Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 25, 2018 | Feb. 13, 2019 | Jun. 26, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | Texas Roadhouse, Inc. | ||
Entity Central Index Key | 1,289,460 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 25, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-25 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 4,573,063,062 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 71,688,113 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 25, 2018 | Dec. 26, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 210,125 | $ 150,918 |
Receivables, net of allowance for doubtful accounts of $34 at December 25, 2018 and $43 at December 26, 2017 | 92,114 | 76,496 |
Inventories, net | 18,827 | 16,306 |
Prepaid income taxes | 7,569 | |
Prepaid expenses | 16,384 | 13,361 |
Total current assets | 345,019 | 257,081 |
Property and equipment, net of accumulated depreciation of $602,451 at December 25, 2018 and $527,710 at December 26, 2017 | 956,676 | 912,147 |
Goodwill | 123,220 | 121,040 |
Intangible assets, net of accumulated amortization of $13,416 at December 25, 2018 and $12,675 at December 26, 2017 | 1,959 | 2,700 |
Other assets | 42,402 | 37,655 |
Total assets | 1,469,276 | 1,330,623 |
Current liabilities: | ||
Accounts payable | 62,060 | 57,579 |
Deferred revenue-gift cards | 192,242 | 156,627 |
Accrued wages | 34,159 | 29,678 |
Income taxes payable | 2,494 | |
Accrued taxes and licenses | 24,631 | 21,997 |
Dividends payable | 17,904 | 14,945 |
Other accrued liabilities | 54,146 | 46,678 |
Total current liabilities | 385,142 | 329,998 |
Long-term debt and obligation under capital lease, excluding current maturities | 2,081 | 51,981 |
Restricted stock and other deposits | 7,703 | 7,699 |
Deferred rent | 48,079 | 42,141 |
Deferred tax liabilities, net | 17,268 | 5,301 |
Other liabilities | 48,295 | 42,112 |
Total liabilities | 508,568 | 479,232 |
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, 71,617,510 and 71,168,897 shares issued and outstanding at December 25, 2018 and December 26, 2017, respectively) | 72 | 71 |
Additional paid-in-capital | 257,388 | 236,548 |
Retained earnings | 688,337 | 602,499 |
Accumulated other comprehensive loss | (228) | (39) |
Total Texas Roadhouse, Inc. and subsidiaries stockholders' equity | 945,569 | 839,079 |
Noncontrolling interests | 15,139 | 12,312 |
Total equity | 960,708 | 851,391 |
Total liabilities and equity | $ 1,469,276 | $ 1,330,623 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 25, 2018 | Dec. 26, 2017 |
Consolidated Balance Sheets | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 34 | $ 43 |
Property and equipment, accumulated depreciation (in dollars) | 602,451 | 527,710 |
Intangible assets, accumulated amortization (in dollars) | $ 13,416 | $ 12,675 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 71,617,510 | 71,168,897 |
Common stock, shares outstanding | 71,617,510 | 71,168,897 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Revenue: | |||
Revenue | $ 2,457,449 | $ 2,219,531 | $ 1,990,714 |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | |||
Cost of sales | 795,300 | 721,550 | 669,203 |
Labor | 793,384 | 687,545 | 590,256 |
Rent | 48,791 | 44,807 | 40,580 |
Other operating | 375,477 | 342,702 | 305,290 |
Pre-opening | 19,051 | 19,274 | 19,547 |
Depreciation and amortization | 101,216 | 93,499 | 82,964 |
Impairment and closure | 278 | 654 | 179 |
General and administrative | 136,163 | 123,294 | 110,795 |
Total costs and expenses | 2,269,660 | 2,033,325 | 1,818,814 |
Income from operations | 187,789 | 186,206 | 171,900 |
Interest expense, net | 591 | 1,577 | 1,255 |
Equity income from investments in unconsolidated affiliates | (1,353) | (1,488) | (1,111) |
Income before taxes | 188,551 | 186,117 | 171,756 |
Provision for income taxes | 24,257 | 48,581 | 51,183 |
Net income including noncontrolling interests | 164,294 | 137,536 | 120,573 |
Less: Net income attributable to noncontrolling interests | 6,069 | 6,010 | 4,975 |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | 158,225 | 131,526 | 115,598 |
Other comprehensive (loss) income, net of tax: | |||
Unrealized gain on derivatives, net of tax of ($-), ($-) and ($18) | 27 | ||
Foreign currency translation adjustment, net of tax of $53, ($97) and $70, respectively | (189) | 155 | (112) |
Total other comprehensive (loss) income, net of tax | (189) | 155 | (85) |
Total comprehensive income | $ 158,036 | $ 131,681 | $ 115,513 |
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: | |||
Basic (in dollars per share) | $ 2.21 | $ 1.85 | $ 1.64 |
Diluted (in dollars per share) | $ 2.20 | $ 1.84 | $ 1.63 |
Weighted average shares outstanding: | |||
Basic (in shares) | 71,467 | 70,989 | 70,396 |
Diluted (in shares) | 71,964 | 71,527 | 71,052 |
Dividends declared per share (in dollars per share) | $ 1 | $ 0.84 | $ 0.76 |
Restaurant and other sales | |||
Revenue: | |||
Revenue | $ 2,437,115 | $ 2,203,017 | $ 1,974,261 |
Franchise royalties and fees | |||
Revenue: | |||
Revenue | $ 20,334 | $ 16,514 | $ 16,453 |
Consolidated Statements of In_2
Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Consolidated Statements of Income and Comprehensive Income | |||
Unrealized gain on derivatives, (tax) | $ (18) | ||
Foreign currency translation adjustment, (tax)/benefit | $ 53 | $ (97) | $ 70 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total Texas Roadhouse, Inc. and Subsidiaries | Common Stock | Additional Paid-in-Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total |
Balance at Dec. 29, 2015 | $ 669,662 | $ 70 | $ 201,023 | $ 468,678 | $ (109) | $ 7,520 | $ 677,182 |
Balance (in shares) at Dec. 29, 2015 | 70,091,203 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 115,598 | 115,598 | 4,975 | 120,573 | |||
Other comprehensive income (loss), net | (85) | (85) | (85) | ||||
Distributions to noncontrolling interest holders | (4,479) | (4,479) | |||||
Dividends declared | (53,553) | (53,553) | (53,553) | ||||
Shares issued under share-based compensation plans including tax effects | 5,959 | $ 1 | 5,958 | 5,959 | |||
Shares issued under share-based compensation plans including tax effects (in shares) | 879,042 | ||||||
Repurchase of shares of common stock | (4,110) | (4,110) | $ (4,110) | ||||
Repurchase of shares of common stock (in shares) | (114,700) | (114,700) | |||||
Indirect repurchase of shares for minimum tax withholdings | (9,312) | (9,312) | $ (9,312) | ||||
Indirect repurchase of shares for minimum tax withholdings (in shares) | (235,808) | ||||||
Share-based compensation | 26,067 | 26,067 | 26,067 | ||||
Balance at Dec. 27, 2016 | 750,226 | $ 71 | 219,626 | 530,723 | (194) | 8,016 | 758,242 |
Balance (in shares) at Dec. 27, 2016 | 70,619,737 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 131,526 | 131,526 | 6,010 | 137,536 | |||
Other comprehensive income (loss), net | 155 | 155 | 155 | ||||
Noncontrolling interests contribution | 3,457 | 3,457 | |||||
Distributions to noncontrolling interest holders | (5,171) | (5,171) | |||||
Dividends declared | (59,681) | (59,681) | (59,681) | ||||
Shares issued under share-based compensation plans including tax effects | 1,558 | $ 1 | 1,557 | $ 1,558 | |||
Shares issued under share-based compensation plans including tax effects (in shares) | 800,189 | ||||||
Repurchase of shares of common stock (in shares) | 0 | ||||||
Indirect repurchase of shares for minimum tax withholdings | (11,639) | $ (1) | (11,638) | $ (11,639) | |||
Indirect repurchase of shares for minimum tax withholdings (in shares) | (251,029) | ||||||
Cumulative effect of change in accounting principle | 69 | (69) | |||||
Share-based compensation | 26,934 | 26,934 | 26,934 | ||||
Balance at Dec. 26, 2017 | 839,079 | $ 71 | 236,548 | 602,499 | (39) | 12,312 | $ 851,391 |
Balance (in shares) at Dec. 26, 2017 | 71,168,897 | 71,168,897 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 158,225 | 158,225 | 6,069 | $ 164,294 | |||
Other comprehensive income (loss), net | (189) | (189) | (189) | ||||
Noncontrolling interests contribution | 2,551 | 2,551 | |||||
Distributions to noncontrolling interest holders | (5,746) | (5,746) | |||||
Acquisition of noncontrolling interest | (75) | (75) | (47) | (122) | |||
Contribution from executive officer | 1,000 | 1,000 | 1,000 | ||||
Dividends declared | (71,509) | (71,509) | $ (71,509) | ||||
Shares issued under share-based compensation plans including tax effects | $ 1 | (1) | |||||
Shares issued under share-based compensation plans including tax effects (in shares) | 684,804 | ||||||
Repurchase of shares of common stock (in shares) | 0 | ||||||
Indirect repurchase of shares for minimum tax withholdings | (14,067) | (14,067) | $ (14,067) | ||||
Indirect repurchase of shares for minimum tax withholdings (in shares) | (236,191) | ||||||
Cumulative effect of change in accounting principle | (878) | (878) | (878) | ||||
Share-based compensation | 33,983 | 33,983 | 33,983 | ||||
Balance at Dec. 25, 2018 | $ 945,569 | $ 72 | $ 257,388 | $ 688,337 | $ (228) | $ 15,139 | $ 960,708 |
Balance (in shares) at Dec. 25, 2018 | 71,617,510 | 71,617,510 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 25, 2018 | Sep. 25, 2018 | Jun. 26, 2018 | Mar. 27, 2018 | Dec. 26, 2017 | Sep. 26, 2017 | Jun. 27, 2017 | Mar. 28, 2017 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Consolidated Statement of Stockholders' Equity | |||||||||||
Dividends declared per share (in dollars per share) | $ (0.25) | $ (0.25) | $ (0.25) | $ (0.25) | $ (0.21) | $ (0.21) | $ (0.21) | $ (0.21) | $ (1) | $ (0.84) | $ (0.76) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Cash flows from operating activities: | |||
Net income including noncontrolling interests | $ 164,294 | $ 137,536 | $ 120,573 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 101,216 | 93,499 | 82,964 |
Deferred income taxes | 12,319 | (5,069) | 5,994 |
Loss on disposition of assets | 6,008 | 4,961 | 5,125 |
Impairment and closure costs | 105 | 600 | 139 |
Contribution from executive officer | 1,000 | ||
Equity income from investments in unconsolidated affiliates | (1,353) | (1,488) | (1,111) |
Distributions of income received from investments in unconsolidated affiliates | 656 | 1,424 | 1,901 |
Provision for doubtful accounts | (9) | 10 | 27 |
Share-based compensation expense | 33,983 | 26,934 | 26,067 |
Changes in operating working capital: | |||
Receivables | (15,597) | (20,379) | (10,733) |
Inventories | (2,495) | (48) | (455) |
Prepaid expenses | (3,023) | (1,211) | (855) |
Other assets | (4,290) | (7,401) | (4,229) |
Accounts payable | 8,882 | 1,601 | 138 |
Deferred revenue-gift cards | 35,519 | 26,678 | 28,284 |
Accrued wages | 4,481 | 3,639 | (10,194) |
Excess tax benefits from share-based compensation | (3,291) | ||
Prepaid income taxes and income taxes payable | (8,581) | 3,448 | 2,300 |
Accrued taxes and licenses | 2,634 | 2,299 | 919 |
Other accrued liabilities | 7,569 | 5,148 | 3,326 |
Deferred rent | 5,938 | 6,038 | 4,610 |
Other liabilities | 3,612 | 8,154 | 5,566 |
Net cash provided by operating activities | 352,868 | 286,373 | 257,065 |
Cash flows from investing activities: | |||
Capital expenditures-property and equipment | (155,980) | (161,628) | (164,738) |
Acquisition of franchise restaurants, net of cash acquired | (2,165) | (16,528) | |
Net cash used in investing activities | (158,145) | (178,156) | (164,738) |
Cash flows from financing activities: | |||
Proceeds from revolving credit facility, net | 25,000 | ||
Debt issuance costs | (476) | ||
Proceeds from noncontrolling interest contribution and other | 2,551 | 3,457 | |
Distributions to noncontrolling interest holders | (5,746) | (5,171) | (4,479) |
Acquisition of noncontrolling interest | (122) | ||
Repurchase of shares of common stock | 4,110 | ||
Excess tax benefits from share-based compensation | 3,291 | ||
Proceeds from restricted stock and other deposits, net | 418 | 740 | 419 |
Indirect repurchase of shares for minimum tax withholdings | (14,067) | (11,639) | (9,312) |
Principal payments on long-term debt and capital lease obligation | (50,000) | (558) | (145) |
Proceeds from exercise of stock options | 1,558 | 2,673 | |
Dividends paid to shareholders | (68,550) | (58,154) | (52,054) |
Net cash used in financing activities | (135,516) | (70,243) | (38,717) |
Net increase in cash and cash equivalents | 59,207 | 37,974 | 53,610 |
Cash and cash equivalents—beginning of period | 150,918 | 112,944 | 59,334 |
Cash and cash equivalents—end of period | 210,125 | 150,918 | 112,944 |
Supplemental disclosures of cash flow information: | |||
Interest paid, net of amounts capitalized | 896 | 1,216 | 1,011 |
Income taxes paid | 20,519 | 50,201 | 42,890 |
Capital expenditures included in current liabilities | $ 7,332 | $ 12,156 | 2,781 |
Obligation under capital lease | $ 2,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 25, 2018 | |
Description of Business | |
Description of Business | (1) The accompanying Consolidated Financial Statements include the accounts of Texas Roadhouse, Inc. ("TRI"), our wholly‑owned subsidiaries and subsidiaries in which we have a controlling interest (collectively, the "Company," "we," "our" and/or "us") as of December 25, 2018 and December 26, 2017 and for each of the years in the three-year period ended December 25, 2018. As of December 25, 2018, we owned and operated 491 restaurants and franchised an additional 91 restaurants in 49 states and nine foreign countries. Of the 491 company restaurants that were operating at December 25, 2018, 471 were wholly‑owned and 20 were majority‑owned. Of the 91 franchise restaurants, 69 were domestic and 22 were international restaurants. As of December 26, 2017, we owned and operated 462 restaurants and franchised an additional 87 restaurants in 49 states and seven foreign countries. Of the 462 company restaurants that were operating at December 26, 2017, 444 were wholly‑owned and 18 were majority-owned. Of the 87 franchise restaurants, 70 were domestic and 17 were international restaurants. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 25, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) Principles of Consolidation As of December 25, 2018 and December 26, 2017, we owned a 5.0% to 10.0% equity interest in 24 restaurants. Additionally, as of December 25, 2018 and December 26, 2017, we owned a 40% equity interest in four non-Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China. The unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in Other assets in our consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under Equity income from investments in unconsolidated affiliates. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated. (b) Fiscal Year We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December. We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks. Fiscal years 2018, 2017 and 2016 were 52 weeks in length. (c) Cash and Cash Equivalents We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents also included receivables from credit card companies, which amounted to $34.1 million and $7.2 million at December 25, 2018 and December 26, 2017, respectively, because the balances are settled within two to three business days. (d) Receivables Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for reimbursement of labor costs, pre‑opening and other expenses, and franchise restaurants for royalty fees. Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write‑off experience. We review our allowance for doubtful accounts quarterly. Past due balances over 120 days and a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (e) Inventories Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first‑in, first‑out) or net realizable value. (f) Pre‑opening Expenses Pre‑opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new restaurant and are comprised principally of opening team and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. (g) Property and Equipment Property and equipment are stated at cost. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed on property and equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related assets or the underlying lease term using the straight‑line method. In most cases, assets on leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more option periods. See note 2(p) for further discussion of leases and leasehold improvements. The estimated useful lives are: Land improvements 10 - 25 years Buildings and leasehold improvements 10 - 25 years Furniture, fixtures and equipment 3 - 10 years The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net. Repairs and maintenance expense amounted to $29.7 million, $25.8 million and $22.4 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. These costs are included in other operating costs in our consolidated statements of income and comprehensive income. (h) Impairment of Goodwill Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles – Goodwill and Other ("ASC 350"), we perform tests to assess potential impairments at the end of each fiscal year or during the year if an event or other circumstance indicates that goodwill may be impaired. Our assessment is performed at the reporting unit level, which is at the individual restaurant level. In the first step of the review process, we compare the estimated fair value of the restaurant with its carrying value, including goodwill. If the estimated fair value of the restaurant exceeds its carrying amount, no further analysis is needed. If the estimated fair value of the restaurant is less than its carrying amount, the second step of the review process requires the calculation of the implied fair value of the goodwill by allocating the estimated fair value of the restaurant to all of the assets and liabilities of the restaurant as if it had been acquired in a business combination. