On January 30, 2023, we celebrated
the opening of our 700th restaurant
systemwide in El Paso, Texas. I
am proud of Managing Partner,
Miro Santiesteban, and team for
representing Texas Roadhouse
with this milestone opening. The
community has embraced our new
location in El Paso and I have no
doubt that great things are ahead.
In a testament to our growth, our
701st restaurant opened just a few
hours later in California.
We also continue our strategy
of relocating some of our older
restaurants with great results.
In 2022, the three restaurants we
relocated experienced at least a 20%
increase in sales, which is consistent
with prior years. Our most recent
relocation in Lubbock, Texas, is
currently the largest Texas Roadhouse
unit at nearly 11,000-square feet!
On the retail front, we launched
a new merchandise shop for fans
to enjoy and share our brand in
new ways. From socks to peanut
brittle and a honey cinnamon butter
candle, our guests can now shop for
branded items on our website. The
honey cinnamon butter candle is our
most popular item and has received
widespread attention on social media
and online news.
Dear
Shareholders,
On February 17, 1993,
Texas Roadhouse opened its doors
for business and the dream of our
founder, Kent Taylor, became a reality.
Over the past 30 years, the country
and the world have come to know and
love our commitment to hospitality and
service, to crave our made-from-scratch
food, and to appreciate our support of
local communities. Despite some early
hardships, since Day One in 1993, our
operators continue to drive sales and
consistently deliver on our promise of
Legendary Food, Legendary Service®
to our guests each and every day.
For the company 2022 was no
exception, marked by over $4 billion
in revenue and double-digit profit
growth despite significant cost
pressures. In addition, our operators
generated over $130,000 in average
weekly sales at company restaurants.
We opened 23 company restaurants,
seven international franchise
restaurants, and acquired eight
domestic franchise restaurants.
While many things at Texas Roadhouse
have remained the same since 1993,
we are and will always be committed
to evolving and changing to improve
the guest and Roadie experience.
As an example, since 2020,
our To-Go business has grown
considerably, and our dining room
traffic also continues to increase.
In 2022, our stores averaged over
$900,000 per location in To-Go sales.
In response to this demand,
we continue to develop processes
and technologies to improve the
guest experience. We recently
launched a guest feedback tool that
allows our stores to track their Net
Promoter Scores (NPS) on a daily
basis, which will help us better
execute on To-Go.
In addition, given our increased traffic,
we continue to explore and implement
new technology to support our in-dining
room experience, such as Roadhouse
Pay, our pay-at-the-table system.
We successfully rolled out Roadhouse
Pay to over 500 locations in 2022.
Roadhouse Pay gives our guests more
freedom to pay at their convenience and
allows us to provide better service to
the guest during the ‘check-and-change’
period of their meal.
Although Kent is no longer with us,
his memory lives on as we carry on
the mission, vision, and purpose he
instilled in all of us. On February 6,
2023, all of our restaurants across
the country joined together to raise
awareness and make a donation of over
$820,000 for the American Tinnitus
Association (ATA). The ATA’s mission
is to promote relief, help prevent, and
find cures for tinnitus. As a result of our
partnership, we made a huge impact on
this organization and those who suffer
from tinnitus, which hits close to home
for so many Roadies.
Our ‘Texas Roadhouse
Rattlesnake Bites™
Seasoning Blend’, is now
available nationwide at
all Sam’s Club stores.
Our 700th restaurant
systemwide in El Paso, Texas.
As we continue to innovate and
extend our legendary brand into
retail grocery and merchandise
spaces, spices are our latest product
to hit the shelves. Our ‘Texas
Roadhouse Rattlesnake Bites™
Seasoning Blend’, which is inspired
by our famous Rattlesnakes Bites™
appetizer, is now available nationwide
at all Sam’s Club stores. The
acceptance and fanfare we continue
to see throughout the retail segment
shows the strength our Texas
Roadhouse brand has achieved over
the course of the last 30 years.
We are also pleased with the
progress of our newer concepts,
Bubba’s 33 and Jaggers.
Bubba’s 33, which ended the year
with 40 restaurants in 15 states, is
celebrating its 10-year anniversary
in 2023 and continues to show great
potential. We recently completed
our first attitude and usage study for
Bubba’s 33, which will help us better
understand and serve our guests
moving forward.
Jaggers is experiencing growth in the
quick service sector. On the company
side, we plan to open three restaurants
in 2023 and expect our first franchise
units to open later this year. We firmly
believe that the food quality, variety,
value, and service will continue to set
us apart as this brand grows.
From socks to peanut brittle and a
honey cinnamon butter candle, our
guests can now shop for branded
items on our website.
We celebrated the opening
of our 700th restaurant
systemwide in El Paso, Texas.
Our international business continues
to expand as well. We ended 2022
with 38 restaurants in 10 foreign
countries. In 2023, we expect our
franchise partners to open as many
as six locations. We believe we have a
strong foundation internationally that
will allow us to continue to grow for
many years.
We are also growing on the people
side of our business with the
promotion of Gina Tobin to President
in January 2023. Gina most recently
held the position of Chief Learning
and Culture Officer. In addition
to her current duties overseeing
Food, Service, Training, Research
& Development, and Diversity &
Inclusion, she will take on more
day-to-day responsibilities at all
levels throughout the Support
Center. Gina is a former operator and
Managing Partner of the Year, who has
contributed to our success as both an
operator and executive. With Gina as
President, I will be able to spend more
time in the field supporting operations
for all three concepts.
It’s our people and our culture of
recognition that are key to our
success. In April 2022, we took time
to motivate and celebrate all of our
operators at our annual Managing
Partner Conference. During the
event, we named our Managing
Partner of the Year, Chad Noble
from Fayetteville, North Carolina.
What I love most about Chad as a
leader is his consistency. Whether
it’s his focus on food, service, or the
culture in his store, Chad is always
committed to legendary standards.
A five-time Managing Partner of the
Year Finalist, I was proud to present
Chad with his $30,000 check. At our
annual Support Center Awards, Shelly
McGowen was named Roadie of the
Year. Throughout her 17-year career,
she has been steadfast in her support
of the Executive Team. Shelly is a true
partner and always the most positive
person in the room.
As we celebrate our 30th anniversary,
our focus will be on what got us here
— providing our guests a legendary
experience each and every shift across
all of our concepts. And, what I’m
most proud of is that you can still feel
the Day One mentality when you taste
our made-from-scratch food and see
the smiling faces of our Roadies the
moment you walk through the door.
We are excited about our continued
growth in 2023, which includes the
potential to open a record number of
systemwide locations across all of our
brands. Given our momentum and the
passion our Roadies have to deliver
on our promise, I have no doubt that
we’re just gettin’ started.
Jerry Morgan
CEO
Gina Tobin
promoted
to President.
March 31, 2023
To our Shareholders:
You are cordially invited to attend the 2023 Annual Meeting of Shareholders of Texas Roadhouse, Inc.
(the “Company”) on Thursday, May 11, 2023. 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
TEXAS ROADHOUSE, INC.
6040 Dutchmans Lane
Louisville, Kentucky 40205
2023 Annual Meeting of Shareholders (the “Annual Meeting”)
of Texas Roadhouse, Inc., a Delaware corporation (the “Company”)
Date and Time:
Thursday, May 11, 2023
9:00 A.M. Eastern Daylight Time
Place:
Texas Roadhouse Support Center
6040 Dutchmans Lane
Louisville, Kentucky 40205
Proposals for Business
Notice on Voting
Proposal 1: To elect seven directors to the
Board of Directors of the Company, each for a
term of one year
Proposal 2: To ratify the appointment of
KPMG LLP as the Company’s independent
auditors for the Company’s 2023 fiscal year
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.
Who Can Vote
Proposal 3: To hold an advisory vote on
executive compensation
Only shareholders of record at the close of business on
March 13, 2023 are entitled to receive notice of and to vote
at the Annual Meeting.
Proposal 4: To hold an advisory vote on the
frequency of the advisory vote on executive
compensation
Proposal 5: To hold an advisory vote on a
shareholder proposal regarding the issuance of
a climate report and to set reduction targets by
the Company, if properly presented at the
Annual Meeting
Proposal 6: To transact such other business as
may properly come before the Annual Meeting
Date of Mailing
This Notice of the Annual Meeting and the attached Proxy
Statement describing matters to be described at the
Annual Meeting are being distributed or otherwise
furnished to shareholders on March 31, 2023.
By Order of the Board of Directors,
Christopher C. Colson
Corporate Secretary
for
the
Important Notice Regarding the Availability
of Proxy Materials
2023
Annual Meeting of Shareholders to be Held
on May 11, 2023: Our Annual Report containing
our Proxy Statement relating to our 2023
Annual Meeting
and
Form 10-K for
ended
December 27, 2022 is available on our website
at www.texasroadhouse.com in the Investors
Section.
Shareholders
of
the
fiscal
year
Table of Contents
1
1
1
1
2
SUMMARY OF MATTERS REQUIRING SHAREHOLDER ACTION ..............................................
Proposal 1: Election of Directors .............................................................................................................
Proposal 2: Ratification of Independent Auditors ....................................................................................
Proposal 3: Advisory Vote on Approval of Executive Compensation .....................................................
Proposal 4: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation ..........
Proposal 5: Advisory Vote on a Shareholder Proposal Regarding the Issuance of a Climate Report
and to Set Reduction Targets ...............................................................................................................
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
ANNUAL MEETING FAQs .........................................................................................................
5
CORPORATE GOVERNANCE AND OUR BOARD ...................................................................
8
8
2022 Corporate Governance Overview ....................................................................................................
Director Summary Overview .................................................................................................................... 10
Director Biographies ................................................................................................................................. 11
Meetings of the Board .............................................................................................................................. 14
Leadership Structure of the Board and the Role of the Board in Risk Oversight ..................................... 14
Committees of the Board .......................................................................................................................... 18
Policy Regarding Consideration of Candidates for Director ..................................................................... 20
Compensation of Directors ....................................................................................................................... 21
Code of Conduct ...................................................................................................................................... 23
Stock Ownership Guidelines .................................................................................................................... 24
Succession Planning ................................................................................................................................ 24
Mandatory Retirement Age for Board Service ......................................................................................... 24
Shareholder Engagement ........................................................................................................................ 24
Board Orientation and Continuing Education ........................................................................................... 25
STOCK OWNERSHIP INFORMATION ....................................................................................... 26
Delinquent Section 16(a) Reports ............................................................................................................ 27
EXECUTIVE COMPENSATION .................................................................................................. 28
2022 Executive Summary ........................................................................................................................ 28
2022 Financial Highlights ......................................................................................................................... 31
Compensation Discussion and Analysis .................................................................................................. 32
Summary Compensation Table ................................................................................................................ 54
Grants of Plan-Based Awards in Fiscal Year 2022 .................................................................................. 56
Outstanding Equity Awards ...................................................................................................................... 59
Stock Vested ............................................................................................................................................ 60
Termination, Change of Control and Change of Responsibility Payments .............................................. 61
Pay Versus Performance ......................................................................................................................... 64
CEO Pay Ratio ......................................................................................................................................... 69
AUDIT COMMITTEE REPORT ................................................................................................... 70
Related Party Transactions ...................................................................................................................... 71
PRESENTATION OF PROPOSALS ........................................................................................... 74
Proposal 1: Election of Directors ............................................................................................................. 74
Proposal 2: Ratification of Independent Auditors .................................................................................... 75
Proposal 3: Advisory Vote on Approval of Executive Compensation ..................................................... 77
Proposal 4: Advisory Vote on Frequency of the Advisory Vote on Executive Compensation ................ 79
Proposal 5: Advisory Vote on a Shareholder Proposal Regarding the Issuance of a Climate Report
and to Set Reduction Targets ............................................................................................................... 80
SHAREHOLDER PROPOSALS ................................................................................................. 83
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD .................................................. 83
FORM 10-K ................................................................................................................................. 83
OTHER BUSINESS ..................................................................................................................... 84
PROXY STATEMENT
2023 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 11, 2023
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 2023 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 March 31,
2023.
The Annual Meeting will be held at the Texas Roadhouse Support Center located at 6040 Dutchmans
Lane, Louisville, Kentucky on Thursday, May 11, 2023 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 26, 2023 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.
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
1
and the other related executive compensation tables and related discussions) will be determined by the
affirmative vote of a majority of the shares present (in person or by proxy) and entitled to vote. You may vote
“FOR” or “AGAINST” approval of the executive compensation, or you may “ABSTAIN” from voting on this
proposal. A vote to “ABSTAIN” will have the same effect as a vote “AGAINST” approval of the executive
compensation.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL.
Proposal 4—Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
The outcome of the advisory vote on how often the Company should hold an advisory vote on executive
compensation will be determined by the affirmative vote of a plurality of the shares present (in person or by
proxy) and entitled to vote. You may select a frequency of “EVERY YEAR,” “EVERY TWO YEARS” or “EVERY
THREE YEARS”, or you may “ABSTAIN” from voting on this proposal. The choice receiving the most votes will
be the frequency selected by the shareholders, so abstentions will not affect the outcome of the vote on this
proposal.
THE BOARD RECOMMENDS THAT YOU SELECT “EVERY YEAR” FOR THIS PROPOSAL.
Proposal 5—Advisory Vote on the Shareholder Proposal Regarding the Issuance of a Climate Report
and to Set Reduction Targets by the Company
The outcome of the vote on whether the Company should issue a climate report describing if, and how,
the Company plans to measure and reduce its total contribution to climate change, including emissions from its
supply chain, and align its operations with the Paris Agreement’s goal of maintaining global temperature
increases to 1.5
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” the shareholder proposal, 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 shareholder proposal.
℃
THE BOARD RECOMMENDS THAT YOU VOTE “AGAINST” 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 13, 2023. 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 67,037,679 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 (as and if
applicable). 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 Proposal 1.
The ratification of the appointment of the Company’s independent auditors (Proposal 2) is a routine
matter under the applicable rules so broker non-votes should not occur. In addition, because this matter is routine
and brokers may vote as stated above, the number of votes cast, plus the number of abstentions, on Proposal
2 will be used to establish whether a quorum is present.
3
The advisory vote on the approval of executive compensation (Proposal 3), the advisory vote on the
frequency of the advisory vote on executive compensation (Proposal 4), the advisory vote on the shareholder
proposal regarding the issuance of a climate report and to set reduction targets by the Company (Proposal 5),
and any other matters that may properly come before the Annual Meeting are also non-routine matters under
the applicable rules, so broker non-votes may occur. Because broker non-votes do not count as shares entitled
to vote, they do not affect the outcome of the vote on Proposals 3, 4, and 5.
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
WHEN AND WHERE IS THE ANNUAL MEETING?
ANNUAL MEETING FAQS
The 2023 Annual Meeting of Shareholders will be held at the Texas Roadhouse Support Center located at 6040
Dutchmans Lane, Louisville, Kentucky 40205 on Thursday, May 11, 2023 at 9:00 AM eastern daylight time.
WHO CAN ATTEND THE ANNUAL MEETING?
The Annual Meeting is open to all shareholders. If you wish to attend the Annual Meeting, please contact our
Investor Relations Department at investment@texasroadhouse.com or (502) 426-9984.
WHO IS SOLICITING MY PROXY?
The Company’s Board is soliciting your proxy in connection with the Annual Meeting. Certain of our directors,
officers and employees also may solicit proxies on the Board’s behalf by personal contact, telephone, mail, e-
mail or other means.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on March 13, 2023 will be entitled to vote at the Annual
Meeting.
WHAT CONSTITUTES A QUORUM?
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.
HOW DO I VOTE?
If you are entitled to vote, then you may cast your vote in accordance with any of the following options:
- Online, by going to the website shown on your proxy card;
- By touch-tone telephone from the United States, using the toll-free number on the proxy card;
- By mail by promptly completing, signing and dating your proxy card and returning it in the enclosed
postage-paid envelope; or
-
In person, by revoking your proxy and attending the Annual Meeting.
Telephone and Internet Voting facilities for Shareholders of record will close on 11:59 PM eastern
daylight time on May 10, 2023.
CAN I CHANGE MY VOTE OR REVOKE MY PROXY?
Yes, you may revoke your proxy at any time before the closing of the polls at the Annual Meeting 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 Chief Legal and
Administrative Officer and 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.
You can 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
5
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.
WHAT IS A BROKER NON-VOTE?
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; therefore, it is important that you complete and return your proxy early so that your
vote may be recorded.
WHAT ITEMS WILL BE VOTED ON AND WHAT ARE THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS?
The Board is requesting that shareholders vote on the following five proposals at the Annual Meeting and makes
the following recommendations with respect to each proposal:
- Proposal 1: To elect seven directors to the Board of Directors of the Company, each for a term of one
year.
Recommendation: “FOR”
- Proposal 2: To ratify the appointment of KPMG LLP as the Company’s independent auditors for the
Company’s 2023 fiscal year.
Recommendation: “FOR”
- Proposal 3: To hold an advisory vote on executive compensation.
Recommendation: “FOR”
- Proposal 4: To hold an advisory vote on the frequency of the advisory vote on executive compensation.
Recommendation: “EVERY YEAR”
- Proposal 5: To hold an advisory vote on a shareholder proposal regarding the issuance of a climate
report and to set reduction targets by the Company, if properly presented at the Annual Meeting.
Recommendation: “AGAINST”
WHO PAYS FOR THE PROXY SOLICITATION?
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.
6
WHO COUNTS THE VOTES?
Computershare, the transfer agent for the Company, will count the votes and will serve as the independent
inspector of election at the Annual Meeting.
WHERE DO I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
Results of the vote held (in person or by proxy) at the Annual Meeting will be included on a Form 8-K which is
expected to be filed with the Securities and Exchange Commission within one business day after the date of the
Annual Meeting.
WHO IS “BUBBA” AND WHY IS HE REFERENCED IN THE PROXY?
Bubba was the nickname of W. Kent Taylor, the Company’s late founder, and is the namesake of our Bubba’s
33 restaurant concept. As used in Compensation Discussion and Analysis and in honor of Mr. Taylor, we use
the headings “Bubba Who” (outlining our Named Executive Officers), “Bubba What” (outlining what we do and
do not do from an executive compensation standpoint), and “Bubba How” (outlining our philosophy on executive
compensation).
7
CORPORATE GOVERNANCE AND OUR BOARD
2022 CORPORATE GOVERNANCE OVERVIEW
The following is an executive summary of corporate governance activities for our 2022 fiscal year:
Meetings
We held 26 meetings of the Board and applicable committees comprised of (i) four meetings of the Board,
(ii) 14 meetings of the audit committee, (iii) four meetings of the compensation committee, and (iv) four
meetings of the nominating and corporate governance committee.
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 current committee membership and leadership:
1) Chairman of the Board: Gregory N. Moore
2) Audit Committee: Donna E. Epps (Chair); Michael A. Crawford; Gregory N. Moore; Curtis A.
Warfield; Kathleen M. Widmer; and James R. Zarley
3) Compensation Committee: James R. Zarley (Chair); Michael A. Crawford; Donna E. Epps; Gregory
N. Moore; Curtis A. Warfield; and Kathleen M. Widmer
4) 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 2022 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. Additionally, the Chairman of the Board received an
annual grant of service based restricted stock units equal to $290,000 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 being rounded up or down to the nearest 100 shares, while each
remaining non-employee director received an annual grant of service based restricted stock units equal to
$200,000 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 being 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.
8
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.
9
Director Summary Overview
Nominee
Michael A. Crawford
Donna E. Epps
Gregory N. Moore
Gerald L. Morgan
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Age
55
59
74
62
55
61
78
OUR DIRECTOR NOMINEES
Director
Since
2020
Independent
(Y/N)
Y
Committee Membership
A
C
N
2021
2005
2021
2018
2013
2004
Y
Y
N
Y
Y
Y
N/A
N/A
N/A
A (Audit Committee) C (Compensation Committee) N (Nominating and Corporate Governance Committee)
Chairperson
Committee Member
10
Director Summaries
Michael A. Crawford
Director Since: 2020
Age: 55
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating & Corporate
Governance Committee
Public Boards:
Hall of Fame Resort &
Entertainment Company
(NASDAQ: HOFV)
Favorite Texas Roadhouse
Food Item:
6oz Filet and Grilled Shrimp
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), including Hall of Fame Village, Hall of Fame Village Media and Gold
Summit Gaming, 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: 2021
Age: 59
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating & Corporate
Governance Committee;
Chairperson of Audit
Committee
Public Boards:
Saia, Inc.
(NASDAQ: SAIA)
Texas Pacific Land
Corporation
(NYSE: TPL)
Favorite Texas Roadhouse
Food Item:
Fall-Off-The-Bone Ribs
Business Experience:
Ms. Epps is a certified public accountant licensed in the State of Texas 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 truckload services in 45 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 of these and other professional experiences, Ms.
Epps possesses particular knowledge and experience that strengthens the
Board’s collective qualifications, skills, and experience.
11
Gregory N. Moore
Director Since: 2005
Age: 74
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating & Corporate
Governance Committee;
Chairman of the Board
Public Boards:
Newegg Commerce, Inc.
(NASDAQ: NEGG)
Favorite Texas Roadhouse
Food Item:
Texas Size Combo of 6oz
Filet and Fall-Off-The Bone
Ribs
Gerald L. Morgan
Director Since: 2021
Age: 62
Board Committees /
Leadership:
Company’s Chief Executive
Officer
Public Boards:
None.
Favorite Texas Roadhouse
Food Item:
Bubba’s 33 Lasagna
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 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.
Business Experience:
Mr. Morgan is an over 25-year veteran of Texas Roadhouse and has 37 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 Chief Executive Officer in
2021. Mr. Morgan also previously served as President of the Company from
December 2020 through January 2023.
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.
12
Curtis A. Warfield
Director Since: 2018
Age: 55
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 licensed in the Commonwealth of
Kentucky 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 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. Previously he served in a variety of roles from
1997 to 2016 at HCA, the largest healthcare provider in the country. 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 2021, Mr. Warfield joined the board of
Talkspace, Inc. (NASDAQ: TALK), a digital 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:
Favorite Texas Roadhouse
Food Item:
Beef Tips, Mashed Potatoes
and Gravy with the World
Famous Texas Roadhouse
Rolls
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: 61
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating & Corporate
Governance Committee
Public Boards:
None.
Favorite Texas Roadhouse
Food Item:
All American Burger
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
the Board’s collective
qualifications, skills, and experience.
that strengthens
13
James R. Zarley
Director Since: 2004
Age: 78
Board Committees /
Leadership:
Audit Committee,
Compensation Committee,
and Nominating & Corporate
Governance Committee;
Chairperson of
Compensation Committee
Public Boards:
None.
Favorite Texas Roadhouse
Food Item:
6oz Filet
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 a couple
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 four occasions and its standing committees (audit committee, compensation
committee, and nominating and corporate governance committee) met on 22 occasions during our fiscal year
ended December 27, 2022. Except for Ms. Widmer, 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 2022 annual meeting. Four regular Board meetings are currently scheduled
for the 2023 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
14
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.
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 and 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 practices and strategies. The audit committee, in fulfilling its
oversight responsibilities, regularly and comprehensively reviews specific risk matters which have been identified
by management, which includes a rotational review of the risks relating to specific departments within the
Company. 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.
ILLUSTRATIVE DEPICTION OF ENTERPRISE RISK MANAGEMENT PROGRAM
AUDIT COMMITTEE
ERM TEAM
EXECUTIVE RISK
COMMITTEE
SUBJECT MATTER
RISK COMMITTEES
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 are composed of cross-functional
leaders within the Company that specialize in specific areas of risk previously identified by the Company, which
regularly meet and report their activities to the enterprise risk management (“ERM”) team. These subject matter
risk committees involve specific risks relating to business continuity / crisis management, food safety,
responsible alcohol service, employment compliance, information governance (including data privacy
compliance), vendor management, employee and guest safety, Americans with Disability Act (ADA) and
corporate sustainability. The ERM team, consisting of our interim Chief Financial Officer, Chief Legal and
Administrative Officer, Associate General Counsel – Brand Protection, Vice President of Legendary People,
Director of Risk, Director of Internal Audit, and Senior Manager of Business Continuity, meets regularly to identify
15
emerging risk areas and key risk areas for the Company, and serves as a liaison between the subject matter
risk committees and the executive risk committee described below. Additionally, the ERM team conducts a
periodic review of a risk register, including an in-depth focus on high priority risks, as well as evaluates the
composition of existing subject matter risk committees and/or the need for the creation of new subject matter
risk committees based on its review of the risk register. The risk register is reviewed with the audit committee
and the executive risk committee. Finally, the Company has an executive risk committee consisting of the
Named Executive Officers and the Vice Presidents of Operation for each of the Company’s three main concepts
which meet throughout the year to determine risk priorities and make decisions on key areas of risk.
Additionally, as shown above, the ERM team regularly updates the audit committee on the results of its
risk management activities at least twice per year. In addition, specific subject matter risk committees periodically
report to the audit committee the risk-based initiatives being performed by the applicable risk committee. The
audit committee is routinely advised of strategic, operational, financial, legal, data privacy, corporate
sustainability, responsible alcohol service, and cybersecurity risks both during and outside of regularly scheduled
meetings, and the audit committee reviews and is informed of specific activities to manage these risks, such as
policies and procedures, insurance plans, indemnification obligations, and internal controls (as and if applicable).
