What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-02-26 · 99 added, 117 removed, 324 unchanged (40% of the section changed)

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Risks Related to our Growth and Operating Strategy

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business, which has and could continue to materially affect our business, financial condition, and results of operations, for an extended period of time.

On March 13, 2020, the COVID-19 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 re-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.

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.

The pandemic has also adversely impacted our ability to open new restaurants.

At the onset of the pandemic, we delayed construction on all restaurants that were not substantially complete.

As a result, we only opened 22 restaurants in 2020 across all concepts.

As of December 29, 2020, 10 restaurants were under construction.

O ur ability to grow our

business could be further impacted, particularly if we have to delay construction on these sites in future periods.

In March 2020, we borrowed $190.0 million under our Amended Credit Agreement in order to enhance our financial flexibility.

The Amended Credit Agreement also provides us the option to increase the credit facility by $200.0 million subject to certain limitations, including approval by the syndicate of lenders, set forth in the Amended Credit Agreement.

On May 11, 2020, as a precautionary measure to further enhance financial flexibility, we amended the revolving credit facility to increase the amount available under the facility by $82.5 million and drew down $50.0 million of this amount.

If the pandemic continues to adversely impact our business for a significant period of time, we may need to further increase the credit facility and/or seek other sources of liquidity.

There is no guarantee that we can increase the credit facility or that additional liquidity will be readily available or available at favorable terms.

Our suppliers could be adversely impacted by the pandemic.

If our supplier’s employees are unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with the pandemic, we could face shortages of food items or other supplies at our restaurants and our operations and sales could be adversely impacted by such interruptions.

The capacity restrictions and temporary closures of our dining rooms have resulted in decreased staffing levels at our restaurants.

We have taken compensation actions to support certain restaurant employees during the pandemic, but those actions may not be enough to compensate them until such time that our dining rooms can re-open at full capacity.

Those restaurant employees might seek and find other employment during the interruption, which could have a material adverse effect on our ability to properly staff our restaurants with experienced team members once we resume our normal operations.

The COVID-19 pandemic has disrupted and could continue to disrupt our business.

The Company has been subject to risks and uncertainties as a result of the pandemic.

These include federal, state and local restrictions on restaurants, some of which have limited capacity or seating in the dining rooms while others have allowed to-go or curbside service only.

As of December 28, 2021, all of our domestic company and franchise locations were operating without restriction.

As a result of a number of factors, including a significant increase in sales, the lingering impact of the pandemic,

and other supply constraints, we have experienced and expect to continue to experience commodity cost inflation and certain food and supply shortages.

The commodity cost inflation, which primarily relates to beef, is due to increased costs incurred by our vendors related to higher labor, transportation, packaging, and raw materials costs.

To date, we have been able to properly manage any food or supply shortages but have experienced increased costs.

If our vendors are unable to fulfill their obligations under their contracts, we may encounter further shortages and/or higher costs to secure adequate supply and a possible loss of sales, any of which would harm our business.

Our restaurant operations could be further disrupted if a significant number of restaurants have employees diagnosed with COVID-19 resulting in some or all of the restaurant’s employees being quarantined and our restaurant facilities having to be disinfected.

If a significant percentage of our workforce is unable to work, whether because of illness or required quarantine, our operations may be negatively impacted which could have a material adverse effect on our business.

The extent to which COVID-19 impacts our business, results of operations, or financial condition will depend on future developments which are outside of our control.

This includes, without limitation, the efficacy and public acceptance of vaccination programs and/or testing mandates in curbing the spread of the virus, the introduction and spread of new variants of the virus, which may prove resistant to currently approved vaccines, and new or reinstated restrictions or regulations on our operations.

If we fail to manage our growth effectively, it could harm our business.

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We have grown significantly since our inception and intend to continue growing in the future.

Our objective is to grow our business and increase shareholder value by (1) expanding our base of company restaurants that are profitable, (2) increasing sales and profits at existing restaurants, and (3) pursuing other strategic initiatives or business opportunities.

While these methods of achieving our objective are important to us, historically the most significant means of achieving our objective has been through opening new restaurants and operating these restaurants on a profitable basis.

