UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March ~~28, 2023~~26, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-50972

Texas Roadhouse, Inc.

(Exact name of registrant specified in its charter)

Delaware		20-1083890
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification Number)

6040 Dutchmans Lane ~~Suite 200~~

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	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TXRH	NASDAQ Global Select Market

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 the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐
			Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock outstanding were ~~67,000,313~~66,790,637 on April ~~26, 2023.~~24, 2024.

Table of Contents

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries		3
Condensed Consolidated Balance Sheets ~~—March 28, 2023~~— March 26, 2024 and December ~~27, 2022~~26, 2023		3
Condensed Consolidated Statements of Income — For the 13 Weeks Ended March ~~28, 2023~~26, 2024 and March ~~29, 2022~~28, 2023		4
Condensed Consolidated Statements of Stockholders’ Equity — For the 13 Weeks Ended March ~~28, 2023~~26, 2024 and March ~~29, 2022~~28, 2023		5
Condensed Consolidated Statements of Cash Flows — For the 13 Weeks Ended March ~~28, 2023~~26, 2024 and March ~~29, 2022~~28, 2023		6
Notes to Condensed Consolidated Financial Statements		7
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		1514
Item 3 — Quantitative and Qualitative Disclosures About Market Risk		2625
Item 4 — Controls and Procedures		2725

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings		2827
Item 1A — Risk Factors		2827
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		2827
Item 3 — Defaults Upon Senior Securities		2827
Item 4 — Mine Safety Disclosures		2827
Item 5 — Other Information		2928
Item 6 — Exhibits		2928

Signatures		3029

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)


	March 28, 2023		December 27, 2022		March 26, 2024		December 26, 2023
Assets
Current assets:
Cash and cash equivalents	$	156,143	$	173,861	$	213,428	$	104,246
Receivables, net of allowance for doubtful accounts of $78 at March 28, 2023 and $50 at December 27, 2022		41,528		150,264
Receivables, net of allowance for doubtful accounts of $45 at March 26, 2024 and $35 at December 26, 2023						53,906		175,474
Inventories, net		36,812		38,015		38,384		38,320
Prepaid income taxes		—		5,097		—		3,262
Prepaid expenses and other current assets		34,235		29,604		38,677		35,172
Total current assets		268,718		396,841		344,395		356,474
Property and equipment, net of accumulated depreciation of $995,149 at March 28, 2023 and $968,036 at December 27, 2022		1,310,782		1,270,349
Property and equipment, net of accumulated depreciation of $1,117,520 at March 26, 2024 and $1,078,855 at December 26, 2023						1,499,860		1,474,722
Operating lease right-of-use assets, net		643,485		630,258		715,731		694,014
Goodwill		169,641		148,732		169,684		169,684
Intangible assets, net of accumulated amortization of $18,554 at March 28, 2023 and $17,905 at December 27, 2022		5,859		5,607
Intangible assets, net of accumulated amortization of $21,484 at March 26, 2024 and $20,929 at December 26, 2023						2,928		3,483
Other assets		76,380		73,878		97,803		94,999
Total assets	$	2,474,865	$	2,525,665	$	2,830,401	$	2,793,376
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	26,466	$	25,490	$	27,545	$	27,411
Accounts payable		113,834		105,560		140,287		131,638
Deferred revenue-gift cards		240,729		335,403		266,482		373,913
Accrued wages		66,153		54,544		85,781		68,062
Income taxes payable		5,718		434		14,957		112
Accrued taxes and licenses		38,401		35,264		45,757		42,758
Other accrued liabilities		96,797		95,315		105,619		101,540
Total current liabilities		588,098		652,010		686,428		745,434
Operating lease liabilities, net of current portion		692,016		677,874		766,516		743,476
Long-term debt		—		50,000
Restricted stock and other deposits		8,487		7,979		9,414		8,893
Deferred tax liabilities, net		23,674		20,979		23,306		23,104
Other liabilities		92,051		89,161		121,621		114,958
Total liabilities		1,404,326		1,498,003		1,607,285		1,635,865
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, 67,000,306 and 66,973,311 shares issued and outstanding at March 28, 2023 and December 27, 2022, respectively)		67		67
Additional paid-in-capital		6,240		13,139
Common stock ($0.001 par value, 100,000,000 shares authorized, 66,846,291 and 66,789,464 shares issued and outstanding at March 26, 2024 and December 26, 2023, respectively)						67		67
Retained earnings		1,048,941		999,432		1,207,119		1,141,595
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		1,055,248		1,012,638		1,207,186		1,141,662
Noncontrolling interests		15,291		15,024		15,930		15,849
Total equity		1,070,539		1,027,662		1,223,116		1,157,511
Total liabilities and equity	$	2,474,865	$	2,525,665	$	2,830,401	$	2,793,376

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)



	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Revenue:
Restaurant and other sales	$	1,167,583	$	980,972	$	1,314,152	$	1,167,583
Franchise royalties and fees		6,773		6,514		7,065		6,773
Total revenue		1,174,356		987,486		1,321,217		1,174,356
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage		410,711		337,396		445,091		410,711
Labor		385,819		321,871		427,547		385,819
Rent		17,828		16,368		19,425		17,828
Other operating		167,529		144,154		193,642		167,529
Pre-opening		5,377		4,291		8,095		5,377
Depreciation and amortization		36,227		33,620		41,493		36,227
Impairment and closure, net		55		(646)		201		55
General and administrative		49,865		40,294		52,595		49,865
Total costs and expenses		1,073,411		897,348		1,188,089		1,073,411
Income from operations		100,945		90,138		133,128		100,945
Interest income (expense), net		1,238		(397)
Interest income, net						1,408		1,238
Equity income from investments in unconsolidated affiliates		755		334		257		755
Income before taxes	$	102,938	$	90,075	$	134,793	$	102,938
Income tax expense		14,334		12,747		18,803		14,334
Net income including noncontrolling interests		88,604		77,328		115,990		88,604
Less: Net income attributable to noncontrolling interests		2,217		2,126		2,784		2,217
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	86,387	$	75,202	$	113,206	$	86,387

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	1.29	$	1.09	$	1.69	$	1.29
Diluted	$	1.28	$	1.08	$	1.69	$	1.28
Weighted average shares outstanding:
Basic		67,016		69,086		66,843		67,016
Diluted		67,293		69,373		67,105		67,293
Cash dividends declared per share	$	0.55	$	0.46	$	0.61	$	0.55

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)


														For the 13 Weeks Ended March 26, 2024
																					Total Texas
																	Additional				Roadhouse, Inc.
															Par		Paid-in-		Retained		and		Noncontrolling
														Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 26, 2023														66,789,464	$	67	$	—	$	1,141,595	$	1,141,662	$	15,849	$	1,157,511
Net income														—		—		—		113,206		113,206		2,784		115,990
Distributions to noncontrolling interest holders														—		—		—		—		—		(2,703)		(2,703)
Dividends declared ($0.61 per share)														—		—		—		(40,791)		(40,791)		—		(40,791)
Shares issued under share-based compensation plans including tax effects														171,259		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings														(54,170)		—		(7,473)		—		(7,473)		—		(7,473)
Repurchase of shares of common stock, including excise tax as applicable														(60,262)		—		(2,050)		(6,891)		(8,941)		—		(8,941)
Share-based compensation														—		—		9,523		—		9,523		—		9,523
Balance, March 26, 2024														66,846,291	$	67	$	—	$	1,207,119	$	1,207,186	$	15,930	$	1,223,116


	For the 13 Weeks Ended March 28, 2023													For the 13 Weeks Ended March 28, 2023
								Total Texas													Total Texas
				Additional				Roadhouse, Inc.									Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling					Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total		Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 27, 2022	66,973,311	$	67	$	13,139	$	999,432	$	1,012,638	$	15,024	$	1,027,662	66,973,311	$	67	$	13,139	$	999,432	$	1,012,638	$	15,024	$	1,027,662
Net income	—		—		—		86,387		86,387		2,217		88,604	—		—		—		86,387		86,387		2,217		88,604
Distributions to noncontrolling interest holders	—		—		—		—		—		(1,950)		(1,950)	—		—		—		—		—		(1,950)		(1,950)
Dividends declared ($0.55 per share)	—		—		—		(36,878)		(36,878)		—		(36,878)	—		—		—		(36,878)		(36,878)		—		(36,878)
Shares issued under share-based compensation plans including tax effects	173,620		—		—		—		—		—		—	173,620		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(53,874)		—		(5,430)		—		(5,430)		—		(5,430)	(53,874)		—		(5,430)		—		(5,430)		—		(5,430)
Repurchase of shares of common stock	(92,751)		—		(9,623)		—		(9,623)		—		(9,623)
Repurchase of shares of common stock, including excise tax as applicable														(92,751)		—		(9,623)		—		(9,623)		—		(9,623)
Share-based compensation	—		—		8,154		—		8,154		—		8,154	—		—		8,154		—		8,154		—		8,154
Balance, March 28, 2023	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539


	For the 13 Weeks Ended March 29, 2022
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 28, 2021	69,382,418	$	69	$	114,504	$	943,551	$	1,058,124	$	15,360	$	1,073,484
Net income	—		—		—		75,202		75,202		2,126		77,328
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,007)		(2,007)
Dividends declared ($0.46 per share)	—		—		—		(31,795)		(31,795)		—		(31,795)
Shares issued under share-based compensation plans including tax effects	204,968		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(66,999)		—		(6,166)		—		(6,166)		—		(6,166)
Repurchase of shares of common stock	(1,060,618)		(1)		(84,704)		—		(84,705)		—		(84,705)
Share-based compensation	—		—		9,120		—		9,120		—		9,120
Balance, March 29, 2022	68,459,769	$	68	$	32,754	$	986,958	$	1,019,780	$	15,479	$	1,035,259

See accompanying notes to condensed consolidated financial statements.