Through the compensation committee’s charter, the Board has authorized the compensation committee
to oversee the compensation programs for the Company’s executive officers and non-employee directors on the
Board. The compensation committee, in fulfilling its oversight responsibilities, designs the compensation
packages applicable to the Company’s executive officers and Board members. The compensation committee
also periodically consults with management on the payments of bonuses and grants of stock awards to key
employees.
The audit committee and the compensation committee jointly perform an annual risk assessment of our
compensation programs for all employees to determine whether these programs encourage unnecessary or
excessive risk taking. In conducting this review, each of our compensation programs is evaluated on a number
of criteria aimed at identifying any incentive programs that deviate from our risk management objectives. Based
on this review in 2022, 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. In connection with the foregoing, the Company has not established
a system of incentives that is reasonably likely to lead to excessive or inappropriate risk taking by employees or
create a risk reasonably likely to have a material adverse effect on the Company. 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.
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 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. At every quarterly Board meeting, the Board and management conduct a
strategic overview of one of the Company’s main restaurant concepts (including international development) and
is continually updated throughout the year on the performance of each brand. 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, international development, retail or other
16
business development initiatives, and the Company’s share repurchase activities and dividend program (as
applicable).
Cybersecurity. The Board and management of the Company take data protection and cybersecurity
seriously. As a Company, we receive and maintain certain sensitive information from our guests, employees,
partners, and from business operations. 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. To protect this information, the Company has created and implemented a detailed set of
Information Security Policies and Procedures that are informed by recognized national and international
standards. The Company’s Head of Information Security leads the Company’s cybersecurity efforts under the
direct oversight of our Chief Technology Officer. As a part of its oversight role, the audit committee receives
regular updates from the Company on cybersecurity and privacy risks impacting the Company.
Additionally, as mentioned above, the Company’s enterprise risk management program has established
an internal risk committee to evaluate information governance risks. This committee is comprised of members
of management of the Company’s information technology, human resources, marketing, accounting, risk,
finance and legal functions, and is focused on performing assessments to identify areas of concern and
implement appropriate changes to enhance its cybersecurity and privacy policies and procedures.
Finally, the Company has implemented extensive detective and preventative controls designed to
ensure the appropriate level of protection for the confidentiality, integrity, and availability of data stored on or
transferred through our information technology resources. Certain members of the Company’s senior leadership
within the information technology department are responsible for developing and implementing these
controls. Both internal and third-party auditing are performed frequently to verify that these controls are effective.
Corporate Sustainability. Both the Board and the Company take great pride in 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 passion and history of dedication to corporate citizenship,
diversity, and the manner in which we often consider sustainability as part of our decision-making process. This
commitment also includes the continued execution of our existing corporate sustainability activities and working
to identify future opportunities. We actively pursue partnerships and opportunities that help conserve resources,
reduce waste, and have a positive impact on our communities, as well as partner with other organizations and
source products from suppliers who share our commitment to corporate sustainability. As a result, 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 also 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 environmental, social
and governance matters. This committee is comprised of members of management from the Company’s legal,
human resources, communications, procurement, investor relations, and financial reporting functions. This
committee works in conjunction with the Company’s enterprise risk management team.
In 2017, we released our initial corporate sustainability report which outlined the four core pillars of our
corporate sustainability efforts: Food, Community, Employees, and Conservation. Our goal is 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 content posted on, or
accessible through, our website is not incorporated by reference 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.
17
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.
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 risk assessment and risk management practices and strategies;
(iii)
the Company’s compliance with legal and regulatory requirements;
(iv)
the independence and performance of the Company’s internal and external auditors; and
(v)
the Company’s internal controls and financial reporting practices.
The audit committee is also directly responsible for the following: (a) pre-approves all audit and permitted
non-audit related services provided by our independent auditors (which can be found on the Company’s website
at www.texasroadhouse.com), (b) the appointment, compensation, retention, and oversight of the Company’s
independent auditors, and (c) periodically reviews 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.
The audit committee reviews all of the Company’s earning press releases, Quarterly and Annual Reports
on Form 10-Q and Form 10-K, respectively, prior to filing with the SEC, and such other applicable financial
disclosure documents (as and if applicable). 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. Ms. Epps currently serves as the chairperson of the audit committee but Mr. Moore served as the
chairperson of the audit committee during the 2022 fiscal year. The Board evaluated the credentials of and
designated Ms. Epps and Messrs. Moore and Warfield as audit committee financial experts. The audit committee
met 14 times during fiscal year 2022, which were comprised of six regular meetings of the audit committee and
two meetings per quarter relating to the audit committee’s review of the Company’s quarterly earnings release
and filings with the SEC.
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;
18
(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 four times during fiscal year 2022.
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;
(iii)
reviewing the qualifications and independence of, approving the nominations of, and
recommending to the Board those persons to be nominated for membership on the Board and presented for
shareholder approval at the annual meeting;
(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.
Additionally, the nominating and corporate governance committee annually conducts on the Board’s
behalf a confidential self-assessment. As a part of the annual self-assessment, each director provides, without
limitation, an assessment on the effectiveness and functionality of the Board and the committees in which such
directors serve. Each director completes an assessment form and sends it to the chairperson of the nominating
and corporate governance committee, who compiles the results and presents them to the Board.
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. As a part of its review of those persons to be
nominated for membership on the Board at the Annual Meeting, the nominating and corporate governance
committee takes a holistic view of the Board to strive to have a diverse Board in terms of core skills, industry
experience, tenure and other diversity characteristics.
19
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 four times during fiscal year 2022.
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 routinely pay an additional fee for this service.
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, 2023
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
Non-
Binary
Did Not
Disclose
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
7
--
--
Female
Male
5
1
--
--
--
--
4
--
2
--
--
--
--
--
2
--
20
Part 3: Tenure
Directors
Part 4: Core Skills
Directors
1 – 5
Years
6 – 10
Years
>10
Years
Restaurant
4
Hospitality /
Retail
1
Finance /
Risk
2
Technology
2
4
3
2
Compensation of Directors
As further discussed in the “Compensation Discussion and Analysis,” the compensation committee
engaged Willis Towers Watson as an independent compensation consultant in 2017 to advise the compensation
committee on the compensation for our executive officers and non-employee directors. In order to supplement
this analysis from our compensation consultant, the compensation committee has subsequently used Equilar
(the Company’s external executive and director compensation database aggregator) to establish the
compensation for our non-employee directors, most recently in establishing the fixed dollar amount on service
based restricted stock units granted to our non-employee directors more particularly described below. Similar to
our compensation philosophy for our executive officers, we believe that issuing service based restricted stock
units to our non-employee directors aligns their interests with those of our shareholders. Specifically, since the
bulk of each non-employee director’s compensation lies in the value of the service based restricted stock units
granted, the non-employee directors are motivated to continually improve the Company’s performance in the
hope that the performance will be reflected by the stock price on the vesting date of their service based restricted
stock units. Moreover, we believe that the service based restricted stock unit awards drive director alignment
with maximizing shareholder value because the value of the service based restricted stock units varies in
response to investor sentiment regarding overall Company performance at the time of vesting.
As described more fully below, the following table summarizes the total compensation earned for fiscal
year 2022 for each of the non-employee directors.
2022 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
($)
59,000
59,000
134,000(2)
69,000(3)
59,000
69,000(4)
Grant Date Fair
Value of
Stock Awards
($)(1)
198,484
198,484
288,704
198,484
198,484
198,484
Total
($)
257,484
257,484
422,704
267,484
257,484
267,484
(1)
On November 11, 2021, the compensation committee agreed that with respect to (i) the
Chairman of the Board’s 2022 fiscal year service, he received an annual grant of service based
restricted stock units equal to $290,000 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 being rounded up or down to the nearest 100 shares;
and (ii) for each remaining non-employee director’s 2022 fiscal year service, each received an
annual grant of service based restricted stock units equal to $200,000 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 being rounded up or down
to the nearest 100 shares.
21
For the service based restricted stock units described in 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 the grants to the non-employee directors on January 8,
2022. Using the formula described in the immediately foregoing paragraph of footnote (1), Mr.
Moore, as Chairman of the Board, was granted 3,200 service based restricted stock units for
his 2022 fiscal year service, and each remaining non-employee director was granted 2,200
service based restricted stock units for their respective 2022 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 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 27,
2022. No other equity awards were granted to the non-employee directors during the period of
time covered by this table. 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.
This amount includes the $50,000 annual fee for serving as the Chairman of the Board and the
$25,000 annual fee for serving as the chairperson of the audit committee.
This amount includes the $10,000 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.
(2)
(3)
(4)
On November 11, 2021, the compensation committee established that all non-employee directors would
receive the following cash compensation relating to their 2022 fiscal year service:
(i)
(ii)
each non-employee director received a base fee of $35,000;
the Chairman of the Board received a fee of $50,000;
(iii)
the chairperson of the audit committee received a fee of $25,000;
(iv)
the chairperson of the compensation committee received a fee of $10,000;
(v)
the chairperson of nominating and corporate governance committee received a fee of $10,000;
(vi)
each member of the audit committee received a fee of $10,000;
(vii)
each member of the compensation committee received a fee of $7,000;
(viii)
each member of the nominating and corporate governance committee received a fee of $7,000;
and
(ix)
the non-employee directors no longer received a fee for meeting attendance.
22
Additionally, on January 6, 2023, the compensation committee established that all non-employee
directors will receive the following cash and stock compensation relating to their 2023 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 $75,000;
(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 not receive a fee for meeting attendance;
(x)
(xi)
the Chairman of the Board will receive an annual grant of restricted stock units equal to $313,000
divided by the closing sales price on January 6, 2023 on the Nasdaq Global Select Market, with
such quotient being rounded up or down to the nearest 100 shares. These restricted stock units
were granted on January 8, 2023 and will vest on January 8, 2024. Based on the foregoing,
the Chairman of the Board received 3,300 service based restricted stock units for his 2023 fiscal
year service; and
each remaining non-employee director will receive an annual grant of restricted stock units equal
to $223,000 divided by the closing sales price on January 6, 2023 on the Nasdaq Global Select
Market, with such quotient being rounded up or down to the nearest 100 shares. These
restricted stock units were granted on January 8, 2023 and will vest on January 8, 2024. Based
on the foregoing, each remaining non-employee director received 2,400 service based restricted
stock units for their respective 2023 fiscal year service.
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
23
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 setting forth our expectations 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 including those laws prohibiting the use of forced labor or the facilitation of slavery and human
trafficking. Our vendor expectations are available
the Company’s website at
www.texasroadhouse.com.
their entirety on
in
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.
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.
Shareholder Engagement
Shareholder engagement is an important component of our overall approach to corporate governance.
It provides us the opportunity to update investors on our business as well as to receive feedback from them. Our
Investor Relations team serves as our primary point of contact with investors, potential investors, and investment
analysts. Additionally, throughout the year, members of our Executive team, Board, and restaurant-level
operators may participate in the investor dialogue.
24
Our interaction with the investment community occurs in a number of ways, including one-on-one and
group phone calls, analyst-sponsored conferences, our Annual Meeting, and our quarterly earnings calls. Topics
discussed vary but typically include corporate strategy, financial results and outlook, new restaurant
development, commodity and wage inflation, capital allocation, and various governance and corporate
sustainability matters. Investor feedback and sentiment is shared with senior management and the Board on a
regular basis.
Board Orientation and Continuing Education
The Board believes that a thorough understanding of the Company’s business is required to enable a
director to make a substantial contribution to the Board. As such, all new directors will participate in an orientation
program within a reasonable period of time following such director’s initial appointment or election to the Board.
The orientation program may consist of meetings with senior management of the Company designed to
familiarize each new director with the Company’s strategic plans, financial planning and key policies and
procedures as well as training within the Company’s restaurant facilities. Additionally, the Company, from time
to time, may provide the Board with internal training programs or presentations from internal or outside third
party experts on topics that will assist the directors in carrying out their Board responsibilities. Finally, the
directors are encouraged to participate in continuing education and other programs provided by outside sources
and to share any applicable learnings from such programs with the other directors on the Board. As a part of
the Board’s continued education, the directors on the Board annually complete the compliance trainings that are
similar to those provided to certain employees. Further, the Company annually budgets a certain amount of
funding to reimburse directors for related costs to attend such programs.
25
STOCK OWNERSHIP INFORMATION
The following table sets forth as of March 6, 2023 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:
Michael A. Crawford
Christopher C. Colson
Donna E. Epps
Keith V. Humpich(2)
S. Chris Jacobsen
Gregory N. Moore
Gerald L. Morgan
Hernan E. Mujica
Tonya R. Robinson(3)
Regina A. Tobin
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Directors and All Executive Officers as a Group (13 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
Common Stock(1)
Common
Stock
Ownership Percent
6,400
5,000
2,412
15,323
27,366
61,258
97,324
17,323
2,020
13,248
13,362
16,700
65,012
342,748
*
*
*
*
*
*
*
*
*
*
*
*
*
0.5%
12.5%
10.28%
*
**
(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, 2023.
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,
2023, no director or executive officer has the right to acquire any beneficial ownership within 60
days. “Common Stock Ownership” includes (a) stock held in joint tenancy, (b) stock owned as
tenants in common, (c) stock owned or held by spouse or other members of the reporting
person’s household, and (d) stock in which the reporting person either has or shares voting
and/or investment power, even though the reporting person disclaims any beneficial interest in
such stock.
26
(2)
(3)
(4)
(5)
Mr. Humpich was appointed interim Chief Financial Officer on January 4, 2023 following Tonya
R. Robinson’s retirement from the Company as Chief Financial Officer on January 4, 2023.
Ms. Robinson retired as Chief Financial Officer of the Company effective as of January 4, 2023.
The stock ownership information listed above was provided to the Company by Ms. Robinson.
As reported on the Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 23, 2023,
it has sole voting power with respect to 8,184,375 shares and sole dispositive power with respect
to 8,383,788 shares.
As reported on the Schedule 13G/A filed by The Vanguard Group with the SEC on February 9,
2023, it has shared voting power with respect to 113,234 shares, sole dispositive power with
respect to 6,710,132 shares, and shared dispositive power with respect to 170,826 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 27, 2022.
27
EXECUTIVE COMPENSATION
2022 EXECUTIVE SUMMARY
The following is an executive summary of our compensation program for our 2022 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.
28
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. All executive officers 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.
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 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.
29
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.
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 an 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 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 executive officer. If requested by the
compensation committee, the applicable 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.
30
2022 Financial Highlights
The following is an executive summary of our financial highlights from the 2022 fiscal year:
Historic Topline Revenue
• Exceeded $4 billion in total revenue for the first time in the Company’s history.
• Average weekly sales growth at company restaurants of 9.7% with average weekly sales at $131,802
of which 13.3% were from to-go sales.
Key Growth in Other Financial Metrics
• Diluted Earnings Per Share growth of 13.5%.
• Net income growth of 10.0%.
•
Income before taxes less net income attributable to non-controlling interests growth of 10.1%.
• Restaurant margin dollars growth of 7.9%.
• Store week growth of 6.1%.
Store Unit Growth
• Opened 23 company restaurants across all concepts.
• Acquired 8 domestic franchise restaurants.
• Franchisees opened 7 international restaurants.
Return to Shareholders
•
Increased our quarterly cash dividend by 15% to $0.46 per share.
• Repurchased 2,734,005 outstanding shares of our common stock for $212.9 million.
31
Compensation Discussion and Analysis
Bubba Who: Our Executive Officers
GERALD L. MORGAN
CHIEF EXECUTIVE OFFICER
Years with Roadhouse: 26
Age: 62
Restaurant Industry Experience: 37
Mr. Morgan is Chief Executive Officer of the Company, having
been appointed to this position in March 2021. Mr. Morgan
joined the Company in 1997, during which time he has held the
positions of Managing Partner, Market Partner and Regional
Market Partner. Mr. Morgan also previously served as
President from December 2020 until Ms. Tobin’s appointment
to President in January 2023. Mr. Morgan has more than 35
years of restaurant management experience with Texas
Roadhouse, Bennigan’s Restaurants, and Burger King.
REGINA A. TOBIN
PRESIDENT
Years with Roadhouse: 27
Age: 59
Restaurant Industry Experience: 37
Ms. Tobin is President of the Company, having been appointed
to this position in January 2023. Ms. Tobin previously served as
the Company’s Chief Learning and Culture Officer, a position
she held from June 2021 through her appointment to President.
Ms. Tobin joined the Company in 1996, during which time she
has held the positions of Managing Partner, Market Partner,
and Vice President of Training. Ms. Tobin has over 35 years of
restaurant industry experience.
KEITH V. HUMPICH
INTERIM CHIEF FINANCIAL OFFICER
Years with Roadhouse: 18
Age: 53
Restaurant Industry Experience: 18
Mr. Humpich is interim Chief Financial Officer of the Company,
having been appointed to this position in January 2023. Mr.
Humpich joined the Company in February 2005, as the Director,
then Senior Director, of Internal Audit, where he served until his
promotion to Vice President of Finance in 2021, where he
oversaw the Company’s Financial Reporting, Tax, Treasury,
Internal Audit, and Financial Analysis functions. In his role as
interim Chief Financial Officer, Mr. Humpich will continue to
oversee the same functions as he was overseeing as Vice
President of Finance as well as overseeing the Company’s
Accounting function. Prior to joining the Company, he held
several different finance and/or audit positions at Lexmark
International and Ernst & Young LLP. Mr. Humpich has 18
years of restaurant industry experience in addition to over 30
years of accounting, audit, and finance experience.
32
S. CHRIS JACOBSEN
CHIEF MARKETING OFFICER
Years with Roadhouse: 20
Age: 58
Restaurant Industry Experience: 33
Mr. Jacobsen is Chief Marketing Officer of the Company,
having been appointed to this position in February 2016. Mr.
Jacobsen joined the Company in January 2003 where he
served as Vice President of Marketing until his appointment to
Chief Marketing Officer. Mr. Jacobsen has more than 30 years
of restaurant marketing experience with Texas Roadhouse,
Papa John’s International, and Waffle House, Inc.
CHRISTOPHER C. COLSON
CHIEF LEGAL AND ADMINISTRATIVE OFFICER;
CORPORATE SECRETARY
Years with Roadhouse: 17
Age: 46
Restaurant Industry Experience: 21
Mr. Colson is Chief Legal and Administrative Officer and
Corporate Secretary of the Company, having been appointed
to Chief Legal and Administrative Officer in January 2023 and
Corporate Secretary in August 2019. Mr. Colson previously
served as the Company’s General Counsel, a position he held
from March 2021 through his appointment to Chief Legal and
Administrative Officer. Mr. Colson joined the Company 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 the Company),
YUM! Brands, Inc. and as assurance staff at KPMG LLP.
HERNAN E. MUJICA
CHIEF TECHNOLOGY OFFICER
Years with Roadhouse: 11
Age: 61
Restaurant Industry Experience: 11
Mr. Mujica is Chief Technology Officer of the Company, having
been appointed to this position in January 2023. Mr. Mujica had
been previously designated Chief Information Officer, an
executive officer position that he held from June 2021 through
his appointment to Chief Technology Officer. Mr. Mujica joined
the Company in January 2012 as Vice President of Information
Technology and was subsequently promoted
to Chief
Information Officer. Prior to joining the Company, 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.
33
Bubba What: What We Do and What We Don’t Do
WHAT WE DO
WHAT WE DON’T DO
Set and evaluate executive compensation to
promote the sustained profitability of the
Company
No automatic increases on executive
compensation
Conduct an Annual “Say on Pay” Vote
No excessive perquisites
Maintain stock ownership guidelines for our
executives and directors and ensure annual
compliance
No multi-year guarantees for salary increases,
bonus or equity compensation
When appropriate, engage an independent
compensation consultant to assist with
executive compensation
No short-selling, trading in derivatives or
engaging in hedging transactions by executive
or directors
Limit accelerated vesting of equity awards by
requiring a “double trigger” upon a change in
control
No compensation or incentives that encourage
unnecessary or excessive risk taking
Employ a Clawback Policy to recover
No payment of dividends on equity awards that
performance based compensation in certain
circumstances
are not fully earned or vested
Determine executive compensation through a
fully independent compensation committee
No grant of equity awards at less than fair
market value
Allow for an annual adjustment of the bonus and
equity portions of executive compensation by
the compensation committee to more accurately
reflect the overall performance of the Company
and the individual executive
No automatic acceleration of equity awards
upon retirement
Bubba How: How We Pay
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 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.
Additionally, on March 18, 2021 and consistent with the Board’s succession planning, Mr. Morgan was named
Chief Executive Officer of the Company following Kent Taylor’s passing. Mr. Morgan remained the President of
the Company 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,
34
2021 in connection with his appointment to General Counsel. Additionally, on June 15, 2021, we entered into
employment agreements with Regina 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 an executive
officer, respectively. As a part of Ms. Tobin’s appointment to President, the Company entered into an amendment
to Ms. Tobin’s employment agreement on January 9, 2023, as well as entered into a second amendment to Mr.
Morgan’s employment agreement to reflect his resignation as President of the Company while remaining as
Chief Executive Officer. As a part of Mr. Colson’s change in title from General Counsel to Chief Legal and
Administrative Officer, the Company entered into an amendment to Mr. Colson’s employment agreement on
January 9, 2023. Finally, with respect to Mr. Mujica’s change in title from Chief Information Officer to Chief
Technology Officer, we entered into an amendment to Mr. Mujica’s employment agreement on January 9, 2023.
As used herein, the employment agreements, as amended (as and if applicable), with Messrs. Morgan,
Jacobsen, 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 January 5, 2023, the Company entered into a Separation Agreement and Release of Claims (the
“Robinson Separation Agreement”) with Ms. Robinson relating to Ms. Robinson’s retirement as Chief Financial
Officer of the Company effective as of January 4, 2023.
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. The Cheesecake Factory
Bloomin Brands, Inc.
Cracker Barrel Old Country Store,
Inc.
Dunkin’ Brands Group, Inc.
Brinker International, Inc.
Dave & Buster’s Entertainment,
Inc.
Papa John’s International, Inc.
The Wendy’s Company
Incorporated
While the compensation committee and management of the Company did 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
35
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, 2022 year service, and 2023 year service, respectively. Additionally,
certain Named Executive Officers had received grants of performance based restricted stock units relating to
their 2021 year service and 2022 year service, respectively, but all Named Executive Officer received grants of
performance based restricted stock units relating to their 2023 year service. 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
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 an 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 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
executive officer. If requested by the compensation committee, the applicable 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 an 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 an 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
36
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:
BJ’s Restaurants, Inc.
Chipotle Mexican Grill, Inc.
Dave & Buster’s Entertainment,
Inc.
Jack in the Box Inc.
Ruth’s Hospitality Group, Inc.
PEER COMPANIES
Bloomin Brands, Inc.
Cracker Barrel Old Country Store,
Inc.
Denny’s Corporation
Brinker International, Inc.
Darden Restaurants, Inc.
Dine Brands Global, Inc.
Papa John’s International, Inc.
The Cheesecake Factory
Incorporated
Red Robin Gourmet Burgers, Inc.
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.
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 and 2023 fiscal year, respectively:
Named Executive Officer
2021(1)
2022
2023
TARGET COMPENSATION BREAKDOWN
Gerald L. Morgan
Chief Executive Officer
Gina A. Tobin
President(2)
Tonya R. Robinson
Former Chief Financial
Officer
S. Chris Jacobsen
Chief Marketing Officer
Base: 15%
Base: 24%
Base: 24%
Bonus: 11%
Bonus: 24%
Bonus: 24%
Equity: 74%
Equity: 52%
Equity: 52%
Base: 31%
Base: 36%
Base: 30%
Bonus: 10%
Bonus: 28%
Bonus: 30%
Equity: 59%
Equity: 36%
Equity: 40%
Base: 20%
Base: 28%
Bonus: 14%
Bonus: 22%
Equity: 66%
Equity: 50%
--
--
--
Base: 21%
Base: 29%
Base: 29%
Bonus: 14%
Bonus: 24%
Bonus: 24%
Equity: 65%
Equity: 47%
Equity: 47%
37
Named Executive Officer
2021(1)
2022
2023
TARGET COMPENSATION BREAKDOWN
Christopher C. Colson
Chief Legal and Administrative
Officer, Corporate Secretary(3)
Hernan E. Mujica
Chief Technology Officer(3)
Base: 26%
Base: 36%
Base: 29%
Bonus: 15%
Bonus: 28%
Bonus: 24%
Equity: 59%
Equity: 36%
Equity: 47%
Base: 25%
Base: 36%
Base: 29%
Bonus: 14%
Bonus: 28%
Bonus: 24%
Equity: 61%
Equity: 36%
Equity: 47%
(1)
(2)
(3)
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.
Ms. Tobin’s compensation breakdown identified above for fiscal years 2021 and 2022 related to
her prior service as Chief Learning and Culture Officer before being appointed to President of
the Company in January 2023.
