2 unchanged sentences
The number of holders of record of our common stock as of February 15, 2023 was 159.
−Removed: On February 17, 2022, our Board of Directors declared a quarterly dividend of $0.46 per share of common stock which will be distributed on March 25, 2022 to shareholders of record at the close of business on March 9, 2022.
−Removed: In 2011, our Board of Directors declared our first quarterly dividend of $0.08 per share of common stock which we consistently grew over time.
−Removed: On March 24, 2020, the Board of Directors voted to suspend the payment of quarterly cash dividends on the Company’s common stock, effective with respect to dividends occurring after the quarterly cash dividend of $0.36 paid on March 27, 2020.
−Removed: This was done to preserve cash flow due to the pandemic.
−Removed: On April 28, 2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of common stock.
−Removed: The declaration and payment of cash dividends on our common stock is at the discretion of our Board of Directors, and any decision to declare a dividend will be based on a number of factors including, but not limited to, earnings, financial condition, applicable covenants under our amended credit facility and other contractual restrictions, or other factors deemed relevant.
+Added: On February 14, 2023, our Board of Directors (the "Board") declared a quarterly dividend of $0.55 per share of common stock which will be distributed on March 24, 2023 to shareholders of record at the close of business on March 8, 2023.
+Added: The declaration and payment of cash dividends on our common stock is at the discretion of our Board, and any decision to declare a dividend will be based on a number of factors including, but not limited to, earnings, financial condition, applicable covenants under our amended credit facility and other contractual restrictions, or other factors deemed relevant.
Unregistered Sales of Equity Securities
1 unchanged sentence
Issuer Repurchases of Securities
−Removed: In 2008, our Board of Directors approved our first stock repurchase program.
+Added: In 2008, our Board approved our first stock repurchase program.
From inception through December 27, 2022, we have paid $633.5 million through our authorized stock repurchase programs to repurchase 21,041,442 shares of our common stock at an average price per share of $30.11.
−Removed: On May 31, 2019, our Board of Directors approved a stock repurchase program under which we may repurchase up to $250.0 million of our common stock.
−Removed: This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 22, 2014.
+Added: On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.
+Added: This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 31, 2019 that authorized the Company to repurchase up to $250.0 million of our common stock.
All repurchases to date have been made through open market transactions.
In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock.
+Added: This includes $133.1 million repurchased under our current authorized stock repurchase program and $79.7 million repurchased under our prior authorization.
+Added: For the 13 week period ended December 27, 2022, we did not repurchase any shares of our common stock.
As of December 27, 2022, $166.9 million remains authorized for stock repurchases.
−Removed: The following table includes information regarding purchases of our common stock made by us during the quarter ended December 28, 2021:
−Removed: Maximum Number
−Removed: (or Approximate
−Removed: Dollar Value) of
−Removed: Part of Publicly
−Removed: Shares that May
−Removed: Yet Be Purchased
−Removed: Under the Plans
−Removed: September 29 to October 26
−Removed: October 27 to November 23
−Removed: November 24 to December 28
Stock Performance Graph
−Removed: The following graph sets forth the cumulative total return experienced by holders of the Company’s common stock compared to the cumulative total return of the Russell 3000 Restaurant Index and the Russell 3000 Index for the five year period ended December 28, 2021, the last trading day of our fiscal year.
+Added: The following graph sets forth the cumulative total shareholder return experienced by holders of the Company’s common stock compared to the cumulative total return of the broad market indices of the S&P 500 Index and Russell 3000 Index as well as the industry specific indices of the S&P Composite 1500 Restaurant Sub-Index and Russell 3000 Restaurant Index for the five year period ended December 27, 2022, the last trading day of our fiscal year.
The graph assumes the values of the investment in our common stock and each index was $100 on December 26, 2017 and the reinvestment of all dividends paid during the period of the securities comprising the indices.
+Added: Historically, we have presented the performance graph by comparing our cumulative total shareholder return against the Russell 3000 Index and Russell 3000 Restaurant Index.
+Added: In 2022, we transitioned to the S&P 500 Index and S&P Composite 1500 Restaurant Sub-Index as these are more widely utilized industry indices.
+Added: The performance graph below presents all the indices used for this transition year.
The stock price performance shown on the graph below does not indicate future performance.
Comparison of Cumulative Total Return Since December 26, 2017
−Removed: Among Texas Roadhouse, Inc., the Russell 3000 Index and the Russell 3000 Restaurant Index
Texas Roadhouse, Inc.
−Removed: Russell 3000 Restaurant
+Added: S&P Composite 1500 Restaurant Sub-Index
+Added: Russell 3000 Restaurant Index
ITEM 6— RESERVED
−Removed: Removed and reserved.
ITEM 7—MANAGEMENT’S DISCUSSIO N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
−Removed: The discussion and analysis below for the Company should be read in conjunction with the consolidated financial statements and the notes to such financial statements (pages F-1 to F-29), "Forward-looking Statements"
+Added: The discussion and analysis below of the financial condition and results of operations for Texas Roadhouse, Inc.
+Added: (collectively, the "Company,"
+Added: "we,"
+Added: "our"
+Added: and/or "us") should be read in conjunction with the consolidated financial statements and the notes to such financial statements (pages F-1 to F-28), "Forward-looking Statements"
(page 3) and Risk Factors set forth in Item 1A.
−Removed: This Management’s Discussion and Analysis of Financial Condition and Results of Operations focuses on discussion of 2021 results as compared to 2020 results.
−Removed: For discussion of 2020 results as compared to 2019 results, see “Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Form 10-K for the year ended December 29, 2020 filed with the SEC on February 26, 2021.
+Added: For discussion and analysis of our financial condition and results of operations for fiscal year 2021 compared to fiscal year 2020, see Part II, Item 7 of our 2021 Form 10-K.
Texas Roadhouse, Inc.
2 unchanged sentences
Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana.
−Removed: Since then, we have grown to 667 restaurants in 49 states and ten foreign countries.
−Removed: Our mission statement is "Legendary Food, Legendary Service ® ."
−Removed: Our operating strategy is designed to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking high- quality, affordable meals served with friendly, attentive service.
+Added: Since then, we have grown to three concepts with 697 restaurants in 49 states and ten foreign countries.
As of December 27, 2022, our 697 restaurants included:
1 unchanged sentence
of which 577 were wholly-owned and 20 were majority- owned.
+Added: Of the 597 restaurants we owned and operated at the end of 2022, we operated 552 as Texas Roadhouse restaurants, 40 as Bubba’s 33 restaurants and five as Jaggers restaurants.
The results of operations of company restaurants are included in our consolidated statements of income and comprehensive income.
−Removed: The portion of income attributable to noncontrolling interests in company restaurants that are not wholly- owned is reflected in the line item entitled "Net income attributable to noncontrolling interests"
+Added: The portion of income attributable to noncontrolling interests in company restaurants that are majority-owned is reflected in the line item entitled "Net income attributable to noncontrolling interests"
in our consolidated statements of income and comprehensive income.
−Removed: Of the 566 restaurants we owned and operated at the end of 2021, we operated 526 as Texas Roadhouse restaurants, 36 as Bubba’s 33 restaurants and four as Jaggers restaurants.
● 100 "franchise restaurants,"
23 of which we have a 5.0% to 10.0% ownership interest.
−Removed: The income derived from our minority interests in these franchise restaurants is reported in the line item entitled "Equity (loss) income from investments in unconsolidated affiliates"
+Added: All of the franchise restaurants operated as Texas Roadhouse restaurants.
+Added: The income derived from our minority interests in these franchise restaurants is reported in the line item entitled "Equity income from investments in unconsolidated affiliates"
in our consolidated statements of income and comprehensive income.
Additionally, we provide various management services to these 23 franchise restaurants, as well as five additional franchise restaurants in which we have no ownership interest.
−Removed: All of the franchise restaurants operated as Texas Roadhouse restaurants.
Of the 100 franchise restaurants, 62 were domestic restaurants and 38 were international restaurants.
3 unchanged sentences
Presentation of Financial and Operating Data
−Removed: We operate on a fiscal year that typically ends on the last Tuesday in December.
−Removed: Fiscal year 2021 and fiscal year 2020 were both 52 weeks in length, while the fourth quarters were both 13 weeks in length.
+Added: We operate on a fiscal year that ends on the last Tuesday in December.