Table of Contents

~~Table of Contents~~

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Cash flows from operating activities:
Net income including noncontrolling interests	$	88,604	$	77,328	$	115,990	$	88,604
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		36,227		33,620		41,493		36,227
Deferred income taxes		2,988		2,630		202		2,988
Loss on disposition of assets		1,223		1,151		369		1,223
Impairment and closure costs		—		26		(8)		—
Equity income from investments in unconsolidated affiliates		(755)		(334)		(257)		(755)
Distributions of income received from investments in unconsolidated affiliates		170		332		238		170
Provision for doubtful accounts		28		12		9		28
Share-based compensation expense		8,154		9,120		9,523		8,154
Changes in operating working capital:
Changes in operating working capital, net of acquisitions:
Receivables		109,483		116,419		121,558		109,483
Inventories		1,612		1,820		(64)		1,612
Prepaid expenses and other current assets		(3,224)		651		(3,505)		(3,224)
Other assets		(2,265)		5,756		(1,212)		(2,265)
Accounts payable		10,418		6,275		13,946		10,418
Deferred revenue—gift cards		(95,838)		(80,009)		(107,431)		(95,838)
Accrued wages		11,609		15,118		17,719		11,609
Prepaid income taxes and income taxes payable		10,381		11,447		18,105		10,381
Accrued taxes and licenses		3,137		315		3,515		3,137
Other accrued liabilities		3,044		(10,676)		5,973		3,044
Operating lease right-of-use assets and lease liabilities		1,090		1,542		614		1,090
Other liabilities		2,895		(4,774)		6,662		2,895
Net cash provided by operating activities		188,981		187,769		243,439		188,981
Cash flows from investing activities:
Capital expenditures—property and equipment		(66,733)		(49,029)		(77,672)		(66,733)
Acquisition of franchise restaurants, net of cash acquired		(39,111)		(26,437)		—		(39,111)
Proceeds from sale of investments in unconsolidated affiliates		472		—		—		472
Proceeds from the sale of property and equipment		—		2,188
Proceeds from sale leaseback transaction		2,072		—
Proceeds from sale of property and equipment						202		—
Proceeds from sale leaseback transactions						2,778		2,072
Net cash used in investing activities		(103,300)		(73,278)		(74,692)		(103,300)
Cash flows from financing activities:
Payments on revolving credit facility		(50,000)		—		—		(50,000)
Distributions to noncontrolling interest holders		(1,950)		(2,007)		(2,703)		(1,950)
Proceeds from restricted stock and other deposits, net		482		260		343		482
Indirect repurchase of shares for minimum tax withholdings		(5,430)		(6,166)		(7,473)		(5,430)
Repurchase of shares of common stock		(9,623)		(84,705)		(8,941)		(9,623)
Dividends paid to shareholders		(36,878)		(31,795)		(40,791)		(36,878)
Net cash used in financing activities		(103,399)		(124,413)		(59,565)		(103,399)
Net decrease in cash and cash equivalents		(17,718)		(9,922)
Net increase (decrease) in cash and cash equivalents						109,182		(17,718)
Cash and cash equivalents—beginning of period		173,861		335,645		104,246		173,861
Cash and cash equivalents—end of period	$	156,143	$	325,723	$	213,428	$	156,143
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	411	$	381	$	238	$	411
Income taxes paid (refunded)	$	965	$	(1,317)
Income taxes paid					$	497	$	965
Capital expenditures included in current liabilities	$	30,908	$	25,006	$	39,817	$	30,908

See accompanying notes to condensed consolidated financial statements.

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Texas Roadhouse, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(tabular amounts in thousands, except ~~share and~~ per share data)

(unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Texas Roadhouse, Inc., our ~~wholly-owned~~wholly owned subsidiaries and subsidiaries in which we have a controlling interest (collectively, the "Company," "we," "our" and/or "us") as of March ~~28, 2023~~26, 2024 and December ~~27, 2022~~26, 2023 and for the 13 weeks ended March ~~28, 2023~~26, 2024 and March ~~29, 2022.~~28, 2023.

The Company maintains three restaurant concepts operating as Texas Roadhouse, Bubba’s 33, and Jaggers. As of March ~~28,~~26, 2024, we owned and operated 644 restaurants and franchised an additional 109 restaurants in 49 states and ten foreign countries. Of the 109 franchise restaurants, there were 59 domestic restaurants and 50 international restaurants. As of March 26, 2023, we owned and operated 611 restaurants and franchised an additional 93 restaurants in 49 states and ten foreign countries. Of the ~~611 company restaurants that were operating at March 28, 2023, there were 591 wholly-owned restaurants and 20~~ ~~majority-owned restaurants. Of the~~ ~~611 restaurants that we owned as of March 28, 2023, we operated 564 as Texas Roadhouse restaurants, 40 as Bubba’s 33 restaurants and seven~~ ~~as Jaggers restaurants. Of the~~ 93 ~~Texas Roadhouse~~ franchise restaurants, there were 54 domestic restaurants and 39 international restaurants.

As of March ~~29, 2022,~~26, 2024 and March 28, 2023, we owned ~~and operated 576 restaurants and franchised an additional 96 restaurants~~a majority interest in ~~49 states and ten~~ ~~foreign countries. Of the~~ ~~576 company restaurants that were operating at March 29, 2022, there were 556 wholly-owned restaurants and~~ 20 company restaurants. The operating results of these majority-owned ~~restaurants. Of~~restaurants are consolidated and the ~~576 restaurants that we owned as~~portion of ~~March 29, 2022, we operated 536 as Texas Roadhouse restaurants, 36 as Bubba’s 33 restaurants and four~~ ~~as Jaggers restaurants. Of~~income attributable to noncontrolling interests is reflected in the ~~96 Texas Roadhouse franchise restaurants, there were 63 domestic restaurants and 33~~ ~~international restaurants.~~line item net income attributable to noncontrolling interests in our unaudited condensed consolidated statements of income.

As of March ~~28, 2023~~26, 2024 and March ~~29, 2022,~~28, 2023, we owned a 5.0% to 10.0% equity interest in 1920 and 2419 domestic franchise restaurants, respectively. These unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in other assets in our unaudited condensed consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our unaudited condensed consolidated statements of income under equity income from investments in unconsolidated affiliates. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, ~~and~~ the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reporting of revenue and expenses during the periods to prepare these unaudited condensed 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~~valuation of property and equipment, goodwill, lease liabilities and right-of-use assets, obligations related to insurance reserves, ~~leases and leasehold improvements,~~ legal reserves, income taxes, and gift card ~~breakage and third party fees and income taxes.~~breakage. Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial statements for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP, except that certain information and footnotes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Operating results for the 13 weeks ended March ~~28, 2023~~26, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December ~~26, 2023.~~31, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December ~~27, 2022.~~26, 2023.

Our significant interim accounting policies include the recognition of income taxes using an estimated annual effective tax rate.

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(2) Recent Accounting Pronouncements

~~Reference Rate Reform~~

In ~~March 2020,~~November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2020-04,~~2023-07, ~~Reference Rate Reform~~Segment Reporting (Topic ~~848)~~280): ~~Facilitation~~Improvements to Reportable Segment Disclosure. This ASUprimarily provides enhanced disclosures about significant segment expenses including requiring segment disclosures to include a description of other segment items by reportable segment and any additional measures of a segment’s profit or loss used by the chief operating decision maker ("CODM") when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods as well as the title of the ~~Effects~~CODM and an explanation of ~~Reference Rate Reform~~how the CODM uses the reported measure of segment profit or loss in assessing performance and allocating resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently assessing the impact of this new standard on ~~Financial Reporting,~~ ~~which provides temporary optional expedients~~our segment reporting disclosures and ~~exceptions~~expect to ~~the current guidance on contract modifications~~provide additional detail 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.~~ disclosures under this new guidance.