The percentage increase in the equity portion of the compensation for Mr. Colson and Mr. Mujica
between the 2022 fiscal year and the 2023 fiscal year relates to the performance based
restricted stock units granted to Mr. Colson and Mr. Mujica as a part of their total compensation
for their respective 2023 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.
38
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 94% of the votes cast at our 2022 annual
meeting on an advisory basis approved the compensation of our Named Executive Officers as disclosed in the
proxy statement for the 2022 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, 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
Gerald L. Morgan
Chief Executive Officer(2)
Regina A. Tobin
President(3)
Tonya R. Robinson
Former Chief Financial
Officer(4)
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative
Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
2021
(starting January 8,
2021)($)(1)
350,000
2022
(starting January 8,
2022)($)
1,000,000
2023
(starting January 8,
2023)($)
1,200,000
350,000
325,000
325,000
350,000
500,000
500,000
500,000
500,000
650,000
---
500,000
500,000
350,000
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)
(ii)
effective as of March 31, 2021, Ms. Robinson’s annual base salary was increased to
$350,000; and
effective as of March 31, 2021, Mr. Jacobsen’s annual base salary was increased to
$350,000.
39
(2)
(3)
(4)
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.
The increase in base salary for Ms. Tobin between fiscal year 2022 and fiscal year 2023 was in
consideration for Ms. Tobin’s increased duties and responsibilities following her appointment to
President of the Company.
As described above, Ms. Robinson retired as the Chief Financial Officer for the Company on January 4,
2023 so no changes were made to Ms. Robinson’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 less net 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 2022 were paid at
124.51% of the total target amount for the fiscal year in which a Named Executive Officer served in such role,
based on an increase in actual EPS of 13.5% and an actual Profit Sharing Pool of $5,486,832 calculated on
fiscal year 2022 pre-tax profit of $313,533,274.
40
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 $0 or increased to a maximum of two times the base target amount under the
current incentive compensation policy of the compensation committee of the Board. The actual amounts earned
by each Named Executive Officer for fiscal year 2022 are more fully described in “Executive Compensation.”
Executive Incentive Compensation for Fiscal Year 2022
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin(1)
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate
Secretary
Hernan E. Mujica
Chief Technology Officer
Target
Bonus
($)(1)
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
(1)
The target bonus amount listed above for Ms. Tobin’s relates to her service as Chief Learning
and Culture Officer during the 2022 fiscal year.
Additionally, on January 6, 2023, 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 2023 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 less net 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 $0 or increased to a
maximum of two times the base target amount under the current incentive compensation policy of the
compensation committee of the Board.
41
Executive Incentive Compensation for Fiscal Year 2023
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate
Secretary
Hernan E. Mujica
Chief Technology Officer
Target
Bonus
($)
1,200,000
Minimum
Bonus
($)
0
650,000
400,000
400,000
400,000
0
0
0
0
Maximum
Bonus
($)
2,400,000
1,300,000
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 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. Morgan, 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
42
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 less
net 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 2022 were paid at 124.51% of the total target amount for the fiscal year in which a Named Executive
Officer served in such role, based on an increase in actual EPS of 13.5% and an actual Profit Sharing Pool of
$5,486,832 calculated on fiscal year 2022 pre-tax profit of $313,533,274. For discussion of the percentages
assigned by the compensation committee to each component of the performance based equity awards for
Messrs. Morgan and Jacobsen, and Mss. Robinson and Tobin (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.
43
Service Based Restricted Stock Units for 2021 Fiscal Year
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Number of Service Based
Restricted Stock
Units vesting on
January 8, 2022
pursuant to
2021 Employment
Agreements
10,000(1)
4,500(2)
10,000
7,000
7,500(3)
4,750(4)
(1)
(2)
(3)
(4)
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, which vested on February 24, 2022 relating to his Q4 2020
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, which vested on February 24, 2022
relating to her Q4 2020 service, (ii) the 1,500 service based restricted stock units granted on
May 5, 2021, which vested 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, which vested on August 4, 2022
relating to her Q2 2021 service.
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, which vested 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, which vested 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, which vested on February 24, 2022
relating to his Q4 2020 service, (ii) the 2,375 service based restricted stock units granted on
May 5, 2021, which vested 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, which vested on August 4, 2022
relating to his Q2 2021 service.
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, with such quotient being rounded up or down to the nearest 100
44
shares. Additionally, these shares were granted on January 8, 2022, with vesting on January 8, 2023, provided
the Named Executive Officer was 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
500,000
400,000
500,000
5,500
5,500(2)
4,400
5,500
500,000
5,500
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative
Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology 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 27, 2022. 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.
(2)
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on January
4, 2023. Upon her retirement, Ms. Robinson forfeited her right to receive the 5,500 service
based restricted stock units relating to her 2022 fiscal year service vesting on January 8, 2023.
Finally, on January 6, 2023, 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 2023 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, with such quotient being rounded up or down to the nearest 100
shares. Additionally, these shares were granted on January 8, 2023 and will vest on January 8, 2024, provided
the Named Executive Officer is still employed by the Company as of the vesting date.
45
Service Based Restricted Stock Units for 2023 Fiscal Year
Service Based
Restricted Stock Units
vesting on January 8, 2024
pursuant to 2021
Employment Agreements ($)
1,300,000
Number of Service Based
Restricted Stock Units
vesting on January 8, 2024
pursuant to 2021
Employment
Agreements(1)
13,900
500,000
400,000
500,000
500,000
5,300
4,300
5,300
5,300
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology 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 $93.52 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 2023 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 27, 2022. 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.
Performance 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. The number of performance based restricted stock units granted
to Messrs. Morgan 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:
46
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
15,000(2)
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
30,000
Actual Number
of Shares
Issued for
2021 following
Certification of
2021
Performance
Goals(1)
28,179
2,500(3)
5,000
0
0
5,000
4,697
10,000
9,393
Gerald L. Morgan
Chief Executive Officer
Tonya R. Robinson
Former Chief Financial
Officer
S. Chris Jacobsen
Chief Marketing Officer
(1)
(2)
(3)
The shares underlying the performance based restricted stock units attributable to the 2021
fiscal year were issued on February 28, 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.
The 15,000 performance based restricted stock units granted to Mr. Morgan for fiscal year 2021
are comprised of (i) 2,500 performance based restricted stock units granted to Mr. Morgan on
January 8, 2021, and (ii) 12,500 performance based restricted stock units granted to Mr. Morgan
on March 31, 2021.
The 2,500 performance based restricted stock units granted to Ms. Robinson for fiscal year 2021
are comprised of (i) 2,000 performance based restricted stock units granted to Ms. Robinson on
January 8, 2021, and (ii) 500 performance based restricted stock units granted to Ms. Robinson
on March 31, 2021.
Additionally, the number of performance based restricted stock units granted to Messrs. Morgan and
Jacobsen and Mss. Tobin and Robinson for the 2022 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:
47
Performance Based Restricted Stock Units for 2022 Fiscal Year
Target Number
of Performance
Based
Restricted
Stock Units
Granted for
2022 pursuant
to
2021
Employment
Agreements(1)
12,200
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
24,400
Actual Number
of Shares
Issued for
2022 following
Certification of
2022
Performance
Goals(2)
15,191
4,200
4,400
4,400
0
0
0
8,400
8,800
5,230
---(3)
8,800
5,479
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial
Officer
S. Chris Jacobsen
Chief Marketing Officer
(1)
The compensation committee authorized the grant of performance based restricted stock units
as described in the table above to Messrs. Morgan and Jacobsen and Mss. Robinson and Tobin
under their respective 2021 Employment Agreements for their respective 2022 fiscal year
service in the following manner:
(i)
(ii)
(iii)
(iv)
With respect to Mr. Morgan, his 12,200 performance based restricted stock units were
calculated by dividing $1,100,000 by $90.22 (which was 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 being rounded up or
down to the nearest 100 shares);
With respect to Ms. Tobin, her 4,200 performance based restricted stock units were
calculated by dividing $300,000 by $71.18 (which was 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 being rounded up or
down to the nearest 100 shares);
With respect to Ms. Robinson, her 4,400 performance based restricted stock units were
calculated by dividing $400,000 by $90.22 (which was 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 being rounded up or
down to the nearest 100 shares); and
With respect to Mr. Jacobsen, his 4,400 performance based restricted stock units were
calculated by dividing $400,000 by $90.22 (which was 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 being rounded up or
down to the nearest 100 shares).
(2)
The shares underlying the performance based restricted stock units attributable to the 2022
fiscal year were issued on February 24, 2023. The compensation committee determined that
50% of the performance based restricted stock unit award for the 2022 fiscal year would be
48
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 2022 fiscal year 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.
(3)
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on January
4, 2023. Upon her retirement, Ms. Robinson forfeited her right to receive the 4,400 performance
based restricted stock units relating to her 2022 fiscal year service vesting on January 8, 2023.
Finally, on January 6, 2023, the compensation committee authorized the grant of performance based
restricted stock units as described in the table below to Messrs. Morgan, Jacobsen, Colson and Mujica and Ms.
Tobin 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, with such quotient being 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, 2023 and will vest on January 8, 2024, 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, Jacobsen, Colson and Mujica and Ms. Tobin for fiscal year
2023 based on achievement of the performance goals assigned to these grants by the compensation committee
will not be calculated until the first quarter of 2024.
Performance Based Restricted Stock Units for 2023 Fiscal Year
Target
Performance
Based Restricted
Stock Units
vesting on
January 8, 2024
pursuant to
2021
Employment
Agreements($)(1)
1,300,000
Minimum
Performance
Based
Restricted
Stock Units
pursuant to
2021
Employment
Agreements($)
0
Maximum
Performance
Based
Restricted
Stock Units
pursuant to
2021
Employment
Agreements($)
2,600,000
Target Number
of Performance
Based
Restricted
Stock Units
vesting on
January 8, 2024
pursuant to
2021
Employment
Agreements(2)
13,900
400,000
400,000
300,000
300,000
0
0
0
0
800,000
800,000
600,000
4,300
4,300
3,200
600,000
3,200
Gerald L. Morgan
Chief Executive Officer
Regina Tobin
President
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and
Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
(1)
The compensation committee determined that 50% of the performance based restricted stock
unit award for 2023 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 2023 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,
49
Jacobsen, Colson and Mujica and Ms. Tobin with respect to fiscal year 2023 will be certified in
the first quarter of 2024.
(2)
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 $93.52 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 2023 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 27, 2022. 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.
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, 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.
50
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 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
51
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, the Company announced that Ms. Robinson had retired as Chief Financial Officer of the
Company effective as of January 4, 2023. On January 5, 2023, the Company entered into the Robinson
Separation Agreement with Ms. Robinson. Under the Robinson Separation Agreement, the Company agreed to
pay to Ms. Robinson an aggregate sum of $3,500,000 (less any applicable withholdings and/or deductions),
which will be paid in three installments in accordance with the following schedule: (i) $1,500,000 due and payable
no later than January 31, 2023; (ii) $500,000 due and payable on July 31, 2023; and (iii) $1,500,000 due and
payable on January 31, 2024. The Robinson Separation Agreement also provided a general release of claims
by Ms. Robinson and affirmed certain obligations under her 2021 Employment Agreement, including, without
limitation, obligations pertaining to confidentiality, non-competition, non-hire, and non-solicitation.
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.
Stipend for Interim Chief Financial Officer
In connection with Mr. Humpich’s appointment to interim Chief Financial Officer on January 5, 2023, the
compensation committee agreed that he would receive a $100,000 stipend per fiscal quarter (or portion thereto)
in which he serves in such position, which amount will be paid in arrears. In the event Mr. Humpich only serves
as interim Chief Financial Officer for a portion of any given fiscal quarter, then the $100,000 per quarter stipend
will be prorated on a month-to-month basis.
Compensation Committee Report
The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis”
required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the
compensation committee recommended to the Board that the “Compensation Discussion and Analysis” be
included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K
for the year ended December 27, 2022.
All members of the compensation committee concur in this report.
James R. Zarley, Chair
52
Michael A. Crawford
Donna E. Epps
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
53
Summary Compensation Table
The following table sets forth the total compensation earned with respect to the fiscal years 2022, 2021,
and 2020 for Mr. Morgan, our Chief Executive Officer, and Ms. Robinson, our former Chief Financial Officer. It
also includes such information for at least three of our other most highly compensated executive officers during
fiscal year 2022, as and if applicable.
Grant Date
Fair Value
of Stock
Awards
($)(2)(3)
2,201,368
2,394,513
291,726
893,178
998,855
671,760
795,166
822,315
793,936
950,640
671,760
496,210
945,109
Non-equity
Incentive Plan
Compensation
($)(4)
1,245,138
880,832
772,944
366,262
446,168
3,290
498,055
238,141
498,055
410,944
3,290
498,055
319,290
All Other
Compensation
($)(5)
Total
($)(3)
2,983 4,421,989
83,151 3,769,765
300 1,165,170
2,983 1,755,123
—
—
1,788,492
920,732
2,983 1,788,904
___ 1,395,079
2,983 1,787,674
7,800 1,712,853
6,658
924,889
2,983
1,497
1,489,948
1,589,173
Year
2022
Salary
($)
972,500
Bonus
($)(1)
__
411,269
100,000
492,500
343,269
245,482
492,500
334,423
492,500
343,269
242,981
492,500
323,077
__
200
200
200
200
200
200
200
200
200
200
200
Name and Principal
Position
Gerald L. Morgan
Chief Executive
Officer
2021
2020
Tonya R. Robinson 2022
Former Chief
2021
2020
2022
2021
2022
2021
2020
2022
2021
Financial Officer
Regina Tobin
President
S. Chris Jacobsen
Chief Marketing
Officer
Christopher C.
Colson
Chief Legal and
Administrative
Officer, Corporate
Secretary
Hernan E. Mujica
Chief Technology
2022
492,500
200
496,210
498,055
2,983 1,489,948
___
Officer
2021
337,707
200
1,142,042
284,783
1,764,732
(1)
(2)
This column represents holiday bonus awards paid to the Named Executive Officers for the
fiscal years ended December 27, 2022, December 28, 2021, and December 29, 2020.
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.
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.”
(3)
With respect to Mr. Morgan, (i) amounts for the 2022 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Mr. Morgan during the
2022 fiscal year relating to his 2022 year service, (ii) amounts for the 2021 fiscal year include
(a) the performance based restricted stock units and service based restricted stock units granted
54
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 (iii) 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 Ms. Robinson, (i) amounts for the 2022 fiscal year include the performance
based restricted stock units and service based restricted stock units granted to Ms. Robinson
during the 2022 fiscal year relating to her 2022 year service, (ii) 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, and (iii)
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.
With respect to Ms. Tobin, (i) amounts for the 2022 fiscal year include the performance based
restricted stock units and service based restricted stock units granted to Ms. Tobin during the
2022 fiscal year relating to her 2022 year service, and (ii) 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.
With respect to Mr. Jacobsen, (i) amounts for the 2022 fiscal year include the performance
based restricted stock units and service based restricted stock units granted to Mr. Jacobsen
during the 2022 fiscal year relating to his 2022 year service, (ii) 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, and (iii)
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.
With respect to Mr. Colson, (i) amounts for the 2022 fiscal year include the service based
restricted stock units granted to Mr. Colson during the 2022 fiscal year relating to his 2022 year
service, and (ii) 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, (i) amounts for the 2022 fiscal year include the service based
restricted stock units granted to Mr. Mujica during the 2022 fiscal year relating to his 2022 year
service, and (ii) 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.
(4)
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on January
4, 2023. The amount shown above reflects the bonus that she received for the first three fiscal
quarters relating to her 2022 fiscal year service. Upon her retirement and pursuant to the
Robinson Separation Agreement, Ms. Robinson forfeited her right to receive any bonus relating
to her Q4 2022 fiscal year service.
(5)
The amount included for Mr. Morgan with respect to fiscal year 2021 includes $81,654 paid by
the Company toward Mr. Morgan’s relocation expenses to Louisville, Kentucky.
55
Grants of Plan-Based Awards in Fiscal Year 2022
The following table presents information with respect to grants of stock awards to the applicable Named
Executive Officers during fiscal year 2022.
Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
Name
Grant Date Minimum Target Maximum
All Other Stock
Awards:
Number of
Shares of Stock
or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
Gerald L. Morgan
Chief Executive Officer
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
Performance Based
RSUs vesting on
January 8, 2023
January 8,
2022
Regina A. Tobin
President
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
Performance Based
RSUs vesting on
January 8, 2023
May 24,
2022
Tonya R. Robinson
Former Chief Financial Officer
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
Performance Based
RSUs vesting on
January 8, 2023
January 8,
2022
S. Chris Jacobsen
Chief Marketing Officer
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
Performance Based
RSUs vesting on
January 8, 2023
January 8,
2022
—
—
—
12,200
1,100,684
—
12,200(4)
24,400
—
1,100,684
—
—
—
5,500
496,210
—
4,200(4)
8,400
—
298,956
—
—
—
5,500
496,210
—
4,400(4)
8,800
—
396,968
—
—
—
4,400
396,968
—
4,400(4)
8,800
—
396,968
56
Grants of Plan-Based Awards Table
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
Name
Grant Date Minimum Target Maximum
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
All Other Stock
Awards:
Number of
Shares of Stock
or Units
(2)
Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
Hernan E. Mujica
Chief Technology Officer
Service Based RSUs
vesting on January 8,
2023
January 8,
2022
—
—
—
5,500
496,210
—
—
—
5,500
496,210
(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)
(iii)
(iv)
(v)
(vi)
With respect to Mr. Morgan, 12,200 service based restricted stock units and 12,200
performance based restricted stock units granted on January 8, 2022 at $90.22.
With respect to Ms. Tobin, 5,500 service based restricted stock units granted on
January 8, 2022 at $90.22 and 4,200 performance based restricted stock units granted
on May 24, 2022 at $71.18.
With respect to Ms. Robinson, 5,500 service based restricted stock units and 4,400
performance based restricted stock units granted on January 8, 2022 at $90.22.
With respect to Mr. Jacobsen, 4,400 service based restricted stock units and 4,400
performance based restricted stock units granted on January 8, 2022 at $90.22.
With respect to Mr. Colson, 5,500 service based restricted stock units granted on
January 8, 2022 at $90.22.
With respect to Mr. Mujica, 5,500 service based restricted stock units granted on
January 8, 2022 at $90.22.
57
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
27, 2022.
(4)
The amount included in the table above represents the target award opportunity. Performance
based equity awards with respect to fiscal year 2022 were paid at 124.51% of the total target
amount for the fiscal year in which a Named Executive Officer served in such role, based on an
increase in actual EPS of 13.5% and an actual Profit Sharing Pool of $5,486,832 calculated on
fiscal year 2022 pre-tax profit of $313,533,274.
58
Outstanding Equity Awards
The following table presents information with respect to outstanding stock option awards, stock awards,
and equity incentive plan awards as of December 27, 2022 by the Named Executive Officers.
Outstanding Equity Awards at Fiscal Year End Table
Stock Awards
Equity Incentive Plan
Awards
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
12,200(2)
Market Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
1,148,874
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
12,200(3)
Market
Value
of Shares or
Units of
Stock That
Have Not
Vested
($)(1)
1,148,874
5,500(4)
517,935
4,200(5)
395,514
5,500(7)
517,935
4,400(8)
414,348
4,400(9)
414,348
4,400(10)
414,348
5,500(11)
517,935
5,500(12)
517,935
—
—
—
—
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson(6)
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
(1)
(2)
(3)
(4)
(5)
(6)
Market value was computed using the Company’s closing stock price on the last trading day of
our fiscal year ended December 27, 2022, which was $94.17.
The vesting schedule is as follows: 12,200 service based restricted stock units on January 8,
2023.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 12,200
performance based restricted stock units on January 8, 2023.
The vesting schedule is as follows: 5,500 service based restricted stock units on January 8,
2023.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 4,200
performance based restricted stock units on January 8, 2023.
As described above, Ms. Robinson retired as Chief Financial Officer of the Company on January
4, 2023. Upon her retirement, Ms. Robinson forfeited her right to receive any of the service
based restricted stock units and performance based restricted stock units previously granted to
Ms. Robinson with respect to her 2022 fiscal year service.
59
(7)
(8)
(9)
(10)
(11)
(12)
The vesting schedule is as follows: 5,500 service based restricted stock units on January 8,
2023.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 4,400
performance based restricted stock units on January 8, 2023.
The vesting schedule is as follows: 4,400 service based restricted stock units on January 8,
2023.
Consists of performance awards which will vest and be earned, if at all, at the time of a
determination by our compensation committee that certain Company performance measures
have been satisfied. If and to the extent earned, the vesting schedule is as follows: 4,400
performance based restricted stock units on January 8, 2023.
The vesting schedule is as follows: 5,500 service based restricted stock units on January 8,
2023.
The vesting schedule is as follows: 5,500 service based restricted stock units on January 8,
2023.
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 27, 2022 by the Named Executive Officers.
Stock Vested Table
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative
Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Number of
Shares Acquired
on Vesting
(#)
39,500
8,500
14,696
16,393
9,750
Value Realized
on Vesting
($)(1)
3,559,621(i)
750,390(ii)
1,325,873(iii)
1,478,976(iv)
867,338(v)
11,875
1,043,528(vi)
(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:
60
(i)
(ii)
(iii)
(iv)
(v)
(vi)
$90.22 with respect to the 10,000 service based restricted stock units which vested on
January 8, 2022, $90.22 with respect to the 28,180 performance based restricted stock
units which vested on January 8, 2022, $88.02 with respect to the 1,250 service based
restricted stock units which vested on February 24, 2022, and $71.37 with respect to 70
service based restricted stock units which vested on May 23, 2022.
$90.22 with respect to the 4,500 service based restricted stock units which vested on
January 8, 2022, $88.02 with respect to the 1,000 service based restricted stock units
which vested on February 24, 2022, $81.48 with respect to the 1,500 service based
restricted stock units which vested on May 5, 2022, and $89.44 with respect to the 1,500
service based restricted stock units which vested on August 4, 2022.
$90.22 with respect to the 10,000 service based restricted stock units which vested on
January 8, 2022 and $90.22 with respect to the 4,696 performance based restricted
stock units which vested on January 8, 2022.
$90.22 with respect to the 7,000 service based restricted stock units which vested on
January 8, 2022 and $90.22 with respect to the 9,393 performance based restricted
stock units which vested on January 8, 2022.
$90.22 with respect to the 7,500 service based restricted stock units which vested on
January 8, 2022, $88.02 with respect to the 1,125 service based restricted stock units
which vested on February 24, 2022, and $81.48 with respect to the 1,125 service based
restricted stock units which vested on May 5, 2022.
$90.22 with respect to the 4,750 service based restricted stock units which vested on
January 8, 2022, $88.02 with respect to the 2,375 service based restricted stock units
which vested on February 24, 2022, $81.48 with respect to the 2,375 service based
restricted stock units which vested on May 5, 2022, and $89.44 with respect to the 2,375
service based restricted stock units which vested on August 4, 2022.
Termination, Change of Control and Change of Responsibility Payments
If a Named Executive Officer had resigned or been terminated for 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.
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
61
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 27, 2022, 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
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Total
Estimated
Cash
Payments
($)(1)
250,000
125,000
125,000
125,000
125,000
125,000
(1)
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.
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 27, 2022, the last day of our fiscal year,
provided that each Named Executive Officer signed a full release of claims against us.
62
Change in Control, Change in Responsibilities Payments Table
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Former Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer, Corporate
Secretary
Hernan E. Mujica
Chief Technology Officer
Estimated
Cash
Payments
($)(1)
2,352,183
Estimated Value of
Newly Vested
Stock Awards
($)(2)
2,297,748
Total
($)
4,649,931
1,043,886
913,449
1,957,335
1,043,886
932,283
1,976,169
1,043,886
828,696
1,872,582
1,043,886
517,935
1,561,821
1,043,886
517,935
1,561,821
(1)
If the employment of any of the Named Executive Officers listed above had been terminated
without Cause following a Change of Control, or if any of the Named Executive Officers listed
above had resigned his or her position for Good Reason within 12 months following a Change
of Control, the Named Executive Officer would have received the amount of his or her then
current base salary through the end of the term of the Named Executive Officer’s employment
agreement, together any incentive bonus earned but not yet paid for any fiscal year ended
before the date of termination, plus an incentive bonus for the year in which the date of
termination occurs, equal to the applicable Named Executive Officer’s target bonus for that year,
prorated based on the number of days in the fiscal year elapsed before the date of termination.
Had a Named Executive Officer’s employment been so terminated on December 27, 2022, each
of Messrs. Morgan, Jacobsen, Colson, and Mujica, and Mss. Robinson and Tobin would have
received payment through January 7, 2024.
