What changed in this filing

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Item 1A. Risk Factors

2023-02-24 compared with 2022-02-25 · 160 added, 190 removed, 233 unchanged (60% of the section changed)

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Risks Related to our Growth and Operating Strategy

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.

Failure to manage our growth effectively could harm our business.

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, (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.

In addition, our existing restaurant management systems, field support systems, financial and management controls and information systems may not be adequate to support our planned expansion.

Our ability to manage our growth effectively will require us to continue to enhance these systems, procedures and controls and to locate, hire, train and retain management and operating personnel.

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

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.

If we were unable to manage our growth effectively, our business and operating results could be materially adversely impacted.

Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to a number of factors, many of which are beyond our control, resulting in a decline in our stock price.

Our quarterly operating results may fluctuate significantly because of several factors, including:

● the timing of new restaurant openings and related expenses;

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

● labor availability and costs for hourly and management personnel including increases relating to unionization and mandated changes in federal and/or state minimum and tipped wage rates, overtime regulations, state unemployment taxes, sick pay or health benefits and other regulatory changes relating to any of the foregoing;

● fluctuations in commodity prices and utility and energy costs;

● profitability of our restaurants, particularly in new markets;

● the impact of litigation, including negative publicity;

● decreases in average unit volume and comparable restaurant sales, including to-go sales;

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

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

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

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

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

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

● changes in consumer preferences and competitive conditions including changes related to environmental, social and/or governance ("ESG") pressures;

● expansion to new domestic and/or international markets;

● the impact of inclement weather, natural disasters and other calamities which impact guest traffic or product availability at our restaurants;

● increases in infrastructure costs;

● changes in interest rates;

● adoption of new, or changes in existing, accounting policies or practices;

● changes in and/or interpretations of federal and state tax laws;

● actual self-insurance claims varying from actuarial estimates;

● competitive actions.

Our business is also subject to seasonal fluctuations.

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

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

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

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

In the future, operating results may fall below the expectations of securities analysts and investors.

In that event, the price of our common stock could decrease.

Our growth strategy, which primarily depends on our ability to open new restaurants that are profitable, is subject to many factors, some of which are beyond our control.

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

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

We have experienced delays in opening some of our restaurants in the past and may experience delays in the future.

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

One of our biggest challenges in executing our growth strategy 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.

One of our biggest challenges in executing our growth strategy may be 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 may be intense.

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

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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, managing partners, and/or other restaurant management personnel who can execute our business strategy;

● our ability to negotiate suitable purchase or lease terms;

● our ability to negotiate suitable purchase or lease terms to execute our business strategy;

● the availability of construction materials, equipment and labor;

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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 (if at all);

● our ability to secure liquor licenses, or at all;

● general economic conditions, including an economic recession;

● changes in federal and state tax laws;

● changes in federal, state and/or local tax laws;

● the cost and availability of capital to fund construction costs and pre-opening expenses;

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A number of factors have historically affected, and will continue to affect, our average unit volume and comparable restaurant sales, including, among other factors:

● consumer awareness and understanding of our brands;

● consumer awareness and understanding of our concepts;

● our ability to execute our business strategy effectively;

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● 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;

● government mandated dining room closures and/or dining rooms operating at limited capacity due to health epidemics or pandemics;

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

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

In addition, changes in our average unit volume and comparable restaurant sales could cause the price of our common stock to fluctuate substantially.

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

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 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.

These decisions could limit our overall long-term growth.

Additionally, expansion of these concepts might divert our management’s attention from other business concerns and could have an adverse impact on our core Texas Roadhouse business.

In addition, changes in our average unit volume and comparable restaurant sales could cause the price of our common stock to significantly fluctuate.

The development and/or acquisition of new restaurant concepts may not contribute to our growth.

The development of new restaurant concepts, including Bubba’s 33 and Jaggers, created internally or acquired as a part of our other strategic initiatives may not be as successful as our experience in the development of the Texas Roadhouse concept.

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

In addition, they may have a higher initial investment cost and/or a lower per person average check amount.

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

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

In the future, we may determine not to move forward with any further expansion and/or acquisition of new restaurant concepts.

These decisions could limit or delay our overall long-term growth.

Additionally, expansion and/or acquisition of new restaurant concepts might divert our management’s attention from other business concerns or initiatives and could have an adverse impact on our core Texas Roadhouse business.

