What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-28 · 168 added, 60 removed, 300 unchanged (43% of the section changed)

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As of December 29, 2020, we owned and operated 537 restaurants and franchised an additional 69 domestic restaurants and 28 international restaurants.

Financial Information about Operating Segments

We consider our restaurant and franchising operations as similar and have aggregated them into a single reportable segment.

The majority of the restaurants operate in the U.S.

within the casual dining segment of the restaurant industry, providing similar products to similar customers, and possessing similar pricing structures, resulting in similar long- term expected financial performance characteristics.

Each of our 514 company restaurants is considered an operating segment.

Narrative Description of Business

Of the 514 restaurants we owned and operated at the end of 2019, we operated 484 as Texas Roadhouse restaurants and 28 as Bubba’s 33 restaurants.

In addition, we operated two restaurants outside of the casual dining segment.

In 2020, we plan to open at least 30 company restaurants.

While the majority of our restaurant growth in 2020 will be Texas Roadhouse restaurants, we currently expect to open as many as seven Bubba’s 33 restaurants.

Of the 537 restaurants we owned and operated at the end of 2020, we operated 503 as Texas Roadhouse restaurants, 31 as Bubba’s 33 restaurants and three as Jaggers restaurants.

Throughout this report, we use the term "restaurants"

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Our first Bubba’s 33 restaurant opened in May 2013 in Fayetteville, North Carolina.

The operating strategy that underlies the growth of our concepts is built on the following key components:

Jaggers is a fast-casual restaurant concept offering burgers, hand-breaded chicken tenders and chicken sandwiches served with scratch-made sauces.

In addition, we offer fresh salads that are chopped and tossed when ordered and served with homemade dressings.

Jaggers offers drive-thru, carry-out, and dine-in service options.

Our first Jaggers restaurant opened in December 2014 in Noblesville, Indiana.

Financial Information about Operating Segments

We consider our restaurant and franchising operations as similar and have aggregated them into a single reportable segment.

The majority of the restaurants operate in the U.S.

Each of our 537 company restaurants is considered an operating segment.

COVID-19 Impact

On March 13, 2020, the novel coronavirus ( "

COVID-19 ") pandemic (the "

pandemic "

) was declared a National Public Health Emergency.

Shortly after the national emergency declaration, state and local officials began placing restrictions on restaurants, some of which allowed To-Go or curbside service only while others limited capacity in the dining room.

By late March, all of our domestic company and franchise restaurants were under state or local order which only allowed for To-Go or curbside service.

Beginning in early May 2020, state and local guidelines began to allow dining rooms to re-open, typically at a limited capacity.

While all of our dining rooms were able to open in some capacity, many were required to close again in areas more severely impacted by the pandemic.

As of December 29, 2020, 82% of our company restaurants had their dining rooms operating under various limited capacity restrictions.

Our remaining restaurants were limited to outdoor and/or To-Go or curbside service only.

In response to the impact of the pandemic on our restaurant operations, we have developed a hybrid operating model that accommodates our limited capacity dining rooms together with enhanced To-Go, which includes a curbside and/or drive-up operating model, as permitted by local guidelines.

This includes design changes to our building to better accommodate the increased To-Go sales and the expansion of outdoor seating areas where allowed.

We also have installed booth partitions in all of our restaurants as an added safety measure for our guests.

In addition, we have increased our already strict sanitation requirements, are conducting daily health and temperature checks for all employees before they begin their shift and are requiring personal protective equipment to be worn by all restaurant employees at all times.

As we work through the local regulations at each of our locations, the safety of our employees and guests remains our top priority.

As a result of the dining room restrictions and temporary closures, we have experienced a significant decrease in traffic which has impacted our operating results.

While the majority of our dining rooms have re-opened, a significant portion continue to operate under capacity restrictions that severely limit the number of guests we can serve.

In addition, while we have seen significant sales growth in our To-Go program, even with dining rooms re-opened, we currently do not expect these sales will generate a similar profit margin and cash flows to our normal operating model.