Name
Gerald L. Morgan
Chief Executive Officer
Regina A. Tobin
President
Tonya R. Robinson
Chief Financial Officer
S. Chris Jacobsen
Chief Marketing Officer
Christopher C. Colson
Chief Legal and Administrative Officer,
Corporate Secretary
Hernan E. Mujica
Chief Technology Officer
Salary
($)
1,030,137
Bonus
($)
1,322,046
Total
Estimated
Payments
($)
2,352,183
515,068
528,818
1,043,886
515,068
528,818
1,043,886
515,068
528,818
1,043,886
515,068
528,818
1,043,886
515,068
528,818
1,043,886
(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
63
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 27, 2022, which was $94.17. The number of service based restricted stock units and
performance based restricted stock units which would have vested on that date are shown in
the table titled “Outstanding Equity Awards at Fiscal Year End Table” set forth above.
Pay Versus Performance
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 402(v) of Regulation S-K, we are providing the following information about the relationship between
executive compensation actually paid and certain financial performance of our Company, illustrating pay versus
performance. The compensation actually paid (“CAP”) for the Principal Executive Officer (“PEO”) and the
average non-PEO named executive officers is calculated by taking the Summary Compensation Table (“SCT”)
values: (a) less the grant value of equity granted during the covered fiscal year (“CFY”); (b) plus the year-end
fair value of unvested equity awards granted during the CFY; (c) plus for equity awards granted in prior years
that are outstanding and unvested at the end of the CFY, the difference between the year-end fair value and the
immediately prior year-end fair value; (d) plus for equity awards granted in the CFY that vested during the CFY,
the fair value of such awards on the vesting date; (e) plus for equity awards granted in a fiscal year prior to the
CFY that vested during the CFY, the difference between the fair value as of the vesting date and the immediately
prior year-end fair value; and (f) less for equity awards granted in a fiscal year prior to the CFY that failed to meet
the applicable vesting conditions during the CFY, the fair value at the end of the prior fiscal year.
Pay Versus Performance Table
Year
2022
2021
2020
(1)
(2)
SCT Total
Comp for
SCT Total
CAP to First
Second
Comp First
PEO
PEO
PEO
($)(3)
($)(2)
($)(1)
4,421,989
5,725,465
N/A
3,769,765 4,986,164 3,801,740
3,620,939
N/A
N/A
CAP to
Second
PEO
($)(4)
N/A
Avg. SCT
Total Comp
for Non-
PEO NEOs
($)(5)
1,662,319
(2,793,754) 2,634,509
7,366,061 1,207,262
Avg. CAP to
Non-PEO
NEOs
($)(6)
1,823,561
1,934,435
1,773,284
Value of Initial Fixed $100
Investment Based on:
Peer Group
TSR (S&P
Index)
($)(8)
$134.26
$145.77
$118.90
Peer Group
TSR
(Russell
Index)
($)(8)
$121.76
$131.20
$113.40
TSR
($)(7)
$173.96
$164.74
$140.80
Net Income
(in Millions)
($)
269.8
245.3
31.3
Diluted EPS
($)
3.97
3.50
0.45
For the purposes of this table, the First Principal Executive Officer refers to Gerald L. Morgan. On March
18, 2021, Mr. Morgan was named Chief Executive Officer of the Company following Mr. Taylor’s passing.
The amounts described in this column relate to amounts disclosed in the Summary Compensation Table
of this proxy statement. Additionally, for the purposes of the 2021 fiscal year, the amounts also reflect
compensation received by Mr. Morgan for positions within the Company before assuming the role of
Chief Executive Officer on March 18, 2021.
For the purposes of this table, the Second Principal Executive Officer refers to W. Kent Taylor. Mr.
Taylor served as the Chief Executive Officer of the Company until his passing on March 18, 2021. The
amounts described in this column relate to amounts disclosed in the Summary Compensation Table of
this proxy statement.
64
(3)
Year
2022
2021
2020
(i)
(4)
Year
2022
2021
2020
(5)
CALCULATION OF FIRST PEO CAP
Change in
Value of
Equity
Awards
Granted in
Prior
Years and
Unvested
at end of
CFY
($)(d)
--
--
N/A
Value of
Unvested
Equity
Awards
Granted
during CFY
($)(c)
2,297,748
2,352,525
N/A
Value of
Equity
Awards
Granted
and
Vested in
CFY
($)(e)
$4,996
--
N/A
Change in
Value of
Granted in
Prior Years
and Vested
in CFY
($)(f)
1,202,100
73,963
N/A
Value of
Equity
Awards
Previously
Granted
that Failed
to Meet
Conditions
in CFY
($)(g)(i)
--
--
N/A
SCT Total
Comp
($)(a)
4,421,989
3,769,765
N/A
SCT
Stock
Awards
($)(b)
2,201,368
2,394,513
N/A
CAP to First PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
5,725,465
3,801,740
N/A
For the purposes of determining the amount that should be included in column (g) of each footnote
throughout the Company’s Pay Versus Performance disclosure, the Company has used (i) the value
of the difference in the target amount of performance based restricted stock units that an applicable
officer was granted for a particular fiscal year and the amount of performance based restricted stock
units that actually vested to the extent the same is less than such target amount, and (ii) the value
of the difference in the target amount of “retention” restricted stock units that an applicable officer
was granted and the amount of “retention” restricted stock units that actually vested (as and if
applicable).
CALCULATION OF SECOND PEO CAP
Value of
Unvested
Equity
Awards
Granted
during CFY
($)(c)
N/A
--
4,737,600
Change in
Value of
Equity
Awards
Granted in
Prior Years
and Unvested
at end of CFY
($)(d)
N/A
--
1,698,000
Value of
Equity
Awards
Granted and
Vested in
CFY
($)(e)
N/A
1,909,885
---
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
N/A
880,222
668,322
Value of
Equity
Awards
Previously
Granted
that Failed
to Meet
Conditions
in CFY
($)(g)
N/A
5,816,825
---
SCT Total
Comp
($)(a)
N/A
4,986,164
3,620,939
SCT
Stock
Awards
($)(b)
N/A
4,753,200
3,358,800
CAP to Second PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
N/A
(2,793,754)
7,366,061
For the purposes of the 2020 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, Doug W. Thompson, S. Chris Jacobsen, and Gerald L. Morgan.
For the purposes of the 2021 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, Doug W. Thompson, S. Chris Jacobsen, Christopher C. Colson, Hernan E. Mujica and Regina
A. Tobin.
For the purposes of the 2022 fiscal year, the Non-Principal Executive Officers include Tonya R.
Robinson, S. Chris Jacobsen, Christopher C. Colson, Hernan E. Mujica and Regina A. Tobin.
65
CALCULATION OF 2020 NON-PEO CAP
Value of
Unvested
Equity
Awards
Granted
during CFY
($)(c)
947,520
2,368,800
947,520
394,800
1,164,660
Change in
Value of
Equity
Awards
Granted in
Prior Years
and Unvested
at end of CFY
($)(d)
226,400
283,000
226,400
---
183,950
Value of
Equity
Awards
Granted and
Vested in
CFY($)(e)
---
---
---
---
---
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
(3,400)
265,278
92,317
(169,900)
46,074
CALCULATION OF 2021 NON-PEO CAP
Value of
Unvested
Equity
Awards
Granted
during CFY
($)(c)
1,120,250
---
1,075,440
761,770
873,795
1,064,238
815,916
Change in
Value of
Equity
Awards
Granted in
Prior Years
and Unvested
at end of CFY
($)(d)
---
---
---
---
---
---
---
Value of
Equity
Awards
Granted and
Vested in
CFY
($)(e)
---
---
---
---
---
---
---
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
5,234
6,192
4,020
56,190
66,566
140,529
46,455
CALCULATION OF 2022 NON-PEO CAP
Value of
Unvested
Equity
Awards
Granted
during CFY
($)(c)
932,283
828,696
913,449
517,935
517,935
742,060
Change in
Value of
Equity
Awards
Granted in
Prior Years
and Unvested
at end of CFY
($)(d)
---
---
---
---
---
---
Value of
Equity
Awards
Granted and
Vested in
CFY
($)(e)
---
---
---
---
---
---
Change in
Value of
Equity Awards
Granted in
Prior Years
and Vested in
CFY
($)(f)
205,623
403,536
(11,380)
(6,458)
(20,710)
114,122
Value of
Equity
Awards
Previously
Granted
that Failed
to Meet
Conditions
in CFY
($)(g)
---
--
---
---
---
Value of
Equity
Awards
Previously
Granted
that Failed
to Meet
Conditions
in CFY
($)(g)
147,497
1,475,289
516,319
---
---
---
356,518
Value of
Equity
Awards
Previously
Granted
that Failed
to Meet
Conditions
in CFY
($)(g)
---
---
---
---
---
---
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,419,492
3,055,934
1,519,366
1,098,344
1,773,284
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,767,624
3,711,025
1,325,354
1,390,724
1,584,425
1,827,456
1,934,435
CAP to Non-PEO($)
(a)-(b)+(c)+(d)+(e)+(f)-(g)
1,999,851
2,225,970
1,895,807
1,505,215
1,490,963
1,823,561
(6)
SCT Total
Comp
($)(a)
920,732
1,818,256
924,889
1,165,170
1,207,262
SCT
Stock
Awards
($)(b)
671,760
1,679,400
671,760
291,726
828,662
Year
Robinson
Thompson
Jacobsen
Morgan
Average
SCT Total
Comp
Amount
($)(a)
1,788,492
7,556,722
1,712,853
1,395,079
1,589,173
1,764,732
2,634,509
SCT
Stock
Awards
($)(b)
998,855
2,376,600
950,640
822,315
945,109
1,142,043
1,205,927
Year
Robinson
Thompson
Jacobsen
Tobin
Colson
Mujica
Average
SCT Total
Comp
($)(a)
1,755,123
1,787,674
1,788,904
1,489,948
1,489,948
1,662,319
SCT
Stock
Awards
($)(b)
893,178
793,936
795,166
496,210
496,210
694,940
Year
Robinson
Jacobsen
Tobin
Colson
Mujica
Average
(7)
(8)
For the purposes of calculating the Company’s total shareholder return (“TSR”), the Company’s TSR
increased 40.8% in fiscal year 2020, increased 17.0% in fiscal year 2021, and increased 5.6% in fiscal
year 2022.
As more particularly shown in the Company’s Annual Report on Form 10-K for the years ended
December 29, 2020 and December 28, 2021, we presented a performance graph by comparing our
cumulative TSR against the Russell 3000 Restaurant Index (the “Russell Index”). In connection with
our Annual Report on Form 10-K for the year ended December 27, 2022, the Company transitioned to
the S&P Composite 1500 Restaurant Sub-Index (the “S&P Index”) as we believe this index is a more
widely utilized industry index. For the purposes of the table above, we have shown the TSR for the
Company’s peer companies using both the Russell Index and the S&P Index. In furtherance of the
foregoing,
66
(A)
(B)
using the Russell 3000 Restaurant Index, the TSR of the Company’s peer companies increased
13.4% in fiscal year 2020, increased 15.7% in fiscal year 2021, and decreased 7.2% in fiscal
year 2022; and
using the S&P Composite 1500 Restaurant Sub-Index, the TSR of the Company’s peer
companies increased 18.9% in fiscal year 2020, increased 22.6% in fiscal year 2021, and
decreased 7.9% in fiscal year 2022.
As shown in the charts as discussed further below, the relationship between the Compensation Actually
Paid to the Principal Executive Officer and the Average Compensation Actually Paid to the Non-Principal
Executive Officers in the 2020 fiscal year, 2021 fiscal year and 2022 fiscal year, respectively, to each of (i) net
income, (ii) total shareholder return, and (iii) diluted earnings per share demonstrates that such compensation
fluctuates to the extent the Company is achieving its goals and increasing value for shareholders in line with the
Company’s compensation philosophy and performance-based objectives. For fiscal year 2020, the Principal
Executive Officer represented in the below tables is W. Kent Taylor, and for 2021 and 2022, the Principal
Executive Officer represented is Gerald L. Morgan.
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
CAP vs. Net Income 2020-2022
$245.3
$269.8
$31.3
$7.4
$1.8
$3.8
$1.9
$5.7
$1.8
2020
2021
Year
2022
Compensation Actually Paid to First PEO
Average Compensation Actually Paid to Non-PEO NEOs
Net Income
$300.0
$250.0
$200.0
$150.0
$100.0
$50.0
$-
e
m
o
c
n
I
t
e
N
)
s
n
o
i
l
l
i
m
n
I
(
67
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
P
A
C
)
s
n
o
i
l
l
i
m
n
I
(
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
CAP vs. TSR 2020-2022
$164.74
$145.77
$131.20
$173.96
$134.26
$121.76
$140.80
$118.90
$113.40
$7.4
$1.8
$3.8
$1.9
$5.7
$1.8
2020
2021
Year
2022
Compensation Actually Paid to First PEO
Average Compensation Actually Paid to Non-PEO NEOs
TSR (TXRH)
TSR (S&P Composite 1500 Restaurant Index)
TSR (Russell 3000 Restaurant Index)
CAP vs. Diluted EPS 2020-2022
$3.50
$3.97
$0.45
$7.4
$1.8
$3.8
$1.9
$5.7
$1.8
2020
2021
Year
2022
Compensation Actually Paid to First PEO
Average Compensation Actually Paid to Non-PEO NEOs
Diluted EPS
$180.00
$160.00
$140.00
R
S
T
′
)
s
$
(
$120.00
$100.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00
S
P
E
′
)
s
$
(
The following table lists the three financial performance measures that we believe represent the most
important financial measures to link compensation actually paid to our Named Executive Officers in 2022 to our
performance.
Most Important Performance Measures
1) Diluted Earnings Per Share Growth
2) Profit Growth
3) Change in Stock Price
68
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 2022 total cash compensation
for all individuals (other than Mr. Morgan, our Chief Executive Officer) who were employed by us as of December
27, 2022, the last day of our 2022 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 2022 fiscal year and who was working
for us at the end of our fiscal year. As of December 27, 2022, approximately 72% of our employees were part-
time employees and our average employee worked approximately 18 hours per week.
We identified our median employee as a server in Brockton, Massachusetts who worked an average of
approximately 17 hours per week. After identifying our median employee, we calculated the annual total
compensation for such employee as $17,127, which is determined using the same methodology we used for our
Named Executive Officers as set forth in the 2022 Summary Compensation Table described above.
As more particularly described in the 2022 Summary Compensation Table, the annual total
compensation for Mr. Morgan, our Chief Executive Officer, for our 2022 fiscal year is $4,421,989 and the ratio
between the compensation for our Chief Executive Officer and the compensation for our median employee is
258 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 Chief Executive Officer
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 Chief Executive Officer in any given year.
69
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. Ms. Epps currently
serves as the chairperson of the Committee but Mr. Moore served as the chairperson of the Committee during
the 2022 fiscal year. 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 27, 2022 (the “Audited Financial
Statements”).
• The Committee met 14 times during fiscal year 2022, which were comprised of six regular meetings
of the Committee and two meetings per quarter relating to the Committee’s review of the Company’s
quarterly earnings release and filings with the SEC. 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 Chief
Legal and Administrative Officer, the independent auditors, and the Company’s enterprise risk
management team consisting of our Vice President of Finance (now our interim Chief Financial
Officer), Chief Legal and Administrative Officer, Associate General Counsel – Brand Protection, Vice
President of Legendary People, Director of Risk, Director of Internal Audit, and Senior Manager of
Business Continuity, 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,
together with reports from the Company’s various risk committees, including the information
governance risk committee, responsible alcohol service risk committee and corporate sustainability
risk committee;
• The Committee reviewed with the Company’s Chief Legal and Administrative Officer the Company’s
disclosures with respect to current lawsuits (as and if applicable);
70
• 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 2022 fiscal year, before
management engaged the independent auditors for those purposes, pursuant to and in accordance
with the Texas Roadhouse, Inc. Policy for Pre-Approval of Services Provided by External Audit Firm
(which is available on the Company’s website at www.texasroadhouse.com);
• On a quarterly basis, the Committee discussed with KPMG LLP the matters required to be discussed
by the Public Company Accounting Oversight Board’s Auditing Standard No. 1301, Communications
with Audit 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 2022
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 27, 2022, for filing with the SEC.
All members of the Committee concur in this report.
Donna E. Epps, Chair
Michael A. Crawford
Gregory N. Moore
Curtis A. Warfield
Kathleen M. Widmer
James R. Zarley
Related Party Transactions
The Committee’s charter provides that the Committee will review and approve any transactions between
us and any of our executive officers, non-employee directors, and 5% shareholders, or any members of their
immediate families, in which the amount involved exceeds the threshold limits established by the regulations of
the SEC. In reviewing a related-party transaction, the Committee considers the material terms of the transaction,
71
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 franchised restaurants to companies owned in part by a Named Executive Officer. The royalty
rate that is paid by these companies is set forth below, and is the amount we typically charge to franchisees. We
believe that allowing certain Named Executive Officers to have ownership interests in our restaurants provides
an ongoing benefit to the Company by these persons being more invested in the overall success of the brand.
Ownership interests of franchised restaurants by Mr. Morgan as of the end of the 2022 fiscal year are
listed below.
Restaurant
El Cajon, CA
McKinney, TX
Brownsville, TX
Oceanside, CA
Name and Ownership
Gerald L. Morgan (2.0%)
Gerald L. Morgan (2.0%)
Gerald L. Morgan (3.06%)
Gerald L. Morgan (2.0%)
Initial
Franchise
Fee
—
—
—
—
Royalty
Rate
4.0%
4.0%
4.0%
4.0%
Management,
Supervision,
and/or
Accounting
Fees
Paid to Us
in Fiscal Year
2022
($)(1)
25,470
49,725
51,885
25,595
Royalties
Paid to
Us in
Fiscal
Year
2022
($)
440,837
397,800
415,076
416,321
(1)
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.
For the 2022 fiscal year, the total amount of distributions received by Mr. Morgan relating to his
ownership interests in the above-referenced franchised restaurants was $138,119. This amount does not reflect
compensation paid by the Company to Mr. Morgan during the 2022 fiscal year; rather, this amount was paid by
the applicable franchise entity and reflects a return on investment in these separate restaurant locations.
The franchise agreements that we have entered into with this current Named Executive Officer contain
the same terms and conditions as those agreements that we enter into with our other Texas Roadhouse domestic
franchisees. We have the contractual right, but not the obligation, to acquire the restaurants owned in part by
such Named Executive Officer 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 a current Named Executive Officer, Gerald L. Morgan, that has an ownership interest in a
certain Texas Roadhouse restaurant that is owned by an entity that the Company controls and in which the
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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. As of the end of the 2022 fiscal year, Mr. Morgan held a 34.5%
ownership interest in the Mansfield, Texas restaurant, which entity paid $345,077 to us for management and
supervision fees. Additionally, for the 2022 fiscal year, the total amount of distributions received by Mr. Morgan
relating to his ownership interest in the Mansfield, Texas restaurant was $519,192. This amount does not reflect
compensation paid by the Company to Mr. Morgan during the 2022 fiscal year; rather, this amount was paid by
the applicable entity and reflects a return on investment in this restaurant location.
Other Related Transactions
None.
73
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 2024 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
55
59
74
62
55
61
78
Position or
Office
Director
Director
Chairman of the Board;
Director
Chief Executive Officer;
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.
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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 26, 2023. 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 2023 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 2022 AND 2021
Audit Fees
Audit-related Fees
Tax Fees
All Other Fees
2022($)
913,816
16,000
66,190
____ --
996,006
2021($)
748,400
20,000
15,751
____ --
784,151
Audit Fees. KPMG LLP charged $913,816 in fiscal year 2022 and $748,400 in fiscal year 2021 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. In addition, the fees for fiscal years 2022 and 2021
contain approximately $18,816 and $18,400, respectively, related to statutory audits. Finally, the fees for fiscal
year 2022 contain $80,000 relating to the testing of general information technology and automated controls
related to an accounting software upgrade which the Company completed during fiscal 2022.
Audit-related Fees. KPMG LLP charged $16,000 in fiscal year 2022 and $15,000 in fiscal year 2021 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.
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Tax Fees. KPMG LLP charged $66,190 in fiscal year 2022 and $15,751 in fiscal year 2021 for
consulting and compliance services. The fees charged in fiscal year 2022 include $40,000 for tax structuring
related services.
All Other Fees. KPMG LLP did not charge any additional amounts during either fiscal year 2022 or fiscal
year 2021.
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 2023 FISCAL YEAR.
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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 3 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 3 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 such 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
77
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 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 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 2022 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.
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PROPOSAL 4
ADVISORY VOTE ON THE FREQUENCY
OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION
This Proposal 4 provides shareholders the opportunity to cast an advisory vote on how frequently they
would like to cast advisory votes on executive compensation (a “say-on-pay” vote). Under this Proposal 4,
shareholders may vote to conduct a say-on-pay vote every year, every two years or every three years. As an
advisory vote, the outcome of the voting on this Proposal 4 is not binding upon the Company; however, the
Board values the opinions expressed by shareholders in their vote on this Proposal 4.
After careful consideration and review of past votes by our shareholders on the same issue, together
with prior communications with our investors and shareholders, the Board recommends that the shareholders
select every year as the frequency with which say-on-pay votes will be conducted. The Board values the input
of our shareholders on executive compensation matters. The Board believes that an annual advisory vote allows
our shareholders the opportunity to provide direct and timely input on the Company’s executive compensation
philosophy, policies and practices that more accurately reflect the shareholders’ then-current sentiment on the
performance of the Company and its Named Executive Officers. Therefore, the Board believes it is in the best
interest of the shareholders to have an annual vote on executive compensation.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS SELECT “EVERY YEAR” AS THE
FREQUENCY WITH WHICH SAY ON PAY VOTES WILL BE CONDUCTED.
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PROPOSAL 5
ADVISORY VOTE ON A SHAREHOLDER PROPOSAL
REGARDING THE ISSUANCE OF A CLIMATE REPORT AND TO SET REDUCTION
TARGETS BY THE COMPANY
Boston Trust Walden Company is the beneficial owner of at least $2,000 in market value of shares of
our Common Stock, and on November 8, 2022, Boston Trust Walden Company notified the Company of its
intention to submit a resolution to the shareholders for approval at the Annual Meeting. We will provide the
proponent’s address to any shareholder promptly upon written request. The text of the proponent’s resolution
and supporting statement appear below, printed verbatim from its submission. We disclaim all responsibility for
the content of the proposal and the supporting statement, including sources referenced therein.
Shareholder Proposal
“Resolved: Shareholders request Texas Roadhouse issue a report, at reasonable cost and omitting
proprietary information, describing if, and how, it plans to measure and reduce its total contribution to
climate change, including emissions from its supply chain, and align its operations with the Paris
Agreement’s goal of maintaining global temperature increases to 1.5
.
Supporting Statement: Shareholders recommend the report disclose, among other issues at board and
management discretion, the relative benefits and drawbacks of:
℃
• Establishing for the Company’s full greenhouse gas emissions (GHG) footprint short-, medium-,
and long-term emissions reduction targets aligned with the goals of the Paris Agreement; and
• Developing a transition plan detailing how the Company intends to achieve such targets.
The 2018 National Climate Assessment found “climate change presents numerous challenges to
sustaining and enhancing crop productivity, livestock health, and the economic vitality of rural
communities,” and rising temperatures are “the largest contributing factor to declines in the productivity
of U.S. agriculture.” Not only is agricultural production susceptible to climate change, it also contributes
approximately 22% of anthropogenic greenhouse gas emissions.
The impacts of climate change on agricultural commodities are evident today. According to the U.S.
Department of Agriculture (USDA), 60% of the nation's cattle were affected by drought in 2022, which
led many ranchers to slaughter herds early due to pasture conditions. In fact, more domestic beef cows
were slaughtered in July of 2022 than in any month on record. The USDA expects “[d]omestic use of
beef…to decline sharply in 2023 as the U.S. cattle herd shrinks, a result of drought and high feed costs,”
with 2023 beef production forecast 6% lower than that of 2022. The price of feeder steers in September
2022 was approximately 14% higher than the prior year.
Texas Roadhouse has yet to disclose the greenhouse gas emissions associated with its direct
operations or supply chain, let alone establish credible targets to reduce those emissions. While the
company discloses anecdotes regarding operational resource management initiatives, much of its
emissions footprint likely lies in the supply chain. Peer Darden Restaurants reports supply chain
emissions account for approximately 80% of its overall footprint.
Several restaurant companies, including Chipotle, McDonald’s, and Yum! Brands, are taking
responsibility for their full value chain emissions and working to align their carbon footprints with goals
of the Paris Agreement. These companies are not only measuring their full value chain emissions, but
also pursuing long-term, science-based emissions reduction goals.
Proponents believe a report describing if, and how, Texas Roadhouse plans to measure and reduce its
full value chain emissions footprint is a prudent and vital course of action that should help the Company
80
and investors understand the sourcing and pricing risks associated with climate change, potential
carbon-related regulations, and evolving consumer preferences.”
Board’s Opposition Statement
After careful consideration, the Board unanimously recommends that the shareholders vote
AGAINST this shareholder proposal.
The Board strongly believes that the issuance of a climate report with target-based commitments for
direct operations and our full supply chain is premature and could result in the inefficient use of time, money,
and resources.