+Added: Fiscal year 2022 and fiscal year 2021 were both 52 weeks in length, and the fourth quarters were both 13 weeks in length.
COVID-19 and Related Impacts
−Removed: The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the “pandemic”).
−Removed: These include federal, state and local restrictions on restaurants, some of which have limited capacity or seating in dining rooms while others have allowed to-go or curbside service only.
−Removed: As of December 28, 2021, all of our domestic company and franchise locations were operating without restriction.
−Removed: As of December 29, 2020, all of our domestic company and franchise locations were operating their dining rooms under various limited capacity restrictions or were limited to outdoor and/or to-go or curbside service only.
−Removed: As a result of these restrictions, we developed a hybrid operating model to accommodate our dining room restrictions together with enhanced to-go.
−Removed: We continue to see sales in our to-go program higher than pre-pandemic levels, even with dining rooms operating without restriction.
−Removed: We cannot predict how long we will continue to be impacted by the pandemic, the extent to which our dining rooms will have to close again or otherwise have limited seating, or if the increased sales in our to-go program will continue.
−Removed: The extent to which the pandemic impacts our business, results of operations, or financial condition will depend on future developments which are outside of our control.
−Removed: 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.
−Removed: As a result of 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.
−Removed: 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 material costs.
−Removed: To date, we have been able to properly manage any food or supply shortages but have experienced increased costs.
−Removed: 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.
−Removed: In addition, as our dining rooms have returned to operating without restriction, our ability to attract and retain restaurant-level employees has become more challenging due to an increasingly competitive job market throughout the country.
−Removed: We have also experienced periodic staffing shortages due to employees testing positive for the virus or having to quarantine.
−Removed: To the extent these challenges persist, we could continue to experience increased labor costs and/or decreased sales.
−Removed: As a result of the pandemic, legislation referred to as the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was passed in 2020 to benefit companies that were significantly impacted by the pandemic.
−Removed: This legislation allowed for the deferral of the social security portion of the employer portion of FICA payroll taxes from the date of enactment through the end of 2020.
−Removed: In total, we deferred $47.3 million in payroll taxes, of which $24.3 million was repaid in 2021 and $23.0 million is required to be repaid by the end of 2022.
−Removed: The amount due in 2022 is included in accrued wages and payroll taxes in our consolidated balance sheets.
−Removed: The CARES Act also allowed for an Employee Retention Credit for companies severely impacted by the pandemic to encourage the retention of full-time employees.
−Removed: This refundable payroll tax credit was available for any company that had fully or partially suspended operations due to government order or experienced a significant decline in gross receipts and had employees who were paid but did not actually work.
−Removed: Since the onset of the pandemic, the Company has provided various forms of relief pay for hourly restaurant employees, a significant portion of which qualified for this tax credit.
−Removed: For the years ended December 28, 2021 and December 29, 2020, we recorded $1.2 million and $7.0 million, respectively, related to this credit which is included as a reduction to labor expense in our consolidated statements of income and comprehensive income.
+Added: The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the "pandemic").
+Added: These include federal, state and local restrictions on restaurants, some of which limited capacity or seating in dining rooms while others allowed to-go or curbside service only.
+Added: In 2022, all of our domestic company and franchise locations operated without restriction.
+Added: We also experienced and expect to continue to experience commodity inflation and certain food and supply shortages as well as a more competitive labor market.
+Added: To the extent these challenges persist, we will continue to experience increased costs.
Long-term Strategies to Grow Earnings Per Share and Create Shareholder Value
2 unchanged sentences
We continue to evaluate opportunities to develop restaurants in existing markets and in new domestic and international markets.
−Removed: Domestically, we remain focused primarily on markets where we believe a significant demand for our restaurants exists because of population size, income levels, and the presence of shopping and entertainment centers and a significant employment base.
−Removed: In recent years, we have relocated several existing Texas Roadhouse locations at or near the end of the associated lease or as a result of eminent domain which allowed us to move to a better site, update them to a current prototypical design, construct a larger building with more seats and greater number of available parking spaces, accommodate increased to-go sales and/or obtain more favorable lease terms.
−Removed: We continue to evaluate these opportunities particularly as it relates to older locations with strong sales.
−Removed: At our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by adding on to our existing building and/or to increase our parking capacity by leasing or purchasing property that adjoins our site.
+Added: Domestically, we remain focused primarily on markets
+Added: where we believe a significant demand for our restaurants exists because of population size, income levels, the presence of shopping and entertainment centers and a significant employment base.
In addition, we continue to pursue opportunities to acquire domestic franchise locations to expand our company restaurant base.
−Removed: In 2021, we opened 29 company restaurants while our franchise partners opened four total restaurants domestic and internationally.
−Removed: This included 23 Texas Roadhouse restaurants, five Bubba’s 33 restaurants, and one Jaggers restaurant.
−Removed: In 2022, we plan to open approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants.
−Removed: In addition, we anticipate our existing franchise partners will open as many as five Texas Roadhouse restaurants in 2022.
−Removed: Our average capital investment for the 23 Texas Roadhouse restaurants opened during 2021, including pre-opening expenses and a capitalized rent factor, was $5.7 million.
−Removed: We expect our average capital investment for Texas Roadhouse restaurants opening in 2022 to be approximately $6.3 million.
−Removed: Our average capital investment for the five Bubba’s 33 restaurants opened during 2021, including pre- opening expenses and a capitalized rent factor, was $7.4 million.
−Removed: We expect our average capital investment for Bubba’s 33 restaurants opening in 2022 to be approximately $7.3 million.
−Removed: We remain focused on driving sales and managing restaurant investment costs to maintain our restaurant development in the future.
−Removed: Our capital investment (including cash and non-cash costs) for new restaurants varies significantly depending on a number of factors including, but not limited to:
−Removed: the square footage, layout, scope of required site work, geographical location, cost of materials, type of construction labor, local permitting requirements, hook-up fees, our ability to negotiate with landlords, and cost of liquor and other licenses.
−Removed: We have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in several foreign countries and one U.S.
−Removed: We currently have signed franchise and/or development agreements in nine countries in the Middle East as well as Taiwan, the Philippines, Mexico, China, South Korea, Brazil and Puerto Rico.
−Removed: As of December 28, 2021, we had 15 restaurants in five countries in the Middle East, five restaurants open in the Philippines, four in Taiwan, four in South Korea, two in Mexico and one in China for a total of 31 restaurants in ten foreign countries .
−Removed: For the existing international agreements, the franchisee is generally required to pay us a franchise fee for each restaurant to be opened, royalties on the gross sales of each restaurant and a development fee for our grant of development rights in the named countries.
−Removed: We anticipate that the specific business terms of any future franchise agreement for international restaurants might vary significantly from the standard terms of our domestic agreements and from the terms of existing international agreements, depending on the territory to be franchised and the extent of franchisor-provided services to each franchisee.
−Removed: In 2021, we entered into our first area development agreements for Jaggers, our fast-casual concept.
−Removed: These agreements allow for the development and operation of restaurants in specific territories in Texas, Oklahoma, and North Carolina.
−Removed: As part of these agreements, the franchisees are required to pay us a franchise fee for each restaurant to be opened, royalties on the gross sales of each restaurant and a development fee for our grant of development rights in the named territories.
−Removed: No franchise agreements have been entered into and no corresponding restaurants have been opened yet related to these area development agreements.
+Added: We have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in numerous foreign countries and one U.S.
+Added: We have also entered into area development agreements for Jaggers, our fast-casual concept.
+Added: We expect our first Jaggers franchise restaurant to open in 2023.
+Added: In 2022, we opened 23 company restaurants while our franchise partners opened seven restaurants internationally.
+Added: The company restaurants included 18 Texas Roadhouse restaurants, four Bubba’s 33 restaurants, and one Jaggers restaurant.
+Added: In 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and three Jaggers company restaurants.
+Added: In addition, we expect as many as nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise openings in 2023.
+Added: In 2022, we completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of $33.1 million.
+Added: On our first day of fiscal year 2023, we completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of approximately $39.0 million.
● Maintaining and/or Improving Restaurant Level Profitability.
−Removed: We continue to balance the impacts of inflationary pressures with our value positioning as we remain focused on our long-term success.
−Removed: This may create a challenge in terms of maintaining and/or increasing restaurant-level profitability (restaurant margin), in any given year, depending on the level of inflation we experience.