We expect our operating results to continue to be impacted until at least such time that all state and local restrictions are lifted, and our dining rooms can operate at full capacity.

We cannot predict how long the pandemic will last, how long it will take until all state and local restrictions will be lifted, or the extent to which our dining rooms will have to close again.

In addition, we cannot predict the overall impact on the economy or consumer spending habits.

The impact on our operating results as well as the operational and financial measures we have implemented in response to the pandemic have been included throughout this report.

In response to the pandemic, the Company and our Board of Directors implemented the following measures in 2020 to enhance financial flexibility:

● Decreased the number of planned new restaurants for 2020;

● Suspended all quarterly cash dividends occurring after March 27, 2020;

● Suspended all share repurchase activity;

● Expanded the capacity of the revolving credit facility and increased the borrowings by $240 million;

● Decreased compensation including voluntary reductions of salary and bonus for the executive and leadership teams to make relief grants available for restaurant employees.

Each non-employee member of the Board of Directors also volunteered to forgo their director and committee fees along with any cash retainers effective April 1, 2020 and continuing throughout fiscal 2020.

Effective March 27, 2020, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was passed to benefit companies that were significantly impacted by the pandemic.

This legislation allowed for the deferral of the social security portion of the employer portion of FICA payroll taxes from the date of enactment through the end of 2020.

Amounts are required to be repaid in equal installments at the end of 2021 and 2022.

As of December 29, 2020, the Company had deferred $47.3 million in payroll taxes with the amount due in 2021 included in accrued wages and payroll taxes and the amount due in 2022 included in other liabilities in our consolidated balance sheets.

The CARES Act also allowed for an Employee Retention Credit for companies severely impacted by the pandemic to encourage the retention of full-time employees.

This refundable payroll tax credit was available for any company that had fully or partially suspended operations due to government order or experienced a significant decline in gross receipts and had employees who were paid but did not actually work.

The Company provided various forms of relief pay for hourly restaurant employees throughout the year, a significant portion of which qualified for this tax credit.

For the year ended December 29, 2020, we recorded $7.0 million related to this credit which is included in labor expense in our consolidated statements of income and comprehensive income.

Finally, the CARES Act provided for small business loans that were forgivable if certain criteria were met.

The Company did not pursue any of these loans on behalf of company restaurants as we believe we have sufficient alternatives for raising capital if needed.

Operating Strategy

Although a significant portion of 2020 required us to focus on adapting our business to account for the impacts of the pandemic, we remain committed to our core operating strategy that has defined and grown our brand.

The operating strategy that underlies this growth is built on the following key components:

● Offering high quality, freshly prepared food.

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Each of these partners earns a base salary plus a performance bonus, which represents a percentage of each of their respective restaurant’s pre- tax income.

By providing our partners with a significant stake in the success of our restaurants, we believe that we are able to attract and retain talented, experienced and highly motivated managing and market partners.

As a result of the pandemic and the impact on restaurant operating results, we guaranteed a portion of these performance bonuses in the periods that were the most significantly impacted.

By providing our partners with a significant stake in the success of our restaurants and underscoring our long-term commitment to them during the pandemic with guaranteed bonuses, we believe that we are able to attract and retain talented, experienced and highly motivated managing and market partners.

● Focusing on dinner.

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Our Texas Roadhouse restaurants feature a rustic southwestern lodge décor accentuated with hand- painted murals, neon signs, and southwestern prints, rugs and artifacts.

Additionally, we offer jukeboxes, which continuously play upbeat country hits.

Our Bubba’s 33 restaurants feature walls lined with televisions playing sports events and music videos and are decorated with sports jerseys, neon signs and other local flair.

Additionally, our restaurants continuously play upbeat country hits.

Our Bubba’s 33 restaurants feature walls lined with televisions playing sporting events and music videos and are decorated with sports jerseys, neon signs and other local flair.