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. If the carrying value of the goodwill associated with the restaurant exceeds the implied fair value of the goodwill, an impairment loss is recognized for that excess amount. The valuation approaches used to determine fair value are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate revenue growth rates, operating margins, weighted average cost of capital and comparable company and acquisition market multiples. In estimating the fair value using the capitalization of earnings method or discounted cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods, expectations of future sales growth and terminal value. Assumptions about important factors such as the trend of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. When developing these key judgments and assumptions, we consider economic, operational and market conditions that could impact fair value. The judgments and assumptions used are consistent with what we believe hypothetical market participants would use. However, estimates are inherently uncertain and represent only our reasonable expectations regarding future developments. If the estimates used in performing the impairment test prove inaccurate, the fair value of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and indicating impairment has occurred. In 2018, 2017 and 2016, as a result of our annual goodwill impairment analysis, we determined that there was no goodwill impairment. Refer to note 7 for additional information related to goodwill and intangible assets. (i) Other Assets Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates, deposits and costs related to the issuance of debt. The debt issuance costs are being amortized to interest expense over the term of the related debt. For further discussion of the deferred compensation plan, see note 15. (j) Impairment or Disposal of Long‑lived Assets In accordance with ASC 360, Property, Plant and Equipment , long-lived assets related to each restaurant to be held and used in the business, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable. When we evaluate restaurants, cash flows are the primary indicator of impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant to estimated undiscounted future cash flows expected to be generated by the restaurant. Under our policies, trailing 12-month cash flow results below $300,000 at the individual restaurant level signals potential impairment. In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which can be for a period of over 20 years. In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations of future sales growth. Assumptions about important factors such as the trend of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. If the carrying amount of the restaurant exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the estimated fair value of the assets. We generally measure fair value by independent third party appraisal or discounting estimated future cash flows. When fair value is measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe hypothetical market participants would use. We also use a discount rate that is commensurate with the risk inherent in the projected cash flows. The adjusted carrying amounts of assets to be held and used are depreciated over their remaining useful life. In 2018, 2017 and 2016, as a result of our impairment analysis, we determined that there was no impairment. For further discussion regarding closures and impairments recorded in 2018, 2017 and 2016 refer to note 16. (k) Insurance Reserves We self‑insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, and property insurance programs. We purchase insurance for individual claims that exceed the retention amounts listed below: Employment practices liability/Class Action $ / $2,000,000 Workers compensation $350,000 General liability $500,000 Employee healthcare $325,000 In addition, we purchase property insurance for claims that exceed $50,000 after an aggregate deductible of $250,000. We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on estimates provided by management, a third party administrator and/or actuary. The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances. (l) Segment Reporting We consider our restaurant and franchising operations as similar and have aggregated them into a single reportable segment. The majority of the restaurants operate in the U.S. within the casual dining segment of the restaurant industry, providing similar products to similar customers. The restaurants also possess similar pricing structures, resulting in similar long‑term expected financial performance characteristics. As of December 25, 2018, we operated 491 restaurants, each as a single operating segment, and franchised an additional 91 restaurants. Revenue from external customers is derived principally from food and beverage sales. We do not rely on any major customers as a source of revenue. (m) Revenue Recognition We recognize revenue from restaurant sales when food and beverage products are sold. Deferred revenue primarily represents our liability for gift cards that have been sold, but not yet redeemed. When the gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. We also recognize revenue from our franchising of Texas Roadhouse restaurants. This includes franchise royalties, initial and upfront franchise fees, fees paid to our domestic marketing and advertising fund, and fees for supervisory and administrative services. For further discussion of revenue, see note 3. (n) Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. We recognize both interest and penalties on unrecognized tax benefits as part of income tax expense. A valuation allowance is established to reduce the carrying value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in the valuation allowance would be charged to income in the period such determination was made. (o) Advertising We have a domestic system‑wide marketing and advertising fund. We maintain control of the marketing and advertising fund and, as such, have consolidated the fund’s activity for the years ended December 25, 2018, December 26, 2017 and December 27, 2016. Domestic company and franchise restaurants are required to remit a designated portion of sales, currently 0.3%, to the advertising fund. Advertising contributions related to company restaurants are recorded as a component of other operating costs. Advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. Other costs related to local restaurant area marketing initiatives are included in other operating costs in our consolidated statements of income and comprehensive income. These costs and the company-owned restaurant contribution amounted to approximately $17.1 million, $14.5 million and $13.3 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. (p) Leases and Leasehold Improvements We lease land and/or buildings for the majority of our restaurants under non‑cancelable lease agreements. Our land and/or building leases typically have initial terms ranging from 10 to 15 years, and certain renewal options for one or more five-year periods. We account for leases in accordance with ASC 840, Leases , and other related authoritative guidance. When determining the lease term, we include option periods for which failure to renew the lease imposes a penalty on us in such an amount that renewal appears, at the inception of the lease, to be reasonably assured. The primary penalty to which we are subject is the economic detriment associated with the existence of leasehold improvements which might become impaired if we choose not to continue the use of the leased property. Certain of our operating leases contain predetermined fixed escalations of the minimum rent during the original term of the lease. For these leases, we recognize the related rent expense on a straight‑line basis over the lease term and record the difference between the amounts charged to operations and amounts paid as deferred rent. We may receive rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession date and end when the lease commences, during which no cash rent payments are typically due under the terms of the lease. Rent holidays are included in the lease term when determining straight‑line rent expense. Additionally, certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable. This may result in some variability in rent expense as a percentage of sales over the term of the lease in restaurants where we pay contingent rent. The judgment regarding the probable term for each restaurant property lease impacts the classification and accounting for a lease as capital or operating, the rent holiday and/or escalation in payments that are taken into consideration when calculating straight‑line rent and the term over which leasehold improvements for each restaurant are amortized. The material factor we consider when making this judgment is the total amount invested in the restaurant at the inception of the lease and whether management believes that renewal appears reasonably assured. While a different term may produce materially different amounts of depreciation, amortization and rent expense than reported, our historical lease renewal rates support the judgments made. We have not made any changes to the nature of the assumptions used to account for leases in any of the fiscal years presented in our consolidated financial statements. Sale leasebacks are transactions through which assets (such as restaurant properties) are sold and subsequently leased back. The resulting leases generally qualify and are accounted for as operating leases. Financing leases are generally the product of a sale leaseback transaction that does not meet the criteria for sale leaseback accounting. The result of a financing lease is the retention of the "sold" assets within land, building and equipment with a financing lease obligation equal to the amount of proceeds received recorded as a component of other liabilities on our consolidated balance sheets. (q) Use of Estimates We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of revenue and expenses during the period to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP"). Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card discounts and breakage and income taxes. Actual results could differ from those estimates. (r) Comprehensive Income ASC 220, Comprehensive Income , establishes standards for reporting and the presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and other comprehensive income (loss) items that are excluded from net income under GAAP. Other comprehensive income (loss) consists of the effective unrealized portion of changes in fair value of cash flow hedges through January 2016 and foreign currency translation adjustments. The foreign currency translation adjustment included in comprehensive income on the consolidated statements of income and comprehensive income represents the unrealized impact of translating the financial statements of our foreign investment. This amount is not included in net income and would only be realized upon the disposition of the business. (s) Fair Value of Financial Instruments Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants on the measurement date. We use a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to note 15 for further discussion of fair value measurement. (t) Derivative Instruments and Hedging Activities We do not use derivative instruments for trading purposes. We account for derivatives and hedging activities in accordance with ASC 815, Derivatives and Hedging , which requires that all derivative instruments be recorded on the consolidated balance sheet at their respective fair values. The accounting for changes in the fair value of a derivative instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship. We had a free standing derivative instrument that had been designated and qualified as a cash flow hedge that expired in January 2016. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. There was no hedge ineffectiveness recognized during the years ended December 25, 2018, December 26, 2017 and December 27, 2016. (u) Recent Accounting Pronouncements Revenue Recognition (ASC 606, Revenue from Contracts with Customers, "ASC 606") On December 27, 2017, we adopted ASC 606, Revenue from Contracts with Customers . This ASC requires an entity to allocate the transaction price received from customers to each separate and distinct performance obligation and recognize revenue as these performance obligations are satisfied. This standard replaces most existing revenue recognition guidance in GAAP. The adoption of this standard did not have an impact on our recognition of sales from company restaurants or our recognition of continuing fees from franchisees, which are based on a percentage of franchise restaurant sales. As further detailed below, the adoption of this standard did have an impact on the recognition of initial franchise fees and upfront fees from international development agreements. In addition, certain transactions that were previously recorded as expense are now classified as revenue. We utilized the cumulative-effect method of adoption and recorded a $0.9 million reduction, net of tax, to retained earnings as of the first day of fiscal 2018 to reflect the change in the recognition pattern of initial franchise fees and upfront fees. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effects of the changes made to our consolidated balance sheet as of December 26, 2017 as a result of the adoption of ASC 606 were as follows: Balance at ASC 606 Balance at December 26, 2017 Adjustments December 27, 2017 Liabilities Deferred tax liabilities, net $ 5,301 $ (299) $ 5,002 Other liabilities, non-current 42,112 1,177 43,289 Equity Retained earnings $ 602,499 $ (878) $ 601,621 Under ASC 606, because the services we provide related to initial franchise fees and upfront fees from international development agreements do not contain separate and distinct performance obligations from the franchise right, these fees will be recognized on a straight-line basis over the term of the associated franchise agreement. Under previous guidance, initial franchise fees were recognized when the related services had been provided, which was generally upon the opening of the restaurant, and upfront fees were recognized on a pro-rata basis as restaurants under the development agreement were opened. These fees will continue to be recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. ASC 606 requires sales-based royalties to continue to be recognized as franchise restaurant sales occur. In addition, certain transactions that were previously recorded as expense are now classified as revenue. These transactions include breakage income and third party gift card fees from our gift card program as well as accounting fees, supervision fees and advertising contributions received from our franchisees. Under ASC 606, breakage income and third party gift card fees are recorded as a component of restaurant and other sales in our consolidated statements of income and comprehensive income. Under previous guidance, these transactions were recorded as a component of other operating expense. Also under ASC 606, accounting fees, supervision fees and advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. Under previous guidance, these transactions were recorded as a reduction of general and administrative expense. As noted above, we adopted ASC 606 as of the first day of fiscal 2018. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of adopting ASC 606 as compared to the previous revenue recognition guidance on our consolidated balance sheet and consolidated statements of income and comprehensive income was as follows: December 25, 2018 Balances Without Adoption Impact of As Reported Adoption of ASC 606 ASC 606 Balance Sheet Liabilities Deferred tax liabilities, net $ 17,268 $ 17,568 $ (300) Other liabilities, non-current 48,295 47,114 1,181 Equity Retained earnings $ 688,337 $ 689,218 $ (881) Fiscal Year Ended December 25, 2018 Balances Without Adoption Adoption of Impact of As Reported ASC 606 ASC 606 Income Statement Revenue Restaurant and other sales $ 2,437,115 $ 2,442,268 $ (5,153) Franchise royalties and fees 20,334 17,990 2,344 Costs and expenses Other operating 375,477 380,630 (5,153) General and administrative 136,163 133,815 2,348 Provision for income taxes 24,257 24,258 (1) Net Income $ 158,225 $ 158,228 $ (3) Statement of Cash Flows (Accounting Standards Update 2016-15, "ASU 2016-15") In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which adds and/or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Income Taxes (Accounting Standards Update 2016-16, "ASU 2016-16") In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) , which addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This standard will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Compensation – Stock Compensation (Accounting Standards Update 2017-09, "ASU 2017-09") In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting , which clarifies when a change in the terms or conditions of a share-based payment award must be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change in the terms and conditions of the award. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Leases (Accounting Standards Update 2016-02, "ASU 2016-02") In February 2016, the FASB issued ASU 2016-02, Leases , which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. This update also requires additional disclosures about the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (our 2019 fiscal year). In March 2018, the FASB approved an amendment that allowed a modified retrospective approach and new required lease disclosures for all leases existing or entered into after either the beginning of the year of adoption or the earliest comparative period in the consolidated financial statements. We will adopt ASU 2016-02 using a modified retrospective approach as of the beginning of the year of adoption. As a result, the comparative financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before December 26, 2018. We will take advantage of the transition package of practical expedients permitted within the new standard which will allow us to carryforward the historical lease classification. We will also elect the practical expedient to not separate lease and non-lease components for all leases as well as the hindsight practical expedient. The election of the hindsight practical expedient will result in a change in lease terms for certain existing leases. We estimate the adoption of this standard will result in the recognition of a right-of-use asset of approximately $470.0 million, net of deferred rent of $48.1 million, and a lease liability of $520.0 million as of December 26, 2018, our initial date of adoption. There will be no significant impact to our results of operations, cash flows, or the related notes. We do not believe this standard will have a significant impact on our liquidity. The standard will have no impact on our compliance with our financial covenants associated with our credit facility. Financial Instruments (Accounting Standards Update 2016-13, "ASU 2016-13") In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected versus incurred losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019 (our 2020 fiscal year), with early adoption permitted for annual periods beginning after December 15, 2018. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows. Goodwill (Accounting Standards Update 2017-04, "ASU 2017-04") In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment and is expected to reduce the cost and complexity of accounting for goodwill. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Instead, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and will be applied on a prospective basis. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows. Fair Value Measurement (Accounting Standards Update 2018-13, "ASU 2018-13") In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, modifies and adds disclosure requirements for fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and for interim periods within those years, with early adoption permitted. We are currently assessing the impact of this new standard on our consolidated financial statements. |
