of our common stock. As of December 28, 2021, we had $96.1 million remaining
under our authorized stock repurchase program.
F-22
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(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 28, 2021, December 29, 2020, and December 31, 2019, 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 as
presented in the accompanying consolidated statements of income and comprehensive income:
Fiscal Year Ended
December 28, December 29, December 31,
2021
2020
2019
Net income attributable to Texas
Roadhouse, Inc. and subsidiaries . . . . . . . . . . . . . $ 245,294
$
31,255 $ 174,452
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,709
3.52
69,709
389
70,098
3.50
$
$
69,438
$
0.45 $
69,438
455
69,893
$
0.45 $
70,509
2.47
70,509
407
70,916
2.46
(13) Commitments and Contingencies
The estimated cost of completing capital project commitments at December 28, 2021 and December 29, 2020 was
$135.0 million and $95.9 million, respectively.
As of December 28, 2021 and December 29, 2020, we are contingently liable for $12.2 million and $13.0 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 liabilities have been recorded as of
December 28, 2021 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees
is not considered significant.
F-23
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Current Lease
Term Expiration
February 2023
Everett, Massachusetts (1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
May 2029
Longmont, Colorado (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Montgomeryville, Pennsylvania (1). . . . . . . . . . . . . . . . . . . .
March 2026
Fargo, North Dakota (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 2026
Logan, Utah (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2024
Irving, Texas (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 December 2024
Louisville, Kentucky (2)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . December 2013 November 2023
Assignment Date
September 2002
October 2003
October 2004
February 2006
January 2009
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) 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.
(3) 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 28, 2021, 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.
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 13, 2021, our stockholders approved the Texas Roadhouse, Inc. 2021 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 2013 Long-Term Incentive Plan and no
subsequent awards will be granted under the 2013 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-24
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 . . . . . . . . . . .
$
$
2021
10,323
27,816
38,139
2020
10,081 $
19,350
29,431 $
2019
9,032
26,468
35,500
$
$
Fiscal Year Ended
December 28, December 29, December 31,
Share-based compensation activity by type of grant as of December 28, 2021 and changes during the period then
ended are presented below. We recognize expense for RSUs and PSUs over the vesting term based on the grant date fair
value of the award. We do not estimate forfeitures as we record them as they occur.
Summary Details for RSUs
Outstanding at December 29, 2020 . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 28, 2021 . . . . . . . . . . . . . .
Shares
793,563
437,996
(83,041)
(590,335)
558,183
$
$
Value
Term (years)
Intrinsic Value
56.37
91.68
66.63
56.40
82.52
0.8
$
50,036
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
As of December 28, 2021, with respect to unvested RSUs, there was $20.5 million of unrecognized compensation
cost that is expected to be recognized over a weighted-average period of 0.8 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 28, 2021,
December 29, 2020 and December 31, 2019 was $54.7 million, $30.5 million and $27.8 million, respectively. The
excess tax benefit associated with vested RSUs for the years ended December 28, 2021, December 29, 2020 and
December 31, 2019 was $4.3 million, $0.4 million and $0.3 million, respectively, which was recognized in the income
tax provision.
Summary Details for PSUs
Outstanding at December 29, 2020 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance shares adjustment (1) . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 28, 2021 . . . . . . . . . . . . . . . .
Shares
79,000
92,500
(73,801)
(60,548)
(5,199)
31,952
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
Value
Term (years)
Intrinsic Value
$
$
55.98
81.64
55.98
66.45
55.98
86.22
0.1
$
2,864
(1) Adjustment to actual payout amount of 6.58% from the January 2020 PSU grant that vested in January 2021.
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 28, 2021, December 29, 2020 and
December 31, 2019 was $0.4 million, $5.4 million and $8.8 million, respectively.
On January 8, 2022, 60,026 shares vested related to the January 2021 PSU grant and are expected to be distributed
during the 13 weeks ending March 29, 2022. As of December 28, 2021, 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-25
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 28,
2021, December 29, 2020 and December 31, 2019.
(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 28, 2021.
The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:
Deferred compensation plan—assets. . . . . . . . . . . . .
Deferred compensation plan—liabilities . . . . . . . . . .
Fair Value Measurements
Level December 28, 2021 December 29, 2020
67,512
$
(67,431) $
55,633
(55,614)
$
$
1
1
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 loss
Fiscal Year Ended
Long-lived assets held for sale . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated affiliates . . .