Unit Prototype and Economics

We design our restaurant prototypes to provide a relaxed atmosphere for our guests, while also focusing on restaurant-level returns over time.

Our current prototypical Texas Roadhouse restaurants consist of a freestanding building with approximately 7,200 to 7,600 square feet of space constructed on sites of approximately 1.5 to 2.2 acres or retail pad sites, with seating of approximately 58 to 68 tables for a total of 270 to 300 guests, including 18 bar seats, and parking for approximately 160 vehicles either on-site or in combination with some form of off-site cross parking arrangement.

Our current prototypical Texas Roadhouse restaurants consist of a freestanding building with approximately 7,600 square feet of space constructed on sites of approximately 1.5 to 2.2 acres or retail pad sites, with seating of approximately 58 to 68 tables for a total of 270 to 300 guests, including 18 bar seats, and

parking for approximately 160 vehicles either on-site or in combination with some form of off-site cross parking arrangement.

Our current prototypes are adaptable to in-line and end- cap locations and/or spaces within an enclosed mall or a shopping center.

Our prototypical Bubba’s 33 restaurant remains under development as we continue to open additional restaurants.

We expect most future Bubba’s 33 restaurants to be approximately 7,500 square feet depending on the location with seating for approximately 270 guests.

Our current prototypical Bubba’s 33 restaurants consist of a freestanding building with approximately 7,500 square feet of space with seating for approximately 270 guests.

In response to the pandemic, we made building modifications to a number of existing restaurants.

These changes were made to better accommodate the increase in our To-Go sales and/or expand our outdoor dining arrangements.

We are currently evaluating the possibility of integrating these changes into our prototypical Texas Roadhouse and Bubba’s 33 restaurant designs.

As of December 29, 2020, we leased 389 properties and owned 148 properties.

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This cost varies based on the licensing requirements in each state.

Our average capital investment for the Texas Roadhouse restaurants opened in 2019, 2018 and 2017 was $5.5 million, $5.2 million and $5.3 million, respectively.

The increase in our 2019 average capital investment was primarily due to higher building costs.

For 2020 and 2019, our average capital investment for the Texas Roadhouse restaurants was $6.2 million and $5.6 million, respectively.

The increase in our 2020 average capital investment was primarily due to higher land and building costs.

The higher land costs were due to increased rent amounts at several sites.

The higher building costs were due to higher material costs and construction delays related to the pandemic.

We expect our average capital investment for restaurants to be opened in 2021 to be approximately $5.5 million.

Our average capital investment for the Bubba’s 33 restaurants opened in 2019, 2018 and 2017 was $6.7 million, $7.1 million and $6.1 million, respectively.

The increase in our 2018 average capital investment for our Bubba’s 33 restaurants was primarily due to higher costs at one urban site in New Jersey as well as higher rent and pre-opening costs.

Excluding this site, the average capital investment would have been $6.6 million.

Our average capital investment for the Bubba’s 33 restaurants opened in 2020 and 2019 was $7.3 million and $6.9 million, respectively.

The increase in our 2020 average capital investment for our Bubba’s 33 restaurants was primarily due to higher building costs, in particular at one site in a more expensive area.

We expect our average capital investment for restaurants to be opened in 2021 to be approximately $6.9 million.

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Our capital investment (including cash and non-cash costs) for new restaurants varies significantly depending on a number of factors including, but not limited to:

the square footage, layout, scope of required site work, type of construction labor (union or non-union), local permitting requirements, our ability to negotiate with landowners and/or landlords, cost of liquor and other licenses and hook-up fees and geographical location.

the square footage, layout, scope of required site work, geographical location, type of construction labor (union or non-union), local permitting requirements, our ability to negotiate with landowners and/or landlords, cost of liquor and other licenses and hook-up fees.

Site Selection

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We offer a broad assortment of wings, burgers, pizzas, salads and sandwiches.

In addition, we also offer our guests a selection of chicken, beef and seafood entrées.