In December ~~2022,~~2023, the FASB issued ASU ~~2022-06,~~ 2023-09, ~~Reference Rate Reform~~Income Taxes (Topic ~~848)~~740): ~~Deferral~~Improvements to Income Tax Disclosures. This ASU primarily provides enhanced disclosures about an entity’s income tax including requiring consistent categories and greater disaggregation of the ~~Sunset Date of Topic 848, which defers~~information included in the ~~sunset date of Topic 848 from~~rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments in this update are effective for fiscal years beginning after December ~~31, 2022 to~~15, 2024, and interim periods within fiscal years beginning after December ~~31, 2024.~~15, 2025. We ~~do not anticipate that~~are currently assessing the ~~adoption~~impact of this new standard ~~will have a significant impact~~ on our ~~consolidated financial statements.~~income tax disclosures and expect to provide additional detail and disclosures under this new guidance.

(3) Long-term Debt

We maintain a revolving credit facility (the ~~"credit~~ ~~facility~~""credit facility") with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The credit facility is 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 credit facility has a maturity date of May 1, 2026.

~~The terms of the credit facility require us~~We are required to pay interest on outstanding borrowings at ~~LIBOR~~the Term Secured Overnight Financing Rate ("SOFR"), plus a ~~margin~~fixed adjustment of 0.10% and a variable adjustment 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 credit facility, in each case~~ depending on our leverage ratio. ~~The credit facility also has an Alternate Base Rate that may be substituted for LIBOR.~~

As of March ~~28,~~26, 2024 and December 26, 2023, we had no outstanding ~~balance on~~borrowings under the credit facility and had ~~$283.5~~$295.3 million of availability, net of ~~$16.5~~$4.7 million of outstanding letters of credit. ~~As of December 27, 2022, we had~~ ~~$50.0 million outstanding on the credit facility and $233.5 million of availability, net of $16.5~~ ~~million of outstanding letters of credit. The outstanding amount as of December 27, 2022 is included as long-term debt on our unaudited condensed consolidated balance sheet.~~

The interest rate for the credit facility as of March 26, 2024 and March 28, 2023 was 6.20% and ~~March 29, 2022 was~~ 5.47% ~~and 1.20%~~, respectively.

The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial ~~covenants.~~covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio. The credit facility permits us to incur additional secured or unsecured indebtedness, 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. We were in compliance with all financial covenants as of March ~~28, 2023.~~26, 2024.

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(4) Revenue

The following table disaggregates our revenue by major source:


	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Restaurant and other sales	$	1,167,583	$	980,972	$	1,314,152	$	1,167,583
Franchise royalties		6,019		5,699		6,848		6,019
Franchise fees		754		815		217		754
Total revenue	$	1,174,356	$	987,486	$	1,321,217	$	1,174,356

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The following table presents a rollforward of deferred revenue-gift cards:


	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Beginning balance	$	335,403	$	300,657	$	373,913	$	335,403
Gift card activations, net		50,563		42,024
Gift card activations, net of third-party fees						56,239		50,563
Gift card redemptions and breakage		(145,237)		(121,202)		(163,670)		(145,237)
Ending balance		240,729		221,479	$	266,482	$	240,729

We recognized restaurant sales of ~~$119.6~~ $137.9 million ~~and $102.1~~for the 13 weeks ended March 26, 2024 related to amounts in deferred revenue as of December 26, 2023. We recognized restaurant sales of $119.6 million for the 13 weeks ended March 28, 2023 ~~and March 29, 2022, respectively,~~ related to ~~the amount~~amounts in deferred revenue as of December 27, ~~2022 and December 28, 2021, respectively.~~2022.

(5) Income Taxes

~~A reconciliation of the statutory federal income tax rate to our effective tax rate for the 13 weeks ended March 28, 2023 and March 29, 2022 is as follows:~~

13 Weeks Ended



March 28, 2023

March 29, 2022

Tax at statutory federal rate

21.0
%
21.0
%
State and local tax, net of federal benefit

3.7

3.8

FICA tip tax credit

(10.2)

(9.7)

Work opportunity tax credit

(1.1)

(1.3)

Stock compensation

(0.3)

(0.2)

Net income attributable to noncontrolling interests

(0.4)

(0.4)

Officers compensation

0.6

0.5

Other

0.6

0.5

Total

13.9
%
14.2
%

~~Our~~The effective tax rate was 13.9% ~~and 14.2%~~ for the 13 weeks ended March ~~28, 2023~~26, 2024 and March ~~29, 2022, respectively. The reduction in our tax rate for~~28, 2023. During the 13 weeks ended March ~~28, 2023 as compared to~~26, 2024, a decrease in the ~~prior year period~~benefit of the FICA tip and work opportunity tax credits, which was ~~primarily~~ driven by increased profitability, was offset by an increase in ~~FICA tip~~the excess tax ~~credits.~~

benefits related to stock compensation.

(6)

Commitments and Contingencies

The estimated cost of completing capital project commitments at March ~~28, 2023~~26, 2024 and December ~~27, 2022~~26, 2023 was ~~$228.6~~$236.5 million and ~~$205.7~~$237.4 million, respectively.

As of March ~~28, 2023~~26, 2024 and December ~~27, 2022,~~26, 2023, we were contingently liable for ~~$11.1~~$10.1 million and ~~$11.3~~$10.4 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 material liabilities have been recorded as of March ~~28, 2023~~26, 2024 and December ~~27, 2022,~~26, 2023, 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 13 weeks ended March 26, 2024 and March 28, 2023, we bought ~~most of~~ our beef primarily 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

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are covered by insurance at varying retention levels, has had a material adverse 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.

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(7) Acquisitions

On December 28, 2022, the first day of the 2023 fiscal year, we completed the acquisition of eight franchise Texas Roadhouse restaurants located in Maryland and Delaware, including four in which we previously held a 5.0% equity interest. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $~~39.0~~39.1 million, net of cash acquired, for 100% of the entities. The transactions in which we held an equity interest were accounted for as a step ~~acquisition~~acquisitions, and we recorded a gain of $0.6 million on our previous investments in equity income from investments in unconsolidated affiliates in the unaudited condensed consolidated statements of income.

These transactions were accounted for using the acquisition method as defined in Accounting Standards Codification ~~("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 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 March 28, 2023.

Inventory

$
410
Other assets

293
Property and equipment

17,763
Operating lease right-of-use assets

4,775
Goodwill

20,024
Intangible assets

1,700
Deferred revenue-gift cards

(1,164)
Current portion of operating lease liabilities

(110)
Operating lease liabilities, net of current portion

(4,665)

$
39,026

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 ~~2.2~~ 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 13 weeks ended March 28, 2023 have not been presented as the results of the acquired restaurants are not material to our unaudited condensed consolidated financial position, results of operations or cash flows.

~~On December 29, 2021, the first day of the 2022 fiscal year, 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~~ ~~$26.5~~ million, net of cash acquired. These acquisitions are consistent with our long-term strategy to increase net income and earnings per share. The transactions were accounted for using the acquisition method as defined in ASC 805, ~~Business Combinations~~.

~~The following table summarizes the consideration paid for the~~these acquisitions and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date, which are adjusted for final measurement-period adjustments.

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Inventory	$	268	$	410
Other assets		211		293
Property and equipment		3,456		17,763
Operating lease right-of-use assets				4,775
Goodwill		18,218		20,067
Intangible assets		5,200		1,700
Deferred revenue-gift cards		(831)		(1,164)
Current portion of operating lease liabilities				(110)
Operating lease liabilities, net of current portion				(4,665)
	$	26,522	$	39,069

Intangible assets represent reacquired franchise rights which ~~will be~~are being amortized over a weighted-average useful life of ~~3.0~~2.2 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.

(8) Related Party Transactions

As of March ~~28, 2023~~26, 2024 and March ~~29, 2022,~~28, 2023, we had four franchise restaurants and one majority-owned company restaurant owned in part by a current officer of the Company. ~~The franchise entities paid us fees~~We recognized revenue of $0.5 million ~~and $0.4 million~~ for both of the 13 weeks ended March 26, 2024 and March 28, 2023, ~~and March 29, 2022, respectively.~~respectively, related to the four franchise restaurants.

(9) 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 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.

For all periods presented, the weighted-average shares of nonvested stock units that were outstanding but not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect were not significant.