Level
3
3
3
December 28, December 29, December 28,
2020
2021
2021
December 29,
2020
$
$
$
1,175
$
— $
— $
1,645
2,625
1,531
$
$
$
(470) $
— $
(1,531) $
(432)
(1,076)
(1,091)
Long-lived assets held for sale include land and building at a site that was relocated and had a carrying amount
of $1.2 million and $1.6 million as of December 28, 2021 and December 29, 2020, respectively. These assets are
included in prepaid expenses and other current assets in our consolidated balance sheets. These are valued using a
Level 3 input, i.e., information from broker listings. We recorded a loss of $0.5 million and $0.4 million for the years
ended December 28, 2021 and December 29, 2020, respectively, which is included in impairment and closure, net in our
consolidated statements of income and comprehensive income.
Goodwill includes two restaurants whose carrying amounts were determined to be in excess of their fair values as
part of our annual goodwill impairment assessment in 2020 and had a carrying amount of $2.6 million as of December
F-26
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
29, 2020. 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.
Investments in unconsolidated affiliates include a 40% equity interest in a joint venture in China that had a carrying
amount of zero and $1.5 million as of December 28, 2021 and December 29, 2020, respectively. We recorded a loss of
$1.5 million and $1.1 million for the years ended December 28, 2021 and December 29, 2020, respectively, which is
included in equity (loss) income from investments in unconsolidated affiliates in our consolidated statements of income
and comprehensive income. This joint venture included four non-Texas Roadhouse restaurants, all of which closed in
2021.
At December 28, 2021 and December 29, 2020, 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 28, 2021 and December 29, 2020, the fair value of our amended 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 $0.7 million, $2.3 million and ($0.9) million for the years ended
December 28, 2021, December 29, 2020 and December 31, 2019, respectively.
Impairment and closure costs in 2021 included $0.7 million related to the impairment of the fixed assets and
operating lease right-of-use assets at two restaurants, both of which have relocated or are scheduled to be relocated.
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. 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.
(17) Related Party Transactions
As of December 28, 2021, December 29, 2020 and December 31, 2019, we had three franchise restaurants and one
majority-owned company restaurant owned in part by current officers of the Company. These franchise entities paid us
fees of $1.7 million, $0.9 million and $0.7 million as of December 28, 2021, December 29, 2020, and December 31,
2019, respectively.
F-27
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(18) Segment Information
We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse,
Bubba's 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas
Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our domestic company
Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33
reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating
segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives,
are included in Other. In addition, Corporate-related segment assets, depreciation and amortization, and capital
expenditures are also included in Other.
Management uses restaurant margin as the measure for assessing performance of our segments. 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 also
includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our
CODM 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.
Restaurant and other sales for all operating segments are derived primarily from food and beverage sales. We do
not rely on any major customer as a source of sales and the customers and assets of our reportable segments are located
predominantly in the United States. There are no material transactions between reportable segments.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:
Fiscal Year Ended December 28, 2021
Texas
Roadhouse
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,253,889
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,701,850
552,039
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
105,079
1,874,620
167,746
Bubba's 33
$
174,355 $
Other
Total
10,932 $ 3,439,176
$
$
145,493
28,862 $
10,101
831 $
2,857,444
581,732
12,700 $
179,856
23,408
8,982 $
457,476
9,538
126,761
2,511,952
200,692
F-28
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Fiscal Year Ended December 29, 2020
Texas
Roadhouse
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,267,815
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,011,517
256,298
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,485
1,714,873
127,162
Bubba's 33
$
106,981 $
Other
Total
5,381 $ 2,380,177
$
$
98,565
8,416 $
4,455
926 $
2,114,537
265,640
12,036 $
159,753
13,833
7,356 $
450,535
13,406
117,877
2,325,161
154,401
Fiscal Year Ended December 31, 2019
Texas
Roadhouse
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,612,433
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,156,859
455,574
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
96,013
164,644
Bubba's 33
$
117,610 $
Other
Total
4,134 $ 2,734,177
$
$
99,561
18,049 $
3,530
604 $
2,259,950
474,227
12,063 $
25,108
7,468 $
24,588
115,544
214,340
A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest
expense (income) and equity (loss) income from investments in unconsolidated affiliates to reportable segments.