Our objective is to grow our business and increase shareholder value by (1) expanding our base of company restaurants, (2) increasing sales and profits at existing restaurants, and (3) pursuing other strategic initiatives or business opportunities.

While all these methods of achieving our objective are important to us, historically the most significant means of achieving our objective has been through opening new restaurants and operating these restaurants on a profitable basis.

As we open and operate more restaurants, our rate of expansion relative to the size of our existing restaurant base will likely decline, which may make it increasingly difficult to achieve levels of sales and profitability growth that we have seen in the past.

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We also place a lot of importance on our culture, which we believe has been an important contributor to our success.

In addition to challenges relating to the COVID-19 pandemic, as we grow, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations, or finding new employees (including new employees arising from strategic initiatives) to assimilate to our culture and brand standards.

As we grow, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations, or finding new employees (including new employees arising from strategic initiatives) to assimilate to our culture and brand standards.

We cannot assure you that we will be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our existing infrastructure.

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We cannot assure you that we will be able to open new restaurants that are profitable in accordance with our expansion plans.

We have experienced delays in opening some of our restaurants in the past, including significant delays in 2020 due to the pandemic, and may experience delays in the future.

We have experienced delays in opening some of our restaurants in the past, including delays due to the pandemic, and may experience delays in the future.

Delays or failures in opening new restaurants could adversely affect our growth strategy.

One of our biggest challenges in executing our growth strategy is locating

and securing an adequate supply of suitable new restaurant sites.

One of our biggest challenges in executing our growth strategy is locating and securing an adequate supply of suitable new restaurant sites that satisfy our financial targets.

Competition for suitable restaurant sites in our target markets is intense.

In addition, we have generally been able to fund the construction of new restaurants from cash provided by our operations.

If our operations continue to be significantly impacted by the pandemic, our ability to open new restaurants could also be impacted.

Once opened, we anticipate that our new restaurants will generally take several months to reach planned operating levels due to start- up inefficiencies typically associated with new restaurants.

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Restaurants opened in new markets may open at lower average weekly sales volume than restaurants opened in existing markets and may have higher restaurant- level operating expense ratios than in existing markets.

Sales at restaurants opened in new markets may take longer to reach average unit volume, if at all, thereby affecting our overall profitability.

Sales at restaurants opened in new markets may take longer to reach average unit volume, if at all, thereby

affecting our overall profitability.

Additionally, the opening of a new restaurant could negatively impact sales at one or more of our existing nearby restaurants, which could adversely affect our financial performance.

Our ability to open new restaurants that are profitable will also depend on numerous other factors, many of which are beyond our control, including, but not limited to, the following:

● our ability to hire, train and retain qualified operating personnel, especially market partners and managing partners who can execute our business strategy;

● our ability to hire, train and retain qualified operating personnel, especially market partners, managing partners, and/or other restaurant management personnel who can execute our business strategy;

● our ability to negotiate suitable purchase or lease terms;

● the availability of construction materials and labor;

● our ability to control construction and development costs of new restaurants;

● the availability of construction materials, equipment and labor;

● our ability to control construction and development costs of new restaurants (including increased site, supply chain and distribution costs);

● our ability to secure required governmental approvals and permits in a timely manner, or at all;

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● redevelopment of other parts of a development adjacent to our premises that affect the parking available for our restaurant;

● our ability to secure liquor licenses;

● our ability to secure liquor licenses (if at all);

● general economic conditions, including an economic recession;

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● our ability to execute our business strategy effectively;

● competition, either from our competitors in the restaurant industry or our own restaurants;

● the impact of inclement weather, natural disasters and other calamities;

● our ability to maintain and manage the increased levels of to-go sales at our restaurants;

● competition, from our competitors in the restaurant industry, our own restaurants, and/or other food service providers (such as delivery services and grocery stores);

● the impact of permanent changes in weather patterns that can cause inclement weather, natural disasters and other calamities;

● consumer trends and seasonality;

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● introduction of new menu items;

● loss of parking and/or access rights due to government action (such as eminent domain actions) or through private transactions;

● mandated dining room closures and/or dining rooms operating at limited capacity;

● negative publicity regarding food safety, health concerns, quality of service, and other food or beverage related matters, including the integrity of our or our suppliers’ food processing;

● general economic conditions, including an economic recession, which can affect restaurant traffic, local labor costs and prices we pay for the food products and other supplies we use;

● effects of actual or threatened terrorist attacks.