Revenue
Revenue | 12 Months Ended |
Dec. 25, 2018 | |
Revenue | |
Revenue | (3) Revenue The following table disaggregates our revenue by major source (in thousands): Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Restaurant and other sales $ 2,437,115 $ 2,203,017 $ 1,974,261 Franchise royalties 17,443 16,195 16,135 Franchise fees 2,891 319 318 Total revenue $ 2,457,449 $ 2,219,531 $ 1,990,714 Restaurant sales include the sale of food and beverage products to our customers. We recognize this revenue when the products are sold. All sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the consolidated statements of income and comprehensive income. Other sales include the amortization of gift card breakage and fees associated with third party gift card sales. We record deferred revenue for gift cards that have been sold but not yet redeemed. When the gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. For some of the gift cards that are sold, the likelihood of redemption is remote. When the likelihood of a gift card's redemption is determined to be remote, we record a breakage adjustment and reduce deferred revenue by the amount never expected to be redeemed. We use historic gift card redemption patterns to determine when the likelihood of a gift card's redemption becomes remote and have determined that approximately 4% of the value of the gift cards sold by our company and our third party retailers will never be redeemed. This breakage adjustment is recorded consistent with the historic redemption pattern of the associated gift card. In addition, we incur fees on all gift cards that are sold through third party retailers. These fees are also deferred and recorded consistent with the historic redemption pattern of the associated gift cards. For the year ended December 25, 2018, we recognized gift card fees, net of gift card breakage income, of approximately $5.2 million. Total deferred revenue related to our gift cards is included in deferred revenue-gift cards in our consolidated balance sheets and includes the full value of unredeemed gift cards less the amortized portion of the breakage rates and the unamortized portion of third party fees. As of December 25, 2018 and December 26, 2017, our deferred revenue balance related to gift cards was approximately $192.2 million and $156.6 million, respectively. This change was primarily due to the sale of additional gift cards partially offset by the redemption of gift cards. We recognized restaurant sales of approximately $108.7 million for the year ended December 25, 2018 related to the amount in deferred revenue as of December 26, 2017. Franchise royalties include continuing fees received from our franchising of Texas Roadhouse restaurants. We execute franchise agreements for each franchise restaurant which sets out the terms of our arrangement with the franchisee. These agreements require the franchisee to pay ongoing royalties of generally 4.0% of gross sales from our domestic franchisees, along with royalties paid to us by our international franchisees. Franchise royalties are recognized as revenue as the corresponding franchise restaurant sales occur. Franchise fees are all remaining fees from our franchisees including initial fees, upfront fees from international agreements, fees paid to our domestic marketing and advertising fund, and fees for supervisory and administrative services. Our franchise agreements typically require the franchisee to pay an initial, non-refundable fee. Subject to our approval and payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration. These initial fees and renewal fees are deferred and recognized over the term of the agreement. We also enter into area development agreements for the development of international Texas Roadhouse restaurants. Upfront fees from development agreements are deferred and recognized on a pro-rata basis over the term of the individual restaurant franchise agreement as restaurants under the development agreement are opened. Our domestic franchise agreement also requires our franchisees to remit 0.3% of sales to our system-wide marketing and advertising fund. These amounts are recognized as revenue as the corresponding franchise restaurant sales occur. Finally, we perform supervisory and administrative services for certain franchise restaurants for which we receive management fees, which are recognized as the services are performed. Total deferred revenue related to our franchise agreements is included in other liabilities in our consolidated balance sheets and was approximately $1.8 million as of December 25, 2018 and December 26, 2017. We recognized revenue of approximately $0.3 million for the year ended December 25, 2018 related to the amount in deferred revenue as of December 26, 2017. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 25, 2018 | |
Acquisitions | |
Acquisitions | (4) Acquisitions On December 3, 2018, we acquired one franchise restaurant in Florida which was subsequently relocated. Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $2.2 million, net of a $0.3 million charge to settle a pre-existing relationship. This transaction was accounted for using the purchase method as defined in ASC 805, Business Combinations. As a result of this acquisition, $2.2 million of goodwill was generated, which is not amortizable for book purposes, but is deductible for tax purposes. The purchase price has been preliminarily allocated as follows: Current assets $ 42 Property and equipment 43 Goodwill 2,180 Current liabilities (97) $ 2,168 On December 28, 2016, we acquired four franchise restaurants in Florida and Georgia. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $16.5 million, net of cash acquired. Two of the acquired restaurants are wholly-owned and the remaining two restaurants are majority-owned. For the two majority-owned restaurants, we received a noncontrolling interest contribution of $3.5 million. These transactions were accounted for using the purchase method as defined in ASC 805. Based on a purchase price of $16.5 million, $4.5 million of goodwill was generated by the acquisition, which is not amortizable for book purposes, but is deductible for tax purposes. The purchase price has been allocated as follows: Current assets $ 170 Property and equipment 12,281 Goodwill 4,469 Current liabilities (392) $ 16,528 These acquisitions are consistent with our long-term strategy to increase net income and earnings per share. Pro forma results of operations and revenue and earnings for the years ended December 25, 2018 and December 26, 2017 have not been presented because the effect of the acquisitions was not material to our consolidated financial position, results of operations or cash flows. |
Long-term Debt and Obligations
Long-term Debt and Obligations Under Capital Lease | 12 Months Ended |
Dec. 25, 2018 | |
Long-term Debt and Obligations Under Capital Lease | |
Long-term Debt and Obligations Under Capital Lease | (5) Long‑term Debt and Obligation Under Capital Lease Long‑term debt consisted of the following: December 25, December 26, 2018 2017 Obligation under capital lease $ 2,081 $ 1,990 Revolver — 50,000 2,081 51,990 Less current maturities — 9 $ 2,081 $ 51,981 During the year ended December 27, 2016, we amended an existing lease at one restaurant location to acquire additional square footage. As a result of this amendment, the lease qualified as a capital lease. On August 7, 2017, we entered into the Amended and Restated Credit Agreement (the "Amended Credit Agreement") with respect to our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A., PNC Bank, N.A., and Wells Fargo Bank, N.A. The amended revolving credit facility remains an unsecured, revolving credit agreement under which we may borrow up to $200.0 million with the option to increase the amended revolving credit facility by an additional $200.0 million subject to certain limitations. The Amended Credit Agreement extends the maturity date of our revolving credit facility until August 5, 2022. The terms of the Amended Credit Agreement require us to pay interest on outstanding borrowings at the London Interbank Offered Rate ("LIBOR") plus a margin of 0.875% to 1.875% and to pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the amended revolving credit facility, in each case depending on our consolidated net leverage ratio, or the Alternate Base Rate, which is the highest of the issuing banks’ prime lending rate, the Federal Reserve Bank of New York rate plus 0.50% or the Adjusted Eurodollar Rate for a one month interest period on such day plus 1.0%. The weighted-average interest rate for the amended revolving credit facility as of December 25, 2018 and December 26, 2017 was 3.81% and 2.37%, respectively. As of December 25, 2018, we had $191.6 million of availability, net of $8.4 million of outstanding letters of credit. The lenders’ obligation to extend credit pursuant to the Amended Credit Agreement depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 2.00 to 1.00 and a maximum consolidated leverage ratio of 3.00 to 1.00. The Amended Credit Agreement permits us to incur additional secured or unsecured indebtedness outside the amended revolving credit facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth. We were in compliance with all financial covenants as of December 25, 2018. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 25, 2018 | |
Property and Equipment, Net | |
Property and Equipment, Net | (6) Property and Equipment, Net Property and equipment were as follows: December 25, December 26, 2018 2017 Land and improvements $ 127,579 $ 124,126 Buildings and leasehold improvements 835,490 757,293 Furniture, fixtures and equipment 556,254 500,954 Construction in progress 28,975 47,457 Liquor licenses 10,829 10,027 1,559,127 1,439,857 Accumulated depreciation and amortization (602,451) (527,710) $ 956,676 $ 912,147 The amount of interest capitalized in connection with restaurant construction was approximately $0.1 million, $0.4 million and $0.3 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 25, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (7) Goodwill and Intangible Assets The changes in the carrying amount of goodwill and intangible assets are as follows: Goodwill Intangible Assets Balance as of December 27, 2016 (1) $ 116,571 $ 3,622 Additions 4,469 — Amortization expense — (922) Disposals and other, net — — Impairment — — Balance as of December 26, 2017 $ 121,040 $ 2,700 Additions 2,180 — Amortization expense — (741) Disposals and other, net — — Impairment — — Balance as of December 25, 2018 $ 123,220 $ 1,959 (1) Net of $4.8 million of accumulated goodwill impairment losses. Intangible assets consist of reacquired franchise rights. The gross carrying amount and accumulated amortization of the intangible assets at December 25, 2018 were $15.4 million and $13.4 million, respectively. As of December 26, 2017, the gross carrying amount and accumulated amortization of the intangible assets was $15.4 million and $12.7 million. We amortize reacquired franchise rights on a straight-line basis over the remaining term of the franchise operating agreements, which varies by restaurant. Amortization expense for the next five years is expected to range from $0.2 million to $0.7 million. Refer to note 4 for discussion of the acquisitions completed for the years ended December 25, 2018 and December 26, 2017. |
Leases
Leases | 12 Months Ended |
Dec. 25, 2018 | |
Leases | |
Leases | (8) Leases The following is a schedule of future minimum lease payments required for operating leases that have remaining terms in excess of one year as of December 25, 2018: Operating Leases 2019 $ 50,030 2020 49,582 2021 49,917 2022 50,237 2023 49,854 Thereafter 677,710 Total $ 927,330 Rent expense for operating leases consisted of the following: Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Minimum rent—occupancy $ 47,741 $ 43,621 $ 39,405 Contingent rent 1,050 1,186 1,175 Rent expense, occupancy 48,791 44,807 40,580 Minimum rent—equipment and other 6,176 5,087 4,379 Rent expense $ 54,967 $ 49,894 $ 44,959 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 25, 2018 | |
Income Taxes | |
Income Taxes | (9) Income Taxes Components of our income tax provision for the years ended December 25, 2018, December 26, 2017 and December 27, 2016 are as follows: Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Current: Federal $ 2,934 $ 43,108 $ 36,201 State 8,794 10,233 8,786 Foreign 210 309 202 Total current 11,938 53,650 45,189 Deferred: Federal 11,909 (4,830) 5,364 State 410 (239) 630 Total deferred 12,319 (5,069) 5,994 Income tax provision $ 24,257 $ 48,581 $ 51,183 Our pre-tax income is substantially derived from domestic restaurants. A reconciliation of the statutory federal income tax rate to our effective tax rate for December 25, 2018, December 26, 2017 and December 27, 2016 is as follows: Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Tax at statutory federal rate 21.0 % 35.0 % 35.0 % State and local tax, net of federal benefit 3.6 3.3 3.4 FICA tip tax credit (9.6) (7.0) (6.8) Work opportunity tax credit (1.5) (0.9) (0.8) Stock compensation (1.4) (1.8) (0.1) Net income attributable to noncontrolling interests (0.8) (1.1) (0.9) Officers compensation 1.7 0.1 0.1 Tax reform — (1.7) — Other (0.1) 0.2 (0.1) Total 12.9 % 26.1 % 29.8 % Our effective tax rate decreased to 12.9% in 2018 compared to 26.1% in 2017 primarily due to new tax legislation enacted in late 2017. As a result of the new tax legislation, significant tax changes were enacted including a reduction of the federal corporate tax rate from 35.0% to 21.0% and changes in the federal taxes paid on foreign sourced earnings. Our effective tax rate decreased to 26.1% in 2017 compared to 29.8% in 2016 primarily due to the adoption of Accounting Standards Update 2016-09, Compensation – Stock Compensation ( " ASU 2016-09 " ) and new tax legislation that was enacted in late 2017. As a result of the new guidance requirements, excess tax benefits and tax deficiencies from share-based compensation are recognized within the income tax provision. During 2017, we recognized $3.4 million, or $0.05 per share, as an income tax benefit related to the new guidance requirements. Also during 2017, as a result of the new tax legislation, we recognized $3.1 million, or $0.04 per share, as an income tax benefit which includes an income tax benefit of approximately $3.8 million to revalue our deferred tax balances as of the enactment date and an income tax expense of approximately $0.7 million related to our foreign operations. During the first quarter of 2017, we adopted ASU 2015-17, Balance Sheet Classification of Deferred Taxes , which required deferred tax assets and liabilities to be classified as noncurrent on our consolidated balance sheets. We adopted ASU 2015-17 on a prospective basis. Components of deferred tax liabilities, net are as follows: December 25, 2018 December 26, 2017 Deferred tax assets: Deferred revenue—gift cards $ 12,851 $ 10,355 Insurance reserves 3,949 3,638 Other reserves 890 621 Share-based compensation 4,623 6,022 Deferred rent 12,179 10,338 Deferred compensation 8,483 6,737 Other assets 2,212 1,866 Total deferred tax asset 45,187 39,577 Deferred tax liabilities: Property and equipment (50,513) (35,430) Goodwill and intangibles (5,398) (4,697) Other liabilities (6,544) (4,751) Total deferred tax liability (62,455) (44,878) Net deferred tax liability $ (17,268) $ (5,301) We have not provided any valuation allowance as we believe the realization of our deferred tax assets is more likely than not. A reconciliation of the beginning and ending liability for unrecognized tax benefits, all of which would impact the effective tax rate if recognized, is as follows: Balance at December 27, 2016 $ 511 Additions to tax positions related to prior years 36 Additions to tax positions related to current year 389 Reductions due to statute expiration (2) Reductions due to exam settlements (128) Balance at December 26, 2017 806 Additions to tax positions related to prior years 36 Additions to tax positions related to current year 754 Reductions due to statute expiration (114) Reductions due to exam settlement — Balance at December 25, 2018 $ 1,482 As of December 25, 2018 and December 26, 2017, the total amount of accrued penalties and interest related to uncertain tax provisions was not material. All entities for which unrecognized tax benefits exist as of December 25, 2018 possess a December tax year-end. As a result, as of December 25, 2018, the tax years ended December 29, 2015, December 27, 2016 and December 26, 2017 remain subject to examination by all tax jurisdictions. As of December 25, 2018, no audits were in process by a tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our unrecognized tax benefits. Additionally, as of December 25, 2018, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 31, 2019. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 25, 2018 | |
Preferred Stock | |
Preferred Stock | (10) Preferred Stock Our Board of Directors is authorized, without further vote or action by the holders of common stock, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the Board of Directors, which may include, but are not limited to, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights. There were no shares of preferred stock outstanding at December 25, 2018 and December 26, 2017. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 25, 2018 | |
Stockholders' Equity | |