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 28,
2021
581,732
Fiscal Year Ended
December 29,
2020
265,640
December 31,
2019
474,227
Add:
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
24,770
17,946
21,986
Less:
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
24,335
126,761
734
157,480
297,192
20,099
117,877
2,263
119,503
$
23,844 $
20,156
115,544
(899)
149,389
212,023
(1
(19) Subsequent Events
On December 29, 2021, the first day of our 2022 fiscal year, we completed the acquisition of seven franchise
restaurants. Pursuant to the terms of the acquisition agreements, we paid an aggregate purchase price of approximately
$27.0 million. We expect to complete the preliminary purchase price allocations relating to these transactions in the first
quarter of fiscal 2022.
F-29
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Dear Shareholders,
Despite the many challenges we faced during the pandemic, our Corporate Sustainability program remained strong throughout
2021. We continued to focus on our four pillars - Food, Community, Employees, and Conservation - and remain committed to our
sustainability mission to make every community we serve better than we found it.
As we have mentioned several times, we
believe that our Managing Partner Model is the
foundation of our sustainability efforts. Our MP
Model provides our Managing Partners with 10%
of their restaurant profits, which encourages
stewardship of resources. Because of this
ownership mentality, our Managing Partners are
incentivized to reduce waste, conserve energy,
and become sustainability champions.
Our commitment to hand-cut steaks also
includes a sustainability benefit. Our in-house
Meat Cutters not only provide higher quality
steaks to our guests, but the program also helps
reduce millions of pounds of food waste each
year. Also, our food is cooked-to-order, which is
another way we reduce waste.
Throughout the year, we were proud to host
many local, regional, and national dine-to-
donate fundraisers at our restaurants across
the country. During the month of October,
stores that opted in to participate in raising
money and awareness for breast cancer raised
$120,000 for the Breast Cancer Research
Foundation. At the end of the year, we hosted
dine-to-donate fundraisers in restaurants across
Kentucky, Indiana, Georgia, West Virginia,
and Pennsylvania. The restaurants collected
donations and donated their profits for the night
to the Western Kentucky Tornado Relief Fund.
As a result, we were able to donate $85,000 to
the fund. In addition, several departments at
the Support Center and many individual Roadies
donated money, toys, gift cards, and time to help
support organizations selected by our operators
in Western Kentucky.
We also continued our commitment to veterans.
We hosted our 12th annual Veterans Day where
we provided over 480,000 free meal vouchers to
active and retired military. The vouchers allowed
the recipients to dine at their convenience. In
addition, our CEO, Jerry Morgan, was appointed
to the Homes for Our Troops Board of Directors.
To date, we have donated more than $2 million
to help build handicap accessible homes for
post-9/11 veterans.
We know that the fundraising efforts mentioned
above and providing Legendary Food, Legendary
Service® every day is only made possible by the
commitment and pride our Roadies have for
their work. Whether it’s training, development,
or benefits – we are always looking for ways to
grow and develop our employees.
In 2021, we continued to focus on Roadie
development through a variety of programs,
including our Women’s Leadership Series and our
monthly Let’s Talk D&I series, to name a
few. We also offered a number of compliance
training courses for our Roadies, including
Code of Conduct review, harassment-free
workplace training, and OSHA training. In
addition, Roadies in our restaurants and at the
Support Center, were offered development
courses throughout the year both in-person and
through virtual options. Over 273,000 training
courses were completed through our learning
management platform.
From an employee benefits perspective, in
2021, we were also proud to announce our new
tuition reimbursement program for restaurant
employees, which offers $5,250 in annual
reimbursement for classes at an accredited
university to team members who qualify for
benefits and work 30 hours or more weekly.
When it comes to conservation, bees,
trees, and water are three resources we are
passionate about protecting and preserving
as a company. Last year, we partnered with
the Bee Conservancy to sponsor 120 native
beehives at non-profits, schools, and other
community organizations across the country.
As part of our partnership with the Arbor Day
Foundation, we hosted tree distribution events
at Texas Roadhouse locations in Cedar Rapids,
IA; Houston, TX; and Miami, FL. Over 1,200 (1-5
gallon) trees were given out to members of these
communities that were recently impacted by
natural disasters.
On the recycling front, in 2021 we were proud
to announce that we replaced all third-party
plastic gift cards with paper gift cards in an effort
to reduce plastic ending up in landfills. We also
are continuing our test with uniforms made from
recycled bottles. The feedback from employees
thus far has been positive. Unfortunately,
we saw another drop in the number of stores
participating in recycling programs from 67%
to 65%. However, as a result of our recycling
program, 15,689 tons were diverted from the
landfill with a 16.2% diversion rate. This
equates to 71,448 trees saved and 36,696 GHG
emissions saved.