● general economic conditions, including an economic recession, which can affect restaurant traffic, local labor costs and prices we pay for the food and beverage products and other supplies we use;

● legislation that impacts our suppliers’ ability to maintain compliance with laws and regulations and impacts our ability to source product;

● effects of actual or threatened terrorist attacks (including cyber and/or ransomware attacks).

Our average unit volume and comparable restaurant sales may not increase at rates achieved in the past, which may affect our sales growth and will continue to be a critical factor affecting our profitability.

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The development of new restaurant concepts may not contribute to our growth.

The development of new restaurant concepts may not be as successful as our experience in the development of the Texas Roadhouse concept.

In May 2013, we launched a new casual dining concept, Bubba’s 33, a family-friendly, sports restaurant that has expanded to 31 restaurants as of December 29, 2020.

In December 2014, we launched a new fast-casual concept, Jaggers, which offers drive-thru service, that has expanded to three restaurants as of December 29, 2020.

Bubba’s 33 and Jaggers each have lower brand awareness and less operating experience than most Texas Roadhouse restaurants.

The development of new restaurant concepts, Bubba’s 33 and Jaggers, may not be as successful as our experience in the development of the Texas Roadhouse concept.

These restaurants each have lower brand awareness and less operating experience than most Texas Roadhouse restaurants.

In addition, Bubba’s 33 restaurants have a higher initial investment cost and Jaggers has a lower per person average check amount.

As a result, the development of these concepts may not contribute to our average unit volume growth and/or profitability in an incremental way.

We can provide no assurance that new units will be accepted in the markets targeted for the expansion of these concepts or that we will be able to achieve our targeted returns when opening new locations.

We can provide no assurance that new units will be accepted in the markets targeted for the expansion of these concepts or that we or our franchisees will be able to achieve our targeted returns when opening new locations.

In the future, we may determine not to move forward with any further expansion of these concepts.

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laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions;

● differences in enforceability and registration of intellectual property and contract rights;

● differences in the registration and/or enforceability of intellectual property and contract rights;

● adverse tax consequences;

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We plan to continue to opportunistically acquire existing restaurants from our domestic franchisees over time.

Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives (including retail initiatives utilizing our intellectual property) to acquire or develop additional business channels or concepts, and/or change the business strategy regarding an existing concept.

Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives (including retail initiatives utilizing our intellectual property or other brand extensions) to acquire or develop additional business channels or concepts, and/or change the business strategy regarding an existing concept.

To successfully execute any acquisition or development strategy, we will need to identify suitable acquisition or development candidates, negotiate acceptable acquisition or development terms and possibly obtain appropriate financing.

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● the diversion of management’s attention from other business concerns.

Future acquisitions of existing restaurants from our franchisees or other strategic partners, which may be accomplished through a cash purchase transaction, the issuance of shares of common stock or a combination of both, could have a dilutive impact on holders of our common stock, and result in the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other tangible and intangible assets, any of which could harm our business and financial condition.

liabilities and impairment charges related to goodwill and other tangible and intangible assets, any of which could harm our business and financial condition.

Additionally, we may evaluate other means to leverage our competitive strengths, including the expansion of our products across other strategic initiatives or business opportunities (including retail initiatives utilizing our intellectual property).

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● restaurant operating costs for our newly-opened restaurants, which are often materially greater during the first several months of operation than thereafter;

● labor availability and costs for hourly and management personnel including mandated changes in federal and/or state minimum and tipped wage rates, overtime regulations, state unemployment taxes, or health benefits;

● profitability of our restaurants, particularly in new markets;

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● the impact of litigation, including negative publicity;

● increases and decreases in average unit volume and comparable restaurant sales;

● decreases in average unit volume and comparable restaurant sales;

● impairment of long-lived assets, including goodwill, and any loss on restaurant relocations or closures;

● general economic conditions, including an economic recession, which can affect restaurant traffic, local labor costs, and prices we pay for the food products and other supplies we use;

● mandated restaurant closures and/or dining rooms operating at limited capacity;

● negative publicity regarding food safety and other food and beverage related matters, including the integrity of our, or our suppliers’, food processing;

● closures and/or dining rooms operating at limited capacity due to mandated restaurant closures and/or limited availability of staff to meet our business standards;

● negative publicity regarding food safety and other food and beverage related matters, including the integrity of our, and/or our suppliers’, food processing;

● negative publicity regarding health concerns and/or global pandemics;

● negative publicity relating to the consumption of beef or other products we serve;

● changes in consumer preferences and competitive conditions;

● changes in consumer preferences and competitive conditions including changes related to environmental, social and/or governance practices;

● expansion to new domestic and/or international markets;

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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.