Stockholders' Equity | (11) Stockholders’ Equity On May 22, 2014, our Board of Directors approved a stock repurchase program under which we may repurchase up to $100.0 million of our common stock. This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on February 16, 2012. All repurchases to date under our stock repurchase program have been made through open market transactions. The timing and the amount of any repurchases will be determined by management under parameters established by our Board of Directors, based on an evaluation of our stock price, market conditions and other corporate considerations. We did not repurchase any shares of common stock during the years ended December 25, 2018 and December 26, 2017. For the year ended December 27, 2016, we paid approximately $4.1 million to repurchase 114,700 shares of our common stock, respectively. As of December 25, 2018, we had approximately $69.9 million remaining under our authorized stock repurchase program. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 25, 2018 | |
Earnings Per Share | |
Earnings Per Share | (12) Earnings Per Share The share and net income per share data for all periods presented are based on the historical weighted‑average shares outstanding. The diluted earnings per share calculations show the effect of the weighted‑average restricted stock units and stock options outstanding from our equity incentive plans. Performance stock units ("PSUs") are not included in the diluted earnings per share calculation until the performance-based criteria have been met. See note 14 for further discussion of our equity incentive plans. For the year ended December 25, 2018, there were no shares of nonvested stock that were outstanding but not included in the computation of diluted earnings per share because their inclusion would have had an anti-dilutive effect. For the years ended December 26, 2017 and December 27, 2016, there were 2,082 and two shares of nonvested stock, respectively, that were not included because they would have had an anti-dilutive effect. The following table sets forth the calculation of earnings per share and weighted average shares outstanding (in thousands) as presented in the accompanying consolidated statements of income and comprehensive income: Fiscal Year Ended December 25, December 26, December 27, 2018 2017 2016 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 158,225 $ 131,526 $ 115,598 Basic EPS: Weighted-average common shares outstanding 71,467 70,989 70,396 Basic EPS $ 2.21 $ 1.85 $ 1.64 Diluted EPS: Weighted-average common shares outstanding 71,467 70,989 70,396 Dilutive effect of stock options and nonvested stock 497 538 656 Shares-diluted 71,964 71,527 71,052 Diluted EPS $ 2.20 $ 1.84 $ 1.63 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 25, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | (13) Commitments and Contingencies The estimated cost of completing capital project commitments at December 25, 2018 and December 26, 2017 was approximately $168.3 million and $150.0 million, respectively. As of December 25, 2018 and December 26, 2017, we are contingently liable for $14.8 million and $15.6 million, respectively, for seven leases listed in the table below. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of December 25, 2018 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant. Lease Current Lease Everett, Massachusetts (1)(2) September 2002 February 2023 Longmont, Colorado (1) October 2003 May 2029 Montgomeryville, Pennsylvania (1) October 2004 March 2021 Fargo, North Dakota (1)(2) February 2006 July 2021 Logan, Utah (1) January 2009 August 2024 Irving, Texas (3) December 2013 December 2019 Louisville, Kentucky (3)(4) December 2013 November 2023 (1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those restaurants. We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the terms of the lease, if the franchisee defaults. (2) As discussed in note 19, these restaurants are owned, in whole or part, by certain officers, directors and 5% shareholders of the Company. (3) Leases associated with restaurants which were sold. The leases were assigned to the acquirer, but we remain contingently liable under the terms of the lease if the acquirer defaults. (4) We may be released from liability after the initial contractual lease term expiration contingent upon certain conditions being met by the acquirer. During the year ended December 25, 2018, we bought most of our beef from three suppliers. Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. A change in suppliers, however, could cause supply shortages, higher costs to secure adequate supplies and a possible loss of sales, which would affect operating results adversely. We have no material minimum purchase commitments with our vendors that extend beyond a year. We and the U.S. Equal Employment Opportunity Commission entered into a consent decree dated March 31, 2017 (the "Consent Decree") to settle the lawsuit styled Equal Employment Opportunity Commission v. Texas Roadhouse, Inc., Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp. in the United States District Court, District of Massachusetts, Civil Action Number 1:11-cv-11732 (the "Lawsuit"). The Consent Decree resolves the issues litigated in the Lawsuit. Under the Consent Decree, among other terms, we have established a fund of $12.0 million, from which awards of monetary relief, allocated as wages for tax purposes, may be made to eligible claimants in accordance with procedures set forth in the Consent Decree. For the year ended December 26, 2017, we recorded a pre-tax charge of $14.9 million ($9.2 million after-tax) related to the Lawsuit and Consent Decree which included costs associated with the legal settlement and legal fees associated with the defense of the case. For the year ended December 25, 2018, we recorded $1.5 million of claims administration costs. These amounts were recorded in general and administrative expense in our consolidated statements of income and comprehensive income. The pre-tax charge was recorded in general and administrative expense in our consolidated statements of income and comprehensive income. On July 15, 2016, the Florida Circuit Court in Palm Beach County approved a settlement agreement styled Andrew Lovett and Semaj Miller, individually and on behalf of others, v. Texas Roadhouse Management Corp. (Case no. 50- 2016-CA-007714-MB-AO) resolving alleged violations of the Fair Labor Standards Act asserted on behalf of a purported nationwide class of current and former employees in exchange for a settlement payment not to exceed $9.5 million. For the year ended December 27, 2016, we recorded a charge of $7.3 million ($4.5 million after-tax) to cover the costs of the settlement including payments to opt-in members and class attorneys, as well as related settlement administration costs. The pre-tax charge was recorded in general and administrative expenses in our consolidated statements of income and comprehensive income. Occasionally, we are a defendant in litigation arising in the ordinary course of business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Dec. 25, 2018 | |
Share-based Compensation | |
Share-based Compensation | (14) Share‑based Compensation On May 16, 2013, our stockholders approved the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (the "Plan"). The Plan provides for the granting of incentive and non-qualified stock options to purchase shares of common stock, stock appreciation rights, and full value awards, including restricted stock, restricted stock units ("RSUs"), deferred stock units, performance stock and performance stock units ("PSUs"). This plan replaced the Texas Roadhouse, Inc. 2004 Equity Incentive Plan. The following table summarizes the share‑based compensation recorded in the accompanying consolidated statements of income and comprehensive income: Fiscal Year Ended December 25, December 26, December 27, 2018 2017 2016 Labor expense $ 8,463 $ 7,171 $ 6,124 General and administrative expense 25,520 19,763 19,943 Total share-based compensation expense $ 33,983 $ 26,934 $ 26,067 Effective December 28, 2016, we adopted ASU 2016-09 which amends and simplifies the accounting for stock compensation. As a result of the adoption of ASU 2016-09, we made a change in our accounting for forfeitures to record as they occur and, as a result, we recorded a $0.1 million cumulative-effect reduction to retained earnings in the year of adoption under the modified retrospective approach. We elected prospective transition for the requirement to classify excess tax benefits as an operating activity in the consolidated statement of cash flows. No prior periods have been adjusted As a result of this adoption, all excess tax benefits and tax deficiencies for restricted shares that vested or options exercised have been recognized within the income tax provision in the consolidated statements of income and comprehensive income for the years ended December 25, 2018 and December 26, 2017. See note 9 for further discussion. Beginning in 2008, we changed the method by which we provide share-based compensation to our employees by granting RSUs as a form of share-based compensation. Prior to 2008, we issued stock options as share-based compensation to our employees. Beginning in 2015, we began granting PSUs to certain of our executives. An RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement. A PSU is the conditional right to receive one share of common stock upon meeting a performance obligation along with the satisfaction of the vesting requirement. In 2017, all remaining unexercised stock options expired leaving only RSUs and PSUs outstanding. Share‑based compensation activity by type of grant as of December 25, 2018 and changes during the period then ended are presented below. Summary Details for RSUs Weighted-Average Weighted-Average Grant Date Fair Remaining Contractual Aggregate Shares Value Term (years) Intrinsic Value Outstanding at December 26, 2017 949,991 $ 43.62 Granted 439,259 60.79 Forfeited (35,077) 47.66 Vested (529,228) 42.20 Outstanding at December 25, 2018 824,945 $ 53.51 1.3 $ 46,870 As of December 25, 2018, with respect to unvested RSUs, there was $22.0 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 1.3 years. The vesting terms of the RSUs range from approximately 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the years ended December 25, 2018, December 26, 2017 and December 27, 2016 was $32.1 million, $23.4 million and $21.5 million, respectively. The excess tax benefit associated with vested RSUs for the years ended December 25, 2018 and December 26, 2017 was $1.9 million and $1.6 million, respectively, which was recognized in the income tax provision. The excess tax benefit associated with vested RSUs for the year ended December 27, 2016 was $1.5 million which was recorded in additional paid-in-capital in the consolidated balance sheets. Summary Details for PSUs Weighted-Average Weighted-Average Grant Date Fair Remaining Contractual Aggregate Shares Value Term (years) Intrinsic Value Outstanding at December 26, 2017 205,000 $ 46.16 Granted — — Incremental Performance Shares (1) 40,576 39.88 Forfeited — — Vested (155,576) 39.88 Outstanding at December 25, 2018 90,000 $ 54.18 0.1 $ 5,113 (1) Additional shares from the November 2016 PSU grant that vested in January 2018 due to exceeding the initial 100% target. Beginning in 2015, we granted PSUs to certain of our executives subject to a one-year vesting and the achievement of certain earnings targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant date and through the performance period. For each grant, PSUs vest after meeting the performance and service conditions. The total intrinsic value of PSUs vested during the years ended December 25, 2018, December 26, 2017 and December 27, 2016 was $8.9 million, $8.6 million and $5.0 million, respectively. On January 8, 2019, 142,169 shares vested related to the December 2017 PSU grant and are expected to be distributed during the 13 weeks ending March 26, 2019. This included 90,000 granted shares and 52,169 incremental shares due to the grant exceeding the initial 100% target. As of December 25, 2018, with respect to unvested PSUs, there was $0.3 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1 year. The excess tax benefit associated with vested PSUs for the years ended December 25, 2018 and December 26, 2017 was $0.7 million and $0.8 million, respectively, which was recognized within the income tax provision. Summary Details for Stock Options No stock options were granted or vested during the fiscal years ended December 25, 2018, December 26, 2017 and December 27, 2016. The total intrinsic value of options exercised during the years ended December 26, 2017 and December 27, 2016 was $4.0 million and $6.3 million, respectively. For the years ended December 26, 2017 and December 27, 2016, cash received before tax withholdings from options exercised was $1.6 million and $2.7 million, respectively. The excess tax benefit for the year ended December 26, 2017 was $1.0 million which was recognized within the income tax provision. The excess tax benefit for the year ended December 27, 2016 was $1.8 million which was recorded in additional paid-in-capital in the consolidated balance sheets. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 25, 2018 | |
Fair Value Measurement | |
Fair Value Measurement | (15) Fair Value Measurement ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 establishes a three‑level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. Level 1 Inputs based on quoted prices in active markets for identical assets. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly. Level 3 Inputs that are unobservable for the asset. There were no transfers among levels within the fair value hierarchy during the year ended December 25, 2018. The following table presents the fair values for our financial assets and liabilities measured on a recurring basis: Fair Value Measurements Level December 25, 2018 December 26, 2017 Deferred compensation plan—assets 1 $ 31,632 $ 28,754 Deferred compensation plan—liabilities 1 (31,721) (28,829) The Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as amended, (the "Deferred Compensation Plan") is a nonqualified deferred compensation plan which allows highly compensated employees to defer receipt of a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust. We report the accounts of the rabbi trust in other assets and the corresponding liability in other liabilities in our consolidated financial statements. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the consolidated statements of income and comprehensive income. At December 25, 2018 and December 26, 2017, 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. The fair value of our amended revolving credit facility at December 26, 2017 approximated its carrying value since it is a variable rate credit facility (Level 2). |
Impairment and Closure Costs
Impairment and Closure Costs | 12 Months Ended |
Dec. 25, 2018 | |
Impairment and Closure Costs | |
Impairment and Closure Costs | (16) Impairment and Closure Costs We recorded closure costs of $0.3 million, $0.7 million and $0.2 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively, related to costs associated with the relocation of restaurants. |
Derivative and Hedging Activiti
Derivative and Hedging Activities | 12 Months Ended |
Dec. 25, 2018 | |
Derivative and Hedging Activities | |
Derivative and Hedging Activities | (17) Derivative and Hedging Activities We enter into derivative instruments for risk management purposes only, including derivatives designated as hedging instruments under FASB ASC 815, Derivatives and Hedging ("ASC 815"). We use interest rate-related derivative instruments to manage our exposure to fluctuations of interest rates. By using these instruments, we expose ourselves, from time to time, to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. We attempt to minimize the credit risk by entering into transactions with high-quality counterparties whose credit rating is evaluated on a quarterly basis. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We attempt to minimize market risk by establishing and monitoring parameters that limit the types and degree of market risk that may be taken. The following table summarizes the effect of our interest rate swaps in the consolidated statements of income and comprehensive income for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively: December 25, December 26, December 27, 2018 2017 2016 Gain recognized in AOCI, net of tax (effective portion) (1) $ — $ — $ 27 Loss reclassified from AOCI to income (effective portion) (1) $ — $ — $ 45 (1) The fiscal year ended December 27, 2016 included the effect of one interest rate swap which expired on January 7, 2016. The loss reclassified from AOCI to income was recognized in interest expense on our consolidated statements of income and comprehensive income. For each of the years ended December 25, 2018, December 26, 2017 and December 27, 2016, we did not recognize any gain or loss due to hedge ineffectiveness related to the derivative instruments in the consolidated statements of income and comprehensive income. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 25, 2018 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | (18) Accumulated Other Comprehensive Loss The components of the changes in accumulated other comprehensive loss for the years ended December 25, 2018 and December 26, 2017, all of which related to foreign currency translation adjustments, were as follows: Accumulated Other Comprehensive Loss Balance as of December 27, 2016 (194) Other comprehensive loss Income taxes Balance as of December 26, 2017 $ Other comprehensive loss Income taxes Balance as of December 25, 2018 $ |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 25, 2018 | |
Related Party Transactions | |
Related Party Transactions | (19) Related Party Transactions As of December 25, 2018, we had nine franchise restaurants and one majority-owned company restaurant owned in whole or part by certain of our officers, directors and 5% stockholders of the Company. As of December 26, 2017 and December 27, 2016, we had 10 franchise restaurants owned in whole or part by certain of our officers, directors and 5% stockholders of the Company. These franchise entities paid us fees of $2.1 million, $2.1 million and $2.0 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. As discussed in note 13, we are contingently liable on leases which are related to two of these restaurants. On December 3, 2018, we acquired one franchise restaurant owned in part by our founder. This entity paid us fees of $0.1 million for the year ended December 25, 2018. See note 4 for further discussion of this acquisition. In addition, in 2018, our founder made a personal contribution of $1.0 million to cover a portion of the planned expenses incurred as part of the annual managing partner conference which marked our 25th anniversary. This amount was recorded as general and administrative expense on the consolidated statements of income and comprehensive income and as additional paid-in-capital on the consolidated statements of stockholders’ equity. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 25, 2018 | |