Our Bubba’s 33 restaurants also offer an extensive selection of draft beer.

In addition, we also offer our guests a selection of pasta, chicken, beef and seafood entrées.

Our Bubba’s 33 restaurants also offer an extensive selection of draft beer and signature cocktails.

We provide a "12 & Under"

menu for children at our Bubba’s 33 restaurants that includes a selection of items, including a beverage, at prices generally between $3.99 and $5.99.

In addition, our full menu is available through our mobile apps or on-line which allows for To-Go pickup.

Most of our restaurants feature a full bar that offers an extensive selection of draft and bottled beer, major brands of liquor and wine as well as made in-house margaritas.

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Alcoholic beverages at our Texas Roadhouse restaurants accounted for 8.6% of restaurant sales in fiscal 2020.

As a result of the significant increase in To-Go sales due to the pandemic, we sold fewer alcoholic beverages compared to fiscal 2019.

We always strive to maintain a consistent menu at our restaurants.

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We have a food team whose function, in conjunction with our product coaches, is to develop, enforce and maintain programs designed to promote compliance with food safety guidelines.

As a requirement of our quality assurance process, primary food items purchased from qualified vendors have been inspected by reputable, outside inspection services confirming that the vendor is compliant with United States Food and Drug Administration and United States Department of Agriculture guidelines.

As a requirement of our quality assurance process, primary food items are purchased from qualified vendors who are regularly audited by reputable, outside inspection services confirming that the vendor is compliant with United States Food and Drug Administration and United States Department of Agriculture guidelines.

We perform food safety and sanitation audits on our restaurants each year and these results are reviewed by various members of operations and management.

To maximize adherence to food safety protocols, we have incorporated HACCP (Hazard Analysis Critical Control Points) principles and critical procedures (such as hand washing) in each recipe.

All restaurant managers are required to complete the American National Standards Institute (ANSI) Certified Food Manager training.

To maximize adherence to food safety protocols, we have incorporated Hazard Analysis Critical Control Points principles and critical procedures (such as hand washing) in each recipe.

All restaurant managers are required to complete the American National Standards Institute Certified Food Manager training.

In addition, most of our product coaches and food team members have obtained or are in the process of obtaining their Certified Professional-Food Safety designation from the National Environmental Health Association.

We also implemented additional sanitation requirements in the current year in response to the pandemic.

This included adding a sanitation coordinator position at each location who is responsible for cleaning high touch areas, adding hand sanitizer stations at each restaurant, and supplying each restaurant with a chemical sanitation sprayer.

These requirements are in addition to the daily health and temperature checks for all employees before they begin their shift as well as the requirement for personal protective equipment to be worn by all restaurant employees at all times.

During 2020, we began participating in the Ecolab Science Certified Inspection program.

This program evaluates our restaurants on COVID-19 cleaning procedures as well as food safety, general cleanliness and safety procedures.

As of December 29, 2020, over 75% of our domestic system-wide stores had been certified under this program with the remainder expected to be certified in early 2021.

Our purchasing philosophy is designed to supply fresh, quality products to the restaurants at competitive prices while maximizing operating efficiencies.

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Through the use of guest surveys, our websites, "texasroadhouse.com,"

and "bubbas33.com,"

"bubbas33.com,"

or "eatjaggers.com,"

a toll- free guest response telephone line, emails, letters, social media, and personal interaction in the restaurant, we receive valuable feedback from guests.

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The resulting reports are used for follow up training and providing feedback to both staff and management.

We continue to evaluate and implement processes relating to guest satisfaction, including reducing guest wait times and improving host interaction with the guest.

We continue to evaluate and implement processes relating to guest satisfaction, including reducing guest wait times, improving host interaction with the guest, and improving the To-Go experience for our guests.

The atmosphere of our restaurants is intended to appeal to broad segments of the population including children, families, couples, adults and business persons.

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The interiors feature wood walls and stained concrete floors and are decorated with hand-painted murals, neon signs, southwestern prints, rugs and artifacts.