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

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

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In that event, the price of our common stock could 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 at least such time that all dining room restrictions related to the pandemic are lifted.

We rely heavily on information technology, and any material failure, weakness or interruption could prevent us from effectively operating our business.

We rely heavily on information systems in all aspects of our operations, including point-of- sale systems, financial systems, marketing programs, e-commerce, cyber-security and various other processes and transactions.

We rely heavily on information technology, and any material failure, weakness, ransomware or interruption could prevent us from effectively operating our business.

We rely heavily on information systems in all aspects of our operations, including point-of- sale systems, digital apps, financial systems, marketing programs, e-commerce, cyber-security and various other processes and transactions.

This reliance has significantly increased since the onset of the pandemic as we have had to rely to a greater extent on systems such as online ordering, contactless payments, online waitlists, and systems supporting a more remote workforce.

Our point-of-sale processing in our restaurants includes payment of obligations, collection of cash, credit and debit card transactions and other processes and procedures.

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The failure of these systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms or a material breach in the security of these systems could result in delays in guest service and reduce efficiency in our operations.

In addition, as we implement new technology platforms to improve the overall guest experience, there can be no guarantees that these platforms will operate as reliably or be as operationally impactful as intended.

Additionally, our corporate systems and processes and corporate support for our restaurant operations are handled primarily at our Support Center.

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Failure of third parties to provide adequate services or internal controls over their processes could have an adverse effect on our results of operations, financial condition or ability to accomplish our financial and management reporting.

We may incur costs and adverse revenue consequences resulting from breaches of security related to confidential guest and/or employee information or the fraudulent use of credit cards.

The nature of our business involves the receipt and storage of information about our guests and employees.

We may incur increased costs to comply with privacy and data protection laws and, if we fail to comply or our systems are compromised by a security breach, we could be subject to government enforcement actions, private litigation and adverse publicity.

We receive and maintain certain personal, financial or other information about our guests and employees.

During 2021, approximately 84% of our transactions were by credit or debit cards.

In addition, certain of our vendors receive and/or maintain certain personal, financial and other information about our employees and guests on our behalf.

The use and handling, including security, of this information is regulated by evolving and increasingly demanding data privacy laws and regulations in various jurisdictions, as well as by certain third-party contracts, frameworks and industry standards, such as the Payment Card Industry Data Security Standard.

Hardware, software or other applications we develop and procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.

Unauthorized parties may also attempt to gain access to our systems and facilities through fraud, trickery or other forms of deceiving our employees or vendors.

In addition, we accept electronic payment cards for payment in our restaurants.

During 2020, approximately 80% of our transactions were by credit or debit cards, and such card usage could increase.

Other retailers have experienced actual or potential security breaches in which credit and debit card along with employee information may have been stolen.

We may in the future become subject to claims for purportedly fraudulent transactions arising out of alleged theft of guest and/or employee information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents.

Any such claim or proceeding could cause us to incur significant unplanned expenses in excess of our insurance coverage,

which could have a material adverse impact on our financial condition and results of operations.

If we fail to adequately control fraudulent credit card and debit card transactions to comply with the Payment Card Industry Data Security Standards, we may face diminished public perception of our security measures, fines and assessments from the card brands and significantly higher credit card and debit card related costs.

In addition, if there are malfunctions or other problems with our processing vendors, billing software or payment processing systems, our guest satisfaction may be adversely affected and one or more of the major payment networks could disallow our continued use of their payment methods.

The termination of our ability to process payments through any major payment network would significantly impact our ability to operate our business.