−Removed: Restaurant margin is not a U.S.
−Removed: generally accepted accounting principle ("GAAP") measure and should not be considered in isolation, or as an alternative to income from operations.
−Removed: See further discussion of restaurant margin below.
−Removed: In addition to restaurant margin, as a percentage of restaurant and other sales, we also focus on the growth of restaurant margin dollars per store week as a measure of restaurant-level profitability.
−Removed: In terms of driving comparable restaurant sales, we remain focused on encouraging repeat visits by our guests and attracting new guests through our continued commitment to operational standards relating to food and service quality.
−Removed: To attract new guests and increase the frequency of visits of our existing guests, we also continue to drive various localized marketing programs, focus on speed of service and increase throughput by adding seats and parking at certain restaurants.
−Removed: In addition, with the increase in to-go sales, we have made changes to our building layout to better accommodate higher to-go volumes at our restaurants.
−Removed: We have also made investments in technology to allow for a better guest experience.
−Removed: We also continue to look for ways through various strategic initiatives to drive awareness of our brands and increase sales and profitability.
−Removed: At the onset of the pandemic, we began selling ready-to-grill steaks for customers to prepare at home.
−Removed: While we reduced our store-level offerings around ready-to-grill once our dining rooms began to re-open in mid-2020, based on the success of this program we developed Texas Roadhouse Butcher Shop.
−Removed: This online retail store allows for the purchase and delivery of quality steaks that are similar to those available in our restaurants.
−Removed: This non-royalty-based product launched in late 2020.
−Removed: We also further expanded our retail business in 2021 with the introduction of our non-alcoholic Margarita Mixer, and our canned cocktail Margarita Seltzer, which rolled out in test markets.
−Removed: These Texas Roadhouse-branded products are subject to royalty-based license agreements.
+Added: We continue to focus on driving comparable restaurant sales to maintain or improve store level profitability.
+Added: This includes a pricing strategy that balances the impacts of inflationary pressures with our long-term value positioning.
+Added: In terms of driving traffic at our restaurants, we remain focused on encouraging repeat visits by our guests and attracting new guests through our continued commitment to operational standards relating to food and service quality.
+Added: To attract new guests and increase the frequency of visits of our existing guests, we continue to drive various localized marketing programs, focus on speed of service, increase throughput by adding seats and parking at certain restaurants and continue to enhance the guest digital experience.
+Added: At our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by adding on to our existing building and/or to increase our parking capacity by leasing or purchasing property that adjoins our site.
+Added: We also continue to make a number of building modifications and/or expansions to existing restaurants in order to better accommodate our increased dine-in and to-go sales.
+Added: These modifications include room expansions which add additional guest seating, the addition of to-go areas, and cooler expansions to accommodate higher inventory levels.
+Added: In recent years, we have relocated several existing Texas Roadhouse locations at or near the end of their associated lease or as a result of eminent domain which allowed us to move to a better site, update them to a current prototypical design, construct a larger building with more seats and greater number of available parking spaces, accommodate increased to-go sales and/or obtain more favorable lease terms.
+Added: We continue to evaluate these opportunities particularly as it relates to older locations with strong sales.
● Leveraging Our Scalable Infrastructure.
−Removed: To support our growth, we have made investments in our infrastructure over the past several years, including information and accounting systems, real estate, human resources, legal, marketing, international and restaurant operations, including the development of new strategic initiatives.
+Added: To support our growth, we have made investments in our infrastructure across all critical functions, including the development of new strategic initiatives.
Whether we are able to leverage our infrastructure in future years by growing our general and administrative costs at a slower rate than our revenue will depend, in part, on our new restaurant openings, our comparable restaurant sales growth rate going forward and the level of investment we continue to make in our infrastructure.
1 unchanged sentence
We continue to evaluate opportunities to return capital to our shareholders, including the payment of dividends and repurchase of common stock.
−Removed: In 2011, our Board of Directors declared our first quarterly dividend of $0.08 per share of common stock which we consistently grew over time.
−Removed: On March 24, 2020, the Board of Directors voted to suspend the payment of quarterly cash dividends on the Company’s common stock, effective with respect to dividends occurring after March 27, 2020.
−Removed: This was done to preserve cash flow due to the pandemic.
−Removed: On April 28, 2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of common stock.
−Removed: On February 17, 2022, our Board of Directors declared a quarterly cash dividend of $0.46 per share of common stock.
−Removed: The declaration and payment of cash dividends on our common stock is at the discretion of our Board of Directors, and any decision to declare a dividend will be based on a number of factors, including, but not limited to, earnings, financial condition, applicable covenants under our amended credit facility, other contractual restrictions and other factors deemed relevant.
−Removed: In 2008, our Board of Directors approved our first stock repurchase program.
+Added: In 2011, our Board of Directors (the "Board") declared our first quarterly dividend of $0.08 per share of common stock which has consistently grown over time.
+Added: In 2022, the Board declared a quarterly cash dividend of $0.46 per share of common stock.
+Added: On February 14, 2023, the Board declared a quarterly cash dividend of $0.55 per share of common stock, representing a 20% increase compared to the quarterly dividend declared in the prior year period.
+Added: In 2008, the Board approved our first stock repurchase program.
From inception through December 27, 2022, we have paid $633.5 million through our authorized stock repurchase programs to repurchase 21,041,442 shares of our common stock at an average price per share of $30.11.
−Removed: On May 31, 2019, our Board of Directors approved a stock repurchase program under which we may repurchase up to $250.0 million of our common stock.
−Removed: This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 22, 2014.
−Removed: All repurchases to date have been made through open market transactions.
+Added: On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.
In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock.
+Added: This includes $133.1 million repurchased under our current authorized stock repurchase program and $79.7 million repurchased under our prior authorization.
As of December 27, 2022, $166.9 million remains authorized for stock repurchases.
−Removed: Key Operating Personnel
−Removed: Key management personnel who have a significant impact on the performance of our restaurants include market partners, managing partners, operations managers, kitchen managers, service managers and assistant managers.
−Removed: Managing partners are single restaurant operators who have primary responsibility for the day-to- day operations of the entire restaurant.
−Removed: Operations managers support the managing partner in overall operations including both departments for kitchen and service.
−Removed: Kitchen managers have primary responsibility for managing the kitchen staff and overall kitchen operations including food production, preparation, execution and quality standards.
−Removed: Service managers have primary responsibility for managing the front of house staff and overall dining room, bar and to-go operations including service quality and the guest experience.
−Removed: Assistant managers support our managing partners, operations managers, kitchen and service managers.
−Removed: All managers are responsible for maintaining our standards of quality and performance.
−Removed: We use market partners to oversee the operation of our restaurants.
−Removed: Each market partner oversees a group of varying sizes of managing partners and their respective management teams.
−Removed: Market partners are also responsible for the hiring and development of each restaurant’s management team and assisting in the site selection process.
−Removed: Through regular visits to the restaurants, the market partners facilitate adherence to all aspects of our concepts, strategies and standards of quality.
−Removed: Managing partners and market partners are required, as a condition of employment, to sign a multi- year employment agreement.
−Removed: The annual compensation of our managing partners and market partners includes a base salary plus a percentage of the pre- tax income of the restaurant(s) they operate or supervise.
−Removed: Managing partners and market partners are eligible to participate in our equity incentive plan and are required to make refundable deposits of $25,000 and $50,000, respectively.
−Removed: Generally, the deposits are refunded after five years of continuous service.
Key Measures We Use To Evaluate Our Company
Key measures we use to evaluate and assess our business include the following:
−Removed: Number of Restaurant Openings.
−Removed: Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period.
−Removed: For company restaurant openings, we incur pre- opening costs, which are defined below, before the restaurant opens.
−Removed: Typically, new restaurants open with an initial start- up period of higher than normalized sales volumes, which decrease to a steady level approximately three to six months after opening.
−Removed: However, although sales volumes are generally higher, so are initial costs, resulting in restaurant margins that are generally lower during the start-up period of operation and increase to a steady level approximately three to six months after opening.
● Comparable Restaurant Sales.
5 unchanged sentences
Average unit volume represents the average annual restaurant sales for Texas Roadhouse and Bubba’s 33 restaurants open for a full six months before the beginning of the period measured excluding sales of restaurants permanently closed during the period.
−Removed: Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels lower than the company average.
−Removed: At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels higher than the company average.
+Added: Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels lower than company average.