The restaurants contain jukeboxes that continuously play upbeat country hits.

The restaurants continuously play upbeat country hits.

Guests may also view a display-baking area, where our fresh baked yeast rolls are prepared, and a meat cooler displaying fresh cut steaks.

While waiting for a table, guests can enjoy complimentary roasted in-shell peanuts and upon being seated at a table, guests can enjoy fresh baked yeast rolls along with roasted in- shell peanuts.

As a result of the pandemic, our peanuts are currently served in individual bags and provided upon request.

Our Bubba’s 33 restaurants feature walls lined with televisions playing a variety of sports events and music videos and are decorated with sports jerseys, neon signs and other local flair.

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Managing partners are single restaurant operators who have primary responsibility for the day-to- day operations of the entire restaurant.

Kitchen managers have primary responsibility for managing operations relating to our food preparation and food quality, and service managers have primary responsibility for managing our service quality and guest experiences.

The assistant managers support our kitchen and service managers;

these managers are collectively responsible for the operations of the restaurant in the absence of a managing partner.

Kitchen managers have primary responsibility for managing the kitchen staff and overall kitchen operations including food preparation and food quality.

Service managers have primary responsibility for managing the front of house staff and overall dining room operations including service quality and the guest experience.

The assistant managers support our managing partners, kitchen, and service managers.

All managers are responsible for maintaining our standards of quality and performance.

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All restaurant employees are required to complete varying degrees of training before and during employment.

Our comprehensive training program emphasizes our operating strategy, procedures and

standards, including responsible alcohol service, and is conducted individually at our restaurants or in groups in Louisville, Kentucky.

Our comprehensive training program emphasizes our operating strategy, procedures and standards, including responsible alcohol service, and is typically conducted individually at our restaurants or in groups in Louisville, Kentucky.

As a result of the pandemic, this training is currently being done virtually.

Our managing and market partners are generally required to have significant experience in the full-service restaurant industry and are generally hired at a minimum of nine to 12 months before their placement in a new or existing restaurant to allow time to fully train in all aspects of restaurant operations.

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Our restaurants do not rely on national television or print advertising to promote our brands.

Earned media on a local level is a critical part of our strategy that features our products and people.

Earned local media is a critical part of our strategy that features our products and people.

Our restaurants use a permission-based email loyalty program, as well as social media and digital marketing, to promote the brand and engage with our guests.

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Domestically, franchise rights are granted for specific restaurants only, as we have not granted any rights to develop a territory in the United States.

We are currently not accepting new domestic franchisees.

We are currently not accepting new

domestic franchisees.

Approximately 75% of our franchise restaurants are operated by ten franchisees and no franchisee operates more than 15 restaurants.

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We may, at our discretion, waive or reduce the royalty fee on a temporary or permanent basis.

In 2020, we waived royalties of $0.4 million for international franchisees in countries that were significantly impacted by the pandemic.

We also made royalty deferral arrangements for many of our domestic and international franchisees.

The majority of these royalty waivers and deferral arrangements were provided in the periods most significantly impacted by the pandemic.

"Gross sales"

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The amount of shares that a franchisee would receive is based on a formula that is included in the franchise agreement.

We have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in several foreign countries.

We currently have signed franchise and/or development agreements in nine countries in the Middle East as well as Taiwan, the Philippines, Mexico, China and South Korea.

As of December 31, 2019, we had 17 restaurants open in five countries in the Middle East, three restaurants open in Taiwan, five in the Philippines and one each in Mexico, China and South Korea for a total of 28 restaurants in ten foreign countries.

We have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in several foreign countries and one U.S.

We currently have signed franchise and/or development agreements in nine countries in the Middle East as well as Taiwan, the Philippines, Mexico, China, South Korea, Brazil and Puerto Rico.

As of December 29, 2020, we had 15 restaurants open in five countries in the Middle East, four restaurants open in Taiwan, five in the Philippines, two in South Korea and one each in Mexico and China for a total of 28 restaurants in ten foreign countries.