In addition, if our security and information systems are compromised as a result of data corruption or loss, cyber-attack or a network security incident, or if our employees or vendors fail to comply with these laws and regulations or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance,

cause us to incur substantial costs and result in a loss of guest confidence, which could adversely affect our results of operations and financial condition.

Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure.

Any such claim or proceeding could cause us to incur significant unplanned expenses in excess of our insurance coverage, which could have a material impact on our financial condition and results of operations.

In addition, if there are malfunctions or other problems with our processing vendors, billing software or payment processing systems, it may cause interruption of normal business performance.

We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance with governmental laws and regulations could adversely affect our operating results.

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Although our restaurants and other places of accommodation are designed to be accessible to the disabled, we could be required to make unexpected modifications to provide service to, or make reasonable accommodations, for disabled persons.

In addition, as a result of the COVID-19 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 cannot predict when these regulations may be lifted or the impact on our business, results of operations, financial condition or liquidity.

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

Compliance with these regulations during the periods in which they were effective led to decreased sales, increased costs, and operational complexity.

The capacity restrictions had lapsed by July 2021.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.

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However, the protective actions that we take may not be enough to prevent unauthorized usage or imitation by others, which could harm our image, brand or competitive position and, if we commence litigation to enforce our rights, cause us to incur significant legal fees.

Our inability to register or protect our marks and other propriety rights in foreign jurisdictions could adversely affect our competitive position in international markets.

Our inability to register or protect our marks and other proprietary rights in foreign jurisdictions could adversely affect our competitive position in international markets.

We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their proprietary rights.

Any such claim, whether or not it has merit, could be time- consuming, result in costly litigation, cause delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements.

As a result, any such claim could have a material adverse effect on our business, results of operations, financial condition or liquidity.

a result, any such claim could have a material adverse effect on our business, results of operations, financial condition or liquidity.

We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.

Increasing legal complexity will continue to affect our operations and results.

We could be subject to legal proceedings that may adversely affect our business, including class actions, administrative proceedings, government investigations, employment and personal injury claims, claims alleging violations of federal and state laws regarding consumer, workplace and employment matters, wage and hour claims, discrimination and similar matters, landlord/tenant disputes, disputes with current and former suppliers, claims by current and former franchisees, and intellectual property claims (including claims that we infringed upon another party’s trademarks, copyrights or patents).

We could be subject to legal proceedings that may adversely affect our business, including class actions, administrative proceedings, government investigations, employment and personal injury claims, claims alleging violations of federal and state laws regarding consumer, workplace and employment matters, wage and hour claims, discrimination and similar matters, landlord/tenant disputes, disputes with current and former suppliers, claims by current and former franchisees, data privacy claims and intellectual property claims (including claims that we infringed upon another party’s trademarks, copyrights or patents).

Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure to litigation which could result in significant judgments, including punitive and liquidated damages, and injunctive relief.

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Litigation involving our relationship with franchisees and the legal distinction between our franchisees and us for employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our franchisees and subject us to incremental liability for their actions.

We are also subject to the legal and compliance risks associated with privacy, data collection, protection and management, in particular as it relates to information we collect when we provide optional technology-related services to franchisees.

Our operating results could also be affected by the following:

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● Adverse results of pending or future litigation, including litigation challenging the composition and preparation of our products, or the appropriateness or accuracy of our marketing or other communication practices;

● The scope and terms of insurance or indemnification protections that we may have.

● The scope and terms of insurance or indemnification protections that we may have (if any).

Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time, attention and money away from our operations and hurt our performance.

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There can be no assurance, however, that these sources of financing will be available on terms favorable to us, or at all.

Our capital allocation strategies include, but are not limited to, new restaurant development, payment of dividends (even though the dividend program was suspended due to the on-going COVID-19 pandemic), refurbishment or relocation of existing restaurants, repurchases of our common stock and franchise acquisitions.

If we experience decreased cash flow from operations, similar to what we experienced in the current year, our ability to fund our operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected.

Our capital allocation strategies include, but are not limited to, new restaurant development, payment of dividends, refurbishment or relocation of existing restaurants, repurchases of our common stock and franchise acquisitions.

If we experience decreased cash flow from operations, similar to what we experienced in the prior year due to the pandemic, our ability to fund our operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected.

In addition, these disruptions or a negative effect on our revenues could affect our ability to borrow or comply with our covenants under our amended revolving credit facility.