At the Support Center, our Sustainability
Committee continues to offer opportunities for
Roadies to get involved in sustainability projects,
such as trash pick-ups and electronic recycling
events. During the spring, the committee hosted
a lunch and learn for Roadies to learn more about
composting. This helped kick off composting in
the Support Center café, which is a great way
for us to test and understand the challenges of
composting from an operations perspective.
We continued to focus on bringing water
to communities around the world with our
partnership with WaterStep, whose mission is
to save lives with safe water. In addition, we are
proud to partner with Doc Hendley, founder of
Wine to Water, and his team on their initiative to
provide clean water to indigenous communities.
Our partnership focuses on bringing clean water
to Native American communities in New Mexico.
As we approach 4 years of highlighting our
Corporate Sustainability efforts, we formed
a cross-functional committee to understand
and capture the various programs and
initiatives throughout the company. The
committee is comprised of representatives from
Communications, Finance, Financial Reporting,
Legal, People, and Purchasing. While 2021 was
all about gaining a clearer understanding of our
areas of success and opportunity, committee
efforts such as developing Vendor Partner
Expectations are now included in our
Corporate Sustainability Report.
We are excited to continue to develop our
Corporate Sustainability program through
building champions, providing opportunities,
testing initiatives, and learning more through
our committees and teams. To review our full
2021 Sustainability Report, visit our website at
texasroadhouse.com/sustainability. This report
is updated annually, and we meet with our
Board of Directors each year to share updates.
Travis Doster
Vice President of Communications
and Public Affairs
We make it our mission
to leave every community
better than we found it.
We were proud to host tree
distribution events at Texas
Roadhouse locations in
Cedar Rapids, IA; Houston,
TX; and Miami, FL. with our
longtime partner Arbor Day.
Over 1,200 (1-5 gallon) trees
were given out to members
of these communities that
were recently impacted by
natural disasters.
LED
lighting
New in 2021, we replaced all third-party plastic gift cards
with paper gift cards in an effort to reduce the amount of
plastic ending up in landfills.
In 2021, we opened 23 company restaurants with
LED lighting and energy-efficient equipment, helping
to reduce our electric, gas, and water usage.
Preserving
Resources
Through Recycling
Trees Saved
GHG Emissions Saved
MTCO2E
Water Saved
GAL
Electricity Saved
KW
71,448
36,696
41.68M
20.71M
MTCO2E
GAL
KW
Restaurant Locations
as of December 28, 2021
---------------------------------------------
Domestic
596
INTERNATIONAL
31
Bubba’s 33
36
Jaggers
4
BOARD OF
Directors
GREGORY N. MOORE
Chairman of the Board, Texas Roadhouse, Inc.
Former Senior Vice President and Controller
Yum! Brands, Inc.
Gerald l. Morgan
President and CEO
Texas Roadhouse, Inc.
Michael A. Crawford
Chairman, President, and CEO
Hall of Fame Resort & Entertainment Co.
DONNA E. Epps
Former Partner
Deloitte LLP
CURTIS A. WARFIELD
President and CEO
Windham Advisors LLC
KATHLEEN M. WIDMER
Company Group Chairman
Consumer North America and Latin America
Johnson & Johnson
JAMES R. ZARLEY
Former Chairman and CEO
Conversant, Inc.
Shareholder
Information
SUPPORT CENTER
(Corporate Office)
6040 Dutchmans Lane, Louisville, KY 40205
(800) TEX-ROAD or (800) 839-7623
ANNUAL MEETING
Thursday, May 12, 2022 – 9:00 am EDT
Texas Roadhouse Support Center
6040 Dutchmans Lane
Louisville, KY 40205
TRANSFER AGENT
Computershare
P.O. Box 505000, Louisville, KY 40233
Phone (877) 581-5548
FINANCIAL INQUIRIES
For 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.com
INDEPENDENT AUDITORS
KPMG LLP
400 W. Market Street, Suite 2400, Louisville, KY 40202
Phone (502) 587-0535
MEDIA INQUIRIES
For all media requests, please contact
Travis Doster at (502) 638-5457
STOCK LISTING
Texas Roadhouse, Inc. Common Stock is listed on the
NASDAQ Stock Exchange under the symbol TXRH
2019 Award Winners
Managing Partner
of the Year
David
Hollinger
Meat cutter
of the Year
Luis
Gonzalez
Roadie of the Year
Brian Bauscher
Service Manager
Courtney Morris
Kitchen Manager
Craig Capps