Our expansion into international markets presents increased economic, political, regulatory and other risks.

As of December 28, 2021, our operations include 31 Texas Roadhouse franchise restaurants in ten countries outside the United States, and we expect to have further international expansion in the future.

The entrance into international markets may not be as successful as our experience in the development of the Texas Roadhouse concept domestically or any success we have had in other international markets.

As of December 27, 2022, our operations include 38 Texas Roadhouse franchise restaurants in ten countries outside the United States, and we expect to have further international expansion in the future with one or more of our concepts.

The entrance into international markets may not be as successful as our experience in the development of the Texas Roadhouse concept domestically or any success we have had with the Texas Roadhouse concept in other international markets.

In addition, operating in international markets may require significant resources and management attention and will subject us to economic, political and regulatory risks that are different from and incremental to those in the United States.

In addition to the risks that we face in the United States, our international operations involve risks that could adversely affect our business, including:

● the need to adapt our brands for specific cultural and language differences;

● the need to adapt our concepts for specific cultural and language differences;

● new and different sources of competition;

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● difficulties in adapting and sourcing product specifications for international restaurant locations;

● fluctuations in currency exchange rates, which could impact revenues and expenses of our international operations and expose us to foreign currency exchange rate risk;

● fluctuations in currency exchange rates, which could impact royalties, revenue and expenses of our international operations and expose us to foreign currency exchange rate risk;

● difficulties in complying with local laws, regulations, and customs in foreign jurisdictions;

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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 or other brand extensions) 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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● risks associated with entering into new domestic markets or conducting operations where we have no or limited prior experience;

● risks associated with successfully integrating new employees, processes and systems;

● risks associated with successfully integrating new employees, processes and systems while also maintaining our culture and brand standards;

● risks inherent in accurately assessing the value, future growth potential, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates, and our ability to achieve projected economic and operating synergies, without impacting our underlying business;

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

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

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

Additionally, following a franchise acquisition, we may be required to incur substantial capital improvement costs to meet company standards, which could impact our return on such acquisition.

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

The expansion of our products may damage our reputation if products bearing our brands are not of the same quality or value that guests associate with our brands.

In addition, we may experience dilution of the goodwill associated with our brands as it becomes more common and increasingly accessible.

The expansion of our products may damage our reputation if products bearing our brands are not of the same quality or value that guests associate with our concepts.

In addition, we may experience dilution of the goodwill associated with our concepts as they become more common and increasingly accessible.

We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases, as well as risks related to renewal.

The majority of our company restaurants are located on leased premises.

Payments under our operating leases account for a significant portion of our operating expenses.

Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases.

In connection with the relocation, other operational changes, or closure of any restaurant, we may nonetheless be committed to perform on our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.

We also are subject to landlord actions that could negatively impact our business or operations.

In addition, as each of our leases expires, there can be no assurance we will be able to renew our expiring leases after the expiration of all remaining renewal options, either on commercially acceptable terms or at all.

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As of December 27, 2022, we operated a total of 81 company restaurants in Texas and 44 company restaurants in Florida.

As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including declines in oil prices that may increase levels of unemployment and cause other economic pressures that may result in lower sales and profits at our restaurants in oil regions of Texas and surrounding areas.

In addition, given our geographic concentration in these states, negative publicity regarding any of our restaurants in either Texas or Florida could have a material adverse effect on our business and operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics (such as COVID-19), local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, hurricanes, fires or other natural disasters.

As a result, we are particularly susceptible to adverse trends and economic conditions in those states, including any state mandated changes in minimum and tipped wage rates and economic pressures that may result in lower sales and profits at our restaurants.

operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics, local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, hurricanes, fires or other natural disasters.

Changes in consumer preferences and discretionary spending could adversely affect our business.

Our success depends, in part, upon the popularity of our food products.

Continued social concerns or shifts in consumer preferences away from our restaurants or cuisine, particularly beef, would harm our business.

In response to the pandemic, many consumers have preferred to order food to-go or by delivery rather than dining-in at full-service restaurants, and if these preferences continue and consumers continue to avoid gathering in public places in large groups, we may need to further adapt our offerings to accommodate these changes.

Continued social concerns or shifts in consumer preferences away from our restaurants or food offerings, particularly beef, could harm our business.

Also, our success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income.