Selected Quarterly Financial Data (unaudited) | |
Selected Quarterly Financial Data (unaudited) | (20) Selected Quarterly Financial Data (unaudited) 2018 First Second Third Fourth Quarter Quarter Quarter Quarter Total Revenue $ 627,705 $ 629,237 $ 594,595 $ 605,912 $ 2,457,449 Total costs and expenses $ 562,834 $ 574,970 $ 559,151 $ 572,705 $ 2,269,660 Income from operations $ 64,871 $ 54,267 $ 35,444 $ 33,207 $ 187,789 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 54,541 $ 44,227 $ 29,125 $ 30,332 $ 158,225 Basic earnings per common share $ 0.76 $ 0.62 $ 0.41 $ 0.42 $ 2.21 Diluted earnings per common share $ 0.76 $ 0.62 $ 0.40 $ 0.42 $ 2.20 Cash dividends declared per share $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 1.00 2017 First Second Third Fourth Quarter Quarter Quarter Quarter Total Revenue $ 567,686 $ 566,262 $ 540,507 $ 545,076 $ 2,219,531 Total costs and expenses $ 518,664 $ 512,048 $ 494,996 $ 507,617 $ 2,033,325 Income from operations $ 49,022 $ 54,214 $ 45,511 $ 37,459 $ 186,206 Net income attributable to Texas Roadhouse, Inc. and subsidiaries (a) $ 34,313 $ 37,581 $ 31,014 $ 28,618 $ 131,526 Basic earnings per common share (a) $ 0.48 $ 0.53 $ 0.44 $ 0.40 $ 1.85 Diluted earnings per common share (a) $ 0.48 $ 0.53 $ 0.43 $ 0.40 $ 1.84 Cash dividends declared per share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.84 (a) The first quarter of 2017 includes an after-tax charge of $9.2 million, or $0.13 per basic and diluted share, related to the settlement of a legal matter. See note 13 for further discussion. The fourth quarter of 2017 includes an income tax benefit of $3.1 million, or $0.04 per basic and diluted share, related to the enactment of new income tax legislation. See note 9 for further discussion. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 25, 2018 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | (a) Principles of Consolidation As of December 25, 2018 and December 26, 2017, we owned a 5.0% to 10.0% equity interest in 24 restaurants. Additionally, as of December 25, 2018 and December 26, 2017, we owned a 40% equity interest in four non-Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China. The unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in Other assets in our consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under Equity 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. |
Fiscal Year | (b) Fiscal Year We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December. We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks. Fiscal years 2018, 2017 and 2016 were 52 weeks in length. |
Cash and Cash Equivalents | (c) Cash and Cash Equivalents We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents also included receivables from credit card companies, which amounted to $34.1 million and $7.2 million at December 25, 2018 and December 26, 2017, respectively, because the balances are settled within two to three business days. |
Receivables | (d) Receivables Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for reimbursement of labor costs, pre‑opening and other expenses, and franchise restaurants for royalty fees. Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical write‑off experience. We review our allowance for doubtful accounts quarterly. Past due balances over 120 days and a specified amount are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Inventories | (e) Inventories Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first‑in, first‑out) or net realizable value. |
Pre-opening Expenses | (f) Pre‑opening Expenses Pre‑opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new restaurant and are comprised principally of opening team and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. |
Property and Equipment | (g) Property and Equipment Property and equipment are stated at cost. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed on property and equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related assets or the underlying lease term using the straight‑line method. In most cases, assets on leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more option periods. See note 2(p) for further discussion of leases and leasehold improvements. The estimated useful lives are: Land improvements 10 - 25 years Buildings and leasehold improvements 10 - 25 years Furniture, fixtures and equipment 3 - 10 years The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net. Repairs and maintenance expense amounted to $29.7 million, $25.8 million and $22.4 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. These costs are included in other operating costs in our consolidated statements of income and comprehensive income. |
Impairment of Goodwill | (h) Impairment of Goodwill Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350, Intangibles – Goodwill and Other ("ASC 350"), we perform tests to assess potential impairments at the end of each fiscal year or during the year if an event or other circumstance indicates that goodwill may be impaired. Our assessment is performed at the reporting unit level, which is at the individual restaurant level. In the first step of the review process, we compare the estimated fair value of the restaurant with its carrying value, including goodwill. If the estimated fair value of the restaurant exceeds its carrying amount, no further analysis is needed. If the estimated fair value of the restaurant is less than its carrying amount, the second step of the review process requires the calculation of the implied fair value of the goodwill by allocating the estimated fair value of the restaurant to all of the assets and liabilities of the restaurant as if it had been acquired in a business combination. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. If the carrying value of the goodwill associated with the restaurant exceeds the implied fair value of the goodwill, an impairment loss is recognized for that excess amount. The valuation approaches used to determine fair value are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate revenue growth rates, operating margins, weighted average cost of capital and comparable company and acquisition market multiples. In estimating the fair value using the capitalization of earnings method or discounted cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods, expectations of future sales growth and terminal value. Assumptions about important factors such as the trend of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. When developing these key judgments and assumptions, we consider economic, operational and market conditions that could impact fair value. The judgments and assumptions used are consistent with what we believe hypothetical market participants would use. However, estimates are inherently uncertain and represent only our reasonable expectations regarding future developments. If the estimates used in performing the impairment test prove inaccurate, the fair value of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and indicating impairment has occurred. In 2018, 2017 and 2016, as a result of our annual goodwill impairment analysis, we determined that there was no goodwill impairment. Refer to note 7 for additional information related to goodwill and intangible assets. |
Other Assets | (i) Other Assets Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates, deposits and costs related to the issuance of debt. The debt issuance costs are being amortized to interest expense over the term of the related debt. For further discussion of the deferred compensation plan, see note 15. |
Impairment or Disposal of Long-lived Assets | (j) Impairment or Disposal of Long‑lived Assets In accordance with ASC 360, Property, Plant and Equipment , long-lived assets related to each restaurant to be held and used in the business, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable. When we evaluate restaurants, cash flows are the primary indicator of impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant to estimated undiscounted future cash flows expected to be generated by the restaurant. Under our policies, trailing 12-month cash flow results below $300,000 at the individual restaurant level signals potential impairment. In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which can be for a period of over 20 years. In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations of future sales growth. Assumptions about important factors such as the trend of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. If the carrying amount of the restaurant exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the estimated fair value of the assets. We generally measure fair value by independent third party appraisal or discounting estimated future cash flows. When fair value is measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe hypothetical market participants would use. We also use a discount rate that is commensurate with the risk inherent in the projected cash flows. The adjusted carrying amounts of assets to be held and used are depreciated over their remaining useful life. In 2018, 2017 and 2016, as a result of our impairment analysis, we determined that there was no impairment. For further discussion regarding closures and impairments recorded in 2018, 2017 and 2016 refer to note 16. |
Insurance Reserves | (k) Insurance Reserves We self‑insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, and property insurance programs. We purchase insurance for individual claims that exceed the retention amounts listed below: Employment practices liability/Class Action $ / $2,000,000 Workers compensation $350,000 General liability $500,000 Employee healthcare $325,000 In addition, we purchase property insurance for claims that exceed $50,000 after an aggregate deductible of $250,000. We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on estimates provided by management, a third party administrator and/or actuary. The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances. |
Segment Reporting | (l) Segment Reporting We consider our restaurant and franchising operations as similar and have aggregated them into a single reportable segment. The majority of the restaurants operate in the U.S. within the casual dining segment of the restaurant industry, providing similar products to similar customers. The restaurants also possess similar pricing structures, resulting in similar long‑term expected financial performance characteristics. As of December 25, 2018, we operated 491 restaurants, each as a single operating segment, and franchised an additional 91 restaurants. Revenue from external customers is derived principally from food and beverage sales. We do not rely on any major customers as a source of revenue. |
Revenue Recognition | (m) Revenue Recognition We recognize revenue from restaurant sales when food and beverage products are sold. Deferred revenue primarily represents our liability for gift cards that have been sold, but not yet redeemed. When the gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. We also recognize revenue from our franchising of Texas Roadhouse restaurants. This includes franchise royalties, initial and upfront franchise fees, fees paid to our domestic marketing and advertising fund, and fees for supervisory and administrative services. For further discussion of revenue, see note 3. |
Income Taxes | (n) Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. We recognize both interest and penalties on unrecognized tax benefits as part of income tax expense. A valuation allowance is established to reduce the carrying value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in the valuation allowance would be charged to income in the period such determination was made. |
Advertising | (o) Advertising We have a domestic system‑wide marketing and advertising fund. We maintain control of the marketing and advertising fund and, as such, have consolidated the fund’s activity for the years ended December 25, 2018, December 26, 2017 and December 27, 2016. Domestic company and franchise restaurants are required to remit a designated portion of sales, currently 0.3%, to the advertising fund. Advertising contributions related to company restaurants are recorded as a component of other operating costs. Advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. Other costs related to local restaurant area marketing initiatives are included in other operating costs in our consolidated statements of income and comprehensive income. These costs and the company-owned restaurant contribution amounted to approximately $17.1 million, $14.5 million and $13.3 million for the years ended December 25, 2018, December 26, 2017 and December 27, 2016, respectively. |
Leases and Leasehold Improvements | (p) Leases and Leasehold Improvements We lease land and/or buildings for the majority of our restaurants under non‑cancelable lease agreements. Our land and/or building leases typically have initial terms ranging from 10 to 15 years, and certain renewal options for one or more five-year periods. We account for leases in accordance with ASC 840, Leases , and other related authoritative guidance. When determining the lease term, we include option periods for which failure to renew the lease imposes a penalty on us in such an amount that renewal appears, at the inception of the lease, to be reasonably assured. The primary penalty to which we are subject is the economic detriment associated with the existence of leasehold improvements which might become impaired if we choose not to continue the use of the leased property. Certain of our operating leases contain predetermined fixed escalations of the minimum rent during the original term of the lease. For these leases, we recognize the related rent expense on a straight‑line basis over the lease term and record the difference between the amounts charged to operations and amounts paid as deferred rent. We may receive rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession date and end when the lease commences, during which no cash rent payments are typically due under the terms of the lease. Rent holidays are included in the lease term when determining straight‑line rent expense. Additionally, certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable. This may result in some variability in rent expense as a percentage of sales over the term of the lease in restaurants where we pay contingent rent. The judgment regarding the probable term for each restaurant property lease impacts the classification and accounting for a lease as capital or operating, the rent holiday and/or escalation in payments that are taken into consideration when calculating straight‑line rent and the term over which leasehold improvements for each restaurant are amortized. The material factor we consider when making this judgment is the total amount invested in the restaurant at the inception of the lease and whether management believes that renewal appears reasonably assured. While a different term may produce materially different amounts of depreciation, amortization and rent expense than reported, our historical lease renewal rates support the judgments made. We have not made any changes to the nature of the assumptions used to account for leases in any of the fiscal years presented in our consolidated financial statements. Sale leasebacks are transactions through which assets (such as restaurant properties) are sold and subsequently leased back. The resulting leases generally qualify and are accounted for as operating leases. Financing leases are generally the product of a sale leaseback transaction that does not meet the criteria for sale leaseback accounting. The result of a financing lease is the retention of the "sold" assets within land, building and equipment with a financing lease obligation equal to the amount of proceeds received recorded as a component of other liabilities on our consolidated balance sheets. |
Use of Estimates | (q) Use of Estimates We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of revenue and expenses during the period to prepare these consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP"). Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card discounts and breakage and income taxes. Actual results could differ from those estimates. |
Comprehensive Income | (r) Comprehensive Income ASC 220, Comprehensive Income , establishes standards for reporting and the presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and other comprehensive income (loss) items that are excluded from net income under GAAP. Other comprehensive income (loss) consists of the effective unrealized portion of changes in fair value of cash flow hedges through January 2016 and foreign currency translation adjustments. The foreign currency translation adjustment included in comprehensive income on the consolidated statements of income and comprehensive income represents the unrealized impact of translating the financial statements of our foreign investment. This amount is not included in net income and would only be realized upon the disposition of the business. |
Fair Value of Financial Instruments | (s) Fair Value of Financial Instruments Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants on the measurement date. We use a three-tier fair value hierarchy based upon observable and non-observable inputs that prioritizes the information used to develop our assumptions regarding fair value. Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to note 15 for further discussion of fair value measurement. |
Derivative Instruments and Hedging Activities | (t) Derivative Instruments and Hedging Activities We do not use derivative instruments for trading purposes. We account for derivatives and hedging activities in accordance with ASC 815, Derivatives and Hedging , which requires that all derivative instruments be recorded on the consolidated balance sheet at their respective fair values. The accounting for changes in the fair value of a derivative instrument is dependent upon whether the derivative has been designated and qualifies as part of a hedging relationship. We had a free standing derivative instrument that had been designated and qualified as a cash flow hedge that expired in January 2016. For derivative instruments that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. There was no hedge ineffectiveness recognized during the years ended December 25, 2018, December 26, 2017 and December 27, 2016. |