Given that many climate targets are beyond the scope or control of the Company, we believe it is not in
the best interest of the Company or our shareholders to set target-based commitments. The business community
is replete with companies that have set and subsequently missed targets, which often leads to negative publicity,
reputational damage, and distractions to the business.
We understand that our investors expect us to make thoughtful materiality assessments before making
strategic decisions on setting targets and/or goals. This understanding is also consistent with their role as a
fiduciary for their clients first and foremost, and that they do not support initiatives – including initiatives relating
to corporate sustainability – to the extent such initiatives could imperil their portfolio companies’ operations
and/or jeopardize value creation and returns for their clients. We believe that this prevailing shareholder view
continues to align with our stated approach.
In lieu of targets, we have told our shareholders to expect more transparency regarding our greenhouse
gas (“GHG”) emissions, including tracking and the hiring of a consultant to assist with reduction measures. We
plan to include the emissions in our corporate sustainability report, which is updated annually. It is also our
intention to fully comply with the U.S. Securities and Exchange Commission (“SEC”) rules for climate-related
disclosures in scope and timing, as finalized and implemented.
As is consistently shared in our public documents, we take great pride in our corporate sustainability
program and our appreciation for, and commitment to, our employees and the communities in which we serve.
This commitment includes not only the continued execution of our existing corporate sustainability measures but
also identifying future opportunities, which is consistent with the philosophy of our overall business and which
we attempt to express in our corporate sustainability report.
Our philosophy is and always has been about taking a deliberate and methodical approach to our work,
rather than being reactive, overly opportunistic, or to over/under commit in matters of such significance. With
this approach as a guiding principle, we first seek to understand an opportunity and/or concern, and then we
create an action plan. We believe that this studied approach has been an instrumental part of our business
success and our ability to consistently deliver shareholder value to a myriad of investors, who must balance their
fiduciary responsibilities with their desire to request management changes with respect to corporate
sustainability and/or other non-pecuniary initiatives or interests.
Our desire to continue to improve and identify future opportunities, all rooted in a philosophy of seeking
broader understanding, led to the creation of an internal corporate sustainability risk committee in the beginning
of 2021 to help evaluate our environmental, social, and governance activities and impact. This cross-functional
committee is designed to work in conjunction with our enterprise risk committee as well as our existing corporate
sustainability program – under which we have disclosed our initiatives in our corporate sustainability reports
since 2017.
We used 2021 as a foundational year for our corporate sustainability risk committee in which we worked
diligently to seek to better understand emerging risks and areas of increased shareholder interest. The
committee undertook a benchmarking project of peer companies and also had numerous conversations with
external resources, outside legal counsel, and proxy advisory firms to understand our corporate sustainability
opportunities from a business and disclosure perspective. We took action in 2022 based on the results of our
81
benchmarking project – which led to greater disclosure in our 2022 corporate sustainability report, as well as the
engagement of a third-party consultant to calculate our Scope 1 and 2 GHG emissions in order to more
accurately track our usage and trends.
We are providing the above detail in order to express to our shareholders the seriousness with which
we take our corporate sustainability efforts and disclosures – especially those concerning our environmental
impact and that of our suppliers. We continue to perform the necessary work to inform ourselves so that we can
plan appropriately and prudently, consistent with impending SEC regulation. It is our intention to take steps to
fully understand our GHG emissions and develop our next steps before making any credible target-based
commitments. From our perspective, setting targets before fully understanding how to achieve any stated target
could have negative and/or other unintended or incidental impact to our operations and, ultimately, our
shareholders.
We do understand and appreciate, however, the value in providing transparency relating to our GHG
emissions and our efforts to measure and manage our GHG emissions. In this regard and consistent with the
deliberate, methodical, and more studied approach described above, the Company has already determined the
following action items in lieu of this shareholder proposal:
• During the 2023 fiscal year, the Company will (i) publicly disclose its Scope 1 and 2 GHG
emissions for the 2021 and 2022 fiscal years, (ii) engage a third-party consultant to discuss
ways in which we can reduce our Scope 1 and 2 GHG emissions consistent with our operating
model, and (iii) engage a third-party consultant to measure our Scope 3 GHG emissions; and
• During the 2024 fiscal year, the Company will (i) continue to publicly disclose our Scope 1 and
2 GHG emissions for the 2023 fiscal year, and (ii) publicly disclose our initial Scope 3 GHG
emissions.
For the above-refenced reasons, the Board recommends that the shareholders vote against this
shareholder proposal.
Recommendation
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “AGAINST” THE SHAREHOLDER
PROPOSAL REGARDING THE ISSUANCE OF A CLIMATE REPORT AND SETTING REDUCTION
TARGETS BY THE COMPANY.
82
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.
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, 2023. 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.
is available on
The Company’s bylaws, a copy of which
the Company’s website at
www.texasroadhouse.com, require shareholders who intend to propose business for consideration by
shareholders at the 2024 annual meeting, other than shareholder proposals that are to be included in the proxy
statement, to deliver written notice to the principal executive offices of the Company on or before December 2,
2023 (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. In addition, the bylaws require shareholders who intend to nominate a candidate for election as a
director to deliver written notice to the principal executive offices of the Company on or before December 2, 2023
(reflecting 120 day 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). The notice of nomination must include the information
set forth in the bylaws for the candidate to be eligible for nomination. Further, to comply with the SEC’s universal
proxy rules, if a shareholder intends to solicit proxies in support of director nominees submitted under these
advance notice provisions, then the Company must receive proper written notice that sets forth all information
required by Rule 14a-19 under the Exchange Act, delivered to the principal executive offices of the Company by
March 11, 2024. The notice requirement under Rule 14a-19 is in addition to the applicable advance notice
requirements under our bylaws as described above.
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.
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 27, 2022,
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 27, 2022, 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.
83
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
statement, 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
March 31, 2023
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.
84
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 27, 2022
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 ☒
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. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 28,
2022 was $6,682,564,289 based on the closing stock price of $100.50 on the Nasdaq Global Select Market.
The number of shares of common stock outstanding were 67,017,505 on February 15, 2023.
Non-accelerated filer ☐
Accelerated filer ☐
Portions of the registrant’s definitive Proxy Statement for the registrant’s 2023 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 27, 2022, are incorporated by reference into Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . .
Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . .
Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections . . . . . . . . . . . . . . . . . . . . . . . . . .
Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence. . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibits, Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures
Page
5
16
31
31
32
32
33
34
35
49
50
50
51
51
51
51
52
52
52
52
53
57
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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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 dine-in and to-go sales as well as 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 impact of health epidemics or pandemics on our business including restrictions or regulations on our
operations;
health, dietary and other 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;
inflationary increases in the costs of our principal food and beverage products and all other operating costs;
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 whose interests may
not align with ours;
risks associated with developing and successfully operating new concepts;
security breaches of confidential guest, vendor and employee 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;
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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 their franchise agreements;
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. (collectively, the "Company," "we," "our" and/or "us") was incorporated under the laws of
the state of Delaware in 2004. The principal executive office is located in Louisville, Kentucky.
Introduction
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 three concepts with 697 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 casual dining 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 27, 2022, we owned and operated
597 restaurants and franchised an additional 62 domestic restaurants and 38 international restaurants.
Restaurant Concepts
Of the 597 restaurants we owned and operated at the end of 2022, we operated 552 as Texas Roadhouse restaurants,
40 as Bubba’s 33 restaurants and five 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 free roasted in-shell peanuts and fresh baked yeast rolls.
Bubba’s 33 is a family-friendly restaurant concept featuring scratch-made food for all with a little rock 'n' roll, 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 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 limited capacity or seating in dining
rooms while others allowed to-go or curbside service only. In 2022, all of our domestic company and franchise
restaurants operated without restriction. We also experienced and expect to continue to experience commodity inflation
and certain food and supply shortages as well as a more competitive labor market. To the extent these challenges persist,
we will continue to experience increased costs.
5
Operating Strategy
The operating strategy that underlies the growth of our restaurants 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, portion size, 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 and overall food
quality.
• 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.
• 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. 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.
• Offering attractive price points. When we evaluate menu pricing, we focus on remaining disciplined as we
balance short-term pressures with long-term growth while always keeping our guest top of mind. Prices are
reviewed individually in each local market and are offered at moderate price points that we believe are as low
as or lower than those offered by our competitors without sacrificing food quality. Within each menu category,
we offer a choice of several price points with the goal of fulfilling each guest’s budget and value expectations.
Based on the results of our pricing evaluations, we will continue to take pricing actions as we feel are needed.
• 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. This focus
on dinner allows our restaurant teams to prepare for and manage only one shift per day during the week and to
prepare for the significant volumes of sales our restaurants generate.
Restaurant Development and Unit Economics
We consistently evaluate opportunities to develop restaurants in new and existing markets. Our site selection
process is critical to our growth strategy. 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 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 restaurant consists of a freestanding
building with approximately 7,600 to 8,400 square feet with seating for approximately 270 to 325 guests 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.
6
Our current prototypical Bubba’s 33 restaurant consists of a freestanding building with approximately 7,600 square
feet with seating for approximately 270 to 330 guests. Some locations include patio seating for approximately 60 guests.
Parking is targeted for approximately 180 vehicles either on-site or in combination with some form of off-site cross
parking arrangement.
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 concept, 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 pre-opening expense.
For 2022 and 2021, our average capital investment for Texas Roadhouse restaurants, which includes a 10x initial
base rent factor in the event the land is leased, was $6.9 million and $5.7 million, respectively. The increase in our 2022
average capital investment was primarily due to a larger building prototype and higher supply costs. We expect our
average capital investment for restaurants to be opened in 2023 to remain flat at approximately $6.9 million with lower
site costs offset by higher rent expense.
For 2022 and 2021, our average capital investment for Bubba’s 33 restaurants, which includes a 10x initial base
rent factor in the event the land is leased, was $7.8 million and $7.4 million, respectively. The increase in our 2022
average capital investment was primarily due to higher supply costs. We expect our average capital investment for
restaurants to be opened in 2023 to decrease to approximately $7.4 million due to lower site costs.
7
Existing Restaurant Locations
As of December 27, 2022, we had 597 company restaurants and 100 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
Company Franchise Total
9
2
20
8
16
18
5
5
44
19
6
19
33
11
7
19
11
3
14
11
21
7
3
18
1
4
4
3
10
7
21
21
3
37
8
2
32
3
9
2
18
86
11
1
21
3
7
14
2
659
1
1
7
3
3
7
1
5
5
5
38
697
—
—
—
—
10
1
—
2
—
3
—
—
8
—
1
2
1
—
6
1
3
—
—
—
1
—
—
—
—
—
—
—
1
2
—
—
6
—
—
—
1
5
1
—
—
1
3
3
—
62
1
1
7
3
3
7
1
5
5
5
38
100
9
2
20
8
6
17
5
3
44
16
6
19
25
11
6
17
10
3
8
10
18
7
3
18
—
4
4
3
10
7
21
21
2
35
8
2
26
3
9
2
17
81
10
1
21
2
4
11
2
597
—
—
—
—
—
—
—
—
—
—
—
597
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, 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 roasted in-shell 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 Bubba’s 33 restaurants, we offer a broad assortment of burgers, pizza and wings as well as a wide variety of
appetizers, sandwiches and dinner 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 that includes a selection of items, including a
beverage.
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 11.0% of restaurant sales in
fiscal 2022.
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.
We work with a third-party vendor to manage an online tool to provide nutritional information as well as help
customers identify known allergens in each of our menu items. This information is currently available for all concepts.
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, portion size, 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 all of 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 additional 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, the results of which are reviewed by our food
safety team.
We perform regular food safety and sanitation audits on our restaurants and these results are reviewed by various
members of operations and management. To maximize adherence to food safety protocols, we have incorporated
Hazard Analysis Critical Control Points principles and critical procedures (such as hand washing) in each recipe. All
restaurant managers are required to complete the American National Standards Institute Certified Food Manager
training. In addition, most of our product coaches and food team members have obtained or are in the process of
obtaining their Certified Professional-Food Safety designation from the National Environmental Health Association.
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Procurement. Our procurement 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 our 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 domestic restaurants
for the purpose of reinforcing service quality and consistency, teamwork, responsible alcohol service, staff attentiveness
and guest interactions in the dining room.
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. We have implemented several programs to evaluate guest
satisfaction, with particular attention given to food, beverage and service quality, cleanliness, staff attitude and
teamwork, and manager visibility and interaction. 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.
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. 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 sections of the kitchen staff and certain kitchen operations including
food production, preparation, execution and quality standards. Service managers have primary responsibility for
managing sections of the front of house staff and certain dining room, bar and to-go operations including service quality
and the guest experience. Assistant managers support our managing partners, operations managers and 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 four managers and the
hands-on assistance of a product coach and a service coach, are critical to our success.
10
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 incudes a base salary
plus a percentage of 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 at the time of
hire that reinforces an ownership mentality. Generally, the deposits are refunded after five years of continuous service.
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
throughout the country.
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 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.
We have designated a number of our restaurants to be certified as training centers by our training department.
These stores are utilized to train our new and existing managers to ensure compliance with all 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 concepts’ 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.
Additionally, we continue to look for ways through various strategic initiatives to drive awareness and guest engagement
with our brands. This includes the introduction of branded food and retail products that are available for purchase online
or in select retailers. These products include non-royalty based food and accessories as well licensing arrangements for
certain alcoholic and non-alcoholic beverages.
Restaurant Franchise Arrangements
Franchise Restaurants. As of December 27, 2022, we had 22 franchisees that operated 100 Texas Roadhouse
restaurants in 21 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. We are currently not
11
accepting new domestic Texas Roadhouse franchisees. Approximately 80% 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 based on a percentage of gross sales. In addition, domestic Texas
Roadhouse franchisees are required to pay a percentage of gross sales to a national marketing fund for system-wide
promotions and related efforts.
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. For the existing international agreements, the
franchisee is generally required to pay us a development fee for our grant of development rights in the named countries,
a franchise fee for each restaurant to be opened and royalties on the sales of each restaurant.
In 2021, we entered into our first two 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 development fee for our grant of
development rights in the named territories, a franchise fee for each restaurant to be opened and royalties on the sales of
each restaurant. We expect our first Jaggers franchise restaurant to open in 2023.
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
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 certain domestic franchise restaurants, some of which
we have an ownership interest and others 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. 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
12
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.
Restaurant hardware and software support for all of our restaurants is provided and coordinated from the restaurant
Support Center in Louisville, Kentucky. We guard against business interruption by maintaining a disaster recovery plan,
which includes, among other things, 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, debit 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 and debit 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, ensuring
compliance with the requirements of Payment Card Industry Data Security Standards and to assess vulnerability in our
systems. 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.
We have made several digital enhancements to improve the guest experience and better support increased volumes
at our restaurants. These enhancements include a new, fully customized digital experience that allows our guests to get
on the waitlist or place an order for 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. In addition, we have implemented systems that enable touchless menus
and contactless payments, providing a smoother guest checkout experience and enhanced turnaround times.
We believe that our current systems and practice of implementing regular updates will position us well to support
our 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 as well
as the 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 chains. 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 to-go 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 channels, 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 across all aspects of the restaurant
industry.
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 multiple 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,
13
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 also subject to laws and
regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional
content and menu labeling.
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. 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 served alcoholic beverages to the intoxicated person. Consistent with industry standards, we
focus on responsible alcohol service training and carry liquor liability coverage as part of our existing comprehensive
general liability insurance as well as excess umbrella coverage.
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. 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 our 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.
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 and debit card numbers) and health information.
Seasonality
Our business is subject to 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 27, 2022, we employed approximately 82,000 people. These employees included 784 executive
and administrative personnel and 3,080 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 and 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.
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Maintaining our Culture and Core Values. In our restaurants and at our Support Center, we are committed to our
shared "Core Values of Passion, Partnership, Integrity, and Fun…all with Purpose". These Core Values form the
foundation of who we are as a company and how we interact with respect, appreciation, and fairness towards one another
every day. We also believe that diversity and inclusion are vital parts of our culture. We value and welcome employees
of all walks of life to share their gifts and strengths while working in our restaurants and the Support Center, as we strive
to reflect the communities we are proud to serve. As a result, we are committed to attracting, retaining, engaging and
developing a workforce that mirrors the diversity of our guests and is committed to upholding our shared values.
Performance-based Compensation and Benefits. We support our employees by offering competitive wages and
benefits for eligible employees. We also offer a performance-based compensation program to our managing partners
and market partners. Each of these positions earn a base salary plus a performance bonus, which represents a percentage
of each of their respective restaurant’s pre-tax income. 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 with employer matching contributions, healthcare and insurance
benefits, health savings and flexible spending accounts, tuition reimbursement, paid time off, paid parental leave and
various employee assistance programs.
Personal 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 and we are committed to providing a
safe workplace, ensuring the safety and well-being of all team members while also ensuring that we are in compliance
with all laws and regulations as well as internal policies. This commitment includes the deployment of specific sanitary
protocols and safety standards to our restaurants that focus on maintaining the health and safety of our employees.
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
practical 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 appointed or
until resignation or removal, in accordance with their employment agreements, if applicable. There are no family
relationships among any of our executive officers.
Name
Gerald L. Morgan . . . . . . . . . . . . . . . . . . .
Regina A. Tobin . . . . . . . . . . . . . . . . . . . .
S. Chris Jacobsen . . . . . . . . . . . . . . . . . . . .
Christopher C. Colson . . . . . . . . . . . . . . . .
Hernan E. Mujica . . . . . . . . . . . . . . . . . . .
Keith V. Humpich . . . . . . . . . . . . . . . . . . .
Age
62
59
57
46
61
53
Position
Chief Executive Officer
President
Chief Marketing Officer
Chief Legal and Administrative Officer
Chief Technology Officer
Interim Chief Financial Officer
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Gerald L. Morgan. Mr. Morgan was appointed Chief Executive Officer in March 2021. 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 also served as President from December 2020 to January 2023. Mr. Morgan has more than
35 years of restaurant management experience with Texas Roadhouse, Bennigan’s Restaurants and Burger King.
Regina A. Tobin. Ms. Tobin was appointed President in January 2023. Ms. Tobin joined Texas Roadhouse in
1996, during which time she has held the positions of Managing Partner, Market Partner, Vice President of Training and
served as Chief Learning and Culture Officer from June 2021 through her appointment as President. Ms. Tobin has
more than 30 years of restaurant management experience.
S. Chris Jacobsen. Mr. Jacobsen was appointed Chief Marketing Officer in February 2016. Mr. Jacobsen joined
Texas Roadhouse in January 2003 where he served as Vice President of Marketing until his appointment as Chief
Marketing Officer. Mr. Jacobsen has more than 30 years of restaurant marketing experience with Texas Roadhouse,
Papa John’s International and Waffle House, Inc.
Christopher C. Colson. Mr. Colson was appointed Chief Legal and Administrative Officer in January 2023 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, Executive Director of the Global Development Group and
General Counsel, a position he held from March 2021 through his appointment as Chief Legal and Administrative
Officer. 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.
Hernan E. Mujica. Mr. Mujica was appointed Chief Technology Officer in January 2023. Mr. Mujica joined
Texas Roadhouse in January 2012 as Vice President of Information Technology and then Chief Information Officer, a
position he held from March 2021 through his appointment as Chief Technology 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.
Keith V. Humpich. Mr. Humpich was appointed Interim Chief Financial Officer in January 2023. Mr. Humpich
joined Texas Roadhouse in 2005, during which time he has held the positions of Director of Internal Audit, Senior
Director of Internal Audit and Vice President of Finance. Prior to joining Texas Roadhouse, Mr. Humpich held several
accounting, finance and audit positions at Lexmark International and Ernst & Young, LLP. Mr. Humpich has over
30 years of accounting and finance experience.
ITEM 1A. RISK FACTORS
Careful consideration should be given to the risks described below. If any of the risks and uncertainties described
in the cautionary factors described below actually occurs, our business, financial condition and results of operations, and
the trading price of our common stock could be materially and adversely affected. Moreover, we operate in a very
competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict
the impact of all these factors on our business, financial condition or results of operations.
Risks Related to our Growth and Operating Strategy
Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts
and investors due to a number of factors, many 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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the timing of new restaurant openings and related expenses;
restaurant operating costs for our newly-opened restaurants, which are often significantly higher during the first
several months of operation than thereafter;
labor availability and costs for hourly and management personnel including increases relating to unionization
and mandated changes in federal and/or state minimum and tipped wage rates, overtime regulations, state
unemployment taxes, sick pay or health benefits and other regulatory changes relating to any of the foregoing;
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fluctuations in commodity prices and utility and energy costs;
profitability of our restaurants, particularly in new markets;
the impact of litigation, including negative publicity;
decreases in average unit volume and comparable restaurant sales, including to-go 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;
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 relating to the consumption of beef or other products we serve;
negative publicity regarding health concerns and/or global pandemics;
closures and/or dining rooms operating at limited capacity due to government mandated restaurant closures
and/or limited availability of staff to meet our business standards;
changes in consumer preferences and competitive conditions including changes related to environmental, social
and/or governance ("ESG") pressures;
expansion to new domestic and/or international markets;
the impact of inclement weather, natural disasters and other calamities which impact guest traffic or product
availability at our restaurants;
increases in infrastructure costs;
changes in interest rates;
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; and
competitive actions.
Our business is also subject to 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.
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 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 may be locating and securing an adequate supply of suitable new
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restaurant sites that satisfy our financial targets. Competition for suitable restaurant sites in our target markets may be
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
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 and maintain our culture
and brand standards;
our ability to negotiate suitable purchase or lease terms to execute our business strategy;
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, or at all;
general economic conditions, including an economic recession;
changes in federal, state and/or local 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 concepts;
our ability to execute our business strategy effectively;
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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;
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;
government mandated dining room closures and/or dining rooms operating at limited capacity due to health
epidemics or pandemics;
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 significantly
fluctuate.
The development and/or acquisition of new restaurant concepts may not contribute to our growth.
The development of new restaurant concepts, including Bubba’s 33 and Jaggers, created internally or acquired as a
part of our other strategic initiatives may not be as successful as our experience in the development of the Texas
Roadhouse concept. These concepts may have lower brand awareness and less operating experience than most Texas
Roadhouse restaurants. In addition, they may have a higher initial investment cost and/or a lower per person average
check amount. As a result, the development and/or acquisition of new restaurant 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 expansion and/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
and/or acquisition of new restaurant concepts. These decisions could limit or delay our overall long-term growth.
Additionally, expansion and/or acquisition of new restaurant concepts might divert our management’s attention from
other business concerns or initiatives and could have an adverse impact on our core Texas Roadhouse business.
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Our expansion into international markets presents increased economic, political, regulatory and other risks.
As of December 27, 2022, our operations include 38 Texas Roadhouse franchise restaurants in ten countries outside
the United States, and we expect to have further international expansion in the future with one or more of our concepts.
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 with the Texas Roadhouse concept 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 concepts 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 royalties, revenue and expenses of our
international operations and expose us to foreign currency exchange rate risk;
difficulties in complying with local laws, regulations, and customs in foreign jurisdictions;
unexpected changes in regulatory requirements or tariffs on goods needed to construct and/or operate our
restaurants;
political or social unrest, economic instability and destabilization of a region;
effects of actual or threatened terrorist attacks;
health concerns from global pandemics;
compliance with U.S. laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions;
differences in 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
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(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 while also maintaining
our culture and brand standards;
risks inherent in accurately assessing the value, future growth potential, strengths, weaknesses, contingent and
other liabilities and potential profitability of acquisition candidates, and our ability to achieve projected
economic and operating synergies, without impacting our underlying business; and
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the diversion of management’s attention from other business concerns.
Future acquisitions of existing restaurants from our franchisees or other strategic partners, which may be
accomplished through a cash purchase transaction, the issuance of shares of common stock or a combination of both,
could have a dilutive impact on holders of our common stock, and result in the incurrence of debt and contingent
liabilities and impairment charges related to goodwill and other tangible and intangible assets, any of which could harm
our business and financial condition. Additionally, following a franchise acquisition, we may be required to incur
substantial capital improvement costs to meet company standards, which could impact our return on such acquisition.
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 concepts. In addition, we may experience dilution of the goodwill
associated with our concepts as they become 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. 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 and real estate taxes for the balance of the lease term. We also are
subject to landlord actions that could negatively impact our business or operations.
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 27, 2022, we operated a total of 81 company restaurants in Texas and 44 company restaurants in
Florida. As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including
any state mandated changes in minimum and tipped wage rates and economic pressures that may result in lower sales
and profits at our restaurants. 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
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operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics, 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 food offerings, particularly beef, could harm our business. 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, pandemics or other periods of uncertainty. 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.
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, hourly 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, or
a federal mandate prohibiting such credits; 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.
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.
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We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their
proprietary rights. Any such claim, whether or not it has merit, could be time-consuming, result in costly litigation,
cause delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements. As
a result, any such claim could have a material adverse effect on our business, results of operations, financial condition or
liquidity.
Issues relating to ESG topics could adversely affect our operating results.