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The following table sets forth the calculation of earnings per share and weighted-average shares outstanding ~~(in thousands)~~ as presented in the accompanying unaudited condensed consolidated statements of income:



	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	86,387	$	75,202	$	113,206	$	86,387
Basic EPS:
Weighted-average common shares outstanding		67,016		69,086		66,843		67,016
Basic EPS	$	1.29	$	1.09	$	1.69	$	1.29
Diluted EPS:
Weighted-average common shares outstanding		67,016		69,086		66,843		67,016
Dilutive effect of nonvested stock		277		287
Dilutive effect of nonvested stock units						262		277
Shares-diluted		67,293		69,373		67,105		67,293
Diluted EPS	$	1.28	$	1.08	$	1.69	$	1.28

(10) Fair Value Measurements

At March ~~28, 2023~~26, 2024 and December ~~27, 2022,~~26, 2023, 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, the fair value of our 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 13 weeks ended March ~~28, 2023.~~26, 2024.

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The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:


	Fair Value Measurements					Fair Value Measurements
	Level	March 28, 2023		December 27, 2022		Level	March 26, 2024		March 28, 2023
Deferred compensation plan—assets	1	$	64,682	$	61,835	1	$	84,200	$	64,682
Deferred compensation plan—liabilities	1	$	(64,476)	$	(61,668)	1	$	(84,200)	$	(64,476)

We report the accounts of the deferred compensation plan in other assets and the corresponding liability in other liabilities in our unaudited condensed consolidated ~~financial statements.~~balance sheets. 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 unaudited condensed consolidated statements of income.

~~The following table presents the fair value of our assets measured on a nonrecurring basis:~~

Fair Value Measurements




March 28,

December 27,

Level

2023

2022
Long-lived assets held for use

3

$
—

$
2,000

~~Long-lived assets held for use include the land and building for one~~ ~~underperforming restaurant that was impaired to fair value at December 27, 2022 using a Level 3 input.~~

(11) Stock Repurchase Program

On March 17, 2022, our Board of Directors (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.~~date. 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.~~considerations, including complying with Rule 10b5-1 trading arrangements under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

For the 13 weeks ended March ~~28, 2023,~~26, 2024, we paid ~~$9.6~~$8.9 million to repurchase ~~92,751~~60,262 shares of our common stock. For the 13 weeks ended March ~~29, 2022,~~28, 2023, we paid $~~84.7~~9.6 million to repurchase ~~1,060,618~~92,751 shares of our common stock. As of March ~~28, 2023,~~26, 2024, $~~157.3~~107.9 million remained under our authorized stock repurchase program.

(12) 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

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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 and franchise 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 primary 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.

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In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including ~~pre-opening and~~ general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance. We 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.

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:


	For the 13 Weeks Ended March 28, 2023								For the 13 Weeks Ended March 26, 2024
	Texas Roadhouse		Bubba's 33		Other		Total		Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,100,926	$	61,369	$	5,288	$	1,167,583	$	1,236,138	$	70,650	$	7,364	$	1,314,152
Restaurant operating costs (excluding depreciation and amortization)		923,936		52,916		5,035		981,887		1,020,925		58,480		6,300		1,085,705
Restaurant margin	$	176,990	$	8,453	$	253	$	185,696	$	215,213	$	12,170	$	1,064	$	228,447

Depreciation and amortization	$	29,888	$	3,447	$	2,892	$	36,227	$	34,756	$	3,867	$	2,870	$	41,493
Capital expenditures		57,137		6,255		3,341		66,733		67,830		7,960		1,882		77,672

	For the 13 Weeks Ended March 29, 2022								For the 13 Weeks Ended March 28, 2023
	Texas Roadhouse		Bubba's 33		Other		Total		Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	926,729	$	51,225	$	3,018	$	980,972	$	1,100,926	$	61,369	$	5,288	$	1,167,583
Restaurant operating costs (excluding depreciation and amortization)		773,261		43,431		3,097		819,789		923,936		52,916		5,035		981,887
Restaurant margin	$	153,468	$	7,794	$	(79)	$	161,183	$	176,990	$	8,453	$	253	$	185,696

Depreciation and amortization	$	27,541	$	3,190	$	2,889	$	33,620	$	29,888	$	3,447	$	2,892	$	36,227
Capital expenditures		39,677		7,377		1,975		49,029		57,137		6,255		3,341		66,733

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A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest income, ~~(expense),~~ net and equity income from investments in unconsolidated affiliates to reportable segments.


	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Restaurant margin	$	185,696	$	161,183	$	228,447	$	185,696

Add:
Franchise royalties and fees		6,773		6,514		7,065		6,773

Less:
Pre-opening		5,377		4,291		8,095		5,377
Depreciation and amortization		36,227		33,620		41,493		36,227
Impairment and closure, net		55		(646)		201		55
General and administrative		49,865		40,294		52,595		49,865
Income from operations	$	100,945	$	90,138	$	133,128	$	100,945

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT

This report contains forward-looking statements based on our current expectations, estimates, and projections about our industry and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will", and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December ~~27, 2022,~~26, 2023, and in Part II, Item 1A in this Form 10-Q, along with disclosures in our other Securities and Exchange Commission ("SEC") filings discuss some of the important risk factors that may affect our business, results of operations, or financial condition. You should carefully consider those risks, in addition to the other information in this report, and in our other filings with the SEC, before deciding to invest in our Company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statements, except as may be required by applicable law. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties, and other factors that may affect our business, results of operations, or financial condition.

Our Company

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. Our late founder, W. Kent Taylor, started the Company in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to three ~~restaurant~~ concepts with ~~704~~753 restaurants in 49 states and ten foreign countries. As of March ~~28, 2023,~~26, 2024, our ~~704~~753 restaurants included:

●

~~611 "company~~644 company restaurants," of which ~~591~~624 were wholly-owned and 20 were majority-owned. The results of operations of company restaurants are included in our unaudited condensed consolidated statements of income. The portion of income attributable to noncontrolling interests in company restaurants that are majority-owned is reflected in the line item ~~"Net~~net income attributable to noncontrolling ~~interests"~~interests in our unaudited condensed consolidated statements of income. Of the ~~611~~644 company restaurants, we ~~owned as of March 28, 2023, we~~ operated ~~564~~591 as Texas Roadhouse restaurants, 4045 as Bubba’s 33 restaurants, and ~~seven~~eight as Jaggers restaurants.

●

~~93 "franchise~~109 franchise restaurants,~~" 19~~ of which 20 we have a 5.0% to 10.0% ownership interest. The income derived from our minority interests in these franchise restaurants is reported in the line item ~~"Equity~~equity income from investments in unconsolidated ~~affiliates"~~affiliates in our unaudited condensed consolidated statements of income. ~~Additionally, we provide various management services to these 19 franchise restaurants. All of~~Of the 109 franchise restaurants, ~~are operated as~~56 were domestic Texas Roadhouse ~~restaurants. Of the 93 franchise~~ restaurants, 54three were domestic Jaggers restaurants, and 3950 were international Texas Roadhouse 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 5054 of the 5459 domestic franchise restaurants.

Throughout this report, we use the term "restaurants" to include Texas Roadhouse and Bubba’s 33, unless otherwise noted.

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Presentation of Financial and Operating Data

Throughout this report, the 13 weeks ended March ~~28, 2023,~~26, 2024 and March ~~29, 2022,~~28, 2023, are referred to as Q1 ~~2023~~2024 and Q1 ~~2022,~~2023, respectively. Fiscal ~~years~~year 2024 will be 53 weeks in length, while the fourth quarter will be 14 weeks in length. Fiscal year 2023 ~~and 2022 will be~~was 52 weeks in length, while the quarters ~~for the year will be~~were 13 weeks in length.

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 reflect the change in sales for all company restaurants across all concepts, unless otherwise noted, 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 quarterly or 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 growth levels lower than the company average. At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth levels higher than the company average.

●

Store Weeks and New Restaurant Openings. Store weeks represent the number of weeks that all company restaurants across all concepts, 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~~simultaneously 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)~~sales, and per store week) 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 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.

1615

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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~~our unaudited condensed consolidated statements of income. Other sales include the net impact of the amortization of ~~fees associated with our~~ third party gift card ~~sales net of the amortization of~~fees and gift card breakage ~~income.~~income, sales related to our non-royalty based retail products, and content revenue related to our tabletop kiosk devices.

●

Franchise Royalties and Fees. Franchise royalties consist of royalties, as defined in our franchise agreement, paid to us by our domestic and international franchisees. Domestic ~~and/or~~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~~consist 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~~relate 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, outside services, property taxes,~~ profit sharing incentive compensation for our restaurant managing partners and market partners, ~~and~~utilities, supplies, general liability ~~insurance.~~insurance, advertising, repairs and maintenance, property taxes, and outside services.