+Added: At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels higher than company average.
+Added: ● Store Weeks and New Restaurant Openings.
Store weeks represent the number of weeks that all company restaurants, unless otherwise noted, were open during the reporting period.
Store weeks include weeks in which a restaurant is temporarily closed.
+Added: Store week growth is driven by new restaurant openings and franchise acquisitions.
+Added: New restaurant openings reflect the number of restaurants opened during a particular fiscal period, excluding store relocations.
+Added: We consider store openings that occur simultaneous with a store closure in the same trade area to be a relocation.
● Restaurant Margin.
Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs.
−Removed: Restaurant margin is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations.
+Added: Restaurant margin is not a measurement determined in accordance with U.S.
+Added: generally accepted accounting principles ("GAAP") and should not be considered in isolation, or as an alternative, to income from operations.
This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded.
−Removed: Restaurant margin is widely regarded as a useful metric by which to evaluate restaurant-level operating efficiency and performance.
−Removed: In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including pre-opening and general and administrative expenses, but do not have a direct impact on restaurant-level operational efficiency and performance.
+Added: Restaurant margin is widely regarded as a useful metric by which to evaluate core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.
+Added: In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including general and administrative expenses, but do not have a direct impact on core restaurant-level operational efficiency and performance.
+Added: We also exclude pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results.
We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants.
7 unchanged sentences
Other sales include the amortization of fees associated with our third-party gift card sales net of the amortization of gift card breakage income.
−Removed: These amounts are amortized consistent with the historic redemption pattern of the associated gift card or on actual redemptions in periods where redemptions do not align with historic redemption patterns.
−Removed: Other sales also include sales related to our non-royalty-based retail products.
Franchise Royalties and Fees.
Franchise royalties consist of royalties, as defined in our franchise agreement, paid to us by our domestic and international franchisees.
−Removed: Domestic and/or international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory.
−Removed: The terms of the international agreements may vary significantly from our domestic agreements.
−Removed: These include advertising fees paid by domestic
−Removed: franchisees to our system-wide marketing and advertising fund and management fees paid by certain domestic franchisees for supervisory and administrative services that we perform.
+Added: Domestic and international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory.
Food and Beverage Costs.
Food and beverage costs consists of the costs of raw materials and ingredients used in the preparation of food and beverage products sold in our company restaurants.
−Removed: Approximately half of our food and beverage costs relates to beef costs.
+Added: Approximately half of our food and beverage costs relates to beef.
Restaurant Labor Expenses.
5 unchanged sentences
Restaurant Other Operating Expenses.
−Removed: Restaurant other operating expenses consist of all other restaurant- level operating costs, the major components of which are utilities, dining room and to-go supplies, local store advertising, repairs and maintenance, equipment rent, property taxes, credit card fees, and general liability insurance.
−Removed: Profit sharing incentive compensation expenses earned by our restaurant managing partners and market partners are also included in restaurant other operating expenses.
+Added: Restaurant other operating expenses consist of all other restaurant- level operating costs, the major components of which are credit card fees, utilities, supplies, repairs and maintenance, equipment rent, property taxes, profit sharing incentive compensation for our restaurant managing partners and market partners and general liability insurance.
Pre-opening Expenses.
−Removed: Pre- opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and are comprised principally of opening team and training compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.
−Removed: On average, over 70% of total pre-opening costs incurred per restaurant opening relate to the hiring and training of employees.
+Added: Pre- opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and are comprised principally of opening and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.
+Added: On average, approximately 70% of total pre-opening costs incurred per restaurant opening relate to the hiring and training of employees.
Pre-opening costs vary by location depending on a number of factors, including the size and physical layout of each location;
5 unchanged sentences
Depreciation and Amortization Expenses.
−Removed: Depreciation and amortization expenses ("D&A") include the depreciation of fixed assets and amortization of intangibles with definite lives, substantially all of which relates to restaurant-level assets.
+Added: Depreciation and amortization expenses include the depreciation of fixed assets and amortization of intangibles with definite lives, substantially all of which relates to restaurant-level assets.
Impairment and Closure Costs, Net.
2 unchanged sentences
General and Administrative Expenses.
−Removed: General and administrative expenses ("G&A") are comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth including advertising costs incurred.
−Removed: G&A also includes legal fees, settlement charges and share-based compensation expense related to executive officers, Support Center employees and market partners and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.
−Removed: Interest Expense (Income), Net.
−Removed: Interest expense (income), net includes interest expense on our debt or financing obligations including the amortization of loan fees reduced by earnings on cash and cash equivalents.
−Removed: Equity (Loss) Income from Unconsolidated Affiliates.
−Removed: Equity (loss) income includes our percentage share of net income earned by unconsolidated affiliates.
−Removed: This includes our 5.0% to 10.0% equity interest in 24 franchise restaurants.
−Removed: Additionally, we had a 40% equity interest in four non- Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China.
−Removed: We fully impaired our equity investment related to this joint venture in 2021 as these restaurants closed during the year.
+Added: General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth.
+Added: This includes software hosting fees, professional fees, group insurance, advertising expense, salary and share-based compensation expense related to executive officers, Support Center employees and market partners and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.
+Added: Interest Expense, Net.
+Added: Interest expense, net includes interest expense on our debt or financing obligations including the amortization of loan fees reduced by earnings on cash and cash equivalents and capitalized interest.
+Added: Equity Income (loss) from Unconsolidated Affiliates.
+Added: Equity income (loss) includes our percentage share of net income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates.
+Added: December 27, 2022 and December 28, 2021, we owned a 5.0% to 10.0% equity interest in 23 and 24 domestic franchise restaurants, respectively.
+Added: Additionally, we had a 40% equity interest in four non- Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China that we fully impaired in 2021.
Net Income Attributable to Noncontrolling Interests.
2 unchanged sentences
2022 Financial Highlights
−Removed: Total revenue increased $1.1 billion or 44.4% to $3.5 billion in 2021 compared to $2.4 billion in 2020 primarily due to an increase in average unit volumes driven by an increase in comparable restaurant sales, along with an increase in store weeks.
+Added: Total revenue increased $551.0 million or 15.9% to $4.0 billion in 2022 compared to $3.5 billion in 2021 primarily due to an increase in store weeks and an increase in comparable restaurant sales.
Store weeks and comparable restaurant sales increased 6.1% and 9.7%, respectively, at company restaurants in 2022.
−Removed: The increase in comparable restaurant sales was driven by the re-opening of our dining rooms, the continued easing of dining room capacity and seating restrictions throughout 2021 and continued strong to-go sales.
−Removed: Restaurant margin increased $316.1 million or 119.0% to $581.7 million in 2021 compared to $265.6 million in 2020 and restaurant margin, as a percentage of restaurant and other sales, increased to 16.9% in 2021 compared to 11.2% in 2020.
−Removed: The increase in restaurant margin was due to higher sales partially offset by commodity inflation.
−Removed: Net income increased $214.0 million or 684.8% to $245.3 million in 2021 compared to $31.3 million in 2020 primarily due to higher restaurant margin dollars partially offset by higher general and administrative expenses and higher income tax expense.
−Removed: Diluted earnings per share increased 682.5% to $3.50 from $0.45 in the prior year.
+Added: The increase in store weeks was due to new store openings and the acquisition of franchise restaurants.
+Added: The increase in comparable restaurant sales was due to an increase in per person average check and an increase in guest traffic.
+Added: Net income increased $24.5 million or 10.0% to $269.8 million in 2022 compared to $245.3 million in 2021 primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and administrative expenses and higher depreciation and amortization expense.
+Added: Diluted earnings per share increased 13.5% to $3.97 from $3.50 in the prior year due to the increase in net income and the benefit of share repurchases.
+Added: Restaurant margin dollars increased $45.8 million or 7.9% to $627.5 million in 2022 compared to $581.7 million in 2021 primarily due to higher sales.
+Added: Restaurant margin, as a percentage of restaurant and other sales, decreased to 15.7% in 2022 compared to 16.9% in 2021.
+Added: The decrease in restaurant margin, as a percentage of restaurant and other sales, was due to commodity and wage and other labor inflation partially offset by higher sales.