Recent Accounting Pronouncements | (u) Recent Accounting Pronouncements Revenue Recognition (ASC 606, Revenue from Contracts with Customers, "ASC 606") On December 27, 2017, we adopted ASC 606, Revenue from Contracts with Customers . This ASC requires an entity to allocate the transaction price received from customers to each separate and distinct performance obligation and recognize revenue as these performance obligations are satisfied. This standard replaces most existing revenue recognition guidance in GAAP. The adoption of this standard did not have an impact on our recognition of sales from company restaurants or our recognition of continuing fees from franchisees, which are based on a percentage of franchise restaurant sales. As further detailed below, the adoption of this standard did have an impact on the recognition of initial franchise fees and upfront fees from international development agreements. In addition, certain transactions that were previously recorded as expense are now classified as revenue. We utilized the cumulative-effect method of adoption and recorded a $0.9 million reduction, net of tax, to retained earnings as of the first day of fiscal 2018 to reflect the change in the recognition pattern of initial franchise fees and upfront fees. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effects of the changes made to our consolidated balance sheet as of December 26, 2017 as a result of the adoption of ASC 606 were as follows: Balance at ASC 606 Balance at December 26, 2017 Adjustments December 27, 2017 Liabilities Deferred tax liabilities, net $ 5,301 $ (299) $ 5,002 Other liabilities, non-current 42,112 1,177 43,289 Equity Retained earnings $ 602,499 $ (878) $ 601,621 Under ASC 606, because the services we provide related to initial franchise fees and upfront fees from international development agreements do not contain separate and distinct performance obligations from the franchise right, these fees will be recognized on a straight-line basis over the term of the associated franchise agreement. Under previous guidance, initial franchise fees were recognized when the related services had been provided, which was generally upon the opening of the restaurant, and upfront fees were recognized on a pro-rata basis as restaurants under the development agreement were opened. These fees will continue to be recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. ASC 606 requires sales-based royalties to continue to be recognized as franchise restaurant sales occur. In addition, certain transactions that were previously recorded as expense are now classified as revenue. These transactions include breakage income and third party gift card fees from our gift card program as well as accounting fees, supervision fees and advertising contributions received from our franchisees. Under ASC 606, breakage income and third party gift card fees are recorded as a component of restaurant and other sales in our consolidated statements of income and comprehensive income. Under previous guidance, these transactions were recorded as a component of other operating expense. Also under ASC 606, accounting fees, supervision fees and advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. Under previous guidance, these transactions were recorded as a reduction of general and administrative expense. As noted above, we adopted ASC 606 as of the first day of fiscal 2018. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The impact of adopting ASC 606 as compared to the previous revenue recognition guidance on our consolidated balance sheet and consolidated statements of income and comprehensive income was as follows: December 25, 2018 Balances Without Adoption Impact of As Reported Adoption of ASC 606 ASC 606 Balance Sheet Liabilities Deferred tax liabilities, net $ 17,268 $ 17,568 $ (300) Other liabilities, non-current 48,295 47,114 1,181 Equity Retained earnings $ 688,337 $ 689,218 $ (881) Fiscal Year Ended December 25, 2018 Balances Without Adoption Adoption of Impact of As Reported ASC 606 ASC 606 Income Statement Revenue Restaurant and other sales $ 2,437,115 $ 2,442,268 $ (5,153) Franchise royalties and fees 20,334 17,990 2,344 Costs and expenses Other operating 375,477 380,630 (5,153) General and administrative 136,163 133,815 2,348 Provision for income taxes 24,257 24,258 (1) Net Income $ 158,225 $ 158,228 $ (3) Statement of Cash Flows (Accounting Standards Update 2016-15, "ASU 2016-15") In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which adds and/or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Income Taxes (Accounting Standards Update 2016-16, "ASU 2016-16") In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) , which addresses the income tax consequences of intra-entity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. This standard will require recognition of current and deferred income taxes resulting from an intra-entity transfer of an asset other than inventory when the transfer occurs. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Compensation – Stock Compensation (Accounting Standards Update 2017-09, "ASU 2017-09") In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting , which clarifies when a change in the terms or conditions of a share-based payment award must be accounted for as a modification. ASU 2017-09 requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change in the terms and conditions of the award. We adopted this guidance as of the beginning of our 2018 fiscal year. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations or cash flows. Leases (Accounting Standards Update 2016-02, "ASU 2016-02") In February 2016, the FASB issued ASU 2016-02, Leases , which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. This update also requires additional disclosures about the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (our 2019 fiscal year). In March 2018, the FASB approved an amendment that allowed a modified retrospective approach and new required lease disclosures for all leases existing or entered into after either the beginning of the year of adoption or the earliest comparative period in the consolidated financial statements. We will adopt ASU 2016-02 using a modified retrospective approach as of the beginning of the year of adoption. As a result, the comparative financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before December 26, 2018. We will take advantage of the transition package of practical expedients permitted within the new standard which will allow us to carryforward the historical lease classification. We will also elect the practical expedient to not separate lease and non-lease components for all leases as well as the hindsight practical expedient. The election of the hindsight practical expedient will result in a change in lease terms for certain existing leases. We estimate the adoption of this standard will result in the recognition of a right-of-use asset of approximately $470.0 million, net of deferred rent of $48.1 million, and a lease liability of $520.0 million as of December 26, 2018, our initial date of adoption. There will be no significant impact to our results of operations, cash flows, or the related notes. We do not believe this standard will have a significant impact on our liquidity. The standard will have no impact on our compliance with our financial covenants associated with our credit facility. Financial Instruments (Accounting Standards Update 2016-13, "ASU 2016-13") In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires measurement and recognition of expected versus incurred losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019 (our 2020 fiscal year), with early adoption permitted for annual periods beginning after December 15, 2018. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows. Goodwill (Accounting Standards Update 2017-04, "ASU 2017-04") In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment and is expected to reduce the cost and complexity of accounting for goodwill. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Instead, goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and will be applied on a prospective basis. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. We are currently assessing the impact of this new standard on our consolidated financial position, results of operations and cash flows. Fair Value Measurement (Accounting Standards Update 2018-13, "ASU 2018-13") In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, modifies and adds disclosure requirements for fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 (our 2020 fiscal year) and for interim periods within those years, with early adoption permitted. We are currently assessing the impact of this new standard on our consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Schedule of estimated useful lives of property and equipment | Land improvements 10 - 25 years Buildings and leasehold improvements 10 - 25 years Furniture, fixtures and equipment 3 - 10 years |
Schedule of type of individual claims against which there is no insurance purchase | Employment practices liability/Class Action $ / $2,000,000 Workers compensation $350,000 General liability $500,000 Employee healthcare $325,000 |
ASU 2014-09 | |
Schedule of cumulative effects of the changes on adoption of ASU 2014-09 | Balance at ASC 606 Balance at December 26, 2017 Adjustments December 27, 2017 Liabilities Deferred tax liabilities, net $ 5,301 $ (299) $ 5,002 Other liabilities, non-current 42,112 1,177 43,289 Equity Retained earnings $ 602,499 $ (878) $ 601,621 December 25, 2018 Balances Without Adoption Impact of As Reported Adoption of ASC 606 ASC 606 Balance Sheet Liabilities Deferred tax liabilities, net $ 17,268 $ 17,568 $ (300) Other liabilities, non-current 48,295 47,114 1,181 Equity Retained earnings $ 688,337 $ 689,218 $ (881) Fiscal Year Ended December 25, 2018 Balances Without Adoption Adoption of Impact of As Reported ASC 606 ASC 606 Income Statement Revenue Restaurant and other sales $ 2,437,115 $ 2,442,268 $ (5,153) Franchise royalties and fees 20,334 17,990 2,344 Costs and expenses Other operating 375,477 380,630 (5,153) General and administrative 136,163 133,815 2,348 Provision for income taxes 24,257 24,258 (1) Net Income $ 158,225 $ 158,228 $ (3) |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Revenue | |
Schedule of disaggregated revenue | The following table disaggregates our revenue by major source (in thousands): Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Restaurant and other sales $ 2,437,115 $ 2,203,017 $ 1,974,261 Franchise royalties 17,443 16,195 16,135 Franchise fees 2,891 319 318 Total revenue $ 2,457,449 $ 2,219,531 $ 1,990,714 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
One franchise restaurant in Florida | |
Schedule of purchase price allocation | Current assets $ 42 Property and equipment 43 Goodwill 2,180 Current liabilities (97) $ 2,168 |
Four franchise restaurants in Florida and Georgia | |
Schedule of purchase price allocation | Current assets $ 170 Property and equipment 12,281 Goodwill 4,469 Current liabilities (392) $ 16,528 |
Long-term Debt and Obligation U
Long-term Debt and Obligation Under Capital Lease (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Long-term Debt and Obligations Under Capital Lease | |
Schedule of long-term debt | December 25, December 26, 2018 2017 Obligation under capital lease $ 2,081 $ 1,990 Revolver — 50,000 2,081 51,990 Less current maturities — 9 $ 2,081 $ 51,981 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Property and Equipment, Net | |
Schedule of property and equipment | December 25, December 26, 2018 2017 Land and improvements $ 127,579 $ 124,126 Buildings and leasehold improvements 835,490 757,293 Furniture, fixtures and equipment 556,254 500,954 Construction in progress 28,975 47,457 Liquor licenses 10,829 10,027 1,559,127 1,439,857 Accumulated depreciation and amortization (602,451) (527,710) $ 956,676 $ 912,147 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying amount of goodwill and intangible assets | Goodwill Intangible Assets Balance as of December 27, 2016 (1) $ 116,571 $ 3,622 Additions 4,469 — Amortization expense — (922) Disposals and other, net — — Impairment — — Balance as of December 26, 2017 $ 121,040 $ 2,700 Additions 2,180 — Amortization expense — (741) Disposals and other, net — — Impairment — — Balance as of December 25, 2018 $ 123,220 $ 1,959 (1) Net of $4.8 million of accumulated goodwill impairment losses. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Leases | |
Schedule of future minimum lease payments required for operating leases that have initial or remaining non-cancellable terms in excess of one year | Operating Leases 2019 $ 50,030 2020 49,582 2021 49,917 2022 50,237 2023 49,854 Thereafter 677,710 Total $ 927,330 |
Schedule of rent expense for operating leases | Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Minimum rent—occupancy $ 47,741 $ 43,621 $ 39,405 Contingent rent 1,050 1,186 1,175 Rent expense, occupancy 48,791 44,807 40,580 Minimum rent—equipment and other 6,176 5,087 4,379 Rent expense $ 54,967 $ 49,894 $ 44,959 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Income Taxes | |
Schedule of components of our income tax provision | Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Current: Federal $ 2,934 $ 43,108 $ 36,201 State 8,794 10,233 8,786 Foreign 210 309 202 Total current 11,938 53,650 45,189 Deferred: Federal 11,909 (4,830) 5,364 State 410 (239) 630 Total deferred 12,319 (5,069) 5,994 Income tax provision $ 24,257 $ 48,581 $ 51,183 |
Schedule of reconciliation of the statutory federal income tax rate to our effective tax rate | Fiscal Year Ended December 25, 2018 December 26, 2017 December 27, 2016 Tax at statutory federal rate 21.0 % 35.0 % 35.0 % State and local tax, net of federal benefit 3.6 3.3 3.4 FICA tip tax credit (9.6) (7.0) (6.8) Work opportunity tax credit (1.5) (0.9) (0.8) Stock compensation (1.4) (1.8) (0.1) Net income attributable to noncontrolling interests (0.8) (1.1) (0.9) Officers compensation 1.7 0.1 0.1 Tax reform — (1.7) — Other (0.1) 0.2 (0.1) Total 12.9 % 26.1 % 29.8 % |
Schedule of components of deferred tax assets (liabilities) | December 25, 2018 December 26, 2017 Deferred tax assets: Deferred revenue—gift cards $ 12,851 $ 10,355 Insurance reserves 3,949 3,638 Other reserves 890 621 Share-based compensation 4,623 6,022 Deferred rent 12,179 10,338 Deferred compensation 8,483 6,737 Other assets 2,212 1,866 Total deferred tax asset 45,187 39,577 Deferred tax liabilities: Property and equipment (50,513) (35,430) Goodwill and intangibles (5,398) (4,697) Other liabilities (6,544) (4,751) Total deferred tax liability (62,455) (44,878) Net deferred tax liability $ (17,268) $ (5,301) |
Schedule of reconciliation of the beginning and ending liability for unrecognized tax benefits | Balance at December 27, 2016 $ 511 Additions to tax positions related to prior years 36 Additions to tax positions related to current year 389 Reductions due to statute expiration (2) Reductions due to exam settlements (128) Balance at December 26, 2017 806 Additions to tax positions related to prior years 36 Additions to tax positions related to current year 754 Reductions due to statute expiration (114) Reductions due to exam settlement — Balance at December 25, 2018 $ 1,482 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Earnings Per Share | |
Schedule of calculation of earnings per share and weighted average shares outstanding | The following table sets forth the calculation of earnings per share and weighted average shares outstanding (in thousands) as presented in the accompanying consolidated statements of income and comprehensive income: Fiscal Year Ended December 25, December 26, December 27, 2018 2017 2016 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 158,225 $ 131,526 $ 115,598 Basic EPS: Weighted-average common shares outstanding 71,467 70,989 70,396 Basic EPS $ 2.21 $ 1.85 $ 1.64 Diluted EPS: Weighted-average common shares outstanding 71,467 70,989 70,396 Dilutive effect of stock options and nonvested stock 497 538 656 Shares-diluted 71,964 71,527 71,052 Diluted EPS $ 2.20 $ 1.84 $ 1.63 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Commitments and Contingencies | |
Schedule of real estate lease agreements for franchises | Lease Current Lease Everett, Massachusetts (1)(2) September 2002 February 2023 Longmont, Colorado (1) October 2003 May 2029 Montgomeryville, Pennsylvania (1) October 2004 March 2021 Fargo, North Dakota (1)(2) February 2006 July 2021 Logan, Utah (1) January 2009 August 2024 Irving, Texas (3) December 2013 December 2019 Louisville, Kentucky (3)(4) December 2013 November 2023 (1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those restaurants. We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the terms of the lease, if the franchisee defaults. (2) As discussed in note 19, these restaurants are owned, in whole or part, by certain officers, directors and 5% shareholders of the Company. (3) Leases associated with restaurants which were sold. The leases were assigned to the acquirer, but we remain contingently liable under the terms of the lease if the acquirer defaults. (4) We may be released from liability after the initial contractual lease term expiration contingent upon certain conditions being met by the acquirer. |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Share-based Compensation | |
Summary of allocation of share-based compensation expense | Fiscal Year Ended December 25, December 26, December 27, 2018 2017 2016 Labor expense $ 8,463 $ 7,171 $ 6,124 General and administrative expense 25,520 19,763 19,943 Total share-based compensation expense $ 33,983 $ 26,934 $ 26,067 |
Summary of restricted stock unit activity | Weighted-Average Weighted-Average Grant Date Fair Remaining Contractual Aggregate Shares Value Term (years) Intrinsic Value Outstanding at December 26, 2017 949,991 $ 43.62 Granted 439,259 60.79 Forfeited (35,077) 47.66 Vested (529,228) 42.20 Outstanding at December 25, 2018 824,945 $ 53.51 1.3 $ 46,870 |