Entities across all industries are facing increased interest related to their ESG compliance and practices. Evolving
consumer and investor interest and preferences as well as governmental regulation may result in additional transparency,
due diligence, reporting and specific target-setting with regard to our business and supply chain that could result in
additional costs to comply with such demands. Failure to comply with the increased demands could result in public or
investor scrutiny and/or litigation and could have an adverse effect on our business. Establishing targets or making other
public commitments due to these demands, without a full or complete understanding of the cost or operational impact of
changes in our supply chain or operating model, could also adversely affect our business and financial condition.
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 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.
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 have significant adverse effect on our financial condition or results
of operations. Further, adverse publicity resulting from these claims may hurt our business.
23
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, cybersecurity and property insurance programs. Unanticipated changes in the actuarial assumptions and
management estimates underlying our reserves for these losses could result in significantly different amounts of expense
under these programs, which could have a material adverse effect on our financial condition, results of operations and
liquidity.
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, 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 revenue 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 significantly 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 review the value of our goodwill on an annual basis and also 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.
24
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 and our
ability to develop future successors of such personnel as a part of our succession planning. Our future performance will
depend on our ability to motivate and retain these and other key officers, employees and managers, particularly regional
market partners, market partners and managing partners. Competition for these employees is intense. The loss of the
services of members of our senior management team or other key officers or managers or the inability to attract
additional qualified personnel as needed could significantly 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 Information Technology and Privacy
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 and various other processes and transactions. This reliance
has significantly increased in recent years 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 as our guests are increasingly
using our website and digital applications to place and pay for their orders. Our point-of-sale processing in our
restaurants includes collection of cash, credit cards, debit cards, gift cards 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. Additionally, as we become
increasingly reliant on digital ordering and payment as a sales channel, our business could be negatively impacted if we
are unable to successfully implement, execute or maintain our consumer-facing digital initiatives.
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 or errors to 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.
We have disaster recovery procedures and business continuity plans in place to address 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.
25
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, including such processes as information
technology, gift card tracking, credit and debit card authorization and processing, insurance claims processing,
unemployment claims processing, payroll tax filings, vendor payment processing and other accounting processes. We
continually evaluate our other business processes to determine if additional outsourcing is a viable, and the most
appropriate, 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.
New, modified and existing privacy and data protection laws and regulations may result in significant costs and
compliance challenges and adversely affect our business and financial condition. These privacy laws and regulations,
which are constantly evolving, may be interpreted by regulatory authorities in new and differing manners and such
interpretations may be inconsistent among jurisdictions. We may incur increased costs to comply with increasingly
demanding privacy laws and regulations. We could also be subject to government enforcement actions, private litigation
and adverse publicity including reputational damage and loss of guest confidence.
We receive and maintain certain personal, financial or other information about our guests, vendors and employees.
In 2022, approximately 85% 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 privacy and data protection 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 (or other persons or entities with which we do
business with) fail to comply with such 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, 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.
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, including increased costs arising from federal and/or state
mandated requirements. 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
26
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 four beef suppliers with all of our beef coming from the
United States or Canada. 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 any regulatory changes resulting from any of the foregoing would adversely impact our operating expenses.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest
satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.
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, personal or public health concerns 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. In addition, regulatory actions
which result in changes to healthcare eligibility, design and cost structure could occur. Any increases in minimum
and/or tipped wages or increases in employee benefits costs will result in higher labor costs.
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.
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.
27
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 chains. 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.
The food service industry is affected by litigation and publicity concerning food quality, health and other issues,
which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.
Food service businesses can be adversely affected by litigation and complaints from guests, consumer groups or
government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming
from one restaurant or a limited number of restaurants. Adverse publicity about these allegations may negatively affect
us, regardless of whether the allegations are true, by discouraging guests from eating at our restaurants. We could also
incur significant liabilities if a lawsuit or claim results in a decision against us or litigation costs regardless of the result.
Our business could be adversely affected by our inability to respond to or effectively manage social media.
As part of our marketing strategy, we utilize social media platforms to promote our concepts 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, 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 impact on our
business.
Health, social and environmental concerns relating to the consumption or sourcing 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 concerns about the consumption or
sourcing 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 or social and environmental concerns about the sourcing of food products throughout our supply
chain. Future regulatory action may occur which could result in further changes in the nutritional and environmental
disclosure requirements. We cannot make any assurances regarding our ability to effectively respond to changes in
consumer perceptions and to adapt our menu offerings to prevailing trends. The imposition of menu-labeling and food
sourcing laws or regulations could have an adverse effect on our results of operations and financial position, as well as
the restaurant industry in general. The labeling and sourcing 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
28
our restaurants. If we react to labeling or sourcing 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, social and environmental concerns or negative publicity or as a result of a change in our menu or concept
could significantly 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 concepts 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.
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. While we attempt to minimize the risk, we cannot assure that all food items are properly maintained
during transport throughout the supply chain and that our employees will identify all products that may be spoiled and
should not be used in our restaurants. If our guests become ill from food-borne illnesses, we could be forced to
temporarily close some restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants,
could subject us or our suppliers to a food recall.
In addition to the novel coronavirus that causes COVID-19, the United States and other countries have experienced,
or may experience in the future, outbreaks of viruses, such as Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and
H1N1. To the extent that a virus is food-borne, future outbreaks may adversely affect the price and availability of
certain food products and cause our guests to eat less of a product which may have a significant adverse effect on our
business.
Risks Related to Our Corporate Structure
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 (the "Board"). 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, 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 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
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,
including discouraging attempts that might result in a premium over the market price for our common stock.
29
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, macro-economic conditions and other factors that our Board may
deem relevant. There can be no assurance that we will continue to pay dividends or repurchase our common stock at the
same levels we have historically (if at all).
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 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 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.
Failure to achieve and maintain effective internal control over financial reporting may negatively impact our
business and our financial results.
The Company is responsible for establishing and maintaining effective internal control over financial reporting.
Despite its inherent limitations, effective internal control over financial reporting helps provide reasonable assurance
regarding the reliability of financial reporting for external purposes. A significant accounting error correction, financial
reporting failure or material weakness in internal control over financial reporting could cause results in our consolidated
financial statements that do not accurately reflect our financial condition, a loss of investor confidence and subsequent
decline in the market price of our common stock, increase our costs and regulatory scrutiny, and lead to litigation or
result in negative publicity that could damage our reputation.
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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 27, 2022, we leased 133,023 square feet. Our lease expires on October 31, 2048, including all applicable
extensions.
Of the 597 company restaurants in operation as of December 27, 2022, we owned 150 locations and leased
447 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
3
2
4
2
—
—
1
5
1
1
3
1
—
2
—
1
3
4
—
12
2
—
3
—
—
1
—
39
1
—
6
—
1
4
2
150
6
2
15
7
5
10
5
2
37
12
5
16
12
8
4
13
8
3
8
9
13
6
2
15
3
4
1
10
6
18
17
2
23
6
2
23
3
9
1
17
42
9
1
15
2
3
7
—
447
9
2
20
8
6
17
5
3
44
16
6
19
25
11
6
17
10
3
8
10
18
7
3
18
4
4
3
10
7
21
21
2
35
8
2
26
3
9
2
17
81
10
1
21
2
4
11
2
597
31
Additional information concerning our properties and leasing arrangements is included in Note 2(h), Note 2(i) 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
Information regarding legal proceedings is included in Note 13 to the Consolidated Financial Statements appearing
in Part II, Item 8 of this Annual Report on Form 10-K.
ITEM 4—MINE SAFETY DISCLOSURES
Not applicable.
32
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 15, 2023 was 159.
On February 14, 2023, our Board of Directors (the "Board") declared a quarterly dividend of $0.55 per share of
common stock which will be distributed on March 24, 2023 to shareholders of record at the close of business on
March 8, 2023. The declaration and payment of cash dividends on our common stock is at the discretion of our Board,
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 approved our first stock repurchase program. From inception through December 27, 2022, we
have paid $633.5 million through our authorized stock repurchase programs to repurchase 21,041,442 shares of our
common stock at an average price per share of $30.11. On March 17, 2022, the Board approved a stock repurchase
program under which we may repurchase up to $300.0 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 31, 2019 that
authorized the Company to repurchase up to $250.0 million of our common stock. All repurchases to date have been
made through open market transactions. In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common
stock. This includes $133.1 million repurchased under our current authorized stock repurchase program and
$79.7 million repurchased under our prior authorization. For the 13 week period ended December 27, 2022, we did not
repurchase any shares of our common stock. As of December 27, 2022, $166.9 million remains authorized for stock
repurchases.
33
Stock Performance Graph
The following graph sets forth the cumulative total shareholder return experienced by holders of the Company’s
common stock compared to the cumulative total return of the broad market indices of the S&P 500 Index and Russell
3000 Index as well as the industry specific indices of the S&P Composite 1500 Restaurant Sub-Index and Russell 3000
Restaurant Index for the five year period ended December 27, 2022, 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 26, 2017 and the
reinvestment of all dividends paid during the period of the securities comprising the indices.
Historically, we have presented the performance graph by comparing our cumulative total shareholder return
against the Russell 3000 Index and Russell 3000 Restaurant Index. In 2022, we transitioned to the S&P 500 Index and
S&P Composite 1500 Restaurant Sub-Index as these are more widely utilized industry indices. The performance graph
below presents all the indices used for this transition year.
Note: The stock price performance shown on the graph below does not indicate future performance.
Comparison of Cumulative Total Return Since December 26, 2017
200
180
160
140
120
100
80
TXRH-US
S&P 500 Index
S&P Composite 1500
Russell 3000
Russell 3000 Restaurant Index
12/26/2017 12/24/2018 12/31/2019 12/29/2020 12/28/2021 12/27/2022
Texas Roadhouse, Inc. . . . . . . . . . . . . . . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P Composite 1500 Restaurant Sub-Index . .
Russell 3000 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Russell 3000 Restaurant Index . . . . . . . . . . . . . .
$ 100.00
$ 100.00
$ 100.00
$ 100.00
$ 100.00
$ 106.69
$ 89.44
$ 104.87
$ 88.62
$ 100.16
$ 108.05
$ 125.44
$ 135.44
$ 123.87
$ 130.00
$ 152.59 $ 175.44
$ 147.34 $ 191.93
$ 161.06 $ 196.79
$ 148.62 $ 188.83
$ 147.41 $ 170.36
$ 188.43
$ 156.08
$ 181.84
$ 151.48
$ 159.21
ITEM 6—RESERVED
34
ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion and analysis below of the financial condition and results of operations for Texas Roadhouse, Inc.
(collectively, the "Company," "we," "our" and/or "us") should be read in conjunction with the consolidated financial
statements and the notes to such financial statements (pages F-1 to F-28), "Forward-looking Statements" (page 3) and
Risk Factors set forth in Item 1A. For discussion and analysis of our financial condition and results of operations for
fiscal year 2021 compared to fiscal year 2020, see Part II, Item 7 of our 2021 Form 10-K.
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 three concepts with 697 restaurants in 49 states and ten foreign
countries. As of December 27, 2022, our 697 restaurants included:
•
•
597 "company restaurants," of which 577 were wholly-owned and 20 were majority-owned. Of the
597 restaurants we owned and operated at the end of 2022, we operated 552 as Texas Roadhouse restaurants,
40 as Bubba’s 33 restaurants and five as Jaggers restaurants. 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 majority-owned is reflected in the line
item entitled "Net income attributable to noncontrolling interests" in our consolidated statements of income and
comprehensive income.
100 "franchise restaurants," 23 of which we have a 5.0% to 10.0% ownership interest. All of the franchise
restaurants operated as Texas Roadhouse restaurants. The income derived from our minority interests in these
franchise restaurants is reported in the line item entitled "Equity income from investments in unconsolidated
affiliates" in our consolidated statements of income and comprehensive income. Additionally, we provide
various management services to these 23 franchise restaurants, as well as five additional franchise restaurants
in which we have no ownership interest. Of the 100 franchise restaurants, 62 were domestic restaurants and 38
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 58 of the 62 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 ends on the last Tuesday in December. Fiscal year 2022 and fiscal year 2021 were
both 52 weeks in length, and 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 limited capacity or seating in dining
rooms while others allowed to-go or curbside service only. In 2022, all of our domestic company and franchise locations
operated without restriction. We also experienced and expect to continue to experience commodity inflation and certain
food and supply shortages as well as a more competitive labor market. To the extent these challenges persist, we will
continue to experience increased costs.
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
35
where we believe a significant demand for our restaurants exists because of population size, income levels, the
presence of shopping and entertainment centers and a significant employment base. In addition, we continue to
pursue opportunities to acquire domestic franchise locations to expand our company restaurant base.
We have entered into area development and franchise agreements for the development and operation of Texas
Roadhouse restaurants in numerous foreign countries and one U.S. territory. We have also entered into area
development agreements for Jaggers, our fast-casual concept. We expect our first Jaggers franchise restaurant
to open in 2023.
In 2022, we opened 23 company restaurants while our franchise partners opened seven restaurants
internationally. The company restaurants included 18 Texas Roadhouse restaurants, four Bubba’s
33 restaurants, and one Jaggers restaurant. In 2023, we plan to open approximately 25 to 30 Texas Roadhouse
and Bubba’s 33 company restaurants and three Jaggers company restaurants. In addition, we expect as many as
nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise
openings in 2023.
In 2022, we completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an
aggregate purchase price of $33.1 million. On our first day of fiscal year 2023, we completed the acquisition of
eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of approximately
$39.0 million.
• Maintaining and/or Improving Restaurant Level Profitability. We continue to focus on driving comparable
restaurant sales to maintain or improve store level profitability. This includes a pricing strategy that balances
the impacts of inflationary pressures with our long-term value positioning. In terms of driving traffic at our
restaurants, 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 continue to drive various localized marketing
programs, focus on speed of service, increase throughput by adding seats and parking at certain restaurants and
continue to enhance the guest digital experience.
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. We also continue to make a number of building modifications and/or expansions to existing
restaurants in order to better accommodate our increased dine-in and to-go sales. These modifications include
room expansions which add additional guest seating, the addition of to-go areas, and cooler expansions to
accommodate higher inventory levels.
In recent years, we have relocated several existing Texas Roadhouse locations at or near the end of their
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.
• Leveraging Our Scalable Infrastructure. To support our growth, we have made investments in our
infrastructure across all critical functions, 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 (the
"Board") declared our first quarterly dividend of $0.08 per share of common stock which has consistently
grown over time. In 2022, the Board declared a quarterly cash dividend of $0.46 per share of common stock.
On February 14, 2023, the Board declared a quarterly cash dividend of $0.55 per share of common stock,
representing a 20% increase compared to the quarterly dividend declared in the prior year period.
36
In 2008, the Board approved our first stock repurchase program. From inception through December 27, 2022,
we have paid $633.5 million through our authorized stock repurchase programs to repurchase 21,041,442 shares
of our common stock at an average price per share of $30.11. On March 17, 2022, the Board approved a stock
repurchase program under which we may repurchase up to $300.0 million of our common stock. In 2022, we
paid $212.9 million to repurchase 2,734,005 shares of our common stock. This includes $133.1 million
repurchased under our current authorized stock repurchase program and $79.7 million repurchased under our
prior authorization. As of December 27, 2022, $166.9 million remains authorized for stock repurchases.
Key Measures We Use To Evaluate Our Company
Key measures we use to evaluate and assess our business include the following:
• 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 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
company average.
•
Store Weeks and New Restaurant Openings. 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. Store week growth is driven by new restaurant openings and franchise
acquisitions. New restaurant openings reflect the number of restaurants opened during a particular fiscal
period, excluding store relocations. We consider store openings that occur simultaneous with a store closure in
the same trade area to be a relocation.
• 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 U.S.
generally accepted accounting principles ("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
core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.
In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations,
including general and administrative expenses, but do not have a direct impact on core restaurant-level
operational efficiency and performance. We also exclude pre-opening expense as it occurs at irregular intervals
and would impact comparability to prior period results. 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.
37
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.
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 international franchisees also typically pay an initial
franchise fee and/or development fee for each new restaurant or territory.
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.
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 credit card fees, utilities, supplies, repairs and maintenance,
equipment rent, property taxes, profit sharing incentive compensation for our restaurant managing partners and market
partners and general liability insurance.
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 and training team
compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. On average,
approximately 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 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 are comprised of expenses associated
with corporate and administrative functions that support development and restaurant operations and provide an
infrastructure to support future growth. This includes software hosting fees, professional fees, group insurance,
advertising expense, salary 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, Net. Interest expense, net includes interest expense on our debt or financing obligations including
the amortization of loan fees reduced by earnings on cash and cash equivalents and capitalized interest.
Equity Income (loss) from Unconsolidated Affiliates. Equity income (loss) includes our percentage share of net
income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates. As of
38
December 27, 2022 and December 28, 2021, we owned a 5.0% to 10.0% equity interest in 23 and 24 domestic franchise
restaurants, respectively. 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 that we fully impaired in 2021.
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.
2022 Financial Highlights
Total revenue increased $551.0 million or 15.9% to $4.0 billion in 2022 compared to $3.5 billion in 2021 primarily
due to an increase in store weeks and an increase in comparable restaurant sales. Store weeks and comparable restaurant
sales increased 6.1% and 9.7%, respectively, at company restaurants in 2022. The increase in store weeks was due to
new store openings and the acquisition of franchise restaurants. The increase in comparable restaurant sales was due to
an increase in per person average check and an increase in guest traffic.
Net income increased $24.5 million or 10.0% to $269.8 million in 2022 compared to $245.3 million in 2021
primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and
administrative expenses and higher depreciation and amortization expense. Diluted earnings per share increased 13.5%
to $3.97 from $3.50 in the prior year due to the increase in net income and the benefit of share repurchases.
Restaurant margin dollars increased $45.8 million or 7.9% to $627.5 million in 2022 compared to $581.7 million in
2021 primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased to 15.7%
in 2022 compared to 16.9% in 2021. The decrease in restaurant margin, as a percentage of restaurant and other sales,
was due to commodity and wage and other labor inflation partially offset by higher sales.
39
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, net . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity income (loss) from investments in
unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . .
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income including noncontrolling interests . . . . . . .
Net income attributable to noncontrolling interests . . . .
Net income attributable to Texas Roadhouse, Inc.
and subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NM – Not meaningful
2022
$
Results of Operations
Fiscal Year Ended
%
$
(In thousands)
2021
%
3,988,791
26,128
4,014,919
99.3
0.7
100.0
3,439,176
24,770
3,463,946
99.3
0.7
100.0
1,378,192
1,319,959
66,834
596,305
21,883
137,237
1,600
172,712
3,694,722
320,197
124
1,239
321,312
43,715
277,597
7,779
269,818
34.6
33.1
1.7
14.9
0.5
3.4
NM
4.3
92.0
8.0
NM
NM
8.0
1.1
6.9
0.2
6.7
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
NM
8.5
1.1
7.3
0.2
7.1
Reconciliation of Income from Operations to Restaurant Margin
Fiscal Year Ended
2022
2021
(In thousands, except per store week)
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 320,197
$ 297,192
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,128
21,883
137,237
1,600
172,712
$ 627,501
$ 20,721
15.7%
24,770
24,335
126,761
734
157,480
$ 581,732
$ 20,389
16.9%
40
Restaurant Unit Activity
Balance at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company openings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise openings - International . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise closings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
667
23
—
—
7
—
697
Texas
Roadhouse
627
18
—
—
7
—
652
Bubba's 33
36
4
—
—
—
—
40
Jaggers
4
1
—
—
—
—
5
December 27, 2022 December 28, 2021
Company - Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Bubba's 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Company - Jaggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise - Texas Roadhouse - International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
552
40
5
62
38
697
526
36
4
70
31
667
41
Restaurant and Other Sales
Restaurant and other sales increased 16.0% in 2022 compared to 2021. 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 in average unit volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase in restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total increase in restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
2021
6.1 %
9.4 %
0.4 %
15.9 %
0.1 %
16.0 %
5.0 %
36.7 %
2.6 %
44.3 %
0.2 %
44.5 %
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,284
28,531
9.7 %
37.8 %
Texas Roadhouse restaurants:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,127
26,622
9.7 %
$
$ 6,962
37.6 %
6,358
Weekly sales by group:
Comparable restaurants (499 and 473 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume restaurants (20 and 18 units)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurants less than six months old (33 and 35 units). . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 134,085
$ 128,665
$ 135,401
$ 123,064
$ 104,545
$ 124,142
Bubba's 33 restaurants:
Store weeks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,936
10.5 %
1,747
43.0 %
$ 5,620
$
5,090
Weekly sales by group:
Comparable restaurants (30 and 25 units) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average unit volume restaurants (4 and 5 units)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurants less than six months old (6 and 6 units). . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 108,132
$ 107,636
$ 121,791
$ 101,097
$ 81,813
$ 115,554
(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, excluding sales from restaurants permanently closed during the period, if applicable.
The increase in restaurant sales for 2022 was primarily attributable to an increase in store weeks and an increase in
comparable restaurant sales. The increase in store weeks was driven by the opening of new restaurants and the
acquisition of franchise restaurants. The increase in comparable restaurant sales growth was driven primarily by
increases in our per person average check as shown in the table below.
Guest traffic counts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per person average check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparable restaurant sales growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
2021
1.9 %
7.8 %
9.7 %
27.6 %
10.2 %
37.8 %
42
The increase in 2022 guest traffic counts was due to an increase in dining room traffic partially offset by a decrease
in to-go traffic. The increase in dining room traffic counts was primarily driven by all of our company locations
operating without capacity restrictions for the entire 2022 period. To-go sales as a percentage of total restaurant sales
were 13.3% in 2022 compared to 17.1% in 2021.
Per person average check includes the benefit of menu price increases of approximately 3.2% and 2.9%
implemented in Q2 2022 and Q4 2022, respectively, as well as increases of 1.8% and 4.2% implemented in Q2 2021 and
Q4 2021, respectively.
In 2022, we opened 23 company restaurants, which included 18 Texas Roadhouse restaurants, four Bubba’s
33 restaurants and one Jaggers restaurant. We also completed the acquisition of eight franchise restaurants.
In 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and three
Jaggers company restaurants. On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition
of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million. In total, we
expect store week growth of at least 6% in 2023, including the impact of the franchise restaurants acquired.
Other sales primarily represents the net impact of amortization of third-party gift card fees and gift card breakage
income. The net impact was ($6.4) million and ($6.1) million for 2022 and 2021, respectively. The change was driven
primarily by favorable adjustments of $6.6 million and $4.8 million recorded in 2022 and 2021, respectively. These
adjustments related to a change in our estimate of breakage due 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 increased. This shift in
redemption patterns was primarily due to the increase in sales through our third-party gift card program. As a result, we
adjusted our expected breakage assumptions on unredeemed gift cards. The adjustments were partially offset by an
increase in amortization of third-party fees due to an increase in sales through our third-party gift card program.
Franchise Royalties and Fees
Franchise royalties and fees increased by $1.4 million or 5.5% compared to 2021 due to comparable restaurant sales
growth and new store openings partially offset by decreased royalties related to the eight franchise acquisitions in 2022.
Franchise comparable restaurant sales increased 10.3% in 2022.
In 2022, our franchise partners opened seven Texas Roadhouse international restaurants. In 2023, we expect as
many as nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise
openings.
Food and Beverage Costs
Food and beverage costs, as a percentage of restaurant and other sales, increased to 34.6% in 2022 from 33.6% in
2021 primarily due to commodity inflation partially offset by the benefit of a higher guest check. Commodity inflation
was 10.8% in 2022, with higher costs across the basket.
For 2023, we currently expect commodity cost inflation of 5% to 6% for the year with prices locked for
approximately 40% 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, increased to 33.1% in 2022 compared to
32.7% in 2021. This increase was primarily due to wage and other labor inflation of 8.3% in 2022. Wage and other
labor inflation was primarily due to higher wage and benefit expense driven by labor market pressures along with
increases in state-mandated minimum and tipped wage rates and increased investment in our people. In addition, a
higher mix of dining room sales versus to-go sales also contributed to the increase. The increase was partially offset by
the benefit of a higher guest check as well as a decrease in group insurance and workers’ compensation expense due to
favorable claims experience of $7.2 million as compared to the prior year.
43
In 2023, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of 5% to 6%
driven by labor market pressures, increases in state-mandated minimum and tipped wages and increased investment in
our people.
Restaurant Rent Expense
Restaurant rent expense, as a percentage of restaurant and other sales, remained flat at 1.7% in both periods
presented. The increase in average unit volume was 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 14.9% in 2022
compared to 15.1% in 2021. The decrease was primarily due to the increase in average unit volume and lower supplies
and bonus expense partially offset by higher credit card charges and repair and maintenance costs.
Restaurant Pre-opening Expenses
Pre-opening expenses were $21.9 million in 2022 compared to $24.3 million in 2021. Pre-opening costs will
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
Depreciation and amortization expenses, as a percentage of revenue, decreased to 3.4% in 2022 compared to 3.7%
in 2021. The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation at
new restaurants and increased amortization of intangible assets generated from franchise restaurant acquisitions.
Impairment and Closure Costs, Net
Impairment and closure costs, net were $1.6 million and $0.7 million in 2022 and 2021, respectively. In 2022,
impairment and closure costs, net included $1.7 million related to the impairment of land, building and operating lease
right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing closure costs.