Results of Operations
16 unchanged sentences
Income from operations
−Removed: Interest expense (income), net
−Removed: Equity (loss) income from investments in unconsolidated affiliates
+Added: Interest expense, net
+Added: Equity income (loss) from investments in unconsolidated affiliates
Income before taxes
−Removed: Income tax expense (benefit)
+Added: Income tax expense
Net income including noncontrolling interests
36 unchanged sentences
Increase in store weeks
−Removed: Increase (decrease) in average unit volume
−Removed: Total increase (decrease) in restaurant sales
−Removed: Total increase (decrease) in restaurant and other sales
+Added: Increase in average unit volume
+Added: Total increase in restaurant sales
+Added: Total increase in restaurant and other sales
Comparable restaurant sales
−Removed: Texas Roadhouse restaurants only:
+Added: Texas Roadhouse restaurants:
Comparable restaurant sales
1 unchanged sentence
Weekly sales by group:
−Removed: Comparable restaurants (473 and 453 units, respectively)
−Removed: Average unit volume restaurants (18 and 20 units, respectively)(2)
−Removed: Restaurants less than six months old (35 and 30 units, respectively)
+Added: Comparable restaurants (499 and 473 units)
+Added: Average unit volume restaurants (20 and 18 units)(2)
+Added: Restaurants less than six months old (33 and 35 units)
Bubba's 33 restaurants:
2 unchanged sentences
Weekly sales by group:
−Removed: Comparable restaurants (25 and 24 units, respectively)
−Removed: Average unit volume restaurants (5 and 1 units, respectively)(2)
−Removed: Restaurants less than six months old (6 and 6 units, respectively)
+Added: Comparable restaurants (30 and 25 units)
+Added: Average unit volume restaurants (4 and 5 units)(2)
+Added: Restaurants less than six months old (6 and 6 units)
(1) Includes the impact of the year-over-year change in sales volume of all Jaggers restaurants, along with Texas Roadhouse and Bubba’s 33 restaurants open less than six months before the beginning of the period measured and, if applicable, the impact of restaurants permanently closed or acquired during the period.
−Removed: (2) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured.
−Removed: The increase in restaurant sales for 2021 was primarily attributable to an increase in average unit volumes, driven by an increase in comparable restaurant sales along with an increase in store weeks.
−Removed: The increase in comparable restaurant sales was driven by the re-opening of our dining rooms, the continued easing of dining room capacity and seating restrictions throughout 2021 and continued strong to-go sales.
−Removed: Comparable restaurant sales increased 37.8% in 2021, which included guest traffic count growth of 27.6% and per person average check growth of 10.2%.
−Removed: Our expanded to-go model helped to offset the loss of dining room sales particularly at the onset of the pandemic when all of our dining rooms were closed.
−Removed: In addition, we continued to see significant to-go sales once our dining rooms reopened.
+Added: (2) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured, excluding sales from restaurants permanently closed during the period, if applicable.
+Added: The increase in restaurant sales for 2022 was primarily attributable to an increase in store weeks and an increase in comparable restaurant sales.
+Added: The increase in store weeks was driven by the opening of new restaurants and the acquisition of franchise restaurants.
+Added: The increase in comparable restaurant sales growth was driven primarily by increases in our per person average check as shown in the table below.
+Added: Guest traffic counts
+Added: Per person average check
+Added: Comparable restaurant sales growth
+Added: The increase in 2022 guest traffic counts was due to an increase in dining room traffic partially offset by a decrease in to-go traffic.
+Added: The increase in dining room traffic counts was primarily driven by all of our company locations operating without capacity restrictions for the entire 2022 period.
To-go sales as a percentage of total restaurant sales were 13.3% in 2022 compared to 17.1% in 2021.
−Removed: Comparable restaurant sales include the benefit of menu price increases of approximately 1.75% and 4.2% implemented in April 2021 and October 2021, respectively, as well as an increase of 1.0% in October 2020.
−Removed: In 2021, we opened 29 company restaurants, including five Bubba’s 33 and one Jaggers restaurant.
−Removed: In 2022, we plan to open approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants.
−Removed: On December 29, 2021, the first day of our 2022 fiscal year, we completed the acquisition of seven franchise restaurants for an aggregate purchase price of approximately $27 million.
−Removed: In total, we expect store week growth of approximately 6.5% in 2022, including the impact of the seven franchise restaurants acquired.
−Removed: Other sales primarily represent the net impact of amortization of third party gift card fees and gift card breakage income.
+Added: Per person average check includes the benefit of menu price increases of approximately 3.2% and 2.9% implemented in Q2 2022 and Q4 2022, respectively, as well as increases of 1.8% and 4.2% implemented in Q2 2021 and Q4 2021, respectively.
+Added: In 2022, we opened 23 company restaurants, which included 18 Texas Roadhouse restaurants, four Bubba’s 33 restaurants and one Jaggers restaurant.
+Added: We also completed the acquisition of eight franchise restaurants.
+Added: In 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and three Jaggers company restaurants.
+Added: On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.
+Added: In total, we expect store week growth of at least 6% in 2023, including the impact of the franchise restaurants acquired.
+Added: Other sales primarily represents the net impact of amortization of third-party gift card fees and gift card breakage income.
The net impact was ($6.4) million and ($6.1) million for 2022 and 2021, respectively.
−Removed: The increase was primarily related to a favorable breakage adjustment of $4.8 million recorded in 2021.
−Removed: This adjustment primarily related to a shift in our historic redemption pattern which indicated that the percentage of gift cards sold that are not expected to be redeemed had shifted from 4.0% to 4.5%.
−Removed: As a result, we adjusted the breakage recognized for all gift cards that had not been fully amortized.
−Removed: The impact of this adjustment was offset by increased amortization of third party fees due to the increase in sales through our third party gift card program.
+Added: The change was driven primarily by favorable adjustments of $6.6 million and $4.8 million recorded in 2022 and 2021, respectively.
+Added: These adjustments related to a change in our estimate of breakage due to a shift in our historic redemption pattern which indicated that the percentage of gift cards sold that are not expected to be redeemed had increased.
+Added: This shift in redemption patterns was primarily due to the increase in sales through our third-party gift card program.
+Added: As a result, we adjusted our expected breakage assumptions on unredeemed gift cards.
+Added: The adjustments were partially offset by an increase in amortization of third-party fees due to an increase in sales through our third-party gift card program.
Franchise Royalties and Fees
−Removed: Franchise royalties and fees increased by $6.8 million or 38.0% compared to 2020 due to higher average unit volumes, driven by comparable restaurant sales increases at domestic stores.
−Removed: Comparable restaurant sales at domestic franchise stores increased 37.5% in 2021.
−Removed: We anticipate our existing franchise partners will open as many as five Texas Roadhouse restaurants in 2022.
+Added: Franchise royalties and fees increased by $1.4 million or 5.5% compared to 2021 due to comparable restaurant sales growth and new store openings partially offset by decreased royalties related to the eight franchise acquisitions in 2022.
+Added: Franchise comparable restaurant sales increased 10.3% in 2022.
+Added: In 2022, our franchise partners opened seven Texas Roadhouse international restaurants.
+Added: In 2023, we expect as many as nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise openings.
Food and Beverage Costs
−Removed: Food and beverage costs, as a percentage of restaurant and other sales, increased to 33.6% in 2021 from 32.8% in 2020 primarily due to higher commodity inflation partially offset by the benefit of a higher guest check.
−Removed: Commodity inflation was 10.0% in 2021, primarily driven by higher beef costs.
−Removed: For 2022, we currently expect commodity cost inflation of approximately 17% for the first half of the year and 12% to 14% for the year with prices locked for approximately 30% of our forecasted costs and the remainder subject to floating market prices.
+Added: Food and beverage costs, as a percentage of restaurant and other sales, increased to 34.6% in 2022 from 33.6% in 2021 primarily due to commodity inflation partially offset by the benefit of a higher guest check.
+Added: Commodity inflation was 10.8% in 2022, with higher costs across the basket.
+Added: For 2023, we currently expect commodity cost inflation of 5% to 6% for the year with prices locked for approximately 40% of our forecasted costs and the remainder subject to floating market prices.
Restaurant Labor Expenses
−Removed: Restaurant labor expense, as a percentage of restaurant and other sales, decreased to 32.7% in 2021 compared to 36.8% in 2020.
−Removed: This decrease was primarily due to an increase in average unit volumes as well as several items related to 2020 including labor inefficiencies as we converted to our hybrid operating model, relief payments and increased benefits provided to our hourly employees.
