Texas Roadhouse, Inc. 10-K

ITEM 9A—CONTROLS AND PROCEDURES Evaluation of disclosure controls and procedures We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to, and as defined in, Rules 13a-15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of our management, including the Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of December 27, 2022. Changes in internal control There were no significant changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 27, 2022 that materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting Under Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to assess the effectiveness of the Company’s internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company’s internal control over financial reporting is effective. Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a- 15(f), internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Under the supervision and with the participation of our management, including our CEO and CFO, we assessed the effectiveness of the Company’s internal control over financial reporting as of the end of the period covered by this report. In this assessment, the Company applied criteria based on the "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission. These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The Company’s assessment included documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting. Based upon this evaluation, our management concluded that our internal control over financial reporting was effective as of December 27, 2022. KPMG LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements included in the Annual Report on Form 10-K, has also audited the effectiveness of the Company’s internal control over financial reporting as of December 27, 2022 as stated in their report at F-3. ITEM 9B—OTHER INFORMATION None. ITEM 9C—DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. PART III ITEM 10—DIRECTORS, EXECUTIV E OFFICERS AND CORPORATE GOVERNANCE Information regarding our directors is incorporated herein by reference to the information set forth under "Election of Directors" in our Definitive Proxy Statement to be dated on or about March 31, 2023. 51 Table of Contents Information regarding our executive officers has been included in Part I of this Annual Report under the caption "Executive Officers of the Company." Information regarding our corporate governance is incorporated herein by reference to the information set forth in our Definitive Proxy Statement to be dated on or about March 31, 2023. ITEM 11—EXECUTIVE COMPENSATION Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023. ITEM 12—SECURITY OWNERSHI P OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023. Equity Compensation Plan Information As of December 27, 2022, shares of common stock authorized for issuance under our equity compensation plans are summarized in the following table. Refer to Note 14 to the Consolidated Financial Statements for a description of the plans. ​ ​ ​ ​ ​ ​ ​ Shares to Be Shares ​ ​ Issued Upon ​ Available for Plan Category ​ Vest Date (1) ​ Future Grants Plans approved by stockholders 524,439 ​ 6,598,721 ​ Plans not approved by stockholders — ​ — ​ Total 524,439 ​ 6,598,721 ​ (1) Total number of shares consist of 494,839 restricted stock units and 29,600 performance stock units. Shares in this column are excluded from the Shares Available for Future Grants column. No stock options were outstanding as of December 27, 2022. ITEM 13—CERTAIN RELATIONSHIP S AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023. ITEM 14—PRINCIPAL ACCOUNTANT FEES AND SERVICES Incorporated by reference from our Definitive Proxy Statement to be dated on or about March 31, 2023. ​ 52 Table of Contents PART IV ITEM 15—EXHIBITS, FINANCIA L STATEMENT SCHEDULES 1. Consolidated Financial Statements ​ Description ​ Page Number in Report Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185 ) ​ F-1 Consolidated Balance Sheets as of December 27, 2022 and December 28, 2021 ​ F-5 Consolidated Statements of Income and Comprehensive Income for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 ​ F-6 Consolidated Statements of Stockholders’ Equity for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 ​ F-7 Consolidated Statements of Cash Flows for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 ​ F-8 Notes to Consolidated Financial Statements ​ F-9 2. Financial Statement Schedules Omitted due to inapplicability or because required information is shown in our Consolidated Financial Statements or Notes thereto. 3. Exhibits ​ Exhibit No. ​ Description 3.1 ​ Amended and Restated Certificate of Incorporation of Registrant (incorporated by reference to Exhibit 3.1 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 28, 2016) (File No. 000- 50972) 3.2 ​ Bylaws of Registrant (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 of Registrant (File No. 333-115259)) 4.1 ​ Description of Securities (incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 000-50972)) 10.1* ​ Form of Indemnification Agreement for Director and Executive Officer 10.2 ​ Form of Limited Partnership Agreement and Operating Agreement for certain company-managed Texas Roadhouse restaurants, including schedule of the owners of such restaurants and the aggregate interests held by directors, executive officers and 5% stockholders who are parties to such an agreement (incorporated by reference to Exhibit 10.10 to the Registration Statement on Form S-1 of Registrant (File No. 333-115259)) 10.3 ​ Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse restaurant franchise, including schedule of directors, executive officers and 5% stockholders which have entered into either agreement (incorporated by reference to Exhibit 10.14 to the Registration Statement on Form S-1 of Registrant (File No. 333-115259)) 10.4 ​ Schedule of the owners of company-managed Texas Roadhouse restaurants and the aggregate interests held by directors, executive officers and 5% stockholders who are parties to Limited Partnership Agreements and Operating Agreements as of December 27, 2022 the form of which is set forth in Exhibit 10.2 of this Form 10-K 10.5 ​ Schedule of the directors, executive officers and 5% stockholders which have entered into Franchise Agreements or Preliminary Agreements for a Texas Roadhouse Franchise as of December 27, 2022 the form of which is set forth in Exhibit 10.3 of this Form 10-K 10.6* ​ Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference from Appendix A to the Texas Roadhouse, Inc. Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 5, 2013 (File No. 000-50972)) 10.7* ​ Form of Restricted Stock Unit Award under the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2013 (File No. 000-50972)) 53 Table of Contents ​ Exhibit No. ​ Description 10.8* ​ Texas Roadhouse, Inc. Cash Bonus Plan for cash incentive awards granted pursuant to the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 25, 2013 (File No. 000-50972)) 10.9* ​ Form of Performance Stock Unit Award Agreement under the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2015 (File No. 000-50972)) 10.10* ​ Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan for officers (incorporated by reference to Exhibit 10.40 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972)) 10.11* ​ Amended and Restated Form of Restricted Stock Unit Award Agreement under the Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan for non-officers (incorporated by reference to Exhibit 10.41 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972)) 10.12* ​ Second Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., as amended December 19, 2007 and December 31, 2008 (incorporated by reference to Exhibit 10.42 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972)) 10.13* ​ Third Amended and Restated Deferred Compensation Plan of Texas Roadhouse Management Corp., effective January 1, 2010 (incorporated by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K for the year ended December 30, 2014 (File No. 000-50972)) 10.14* ​ Form of Nonqualified Stock Option Agreement under Texas Roadhouse, Inc. 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2015 (File No. 000-50972)) 10.15 ​ Master Lease Agreement dated October 26, 2018 between Paragon Centre Holdings, LLC and Texas Roadhouse Holdings LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 25, 2018 (File No. 000-50972)) 10.16 ​ Amended and Restated Credit Agreement dated as of August 7, 2017, by and among Texas Roadhouse Inc., and the lenders named therein and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 7, 2017 (File No. 000-50972)) 10.17 ​ Assignment and Assumption Agreement between Texas Roadhouse Holdings LLC and Texas Roadhouse, Inc. dated October 26, 2018 (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 000-50972)) 10.18 ​ First Amendment to Paragon Centre Master Lease Agreement between Paragon Centre Holdings, LLC and Texas Roadhouse, Inc. dated December 13, 2019 (incorporated by reference to Exhibit 10.28 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 000-50972)) 10.19 ​ First Amendment to Amended and Restated Credit Agreement, dated as of May 11, 2020, by and among Texas Roadhouse, Inc., and the lenders named therein and JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on 8-K dated May 11, 2020 (File No. 000-50972)) 10.20* ​ Employment Agreement between Registrant and Gerald L. Morgan entered into as of December 17, 2020 (incorporated by reference to Exhibit 10.33 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No. 000-50972)) 10.21* ​ Employment Agreement between Registrant and S. Chris Jacobsen entered into as of December 30, 2020 (incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No. 000-50972)) 10.22* ​ Employment Agreement between Registrant and Tonya Robinson entered into as of December 30, 2020 (incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K for the year ended December 29, 2020 (File No. 000-50972)) 10.23* ​ Employment Agreement between Registrant and Christopher C. Colson entered into as of March 31, 2021 (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q for the period ended March 30, 2021 (File No. 000- 50972)) 54 Table of Contents ​ Exhibit No. ​ Description 10.24* ​ First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald L. Morgan dated March 31, 2021, with a retroactive effective date of March 18, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated March 31, 2021 (File No. 000-50972)) 10.25* ​ Employment Agreement between Registrant and Regina A. Tobin entered into as of June 15, 2021 with an effective date of June 30, 2021 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2021 (File No. 000- 50972)) 10.26* ​ Employment Agreement between Registrant and Hernan E. Mujica entered into as of June 15, 2021 with an effective date of June 30, 2021 (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q for the period ended June 29, 2021 (File No. 000- 50972)) 10.27 ​ Second Amendment to Amended and Restated Credit Agreement dated as of May 4, 2021 by and among Texas Roadhouse, Inc. and the lenders named therein and JPMorgan Chase Bank, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated May 4, 2021 (File No. 000-50972) 10.28* ​ Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan (incorporated by reference from Appendix A to the Texas Roadhouse, Inc. Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 2, 2021 (File No. 000-50972)) 10.29* ​ Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Performance Stock Unit Award Agreement (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No. 000-50972)) 10.30* ​ Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Officers) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No. 000-50972)) 10.31* ​ Form of Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan Restricted Stock Unit Award Agreement (Member of Board of Directors) (incorporated by reference to Exhibit 10.1 of Registrant's Current Report on Form 8-K dated June 15, 2021 (File No. 000-50972)) 10.32* ​ Second Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Gerald L. Morgan dated January 9, 2023 (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972)) 10.33* ​ First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Regina A. Tobin dated January 9, 2023 (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972)) 10.34* ​ First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Hernan E. Mujica dated January 9, 2023 (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972)) 10.35* ​ First Amendment to Employment Agreement between Texas Roadhouse Management Corp. and Christopher C. Colson dated January 9, 2023 (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K dated January 6, 2023 (File No. 000-50972)) 10.36* ​ Separation Agreement and Release of Claims dated January 5, 2023 by and between Tonya R. Robinson and Texas Roadhouse Management Corp. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K dated January 4, 2023 (File No. 000-50972)) 21.1 ​ List of Subsidiaries 23.1 ​ Consent of KPMG LLP, Independent Registered Public Accounting Firm 31.1 ​ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 ​ Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 ​ Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 ​ Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 55 Table of Contents ​ Exhibit No. ​ Description 101 ​ The following financial statements from the Texas Roadhouse, Inc. Annual Report on Form 10-K for the year ended December 27, 2022, filed February 24, 2023, formatted in inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements. 104 ​ Cover page, formatted in iXBRL and contained in Exhibit 101. * Management contract or compensatory plan or arrangement required to be filed as an exhibit to Form 10-K. 56 Table of Contents ITEM 16. FORM 10-K SUMMARY Not applicable. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ​ TEXAS ROADHOUSE, INC. ​ ​ ​ By: /s/ Gerald L. Morgan ​ ​ ​ ​ Chief Executive Officer, Director ​ Date: February 24, 2023 ​ Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date ​ ​ ​ ​ ​ /s/ Gerald L. Morgan W. Gerald L. Morgan ​ Chief Executive Officer, Director (Principal Executive Officer) ​ February 24, 2023 ​ ​ ​ ​ ​ /s/ Keith V. Humpich Keith V. Humpich ​ Interim Chief Financial Officer (Principal Financial Officer) (Principal Accounting Officer) ​ February 24, 2023 ​ ​ ​ ​ ​ /s/ G regory N. Moore ​ Chairman of the Board, Director ​ February 24, 2023 Gregory N. Moore ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Michael A. Crawford Michael A. Crawford ​ Director ​ February 24, 2023 ​ ​ ​ ​ ​ /s/ Donna E. Epps ​ Director ​ February 24, 2023 Donna E. Epps ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Curtis A. Warfield ​ Director ​ February 24, 2023 Curtis A. Warfield ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Kathleen M. Widmer Kathleen M. Widmer ​ Director ​ February 24, 2023 ​ ​ ​ ​ ​ /s/ James R. Zarley James R. Zarley ​ Director ​ February 24, 2023 ​ ​ ​ ​ ​ ​ ​ ​ 57 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Texas Roadhouse, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Texas Roadhouse, Inc. and subsidiaries (the Company) as of December 27, 2022 and December 28, 2021, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 27, 2022, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 27, 2022 and December 28, 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 27, 2022, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 27, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Potential indicators of impairment of long-lived assets As discussed in Notes 2 and 17 to the consolidated financial statements, the Company assesses long-lived assets, primarily related to restaurants held and used in the business, including property and equipment and right-of-use assets, for potential impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant, or asset group, may not be recoverable. Trailing 12-month cash flows under predetermined amounts at the individual restaurant level are the Company’s primary indicator that the carrying amount of a restaurant may not be recoverable. Property and equipment, net of accumulated depreciation, and the operating lease right-of-use asset, net as of December 27, 2022 were $1,270.3 million and $630.3 million, respectively. F-1 Table of Contents We identified the assessment of the Company’s determination of potential indicators of impairment of long-lived assets as a critical audit matter. Subjective auditor judgement was required to evaluate the events or circumstances indicating the carrying amount of an asset group may not be recoverable, including the determination of the cash flow thresholds and the utilization of the trailing 12-month cash flows to identify a potential impairment trigger. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s long-lived asset impairment process, including controls relating to determination and identification of potential indicators of impairment. We evaluated the Company’s methodology of using trailing 12-month cash flow results under predetermined thresholds at the individual restaurant level as a potential indicator of impairment. Specifically, we evaluated the Company’s assessment of the factors considered, including the cash flows at the individual restaurant level and the cash flow thresholds used in the Company’s analysis. We tested that those restaurants with trailing 12-month cash flows were evaluated for potential impairment triggers and we compared the trailing 12-month cash flows to historical financial data. We also assessed other events and circumstances that could have been indicative of a potential impairment trigger by reviewing management’s development reports and related meeting minutes and the board of directors meeting minutes. /s/ KPMG LLP We have served as the Company’s auditor since 1998. Louisville, Kentucky February 24, 2023 ​ ​ F-2 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Texas Roadhouse, Inc.: Opinion on Internal Control Over Financial Reporting We have audited Texas Roadhouse, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 27, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 27, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 27, 2022 and December 28, 2021, the related consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 27, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2023 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become F-3 Table of Contents inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Louisville, Kentucky February 24, 2023 ​ ​ ​ F-4 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Consolidated Balance Sheet s (in thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 27, 2022 ​ December 28, 2021 Assets ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ $ 173,861 ​ $ 335,645 ​ Receivables, net of allowance for doubtful accounts of $ 50 at December 27, 2022 and $ 17 at December 28, 2021 ​ ​ 150,264 ​ 161,358 ​ Inventories, net ​ ​ 38,015 ​ 31,595 ​ Prepaid income taxes ​ ​ 5,097 ​ 10,701 ​ Prepaid expenses and other current assets ​ ​ 29,604 ​ 24,226 ​ Total current assets ​ ​ 396,841 ​ 563,525 ​ Property and equipment, net of accumulated depreciation of $ 968,036 at December 27, 2022 and $ 869,375 at December 28, 2021 ​ ​ 1,270,349 ​ 1,162,441 ​ Operating lease right-of-use assets, net ​ ​ ​ 630,258 ​ ​ 578,413 ​ Goodwill ​ ​ 148,732 ​ 127,001 ​ Intangible assets, net of accumulated amortization of $ 17,905 at December 27, 2022 and $ 15,092 at December 28, 2021 ​ ​ 5,607 ​ 1,520 ​ Other assets ​ ​ 73,878 ​ 79,052 ​ Total assets ​ ​ $ 2,525,665 ​ $ 2,511,952 ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Current portion of operating lease liabilities ​ ​ $ 25,490 ​ $ 21,952 ​ Accounts payable ​ ​ ​ 105,560 ​ ​ 95,234 ​ Deferred revenue-gift cards ​ ​ 335,403 ​ 300,657 ​ Accrued wages and payroll taxes ​ ​ 54,544 ​ 64,716 ​ Income taxes payable ​ ​ ​ 434 ​ ​ 85 ​ Accrued taxes and licenses ​ ​ 35,264 ​ 33,375 ​ Other accrued liabilities ​ ​ 95,315 ​ 86,125 ​ Total current liabilities ​ ​ 652,010 ​ 602,144 ​ Operating lease liabilities, net of current portion ​ ​ ​ 677,874 ​ ​ 622,892 ​ Long-term debt ​ ​ 50,000 ​ 100,000 ​ Restricted stock and other deposits ​ ​ 7,979 ​ 8,027 ​ Deferred tax liabilities, net ​ ​ 20,979 ​ 11,734 ​ Other liabilities ​ ​ 89,161 ​ 93,671 ​ Total liabilities ​ ​ 1,498,003 ​ 1,438,468 ​ Texas Roadhouse, Inc. and subsidiaries stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ Preferred stock ($ 0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding) ​ ​ — ​ — ​ Common stock ( $ 0.001 par value, 100,000,000 shares authorized, 66,973,311 and 69,382,418 shares issued and outstanding at December 27, 2022 and December 28, 2021, respectively) ​ ​ 67 ​ 69 ​ Additional paid-in-capital ​ ​ 13,139 ​ 114,504 ​ Retained earnings ​ ​ 999,432 ​ 943,551 ​ Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity ​ ​ 1,012,638 ​ 1,058,124 ​ Noncontrolling interests ​ ​ 15,024 ​ 15,360 ​ Total equity ​ ​ 1,027,662 ​ 1,073,484 ​ Total liabilities and equity ​ ​ $ 2,525,665 ​ $ 2,511,952 ​ ​ See accompanying Notes to Consolidated Financial Statements. ​ F-5 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Consolidated Statements of Income and Comprehensive Incom e (in thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ December 27, December 28, December 29, ​ 2022 ​ 2021 ​ 2020 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant and other sales ​ ​ $ 3,988,791 ​ $ 3,439,176 ​ $ 2,380,177 ​ Franchise royalties and fees ​ ​ ​ 26,128 ​ ​ 24,770 ​ ​ 17,946 ​ Total revenue ​ ​ 4,014,919 ​ 3,463,946 ​ 2,398,123 ​ Costs and expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Restaurant operating costs (excluding depreciation and amortization shown separately below): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Food and beverage ​ ​ 1,378,192 ​ 1,156,628 ​ 780,646 ​ Labor ​ ​ 1,319,959 ​ 1,123,003 ​ 875,764 ​ Rent ​ ​ 66,834 ​ 60,005 ​ 54,401 ​ Other operating ​ ​ 596,305 ​ 517,808 ​ 403,726 ​ Pre-opening ​ ​ 21,883 ​ 24,335 ​ 20,099 ​ Depreciation and amortization ​ ​ 137,237 ​ 126,761 ​ 117,877 ​ Impairment and closure, net ​ ​ 1,600 ​ 734 ​ 2,263 ​ General and administrative ​ ​ 172,712 ​ 157,480 ​ 119,503 ​ Total costs and expenses ​ ​ 3,694,722 ​ 3,166,754 ​ 2,374,279 ​ Income from operations ​ ​ 320,197 ​ 297,192 ​ 23,844 ​ Interest expense, net ​ ​ 124 ​ 3,663 ​ 4,091 ​ Equity income (loss) from investments in unconsolidated affiliates ​ ​ 1,239 ​ ( 637 ) ​ ( 500 ) ​ Income before taxes ​ ​ ​ 321,312 ​ ​ 292,892 ​ ​ 19,253 ​ Income tax expense (benefit) ​ ​ 43,715 ​ 39,578 ​ ( 15,672 ) ​ Net income including noncontrolling interests ​ ​ ​ 277,597 ​ ​ 253,314 ​ ​ 34,925 ​ Less: Net income attributable to noncontrolling interests ​ ​ 7,779 ​ 8,020 ​ 3,670 ​ Net income attributable to Texas Roadhouse, Inc. and subsidiaries ​ ​ $ 269,818 ​ $ 245,294 ​ $ 31,255 ​ Other comprehensive income, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment, net of tax of $—, ($ 36 ) and ($ 40 ), respectively ​ ​ ​ — ​ ​ 106 ​ ​ 119 ​ Total comprehensive income ​ ​ $ 269,818 ​ $ 245,400 ​ $ 31,374 ​ Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ 3.99 ​ $ 3.52 ​ $ 0.45 ​ Diluted ​ ​ $ 3.97 ​ $ 3.50 ​ $ 0.45 ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 67,643 ​ 69,709 ​ 69,438 ​ Diluted ​ ​ 67,920 ​ 70,098 ​ 69,893 ​ Cash dividends declared per share ​ ​ $ 1.84 ​ $ 1.20 ​ $ 0.36 ​ ​ See accompanying Notes to Consolidated Financial Statements. ​ F-6 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Consolidated Statements of Stockholders’ Equit y (tabular amounts in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated Total Texas ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Roadhouse, Inc. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Par ​ Paid-in- ​ Retained ​ Comprehensive ​ and ​ Noncontrolling ​ ​ ​ ​ ​ Shares ​ Value ​ Capital ​ Earnings ​ Loss ​ Subsidiaries ​ Interests ​ Total Balance, December 31, 2019 69,400,252 ​ $ 69 ​ $ 140,501 ​ $ 775,649 ​ $ ( 225 ) ​ $ 915,994 ​ $ 15,175 ​ $ 931,169 ​ Net income — ​ — ​ — ​ 31,255 ​ — ​ 31,255 ​ 3,670 ​ 34,925 ​ Other comprehensive income, net of tax — ​ — ​ — ​ — ​ 119 ​ 119 ​ — ​ 119 ​ Noncontrolling interest contribution ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 133 ​ ​ 133 ​ Distributions to noncontrolling interest holders — ​ — ​ — ​ — ​ — ​ — ​ ( 3,432 ) ​ ( 3,432 ) ​ Dividends declared ($ 0.36 per share) — ​ — ​ — ​ ( 24,989 ) ​ — ​ ( 24,989 ) ​ — ​ ( 24,989 ) ​ Shares issued under share-based compensation plans including tax effects 615,181 ​ 1 ​ ( 1 ) ​ — ​ — ​ — ​ — ​ — ​ Indirect repurchase of shares for minimum tax withholdings ( 201,163 ) ​ — ​ ( 11,684 ) ​ — ​ — ​ ( 11,684 ) ​ — ​ ( 11,684 ) ​ Repurchase of shares of common stock ​ ( 252,409 ) ​ ​ — ​ ​ ( 12,621 ) ​ ​ — ​ ​ — ​ ​ ( 12,621 ) ​ ​ — ​ ​ ( 12,621 ) ​ Share-based compensation — ​ — ​ 29,431 ​ — ​ — ​ 29,431 ​ — ​ 29,431 ​ Balance, December 29, 2020 69,561,861 ​ $ 70 ​ $ 145,626 ​ $ 781,915 ​ $ ( 106 ) ​ $ 927,505 ​ $ 15,546 ​ $ 943,051 ​ Net income — ​ — ​ — ​ 245,294 ​ — ​ 245,294 ​ 8,020 ​ 253,314 ​ Other comprehensive income, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 106 ​ ​ 106 ​ ​ — ​ ​ 106 ​ Distributions to noncontrolling interest holders — ​ — ​ — ​ — ​ — ​ — ​ ( 8,206 ) ​ ( 8,206 ) ​ Dividends declared ($ 1.20 per share) — ​ — ​ — ​ ( 83,658 ) ​ — ​ ( 83,658 ) ​ — ​ ( 83,658 ) ​ Shares issued under share-based compensation plans including tax effects 595,534 ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ Indirect repurchase of shares for minimum tax withholdings ( 190,045 ) ​ — ​ ( 17,628 ) ​ — ​ — ​ ( 17,628 ) ​ — ​ ( 17,628 ) ​ Repurchase of shares of common stock ​ ( 584,932 ) ​ ​ ( 1 ) ​ ​ ( 51,633 ) ​ ​ — ​ ​ — ​ ​ ( 51,634 ) ​ ​ — ​ ​ ( 51,634 ) ​ Share-based compensation — ​ — ​ 38,139 ​ — ​ — ​ 38,139 ​ — ​ 38,139 ​ Balance, December 28, 2021 69,382,418 ​ $ 69 ​ $ 114,504 ​ $ 943,551 ​ $ — ​ $ 1,058,124 ​ $ 15,360 ​ $ 1,073,484 ​ Net income — ​ — ​ — ​ 269,818 ​ — ​ 269,818 ​ 7,779 ​ 277,597 ​ Distributions to noncontrolling interest holders — ​ — ​ — ​ — ​ — ​ — ​ ( 7,775 ) ​ ( 7,775 ) ​ Acquisition of noncontrolling interest ​ — ​ ​ — ​ ​ ( 1,395 ) ​ ​ — ​ ​ — ​ ​ ( 1,395 ) ​ ​ ( 340 ) ​ ​ ( 1,735 ) ​ Dividends declared ($ 1.84 per share) — ​ — ​ — ​ ( 124,137 ) ​ — ​ ( 124,137 ) ​ — ​ ( 124,137 ) ​ Shares issued under share-based compensation plans including tax effects 474,771 ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ Indirect repurchase of shares for minimum tax withholdings ( 149,873 ) ​ — ​ ( 13,576 ) ​ — ​ — ​ ( 13,576 ) ​ — ​ ( 13,576 ) ​ Repurchase of shares of common stock ​ ( 2,734,005 ) ​ ​ ( 2 ) ​ ​ ( 123,057 ) ​ ​ ( 89,800 ) ​ ​ — ​ ​ ( 212,859 ) ​ ​ — ​ ​ ( 212,859 ) ​ Share-based compensation — ​ — ​ 36,663 ​ — ​ — ​ 36,663 ​ — ​ 36,663 ​ Balance, December 27, 2022 66,973,311 ​ $ 67 ​ $ 13,139 ​ $ 999,432 ​ $ — ​ $ 1,012,638 ​ $ 15,024 ​ $ 1,027,662 ​ ​ See accompanying Notes to Consolidated Financial Statements. ​ F-7 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Consolidated Statements of Cash Flow s (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ December 27, December 28, December 29, ​ ​ 2022 ​ 2021 ​ 2020 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income including noncontrolling interests ​ ​ $ 277,597 ​ $ 253,314 ​ $ 34,925 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 137,237 ​ 126,761 ​ 117,877 ​ Deferred income taxes ​ ​ 9,456 ​ 8,896 ​ ( 19,932 ) ​ Loss on disposition of assets ​ ​ 5,206 ​ 3,167 ​ 3,144 ​ Impairment and closure costs ​ ​ 1,770 ​ 673 ​ 2,290 ​ Equity (income) loss from investments in unconsolidated affiliates ​ ​ ( 1,239 ) ​ 637 ​ 500 ​ Distributions of income received from investments in unconsolidated affiliates ​ ​ 1,022 ​ 1,071 ​ 329 ​ Provision for doubtful accounts ​ ​ 33 ​ 7 ​ ( 1 ) ​ Share-based compensation expense ​ ​ 36,663 ​ 38,139 ​ 29,431 ​ Changes in operating working capital: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Receivables ​ ​ 11,062 ​ ( 62,399 ) ​ 1,058 ​ Inventories ​ ​ ( 6,099 ) ​ ( 9,231 ) ​ ( 2,017 ) ​ Prepaid expenses and other current assets ​ ​ ( 6,540 ) ​ ( 2,485 ) ​ ( 2,133 ) ​ Other assets ​ ​ 5,775 ​ ( 13,918 ) ​ ( 12,698 ) ​ Accounts payable ​ ​ 5,408 ​ 27,730 ​ 490 ​ Deferred revenue—gift cards ​ ​ 33,799 ​ 67,845 ​ 23,458 ​ Accrued wages and payroll taxes ​ ​ ( 10,172 ) ​ 12,734 ​ 12,283 ​ Prepaid income taxes and income taxes payable ​ ​ 5,953 ​ ( 8,973 ) ​ 372 ​ Accrued taxes and licenses ​ ​ 1,889 ​ 8,624 ​ ( 5,700 ) ​ Other accrued liabilities ​ ​ 2,147 ​ 20,352 ​ 4,099 ​ Operating lease right-of-use assets and lease liabilities ​ ​ 5,268 ​ 5,553 ​ 4,635 ​ Other liabilities ​ ​ ( 4,510 ) ​ ( 9,671 ) ​ 38,028 ​ Net cash provided by operating activities ​ ​ 511,725 ​ 468,826 ​ 230,438 ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures—property and equipment ​ ​ ( 246,121 ) ​ ( 200,692 ) ​ ( 154,401 ) ​ Acquisition of franchise restaurants, net of cash acquired ​ ​ ​ ( 33,069 ) ​ ​ — ​ ​ ( 10,580 ) ​ Proceeds from sale of investment in unconsolidated affiliate ​ ​ ​ 316 ​ ​ — ​ ​ — ​ Proceeds from the sale of property and equipment ​ ​ 2,269 ​ — ​ 1,709 ​ Proceeds from sale leaseback transactions ​ ​ ​ 12,871 ​ ​ 5,588 ​ ​ 2,167 ​ Net cash used in investing activities ​ ​ ( 263,734 ) ​ ( 195,104 ) ​ ( 161,105 ) ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Payments on) proceeds from revolving credit facility, net ​ ​ ​ ( 50,000 ) ​ ​ ( 140,000 ) ​ ​ 240,000 ​ Debt issuance costs ​ ​ ​ — ​ ​ ( 708 ) ​ ​ ( 641 ) ​ Proceeds from noncontrolling interest contribution ​ ​ ​ — ​ ​ — ​ ​ 133 ​ Distributions to noncontrolling interest holders ​ ​ ( 7,775 ) ​ ( 8,206 ) ​ ( 3,432 ) ​ Acquisition of noncontrolling interest ​ ​ ​ ( 1,735 ) ​ ​ — ​ ​ — ​ Proceeds from (payments on) restricted stock and other deposits, net ​ ​ 307 ​ 602 ​ ( 823 ) ​ Indirect repurchase of shares for minimum tax withholdings ​ ​ ( 13,576 ) ​ ( 17,628 ) ​ ( 11,684 ) ​ Repurchase of shares of common stock ​ ​ ​ ( 212,859 ) ​ ​ ( 51,634 ) ​ ​ ( 12,621 ) ​ Dividends paid to shareholders ​ ​ ( 124,137 ) ​ ( 83,658 ) ​ ( 24,989 ) ​ Net cash (used in) provided by financing activities ​ ​ ( 409,775 ) ​ ( 301,232 ) ​ 185,943 ​ Net (decrease) increase in cash and cash equivalents ​ ​ ( 161,784 ) ​ ( 27,510 ) ​ 255,276 ​ Cash and cash equivalents—beginning of period ​ ​ 335,645 ​ 363,155 ​ 107,879 ​ Cash and cash equivalents—end of period ​ ​ $ 173,861 ​ $ 335,645 ​ $ 363,155 ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest paid, net of amounts capitalized ​ ​ $ 1,547 ​ $ 3,186 ​ $ 3,890 ​ Income taxes paid ​ ​ $ 25,910 ​ $ 39,789 ​ $ 3,776 ​ Capital expenditures included in current liabilities ​ ​ $ 34,689 ​ $ 23,087 ​ $ 14,808 ​ ​ See accompanying Notes to Consolidated Financial Statements. ​ F-8 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (1) Description of Business Texas Roadhouse, Inc. (collectively, the "Company," "we," "our" and/or "us"), is a growing restaurant company operating predominately in the casual dining segment. Our late founder, W. Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. As of December 27, 2022, we owned and operated 597 restaurants and franchised an additional 100 restaurants in 49 states and ten foreign countries. Of the 597 company restaurants that were operating at December 27, 2022, 577 were wholly-owned and 20 were majority-owned and we operated 552 as Texas Roadhouse restaurants, 40 as Bubba’s 33 restaurants and five as Jaggers restaurants. Of the 100 franchise restaurants, 62 were domestic and 38 were international restaurants, all of which were operated as Texas Roadhouse restaurants . As of December 28, 2021, we owned and operated 566 restaurants and franchised an additional 101 restaurants in 49 states and ten foreign countries. Of the 566 company restaurants that were operating at December 28, 2021, 546 were wholly-owned and 20 were majority-owned and we operated 526 as Texas Roadhouse restaurants, 36 as Bubba’s 33 restaurants and four as Jaggers restaurants. Of the 101 franchise restaurants, 70 were domestic and 31 were international restaurants , all of which were operated as Texas Roadhouse restaurants . Risks and Uncertainties The Company has been subject to risks and uncertainties as a result of the COVID-19 pandemic (the "pandemic" ). 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. In 2022, all of our domestic company and franchise restaurants operated without restriction. In 2021 and 2020, all of our domestic company and franchise restaurants operated under various forms of capacity restrictions, which included outdoor and/or to-go or curbside service only. (2) Summary of Significant Accounting Policies (a) Principles of Consolidation The accompanying consolidated financial statements present the financial position, results of operations and cash flows of the Company and its majority-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. As of December 27, 2022 and December 28, 2021, we had majority ownership in 20 restaurants. The portion of income attributable to noncontrolling interests in these restaurants is reflected in the line item entitled "Net income attributable to noncontrolling interests" in our consolidated statements of income and comprehensive income. As of December 27, 2022 and December 28, 2021, we owned a 5.0 % to 10.0 % equity interest in 23 and 24 restaurants, respectively. Additionally, as of December 28, 2021, we owned a 40 % interest in four non-Texas Roadhouse restaurants in China that was fully impaired in 2021. The unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in other assets in our consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our consolidated statements of income and comprehensive income under equity income (loss) from investments in unconsolidated affiliates. (b) Fiscal Year We utilize a 52 or 53 week accounting period that typically ends on the last Tuesday in December. We utilize a 13 week accounting period for quarterly reporting purposes, except in years containing 53 weeks when the fourth quarter contains 14 weeks. Fiscal years 2022, 2021 and 2020 were 52 weeks in length. F-9 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (c) Use of Estimates We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reporting of revenue and expenses during the period to prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"). Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill, obligations related to insurance reserves, leases and leasehold improvements, legal reserves, gift card breakage and third-party fees and income taxes. Actual results could differ from those estimates. (d) Segment Reporting Operating segments are defined as components of a company that engage in business activities from which it may earn revenue and incur expenses, and for which separate financial information is available and is regularly reviewed by the chief operating decision maker ( " CODM " ), to assess the performance of the individual segments and make decisions about resources to be allocated to the segments. The Company’s operating segments have been identified in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC 280, Segment Reporting . We have identified Texas Roadhouse, Bubba’s 33, Jaggers and our retail initiatives as separate operating segments. In addition, we have identified Texas Roadhouse and Bubba’s 33 as reportable segments. For further discussion of segment reporting, refer to Note 19. (e) Cash and Cash Equivalents We consider all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents also include receivables from credit card companies as these balances are highly liquid in nature and are settled within two to three business days. These amounted to $ 22.0 million and $ 26.4 million at December 27, 2022 and December 28, 2021, respectively. (f) Receivables Receivables consist principally of amounts due from retail gift card providers, certain franchise restaurants for reimbursement of labor costs, pre-opening and other expenses, and franchise restaurants for royalty fees. Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on historical collection experience and the age of receivables. We review our allowance for doubtful accounts quarterly. Past due balances over 120 days are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. (g) Inventories Inventories, consisting principally of food, beverages and supplies, are valued at the lower of cost (first-in, first-out) or net realizable value. (h) Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed on property and equipment, including assets located on leased properties, over the shorter of the estimated useful lives of the related assets or the underlying lease term using the straight- line method. In most cases, assets on F-10 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) leased properties are depreciated over a period of time which includes both the initial term of the lease and one or more option periods. Refer to Note 2(i) for further discussion of leases. The estimated useful lives are: ​ ​ ​ ​ ​ Land improvements 10 - 25 years Buildings and leasehold improvements 10 - 25 years ​ Furniture, fixtures and equipment 3 - 10 years ​ ​ The cost of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived assets and included in Property and equipment, net. (i) Leases We recognize operating lease right-of-use assets and operating lease liabilities for real estate leases, including our restaurant leases and Support Center lease, as well as certain restaurant equipment leases based on the present value of the lease payments over the lease term. We estimate the present value based on our incremental borrowing rate which corresponds to the underlying lease term. In addition, operating lease right-of-use assets are reduced for accrued rent and increased for any initial direct costs recognized at lease inception. For real estate and restaurant equipment leases commencing in 2019 and later, we account for lease and non-lease components as a single lease component. Certain of our operating leases contain predetermined fixed escalations of the minimum rent over the lease term. For these leases, we recognize the related total rent expense on a straight-line basis over the lease term. We may receive rent concessions or leasehold improvement incentives upon opening a restaurant that is subject to a lease which we consider when determining straight-line rent expense. We also may receive rent holidays, which would begin on the possession date and end when the store opens, during which no cash rent payments are typically due under the terms of the lease. Rent holidays are included in the lease term when determining straight-line rent expense. In recognizing straight-line rent expense, we record the difference between amounts charged to operations and amounts paid as accrued rent. Certain of our operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of the target is considered probable. In addition, certain of our operating leases have variable escalations of the minimum rent that depend on an index or rate. For these leases, we recognize operating lease right-of-use assets and operating lease liabilities based on the index or rate at the commencement date. Any subsequent changes to the index or rate are recognized as variable rent expense when the escalation is determinable. Sale-leasebacks are transactions through which we sell previously acquired land at fair value and subsequently enter into a lease agreement on the same land. The resulting lease agreement is evaluated to determine classification as an operating or finance lease and is recorded based on the lease classification. Refer to Note 8 for further discussion of leases. (j) Goodwill Goodwill represents the excess of cost over fair value of assets of businesses acquired. In accordance with ASC 350, Intangibles—Goodwill and Other ("ASC 350"), goodwill is not subject to amortization and is evaluated for impairment on an annual basis, or sooner if an event or other circumstance indicates that goodwill may be impaired. The annual assessment date is the first day of our fourth quarter. ASC 350 requires that goodwill be tested for impairment at the reporting unit level, or the level of internal reporting that reflects the way in which an entity manages its businesses. A reporting unit is defined as an operating segment, or one level below an operating segment. Historically, we designated our operating segment and reporting unit to be at the F-11 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) same level which we defined to be the individual restaurant. In 2021, we changed the designation of our operating segment and reporting unit to be at the concept level. 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. In 2022, we performed the goodwill impairment analysis at the concept level. As stated in ASC 350, an entity may first assess qualitative factors in order to determine if it is necessary to perform the quantitative test. In 2022 and 2021, we elected to perform a qualitative assessment for our annual review of goodwill. This review included evaluating 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. 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. In 2022 and 2021, we determined there was no goodwill impairment. In 2020, as a result of our annual goodwill impairment analysis, we recorded goodwill impairment of $ 1.1 million. Refer to Note 7 for additional information related to goodwill and intangible assets. (k) Other Assets Other assets consist primarily of deferred compensation plan assets, investments in unconsolidated affiliates and deposits. For further discussion of the deferred compensation plan, refer to Note 15 and Note 16. (l) Impairment or Disposal of Long-lived Assets In accordance with ASC 360, Property, Plant and Equipment , long-lived assets related to each restaurant to be held and used in the business, such as property and equipment, operating lease right-of-use assets and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant may not be recoverable. For the purposes of this evaluation, we define the asset group at the individual restaurant level. When we evaluate the restaurants, cash flows are the primary indicator of impairment. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the restaurant to estimated undiscounted future cash flows expected to be generated by the restaurant. Under our policies, trailing 12- month cash flow results under a predetermined amount at the individual restaurant level signals potential impairment. In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which can be for a period of over 20 years . In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations of future sales growth. Assumptions about important factors such as the trend of future operations and sales growth are limited to those that are supportable based upon the plans for the restaurant and actual results at comparable restaurants. If the carrying amount of the restaurant exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the estimated fair value of the assets. We generally measure fair value by discounting estimated future cash flows. When fair value is measured by discounting estimated future cash flows, the assumptions used are consistent with what we believe hypothetical market participants would use. We also use a discount rate that is commensurate with the risk inherent in the projected cash flows. The adjusted carrying amounts of assets to be held and used are depreciated over their remaining useful life. Refer to Note 17 for further discussion of amounts recorded as part of our impairment analysis. F-12 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (m) Insurance Reserves We self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, and property insurance programs. We purchase insurance for individual claims that exceed the retention amounts listed below: ​ ​ ​ ​ ​ ​ ​ ​ December 27, 2022 ​ December 28, 2021 Employment practices liability ("EPL") $ 500,000 $ 500,000 EPL Class Action ​ $ 2,500,000 ​ $ 2,500,000 Workers' compensation ​ $ 350,000 ​ $ 350,000 General liability ​ $ 2,500,000 ​ $ 1,000,000 Property ​ $ 250,000 ​ $ 250,000 Employee healthcare ​ $ 400,000 ​ $ 400,000 ​ We record a liability for unresolved claims and for an estimate of incurred but not reported claims based on historical experience. The estimated liability is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Our assumptions are reviewed, monitored, and adjusted when warranted by changing circumstances. (n) Revenue Recognition We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, which requires an entity to allocate the transaction price received from customers to each separate and distinct performance obligation and recognize revenue as these performance obligations are satisfied. We recognize revenue from company restaurant sales when food and beverage products are sold. Restaurant sales include gross food and beverage sales, net of promotions and discounts, for all company restaurants. Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from restaurant sales in the consolidated statements of income and comprehensive income. We record deferred revenue for gift cards that have been sold but not yet redeemed. When the gift cards are redeemed, we recognize restaurant sales and reduce deferred revenue. For some of the gift cards that are sold we have determined that, based on our historic gift card redemption patterns, the likelihood of redemption is remote. For these gift cards, we record a breakage adjustment and reduce deferred revenue by the amount never expected to be redeemed. We use historic gift card redemption patterns to determine the breakage rate to utilize and recognize the expected breakage amount in a manner generally consistent with the actual redemption pattern of the associated gift card. We review the breakage rate on an annual basis, or sooner if circumstances indicate that the rate may have significantly changed and update the rate accordingly as needed. In addition, we incur fees on all gift cards that are sold through third-party retailers. These fees are also deferred and generally recorded consistent with the actual redemption pattern of the associated gift cards. We also recognize revenue from our franchising of Texas Roadhouse restaurants. This includes franchise royalties and domestic marketing and advertising fees, initial and upfront franchise fees, domestic and international development agreements and supervisory and administrative service fees. We recognize franchise royalties and domestic marketing and advertising fees as franchise restaurant sales occur. For initial and upfront franchise fees and fees from development agreements, because the services we provide related to these fees do not contain separate and distinct performance obligations from the franchise right, these fees are recognized on a straight-line basis over the term of the associated franchise agreement. We recognize fees from supervision and administrative services as incurred. F-13 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (o) Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes , under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. We recognize both interest and penalties on unrecognized tax benefits as part of income tax expense. A valuation allowance is established to reduce the carrying value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in the valuation allowance would be charged to income in the period such determination was made. For all years presented, no valuation allowances have been recorded. (p) Advertising We have a domestic system- wide marketing and advertising fund. We maintain control of the marketing and advertising fund and, as such, have consolidated the fund’s activity for all the years presented. Domestic company and franchise restaurants are required to remit a designated portion of sales to the advertising fund. Advertising contributions related to company restaurants are recorded as a component of other operating costs. Advertising contributions received from our franchisees are recorded as a component of franchise royalties and fees in our consolidated statements of income and comprehensive income. Other costs related to local restaurant area marketing initiatives are included in other operating costs in our consolidated statements of income and comprehensive income. These costs and the company restaurant contribution amounted to $ 25.0 million, $ 21.1 million and $ 13.8 million for the years ended December 27, 2022, December 28, 2021 and December 29, 2020, respectively. (q) Pre-opening Expenses 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 team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses. (r) Comprehensive Income ASC 220, Comprehensive Income , establishes standards for reporting and the presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and foreign currency translation adjustments which are excluded from net income under GAAP. Foreign currency translation adjustment represents the unrealized impact of translating the financial statements of our foreign investment. (s) Fair Value of Financial Instruments Fair value is defined as the price that we would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants on the measurement date. ASC 820, Fair Value Measurements and Disclosures , establishes a framework for measuring fair value and expands disclosures about fair value measurements. This includes a three- level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs in measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. ​ ​ Level 1 Inputs based on quoted prices in active markets for identical assets. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the assets, either directly or indirectly. Level 3 Inputs that are unobservable for the asset. Fair value measurements are separately disclosed by level within the fair value hierarchy. Refer to Note 16 for further discussion of fair value measurement. F-14 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (t) Recent Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting. These changes are intended to simplify the market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 which defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. We do not anticipate that the adoption of this standard will have a significant impact on our consolidated financial statements . ​ (3) Revenue The following table disaggregates our revenue by major source: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 27, 2022 ​ December 28, 2021 ​ December 29, 2020 Restaurant and other sales ​ $ 3,988,791 ​ $ 3,439,176 ​ $ 2,380,177 Franchise royalties ​ ​ 23,058 ​ ​ 21,770 ​ ​ 15,542 Franchise fees ​ ​ 3,070 ​ ​ 3,000 ​ ​ 2,404 Total revenue ​ $ 4,014,919 ​ $ 3,463,946 ​ $ 2,398,123 ​ The following table presents a rollforward of deferred revenue-gift cards: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 27, 2022 ​ December 28, 2021 Beginning balance ​ $ 300,657 ​ $ 232,812 Gift card activations, net ​ ​ 366,606 ​ ​ 319,698 Gift card redemptions and breakage ​ ​ ( 331,860 ) ​ ​ ( 251,853 ) Ending balance ​ ​ 335,403 ​ ​ 300,657 ​ We recognized restaurant sales of $ 190.5 million for the year ended December 27, 2022 related to the amount in deferred revenue as of December 28, 2021. We recognized restaurant sales of $ 140.1 million for the year ended December 28, 2021 related to the amount in deferred revenue as of December 29, 2020. (4) Acquisitions On March 30, 2022, we completed the acquisition of one franchise Texas Roadhouse restaurant located in Nebraska in which we previously held a 5.49 % equity interest. Pursuant to the terms of the acquisition agreement, we paid a total purchase price of $ 6.6 million, net of cash acquired for 100 % of the entity. The transaction was accounted for as a step acquisition and we recorded a gain of $ 0.3 million on our previous investment in equity income from investments in unconsolidated affiliates in the consolidated statements of income and comprehensive income. Additionally, on December 29, 2021, we completed the acquisition of seven franchise Texas Roadhouse restaurants located in South Carolina and Georgia. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $ 26.4 million, net of cash acquired. F-15 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) These transactions were accounted for using the acquisition method as defined in ASC 805, Business Combinations . These acquisitions are consistent with our long-term strategy to increase net income and earnings per share. The following table summarizes the consideration paid (in thousands) for the acquisitions, and the estimated fair value of the assets acquired, and the liabilities assumed at the acquisition date, which are adjusted for measurement-period adjustments through December 27, 2022. ​ ​ ​ ​ ​ Inventory ​ $ 321 ​ Other assets ​ ​ 222 ​ Property and equipment ​ ​ 4,841 ​ Operating lease right-of-use assets ​ ​ 1,221 ​ Goodwill ​ ​ 21,731 ​ Intangible assets ​ ​ 6,900 ​ Deferred revenue-gift cards ​ ​ ( 947 ) ​ Current portion of operating lease liabilities ​ ​ ( 47 ) ​ Operating lease liabilities, net of current portion ​ ​ ( 1,173 ) ​ ​ ​ $ 33,069 ​ ​ The aggregate purchase prices are preliminary as the Company is finalizing working capital adjustments. Intangible assets represent reacquired franchise rights which will be amortized over a weighted-average useful life of 3.5 years. We expect all of the goodwill and intangible asset amortization will be deductible for tax purposes and believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of the acquired restaurants. Pro forma operating results for the year ended December 27, 2022 have not been presented as the results of the acquired restaurants are not material to our consolidated financial position, results of operations or cash flows. (5) Long-term Debt 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. and PNC Bank, N.A. The amended revolving credit facility remains an unsecured, revolving credit agreement and has a borrowing capacity of up to $ 300.0 million with the option to increase by an additional $ 200.0 million subject to certain limitations, including approval by the syndicate of lenders. The amendment also extended the maturity date to May 1, 2026. 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. The terms of the amendment 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. 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. 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. These outstanding amounts are included as long-term debt on our consolidated balance sheets. F-16 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) The interest rate for the $ 50.0 million outstanding as of December 27, 2022 was 5.21 % . 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. We were in compliance with all financial covenants as of December 27, 2022 and December 28, 2021. (6) Property and Equipment, Net Property and equipment were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 27, December 28, ​ ​ 2022 ​ 2021 Land and improvements ​ $ 148,220 ​ $ 144,182 ​ Buildings and leasehold improvements ​ 1,206,930 ​ 1,092,776 ​ Furniture, fixtures and equipment ​ 797,058 ​ 732,160 ​ Construction in progress ​ 73,639 ​ 50,809 ​ Liquor licenses ​ 12,538 ​ 11,889 ​ ​ ​ 2,238,385 ​ 2,031,816 ​ Accumulated depreciation and amortization ​ ( 968,036 ) ​ ( 869,375 ) ​ ​ ​ $ 1,270,349 ​ $ 1,162,441 ​ ​ For the years ended December 27, 2022, December 28, 2021 and December 29, 2020, the amount of interest capitalized in connection with restaurant construction was $ 1.3 million, $ 0.2 million and $ 0.3 million, respectively. (7) Goodwill and Intangible Assets All of our goodwill and intangible assets reside within the Texas Roadhouse reportable segment. The changes in the carrying amount of goodwill and intangible assets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Goodwill ​ Intangible Assets ​ Balance as of December 29, 2020 (1) $ 127,001 ​ $ 2,271 ​ Additions — ​ ​ — ​ Amortization expense — ​ ​ ( 751 ) ​ Disposals and other, net — ​ — ​ Impairment — ​ — ​ Balance as of December 28, 2021 $ 127,001 ​ $ 1,520 ​ Additions 21,731 ​ ​ 6,900 ​ Amortization expense — ​ ​ ( 2,813 ) ​ Disposals and other, net — ​ ​ — ​ Impairment — ​ ​ — ​ Balance as of December 27, 2022 $ 148,732 ​ $ 5,607 ​ (1) Net of $ 5.9 million of accumulated goodwill impairment losses. Intangible assets consist of reacquired franchise rights. The gross carrying amount and accumulated amortization of the intangible assets at December 27, 2022 were $ 23.5 million and $ 17.9 million, respectively. As of December 28, 2021, the gross carrying amount and accumulated amortization of the intangible assets were $ 16.6 million and $ 15.1 million, respectively. We amortize reacquired franchise rights on a straight-line basis over the remaining term of the franchise operating agreements, which varies by franchise agreement. Amortization expense for the next four years is expected to range from $ 0.1 million to $ 2.6 million. Refer to Note 4 for discussion of the acquisitions completed for the year ended December 27, 2022. F-17 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (8) Leases We recognize right-of-use assets and lease liabilities for both real estate and equipment leases that have a term in excess of one year . As of December 27, 2022 and December 28, 2021, these amounts were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 27, 2022 ​ Real estate ​ Equipment ​ Total Operating lease right-of-use assets $ 625,164 ​ $ 5,094 ​ $ 630,258 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of operating lease liabilities ​ 23,803 ​ ​ 1,687 ​ ​ 25,490 Operating lease liabilities, net of current portion ​ 674,468 ​ ​ 3,406 ​ ​ 677,874 Total operating lease liabilities $ 698,271 ​ $ 5,093 ​ $ 703,364 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 28, 2021 ​ Real estate ​ Equipment ​ Total Operating lease right-of-use assets $ 574,356 ​ $ 4,057 ​ $ 578,413 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of operating lease liabilities ​ 20,577 ​ ​ 1,375 ​ ​ 21,952 Operating lease liabilities, net of current portion ​ 620,210 ​ ​ 2,682 ​ ​ 622,892 Total operating lease liabilities $ 640,787 ​ $ 4,057 ​ $ 644,844 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-18 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) Information related to our real estate operating leases as of and for the fiscal year ended December 27, 2022 and December 28, 2021 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Real estate costs ​ ​ ​ ​ December 27, 2022 ​ ​ December 28, 2021 ​ Operating lease ​ ​ ​ $ 68,742 ​ $ 62,430 ​ Variable lease ​ ​ ​ ​ 4,393 ​ ​ 3,767 ​ Total lease costs ​ ​ ​ $ 73,135 ​ $ 66,197 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate lease liabilities maturity analysis ​ ​ ​ ​ ​ ​ ​ December 27, 2022 ​ 2023 ​ ​ ​ ​ ​ ​ $ 66,675 ​ 2024 ​ ​ ​ ​ ​ ​ ​ 67,195 ​ 2025 ​ ​ ​ ​ ​ ​ ​ 65,206 ​ 2026 ​ ​ ​ ​ ​ ​ ​ 65,081 ​ 2027 ​ ​ ​ ​ ​ ​ ​ 65,493 ​ Thereafter ​ ​ ​ ​ ​ ​ ​ 861,414 ​ Total ​ ​ ​ ​ ​ ​ $ 1,191,064 ​ Less interest ​ ​ ​ ​ ​ ​ ​ 492,793 ​ Total discounted operating lease liabilities ​ ​ ​ ​ ​ ​ $ 698,271 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ Real estate leases other information ​ ​ ​ ​ December 27, 2022 ​ ​ December 28, 2021 ​ Cash paid for amounts included in measurement of operating lease liabilities ​ ​ ​ $ 63,269 ​ $ 57,040 ​ Right-of-use assets obtained in exchange for new operating lease liabilities ​ ​ ​ $ 54,666 ​ $ 68,921 ​ Weighted-average remaining lease term (years) ​ ​ ​ ​ 17.57 ​ ​ 17.88 ​ Weighted-average discount rate ​ ​ ​ ​ 6.34 % ​ 6.46 % ​ Operating lease payments exclude $ 7.9 million of future minimum lease payments for executed real estate leases of which we have not yet taken possession. In addition to the above operating leases, as of December 27, 2022, we had two finance leases with a right-of-use asset balance and lease liability balance of $ 2.1 million and $ 2.7 million, respectively. As of December 28, 2021, we had two finance leases with a right-of-use asset balance and lease liability balance of $ 2.2 million and $ 2.7 million, respectively. The right-of-use asset balance is included as a component of other assets and the lease liability balance as a component of other liabilities in the consolidated balance sheets. In 2022, we entered into four sale leaseback transactions involving land that had recently been acquired. These sales generated proceeds of $ 12.9 million and no gain or loss was recognized on the transactions. In 2021, we entered into three sale leaseback transactions involving land that had recently been acquired. These sales generated proceeds of $ 5.6 million and no gain or loss was recognized on the transactions. The resulting operating leases are included in the operating lease right-of-use assets and lease liabilities noted above. F-19 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (9) Income Taxes Components of our income tax expense (benefit) for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ December 27, 2022 December 28, 2021 December 29, 2020 Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 15,549 ​ $ 16,700 ​ $ ( 648 ) ​ State ​ 18,120 ​ 13,539 ​ 4,505 ​ Foreign ​ ​ 590 ​ ​ 443 ​ ​ 403 ​ Total current ​ 34,259 ​ 30,682 ​ 4,260 ​ Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ 9,664 ​ ​ 7,391 ​ ( 16,859 ) ​ State ​ ( 208 ) ​ ​ 1,505 ​ ( 3,073 ) ​ Total deferred ​ 9,456 ​ 8,896 ​ ( 19,932 ) ​ Income tax expense (benefit) ​ $ 43,715 ​ $ 39,578 ​ $ ( 15,672 ) ​ ​ Our pre-tax income is substantially derived from domestic restaurants. A reconciliation of the statutory federal income tax rate to our effective tax rate for December 27, 2022, December 28, 2021 and December 29, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ ​ December 27, 2022 ​ December 28, 2021 ​ December 29, 2020 ​ Tax at statutory federal rate ​ ​ 21.0 % 21.0 % 21.0 % State and local tax, net of federal benefit ​ ​ 3.7 ​ 3.8 ​ 3.6 ​ FICA tip tax credit ​ ​ ( 10.5 ) ​ ( 9.3 ) ​ ( 92.5 ) ​ Work opportunity tax credit ​ ​ ( 1.3 ) ​ ( 1.2 ) ​ ( 12.4 ) ​ Stock compensation ​ ​ ( 0.1 ) ​ ( 1.5 ) ​ ( 2.3 ) ​ Net income attributable to noncontrolling interests ​ ​ ( 0.4 ) ​ ( 0.5 ) ​ ( 3.0 ) ​ Officers compensation ​ ​ 0.7 ​ 1.1 ​ 2.6 ​ Other ​ ​ 0.5 ​ 0.1 ​ 1.6 ​ Total ​ ​ 13.6 % 13.5 % ( 81.4 ) % ​ Our effective tax rate increased to 13.6 % in 2022 compared to 13.5 % in 2021. 