Accordingly, we may experience declines in sales during economic downturns or during periods of uncertainty.

This includes any downturns that result from the pandemic.

Accordingly, we may experience declines in sales during economic downturns, pandemics or other periods of uncertainty.

Any material decline in the amount of discretionary spending could have a material adverse effect on our business, results of operations, financial condition or liquidity.

Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to a number of factors, some of which are beyond our control, resulting in a decline in our stock price.

Our quarterly operating results may fluctuate significantly because of several factors, including:

● the timing of new restaurant openings and related expenses;

● 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, sick pay or health benefits;

● profitability of our restaurants, particularly in new markets;

● changes in interest rates;

● the impact of litigation, including negative publicity;

● 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;

● 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 including changes related to environmental, social and/or governance practices;

● expansion to new domestic and/or international markets;

● adverse weather conditions which impact guest traffic at our restaurants;

● increases in infrastructure costs;

● adoption of new, or changes in existing, accounting policies or practices;

● changes in and/or interpretations of federal and state tax laws;

● actual self-insurance claims varying from actuarial estimates;

● fluctuations in commodity prices;

● competitive actions;

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

Our business is also subject to minor seasonal fluctuations.

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

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

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

In the future, operating results may fall below the expectations of securities analysts and investors.

In that event, the price of our common stock could decrease.

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.

Our ability to efficiently and effectively manage our business depends significantly on the reliability, security and capacity of these systems.

As our business needs continue to evolve, these systems will require upgrading and maintenance over time, consequently requiring significant future commitments of resources and capital.

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.

As a result of the pandemic, a significant portion of our Support Center staff continue to work remotely.

We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature, including tornadoes and other natural disasters, and back up off-site locations for recovery of electronic and other forms of data information.

However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operations and exposure to administrative and other legal claims.

We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs.

Some business processes are currently outsourced to third parties.

Such processes include information technology processes, gift card tracking, credit card authorization and processing, insurance claims processing, unemployment claims processing, payroll tax filings, check payment processing, and other accounting processes.

We also continue to evaluate our other business processes to determine if additional outsourcing is a viable option to accomplish our goals.

We make a diligent effort to validate that all providers of outsourced services maintain customary internal controls, such as redundant processing facilities and adequate security frameworks to guard against breaches or data loss;

however, there are no guarantees that failures will not occur.

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

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

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, 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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A number of factors could adversely affect our operating results, including:

● additional government-imposed increases in minimum and/or tipped wages, hour and overtime pay, paid leaves of absence, sick leave, and mandated health benefits;

● additional government-imposed increases in minimum and/or tipped wages, hourly and overtime pay, paid leaves of absence, sick leave, and mandated health benefits;

● increased tax reporting and tax payment requirements for employees who receive gratuities;

● any failure of our employees to comply with laws and regulations governing work authorization or residency requirements resulting in disruption of our work force and adverse publicity;

● a reduction in the number of states that allow gratuities to be credited toward minimum wage requirements;

● a reduction in the number of states that allow gratuities to be credited toward minimum wage requirements, or a federal mandate prohibiting such credits;

● increased litigation including claims under federal and/or state wage and hour laws.

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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 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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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.

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

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

Issues relating to ESG topics could adversely affect our operating results.

Entities across all industries are facing increased interest related to their ESG compliance and practices.

Evolving consumer and investor interest and preferences as well as governmental regulation may result in additional transparency, due diligence, reporting and specific target-setting with regard to our business and supply chain that could result in additional costs to comply with such demands.

Failure to comply with the increased demands could result in public or investor scrutiny and/or litigation and could have an adverse effect on our business.

Establishing targets or making other public commitments due to these demands, without a full or complete understanding of the cost or operational impact of changes in our supply chain or operating model, could also adversely affect our business and financial condition.

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

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However, we are subject to "dram shop"

These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that served alcoholic beverages to the intoxicated person.

Some litigation against restaurant chains has resulted in significant judgments, including punitive damages, under dram shop statutes.

Because a plaintiff may seek punitive damages, which may not be covered by insurance, this type of action could have an adverse impact on our financial condition and results of operations.

It is also possible that employees, guests or others could make claims against us as a result of the pandemic, and the nature and scope of such matters, if any, is unknown.

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.

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

A judgment significantly in excess of any applicable insurance coverage could materially adversely affect our financial condition or results of operations.