●

Pre-opening Expenses. Pre-~~Pre-opening~~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~~consist principally of opening ~~team~~ and training team compensation and benefits, travel expenses, rent, food, beverage, and other initial supplies and expenses. The majority of pre-opening costs incurred relate to the hiring and training of employees due to the significant investment we make in training our people. Pre-opening costs vary by location depending on ~~many~~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.~~each restaurant.

●

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~~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~~comprise expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth. This includes salary, incentive-based and share-based compensation expense related to executive officers and Support Center employees, salary and share-based compensation

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expense related to market partners, software hosting fees, professional fees, group insurance, advertising expense, ~~salary and share-based compensation expense related to executive officers,~~

~~Table of Contents~~

~~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 Income, ~~(Expense),~~ Net. Interest income, ~~(expense),~~ net includes earnings on cash and cash equivalents and is reduced by interest expense, net of capitalized interest, on our debt or financing obligations including the amortization of loan fees, ~~offset by capitalized interest.~~as applicable.

●

Equity Income from Investments in Unconsolidated Affiliates. Equity income includes our percentage share of net income earned by unconsolidated affiliates and our share of any gain on the ~~sale~~acquisition of these affiliates. As of March ~~28, 2023,~~26, 2024, and March ~~29, 2022,~~28, 2023, we owned a 5.0% to 10.0% equity interest in 1920 and 2419 domestic franchise restaurants, respectively.

●

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.

Q1 ~~2023~~2024 Financial Highlights

Total revenue increased ~~$186.9~~$146.9 million or ~~18.9%~~12.5% to $1,321.2 million in Q1 2024 compared to $1,174.4 million in Q1 2023 ~~compared to $987.5 million in Q1 2022~~ primarily due to an increase in ~~store weeks and an increase in comparable restaurant sales. Store weeks and~~ comparable restaurant sales and store weeks. Comparable restaurant sales and store weeks increased ~~6.0%~~8.4% and ~~12.9%~~4.9%, respectively, at company restaurants in Q1 ~~2023~~2024 compared to Q1 ~~2022. The increase in store weeks was due to new store openings and the acquisition of franchise restaurants.~~2023. The increase in comparable restaurant sales was due to an increase in guest traffic along with an increase in our per person average check. The increase in store weeks was due to new store openings.

Net income increased ~~$11.2~~$26.8 million or ~~14.9%~~31.0% to $113.2 million in Q1 2024 compared to $86.4 million in Q1 2023 ~~compared to $75.2 million in Q1 2022~~ primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and administrative, pre-opening, and depreciation and amortization expenses. Diluted earnings per share increased ~~18.4%~~31.4% to $1.69 in Q1 2024 from $1.28 in Q1 2023 ~~from $1.08 in Q1 2022~~primarily due to the increase in net ~~income and the benefit of share repurchases.~~income.

Restaurant margin dollars increased ~~$24.5~~$42.8 million or ~~15.2%~~23.0% to $228.4 million in Q1 2024 compared to $185.7 million in Q1 2023 ~~compared to $161.2 million in Q1 2022~~ primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, ~~decreased~~increased to 17.4% in Q1 2024 compared to 15.9% in Q1 ~~2023 compared to 16.4% in Q1 2022.~~2023. The ~~decrease~~increase in restaurant margin, as a percentage of restaurant and other sales, was ~~due to commodity~~driven by higher sales partially offset by higher general liability insurance expense. The benefit of a higher average guest check and labor productivity more than offset wage and other labor inflation ~~partially offset by higher sales.~~of 4.3% and commodity inflation of 0.9%.

WeIn addition, we incurred $77.7 million of capital expenditures, paid dividends of $40.8 million, and repurchased ~~92,751 shares~~$8.9 million of common ~~stock for $9.6 million~~ stock.

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Results of Operations

(in ~~Q1 2023. We also increased our quarterly dividend to $0.55 per share of common stock, representing a 20% increase compared to our quarterly dividend of $0.46 per share in Q1 2022.~~thousands)



	13 Weeks Ended
	March 26, 2024		March 28, 2023
	$	%	$	%

Condensed Consolidated Statements of Income:
Revenue:
Restaurant and other sales	1,314,152	99.5	1,167,583	99.4
Franchise royalties and fees	7,065	0.5	6,773	0.6
Total revenue	1,321,217	100.0	1,174,356	100.0
Costs and expenses:
(As a percentage of restaurant and other sales)
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage	445,091	33.9	410,711	35.2
Labor	427,547	32.5	385,819	33.0
Rent	19,425	1.5	17,828	1.5
Other operating	193,642	14.7	167,529	14.3
(As a percentage of total revenue)
Pre-opening	8,095	0.6	5,377	0.5
Depreciation and amortization	41,493	3.1	36,227	3.1
Impairment and closure, net	201	NM	55	NM
General and administrative	52,595	4.0	49,865	4.2
Total costs and expenses	1,188,089	89.9	1,073,411	91.4
Income from operations	133,128	10.1	100,945	8.6
Interest income, net	1,408	0.1	1,238	0.1
Equity income from investments in unconsolidated affiliates	257	NM	755	0.1
Income before taxes	134,793	10.2	102,938	8.8
Income tax expense	18,803	1.4	14,334	1.2
Net income including noncontrolling interests	115,990	8.8	88,604	7.5
Net income attributable to noncontrolling interests	2,784	0.2	2,217	0.2
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	113,206	8.6	86,387	7.4

NM — Not meaningful

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~~Results of Operations~~

13 Weeks Ended

March 28, 2023

March 29, 2022


$

%

$

%

(In thousands)
Consolidated Statements of Income:

Revenue:

Restaurant and other sales

1,167,583

99.4

980,972

99.3
Franchise royalties and fees

6,773

0.6

6,514

0.7
Total revenue

1,174,356

100.0

987,486

100.0
Costs and expenses:

(As a percentage of restaurant and other sales)

Restaurant operating costs (excluding depreciation and amortization shown separately below):

Food and beverage

410,711

35.2

337,396

34.4
Labor

385,819

33.0

321,871

32.8
Rent

17,828

1.5

16,368

1.7
Other operating

167,529

14.3

144,154

14.7
(As a percentage of total revenue)

Pre-opening

5,377

0.5

4,291

0.4
Depreciation and amortization

36,227

3.1

33,620

3.4
Impairment and closure, net

55

NM

(646)

NM
General and administrative

49,865

4.2

40,294

4.1
Total costs and expenses

1,073,411

91.4

897,348

90.9
Income from operations

100,945

8.6

90,138

9.1
Interest income (expense), net

1,238

0.1

(397)

NM
Equity income from investments in unconsolidated affiliates

755

NM

334

NM
Income before taxes

102,938

8.8

90,075

9.1
Income tax expense

14,334

1.2

12,747

1.3
Net income including noncontrolling interests

88,604

7.5

77,328

7.8
Net income attributable to noncontrolling interests

2,217

0.2

2,126

0.2
Net income attributable to Texas Roadhouse, Inc. and subsidiaries

86,387

7.4

75,202

7.6

~~NM — Not meaningful~~

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	Reconciliation of Income from Operations to Restaurant Margin				Reconciliation of Income from Operations to Restaurant Margin
	(in thousands)				(in thousands)
	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023


Income from operations	$	100,945	$	90,138	$	133,128	$	100,945

Less:
Franchise royalties and fees		6,773		6,514		7,065		6,773

Add:
Pre-opening		5,377		4,291		8,095		5,377
Depreciation and amortization		36,227		33,620		41,493		36,227
Impairment and closure, net		55		(646)		201		55
General and administrative		49,865		40,294		52,595		49,865
Restaurant margin	$	185,696	$	161,183	$	228,447	$	185,696

Restaurant margin $/store week	$	23,505	$	21,618	$	27,577	$	23,505
Restaurant margin (as a percentage of restaurant and other sales)		15.9%		16.4%		17.4%		15.9%

See above for the definition of restaurant margin.