For the existing international agreements, the franchisee is generally required to pay us a franchise fee for each restaurant to be opened, royalties on the gross sales of each restaurant and a development fee for our grant of development rights in the named countries.

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We have various systems in place to promote compliance with our systems and standards, both during the development and operation of franchise restaurants.

We actively work with our franchisees to ensure successful franchise operations as well as compliance with the Texas Roadhouse standards and procedures.

We actively work with our franchisees to support successful franchise operations as well as compliance with the Texas Roadhouse standards and procedures.

During the restaurant development phase, we consent to the selection of restaurant sites and make available copies of our prototype building plans to franchisees.

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Finally, on an ongoing basis, we conduct reviews on all franchise restaurants to determine their level of effectiveness in executing our concept at a variety of operational levels.

Our franchisees are required to follow the same standards and procedures regarding equipment and food purchases, preparation and safety procedures as we maintain in our company restaurants.

Our franchisees are required to

follow the same standards and procedures regarding equipment and food purchases, preparation and safety procedures as we maintain in our company restaurants.

Reviews are conducted by seasoned operations teams and focus on key areas including health, safety and execution proficiency.

Management Services.

We provide management services to 24 of the franchise restaurants in which we and/or our founder have an ownership interest and six additional franchise restaurants in which neither we nor our founder have an ownership interest.

Such management services include accounting, operational supervision, human resources, training, and food, beverage and equipment consulting for which we receive monthly fees of up to 2.5% of gross sales.

We provide management services to 24 of the franchise restaurants in which we and/or our founder have an ownership interest and five additional franchise restaurants in which neither we nor our founder have an ownership interest.

Such management services may include accounting, operational supervision, human resources, training, and food, beverage and equipment consulting for which we receive monthly fees of up to 2.5% of gross sales.

We also make available to these restaurants certain legal services, restaurant employees and employee benefits on a pass-through cost basis.

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All of our company restaurants utilize computerized management information systems, which are designed to improve operating efficiencies, provide restaurant and Support Center management with timely access to financial and operating data and reduce administrative time and expense.

With our current information systems, we have the ability to

query, report and analyze this intelligent data on a daily, weekly, period, quarterly and year-to-date basis and beyond, on a company-wide, regional or individual restaurant basis.

With our current information systems, we have the ability to query, report and analyze this intelligent data on a daily, weekly, monthly, quarterly and year-to-date basis and beyond, on a company-wide, regional, market, or individual restaurant basis.

Together, this enables us to closely monitor sales, food and beverage costs and labor and operating expenses at each of our restaurants.

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See Risk Factors in Item 1A of this Form 10-K for a discussion of risks associated with breaches of security related to confidential guest and/or employee information.

As a result of the significant increase in To-Go and curbside service, we made several digital enhancements to improve the guest experience and better support our increased volumes.

These enhancements include a new, fully customized digital experience that allows our guests to get on the waitlist or order pickup or curbside service.

The new digital experience also has added gift card and payment functionality.

We have also implemented texting systems which allow our dine-in guests to wait outside or in their cars and improved the To-Go experience for our To-Go guests.

Finally, we have implemented systems for touchless menus and contactless payments for enhanced guest safety.

We believe that our current systems and practice of implementing regular updates will position us well to support current needs and future growth.

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We also face competition from meal kit delivery services as well as the supermarket industry.

In addition, improving product offerings of fast casual and quick-service restaurants, together with negative economic conditions could cause consumers to choose less expensive alternatives.

In addition, improving product offerings of fast casual and quick-service restaurants and better execution of off-premise sales, together with negative economic conditions could cause consumers to choose less

expensive alternatives.

Although we believe that we compete favorably with respect to each of the above factors, other restaurants and retail establishments compete for the same casual dining guests, quality site locations and restaurant-level employees as we do.

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We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional content and menu labeling.