A judgment significantly in excess of any applicable insurance coverage could have significant adverse effect on our financial condition or results of operations.

Further, adverse publicity resulting from these claims may hurt our business.

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Such damages could have a material adverse effect on our business, results of operations and/or liquidity.

In addition, we self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability and property insurance programs.

Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different amounts of expense under these programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.

In addition, we self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, cybersecurity and property insurance programs.

Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in significantly different amounts of expense under these programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.

Decreased cash flow from operations, or an inability to access credit, could negatively affect our business initiatives or may result in our inability to execute our revenue, expense, and capital allocation strategies.

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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.

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

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

If we are unable to raise additional capital, our growth could be impeded.

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The amended revolving credit facility permits us to incur additional secured or unsecured indebtedness outside the revolving credit facility, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth or circumstances where the incurrence of secured or unsecured indebtedness would prevent us from complying with our financial covenants.

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

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

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If the carrying value exceeds the undiscounted cash flows, an impairment charge would be recorded equal to the difference between the carrying value and the estimated fair value.

We also review the value of our goodwill on an annual basis and when events or changes in circumstances indicate that the carrying value of goodwill or other intangible assets may exceed the fair value of such assets.

We review the value of our goodwill on an annual basis and also when events or changes in circumstances indicate that the carrying value of goodwill or other intangible assets may exceed the fair value of such assets.

The estimates of fair value are based upon the best information available as of the date of the assessment and incorporate management assumptions about expected future cash flows and contemplate other valuation measurements and techniques.

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Failure to retain the services of our key management personnel, or to successfully execute succession planning and attract additional qualified personnel could harm our business.

Our future success depends on the continued services and performance of our key management personnel.

Our future performance will depend on our ability to motivate and retain these and other key officers and managers, particularly regional market partners, market partners and managing partners.

Our future success depends on the continued services and performance of our key management personnel and our ability to develop future successors of such personnel as a part of our succession planning.

Our future performance will depend on our ability to motivate and retain these and other key officers, employees and managers, particularly regional market partners, market partners and managing partners.

Competition for these employees is intense.

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

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

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

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

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

Risks Related to Information Technology and Privacy

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

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

This reliance has significantly increased in recent years as we have had to rely to a greater extent on systems such as online ordering, contactless payments, online waitlists, and systems supporting a more remote workforce as our guests are increasingly using our website and digital applications to place and pay for their orders.

Our point-of-sale processing in our restaurants includes collection of cash, credit cards, debit cards, gift cards and other processes and procedures.

Our ability to efficiently and effectively manage our business depends significantly on the reliability, security and capacity of these systems.

As our business needs continue to evolve, these systems will require upgrading and maintenance over time, consequently requiring significant future commitments of resources and capital.

Additionally, as we become increasingly reliant on digital ordering and payment as a sales channel, our business could be negatively impacted if we are unable to successfully implement, execute or maintain our consumer-facing digital initiatives.

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

We have disaster recovery procedures and business continuity plans in place to address events of a crisis nature, including tornadoes and other natural disasters, and back up off-site locations for recovery of electronic and other forms of data information.

We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs.

Some business processes are currently outsourced to third parties, including such processes as information technology, gift card tracking, credit and debit card authorization and processing, insurance claims processing, unemployment claims processing, payroll tax filings, vendor payment processing and other accounting processes.

We continually evaluate our other business processes to determine if additional outsourcing is a viable, and the most appropriate, option to accomplish our goals.

however, there are no guarantees that failures will not occur.

New, modified and existing privacy and data protection laws and regulations may result in significant costs and compliance challenges and adversely affect our business and financial condition.

These privacy laws and regulations, which are constantly evolving, may be interpreted by regulatory authorities in new and differing manners and such interpretations may be inconsistent among jurisdictions.

We may incur increased costs to comply with increasingly demanding privacy laws and regulations.

We could also be subject to government enforcement actions, private litigation and adverse publicity including reputational damage and loss of guest confidence.

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

In 2022, approximately 85% of our transactions were by credit or debit cards.

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

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

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

In addition, if our security and information systems are compromised as a result of data corruption or loss, cyber-attack or a network security incident, or if our employees or vendors (or other persons or entities with which we do business with) fail to comply with such laws and regulations or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and result in a loss of guest confidence, which could adversely affect our results of operations and financial condition.