Summary of performance share units | Weighted-Average Weighted-Average Grant Date Fair Remaining Contractual Aggregate Shares Value Term (years) Intrinsic Value Outstanding at December 26, 2017 205,000 $ 46.16 Granted — — Incremental Performance Shares (1) 40,576 39.88 Forfeited — — Vested (155,576) 39.88 Outstanding at December 25, 2018 90,000 $ 54.18 0.1 $ 5,113 (1) Additional shares from the November 2016 PSU grant that vested in January 2018 due to exceeding the initial 100% target. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Fair Value Measurement | |
Schedule of fair values for our financial assets and liabilities measured on a recurring basis | Fair Value Measurements Level December 25, 2018 December 26, 2017 Deferred compensation plan—assets 1 $ 31,632 $ 28,754 Deferred compensation plan—liabilities 1 (31,721) (28,829) |
Derivative and Hedging Activi_2
Derivative and Hedging Activities (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Derivative and Hedging Activities | |
Summary of effect of interest rate swaps in the consolidated statements of income and comprehensive income | December 25, December 26, December 27, 2018 2017 2016 Gain recognized in AOCI, net of tax (effective portion) (1) $ — $ — $ 27 Loss reclassified from AOCI to income (effective portion) (1) $ — $ — $ 45 (1) The fiscal year ended December 27, 2016 included the effect of one interest rate swap which expired on January 7, 2016. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Accumulated Other Comprehensive Loss. | |
Schedule of components of the changes in accumulated other comprehensive loss | Accumulated Other Comprehensive Loss Balance as of December 27, 2016 (194) Other comprehensive loss Income taxes Balance as of December 26, 2017 $ Other comprehensive loss Income taxes Balance as of December 25, 2018 $ |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Tables) | 12 Months Ended |
Dec. 25, 2018 | |
Selected Quarterly Financial Data (unaudited) | |
Schedule of selected quarterly financial data (unaudited) | 2018 First Second Third Fourth Quarter Quarter Quarter Quarter Total Revenue $ 627,705 $ 629,237 $ 594,595 $ 605,912 $ 2,457,449 Total costs and expenses $ 562,834 $ 574,970 $ 559,151 $ 572,705 $ 2,269,660 Income from operations $ 64,871 $ 54,267 $ 35,444 $ 33,207 $ 187,789 Net income attributable to Texas Roadhouse, Inc. and subsidiaries $ 54,541 $ 44,227 $ 29,125 $ 30,332 $ 158,225 Basic earnings per common share $ 0.76 $ 0.62 $ 0.41 $ 0.42 $ 2.21 Diluted earnings per common share $ 0.76 $ 0.62 $ 0.40 $ 0.42 $ 2.20 Cash dividends declared per share $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 1.00 2017 First Second Third Fourth Quarter Quarter Quarter Quarter Total Revenue $ 567,686 $ 566,262 $ 540,507 $ 545,076 $ 2,219,531 Total costs and expenses $ 518,664 $ 512,048 $ 494,996 $ 507,617 $ 2,033,325 Income from operations $ 49,022 $ 54,214 $ 45,511 $ 37,459 $ 186,206 Net income attributable to Texas Roadhouse, Inc. and subsidiaries (a) $ 34,313 $ 37,581 $ 31,014 $ 28,618 $ 131,526 Basic earnings per common share (a) $ 0.48 $ 0.53 $ 0.44 $ 0.40 $ 1.85 Diluted earnings per common share (a) $ 0.48 $ 0.53 $ 0.43 $ 0.40 $ 1.84 Cash dividends declared per share $ 0.21 $ 0.21 $ 0.21 $ 0.21 $ 0.84 (a) The first quarter of 2017 includes an after-tax charge of $9.2 million, or $0.13 per basic and diluted share, related to the settlement of a legal matter. See note 13 for further discussion. The fourth quarter of 2017 includes an income tax benefit of $3.1 million, or $0.04 per basic and diluted share, related to the enactment of new income tax legislation. See note 9 for further discussion. |
Description of Business (Detail
Description of Business (Details) | Dec. 25, 2018restaurantitem | Dec. 26, 2017restaurantitem |
Description of Business | ||
Number of states in which restaurants operate | item | 49 | 49 |
Number of countries in which restaurants operate | item | 9 | 7 |
Company | ||
Description of Business | ||
Number of restaurants | 491 | 462 |
Company | Wholly-owned | ||
Description of Business | ||
Number of restaurants | 471 | 444 |
Company | Majority-owned | ||
Description of Business | ||
Number of restaurants | 20 | 18 |
Franchise | ||
Description of Business | ||
Number of restaurants | 91 | 87 |
Franchise | Domestic | ||
Description of Business | ||
Number of restaurants | 69 | 70 |
Franchise | International | ||
Description of Business | ||
Number of restaurants | 22 | 17 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) $ in Millions | 12 Months Ended | ||
Dec. 25, 2018USD ($)restaurant | Dec. 26, 2017USD ($)restaurant | Dec. 27, 2016 | |
Fiscal Year | |||
Length of fiscal year | 364 days | 364 days | 364 days |
Cash and Cash Equivalents | |||
Cash and cash equivalents included receivables from credit card entity | $ | $ 34.1 | $ 7.2 | |
Settlement period of credit card receivables, minimum | 2 days | ||
Settlement period of credit card receivables, maximum | 3 days | ||
Receivables | |||
Minimum number of days receivable are past due, warranting individual evaluation for collectability | 120 days | ||
Minimum | |||
Fiscal Year | |||
Length of fiscal year | 364 days | ||
Length of fiscal quarter | 91 days | ||
Maximum | |||
Fiscal Year | |||
Length of fiscal year | 371 days | ||
Length of fiscal quarter | 98 days | ||
Unconsolidated restaurants | |||
Principles of Consolidation | |||
Number of restaurants | 24 | 24 | |
Unconsolidated restaurants | Minimum | |||
Principles of Consolidation | |||
Ownership percentage by entity | 5.00% | 5.00% | |
Unconsolidated restaurants | Maximum | |||
Principles of Consolidation | |||
Ownership percentage by entity | 10.00% | 10.00% | |
Unconsolidated restaurants | China restaurant operator | |||
Principles of Consolidation | |||
Ownership percentage by entity | 40.00% | 40.00% | |
Number of restaurants | 4 | 4 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies, PPE (Details) - USD ($) | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Property and Equipment | |||
Repairs and maintenance expense | $ 29,700,000 | $ 25,800,000 | $ 22,400,000 |
Impairment of Goodwill | |||
Impairment of goodwill | 0 | 0 | 0 |
Impairment or Disposal of Long-Lived Assets | |||
Maximum threshold amount considered for impairment | 300,000 | ||
Impairment of restaurant | $ 0 | $ 0 | $ 0 |
Minimum | |||
Impairment or Disposal of Long-Lived Assets | |||
Impairment analysis, estimated useful life of operating a restaurant | 20 years | ||
Land improvements | Minimum | |||
Property and Equipment | |||
Estimated useful life | 10 years | ||
Land improvements | Maximum | |||
Property and Equipment | |||
Estimated useful life | 25 years | ||
Buildings and leasehold improvements | Minimum | |||
Property and Equipment | |||
Estimated useful life | 10 years | ||
Buildings and leasehold improvements | Maximum | |||
Property and Equipment | |||
Estimated useful life | 25 years | ||
Furniture, fixtures And equipment | Minimum | |||
Property and Equipment | |||
Estimated useful life | 3 years | ||
Furniture, fixtures And equipment | Maximum | |||
Property and Equipment | |||
Estimated useful life | 10 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies, Ins (Details) | 12 Months Ended |
Dec. 25, 2018USD ($) | |
Insurance Reserves | |
Self-insurance limit, Employee practices liability | $ 250,000 |
Self-insurance limit, Employee practices liability Class Action | 2,000,000 |
Self-insurance limit, Workers compensation | 350,000 |
Self-insurance limit, General liability | 500,000 |
Self-insurance limit, Employee healthcare | 325,000 |
Insurance claims | |
Property insurance deductible | 250,000 |
Plan | Minimum | |
Insurance claims | |
Property insurance claim | $ 50,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies, Segment (Details) - restaurant | Dec. 25, 2018 | Dec. 26, 2017 |
Company | ||
Segment Reporting | ||
Number of restaurants | 491 | 462 |
Franchise | ||
Segment Reporting | ||
Number of restaurants | 91 | 87 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies, Advertising (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Advertising | |||
Designated portion of sales from domestic and franchise restaurants remitted to the advertising fund | 0.30% | ||
Company-owned restaurant contribution and other costs related to marketing initiatives | $ 17.1 | $ 14.5 | $ 13.3 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies, Leases (Details) - Land and/or building | 12 Months Ended |
Dec. 25, 2018 | |
Leases and Leasehold Improvements | |
Lease renewal term | 5 years |
Minimum | |
Leases and Leasehold Improvements | |
Lease term | 10 years |
Lease renewal option | 1 year |
Maximum | |
Leases and Leasehold Improvements | |
Lease term | 15 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies, Derivatives (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Derivative Instruments and Hedging Activities | |||
Amount of hedge ineffectiveness | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 25, 2018 | Dec. 27, 2017 | Dec. 26, 2017 |
Liabilities | |||
Deferred tax liabilities, net | $ 17,268 | $ 5,002 | $ 5,301 |
Other liabilities, non-current | 48,295 | 43,289 | 42,112 |
Equity | |||
Retained earnings | 688,337 | 601,621 | 602,499 |
ASU 2014-09 | Balances Without Adoption of ASU 2014-09 | |||
Liabilities | |||
Deferred tax liabilities, net | 17,568 | 5,301 | |
Other liabilities, non-current | 47,114 | 42,112 | |
Equity | |||
Retained earnings | 689,218 | $ 602,499 | |
ASU 2014-09 | Adoption Impact of ASU 2014-09 | |||
Liabilities | |||
Deferred tax liabilities, net | (300) | (299) | |
Other liabilities, non-current | 1,181 | 1,177 | |
Equity | |||
Retained earnings | $ (881) | $ (878) |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 25, 2018 | Sep. 25, 2018 | Jun. 26, 2018 | Mar. 27, 2018 | Dec. 26, 2017 | Sep. 26, 2017 | Jun. 27, 2017 | Mar. 28, 2017 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Revenue: | |||||||||||
Total revenue | $ 605,912 | $ 594,595 | $ 629,237 | $ 627,705 | $ 545,076 | $ 540,507 | $ 566,262 | $ 567,686 | $ 2,457,449 | $ 2,219,531 | $ 1,990,714 |
Costs and expenses | |||||||||||
Other operating | 375,477 | 342,702 | 305,290 | ||||||||
General and administrative | 136,163 | 123,294 | 110,795 | ||||||||
Provision for income taxes | 24,257 | 48,581 | 51,183 | ||||||||
Net income | $ 30,332 | $ 29,125 | $ 44,227 | $ 54,541 | $ 28,618 | $ 31,014 | $ 37,581 | $ 34,313 | 158,225 | 131,526 | 115,598 |
ASU 2014-09 | Balances Without Adoption of ASU 2014-09 | |||||||||||
Costs and expenses | |||||||||||
Other operating | 380,630 | ||||||||||
General and administrative | 133,815 | ||||||||||
Provision for income taxes | 24,258 | ||||||||||
Net income | 158,228 | ||||||||||
ASU 2014-09 | Adoption Impact of ASU 2014-09 | |||||||||||
Costs and expenses | |||||||||||
Other operating | (5,153) | ||||||||||
General and administrative | 2,348 | ||||||||||
Provision for income taxes | (1) | ||||||||||
Net income | (3) | ||||||||||
Restaurant and other sales | |||||||||||
Revenue: | |||||||||||
Total revenue | 2,437,115 | 2,203,017 | 1,974,261 | ||||||||
Restaurant and other sales | ASU 2014-09 | Balances Without Adoption of ASU 2014-09 | |||||||||||
Revenue: | |||||||||||
Total revenue | 2,442,268 | ||||||||||
Restaurant and other sales | ASU 2014-09 | Adoption Impact of ASU 2014-09 | |||||||||||
Revenue: | |||||||||||
Total revenue | (5,153) | ||||||||||
Franchise royalties and fees | |||||||||||
Revenue: | |||||||||||
Total revenue | 20,334 | $ 16,514 | $ 16,453 | ||||||||
Franchise royalties and fees | ASU 2014-09 | Balances Without Adoption of ASU 2014-09 | |||||||||||
Revenue: | |||||||||||
Total revenue | 17,990 | ||||||||||
Franchise royalties and fees | ASU 2014-09 | Adoption Impact of ASU 2014-09 | |||||||||||
Revenue: | |||||||||||
Total revenue | $ 2,344 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements - Leases (Details) - USD ($) $ in Thousands | Dec. 26, 2018 | Dec. 25, 2018 | Dec. 26, 2017 |
Accounting pronouncements | |||
Deferred rent | $ 48,100 | $ 48,079 | $ 42,141 |
ASU 2016-02 | Adjustments | |||
Accounting pronouncements | |||
Right-of-use asset | 470,000 | ||
Lease liability | $ 520,000 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 25, 2018 | Sep. 25, 2018 | Jun. 26, 2018 | Mar. 27, 2018 | Dec. 26, 2017 | Sep. 26, 2017 | Jun. 27, 2017 | Mar. 28, 2017 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Revenue | |||||||||||
Total revenue | $ 605,912 | $ 594,595 | $ 629,237 | $ 627,705 | $ 545,076 | $ 540,507 | $ 566,262 | $ 567,686 | $ 2,457,449 | $ 2,219,531 | $ 1,990,714 |
Restaurant and other sales | |||||||||||
Revenue | |||||||||||
Total revenue | 2,437,115 | 2,203,017 | 1,974,261 | ||||||||
Franchise royalties | |||||||||||
Revenue | |||||||||||
Total revenue | 17,443 | 16,195 | 16,135 | ||||||||
Franchise fees | |||||||||||
Revenue | |||||||||||
Total revenue | $ 2,891 | $ 319 | $ 318 |
Revenue - Other (Details)
Revenue - Other (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2018 | Dec. 26, 2017 | |
Revenue | ||
Estimated gift cards sold by Company that are never redeemed (as a percent) | 4.00% | |
Gift card fees | $ 5,200 | |
Deferred revenue-gift cards | 192,242 | $ 156,627 |
Franchise royalties and fees | ||
Revenue | ||
Deferred revenue recognized | $ 300 | |
Ongoing royalties received as a percentage of gross sales from domestic franchisees and international franchisee | 4.00% | |
Sales percentage, remittance to marketing and advertising | 0.30% | |
Gift cards | ||
Revenue | ||
Deferred revenue recognized | $ 108,700 | |
Other Liabilities | Franchise royalties and fees | ||
Revenue | ||
Deferred revenue | $ 1,800 | $ 1,800 |
Acquisitions (Details)
Acquisitions (Details) $ in Thousands | Dec. 03, 2018USD ($)restaurant | Dec. 28, 2016USD ($)restaurant | Dec. 25, 2018USD ($) | Dec. 26, 2017USD ($) | Dec. 27, 2016USD ($) |
Acquisitions | |||||
Acquisition of franchise restaurants, net of cash acquired | $ 2,165 | $ 16,528 | |||
Proceeds from noncontrolling interest contribution and other | 2,551 | 3,457 | |||
Purchase price allocation | |||||
Goodwill | $ 123,220 | $ 121,040 | $ 116,571 | ||
One franchise restaurant in Florida | |||||
Acquisitions | |||||
Number of restaurants acquired | restaurant | 1 | ||||
Purchase price paid | $ 2,200 | ||||
Acquisition related charge | 300 | ||||
Goodwill deductible for tax purposes | 2,200 | ||||
Purchase price allocation | |||||
Current assets | 42 | ||||
Property and equipment | 43 | ||||
Goodwill | 2,180 | ||||
Current liabilities | (97) | ||||
Purchase price | $ 2,168 | ||||
Four franchise restaurants in Florida and Georgia | |||||
Acquisitions | |||||
Number of restaurants acquired | restaurant | 4 | ||||
Acquisition of franchise restaurants, net of cash acquired | $ 16,500 | ||||
Purchase price paid | 16,500 | ||||
Goodwill deductible for tax purposes | 4,500 | ||||
Purchase price allocation | |||||
Current assets | 170 | ||||
Property and equipment | 12,281 | ||||
Goodwill | 4,469 | ||||
Current liabilities | (392) | ||||
Purchase price | $ 16,528 | ||||
Four franchise restaurants in Florida and Georgia | Wholly-owned | |||||
Acquisitions | |||||
Number of restaurants acquired | restaurant | 2 | ||||
Four franchise restaurants in Florida and Georgia | Majority-owned | |||||
Acquisitions | |||||
Number of restaurants acquired | restaurant | 2 | ||||
Proceeds from noncontrolling interest contribution and other | $ 3,500 |
Long-term Debt and Obligation_2
Long-term Debt and Obligations Under Capital Lease (Details) $ in Thousands | Aug. 07, 2017USD ($) | Dec. 27, 2016restaurant | Dec. 25, 2018USD ($) | Dec. 26, 2017USD ($) |
Long-term debt | ||||
Long-term debt and capital lease obligations | $ 2,081 | $ 51,990 | ||
Less current maturities | 9 | |||
Long-term debt and capital lease obligations, excluding current maturities | 2,081 | 51,981 | ||
Long-term debt | ||||
Number of restaurant locations lease amended qualifies as capital lease | restaurant | 1 | |||
Obligation under capital lease | ||||
Long-term debt | ||||
Long-term debt and capital lease obligations | $ 2,081 | 1,990 | ||
Revolver | ||||
Long-term debt | ||||
Long-term debt and capital lease obligations | $ 50,000 | |||
Revolving Credit Facility | ||||
Revolving credit facility, maximum borrowing capacity | $ 200,000 | |||
Revolving credit facility contingent increase in maximum borrowing capacity | $ 200,000 | |||
Weighted-average interest rate (as a percent) | 3.81% | 2.37% | ||
Revolving credit facility, remaining borrowing capacity | $ 191,600 | |||
Letters of credit outstanding | $ 8,400 | |||
Debt instrument condition for additional borrowing of secured debt, based on percentage of consolidated tangible net worth | 20.00% | |||
Revolver | Minimum | ||||
Revolving Credit Facility | ||||
Percentage of commitment fee on unused credit facility | 0.125% | |||
Revolving credit facility, fixed charge coverage ratio | 2 | |||
Threshold for aggregate secured indebtedness | $ 125,000 | |||
Revolver | Maximum | ||||
Revolving Credit Facility | ||||
Percentage of commitment fee on unused credit facility | 0.30% | |||
Revolving credit facility, leverage ratio | 3 | |||
Revolver | LIBOR | Minimum | ||||
Revolving Credit Facility | ||||
Interest rate added to base rate (as a percent) | 0.875% | |||
Revolver | LIBOR | Maximum | ||||
Revolving Credit Facility | ||||
Interest rate added to base rate (as a percent) | 1.875% | |||
Revolver | Federal Reserve Bank of New York | ||||
Revolving Credit Facility | ||||
Interest rate added to base rate (as a percent) | 0.50% | |||
Revolver | Adjusted Eurodollar Rate | ||||
Revolving Credit Facility | ||||
Interest rate added to base rate (as a percent) | 1.00% | |||
Interest period | 1 month |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Property and Equipment, Net | |||
Property and Equipment, Gross | $ 1,559,127 | $ 1,439,857 | |
Accumulated depreciation and amortization | (602,451) | (527,710) | |
Property, Plant and Equipment, Net | 956,676 | 912,147 | |
Interest capitalized | 100 | 400 | $ 300 |
Land and improvements | |||
Property and Equipment, Net | |||
Property and Equipment, Gross | 127,579 | 124,126 | |
Buildings and leasehold improvements | |||
Property and Equipment, Net | |||
Property and Equipment, Gross | 835,490 | 757,293 | |
Furniture, fixtures And equipment | |||
Property and Equipment, Net | |||
Property and Equipment, Gross | 556,254 | 500,954 | |
Construction in progress | |||
Property and Equipment, Net | |||
Property and Equipment, Gross | 28,975 | 47,457 | |
Liquor licenses | |||
Property and Equipment, Net | |||
Property and Equipment, Gross | $ 10,829 | $ 10,027 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Changes in the carrying amount of goodwill | |||