Restaurant Unit Activity


	Total	Texas Roadhouse	Bubba's 33	Jaggers	Total	Texas Roadhouse	Bubba's 33	Jaggers
Balance at December 27, 2022	697	652	40	5
Balance at December 26, 2023					741	686	45	10
Company openings	6	4	—	2	9	9	—	—
Company closings	—	—	—	—
Franchise openings - Domestic	—	—	—	—	1	—	—	1
Franchise openings - International	1	1	—	—	2	2	—	—
Franchise closings	—	—	—	—
Balance at March 28, 2023	704	657	40	7
Balance at March 26, 2024					753	697	45	11


	March 28, 2023	March 29, 2022	March 26, 2024	March 28, 2023
Company - Texas Roadhouse	564	536	591	564
Company - Bubba's 33	40	36	45	40
Company - Jaggers	7	4	8	7
Franchise - Texas Roadhouse - U.S.	54	63
Total company			644	611

Franchise - Texas Roadhouse - Domestic			56	54
Franchise - Jaggers - Domestic			3	—
Franchise - Texas Roadhouse - International	39	33	50	39
Total franchise			109	93

Total	704	672	753	704

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Q1 ~~2023 (13 weeks)~~2024 compared to Q1 ~~2022 (13 weeks)~~2023

Restaurant and Other Sales

Restaurant and other sales increased ~~19.0%~~12.6% in Q1 ~~2023~~2024 compared to Q1 ~~2022.~~2023. 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.


	Q1 2023			Q1 2022			Q1 2024			Q1 2023
Company Restaurants:
Increase in store weeks		6.0	%		6.6	%		4.9	%		6.0	%
Increase in average unit volume		12.5	%		15.7	%		7.7	%		12.5	%
Other(1)		0.4	%		1.1	%
Other (1)								—	%		0.4	%
Total increase in restaurant sales		18.9	%		23.4	%		12.6	%		18.9	%
Other sales		0.1	%		—	%		—	%		0.1	%
Total increase in restaurant and other sales		19.0	%		23.4	%		12.6	%		19.0	%

Store weeks		7,900			7,456			8,284			7,900
Comparable restaurant sales		12.9	%		16.0	%		8.4	%		12.9	%

Texas Roadhouse restaurants:
Store weeks		7,304			6,936			7,595			7,304
Comparable restaurant sales		13.1	%		15.8	%		8.7	%		13.1	%
Average unit volume (in thousands)	$	1,966		$	1,741
Average unit volume (in thousands) (2)							$	2,133		$	1,966

Weekly sales by group:
Comparable restaurants (527 and 498 units)	$	151,439		$	134,422
Average unit volume restaurants (22 and 20 units)(2)	$	146,220		$	129,143
Restaurants less than six months old (15 and 18 units)	$	162,150		$	140,535
Comparable restaurants (549 and 527 units)							$	164,332		$	151,439
Average unit volume restaurants (17 and 22 units)							$	156,114		$	146,220
Restaurants less than six months old (25 and 15 units)							$	149,400		$	162,150

Bubba's 33 restaurants:
Store weeks		520			468			585			520
Comparable restaurant sales		8.7	%		21.3	%		3.5	%		8.7	%
Average unit volume (in thousands)	$	1,521		$	1,398
Average unit volume (in thousands) (2)							$	1,547		$	1,521

Weekly sales by group:
Comparable restaurants (34 and 30 units)	$	116,916		$	107,387
Average unit volume restaurants (3 and 4 units)(2)	$	117,920		$	108,771
Restaurants less than six months old (3 and 2 units)	$	127,955		$	140,855
Comparable restaurants (37 and 34 units)							$	121,086		$	116,916
Average unit volume restaurants (4 and 3 units)							$	100,079		$	117,920
Restaurants less than six months old (4 and 3 units)							$	135,977		$	127,955

(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 during the period.

(2)	Average unit volume includes 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 Q1 ~~2023~~2024 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 was driven by an increase in guest traffic ~~count~~counts along with an increase in our per person average check as shown in the table below.

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Table of Contents

Q1 2023

Q1 2022

Guest traffic counts

7.6
%

7.0
%
Per person average check

5.3
%

9.0
%
Comparable restaurant sales growth

12.9
%

16.0
%


	Q1 2024		Q1 2023
Guest traffic counts	4.3	%	7.6	%
Per person average check	4.1	%	5.3	%
Comparable restaurant sales growth	8.4	%	12.9	%

The increase in Q1 ~~2023~~2024 guest traffic counts ~~was due to~~includes an increase in ~~dining room traffic partially offset by a decrease in~~dine-in and to-go traffic. To-go sales as a percentage of restaurant sales were 13.1% for Q1 2024 compared to 12.8% for Q1 ~~2023 compared to 14.8% for Q1 2022.~~2023.

~~In Q1 2023, per~~Per person average check ~~included~~includes the benefit of menu price increases of approximately ~~3.2%~~2.2% and ~~2.9%~~2.7% implemented in Q2 ~~2022~~2023 and Q4 ~~2022,~~2023, respectively. ~~In addition, we~~We implemented a menu price increase of ~~approximately~~ 2.2% in ~~late March 2023.~~early Q2 2024.

In Q1 ~~2023,~~2024, we opened ~~four~~nine Texas Roadhouse company ~~restaurants and completed the acquisition of eight domestic franchise~~ restaurants. ~~As of March 28, 2023, an additional 13 Texas Roadhouse and Bubba’s 33 restaurants were under construction.~~ In ~~addition, we opened two Jaggers company restaurants in Q1 2023.~~

~~In total for 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and~~2024, we expect store week growth of ~~at least 6%~~approximately 8% across all concepts, including a benefit of 2% from the ~~impact of the eight franchise restaurants acquired at the beginning of the fiscal year.~~53^rd week.

Other sales include the net impact of the amortization of third party gift card fees and gift card breakage income, sales related to our non-royalty based retail products, and content revenue related to our tabletop kiosk devices. The net impact of these amounts was ~~($5.1) million and ($5.2)~~a reduction to other sales of $6.1 million in Q1 ~~2023~~2024 and $5.1 million in Q1 ~~2022, respectively.~~2023.

Franchise Royalties and Fees

Franchise royalties and fees increased by $0.3 million or ~~4.0%~~4.3% in Q1 ~~2023~~2024 compared to Q1 ~~2022.~~2023. The increase was due to comparable restaurant sales growth and new store openings partially offset by ~~decreased royalties~~a reclassification of $0.6 million related to ~~the eight franchise restaurants~~certain items that were ~~acquired.~~previously reported in general and administrative expense in our unaudited condensed consolidated statements of income.

In Q1 ~~2023,~~2024, our existing franchise partners opened ~~one~~two international Texas Roadhouse ~~restaurant. In total for 2023, we expect approximately 10 international~~restaurants and one Jaggers domestic franchise ~~openings including two Jaggers franchise openings.~~restaurant.

Food and Beverage Costs

Food and beverage costs, as a percentage of restaurant and other sales, ~~increased~~decreased to 33.9% in Q1 2024 compared to 35.2% in Q1 ~~2023 compared to 34.4%~~2023. The decrease in Q1 ~~2022. The increase~~2024 was primarily ~~due to commodity inflation partially offset~~driven by the benefit of a higher average guest ~~check. Commodity~~check partially offset by commodity inflation ~~was 8.9% in Q1 2023, with~~of 0.9% primarily due to higher ~~costs across the basket.~~beef costs.

In total for ~~2023,~~2024, we expect commodity inflation ~~to moderate to~~of approximately ~~5% to 6%~~3% for the year with prices locked for approximately ~~50%~~60% of our remaining forecasted costs and the remainder subject to floating market prices.

Restaurant Labor Expenses

Restaurant labor expenses, as a percentage of restaurant and other sales, ~~increased~~decreased to 32.5% in Q1 2024 compared to 33.0% in Q1 ~~2023 compared to 32.8% in Q1 2022.~~2023. The ~~increase~~decrease was primarily ~~due to~~driven by the benefit of a higher average guest check and labor productivity partially offset by wage and other labor inflation of ~~8.0%~~4.3% in Q1 ~~2023.~~2024. Wage and other labor inflation iswas driven by higher wage and benefit expense ~~driven by~~due to labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people. A higher mix of dining room sales versus to-go sales also contributed to the increase. In addition, there was an increase in group insurance expense of $2.2 million due to unfavorable claims experience. The increase was partially offset by the benefit of a higher guest check.

~~Table of Contents~~

In ~~total for 2023,~~2024, we ~~expect~~anticipate our labor costs will continue to be pressured by wage and other labor inflation ~~to moderate~~of 4% to 5% ~~to 6% for the year driven by labor market pressures, increases in state-mandated minimum and tipped wage rates and increased investment in our people.~~

Restaurant Rent Expense

Restaurant rent expense, as a percentage of restaurant and other sales, ~~decreased to~~was 1.5% in Q1 ~~2023 compared to 1.7% in~~2024 and Q1 ~~2022. The decrease was primarily due to the~~2023. In Q1 2024, increase in average unit volume ~~and~~ was ~~partially~~ offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.