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

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

Risks Related to the Restaurant Industry

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

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

Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs and/or the availability of products necessary to operate our business, including increased costs arising from federal and/or state mandated requirements.

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

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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.

Extreme and/or long term increases in commodity prices

could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices.

Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term results could be negatively affected.

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

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

We currently purchase the majority of our beef from four beef suppliers with all of our beef coming from the United States or Canada.

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

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

In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.

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

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A shortage in the labor pool could also cause our restaurants to be required to operate with reduced staff which could negatively impact our ability to provide adequate service levels to our guests resulting in adverse guest reactions and a possible reduction in guest traffic counts.

Additionally, so long as the COVID-19 pandemic continues, personal or public health concerns related to the pandemic might make some existing personnel or potential candidates reluctant to work in enclosed restaurant environments.

Additionally, personal or public health concerns might make some existing personnel or potential candidates reluctant to work in enclosed restaurant environments.

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

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

Any government actions related to employee compensation or employer liability in response to the pandemic, whether temporary or permanent, could increase our labor costs.

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.

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 and tuition reimbursement.

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

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

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

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

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

and other global economies continue to be strong.

In future periods, the U.S.

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We compete with many well- established food service companies on the basis of taste, quality and price of products offered, guest service, atmosphere, location, take-out and delivery options and overall guest experience.

Our competitors include a large and diverse group of restaurant chains and individual restaurants that range from independent local operators that have opened restaurants in various markets to well- capitalized national restaurant companies.

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

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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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Our business could be adversely affected by our inability to respond to or effectively manage social media.

As part of our marketing strategy, we utilize social media platforms to promote our brands and attract and retain guests.

As part of our marketing strategy, we utilize social media platforms to promote our concepts and attract and retain guests.

Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand relevance.

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The inappropriate use of social media vehicles by our guests or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation and adversely affect our results of operations.

Given the marked increase in the use of social media platforms along with smart phones in recent years, individuals have access to a broad audience of consumers and other interested persons.

Given the marked increase in the use of social media platforms, individuals have access to a broad audience of consumers and other interested persons.

The availability of information on social media platforms is virtually immediate as is its impact.

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The impact may be immediate without affording us an opportunity for redress or correction.

These factors could have a material adverse effect on our business.

Health and social concerns relating to the consumption of beef or other food products could affect consumer preferences and could negatively impact our results of operations.

Like other restaurant chains, consumer preferences could be affected by health concerns about the consumption of beef, the key ingredient in many of our menu items, or negative publicity concerning food quality and food safety, including food-borne illnesses.

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

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.

The imposition of menu- labeling laws could have an adverse effect on our results of operations and financial position, as well as the restaurant industry in general.

The labeling requirements and any negative publicity concerning any of the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to our restaurants.

If we react to the labeling requirements or negative publicity by changing our concepts or our menu offerings or their ingredients, we may lose guests who do not prefer the new concept or products, and we may not be able to attract sufficient new guests to produce the revenue needed to make our restaurants profitable.

These factors could have a material adverse impact on our business.

Health, social and environmental concerns relating to the consumption or sourcing of beef or other food products could affect consumer preferences and could negatively impact our results of operations.

Like other restaurant chains, consumer preferences could be affected by concerns about the consumption or sourcing of beef, the key ingredient in many of our menu items, or negative publicity concerning food quality and food safety, including food-borne illnesses.

In addition, consumer preferences may be impacted by current and future menu-labeling requirements or social and environmental concerns about the sourcing of food products throughout our supply chain.

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

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

The imposition of menu- labeling and food sourcing laws or regulations could have an adverse effect on our results of operations and financial position, as well as the restaurant industry in general.

The labeling and sourcing requirements and any negative publicity concerning any of the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to

our restaurants.

If we react to labeling or sourcing requirements or negative publicity by changing our concepts or our menu offerings or their ingredients, we may lose guests who do not prefer the new concept or products, and we may not be able to attract sufficient new guests to produce the revenue needed to make our restaurants profitable.

In addition, we may have different or additional competitors for our intended guests as a result of a change in our concept and may not be able to compete successfully against those competitors.

A decrease in guest traffic to our restaurants as a result of these health concerns or negative publicity or as a result of a change in our menu or concept could materially harm our business.

A decrease in guest traffic to our restaurants as a result of these health, social and environmental concerns or negative publicity or as a result of a change in our menu or concept could significantly harm our business.