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If we are unable to borrow additional capital or have sufficient liquidity to either repay or refinance the then outstanding balance at the expiration of our amended revolving credit facility, or upon violation of the covenants, our growth could be impeded and our financial performance could be materially adversely affected.

Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results.

We are primarily subject to income and other taxes in the United States.

Our effective income tax rate and other taxes in the future could be affected by a number of factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws or other legislative changes and the outcome of income tax audits.

Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results.

We may be required to record additional impairment charges in the future.

In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with regard to company restaurant operations, as well as our overall performance in connection with our impairment analyses for long-lived assets.

When impairment triggers are deemed to exist for any company restaurant, the estimated undiscounted future cash flows for the restaurant are compared to its carrying value.

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Competition for these employees is intense.

The loss of the services of members of our senior management team or other key officers or managers or the inability to attract additional qualified personnel as needed could materially harm our business.

In addition, our business could suffer from the misconduct of any of our key personnel.

The loss of the services of members of our senior management team or other key officers or managers or the

inability to attract additional qualified personnel as needed could materially harm our business.

In addition, our business could suffer from any actual or alleged misconduct of any of our key personnel.

Our franchisees could take actions that could harm our business.

Both our domestic and international franchisees are contractually obligated to operate their restaurants in accordance with Texas Roadhouse standards.

Both our domestic and international franchisees are contractually obligated to operate their restaurants in accordance with our applicable restaurant operating standards.

We also provide training and support to franchisees.

However, most

franchisees are independent third parties that we do not control, and these franchisees own, operate and oversee the daily operations of their restaurants.

However, most franchisees are independent third parties that we do not control, and these franchisees own, operate and oversee the daily operations of their restaurants.

As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee.

If franchisees do not successfully operate restaurants in a manner consistent with our standards, the Texas Roadhouse image and reputation could be harmed, which in turn could adversely affect our business and operating results.

If franchisees do not successfully operate restaurants in a manner consistent with our standards, our image and reputation could be harmed, which in turn could adversely affect our business and operating results.

Risks Related to the Restaurant Industry

Changes in food and supply costs could adversely affect our results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs.

Any increase in food prices, particularly proteins, could adversely affect our operating results.

Changes in food and supply costs and/or availability of products could adversely affect our results of operations.

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs and/or the availability of products necessary to operate our business.

Any increase in food prices or loss of supply, particularly proteins, could adversely affect our operating results.

In addition, we are susceptible to increases in food costs as a result of factors beyond our control, such as food supply constrictions, weather conditions, food safety concerns, global pandemics, product recalls, global market and trade conditions, and government regulations.

We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our operating results.

We cannot predict whether we will be able to anticipate and react to changing food costs and/or loss of supply by adjusting our purchasing practices, menu prices or menu offerings, and a failure to do so could adversely affect our operating results.

Extreme and/or long term increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices.

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Also, if we adjust pricing there is no assurance that we will realize the full benefit of any adjustment due to changes in our guests’ menu item selections and guest traffic.

We currently purchase the majority of our beef from three beef suppliers under annual contracts.

We currently purchase the majority of our beef from three beef suppliers.

While we maintain relationships with additional suppliers, if any of these vendors were unable to fulfill its obligations under its contracts, we could encounter supply shortages and incur higher costs to secure adequate supplies, either of which would harm our business.

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We devote significant resources to recruiting and training our restaurant managers and hourly employees.

Increased labor costs due to competition, unionization, increased minimum and tipped wages, changes in hour and overtime pay, state unemployment rates or employee benefits costs (including workers’ compensation and health insurance), company staffing initiatives, or otherwise would adversely impact our operating expenses.

Increased labor costs due to competition, unionization, increased minimum and tipped wages, changes in hourly and overtime pay, state unemployment rates, sick pay or other employee benefits costs (including workers’ compensation and health insurance), company staffing initiatives, or otherwise would adversely impact our operating expenses.

Increased competition for qualified employees caused by a shortage in the labor pool exerts upward pressure on wages paid to attract and retain such personnel, resulting in higher labor costs, together with greater recruitment and training expense.

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In addition, regulatory actions which result in changes to healthcare eligibility, design and cost structure could occur.