We are or may become subject to laws and regulations requiring disclosure of calorie, fat, trans-fat, salt and allergen content.

In 2018, federal regulations went into effect under the Patient Protection and Affordable Care Act of 2010 ("PPACA") requiring new menu nutritional labeling requirements.

As a result, we include calorie information on our menus and make additional nutritional information available at our restaurants and on our website.

As a result, we include calorie information on our menus and make additional nutritional information available at our restaurants and on our websites.

Future regulatory action may occur which could result in further changes in the federal nutritional disclosure requirements.

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Consistent with industry standards, we carry liquor liability coverage as part of our existing comprehensive general liability insurance as well as excess umbrella coverage.

In 2019, the sale of alcoholic beverages accounted for 10.6% of our Texas Roadhouse restaurant sales.

In fiscal 2020, the sale of alcoholic beverages accounted for 8.6% of our Texas Roadhouse restaurant sales.

As a result of the significant increase in To-Go sales due to the pandemic, we sold fewer alcoholic beverages compared to fiscal 2019.

Our restaurant operations are also subject to federal and state labor laws governing such matters as minimum and tipped wage requirements, overtime pay, health benefits, unemployment taxes, workers’ compensation, work eligibility requirements, working conditions, safety standards, and hiring and employment practices.

We have many restaurants located in states or municipalities where the minimum and/or tipped wage is greater than the federal minimum and/or tipped wage.

We anticipate that additional legislation increasing minimum and/or tipped wage standards will be enacted in future periods and in other jurisdictions.

We anticipate that additional federal and state legislation significantly increasing minimum and/or tipped wage standards will be enacted in future periods and in other jurisdictions.

Further regulatory action may occur which could result in changes to healthcare eligibility, design and cost structure.

A significant number of our hourly restaurant personnel receive tips as part of their compensation and are paid at or above a minimum wage rate after giving effect to applicable tips.

A significant number of our hourly restaurant personnel receive tips as part of their compensation and are paid at or

above a minimum wage rate after giving effect to applicable tips.

We rely on our employees to accurately disclose the full amount of their tip income.

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In addition, when constructing or undertaking remodeling of our restaurants, we must make those facilities accessible.

As a result of the pandemic, certain state and local jurisdictions have enacted various health, safety and other regulations that have impacted our restaurants.

Compliance with these regulations has led to decreased sales, increased costs, and operational complexity.

We expect our operating results to continue to be impacted until at least such time that these regulations are lifted.

We are subject to laws relating to information security, privacy, cashless payments and consumer credit protection and fraud.

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Historically, sales in most of our restaurants have been higher during the winter months of each year.

Holidays, changes in weather, severe weather and similar conditions may

impact sales volumes seasonally in some operating regions.

As a result, our quarterly operating results and comparable restaurant sales may fluctuate as a result of seasonality.

Holidays, changes in weather, severe weather and similar conditions may impact sales volumes seasonally in some operating regions.

As a result, our quarterly operating results and comparable restaurant sales may fluctuate due to seasonality.

Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and comparable restaurant sales for any particular future period may decrease.

Beginning in March 2020, our quarterly operating results were severely impacted by the pandemic which resulted in significant fluctuations between quarters.

We expect that our quarterly operating results will continue to fluctuate until such time that all dining room restrictions related to the pandemic are lifted.

Human Capital Management

As of December 29, 2020, we employed approximately 61,600 people.

This amount includes 682 executive and administrative personnel and 2,526 restaurant management personnel, while the remainder were hourly restaurant personnel.

These employees include 681 executive and administrative personnel and 2,666 restaurant management personnel, while the remainder were hourly restaurant personnel.

Many of our hourly restaurant employees work part-time.

None of our employees are covered by a collective bargaining agreement.

We consider our employee relations to be good.

Our business relies on our ability to attract and retain talented employees.