This was partially offset by a $0.7 million gain on the sale of land and building that was previously classified as assets
held for sale. 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.
General and Administrative Expenses
General and administrative expenses, as a percentage of total revenue, decreased to 4.3% in 2022 compared to 4.5%
in 2021. The decrease was primarily driven by the increase in average unit volume and lower legal settlement expense
partially offset by increased managing partner conference expense of $2.5 million.
Interest Expense, Net
Interest expense was $0.1 million in 2022 compared to $3.7 million in 2021. The decrease was primarily driven by
increased earnings on our cash and cash equivalents and decreased borrowings on our amended revolving credit facility.
Income Taxes
Our effective tax rate increased to 13.6% in 2022 compared to 13.5% in 2021. The increase was primarily due to
lower excess tax benefits related to our share-based compensation program partially offset by an increase in the FICA tip
tax credit. For 2023, we expect our effective tax rate to be approximately 14% based on forecasted operating results,
excluding the impact of any legislative changes enacted.
44
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):
Texas Roadhouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bubba's 33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52 Weeks Ended
December 27, 2022
December 28, 2021
$ 600,197 16.0 % $ 552,039 16.9 %
26,934
370
$ 627,501
28,862
12.7
831
2.6
15.7 % $ 581,732
16.6
7.6
16.9 %
In our Texas Roadhouse reportable segment, restaurant margin dollars increased $48.2 million or 8.7% in 2022.
The increase was primarily due to higher sales which were partially offset by commodity and wage and other labor
inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 16.0% in 2022 from
16.9% in 2021. Restaurant margin was negatively impacted by commodity and wage and other labor inflation which
was partially offset by the benefit of an increase in comparable restaurant sales.
In our Bubba’s 33 reportable segment, restaurant margin dollars decreased $1.9 million or 6.7% in 2022. In
addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 12.7% in 2022 from 16.6% in
2021. These decreases were primarily driven by commodity and wage and other labor inflation which was partially
offset by the benefit of an increase in comparable restaurant sales.
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 financing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . .
$ 511,725 $ 468,826
(195,104)
(301,232)
$ (161,784) $ (27,510)
(263,734)
(409,775)
Fiscal Year Ended
2022
2021
Net cash provided by operating activities was $511.7 million in 2022 compared to $468.8 million in 2021. This
increase was primarily due to an increase in net income, an increase in non-cash items such as depreciation and
amortization and a favorable increase in working capital. The favorable increase in working capital was partially offset
by the final remittance of our deferred payroll tax liability of $23.0 million related to the Coronavirus Aid, Relief, and
Economic Security 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.
45
Net cash used in investing activities was $263.7 million in 2022 compared to $195.1 million in 2021. The increase
was due to the acquisition of eight franchise restaurants for a net purchase price of $33.1 million as well as an increase in
capital expenditures, primarily driven by an increase in new company restaurant construction and refurbishments and
relocations of existing restaurants.
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 27, 2022, 150 of the 597 company restaurants have been developed on land which we
own.
The following table presents a summary of capital expenditures (in thousands):
2022
2021
New company restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refurbishment or expansion of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . .
Relocation of existing restaurants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures related to Support Center office . . . . . . . . . . . . . . . . . . . . . . . . .
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
139,210 $
84,414
18,478
4,019
246,121 $
123,044
64,146
8,374
5,128
200,692
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 new restaurant construction costs or relocating existing restaurants and may also include costs
necessary to ensure that our infrastructure is able to support a larger restaurant base. In 2023, we expect our capital
expenditures to be approximately $265 million as we currently plan to open approximately 25 to 30 Texas Roadhouse
and Bubba’s 33 company restaurants. We also expect to have as many as four relocations in 2023. In addition, on the
first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants for an aggregate
purchase price of approximately $39.0 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 $409.8 million in 2022 compared to $301.2 million in 2021. The increase
is primarily due to the significant increases in share repurchases and our dividend payment. These increases were
partially offset by a decrease in repayments made on our amended revolving credit facility.
On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to
$300.0 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 31, 2019. All repurchases to date under our stock repurchase
programs have been made through open market transactions. The timing and amount of any repurchases will be
determined by management under parameters established by the Board, based on an evaluation of our stock price,
market conditions and other corporate considerations.
In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock. This includes $133.1 million
repurchased under our current authorized stock repurchase program and $79.7 million repurchased under our prior
authorization. In 2021, we paid $51.6 million to repurchase 584,932 shares of our common stock. As of December 27,
2022, $166.9 million remained under our authorized stock repurchase program.
On February 17, 2022, our Board authorized the payment of a quarterly dividend of $0.46 per share of common
stock. The payment of dividends totaled $124.1 million and $83.7 million in 2022 and 2021, respectively. On
February 14, 2023, our Board declared a quarterly cash dividend of $0.55 per share of common stock.
We paid distributions of $7.8 million and $8.2 million in 2022 and 2021, respectively, to equity holders of our
majority-owned company restaurants.
46
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.
The terms of the amendment require us to pay interest on outstanding borrowings at the London Interbank Offered
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 agreement
also provides an Alternate Base Rate that may be substituted for LIBOR.
As of December 27, 2022, we had $50.0 million outstanding on the amended revolving credit facility and
$233.5 million of availability, net of $16.5 million of outstanding letters of credit. 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. These outstanding amounts are included as long-term debt on our
consolidated balance sheets.
The interest rate for the $50.0 million outstanding as of December 27, 2022 was 5.21%. The interest rate for the
$100.0 million outstanding as of December 28, 2021 was 0.98%.
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 27, 2022 and
December 28, 2021.
Contractual Obligations
The following table summarizes the amount of payments due under specified contractual obligations as of
December 27, 2022 (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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate operating lease obligations . . . . . . . . .
Capital obligations. . . . . . . . . . . . . . . . . . . . . . . . . .
Total contractual obligations(2) . . . . . . . . . . . . . . .
$
50,000
2,750
13,208
1,191,064
205,663
$ 1,462,685
$
—
—
2,919
66,675
205,663
$ 275,257
$
—
—
5,840
132,401
—
—
2,750
2,965
861,414
—
$ 138,241 $ 182,058 $ 867,129
50,000 $
—
1,484
130,574
—
(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 27, 2022 for our variable rate debt and assumed $50.0 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 Accounting Standards Codification 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. Refer to
Notes 5, 8 and 13 to the consolidated financial statements for details of contractual obligations.
47
Guarantees
As of December 27, 2022 and December 28, 2021, we were contingently liable for $11.3 million and $12.2 million,
respectively, for seven lease guarantees. 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 27, 2022 as the
likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered
significant.
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 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 significantly 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 is usually a period of 25 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 2022, we recorded impairment and closure costs, net of $1.6 million. This included $1.7 million related to the
impairment of land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and
$0.6 million related to ongoing closure costs. This was partially offset by a gain of $0.7 million associated with the sale
of land and building that was previously classified as assets held for sale. Refer to Note 17 in the consolidated financial
statements for further discussion regarding closures and impairments recorded in 2022, 2021 and 2020.
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
48
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 27, 2022, our Texas Roadhouse reporting unit had allocated goodwill of $148.7 million. No other
reporting units had goodwill balances. 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 from the restaurant level. As a result
of this change, in 2021, 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 2022, we performed the
goodwill impairment analysis at the concept level.
In performing the qualitative assessment, we reviewed 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 the 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. Changes in circumstances existing at the
measurement date or at other times in the future could result in an impairment loss. Refer to Note 17 in the consolidated
financial statements for further discussion regarding closures and impairments recorded, if any.
Effects of Inflation
We are currently operating in a period of high inflation, led primarily by commodity cost and wage and other labor
inflation. Commodity cost inflation is due to increased costs incurred by our vendors related to increased labor,
transportation, packaging, and raw materials costs. Wage and other labor inflation is driven by higher wage and benefit
expense due to by labor market pressures along with increases in state-mandated minimum and tipped wage rates and
increased investment in our people. Some of the impacts of 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 27, 2022, we
had $50.0 million outstanding on our amended credit agreement. This outstanding amount is included as long-term debt
on our consolidated balance sheets.
The interest rate for the $50.0 million outstanding on our amended revolving credit facility as of December 27,
2022 was 5.21%. Should interest rates based on these variable rate borrowings increase by one percentage point, our
estimated annual interest expense would increase by $0.5 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.
49
We are subject to business risk as our beef supply is highly dependent upon four 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.
50
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 27, 2022.
Changes in internal control
There were no significant changes in the Company’s internal control over financial reporting that occurred during
the quarter ended December 27, 2022 that materially affected or are reasonably likely to materially affect, the
Company’s 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 27, 2022.
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 27, 2022 as stated in their report at F-3.
ITEM 9B—OTHER INFORMATION
None.
ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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 March 31, 2023.
51
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 March 31, 2023.
ITEM 11—EXECUTIVE COMPENSATION
Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.
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 March 31, 2023.
Equity Compensation Plan Information
As of December 27, 2022, shares of common stock authorized for issuance under our equity compensation plans are
summarized in the following table. Refer to Note 14 to the Consolidated Financial Statements for a description of the
plans.
Plan Category
Plans approved by stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plans not approved by stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Shares to Be
Issued Upon
Available for
Vest Date (1) Future Grants
6,598,721
—
6,598,721
524,439
—
524,439
(1) Total number of shares consist of 494,839 restricted stock units and 29,600 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 27, 2022.
ITEM 13—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.
ITEM 14—PRINCIPAL ACCOUNTANT FEES AND SERVICES
Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023.
52
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 27, 2022 and December 28, 2021 . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income and Comprehensive Income for the years ended December 27,
2022, December 28, 2021 and December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Stockholders’ Equity for the years ended December 27, 2022,
December 28, 2021 and December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 27, 2022, December 28, 2021
and December 29, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 27, 2022 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 27, 2022 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))
53
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
10.16
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))
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 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))
10.22* 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))
10.23* 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))
54
Exhibit
No.
Description
10.24* 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))
10.25* 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))
10.26* Employment Agreement between Registrant and Hernan E. Mujica entered into as of June 15, 2021 with an
10.27
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))
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)
10.28* 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))
10.29* 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))
10.30* 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))
10.31* 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))
10.32* Second Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald
L. Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current
Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.33* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Regina A.
Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report
on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.34* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and
Hernan E. Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant's
Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.35* First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and
Christopher C. Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant's
Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972))
10.36* Separation Agreement and Release of Claims dated January 5, 2023 by and between Tonya R. Robinson
and Texas Roadhouse Management Corp. (incorporated by reference to Exhibit 10.1 to the Registrant's
Current Report on Form 8-K dated January 4, 2023 (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
55
Exhibit
No.
101
Description
The following financial statements from the Texas Roadhouse, Inc. Annual Report on Form 10-K for the
year ended December 27, 2022, filed February 24, 2023, 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.
56
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
Chief Executive Officer, Director
Date: February 24, 2023
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
Chief Executive Officer, Director
(Principal Executive Officer)
February 24, 2023
/s/ KEITH V. HUMPICH
Keith V. Humpich
/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
Interim Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
February 24, 2023
Chairman of the Board, Director
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
February 24, 2023
Director
Director
Director
Director
Director
57
[This page intentionally left blank]
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 27, 2022 and December 28, 2021, 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 27, 2022, 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 27, 2022 and December 28, 2021, and the results of its operations and its cash flows for each of the years in
the three-year period ended December 27, 2022, 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 27, 2022, 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 24, 2023 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 17 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 27, 2022 were $1,270.3 million and $630.3 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 24, 2023
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 27, 2022, 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 27, 2022, 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 27, 2022 and December 28, 2021, 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 27, 2022, and the related notes (collectively, the consolidated
financial statements), and our report dated February 24, 2023 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 24, 2023
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 $50 at December 27, 2022 and
$17 at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net of accumulated depreciation of $968,036 at
December 27, 2022 and $869,375 at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net of accumulated amortization of $17,905 at December 27, 2022 and
$15,092 at December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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, 66,973,311 and
69,382,418 shares issued and outstanding at December 27, 2022 and December 28,
2021, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in-capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity. . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 27, 2022 December 28, 2021
$
173,861 $
335,645
150,264
38,015
5,097
29,604
396,841
1,270,349
630,258
148,732
5,607
73,878
2,525,665 $
25,490 $
105,560
335,403
54,544
434
35,264
95,315
652,010
677,874
50,000
7,979
20,979
89,161
1,498,003
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
—
—
67
13,139
999,432
1,012,638
15,024
1,027,662
2,525,665 $
69
114,504
943,551
1,058,124
15,360
1,073,484
2,511,952
$
$
$
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 27, December 28, December 29,
2021
2020
2022
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, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity income (loss) 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) and
($40), 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,988,791
26,128
4,014,919
$ 3,439,176 $ 2,380,177
17,946
2,398,123
24,770
3,463,946
1,378,192
1,319,959
66,834
596,305
21,883
137,237
1,600
172,712
3,694,722
320,197
124
1,239
321,312
43,715
277,597
7,779
269,818
—
269,818
3.99
3.97
67,643
67,920
1.84
$
$
$
$
$
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
106
245,400 $
119
31,374
3.52 $
3.50 $
0.45
0.45
$
$
$
69,709
70,098
$
1.20 $
69,438
69,893
0.36
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 31, 2019 . . . . . . . . . . . . . . . . 69,400,252
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income, net of tax . . . . . . . .
—
—
Noncontrolling interest contribution . . . . . . . . . . .
Distributions to noncontrolling interest holders . . .
—
Dividends declared ($0.36 per share) . . . . . . . . . .
—
Shares issued under share-based compensation
Additional
Paid-in-
Par
Value Capital
$ 69 $ 140,501
—
—
—
—
—
—
—
—
—
—
Other
$
Loss
Retained Comprehensive
Earnings
$ 775,649
31,255
—
—
—
(24,989)
(225) $
—
119
—
—
—
Roadhouse, Inc.
and
Subsidiaries
Noncontrolling
Interests
915,994 $
31,255
119
—
—
(24,989)
$
15,175
3,670
—
133
(3,432)
—
Total
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 . . . . . . . . . . . . . . . . .
—
—
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
$ 70 $ 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 . . . . . . . . . . . . . . . . .
—
—
Balance, December 28, 2021 . . . . . . . . . . . . . . . . 69,382,418
—
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Distributions to noncontrolling interest holders . . .
—
Acquisition of noncontrolling interest . . . . . . . . .
Dividends declared ($1.84 per share) . . . . . . . . . .
—
Shares issued under share-based compensation
(17,628)
(51,633)
38,139
$ 69 $ 114,504
—
—
(1,395)
—
—
—
$ 943,551
269,818
—
—
— (124,137)
—
—
—
—
$
$
plans including tax effects . . . . . . . . . . . . . . . .
474,771
—
—
—
Indirect repurchase of shares for minimum
tax withholdings . . . . . . . . . . . . . . . . . . . . . .
Repurchase of shares of common stock . . . . . . . .
(2,734,005)
—
Share-based compensation . . . . . . . . . . . . . . . . .
Balance, December 27, 2022 . . . . . . . . . . . . . . . . 66,973,311
(149,873) —
(2)
—
$ 67 $
(13,576)
(123,057)
36,663
13,139
—
(89,800)
—
$ 999,432
$
—
—
—
(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 $
269,818
—
(1,395)
(124,137)
—
—
—
15,360
7,779
(7,775)
(340)
—
(17,628)
(51,634)
38,139
$ 1,073,484
277,597
(7,775)
(1,735)
(124,137)
—
—
—
(13,576)
(212,859)
36,663
1,012,638 $
—
—
—
15,024
(13,576)
(212,859)
36,663
$ 1,027,662
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 (income) loss 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 investment in unconsolidated affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
December 27, December 28, December 29,
2022
2021
2020
$
277,597 $
253,314
$
34,925
137,237
9,456
5,206
1,770
(1,239)
1,022
33
36,663
11,062
(6,099)
(6,540)
5,775
5,408
33,799
(10,172)
5,953
1,889
2,147
5,268
(4,510)
511,725
(246,121)
(33,069)
316
2,269
12,871
(263,734)
(50,000)
—
—
(7,775)
(1,735)
307
(13,576)
(212,859)
(124,137)
(409,775)
(161,784)
335,645
173,861 $
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
1,547 $
25,910 $
34,689 $
3,186
39,789
23,087
$
$
$
$
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
3,890
3,776
14,808
$
$
$
$
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
Texas Roadhouse, Inc. (collectively, the "Company," "we," "our" and/or "us"), 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.
As of December 27, 2022, we owned and operated 597 restaurants and franchised an additional 100 restaurants in
49 states and ten foreign countries. Of the 597 company restaurants that were operating at December 27, 2022, 577 were
wholly-owned and 20 were majority-owned and we operated 552 as Texas Roadhouse restaurants, 40 as Bubba’s
33 restaurants and five as Jaggers restaurants. Of the 100 franchise restaurants, 62 were domestic and 38 were
international restaurants, all of which were operated as Texas Roadhouse restaurants.
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 and we operated 526 as Texas Roadhouse restaurants, 36 as Bubba’s
33 restaurants and four as Jaggers restaurants. Of the 101 franchise restaurants, 70 were domestic and 31 were
international restaurants, all of which were operated as Texas Roadhouse 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 limited capacity or seating in dining
rooms while others allowed to-go or curbside service only. In 2022, all of our domestic company and franchise
restaurants operated without restriction. In 2021 and 2020, all of our domestic company and franchise restaurants
operated under various forms of capacity restrictions, which included outdoor and/or to-go or curbside service only.
(2) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements present the financial position, results of operations and cash
flows of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have
been eliminated in consolidation.
As of December 27, 2022 and December 28, 2021, we had majority ownership in 20 restaurants. The portion of
income attributable to noncontrolling interests in these restaurants is reflected in the line item entitled "Net income
attributable to noncontrolling interests" in our consolidated statements of income and comprehensive income.
As of December 27, 2022 and December 28, 2021, we owned a 5.0% to 10.0% equity interest in 23 and
24 restaurants, respectively. Additionally, as of December 28, 2021, we owned a 40% interest in four non-Texas
Roadhouse restaurants in China that was fully impaired in 2021. The unconsolidated restaurants are accounted for using
the equity method. Our investments in these unconsolidated affiliates are included in other assets in our consolidated
balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our
consolidated statements of income and comprehensive income under equity income (loss) from investments in
unconsolidated affiliates.
(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 2022, 2021 and 2020 were 52 weeks in length.
F-9
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(c) 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 principles ("GAAP"). Significant items subject to such estimates and assumptions
include the carrying amount of property and equipment, goodwill, obligations related to insurance reserves, leases and
leasehold improvements, legal reserves, gift card breakage and third-party fees and income taxes. Actual results could
differ from those estimates.
(d) Segment Reporting
Operating segments are defined as components of a company that engage in business activities from which it may
earn revenue 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.
We have identified Texas Roadhouse, Bubba’s 33, Jaggers and our retail initiatives as separate operating segments.
In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments. For further discussion of
segment reporting, refer to Note 19.
(e) 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 include receivables from credit card companies as these balances are highly
liquid in nature and are settled within two to three business days. These amounted to $22.0 million and $26.4 million at
December 27, 2022 and December 28, 2021, respectively.
(f) 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 collection experience and the age of receivables. 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.
(g) Inventories
Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first-in, first-out)
or net realizable value.
(h) Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. 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
F-10
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more
option periods. Refer to Note 2(i) 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.
(i) Leases
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 real estate and restaurant equipment 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.
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.
Sale-leasebacks are transactions through which we sell previously acquired land at fair value and subsequently enter
into a lease agreement on the same land. The resulting lease agreement is evaluated to determine classification as an
operating or finance lease and is recorded based on the lease classification. Refer to Note 8 for further discussion of
leases.
(j) 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
F-11
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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, in 2021, 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 2022, we performed the goodwill impairment analysis at the concept
level.
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 2022 and 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 the 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.
In 2022 and 2021, we determined there was no goodwill impairment. In 2020, as a result of our annual goodwill
impairment analysis, we recorded goodwill impairment of $1.1 million. Refer to Note 7 for additional information
related to goodwill and intangible assets.
(k) 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, refer to Note 15 and Note 16.
(l) 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. Refer to Note 17 for
further discussion of amounts recorded as part of our impairment analysis.
F-12
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(m) 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 ("EPL") . . . . . . . . . . . . . . . . . . . . . . . .
EPL Class Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Workers' compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 27, 2022
$500,000
$2,500,000
$350,000
$2,500,000
$250,000
$400,000
December 28, 2021
$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.
(n) Revenue Recognition
We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, which 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 revenue from company restaurant sales
when food and beverage products are sold. 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.
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 we have
determined that, based on our historic gift card redemption patterns, the likelihood of redemption is remote. For these
gift cards, 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 the breakage rate to utilize and recognize the expected
breakage amount in a manner generally consistent with the actual redemption pattern of the associated gift card. We
review the breakage rate on an annual basis, or sooner if circumstances indicate that the rate may have significantly
changed and update the rate accordingly as needed. In addition, we incur fees on all gift cards that are sold through
third-party retailers. These fees are also deferred and generally recorded consistent with the actual redemption pattern of
the associated gift cards.
We also recognize revenue from our franchising of Texas Roadhouse restaurants. This includes franchise royalties
and domestic marketing and advertising fees, initial and upfront franchise fees, domestic and international development
agreements and supervisory and administrative service fees. We recognize franchise royalties and domestic marketing
and advertising fees as franchise restaurant sales occur. For initial and upfront franchise fees and fees from 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. We recognize fees from supervision and administrative services as incurred.
F-13
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(o) 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.
(p) 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 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 $25.0 million, $21.1 million and $13.8 million for the years ended December 27, 2022, December 28, 2021
and December 29, 2020, respectively.
(q) 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.
(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.
(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. ASC 820, Fair Value Measurements and Disclosures,
establishes a framework for measuring fair value and expands disclosures about fair value measurements. This includes
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.
Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to Note 16 for
further discussion of fair value measurement.
F-14
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(t) Recent Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued Accounting Standards Update ("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. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform
(Topic 848): Deferral of the Sunset Date of Topic 848 which defers the sunset date of Topic 848 from December 31,
2022 to December 31, 2024. We do not anticipate that the adoption of this standard will have a significant impact on our
consolidated financial statements.
(3) Revenue
The following table disaggregates our revenue by major source:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise royalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Franchise fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 27, 2022
3,988,791
$
23,058
3,070
4,014,919
$
The following table presents a rollforward of deferred revenue-gift cards:
Beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gift card activations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gift card redemptions and breakage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended
December 28, 2021 December 29, 2020
2,380,177
$
15,542
2,404
2,398,123
3,439,176 $
21,770
3,000
3,463,946 $
$
December 27, 2022
$
300,657 $
366,606
(331,860)
335,403
December 28, 2021
232,812
319,698
(251,853)
300,657
We recognized restaurant sales of $190.5 million for the year ended December 27, 2022 related to the amount in
deferred revenue as of December 28, 2021. 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.
(4) Acquisitions
On March 30, 2022, we completed the acquisition of one franchise Texas Roadhouse restaurant located in Nebraska
in which we previously held a 5.49% equity interest. Pursuant to the terms of the acquisition agreement, we paid a total
purchase price of $6.6 million, net of cash acquired for 100% of the entity. The transaction was accounted for as a step
acquisition and we recorded a gain of $0.3 million on our previous investment in equity income from investments in
unconsolidated affiliates in the consolidated statements of income and comprehensive income.
Additionally, on December 29, 2021, we completed the acquisition of seven franchise Texas Roadhouse restaurants
located in South Carolina and Georgia. Pursuant to the terms of the acquisition agreements, we paid a total purchase
price of $26.4 million, net of cash acquired.
F-15
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
These transactions were accounted for using the acquisition method as defined in ASC 805, Business
Combinations. These acquisitions are consistent with our long-term strategy to increase net income and earnings per
share.
The following table summarizes the consideration paid (in thousands) for the acquisitions, and the estimated fair
value of the assets acquired, and the liabilities assumed at the acquisition date, which are adjusted for measurement-
period adjustments through December 27, 2022.
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue-gift cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . .
321
222
4,841
1,221
21,731
6,900
(947)
(47)
(1,173)
$ 33,069
The aggregate purchase prices are preliminary as the Company is finalizing working capital adjustments.
Intangible assets represent reacquired franchise rights which will be amortized over a weighted-average useful life of
3.5 years. We expect all of the goodwill and intangible asset amortization will be deductible for tax purposes and
believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit
of the assembled workforce of the acquired restaurants.
Pro forma operating results for the year ended December 27, 2022 have not been presented as the results of the
acquired restaurants are not material to our consolidated financial position, results of operations or cash flows.
(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.
The terms of the amendment 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 27, 2022, we had $50.0 million outstanding on the amended revolving credit facility and
$233.5 million of availability, net of $16.5 million of outstanding letters of credit. 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. These outstanding amounts are included as long-term debt on our consolidated
balance sheets.
F-16
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
The interest rate for the $50.0 million outstanding as of December 27, 2022 was 5.21%. The interest rate for
the $100.0 million outstanding as of December 28, 2021 was 0.98%.