Balance at the beginning of the period | $ 121,040 | $ 116,571 | |
Additions | 2,180 | 4,469 | |
Impairment | 0 | 0 | $ 0 |
Balance at the end of the period | 123,220 | 121,040 | 116,571 |
Accumulated goodwill impairment loss | 4,800 | ||
Changes in the carrying amount of intangible assets | |||
Balance at the beginning of the period, net | 2,700 | 3,622 | |
Amortization expense | (741) | (922) | |
Balance at the end of the period, net | 1,959 | 2,700 | $ 3,622 |
Gross carrying amount | 15,400 | 15,400 | |
Accumulated amortization | 13,416 | $ 12,675 | |
Minimum | |||
Changes in the carrying amount of intangible assets | |||
Expected amortization expense for each of the next five years | 200 | ||
Maximum | |||
Changes in the carrying amount of intangible assets | |||
Expected amortization expense for each of the next five years | $ 700 |
Leases (Details)
Leases (Details) $ in Thousands | Dec. 25, 2018USD ($) |
Leases | |
2,019 | $ 50,030 |
2,020 | 49,582 |
2,021 | 49,917 |
2,022 | 50,237 |
2,023 | 49,854 |
Thereafter | 677,710 |
Total | $ 927,330 |
Leases, Rent (Details)
Leases, Rent (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Rent expense for operating leases | |||
Contingent rent | $ 1,050 | $ 1,186 | $ 1,175 |
Rent expense, occupancy | 48,791 | 44,807 | 40,580 |
Rent expense | 54,967 | 49,894 | 44,959 |
Occupancy | |||
Rent expense for operating leases | |||
Minimum rent | 47,741 | 43,621 | 39,405 |
Rent expense, occupancy | 48,791 | 44,807 | 40,580 |
Equipment and other | |||
Rent expense for operating leases | |||
Minimum rent | $ 6,176 | $ 5,087 | $ 4,379 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 25, 2018 | Dec. 31, 2017 | Dec. 26, 2017 | Dec. 27, 2016 | |
Current: | |||||
Federal | $ 2,934 | $ 43,108 | $ 36,201 | ||
State | 8,794 | 10,233 | 8,786 | ||
Foreign | 210 | 309 | 202 | ||
Total current | 11,938 | 53,650 | 45,189 | ||
Deferred: | |||||
Federal | 11,909 | (4,830) | 5,364 | ||
State | 410 | (239) | 630 | ||
Total deferred | 12,319 | (5,069) | 5,994 | ||
Income tax provision | $ 24,257 | $ 48,581 | $ 51,183 | ||
Reconciliation of the statutory federal income tax rate to our effective tax rate: | |||||
Tax at statutory federal rate (as a percent) | 21.00% | 21.00% | 35.00% | 35.00% | 35.00% |
State and local tax, net of federal benefit (as a percent) | 3.60% | 3.30% | 3.40% | ||
FICA tip tax credit (as a percent) | (9.60%) | (7.00%) | (6.80%) | ||
Work opportunity tax credit (as a percent) | (1.50%) | (0.90%) | (0.80%) | ||
Stock compensation (as a percent) | (1.40%) | (1.80%) | (0.10%) | ||
Net income attributable to noncontrolling interests (as a percent) | (0.80%) | (1.10%) | (0.90%) | ||
Officer compensation (as a percent) | 1.70% | 0.10% | 0.10% | ||
Tax reform | (1.70%) | ||||
Other (as a percent) | (0.10%) | 0.20% | (0.10%) | ||
Total (as a percent) | 12.90% | 26.10% | 29.80% |
Income Taxes, New Tax Legislati
Income Taxes, New Tax Legislation and ASU 2016-09 (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 26, 2017 | Dec. 31, 2018 | Dec. 25, 2018 | Dec. 31, 2017 | Dec. 26, 2017 | Dec. 27, 2016 | |
Income Taxes | ||||||
Effective tax rate (as a percent) | 12.90% | 26.10% | 29.80% | |||
Income tax (expense) benefit | $ (24,257) | $ (48,581) | $ (51,183) | |||
Federal corporate tax rate (as a percent) | 21.00% | 21.00% | 35.00% | 35.00% | 35.00% | |
Income tax (expense) benefit related to share-based compensation | $ 3,400 | |||||
Earnings per share basic and diluted, related to new tax legislation, share-based compensation (in dollars per share) | $ 0.05 | |||||
Income tax (expense) benefit, net tax legislation, revalue of deferred tax balances and foreign operations | $ 3,100 | $ 3,100 | ||||
Earnings per share basic and diluted, related to new tax legislation, revaluation of deferred tax balances and foreign operations | $ 0.04 | $ 0.04 | ||||
Income tax (expense) benefit, new tax legislation revaluing deferred tax balances | $ 3,800 | |||||
Income tax expense, new tax legislation foreign operations | $ 700 |
Income Taxes, Deferred Tax Asse
Income Taxes, Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 25, 2018 | Dec. 26, 2017 |
Deferred tax assets: | ||
Deferred revenue—gift cards | $ 12,851 | $ 10,355 |
Insurance reserves | 3,949 | 3,638 |
Other reserves | 890 | 621 |
Share-based compensation | 4,623 | 6,022 |
Deferred rent | 12,179 | 10,338 |
Deferred compensation | 8,483 | 6,737 |
Other assets | 2,212 | 1,866 |
Total deferred tax asset | 45,187 | 39,577 |
Deferred tax liabilities: | ||
Property and equipment | (50,513) | (35,430) |
Goodwill and intangibles | (5,398) | (4,697) |
Other liabilities | (6,544) | (4,751) |
Total deferred tax liability | (62,455) | (44,878) |
Net deferred tax liability | $ (17,268) | $ (5,301) |
Income Taxes (Unrecognized) (De
Income Taxes (Unrecognized) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2018 | Dec. 26, 2017 | |
Reconciliation of the beginning and ending liability for unrecognized tax benefits: | ||
Balance at the beginning of the period | $ 806 | $ 511 |
Additions to tax positions related to prior years | 36 | 36 |
Additions to tax positions related to current year | 754 | 389 |
Reductions due to statute expiration | (114) | (2) |
Reductions due to exam settlement | (128) | |
Balance at the end of the period | $ 1,482 | $ 806 |
Preferred Stock (Details)
Preferred Stock (Details) | Dec. 25, 2018itemshares | Dec. 26, 2017shares |
Preferred Stock | ||
Number of preferred stock shares authorized to issue | 1,000,000 | 1,000,000 |
Minimum number of series of preferred stock authorized | item | 1 | |
Number of shares of preferred stock outstanding | 0 | 0 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | May 22, 2014 | |
Stockholders' Equity | ||||
Repurchase of common stock authorized by board of directors | $ 100,000 | |||
Number of shares repurchased | 0 | 0 | 114,700 | |
Payments to repurchase common stock | $ 4,110 | |||
Amount remaining under authorized stock repurchase program | $ 69,900 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 25, 2018 | Sep. 25, 2018 | Jun. 26, 2018 | Mar. 27, 2018 | Dec. 26, 2017 | Sep. 26, 2017 | Jun. 27, 2017 | Mar. 28, 2017 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Earnings Per Share | |||||||||||
Anti-dilutive securities (in shares) | 0 | 2,082 | 2 | ||||||||
Earnings per share | |||||||||||
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | $ 158,225 | $ 131,526 | $ 115,598 | ||||||||
Basic EPS: | |||||||||||
Weighted-average common shares outstanding (in shares) | 71,467,000 | 70,989,000 | 70,396,000 | ||||||||
Basic EPS (in dollars per share) | $ 0.42 | $ 0.41 | $ 0.62 | $ 0.76 | $ 0.40 | $ 0.44 | $ 0.53 | $ 0.48 | $ 2.21 | $ 1.85 | $ 1.64 |
Diluted EPS: | |||||||||||
Weighted-average common shares outstanding (in shares) | 71,467,000 | 70,989,000 | 70,396,000 | ||||||||
Dilutive effect of stock options and nonvested stock (in shares) | 497,000 | 538,000 | 656,000 | ||||||||
Shares-diluted (in shares) | 71,964,000 | 71,527,000 | 71,052,000 | ||||||||
Diluted EPS (in dollars per share) | $ 0.42 | $ 0.40 | $ 0.62 | $ 0.76 | $ 0.40 | $ 0.43 | $ 0.53 | $ 0.48 | $ 2.20 | $ 1.84 | $ 1.63 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended | ||||
Dec. 25, 2018USD ($)item | Dec. 26, 2017USD ($)item | Dec. 27, 2016USD ($) | Mar. 31, 2017USD ($) | Jul. 15, 2016USD ($) | |
Commitments and Contingencies | |||||
Estimated cost to complete capital project commitments (in dollars) | $ 168.3 | $ 150 | |||
Number of suppliers providing most of the company's beef | item | 3 | ||||
Lease Agreements | |||||
Commitments and Contingencies | |||||
Contingently liable amount | $ 14.8 | $ 15.6 | |||
Number of leases guarantees entity contingently liable | item | 7 | 7 | |||
Fair Labor Standards Act Class of Employees Claim | |||||
Commitments and Contingencies | |||||
Estimated loss contingency, net of tax | $ 4.5 | ||||
Fair Labor Standards Act Class of Employees Claim | General and administrative expense | |||||
Commitments and Contingencies | |||||
Total pre-tax charge | $ 7.3 | ||||
Fair Labor Standards Act Class of Employees Claim | Maximum | |||||
Commitments and Contingencies | |||||
Contingently liable amount | $ 9.5 | ||||
U.S. Equal Employment Opportunity Commission | |||||
Commitments and Contingencies | |||||
Contingently liable amount | $ 12 | ||||
Estimated loss contingency, net of tax | $ 9.2 | ||||
U.S. Equal Employment Opportunity Commission | General and administrative expense | |||||
Commitments and Contingencies | |||||
Total pre-tax charge | $ 14.9 | ||||
Legal settlement expense, after tax | $ 1.5 | ||||
Everett, Massachusetts | Officers, directors and shareholders | |||||
Commitments and Contingencies | |||||
Ownership percentage | 5.00% | ||||
Fargo, North Dakota | Officers, directors and shareholders | |||||
Commitments and Contingencies | |||||
Ownership percentage | 5.00% |
Share-based Compensation (Detai
Share-based Compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Share-based Compensation | |||
Share-based compensation expense | $ 33,983 | $ 26,934 | $ 26,067 |
Labor expense | |||
Share-based Compensation | |||
Share-based compensation expense | 8,463 | 7,171 | 6,124 |
General and administrative expense | |||
Share-based Compensation | |||
Share-based compensation expense | $ 25,520 | $ 19,763 | $ 19,943 |
Share-based Compensation, ASU 2
Share-based Compensation, ASU 2016-09 (Details) - USD ($) $ in Thousands | Dec. 28, 2016 | Dec. 25, 2018 |
ASU 2016-09 | ||
Cumulative effect on retained earnings | $ 878 | |
ASU 2016-09 | ||
ASU 2016-09 | ||
Cumulative effect on retained earnings | $ 100 |
Share-based Compensation, Restr
Share-based Compensation, Restricted Stock and PSU (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 08, 2019 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | Dec. 25, 2018 |
RSUs | |||||
Share-based Compensation | |||||
Number of common shares that a holder would receive upon satisfaction of the vesting requirement (in shares) | 1 | 1 | |||
Shares | |||||
Outstanding at the beginning of the period (in shares) | 949,991 | ||||
Granted (in shares) | 439,259 | ||||
Forfeited (in shares) | (35,077) | ||||
Vested (in shares) | (529,228) | ||||
Outstanding at the end of period (in shares) | 824,945 | 949,991 | 824,945 | ||
Weighted-Average Grant Date Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 43.62 | ||||
Granted (in dollars per share) | 60.79 | ||||
Forfeited (in dollars per share) | 47.66 | ||||
Vested (in dollars per share) | 42.20 | ||||
Outstanding at the end of the period (in dollars per share) | $ 53.51 | $ 43.62 | $ 53.51 | ||
Weighted-Average Remaining Contractual Term (years) | |||||
Weighted-Average Remaining Contractual Term | 1 year 3 months 18 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding at the end of the period (in dollars) | $ 46,870 | $ 46,870 | |||
Unrecognized compensation cost | |||||
Unrecognized compensation cost of unvested stock awards (in dollars) | $ 22,000 | $ 22,000 | |||
Expected weighted-average period of recognition of unrecognized compensation cost of unvested awards | 1 year 3 months 18 days | ||||
Share-based Compensation, other disclosures | |||||
Intrinsic value of awards vested (in dollars) | $ 32,100 | $ 23,400 | $ 21,500 | ||
Excess tax benefit recognized within the income tax provision | $ 1,900 | $ 1,600 | |||
Excess tax benefit recorded in additional paid-in capital | 1,500 | ||||
RSUs | Minimum | |||||
Share-based Compensation, other disclosures | |||||
Vesting period | 1 year | ||||
RSUs | Maximum | |||||
Share-based Compensation, other disclosures | |||||
Vesting period | 5 years | ||||
PSUs | |||||
Share-based Compensation | |||||
Number of common shares that a holder would receive upon meeting a performance obligation and vesting requirement (in shares) | 1 | 1 | |||
Shares | |||||
Outstanding at the beginning of the period (in shares) | 205,000 | ||||
Granted (in shares) | 90,000 | ||||
Incremental Performance Shares (in shares) | 52,169 | 40,576 | |||
Vested (in shares) | (142,169) | (155,576) | |||
Outstanding at the end of period (in shares) | 90,000 | 205,000 | 90,000 | ||
Weighted-Average Grant Date Fair Value | |||||
Outstanding at the beginning of the period (in dollars per share) | $ 46.16 | ||||
Incremental Performance Shares (in dollars per share) | 39.88 | ||||
Vested (in dollars per share) | 39.88 | ||||
Outstanding at the end of the period (in dollars per share) | $ 54.18 | $ 46.16 | $ 54.18 | ||
Weighted-Average Remaining Contractual Term (years) | |||||
Weighted-Average Remaining Contractual Term | 1 month 6 days | ||||
Aggregate Intrinsic Value | |||||
Outstanding at the end of the period (in dollars) | $ 5,113 | $ 5,113 | |||
Unrecognized compensation cost | |||||
Unrecognized compensation cost of unvested stock awards (in dollars) | $ 300 | $ 300 | |||
Expected weighted-average period of recognition of unrecognized compensation cost of unvested awards | 1 month 6 days | ||||
Share-based Compensation, other disclosures | |||||
Target percentage relating to shares granted (as a percent) | 100.00% | ||||
Vesting period | 1 year | ||||
Intrinsic value of awards vested (in dollars) | $ 8,900 | $ 8,600 | $ 5,000 | ||
Excess tax benefit recognized within the income tax provision | $ 700 | $ 800 |
Share-based Compensation, Optio
Share-based Compensation, Options (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Aggregate Intrinsic Value | |||
Proceeds from exercise of stock options | $ 1,558 | $ 2,673 | |
Stock Options | |||
Shares | |||
Granted (in shares) | 0 | 0 | 0 |
Stock options vested (in shares) | 0 | 0 | 0 |
Aggregate Intrinsic Value | |||
Intrinsic value of options exercised (in dollars) | $ 4,000 | $ 6,300 | |
Proceeds from exercise of stock options | 1,600 | 2,700 | |
Excess tax benefit recorded in additional paid-in capital | $ 1,000 | $ 1,800 |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | 12 Months Ended | |
Dec. 25, 2018USD ($)item | Dec. 26, 2017USD ($) | |
Fair value of financial instruments | ||
Transfer of asset levels within the fair value hierarchy | $ 0 | |
Minimum number of investment funds in rabbi trust for deferred compensation plan | item | 1 | |
Fair value measured on a recurring basis | Level 1 | ||
Fair value of financial instruments | ||
Deferred compensation plan - assets | $ 31,632 | $ 28,754 |
Deferred compensation plan - liabilities | $ (31,721) | $ (28,829) |
Impairment and Closure Costs (D
Impairment and Closure Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Impairment and Closure Costs | |||
Closure costs | $ 278 | $ 654 | $ 179 |
Derivative and Hedging Activi_3
Derivative and Hedging Activities (Details) $ in Thousands | Jan. 07, 2016derivative | Dec. 27, 2016USD ($) |
Interest rate cash flow hedges | ||
Unrealized gain on derivatives, net of tax of ($-), ($-) and ($18) | $ 27 | |
Loss reclassified from AOCI to income (effective portion) | $ 45 | |
Interest Rate Swap | ||
Interest rate cash flow hedges | ||
Number of interest rate swaps with activity during the period which have expired | derivative | 1 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2018 | Dec. 26, 2017 | |
Accumulated Other Comprehensive Loss | ||
Balance as of beginning of period | $ 839,079 | |
Balance as of end of period | 945,569 | $ 839,079 |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Loss | ||
Balance as of beginning of period | (39) | (194) |
Other comprehensive loss | (242) | 252 |
Income taxes | 53 | (97) |
Balance as of end of period | $ (228) | $ (39) |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | Dec. 03, 2018USD ($)restaurant | Dec. 25, 2018USD ($)restaurant | Dec. 26, 2017USD ($)restaurant | Dec. 27, 2016USD ($)restaurant |
Franchise | ||||
Related Party Transactions | ||||
Number of restaurants | 91 | 87 | ||
Officers, directors and shareholders | ||||
Related Party Transactions | ||||
Ownership percentage | 5.00% | |||
Officers, directors and shareholders | Majority-owned | ||||
Related Party Transactions | ||||
Number of restaurants | 1 | |||
Officers, directors and shareholders | Franchise | ||||
Related Party Transactions | ||||
Number of restaurants | 9 | 10 | 10 | |
Ownership percentage | 5.00% | 5.00% | 5.00% | |
Fees received from franchise and license restaurants | $ | $ 2.1 | $ 2.1 | $ 2 | |
Number of restaurants for which the entity is contingently liable on the lease | 2 | |||
Founder | Franchise | ||||
Related Party Transactions | ||||
Number of restaurants acquired | 1 | |||
Fees received from franchise and license restaurants | $ | $ 0.1 | |||
Founder | Personal contribution | ||||
Related Party Transactions | ||||
Transactions with related party | $ | $ 1 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 25, 2018 | Sep. 25, 2018 | Jun. 26, 2018 | Mar. 27, 2018 | Dec. 26, 2017 | Sep. 26, 2017 | Jun. 27, 2017 | Mar. 28, 2017 | Dec. 25, 2018 | Dec. 26, 2017 | Dec. 27, 2016 | |
Selected Quarterly Financial Data (unaudited) | |||||||||||
Total revenue | $ 605,912 | $ 594,595 | $ 629,237 | $ 627,705 | $ 545,076 | $ 540,507 | $ 566,262 | $ 567,686 | $ 2,457,449 | $ 2,219,531 | $ 1,990,714 |
Total costs and expenses | 572,705 | 559,151 | 574,970 | 562,834 | 507,617 | 494,996 | 512,048 | 518,664 | 2,269,660 | 2,033,325 | 1,818,814 |
Income from operations | 33,207 | 35,444 | 54,267 | 64,871 | 37,459 | 45,511 | 54,214 | 49,022 | 187,789 | 186,206 | 171,900 |
Net income attributable to Texas Roadhouse, Inc. and subsidiaries | $ 30,332 | $ 29,125 | $ 44,227 | $ 54,541 | $ 28,618 | $ 31,014 | $ 37,581 | $ 34,313 | $ 158,225 | $ 131,526 | $ 115,598 |
Basic EPS (in dollars per share) | $ 0.42 | $ 0.41 | $ 0.62 | $ 0.76 | $ 0.40 | $ 0.44 | $ 0.53 | $ 0.48 | $ 2.21 | $ 1.85 | $ 1.64 |
Diluted EPS (in dollars per share) | 0.42 | 0.40 | 0.62 | 0.76 | 0.40 | 0.43 | 0.53 | 0.48 | 2.20 | 1.84 | 1.63 |
Dividends declared per share (in dollars per share) | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.21 | $ 0.21 | $ 0.21 | $ 0.21 | $ 1 | $ 0.84 | $ 0.76 |
Selected Quarterly Financial _4
Selected Quarterly Financial Data (unaudited), Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 26, 2017 | Mar. 28, 2017 | Dec. 26, 2017 | |
Income tax | |||
Income tax (expense) benefit, net tax legislation, revalue of deferred tax balances and foreign operations | $ 3.1 | $ 3.1 | |
Earnings per share basic and diluted, related to new tax legislation, revaluation of deferred tax balances and foreign operations | $ 0.04 | $ 0.04 | |
Legal settlement | |||
Legal settlement | |||
Legal settlement expense, after tax | $ 9.2 | ||
Earnings per share, basic and diluted (in dollars per share) | $ (0.13) |