To attract and retain talent, we strive to maintain our culture through shared core values, a performance-based compensation program supported by competitive benefits and health programs, and a diverse, inclusive and supportive workplace, with opportunities for our employees to grow and develop in their careers.

Maintaining our Culture and Core Values.

In our restaurants and at our Support Center, we are committed to our shared Core Values of Passion, Partnership, Integrity, and Fun…all with Purpose.

These Core Values form the foundation of who we are as a company and how we interact with respect, appreciation, and fairness towards one another every day.

We also believe that diversity and inclusion are vital parts of our culture.

We value and welcome employees of all walks of life to share their gifts and strengths while working in our restaurants and the Support Center, as we strive to reflect the communities we are proud to serve.

As a result, we are committed to attracting, retaining, engaging and developing a workforce that mirrors the diversity of our guests and is committed to upholding our shared values.

Performance-based Compensation and Benefits .

We support our employees by offering competitive wages and benefits for eligible employees.

We also offer a performance-based compensation program to our managing partners and market partners.

Each of these positions earns a base salary plus a performance bonus, which represents a percentage of each of their respective restaurant’s pre- tax income.

As a result of the pandemic and the impact on restaurant operating results, we guaranteed a portion of these performance bonuses in the periods that were the most significantly impacted.

By providing our partners with a significant stake in the success of our restaurants, we believe that we are

able to attract and retain talented, experienced and highly motivated managing and market partners.

In addition to salaries, these programs (which vary by employee level) include, among other items, bonuses, stock awards, retirement savings plans, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, paid parental leave and various employee assistance programs.

As a result of the pandemic, we provided increased benefits to our employees in the form of enhanced sick pay and accrued vacation benefits and also provided a premium holiday on health insurance.

We motivate and develop our employees by providing them with opportunities for increased responsibilities and advancement.

We provide numerous training opportunities for our employees, with a focus on continuous learning and development.

With thousands of leadership positions across our restaurants, we provide a pathway and training for thousands of individuals across the country to advance from entry-level jobs into management roles.

In addition, our geographic footprint often allows us to offer our restaurant team members relocation options at similar roles when personal circumstances require it.

Health and Safety.

The health and safety of our employees is a top priority.

In response to the pandemic, we implemented changes at our restaurants to help protect our employees and guests.

This included providing personal protective equipment for our employees, adding a sanitation coordinator position at each restaurant who is responsible for cleaning high touch areas, adding hand sanitizer stations at each restaurant, and supplying each restaurant with a chemical sanitation sprayer.

In addition, the majority of our Support Center employees continue to work remotely.

For the employees that continue to work on-site in our Support Center, we have implemented additional measures to ensure their safety including enhanced sanitation efforts and daily health and temperature checks.

We believe we have been able to preserve our business continuity without sacrificing our commitment to keeping our employees safe during the pandemic.

Website Access to Reports

We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, available, free of charge on or through our Internet website, www.texasroadhouse.com, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission ("SEC").

The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Information about our Executive Officers

2 unchanged sentences

There are no family relationships among any of our executive officers.

Chairman, Chief Executive Officer, and President

Chairman and Chief Executive Officer

Chris Jacobsen

1 unchanged sentence

Chief Financial Officer

Chief Operating Officer

Chief Operations Officer

Taylor founded Texas Roadhouse in 1993.

He resumed his role as Chief Executive Officer in August 2011, a position he held between May 2000 and October 2004, and his role as President in June 2019.

He resumed his role as Chief Executive Officer in August 2011, a position he held between May 2000 and October 2004.

He was named Chairman of the Company and Board in October 2004.

2 unchanged sentences

Taylor has over 35 years of experience in the restaurant industry.

Morgan was appointed President in December 2020.

He assumed this role from Mr.

He joined Texas Roadhouse in 1997 and has held a number of positions, including Managing Partner, Market

Partner and Regional Market Partner.

Morgan has more than 35 years of restaurant management experience with Texas Roadhouse, Bennigan’s Restaurants, and Burger King.

Chris Jacobsen.

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business