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Restaurant Other Operating Expenses

Restaurant other operating expenses, as a percentage of restaurant and other sales, ~~decreased~~increased to 14.7% in Q1 2024 compared to 14.3% in Q1 ~~2023~~2023. The increase was driven by an increase in general liability insurance expense of $4.4 million, as compared to ~~14.7% in Q1 2022. The decrease was primarily due to~~ the prior year period, and higher incentive compensation expense partially offset by an increase in average unit volume and lower supplies expense. The increase in general liability insurance expense was due to unfavorable claims experience and ~~bonus expense partially offset by higher repair and maintenance costs and equipment rent.~~an increase in retention levels.

Pre-opening Expenses

Pre-opening expenses were $8.1 million in Q1 2024 compared to $5.4 million in Q1 2023 ~~compared to $4.3 million~~driven by an increase in ~~Q1 2022.~~the number and timing of new store openings. Pre-opening costs will fluctuate from quarter to quarter based on ~~wage inflation,~~ 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 Expense

Depreciation and amortization ~~expenses,~~expense, as a percentage of total revenue, ~~decreased to~~was 3.1% in Q1 ~~2023 compared to 3.4% in~~2024 and Q1 ~~2022. The decrease was primarily due to~~2023. In Q1 2024, the increase in average unit volume ~~partially~~was offset by higher depreciation at ~~new~~our newer restaurants.

Impairment and Closure Costs, Net

Impairment and closure costs, net was $0.2 million in Q1 2024 and was not significant in Q1 ~~2023 and ($0.6) million in~~2023. In Q1 ~~2022. For Q1 2022,~~2024, impairment and closure costs, net included closure costs related to a ~~gain of $0.7 million associated with the sale of land and building that previously was classified as assets held for sale.~~planned restaurant relocation.

General and Administrative Expenses

General and administrative expenses, as a percentage of total revenue, ~~increased~~decreased to 4.0% in Q1 2024 compared to 4.2% in Q1 ~~2023 compared to 4.1%~~2023. The decrease was driven by an increase in ~~Q1 2022. The increase was primarily driven by~~average unit volume and a separation payout ~~net of restricted stock forfeitures,~~ of $2.6 million in Q1 2023 related to the retirement of an executive officer ~~increased salary and bonus expense and increased software hosting fees. The increase was~~ partially offset by ~~the~~an increase in ~~average unit volume.~~incentive compensation expense.

Interest Income, ~~(Expense),~~ Net

Interest income, ~~(expense),~~ net was ~~$1.2~~$1.4 million and ~~($0.4)~~$1.2 million in Q1 ~~2023~~2024 and Q1 ~~2022,~~2023, respectively. The increase was ~~primarily~~ driven by increased earnings on our cash and cash equivalents and decreased borrowings on our revolving credit facility.

Equity Income from Investments in Unconsolidated Affiliates

Equity income was $0.3 million in Q1 2024 compared to $0.8 million in Q1 ~~2023 compared to $0.3 million~~2023. The decrease in Q1 ~~2022. The increase~~2024 was primarily driven by a $0.6 million gain on the acquisition of four of these affiliates in Q1 2023.

~~Table of Contents~~

Income Tax Expense

Our effective tax rate ~~decreased to~~was 13.9% in Q1 ~~2023 compared to 14.2%~~2024 and Q1 2023. In Q1 2024, a decrease in ~~Q1 2022. The decrease~~the benefit of the FICA tip and work opportunity tax credits, which was ~~primarily~~ driven by increased profitability, was offset by an increase in ~~FICA tip~~the excess tax ~~credit benefits.~~benefits related to stock compensation. For ~~2023,~~2024, we expect ~~our~~an effective tax rate ~~to be~~of approximately 14% based on forecasted operating ~~results, excluding the impact of any legislative changes enacted.~~results.

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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 and franchise 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 primary 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.~~initiatives that is included in Other. 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):


	13 Weeks Ended								13 Weeks Ended
	March 28, 2023				March 29, 2022				March 26, 2024				March 28, 2023
Texas Roadhouse	$	176,990	16.1	%	$	153,468	16.5	%	$	215,213	17.4	%	$	176,990	16.1	%
Bubba's 33		8,453	13.8			7,794	15.2			12,170	17.2			8,453	13.8
Other		253	4.8			(79)	(2.6)			1,064	14.4			253	4.8
Total	$	185,696	15.9	%	$	161,183	16.4	%	$	228,447	17.4	%	$	185,696	15.9	%

~~For~~In our Texas Roadhouse reportable segment, restaurant margin dollars increased ~~$23.5~~$38.2 million or ~~15.3%~~21.6% in Q1 ~~2023.~~2024. The increase was primarily due to higher sales which was primarily offset by commodity inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 16.1% in Q1 2023 from 16.5% in Q1 2022. Restaurant margin percentage was primarily impacted by commodity inflation which was partially offset by ~~the benefit of~~ an increase in ~~comparable restaurant sales.~~general liability expense and wage and other labor inflation.

~~For~~In our Bubba’s 33 reportable segment, restaurant margin dollars increased ~~$0.7~~$3.7 million or ~~8.5%~~44.0% in Q1 ~~2023.~~2024. The increase was primarily due to higher sales ~~which was primarily~~and commodity deflation, driven by poultry, partially offset by wage and other labor inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 13.8% in Q1 2023 from 15.2% in Q1 2022. Restaurant margin percentage was primarily impacted by wage and other labor inflation which was partially offset by the benefit of an increase in comparable restaurant sales.

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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):


	13 Weeks Ended				13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
Net cash provided by operating activities	$	188,981	$	187,769	$	243,439	$	188,981
Net cash used in investing activities		(103,300)		(73,278)		(74,692)		(103,300)
Net cash used in financing activities		(103,399)		(124,413)		(59,565)		(103,399)
Net decrease in cash and cash equivalents	$	(17,718)	$	(9,922)	$	109,182	$	(17,718)

Net cash provided by operating activities was $243.4 million in Q1 2024 compared to $189.0 million in Q1 ~~2023 compared to $187.8 million in Q1 2022.~~2023. This increase was primarily due to an increase in net income and ~~non-cash items such as depreciation and amortization partially offset by an unfavorable~~a favorable change in working capital.

Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital, if necessary. 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.

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Net cash used in investing activities was $74.7 million in Q1 2024 compared to $103.3 million in Q1 ~~2023 compared to $73.3 million in Q1 2022.~~2023. The ~~increase~~decrease was primarily due to ~~an increase in capital expenditures, driven by an increase in new company restaurants, and~~ the acquisition of eight domestic franchise restaurants ~~compared to seven~~for $39.1 million in Q1 ~~2022.~~2023 partially offset by an increase in capital expenditures.

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.~~as applicable. We either lease our restaurant site locations under operating leases for periods of five to 30 years (including renewal periods) or purchase the land when appropriate. As of March ~~28, 2023,~~26, 2024, we had developed 154 of the ~~611~~644 company restaurants on land that we own.

The following table presents a summary of capital expenditures (in thousands):


	13 Weeks Ended					13 Weeks Ended
	March 28, 2023		March 29, 2022		March 26, 2024		March 28, 2023
New company restaurants	$	41,301	$	26,326	$	42,563	$	41,301
Refurbishment or expansion of existing restaurants		19,196		18,160		29,269		19,196
Relocation of existing restaurants		4,627		3,666		4,220		4,627
Capital expenditures related to Support Center office		1,609		877		1,620		1,609
Total capital expenditures	$	66,733	$	49,029	$	77,672	$	66,733

Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the timing of those openings, and the restaurant prototype developed in a given fiscal year. These requirements will include costs directly related to opening new restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base. ~~In 2023, we expect our capital expenditures to be approximately $265 million as we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 restaurants.~~

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 revolving credit facility.

~~As of March 28, 2023, the estimated cost of completing~~ In 2024, we expect our capital ~~project commitments over the next 12 months was~~expenditures to be approximately ~~$228.6~~$340 million to $350 million. ~~See note 6 to the unaudited condensed consolidated financial statements for a discussion of contractual obligations.~~

Net cash used in financing activities was $59.6 million in Q1 2024 compared to $103.4 million in Q1 ~~2023 compared $124.4 million in Q1 2022.~~2023. The decrease is primarily due to ~~a decrease in~~ the ~~amount~~$50 million repayment of ~~share repurchases partially offset by payments on~~ our revolving credit facility ~~as well as~~in Q1 2023 partially offset by an increase in our quarterly dividend payment.

~~Table~~On February 14, 2024, our Board authorized the payment of ~~Contents~~a quarterly cash dividend of $0.61 per share of common stock compared to the quarterly dividend of $0.55 per share of common stock declared in 2023. The payment of quarterly dividends totaled $40.8 million and $36.9 million in Q1 2024 and Q1 2023, respectively.

On March 17, 2022, our Board ~~of Directors (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.~~date. All repurchases to date under our stock repurchase programs have been made through open market transactions.