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. Our effective tax rate was 13.5 % in 2021 compared to a tax benefit of 81.4 % in 2020. The increase was primarily due to the significant increase in pre-tax income. In 2020, our FICA tip and Work opportunity tax credits exceeded our federal tax liability which resulted in a tax rate benefit. F-20 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) Components of deferred tax liabilities, net are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 27, 2022 December 28, 2021 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ Deferred revenue—gift cards ​ $ 29,889 ​ $ 24,056 ​ Insurance reserves ​ ​ 6,506 ​ ​ 6,407 ​ Deferred payroll taxes ​ ​ - ​ ​ 5,995 ​ Other reserves ​ 1,060 ​ 1,077 ​ Share-based compensation ​ 5,059 ​ 6,040 ​ Operating lease liabilities ​ ​ 173,853 ​ ​ 160,638 ​ Deferred compensation ​ 17,934 ​ 16,233 ​ Tax credit carryforwards ​ ​ 2,740 ​ ​ 3,618 ​ Other assets ​ 2,991 ​ 2,801 ​ Total deferred tax asset ​ 240,032 ​ 226,865 ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ ​ Property and equipment ​ ( 82,832 ) ​ ( 75,022 ) ​ Goodwill and intangibles ​ ( 8,374 ) ​ ( 7,742 ) ​ Operating lease right-of-use asset ​ ​ ( 155,837 ) ​ ​ ( 144,153 ) ​ Other liabilities ​ ​ ( 13,968 ) ​ ​ ( 11,682 ) ​ Total deferred tax liability ​ ( 261,011 ) ​ ( 238,599 ) ​ Net deferred tax liability ​ $ ( 20,979 ) ​ $ ( 11,734 ) ​ ​ As of December 27, 2022 and December 28, 2021, we had tax credit carryforwards of $ 2.7 million and $ 3.6 million, respectively, primarily related to FICA tip and Work opportunity tax credit carryforwards that exceeded credit limitations. These federal carryforwards expire in 2042. We expect to generate sufficient earnings in future periods and/or may implement tax planning strategies that would allow us to fully utilize these credits. As such, we have not provided any valuation allowances for these credits, or any of our other deferred tax assets, as their realization is more likely than not. A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows: ​ ​ ​ ​ ​ ​ Balance at December 29, 2020 ​ $ 1,662 ​ Additions to tax positions related to prior years ​ 49 ​ Additions to tax positions related to current year ​ ​ 413 ​ Reductions due to statute expiration ​ ​ ( 160 ) ​ Reductions due to exam settlement ​ ( 436 ) ​ Balance at December 28, 2021 ​ 1,528 ​ Additions to tax positions related to prior years ​ ​ 1,545 ​ Additions to tax positions related to current year ​ 872 ​ Reductions due to statute expiration ​ - ​ Reductions due to exam settlement ​ ​ ( 20 ) ​ Balance at December 27, 2022 ​ $ 3,925 ​ ​ As of December 27, 2022 and December 28, 2021, the amount of unrecognized tax benefits that would impact the effective tax rate if recognized was $ 2.1 million and $ 1.5 million, respectively. As of December 27, 2022 and December 28, 2021, the total amount of accrued penalties and interest related to uncertain tax provisions was recognized as a part of income tax expense and these amounts were not material. All entities for which unrecognized tax benefits exist as of December 27, 2022 possess a December tax year-end. As a result, as of December 27, 2022, the tax years ended December 28, 2021, December 29, 2020 and December 31, 2019 remain subject to examination by all tax jurisdictions. As of December 27, 2022, no audits were in process by a F-21 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) tax jurisdiction that, if completed during the next twelve months, would be expected to result in a material change to our unrecognized tax benefits. Additionally, as of December 27, 2022, no event occurred that is likely to result in a significant increase or decrease in the unrecognized tax benefits through December 26, 2023. (10) Preferred Stock Our Board of Directors (the "Board") is authorized, without further vote or action by the holders of common stock, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the Board, which may include, but are not limited to, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights. There were no shares of preferred stock outstanding at December 27, 2022 and December 28, 2021. (11) Stock Repurchase Program On March 17, 2022, our 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 that authorized the Company to repurchase up to $ 250.0 million of our common stock. All repurchases to date under our stock repurchase programs have been made through open market transactions. The timing and the amount of any repurchases are determined by management under parameters established by the Board, based on an evaluation of our stock price, market conditions and other corporate considerations. For the year ended December 27, 2022, we paid $ 212.9 million to repurchase 2,734,005 shares of our common stock. This includes $ 133.1 million repurchased under our current authorized stock repurchase program and $ 79.7 million repurchased under our prior authorization. For the year ended December 28, 2021, we paid $ 51.6 million to repurchase 584,932 shares of our common stock. As of December 27, 2022, we had $ 166.9 million remaining under our authorized stock repurchase program. (12) Earnings Per Share The share and net income per share data for all periods presented are based on the historical weighted- average shares outstanding. The diluted earnings per share calculations show the effect of the weighted- average restricted stock units outstanding from our equity incentive plans. Performance stock units are not included in the diluted earnings per share calculation until the performance-based criteria have been met. Refer to Note 14 for further discussion of our equity incentive plans. For the years ended December 27, 2022, December 28, 2021, and December 29, 2020, the shares of non-vested stock that were not included because they would have had an anti-dilutive effect were not significant. F-22 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) The following table sets forth the calculation of earnings per share and weighted average shares outstanding as presented in the accompanying consolidated statements of income and comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 27, December 28, December 29, ​ 2022 ​ 2021 ​ 2020 Net income attributable to Texas Roadhouse, Inc. and subsidiaries ​ $ 269,818 ​ $ 245,294 ​ $ 31,255 Basic EPS: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding ​ 67,643 ​ 69,709 ​ ​ 69,438 Basic EPS ​ $ 3.99 ​ $ 3.52 ​ $ 0.45 Diluted EPS: ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average common shares outstanding ​ 67,643 ​ 69,709 ​ ​ 69,438 Dilutive effect of nonvested stock ​ 277 ​ 389 ​ ​ 455 Shares-diluted ​ 67,920 ​ 70,098 ​ 69,893 Diluted EPS ​ $ 3.97 ​ $ 3.50 ​ $ 0.45 ​ ​ (13) Commitments and Contingencies The estimated cost of completing capital project commitments at December 27, 2022 and December 28, 2021 was $ 205.7 million and $ 135.0 million, respectively. As of December 27, 2022 and December 28, 2021, we are 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. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. 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. During the year ended December 27, 2022, we bought most of our beef from four suppliers. Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. We have no material minimum purchase commitments with our vendors that extend beyond a year. Occasionally, we are a defendant in litigation arising in the ordinary course of business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns. None of these types of litigation, most of which are covered by insurance, has had a material effect on us and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business. (14) Share-based Compensation On May 13, 2021, our stockholders approved the Texas Roadhouse, Inc. 2021 Long-Term Incentive Plan (the "Plan"). The Plan provides for the granting of various forms of equity awards including options, stock appreciation rights, full value awards, and performance-based awards. This plan replaced the 2013 Long-Term Incentive Plan and no subsequent awards will be granted under the 2013 plan. The Company provides restricted stock units ("RSUs") to employees as a form of share-based compensation. A RSU is the conditional right to receive one share of common stock upon satisfaction of the vesting requirement. In addition to RSUs, the Company provides performance stock units ("PSUs") to executives as a form of share-based compensation. A PSU is the conditional right to receive one share of common stock upon meeting a performance obligation along with the satisfaction of the vesting requirement. F-23 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) The following table summarizes the share-based compensation recorded in the accompanying consolidated statements of income and comprehensive income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ December 27, December 28, December 29, ​ 2022 ​ 2021 ​ 2020 Labor expense ​ ​ $ 10,656 ​ $ 10,323 ​ $ 10,081 ​ General and administrative expense ​ ​ 26,007 ​ 27,816 ​ 19,350 ​ Total share-based compensation expense ​ ​ $ 36,663 ​ $ 38,139 ​ $ 29,431 ​ ​ Share- based compensation activity by type of grant as of December 27, 2022 and changes during the period then ended are presented below. We recognize expense for RSUs and PSUs over the vesting term based on the grant date fair value of the award. We do not estimate forfeitures as we record them as they occur. Summary Details for RSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average Weighted-Average ​ ​ ​ ​ ​ ​ Grant Date Fair ​ Remaining Contractual ​ Aggregate ​ ​ Shares ​ Value ​ Term (years) ​ Intrinsic Value Outstanding at December 28, 2021 558,183 ​ $ 82.52 ​ ​ ​ ​ ​ ​ Granted 395,859 ​ ​ 88.40 ​ ​ ​ ​ ​ ​ Forfeited ( 45,207 ) ​ ​ 84.26 ​ ​ ​ ​ ​ ​ Vested ( 413,996 ) ​ ​ 85.37 ​ ​ ​ ​ ​ ​ Outstanding at December 27, 2022 494,839 ​ $ 84.55 0.9 ​ $ 47,663 ​ ​ As of December 27, 2022, with respect to unvested RSUs, there was $ 18.5 million of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.9 years. The vesting terms of the RSUs range from 1.0 to 5.0 years. The total intrinsic value of RSUs vested during the years ended December 27, 2022, December 28, 2021 and December 29, 2020 was $ 37.1 million, $ 54.7 million and $ 30.5 million, respectively. The excess tax benefit associated with vested RSUs for the years ended December 27, 2022, December 28, 2021 and December 29, 2020 was $ 0.4 million, $ 4.3 million and $ 0.4 million, respectively, which was recognized in the income tax provision. Summary Details for PSUs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average Weighted-Average ​ ​ ​ ​ ​ ​ Grant Date Fair ​ Remaining Contractual ​ Aggregate ​ ​ Shares ​ Value ​ Term (years) ​ Intrinsic Value Outstanding at December 28, 2021 31,952 ​ $ 86.22 ​ ​ ​ ​ ​ Granted 