−Removed: In 2021, the benefit of a higher guest check amount also contributed to the decrease.
−Removed: These decreases were partially offset by higher wage rates primarily due to labor market pressures along with increases in state-mandated minimum and tipped wage rates, the impact of higher employee retention payroll tax credits in the prior year and an increase in workers’ compensation expense.
−Removed: In 2021, we incurred costs of $4.0 million for relief pay and enhanced benefits to our restaurant-level managers and hourly employees compared to $20.2 million in 2020.
−Removed: In 2021, we recognized employee retention payroll tax credits of $1.2 million compared to $7.0 million in 2020.
−Removed: No employee retention credits were recognized in the second half of 2021 as we no longer qualified for these credits.
−Removed: The increase in workers’ compensation expense was due to changes in our claims development history included in our quarterly actuarial reserve estimate that resulted in an unfavorable adjustment of $1.8 million in 2021.
−Removed: This compared to a favorable adjustment of $1.8 million in 2020.
−Removed: In 2022, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of approximately 7% driven by labor market pressures, increases in state-mandated minimum and tipped wages and increased investment in our people.
+Added: Restaurant labor expense, as a percentage of restaurant and other sales, increased to 33.1% in 2022 compared to 32.7% in 2021.
+Added: This increase was primarily due to wage and other labor inflation of 8.3% in 2022.
+Added: Wage and other labor inflation was primarily due to higher wage and benefit expense driven by labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people.
+Added: In addition, a higher mix of dining room sales versus to-go sales also contributed to the increase.
+Added: The increase was partially offset by the benefit of a higher guest check as well as a decrease in group insurance and workers’ compensation expense due to favorable claims experience of $7.2 million as compared to the prior year.
+Added: In 2023, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of 5% to 6% driven by labor market pressures, increases in state-mandated minimum and tipped wages and increased investment in our people.
Restaurant Rent Expense
−Removed: Restaurant rent expense, as a percentage of restaurant and other sales, decreased to 1.7% in 2021 compared to 2.3% in 2020 due to the increase in average unit volumes partially offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.
+Added: Restaurant rent expense, as a percentage of restaurant and other sales, remained flat at 1.7% in both periods presented.
+Added: The increase in average unit volume was offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.
Restaurant Other Operating Expenses
Restaurant other operating expenses, as a percentage of restaurant and other sales, decreased to 14.9% in 2022 compared to 15.1% in 2021.
−Removed: The decrease was primarily due to the increase in average unit volumes, lower to-go supplies, and lower general liability insurance expense.
−Removed: The lower supplies expense was due to the prior year period having significantly higher to-go sales due to the closure of our dining rooms.
−Removed: The decrease in general liability insurance expense was due to changes in our claims development history included in our quarterly actuarial reserve estimate that resulted in favorable adjustments totaling $3.9 million in 2021 compared to unfavorable adjustments totaling $3.1 million in 2020.
−Removed: In addition, due to the significant increase in our average unit volumes, expenses that are largely fixed, including utilities, property taxes and other outside services decreased as a percentage of restaurant and other sales.
+Added: The decrease was primarily due to the increase in average unit volume and lower supplies and bonus expense partially offset by higher credit card charges and repair and maintenance costs.
Restaurant Pre-opening Expenses
−Removed: Pre-opening expenses increased to $24.3 million in 2021 from $20.1 million in 2020.
−Removed: The increase was primarily due to the timing and number of restaurant openings as well as a slight increase in average pre-opening expenses incurred.
−Removed: Pre-opening costs will typically fluctuate from period to period based on the specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings and the number and timing of restaurant managers hired.
−Removed: Depreciation and Amortization Expenses ("D&A")
−Removed: D&A, as a percentage of revenue, decreased to 3.7% in 2021 compared to 4.9% in 2020.
−Removed: The decrease was primarily due to an increase in average unit volumes partially offset by higher depreciation at newer restaurants.
+Added: Pre-opening expenses were $21.9 million in 2022 compared to $24.3 million in 2021.
+Added: Pre-opening costs will fluctuate from period to period based on the specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings and the number and timing of restaurant managers hired.
+Added: Depreciation and Amortization Expenses
+Added: Depreciation and amortization expenses, as a percentage of revenue, decreased to 3.4% in 2022 compared to 3.7% in 2021.
+Added: The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation at new restaurants and increased amortization of intangible assets generated from franchise restaurant acquisitions.
Impairment and Closure Costs, Net
−Removed: Impairment and closure costs, net was $0.7 million and $2.3 million in 2021 and 2020, respectively.
−Removed: In 2021, impairment and closure costs, net included the impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both of which have relocated or are scheduled to be relocated.
−Removed: In 2020, impairment and closure costs, net included $1.2 million related to the impairment of the fixed assets and operating lease right-of-use assets at four restaurants, all of which were relocated.
−Removed: In addition, we recorded goodwill impairment of $1.1 million related to two restaurants.
−Removed: General and Administrative Expenses ("G&A")
−Removed: G&A, as a percentage of total revenue, decreased to 4.5% in 2021 compared to 5.0% in 2020.
−Removed: The decrease was primarily due to the increase in average unit volumes partially offset by higher incentive and performance-based compensation costs, the prior year favorable impact of the sale of a legal claim for $3.0 million and higher managing partner conference costs.
−Removed: In 2021, we incurred costs of $3.0 million for our annual managing partner conference which was not held in 2020.
−Removed: As a result of the pandemic, our executive and leadership teams voluntarily agreed to reductions of salary and bonus for a portion of our 2020 fiscal year.
−Removed: Also, each non-employee member of our Board of Directors volunteered to forgo their director and committee fees and any cash retainers for a portion of our 2020 fiscal year.
−Removed: We are currently subject to various claims and contingencies that arise from time to time in the ordinary course of business, including those related to litigation, business transactions, employee-related matters and taxes, among others.
−Removed: See note 13 to the consolidated financial statements for further discussion of these matters.
+Added: Impairment and closure costs, net were $1.6 million and $0.7 million in 2022 and 2021, respectively.
+Added: In 2022, impairment and closure costs, net included $1.7 million related to the impairment of land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing closure costs.
+Added: This was partially offset by a $0.7 million gain on the sale of land and building that was previously classified as assets held for sale.
+Added: In 2021, impairment and closure costs, net included the impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both of which have relocated.
+Added: General and Administrative Expenses
+Added: General and administrative expenses, as a percentage of total revenue, decreased to 4.3% in 2022 compared to 4.5% in 2021.
+Added: The decrease was primarily driven by the increase in average unit volume and lower legal settlement expense partially offset by increased managing partner conference expense of $2.5 million.
Interest Expense, Net
−Removed: Interest expense was $3.7 million compared to $4.1 million in 2020.
−Removed: The decrease in interest expense was primarily driven by lower interest rates and the repayment of our incremental revolving credit facility partially offset by reduced earnings on our cash and cash equivalents.
−Removed: Our effective tax rate increased to 13.5% compared to an effective tax rate benefit of 81.4% in 2020.
−Removed: The increase was primarily due to the significant increase in pre-tax income.
−Removed: In 2020, our FICA tip and Work opportunity tax credits exceeded our federal tax liability which resulted in a tax rate benefit.
−Removed: For 2022, we expect our effective tax rate to be approximately 15%, excluding the impact of any legislative changes enacted.
+Added: Interest expense was $0.1 million in 2022 compared to $3.7 million in 2021.
+Added: The decrease was primarily driven by increased earnings on our cash and cash equivalents and decreased borrowings on our amended revolving credit facility.
+Added: Our effective tax rate increased to 13.6% in 2022 compared to 13.5% in 2021.
+Added: The increase was primarily due to lower excess tax benefits related to our share-based compensation program partially offset by an increase in the FICA tip tax credit.
+Added: For 2023, we expect our effective tax rate to be approximately 14% based on forecasted operating results, excluding the impact of any legislative changes enacted.
Segment Information
7 unchanged sentences
Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives.
−Removed: Restaurant margin is used by our chief operating decision maker (“CODM”) to evaluate restaurant-level operating efficiency and performance.
+Added: Restaurant margin is used by our chief operating decision maker ( "CODM"
+Added: ) to evaluate restaurant-level operating efficiency and performance.
A reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.