Food safety and sanitation, food-borne illness and health concerns may have an adverse effect on our business by reducing demand and increasing costs.

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However, food- borne illnesses and food safety issues occur in the food industry from time to time.

Any report or publicity, whether true or not, linking us to instances of food- borne illness or other food safety issues, including food tampering or contamination, could adversely affect our brands and reputation as well as our revenue and profits.

Any report or publicity, whether true or not, linking us to instances of food- borne illness or other food safety issues, including food tampering or contamination, could adversely affect our concepts and reputation as well as our revenue and profits.

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

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.

We cannot assure that all food items are properly maintained during transport throughout the supply chain and that our employees will identify all products that may be spoiled and should not be used in our restaurants.

While we attempt to minimize the risk, we cannot assure that all food items are properly maintained during transport throughout the supply chain and that our employees will identify all products that may be spoiled and should not be used in our restaurants.

If our guests become ill from food- borne illnesses, we could be forced to temporarily close some restaurants.

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In addition to the novel coronavirus that causes COVID-19, the United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and H1N1.

To the extent that a virus is food- borne, future outbreaks may adversely affect the price and availability of certain food products and cause our guests to eat less of a product which may materially adversely affect our business.

Risks Related to Our Corporate Structure, Our Stock Ownership and Our Common Stock

Risks Related to Our Corporate Structure

Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party.

Our certificate of incorporation and by- laws contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board of Directors.

Our certificate of incorporation and by- laws contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board of Directors (the "Board").

These provisions include, among other things, advance notice for raising business or making nominations at meetings and "blank check"

preferred stock.

Blank check preferred stock enables our Board of Directors, without approval of the shareholders, to designate and issue additional series of preferred stock with such dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with no limitations on conversion, as our Board of Directors may determine.

The issuance of blank check preferred stock may adversely affect the voting and other rights of the holders of our common stock as our Board of Directors may designate and issue preferred stock with terms that are senior to our common stock.

Blank check preferred stock enables our Board, without approval of the shareholders, to designate and issue additional series of preferred stock with such dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with no limitations on conversion, as our Board may determine.

The issuance of blank check preferred stock may adversely affect the voting and other rights of the holders of our common stock as our Board may designate and issue preferred stock with terms that are senior to our common stock.

These provisions may make it more difficult or expensive for a third party to acquire a majority of our outstanding common stock.

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(with some exceptions) unless such transaction is approved in a prescribed manner.

The existence of this provision could have an anti-takeover effect with respect to transactions not approved in advance by the Board of Directors, including discouraging attempts that might result in a premium over the market price for our common stock.

The existence of this provision could have an anti-takeover effect with respect to transactions not approved in advance by the Board, including discouraging attempts that might result in a premium over the market price for our common stock.

There can be no assurance that we will continue to pay dividends on our common stock or repurchase our common stock up to the maximum amounts permitted under our previously announced repurchase program.

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

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.

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

There can be no assurance that we will continue to pay dividends or repurchase our common stock at the same levels we have historically (if at all).

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

We value constructive input from our shareholders and the investment community.

Our Board of Directors and management team are committed to acting in the best interests of all of our shareholders.

There is no assurance that the actions taken by our Board of Directors and management in seeking to maintain constructive engagement with our shareholders will be successful.

Our Board and management team are committed to acting in the best interests of all of our shareholders.

There is no assurance that the actions taken by our Board and management in seeking to maintain constructive engagement with our shareholders will be successful.

Responding to actions by activist shareholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and our employees.

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The perceived uncertainties as to our future direction also resulting from activist strategies could also affect the market price and volatility of our common stock.

Failure to achieve and maintain effective internal control over financial reporting may negatively impact our business and our financial results.

The Company is responsible for establishing and maintaining effective internal control over financial reporting.

Despite its inherent limitations, effective internal control over financial reporting helps provide reasonable assurance regarding the reliability of financial reporting for external purposes.

A significant accounting error correction, financial reporting failure or material weakness in internal control over financial reporting could cause results in our consolidated financial statements that do not accurately reflect our financial condition, a loss of investor confidence and subsequent decline in the market price of our common stock, increase our costs and regulatory scrutiny, and lead to litigation or result in negative publicity that could damage our reputation.

ITEM 1B—UNRESOLVED STAFF COMMENTS

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