~~For the 13 weeks ended March 28,~~In Q1 2024, we paid $8.9 million to repurchase 60,262 shares of our common stock. In Q1 2023, we paid $9.6 million ~~to repurchase~~for 92,751 ~~shares of our common stock. For the 13 weeks ended March 29, 2022, we paid $84.7 million to repurchase 1,060,618~~ shares of our common stock. As of March ~~28, 2023, $157.3~~26, 2024, $107.9 million remained under our authorized stock repurchase program.

On February 14, 2023, our Board authorized the payment of a quarterly cash dividend of $0.55 per share of common stock which represented a 20% increase compared to the quarterly dividend of $0.46 per share of common stock declared in 2022. ~~The payment of quarterly dividends totaled $36.9 million and $31.8 million in Q1 2023 and Q1 2022, respectively.~~

We maintain a ~~revolving~~ credit facility ~~(the~~ ~~"credit~~ ~~facility~~") with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The credit facility is 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 credit facility has a maturity date of May 1, 2026.

The terms of the credit facility require us to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the credit facility, in each case depending on our leverage ratio. The credit facility also has an Alternate Base Rate that may be substituted for LIBOR.

As of March ~~28,~~26, 2024 and December 26, 2023, we had no outstanding ~~balance on~~borrowings under the credit facility and had ~~$283.5~~$295.3 million of availability, net of ~~$16.5~~$4.7 million of outstanding letters of ~~credit. As of December 27, 2022, we had $50.0 million outstanding on the~~ credit, facility, which was repaid in Q1 2023, and $233.5 million of availability, net of $16.5 million of outstanding letters of credit. The outstanding amount as of December 27, 2022 is included as long-term debt on our unaudited condensed consolidatedrespectively. ~~balance sheet.~~

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The interest rate for the credit facility as of March 26, 2024 and March 28, 2023 ~~and March 29, 2022~~ was ~~5.47%~~6.20% and ~~1.20%~~5.47%, respectively.

Guarantees

As of March ~~28, 2023~~26, 2024 and December ~~27, 2022,~~26, 2023, we were contingently liable for ~~$11.1~~$10.1 million and ~~$11.3~~$10.4 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 material liabilities have been recorded as of March ~~28, 2023~~26, 2024 and December ~~27, 2022~~26, 2023 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

ITEM 3. 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 ~~revolving~~ credit facility ~~(the~~ ~~"credit~~ ~~facility~~") require us to pay interest on outstanding borrowings at ~~London Interbank Offering Rate ("LIBOR")~~SOFR, plus a ~~margin~~fixed adjustment of 0.10%, plus a variable adjustment of 0.875% to 1.875% ~~and pay a commitment fee of 0.125% to 0.30% per year on any unused~~

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~~portion of the credit facility, in each case~~ depending on our leverage ratio. ~~The credit facility also has an Alternate Base Rate that may be substituted for LIBOR.~~ As of March ~~28, 2023,~~26, 2024, we had no outstanding borrowings onunder our credit facility.

In an effort to secure high quality, low-cost ingredients used in the products sold in our restaurants, we employ various purchasing and pricing contract techniques. When purchasing certain types of commodities, we may be subject to prevailing market conditions resulting in unpredictable price volatility. For certain commodities, we may also enter into contracts for terms of one year or less that are either fixed price agreements or fixed volume agreements where the price is negotiated with reference to fluctuating market prices. We currently do not use financial instruments to hedge commodity prices, but we will continue to evaluate their effectiveness. Extreme and/or long-term increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.

We are subject to business risk as our beef supply is highly dependent upon 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 supply shortages and/or higher costs to secure adequate supply and a possible loss of sales, any of which would harm our business.

ITEM 4. 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 March ~~28, 2023.~~26, 2024.

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Changes in Internal Control

There were no ~~significant~~ changes in the Company’s internal control over financial reporting that occurred during the 13 weeks ended March ~~28, 2023~~26, 2024 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Occasionally, we are a defendant in litigation arising in the ordinary course of our business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which are covered by insurance at varying retention levels, has had a material adverse effect on us during the periods covered by this report and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.

ITEM 1A. RISK FACTORS

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended December ~~27, 2022,~~26, 2023, under the heading "Special Note Regarding Forward-looking Statements" and in the Form 10-K Part I, Item 1A, Risk Factors. There have been no material changes from the risk factors previously disclosed in our Form 10-K for the fiscal year ended December ~~27, 2022.~~26, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In 2008, our Board approved our first stock repurchase program. From inception through March 26, 2024, we have paid $692.4 million through our authorized stock repurchase programs to repurchase 21,556,730 shares of our common stock at an average price per share of $32.12. On March 17, 2022, our Board ~~of Directors (the "Board")~~ approved a stock repurchase program which authorized us to repurchase up to $300.0 million of our common stock. This stock repurchase program has no expiration date. All repurchases to date under our stock repurchase program have been made through open market transactions. The timing and the amount of any repurchases through this program 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.~~considerations, including complying with Rule 10b5-1 trading arrangements under the Exchange Act.

For the 13 weeks ended March ~~28, 2023,~~26, 2024, we paid $~~9.6~~8.9 million to repurchase ~~92,751~~60,262 shares of our common stock. As of March ~~28, 2023, $157.3~~26, 2024, $107.9 million remained authorized for stock repurchases.


					Maximum Number						Maximum Number
					(or Approximate						(or Approximate
				Total Number of	Dollar Value)					Total Number of	Dollar Value)
				Shares Purchased	of Shares that					Shares Purchased	of Shares that
	Total Number	Average		as Part of Publicly	May Yet Be		Total Number	Average		as Part of Publicly	May Yet Be
	of Shares	Price Paid		Announced Plans	Purchased Under the		of Shares	Price Paid		Announced Plans	Purchased Under the
Period	Purchased	per Share		or Programs	Plans or Programs		Purchased	per Share		or Programs	Plans or Programs
December 28 to January 24	—	$	—	—	$	166,877,726
January 25 to February 21	—	$	—	—	$	166,877,726
February 22 to March 28	92,751	$	103.76	92,751	$	157,253,537

December 27 to January 23							5,012	$	118.33	5,012	$	116,290,426
January 24 to February 20							—	$	—	—	$	116,290,426
February 21 to March 26							55,250	$	151.10	55,250	$	107,942,000
Total	92,751			92,751			60,262			60,262

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

~~None.~~Rule 10b5-1 Trading Plans

In accordance with the disclosure requirement set forth in Item 408 of Regulation S-K, the following table discloses any executive officer or director who is subject to the filing requirements of Section 16 of the Exchange Act that adopted a Rule 10b5-1 trading arrangement during the 13 weeks ended March 26, 2024. These trading arrangements are intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).


Name	Title	Adoption Date	End Date (1)	Aggregate Number of Securities to be Sold
Gerald L. Morgan	Chief Executive Officer	2/29/2024	8/30/2025	15,000

(1)

A trading plan may expire on such earlier date that all transactions under the trading plan are completed.

Other than those disclosed above, no other executive officer or director adopted, modified or terminated a Rule 10b5-1 or a non-Rule 10b5-1 trading arrangement during the 13 weeks ended March 26, 2024.

ITEM 6. EXHIBITS


Exhibit No.		Description
~~3.1~~		Amended and Restated Bylaws for Texas Roadhouse, Inc. dated February 23, 2023 (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated February 23, 2023 (File No. 000-50972))
~~10.1~~		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))
~~10.2~~		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))
~~10.3~~		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))
~~10.4~~		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))
~~10.5~~		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))
31.1		~~Certification of Principal Executive Officer~~Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		~~Certification~~Certifications pursuant to Section 302 of ~~Principal Financial Officer~~the Sarbanes-Oxley Act of 2002
31.3		Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		~~Certification of Principal 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 Principal Financial Officer~~Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TEXAS ROADHOUSE, INC.

Date: May ~~5, 2023~~3, 2024	By:	/s/ GERALD L. MORGAN
		Gerald L. Morgan
		Chief Executive Officer (~~principal executive officer)~~Principal Executive Officer)


Date: May ~~5, 2023~~3, 2024	By:	/s/ D. CHRISTOPHER MONROE
		D. Christopher Monroe
		Chief Financial Officer
		(Principal Financial Officer)

Date: May 3, 2024	By:	/s/ KEITH V. HUMPICH
		Keith V. Humpich
		~~Interim Chief Financial Officer~~Vice President of Finance
		(~~principal financial officer)~~Principal Accounting Officer)
		~~(principal accounting officer)~~

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	Fair Value Measurements

		March 28,		December 27,
	Level	2023		2022
Long-lived assets held for use	3	$	—	$	2,000