The following table presents a summary of restaurant margin by segment (in thousands):
−Removed: Fiscal Year Ended
+Added: 52 Weeks Ended
+Added: December 27, 2022
+Added: December 28, 2021
Texas Roadhouse
−Removed: The increase in Texas Roadhouse and Bubba’s 33 restaurant margin is driven by the increase in restaurant sales partially offset by commodity inflation.
−Removed: The increase in restaurant sales for 2021 was primarily attributable to an increase in average unit volumes, driven by an increase in comparable restaurant sales along with an increase in store weeks.
−Removed: The increase in comparable restaurant sales was driven by the re-opening of our dining rooms, the continued easing of dining room capacity and seating restrictions throughout 2021 and continued strong to-go sales.
−Removed: In addition, restaurant margin at Bubba’s 33 was negatively impacted in 2020 by the impact of increased to-go sales resulting in decreased alcoholic beverage sales.
+Added: In our Texas Roadhouse reportable segment, restaurant margin dollars increased $48.2 million or 8.7% in 2022.
+Added: The increase was primarily due to higher sales which were partially offset by commodity and wage and other labor inflation.
+Added: In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 16.0% in 2022 from 16.9% in 2021.
+Added: Restaurant margin was negatively impacted by commodity and wage and other labor inflation which was partially offset by the benefit of an increase in comparable restaurant sales.
+Added: In our Bubba’s 33 reportable segment, restaurant margin dollars decreased $1.9 million or 6.7% in 2022.
+Added: In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 12.7% in 2022 from 16.6% in 2021.
+Added: These decreases were primarily driven by commodity and wage and other labor inflation which was partially offset by the benefit of an increase in comparable restaurant sales.
Liquidity and Capital Resources
3 unchanged sentences
Net cash used in investing activities
−Removed: Net cash (used in) provided by financing activities
−Removed: Net (decrease) increase in cash and cash equivalents
+Added: Net cash used in financing activities
+Added: Net decrease in cash and cash equivalents
Net cash provided by operating activities was $511.7 million in 2022 compared to $468.8 million in 2021.
−Removed: This increase was primarily due to an increase in net income.
−Removed: The increase was partially offset by our working capital being negatively impacted by the remittance of a portion of our deferred payroll tax liability of $24.3 million related to the CARES Act.
+Added: This increase was primarily due to an increase in net income, an increase in non-cash items such as depreciation and amortization and a favorable increase in working capital.
+Added: The favorable increase in working capital was partially offset by the final remittance of our deferred payroll tax liability of $23.0 million related to the Coronavirus Aid, Relief, and Economic Security Act.
Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital.
2 unchanged sentences
Net cash used in investing activities was $263.7 million in 2022 compared to $195.1 million in 2021.
−Removed: The increase was due to an increase in capital expenditures, primarily driven by an increase in new company restaurants and an increase in refurbishments of existing restaurants.
−Removed: This was due to the delay in our development schedule in 2020 due to the pandemic.
−Removed: This increase was partially offset by fewer expenditures related to relocation sites.
+Added: The increase was due to the acquisition of eight franchise restaurants for a net purchase price of $33.1 million as well as an increase in capital expenditures, primarily driven by an increase in new company restaurant construction and refurbishments and relocations of existing restaurants.
We require capital principally for the development of new company restaurants, the refurbishment or relocation of existing restaurants and the acquisition of franchise restaurants, if any.
8 unchanged sentences
Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the timing of those openings and the restaurant prototype developed in a given fiscal year.
−Removed: These requirements will include costs directly related to opening new restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.
−Removed: In 2022, we expect our capital expenditures to be approximately $230 million as we currently plan to open approximately 25 Texas Roadhouse and Bubba’s 33 company restaurants.
−Removed: We also expect to have as many as six relocations in 2022.
−Removed: In addition, on the first day of our 2022 fiscal year, we completed the acquisition of seven franchise restaurants for an aggregate purchase price of approximately $27 million.
+Added: These requirements will include costs directly related to new restaurant construction costs or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.
+Added: In 2023, we expect our capital expenditures to be approximately $265 million as we currently plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants.
+Added: We also expect to have as many as four relocations in 2023.
+Added: In addition, on the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.
We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by operating activities, and if needed, funds available under our amended credit facility.
−Removed: Net cash used in financing activities was $301.2 million in 2021 compared to net cash provided by financing activities of $185.9 million in 2020.
−Removed: The decrease is primarily due to repayments on our amended revolving credit facility, an increase in dividends paid due to the reinstatement of our quarterly dividend payment and an increase in share repurchases.
−Removed: In 2021, we repaid $140.0 million that was previously outstanding on our amended revolving credit facility.
−Removed: 2020, we increased our borrowings by $240.0 million as a precautionary measure in order to bolster our cash position and enhance financial flexibility in response to the pandemic.
−Removed: On April 28, 2021, our Board of Directors reinstated the payment of a quarterly cash dividend of $0.40 per share of common stock which was distributed on June 4, 2021 .
−Removed: This was the first dividend since the Board of Directors voted to suspend the payment of quarterly cash dividends at the onset of the pandemic.
−Removed: In 2021 and 2020, the Company paid $83.7 million and $25.0 million, respectively, in dividends to shareholders.
−Removed: On February 17, 2022, our Board of Directors declared a quarterly cash dividend of $0.46 per share of common stock.
−Removed: On May 31, 2019, our Board of Directors approved a stock repurchase program under which we may repurchase up to $250.0 million of our common stock.
+Added: Net cash used in financing activities was $409.8 million in 2022 compared to $301.2 million in 2021.
+Added: The increase is primarily due to the significant increases in share repurchases and our dividend payment.
+Added: These increases were partially offset by a decrease in repayments made on our amended revolving credit facility.
+Added: On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.
This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 31, 2019.
All repurchases to date under our stock repurchase programs have been made through open market transactions.
−Removed: The timing and the amount of any repurchases will be determined by management under parameters established by the Board of Directors, based on an evaluation of our stock price, market conditions and other corporate considerations.
−Removed: On August 2, 2021, the Company resumed the share repurchase program that was suspended in 2020 at the onset of the pandemic.
−Removed: During 2021 and 2020, we paid $51.6 million and $12.6 million to repurchase 584,932 shares and 252,409 shares of our common stock, respectively.
−Removed: As of December 28, 2021, $96.1 million remains authorized for stock repurchases.
−Removed: We paid distributions of $8.2 million and $3.4 million in 2021 and 2020, respectively, to noncontrolling interest holders of our 20 majority-owned company restaurants.
+Added: The timing and amount of any repurchases will be determined by management under parameters established by the Board, based on an evaluation of our stock price, market conditions and other corporate considerations.
+Added: In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock.
+Added: This includes $133.1 million repurchased under our current authorized stock repurchase program and $79.7 million repurchased under our prior authorization.
+Added: In 2021, we paid $51.6 million to repurchase 584,932 shares of our common stock.
+Added: As of December 27, 2022, $166.9 million remained under our authorized stock repurchase program.
+Added: On February 17, 2022, our Board authorized the payment of a quarterly dividend of $0.46 per share of common stock.
+Added: The payment of dividends totaled $124.1 million and $83.7 million in 2022 and 2021, respectively.
+Added: On February 14, 2023, our Board declared a quarterly cash dividend of $0.55 per share of common stock.
+Added: We paid distributions of $7.8 million and $8.2 million in 2022 and 2021, respectively, to equity holders of our majority-owned company restaurants.
On May 4, 2021, we entered into an agreement to amend our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A.
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The amendment also extended the maturity date to May 1, 2026.
−Removed: Prior to the amendment, our original revolving credit facility had a borrowing capacity of up to $200.0 million with the option to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate of lenders.
−Removed: On May 11, 2020, we amended the original revolving credit facility to provide for an incremental revolving credit facility of up to $82.5 million.
−Removed: This amount reduced the additional $200.0 million that was available under the original revolving credit facility.
−Removed: The terms of the amended revolving credit facility require us to pay interest on outstanding borrowings at LIBOR plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the amended revolving credit facility, in each case depending on our leverage ratio.
+Added: The terms of the amendment require us to pay interest on outstanding borrowings at the London Interbank Offered Rate ("LIBOR") plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the amended revolving credit facility, in each case depending on our leverage ratio.
The agreement also provides an Alternate Base Rate that may be substituted for LIBOR.
As of December 27, 2022, we had $50.0 million outstanding on the amended revolving credit facility and $233.5 million of availability, net of $16.5 million of outstanding letters of credit.