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 27, 2022 and
December 28, 2021.
(6) Property and Equipment, Net
Property and equipment were as follows:
December 27, December 28,
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . .
Furniture, fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liquor licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and amortization. . . . . . . . . . . . . . . . . .
$
2022
148,220 $
2021
144,182
1,092,776
732,160
50,809
11,889
2,031,816
(869,375)
$ 1,270,349 $ 1,162,441
1,206,930
797,058
73,639
12,538
2,238,385
(968,036)
For the years ended December 27, 2022, December 28, 2021 and December 29, 2020, the amount of interest
capitalized in connection with restaurant construction was $1.3 million, $0.2 million and $0.3 million, respectively.
(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:
Balance as of December 29, 2020 (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 28, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals and other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill Intangible Assets
2,271
$
—
(751)
—
—
1,520
6,900
(2,813)
—
—
5,607
$ 127,001
—
—
—
—
$ 127,001
21,731
—
—
—
$ 148,732
$
$
(1) Net of $5.9 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 27, 2022 were $23.5 million and $17.9 million, respectively. As of December 28,
2021, the gross carrying amount and accumulated amortization of the intangible assets were $16.6 million and
$15.1 million, respectively. We amortize reacquired franchise rights on a straight-line basis over the remaining term of
the franchise operating agreements, which varies by franchise agreement. Amortization expense for the next four years
is expected to range from $0.1 million to $2.6 million. Refer to Note 4 for discussion of the acquisitions completed for
the year ended December 27, 2022.
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 27, 2022 and December 28, 2021, these amounts were as follows:
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
625,164
$
5,094 $
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
23,803
674,468
698,271
$
1,687
3,406
5,093 $
Real estate
December 27, 2022
Equipment
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
December 28, 2021
Equipment
Total
630,258
25,490
677,874
703,364
Total
578,413
21,952
622,892
644,844
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 27, 2022 and
December 28, 2021 was as follows:
Real estate costs
Operating lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Fiscal Year Ended
December 27, 2022
December 28, 2021
68,742 $
4,393
73,135 $
62,430
3,767
66,197
Real estate lease liabilities maturity analysis
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total discounted operating lease liabilities . . . . . . . . . . . . . . . . . . . . . .
December 27, 2022
66,675
67,195
65,206
65,081
65,493
861,414
1,191,064
492,793
698,271
$
$
$
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
Fiscal Year Ended
December 27, 2022
December 28, 2021
63,269 $
54,666 $
17.57
6.34 %
57,040
68,921
17.88
6.46 %
Operating lease payments exclude $7.9 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 27, 2022, we had two
finance leases with a right-of-use asset balance and lease liability balance of $2.1 million and $2.7 million, respectively.
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. 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 2022, we entered into four sale leaseback transactions involving land that had recently been acquired. These
sales generated proceeds of $12.9 million and no gain or loss was recognized on the transactions. 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.
F-19
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(9) Income Taxes
Components of our income tax expense (benefit) for the years ended December 27, 2022, December 28, 2021 and
December 29, 2020 are as follows:
December 27, 2022 December 28, 2021 December 29, 2020
Fiscal Year Ended
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . .
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . .
$
$
15,549
18,120
590
34,259
9,664
(208)
9,456
43,715
$
$
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)
Our pre-tax income is substantially derived from domestic restaurants.
A reconciliation of the statutory federal income tax rate to our effective tax rate for December 27, 2022,
December 28, 2021 and December 29, 2020 is as follows:
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 . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 27, 2022
Fiscal Year Ended
December 28, 2021
December 29, 2020
21.0 %
21.0 %
21.0 %
3.7
(10.5)
(1.3)
(0.1)
(0.4)
0.7
0.5
13.6 %
3.8
(9.3)
(1.2)
(1.5)
(0.5)
1.1
0.1
13.5 %
3.6
(92.5)
(12.4)
(2.3)
(3.0)
2.6
1.6
(81.4)%
Our effective tax rate increased to 13.6% in 2022 compared to 13.5% in 2021. The increase was primarily due to
lower excess tax benefits related to our share-based compensation program partially offset by an increase in the FICA tip
tax credit.
Our effective tax rate was 13.5% in 2021 compared to a tax 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.
F-20
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Components of deferred tax liabilities, net are as follows:
December 27, 2022 December 28, 2021
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
29,889
6,506
-
1,060
5,059
173,853
17,934
2,740
2,991
240,032
24,056
6,407
5,995
1,077
6,040
160,638
16,233
3,618
2,801
226,865
(82,832)
(8,374)
(155,837)
(13,968)
(261,011)
(20,979) $
(75,022)
(7,742)
(144,153)
(11,682)
(238,599)
(11,734)
As of December 27, 2022 and December 28, 2021, we had tax credit carryforwards of $2.7 million and $3.6
million, respectively, primarily related to FICA tip and Work opportunity tax credit carryforwards that exceeded credit
limitations. These federal carryforwards expire in 2042. We expect to generate sufficient earnings in future periods
and/or may implement tax planning strategies that would allow us to fully utilize these credits. As such, we have not
provided any valuation allowances for these credits, or any of our other deferred tax assets, as their realization is more
likely than not.
A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows:
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 27, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1,662
49
413
(160)
(436)
1,528
1,545
872
-
(20)
3,925
As of December 27, 2022 and December 28, 2021, the amount of unrecognized tax benefits that would impact the
effective tax rate if recognized was $2.1 million and $1.5 million, respectively.
As of December 27, 2022 and December 28, 2021, 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 27, 2022 possess a December tax year-end.
As a result, as of December 27, 2022, the tax years ended December 28, 2021, December 29, 2020 and December 31,
2019 remain subject to examination by all tax jurisdictions. As of December 27, 2022, no audits were in process by a
F-21
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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 27, 2022, no event occurred that is likely to result in a
significant increase or decrease in the unrecognized tax benefits through December 26, 2023.
(10) Preferred Stock
Our Board of Directors (the "Board") 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, 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 27, 2022 and December 28, 2021.
(11) Stock Repurchase Program
On March 17, 2022, our Board approved a stock repurchase program under which we may repurchase up to $300.0
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 31, 2019 that authorized the Company to repurchase up to $250.0
million of our common stock. 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 the Board, based on an evaluation of our stock price, market conditions and other corporate
considerations.
For the year ended December 27, 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common
stock. This includes $133.1 million repurchased under our current authorized stock repurchase program and $79.7
million repurchased under our prior authorization. For the year ended December 28, 2021, we paid $51.6 million to
repurchase 584,932 shares of our common stock. As of December 27, 2022, we had $166.9 million remaining under our
authorized stock repurchase program.
(12) Earnings Per Share
The share and net income per share data for all periods presented are based on the historical weighted-average
shares outstanding. The diluted earnings per share calculations show the effect of the weighted-average restricted stock
units outstanding from our equity incentive plans. Performance stock units are not included in the diluted earnings per
share calculation until the performance-based criteria have been met. Refer to Note 14 for further discussion of our
equity incentive plans. For the years ended December 27, 2022, December 28, 2021, and December 29, 2020, the shares
of non-vested stock that were not included because they would have had an anti-dilutive effect were not significant.
F-22
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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 27, December 28, December 29,
2022
2021
2020
Net income attributable to Texas Roadhouse, Inc.
and subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .
$
269,818
$
245,294 $
31,255
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67,643
3.99
67,643
277
67,920
3.97
$
$
69,709
3.52 $
69,438
0.45
69,709
389
70,098
3.50 $
69,438
455
69,893
0.45
$
$
(13) Commitments and Contingencies
The estimated cost of completing capital project commitments at December 27, 2022 and December 28, 2021 was
$205.7 million and $135.0 million, respectively.
As of December 27, 2022 and December 28, 2021, we are contingently liable for $11.3 million and $12.2 million,
respectively, for seven lease guarantees. 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 27, 2022 as the
likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered
significant.
During the year ended December 27, 2022, we bought most of our beef from four 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. A
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.
F-23
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
The following table summarizes the share-based compensation recorded in the accompanying consolidated
statements of income and comprehensive income:
Labor expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative expense . . . . . . . . . . . . . . .
Total share-based compensation expense . . . . . . . . . . .
$
$
2022
10,656
26,007
36,663
2021
10,323 $
27,816
38,139 $
2020
10,081
19,350
29,431
$
$
Fiscal Year Ended
December 27, December 28, December 29,
Share-based compensation activity by type of grant as of December 27, 2022 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 28, 2021 . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 27, 2022 . . . . . . . . . . . . . .
Shares
558,183
395,859
(45,207)
(413,996)
494,839
$
$
Value
Term (years)
Intrinsic Value
82.52
88.40
84.26
85.37
84.55
0.9
$
47,663
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
As of December 27, 2022, with respect to unvested RSUs, there was $18.5 million of unrecognized compensation
cost that is expected to be recognized over a weighted-average period of 0.9 years. The vesting terms of the RSUs range
from 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the years ended December 27, 2022,
December 28, 2021 and December 29, 2020 was $37.1 million, $54.7 million and $30.5 million, respectively. The
excess tax benefit associated with vested RSUs for the years ended December 27, 2022, December 28, 2021 and
December 29, 2020 was $0.4 million, $4.3 million and $0.4 million, respectively, which was recognized in the income
tax provision.
Summary Details for PSUs
Weighted-Average Weighted-Average
Grant Date Fair
Remaining Contractual Aggregate
Outstanding at December 28, 2021 . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance shares adjustment (1) . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 27, 2022 . . . . . . . . . . . . . . . .
Shares
31,952
29,600
28,074
—
(60,026)
29,600
$
$
Value
Term (years)
Intrinsic Value
86.22
86.41
84.96
—
86.22
87.52
0.1
$
2,851
(1) Additional shares from the January 2021 PSU grant that vested in January 2022 due to exceeding the initial 100%
target.
We grant PSUs to certain of our executives subject to a one-year vesting and the achievement of certain earnings
targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation expense
is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant
date and through the performance period. For each grant, PSUs vest after meeting the performance and service
conditions. The total intrinsic value of PSUs vested during the years ended December 27, 2022, December 28, 2021 and
December 29, 2020 was $5.4 million, $0.4 million and $5.4 million, respectively.
F-24
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
On January 8, 2023, 31,379 shares vested related to the January 2022 PSU grant and are expected to be distributed
during the 13 weeks ending March 28, 2023. As of December 27, 2022, 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
significant. There was no allowable excess tax benefit associated with vested PSUs for the years ended December 27,
2022, December 28, 2021 and December 29, 2020.
(15) Employee Benefit Plans
We have a defined contribution benefit plan ("401(k) Plan") that is available to our Support Center employees and
managers in our restaurants who meet certain compensation and eligibility requirements. The 401(k) Plan allows
participating employees to defer the receipt of a portion of their compensation and contribute such amount to one or
more investment options. Beginning in 2022, we implemented a company match of a certain percentage of the
employee contributions to the 401(k) Plan. Company contributions totaling $5.4 million and $1.6 million were recorded
in labor expense and general and administrative expense, respectively, within the consolidated statements of income and
comprehensive income.
We also have a deferred compensation plan which allows highly compensated employees to defer a portion of their
compensation and contribute such amounts to one or more investment funds held in a rabbi trust. The Company did not
provide any contributions into this plan for any period presented. Refer to Note 16 for further discussion on the fair
value measurement of the deferred compensation plan assets and liabilities.
(16) Fair Value Measurement
At December 27, 2022 and December 28, 2021, 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 27, 2022 and December 28, 2021, the fair value of our amended revolving credit facility approximated its
carrying value since it is a variable rate credit facility (Level 2). There were no transfers among levels within the fair
value hierarchy during the year ended December 27, 2022.
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 27, 2022 December 28, 2021
67,512
61,835
$
(67,431)
(61,668) $
1
1
$
$
We report the accounts of the deferred compensation plan in other assets and the corresponding liability in other
liabilities in our consolidated financial statements. These investments are considered trading securities and are reported
at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these
investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the
consolidated statements of income and comprehensive income.
The following table presents the fair value of our assets measured on a nonrecurring basis:
Fair Value Measurements
Total gain (loss)
Fiscal Year Ended
Long-lived assets held for sale . . . . . . . . . . .
Long-lived assets held for use . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . .
Investments in unconsolidated affiliates . . .
Level
3
3
3
3
December 27, December 28, December 27,
2021
2022
2022
December 28,
2021
$
$
$
$
2,000
— $
$
— $
— $
1,175
$
— $
— $
— $
690 $
(997) $
(708) $
— $
(470)
—
—
(1,531)
F-25
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
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 as of December 28, 2021. These assets were included in prepaid expenses and other current assets in our
consolidated balance sheets and were valued using a Level 3 input. These assets were sold during the fiscal year ended
December 27, 2022 and resulted in a gain of $0.7 million which is included in impairment and closure, net in our
consolidated statements of income and comprehensive income. We recorded a loss of $0.5 million related to these assets
for the year ended December 28, 2021, which is included in impairment and closure, net in our consolidated statements
of income and comprehensive income.
Long-lived assets held for use include the land and building for one underperforming restaurant that was impaired
down to fair value in 2022. These assets are valued using a Level 3 input. This impairment, which totaled $1.0 million,
is included in impairment and closure costs, net in our consolidated statements of income and comprehensive income.
For further discussion of impairment charges, refer to Note 17.
Operating lease right-of-use assets as of December 27, 2022 includes the lease related asset for two restaurants that
were relocated in 2022. These assets were reduced to a fair value of zero in 2022. This resulted in a loss of $0.7 million
for the fiscal year ended December 27, 2022, which is included in impairment and closure, net in our consolidated
statements of income and comprehensive income.
Investments in unconsolidated affiliates included a 40% equity interest in a joint venture in China which was fully
impaired in late 2021. This asset was valued using a Level 3 input, or the amount we expected to receive upon the sale
of this investment. This resulted in a loss of $1.5 million for the year ended December 28, 2021, which is included in
equity income (loss) from investments in unconsolidated affiliates in our consolidated statements of income and
comprehensive income.
(17) Impairment and Closure Costs
We recorded impairment and closure costs of $1.6 million, $0.7 million and $2.3 million for the years ended
December 27, 2022, December 28, 2021 and December 29, 2020, respectively.
Impairment and closure costs in 2022 included $1.7 million related to the impairment of the land, building and
operating lease right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing
closure costs. This was partially offset by a $0.7 million gain on the sale of land and building that was previously
classified as assets held for sale.
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.
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.
(18) Related Party Transactions
As of December 27, 2022, December 28, 2021 and December 29, 2020, we had four franchise restaurants and one
majority-owned company restaurant owned in part by a current officer of the Company. We recognized revenue of
$1.8 million, $1.7 million and $0.9 million for the years ended December 27, 2022, December 28, 2021, and
December 29, 2020, respectively, related to these restaurants.
F-26
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
(19) 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 core restaurant-level operating efficiency and performance over various reporting periods on a
consistent basis.
In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including
general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and
performance. We exclude pre-opening expense as it occurs at irregular intervals and would impact comparability to
prior period results. We 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:
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended December 27, 2022
Texas
Roadhouse
$ 3,762,884
$
$
3,162,687
600,197
112,546
2,015,173
204,662
Bubba's 33
$ 211,690 $
Other
14,217 $ 3,988,791
Total
$
$
184,756
26,934 $
13,847
370 $
3,361,290
627,501
13,012 $
201,503
30,625
11,679 $
308,989
10,834
137,237
2,525,665
246,121
F-27
Texas Roadhouse, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Tabular amounts in thousands, except share and per share data)
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant and other sales . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant operating costs (excluding depreciation and
amortization) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal Year Ended December 28, 2021
Texas
Roadhouse
$ 3,253,889
$
$
2,701,850
552,039
105,079
1,874,620
167,746
Bubba's 33
$ 174,355 $
Other
10,932 $ 3,439,176
Total
$
$
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
Fiscal Year Ended December 29, 2020
Texas
Roadhouse
$ 2,267,815
$
$
2,011,517
256,298
98,485
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 $
13,833
7,356 $
13,406
117,877
154,401
A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest
expense, net and equity income (loss) from investments in unconsolidated affiliates to reportable segments.
Restaurant margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 27,
2022
627,501
$
Fiscal Year Ended
December 28,
2021
581,732 $
$
December 29,
2020
265,640
Add:
Franchise royalties and fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26,128
24,770
17,946
Less:
Pre-opening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment and closure, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
21,883
137,237
1,600
172,712
320,197
$
24,335
126,761
734
157,480
297,192 $
20,099
117,877
2,263
119,503
23,844
(20) Subsequent Events
On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition of eight domestic
franchise restaurants. Pursuant to the terms of the acquisition agreements, we paid an aggregate purchase price of
approximately $39.0 million. We expect to complete the preliminary purchase price allocations relating to these
transactions in the first quarter of fiscal 2023.
F-28
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[This Page Intentionally Left Blank]
Dear Shareholders,
Throughout 2022, we saw a return to normal
seasonality on sales trends following the
challenges of the pandemic in recent years.
Although we felt the pressure of inflation,
particularly on higher commodity costs, we
remained consistent in our commitment to our
corporate sustainability initiatives.
Our sustainability mission is to leave every
community better than we found it through
focusing on four pillars – food, community,
employees, and conservation. As we test and roll
out new programs, we continue to build champions
who are invested in furthering our sustainability
efforts. Ongoing initiatives such as our meat
cutter program, support of non-profits, employee
development, and focus on conservation,
create steady progress for our overall corporate
sustainability program and are integrated into
our daily operations.
with Homes for Our Troops and our annual
Veterans Day celebration. In 2022, employees
from our local stores participated in 10 Homes
for Our Troops Community Kick-Offs and 10
Volunteer Days. As part of these volunteer
opportunities, our employees provide meals and
help with landscaping of the project. We also
hosted fundraisers, motorcycle rides, and featured
Homes for Our Troops as our fourth quarter gift
card partner to support their mission of building
specially adapted custom homes for severely
injured post-9/11 veterans. For Veterans Day,
we were proud to serve 681,047 free meals to
veterans and active military across the country.
In 2022, employee development remained a
priority through training and DE&I events. Over
400,000 trainings were completed covering a
variety of subjects such as responsible alcohol
service, food safety, harassment-free workplace
We make it our mission
to leave every community
better than we found it.
training, and
anti-corruption
practices. In
addition to these
courses, learning
opportunities were
offered throughout
the year at our
From our in-house bakers to our meat cutters,
serving safe, made-from-scratch food is something
we take great pride in. Our meat cutters, who
hand-cut every steak we serve, receive ongoing
expert-level training on providing the highest
quality cuts and reducing waste. They are
incentivized through bonuses and an annual Meat
Cutter of the Year Competition with a grand prize
of $25,000. This program is a great example of
celebrating our people while also making a positive
impact on sustainability.
Partnering with local non-profits, causes, and
schools is one of the ways we give back to our local
communities. On average, each store hosts four
local fundraisers per month, and we also proudly
supported select partners on the national level
in 2022. To honor our late founder, Kent Taylor,
our stores across the country banded together
to raise over $730,000 for the American Tinnitus
Association, which was the largest corporate
donation in the organization’s 50-year history. For
the second year in a row, we raised awareness and
funds for our partners at The Bee Conservancy and
The Breast Cancer Research Foundation. We were
also there for our employees and guests following
Hurricane Ian. We donated meals, supplies, and
over $70,000 to hurricane relief efforts through
fundraisers in our stores and a donation from
our company. In addition, Andy’s Outreach, our
employee assistance fund, granted $1,251,950 to
3,965 employees following the devastation.
We continued supporting and honoring our
nation’s military heroes through our partnership
Women’s Leadership Summit, Hispanic Leaders
Panel, and more. With the addition of our Human
Rights Policy last year, we began partnering with
Refuge for Women, a non-profit organization
providing specialized long-term housing and
emergency housing for women who have
escaped human trafficking or sexual exploitation.
Through monetary donations, we have
supported the development of housing for the
organization and are exploring additional ways
we can help survivors.
At the Support Center, our Accounting Team is
leveraging an electronic invoicing system, which
not only reduces paper usage across our entire
company, but ultimately saved a total emissions
of 83,639 kgCO2e. Another notable achievement
in 2022 was the hands-on outreach efforts put
into motion. Throughout the year, our Support
Center Sustainability Committee coordinated
and executed three trash pick-up events at local
parks. The team’s efforts were both by foot and by
kayak to clean up in and around the waterways in
Louisville, KY.
Since the roll out of our Vendor Partner
Expectations, our cross-functional Corporate
Sustainability Risk Committee continues to meet
with our vendor partners to understand their
commitments and how we can continue to partner
on their sustainability efforts. For example, our
distribution partners at SYGMA are committed
to reducing their emissions and we are proud to
partner with them on freight consolidation, which
lessens the number of deliveries to our stores
and ensures full trucks arrive at our stores.
Another major initiative of our committee during
2022 was partnering with an energy management
firm to calculate our greenhouse gas emissions
at both our stores and our Support Center. Now
that we have collected the data, we are focused
on confirming the accuracy before releasing the
information. The goal is to determine a baseline
based off the data, take a deeper dive into our
equipment, and focus on ways to reduce our
energy usage in the future.
Throughout 2023, we will continue to focus on our
four pillars with ongoing initiatives and tests. In
our stores, we have determined an opportunity to
evaluate our equipment maintenance programs,
which ultimately reduces energy usage and
extends the life of equipment. In addition, we are
interested in learning more about composting
from our locations in California that are currently
composting. As part of these learnings, we hope
to find solutions to some of the obstacles we
have heard in the past such as space and properly
balancing the materials. On the national level,
we renewed our agreement with the Arbor Day
Foundation. We will donate $50,000 each year to
support the communities we serve and contribute
to the Arbor Day Foundation’s ambitious goal of
planting 500 million trees in the next five years.
From an employee development perspective,
Texas Roadhouse believes diversity, equity,
and inclusion are vital parts of our culture and
what truly makes us legendary. In 2023, we will
be implementing our first English as a Second
Language Program. The pilot program will be
available to Hispanic/Latino operators who are
interested in professional development and
growth. The 90-day pilot will be available for
20 Roadies, with a full year program to follow.
We will also launch a management/Managing
Partner Mentorship Program with a focus on
reaching African American Roadies interested
in professional development. The purpose is to
provide support through the knowledge of
others, while increasing confidence and
achieving career goals.
We are excited about the momentum we have
going into 2023 while building champions,
providing opportunities, testing initiatives, and
learning more through our committees and teams.
To review our full 2022 Sustainability Report, visit
our website at texasroadhouse.com/sustainability.
Travis Doster
Vice President of Communications
and Public Affairs
Preserving
Resources
Through
Recycling
Recycling
trees saved
74,359
water saved
43.37m
gallons
electricity saved
21.87m
kw-hr
EMBROIDERY LOGOS
FOR FRONT LEFT CHEST
OF SHIRTS
ghg emissions
saved
36,688
mtco2e
PMS 186
PMS 157 (75%)
Our distribution partners
at SYGMA are committed
to reducing their emissions
and we are proud to
partner with them on
freight consolidation,
which lessens the number
of deliveries to our stores
and ensures full trucks
arrive at our stores.
To honor our late founder,
Kent Taylor, our stores
across the country
banded together to
raise over $700,000 for
the American Tinnitus
Association (ATA). The
ATA helps individuals
and families cope, funds
research, advocates for
better care, and provides
trustworthy information
to thousands of people
every day.
Andy’s Outreach, our
employee assistance
fund, granted $1,251,950
to 3,965 employees
following the devastation
of Hurricane Ian. The
funds were used to meet
emergency needs of our
employees, including food
and shelter.
THE “AO” LOGO
MAY BE USED ON
SIDES OR BACKS OF
BALL CAPS OR ON
SLEEVES. DO NOT USE
AS FRONT OF BALL
CAPS. THE TEXAS
ROADHOUSE LOGO
SHOULD ALWAYS BE
ON THE FRONT.
We were proud to
partner with the Arbor
Day Foundation to host
tree distribution events
at Texas Roadhouse
locations in Cookeville, TN;
Shreveport, LA; and Port
Arthur, TX. Nearly 1,300
(1-5 gallon) trees were
given out to members of
these communities that
were recently impacted by
natural disasters.
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
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,
North America and Latin America
Johnson & Johnson Consumer Health
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 11, 2023– 9:00 am EDT
Texas Roadhouse Support Center
6040 Dutchmans Lane
Louisville, KY 40205
TRANSFER AGENT
Computershare
P.O. Box 43078, Providence RI 02940-3078
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
Restaurant Locations
as of December 27, 2022
---------------------------------------------
Domestic
614
international
38
bubba’s 33
40
jaggers
5
Managing
partner
OF THE YEAR
OF THE YEAR
CHAD NOBLE
meat
cutter
OF THE YEAR
OF THE YEAR
henry berdugo
roadie
OF THE YEAR
OF THE YEAR
shelly mcgowen
service
manager
OF THE YEAR
OF THE YEAR
kiana burklund
kitchen
manager
OF THE YEAR
OF THE YEAR
manny alvarenga