Any increases in minimum and/or tipped wages or increases in employee benefits costs will result in higher labor costs.

In addition, the pandemic resulted in a number of staffing challenges at our restaurants in the current year.

To address these challenges, we provided relief pay and enhanced benefits for our hourly employees.

Any increases in minimum and/or tipped wages or increases in employee benefits costs

will result in higher labor costs.

In addition, the pandemic resulted in a number of staffing challenges at our restaurants.

To address these challenges, we provided relief pay and enhanced benefits for our hourly employees and also completed two national hiring day events.

The relief pay included pay for employees who received significantly less or no hours at locations where dining rooms were required to close.

The benefits included certain sick pay and accrued vacation enhancements as well as a premium holiday on health insurance.

These actions were performed to retain employees and ensure that we maintained adequate staffing levels as

our dining rooms re-opened.

The benefits included certain sick pay and accrued vacation enhancements as well as a premium holiday on health insurance and tuition reimbursement.

These actions were performed to retain employees and ensure that we maintained adequate staffing levels as our dining rooms re-opened.

Our operating margin will be adversely affected to the extent that we are unable or are unwilling to offset any increase in these labor costs through higher prices on our products.

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Our objective to increase sales and profits at existing restaurants could be adversely affected by macroeconomic conditions.

The pandemic has significantly impacted our business as well as the global economy.

During 2021 and beyond, the U.S.

Despite the impact of the pandemic, the U.S.

and other global economies continue to be strong.

In future periods, the U.S.

and global economies could further suffer from a downturn in economic activity.

Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws or other economic factors that may affect consumer spending or buying habits could adversely affect the demand for our products.

Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, financial market volatility, social unrest, government spending, a low or stagnant pace of economic recovery and growth, or other economic factors that may affect consumer spending or buying habits could adversely affect the demand for our products.

In addition, there is no assurance that any governmental plans to stimulate the economy will foster growth in consumer spending or buying habits.

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Additionally, our competitors may generate or better implement business strategies that improve the value and the relevance of their brands and reputation, relative to ours.

This could include the testing of delivery via internal or third-party methods or better execution around guests’ To-Go experience in response to dine-in capacity restrictions.

This could include the testing of delivery via internal or third-party methods or better execution around guests’ to-go experience.

We continue to see elevated levels of to-go sales even without capacity restrictions in our dining room.

The food service industry is affected by litigation and publicity concerning food quality, health and other issues, which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.

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In addition, consumer preferences may be impacted by current and future menu-labeling requirements.

In 2018, federal disclosure requirements went into effect under the Patient Protection and Affordable Care Act of 2010 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 websites.

However, future regulatory action may occur which could result in further changes in the nutritional disclosure requirements.

Federal disclosure requirements under the Patient Protection and Affordable Care Act of 2010 require that we include calorie information on our menus and make additional nutritional information available at our restaurants and on our websites.

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

We cannot make any assurances regarding our ability to effectively respond to changes in consumer health perceptions and to adapt our menu offerings to trends in eating habits.

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In addition, instances of food- borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the food service industry generally and adversely impact our revenue and profits.

Heightened concern regarding restaurant safety caused by the COVID-19 pandemic would likely magnify such adverse impact.

Heightened concern regarding restaurant safety caused by the pandemic would likely magnify such adverse impact.

Furthermore, our reliance on third-party food suppliers and distributors increases the risk that food- borne illness incidents could be caused by factors outside of our control and that multiple locations would be affected rather than a single restaurant.

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Payment of cash dividends on our common stock or repurchases of our common stock are subject to compliance with applicable laws and depends on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, business prospects and other factors that our Board of Directors may deem relevant.

We temporarily suspended all cash dividends and share repurchases to enhance our financial flexibility as a result of the pandemic.

Once this suspension has been lifted, there can be no assurance that we will continue to pay dividends or repurchase our common stock at the same levels we have historically.

As a result of the pandemic, we temporarily suspended all cash dividends and share repurchases to enhance our financial flexibility.

Payment of cash dividends and share purchases resumed in 2021, however there can be no assurance that we will continue to pay dividends or repurchase our common stock at the same levels we have historically.

Our business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value of our common stock.

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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 1A. Risk Factors