−Removed: This outstanding amount is included as long-term debt on our consolidated balance sheet.
−Removed: As of December 29, 2020, we had $190.0 million outstanding on the amended revolving credit facility which is included as long-term debt on our consolidated balance sheet.
−Removed: In addition, we had $50.0 million outstanding on the incremental revolving credit facility which is included as current maturities of long-term debt on our consolidated balance sheet.
−Removed: The weighted-average interest rate for the amended revolving credit facility as of December 28, 2021 and December 29, 2020 was 0.98% and 1.98%, respectively.
+Added: As of December 28, 2021, we had $100.0 million outstanding on the amended revolving credit facility and $189.1 million of availability, net of $10.9 million of outstanding letters of credit.
+Added: These outstanding amounts are included as long-term debt on our consolidated balance sheets.
+Added: The interest rate for the $50.0 million outstanding as of December 27, 2022 was 5.21%.
+Added: The interest rate for the $100.0 million outstanding as of December 28, 2021 was 0.98%.
The lenders’ obligation to extend credit pursuant to the amended revolving credit facility depends on us maintaining certain financial covenants.
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Obligations under finance leases
−Removed: Operating lease obligations
+Added: Real estate operating lease obligations
Capital obligations
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We assumed a constant interest rate until maturity on our financing leases.
−Removed: (2) Unrecognized tax benefits under ASC 740, Income Taxes, are not significant and excluded from this amount.
+Added: (2) Unrecognized tax benefits under Accounting Standards Codification 740, Income Taxes, are not significant and excluded from this amount.
We have no material minimum purchase commitments with our vendors that extend beyond a year.
−Removed: See notes 5 and 8 to the consolidated financial statements for details of contractual obligations.
−Removed: As of December 28, 2021 and December 29, 2020, we were contingently liable for $12.2 million and $13.0 million, respectively, for seven leases, listed in the table below.
+Added: Refer to Notes 5, 8 and 13 to the consolidated financial statements for details of contractual obligations.
+Added: As of December 27, 2022 and December 28, 2021, we were contingently liable for $11.3 million and $12.2 million, respectively, for seven lease guarantees.
These amounts represent the maximum potential liability of future payments under the guarantees.
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No liabilities have been recorded as of December 27, 2022 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.
−Removed: Current Lease
−Removed: Assignment Date
−Removed: Term Expiration
−Removed: Everett, Massachusetts (1)
−Removed: September 2002
−Removed: February 2023
−Removed: Longmont, Colorado (1)
−Removed: Montgomeryville, Pennsylvania (1)
−Removed: Fargo, North Dakota (1)
−Removed: February 2006
−Removed: Logan, Utah (1)
−Removed: Irving, Texas (2)
−Removed: December 2013
−Removed: December 2024
−Removed: Louisville, Kentucky (2)(3)
−Removed: December 2013
−Removed: November 2023
−Removed: (1) Real estate lease agreements for restaurant locations which we entered into before granting franchise rights to those restaurants.
−Removed: We have subsequently assigned the leases to the franchisees, but remain contingently liable, under the terms of the lease, if the franchisee defaults.
−Removed: (2) Leases associated with non-Texas Roadhouse restaurants which were sold.
−Removed: The leases were assigned to the acquirer, but we remain contingently liable under the terms of the lease if the acquirer defaults.
−Removed: (3) We may be released from liability after the initial lease term expiration contingent upon certain conditions being met by the acquirer.
Critical Accounting Policies and Estimates
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Our significant accounting policies are described in Note 2 to the accompanying consolidated financial statements.
−Removed: Critical accounting policies are those that we
−Removed: believe are most important to portraying our financial condition and results of operations and also require the greatest amount of subjective or complex judgments by management.
−Removed: Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions.
+Added: Critical accounting policies are those that we believe are most important to portraying our financial condition and results of operations and also require the greatest amount of subjective or complex judgments by management.
+Added: Judgments or uncertainties regarding the application of these policies may result in significantly different amounts being reported under different conditions or using different assumptions.
We consider the following policies to be the most critical in understanding the judgments that are involved in preparing the consolidated financial statements.
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Under our policies, trailing 12- month cash flow results under a predetermined amount at the individual restaurant level signals a potential impairment.
−Removed: In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which can be a period of over 20 years.
+Added: In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which is usually a period of 25 years.
In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations for future sales growth.
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If these assumptions change in the future, we may be required to record impairment charges for these assets.
−Removed: In 2021, as a result of our quarterly impairment analysis, we recorded a total charge of $0.7 million related to the impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both of which have relocated or are scheduled to be relocated.
−Removed: See note 16 in the consolidated financial statements for further discussion regarding closures and impairments recorded in 2021, 2020 and 2019.
+Added: In 2022, we recorded impairment and closure costs, net of $1.6 million.
+Added: This included $1.7 million related to the impairment of land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing closure costs.
+Added: This was partially offset by a gain of $0.7 million associated with the sale of land and building that was previously classified as assets held for sale.
+Added: Refer to Note 17 in the consolidated financial statements for further discussion regarding closures and impairments recorded in 2022, 2021 and 2020.
Goodwill is tested annually for impairment and is tested more frequently if events and circumstances indicate that the asset might be impaired.
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A reporting unit is defined as an operating segment, or one level below an operating segment.
−Removed: An entity may first assess qualitative factors in order to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
+Added: An entity may first assess qualitative factors
+Added: in order to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.
The entity may also elect to bypass the qualitative assessment and determine the fair value of the reporting unit and compare it to its carrying amount.
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No other reporting units had goodwill balances.
−Removed: Historically, we designated our operating segment and reporting unit to be at the same level which we defined to be the individual restaurant.
−Removed: In 2021, due to a change in our management reporting structure, we changed the designation of our operating segment and reporting unit to be at the concept level.
−Removed: As a result of this change, we performed the goodwill impairment analysis at both the individual restaurant and concept level to substantiate that our goodwill was not impaired under either reporting unit definition.
−Removed: In performing the qualitative assessment, we reviewed factors such as results of prior impairment tests, impacts of the pandemic, macroeconomic conditions, industry and market considerations, cost factors of materials, labor, and other
−Removed: items, financial performance, operational stability, competitive environment, and share price performance.
−Removed: Based on the financial performance of the Texas Roadhouse concept, as well as the improved operating environment in 2021, no indicators of impairment were identified.
+Added: In 2021, due to a change in our management reporting structure, we changed the designation of our operating segment and reporting unit to be at the concept level from the restaurant level.
+Added: As a result of this change, in 2021, we performed the goodwill impairment analysis at both the individual restaurant and concept level to substantiate that our goodwill was not impaired under either reporting unit definition.
+Added: In 2022, we performed the goodwill impairment analysis at the concept level.
+Added: In performing the qualitative assessment, we reviewed factors such as macroeconomic conditions, industry and market considerations, cost factors, changes in management or key personnel, sustained decreases in share price and the overall financial performance of the Company’s reporting units at the concept level.
+Added: As a result of the qualitative assessment, no indicators of impairment were identified, and no additional indicators of impairment were identified through the end of the fourth quarter that would require additional testing.
Changes in circumstances existing at the measurement date or at other times in the future could result in an impairment loss.
−Removed: See note 16 in the consolidated financial statements for further discussion regarding closures and impairments recorded in 2021, 2020 and 2019.
+Added: Refer to Note 17 in the consolidated financial statements for further discussion regarding closures and impairments recorded, if any.
Effects of Inflation
−Removed: We are currently operating in a period of high inflation, led by commodity cost inflation which primarily relates to beef.
−Removed: This is due to increased costs incurred by our vendors related to high labor, transportation, packaging, and raw materials costs.
−Removed: Some of the impacts of the inflation have been offset by menu price increases and other adjustments made during the year.
+Added: We are currently operating in a period of high inflation, led primarily by commodity cost and wage and other labor inflation.
+Added: Commodity cost inflation is due to increased costs incurred by our vendors related to increased labor, transportation, packaging, and raw materials costs.
+Added: Wage and other labor inflation is driven by higher wage and benefit expense due to by labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people.
+Added: Some of the impacts of inflation have been offset by menu price increases and other adjustments made during the year.
Whether we are able and/or choose to continue to offset the effects of inflation will determine to what extent, if any, inflation affects our restaurant profitability in future periods.
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.