29,600 ​ ​ 86.41 ​ ​ ​ ​ ​ Performance shares adjustment (1) ​ 28,074 ​ ​ 84.96 ​ ​ ​ ​ ​ Forfeited — ​ ​ — ​ ​ ​ ​ ​ Vested ( 60,026 ) ​ ​ 86.22 ​ ​ ​ ​ ​ Outstanding at December 27, 2022 29,600 ​ $ 87.52 0.1 ​ $ 2,851 (1) Additional shares from the January 2021 PSU grant that vested in January 2022 due to exceeding the initial 100% target. We grant PSUs to certain of our executives subject to a one-year vesting and the achievement of certain earnings targets, which determine the number of units to vest at the end of the vesting period. Share-based compensation expense is recognized for the number of units expected to vest at the end of the period and is expensed beginning on the grant date and through the performance period. For each grant, PSUs vest after meeting the performance and service conditions. The total intrinsic value of PSUs vested during the years ended December 27, 2022, December 28, 2021 and December 29, 2020 was $ 5.4 million, $ 0.4 million and $ 5.4 million, respectively. F-24 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) On January 8, 2023, 31,379 shares vested related to the January 2022 PSU grant and are expected to be distributed during the 13 weeks ending March 28, 2023. As of December 27, 2022, with respect to unvested PSUs, the amount of unrecognized compensation cost that is expected to be recognized over a weighted-average period of 0.1 year was not significant. There was no allowable excess tax benefit associated with vested PSUs for the years ended December 27, 2022, December 28, 2021 and December 29, 2020. (15) Employee Benefit Plans We have a defined contribution benefit plan ("401(k) Plan") that is available to our Support Center employees and managers in our restaurants who meet certain compensation and eligibility requirements. The 401(k) Plan allows participating employees to defer the receipt of a portion of their compensation and contribute such amount to one or more investment options. Beginning in 2022, we implemented a company match of a certain percentage of the employee contributions to the 401(k) Plan. Company contributions totaling $ 5.4 million and $ 1.6 million were recorded in labor expense and general and administrative expense, respectively, within the consolidated statements of income and comprehensive income. We also have a deferred compensation plan which allows highly compensated employees to defer a portion of their compensation and contribute such amounts to one or more investment funds held in a rabbi trust. The Company did not provide any contributions into this plan for any period presented. Refer to Note 16 for further discussion on the fair value measurement of the deferred compensation plan assets and liabilities. (16) Fair Value Measurement At December 27, 2022 and December 28, 2021, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values based on the short-term nature of these instruments. At December 27, 2022 and December 28, 2021, the fair value of our amended revolving credit facility approximated its carrying value since it is a variable rate credit facility (Level 2). There were no transfers among levels within the fair value hierarchy during the year ended December 27, 2022. The following table presents the fair values for our financial assets and liabilities measured on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ Level December 27, 2022 December 28, 2021 Deferred compensation plan—assets 1 ​ $ 61,835 ​ $ 67,512 ​ Deferred compensation plan—liabilities 1 ​ $ ( 61,668 ) ​ $ ( 67,431 ) ​ ​ We report the accounts of the deferred compensation plan in other assets and the corresponding liability in other liabilities in our consolidated financial statements. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the consolidated statements of income and comprehensive income. The following table presents the fair value of our assets measured on a nonrecurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements ​ Total gain (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ December 27, December 28, December 27, ​ December 28, ​ ​ Level ​ 2022 ​ 2021 ​ 2022 ​ 2021 Long-lived assets held for sale ​ 3 ​ $ — ​ $ 1,175 ​ $ 690 ​ $ ( 470 ) Long-lived assets held for use ​ 3 ​ $ 2,000 ​ $ — ​ $ ( 997 ) ​ $ — Operating lease right-of-use assets ​ 3 ​ $ — ​ $ — ​ $ ( 708 ) ​ $ — Investments in unconsolidated affiliates ​ 3 ​ $ — ​ $ — ​ $ — ​ $ ( 1,531 ) ​ F-25 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) Long-lived assets held for sale include land and building at a site that was relocated and had a carrying amount of $ 1.2 million as of December 28, 2021. These assets were included in prepaid expenses and other current assets in our consolidated balance sheets and were valued using a Level 3 input. These assets were sold during the fiscal year ended December 27, 2022 and resulted in a gain of $ 0.7 million which is included in impairment and closure, net in our consolidated statements of income and comprehensive income. We recorded a loss of $ 0.5 million related to these assets for the year ended December 28, 2021, which is included in impairment and closure, net in our consolidated statements of income and comprehensive income. Long-lived assets held for use include the land and building for one underperforming restaurant that was impaired down to fair value in 2022. These assets are valued using a Level 3 input. This impairment, which totaled $ 1.0 million, is included in impairment and closure costs , net in our consolidated statements of income and comprehensive income. For further discussion of impairment charges, refer to Note 17. Operating lease right-of-use assets as of December 27, 2022 includes the lease related asset for two restaurants that were relocated in 2022. These assets were reduced to a fair value of zero in 2022. This resulted in a loss of $ 0.7 million for the fiscal year ended December 27, 2022, which is included in impairment and closure, net in our consolidated statements of income and comprehensive income. Investments in unconsolidated affiliates included a 40 % equity interest in a joint venture in China which was fully impaired in late 2021. This asset was valued using a Level 3 input, or the amount we expected to receive upon the sale of this investment. This resulted in a loss of $ 1.5 million for the year ended December 28, 2021, which is included in equity income (loss) from investments in unconsolidated affiliates in our consolidated statements of income and comprehensive income. (17) Impairment and Closure Costs We recorded impairment and closure costs of $ 1.6 million, $ 0.7 million and $ 2.3 million for the years ended December 27, 2022, December 28, 2021 and December 29, 2020, respectively. Impairment and closure costs in 2022 included $ 1.7 million related to the impairment of the 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. 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. Impairment and closure costs in 2021 included $ 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. Impairment and closure costs in 2020 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 have relocated. In addition, in 2020, we recorded goodwill impairment of $ 1.1 million related to two restaurants. (18) Related Party Transactions As of December 27, 2022, December 28, 2021 and December 29, 2020, we had four franchise restaurants and one majority-owned company restaurant owned in part by a current officer of the Company. We recognized revenue of $ 1.8 million, $ 1.7 million and $ 0.9 million for the years ended December 27, 2022, December 28, 2021, and December 29, 2020, respectively, related to these restaurants. F-26 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) (19) Segment Information We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba's 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our domestic company Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating segments, which include the results of our domestic company Jaggers restaurants and the results of our retail initiatives, are included in Other. In addition, Corporate-related segment assets, depreciation and amortization, and capital expenditures are also included in Other. Management uses restaurant margin as the measure for assessing performance of our segments. 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. Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our CODM to evaluate core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis. 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 restaurant-level operational efficiency and performance. We exclude pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results. We 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. We also exclude impairment and closure expense as we believe this provides a clearer perspective of the Company’s ongoing operating performance and a more useful comparison to prior period results. Restaurant margin as presented may not be comparable to other similarly titled measures of other companies in our industry. Restaurant and other sales for all operating segments are derived primarily from food and beverage sales. We do not rely on any major customer as a source of sales and the customers and assets of our reportable segments are located predominantly in the United States. There are no material transactions between reportable segments. The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended December 27, 2022 ​ Texas Roadhouse ​ Bubba's 33 ​ Other ​ Total Restaurant and other sales $ 3,762,884 ​ $ 211,690 ​ $ 14,217 ​ $ 3,988,791 Restaurant operating costs (excluding depreciation and amortization) ​ 3,162,687 ​ ​ 184,756 ​ ​ 13,847 ​ ​ 3,361,290 Restaurant margin $ 600,197 ​ $ 26,934 ​ $ 370 ​ $ 627,501 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization $ 112,546 ​ $ 13,012 ​ $ 11,679 ​ $ 137,237 Segment assets ​ 2,015,173 ​ ​ 201,503 ​ ​ 308,989 ​ ​ 2,525,665 Capital expenditures ​ 204,662 ​ ​ 30,625 ​ ​ 10,834 ​ ​ 246,121 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-27 Table of Contents Texas Roadhouse, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Tabular amounts in thousands, except share and per share data) ​ Fiscal Year Ended December 28, 2021 ​ Texas Roadhouse ​ Bubba's 33 ​ Other ​ Total Restaurant and other sales $ 3,253,889 ​ $ 174,355 ​ $ 10,932 ​ $ 3,439,176 Restaurant operating costs (excluding depreciation and amortization) ​ 2,701,850 ​ ​ 145,493 ​ ​ 10,101 ​ ​ 2,857,444 Restaurant margin $ 552,039 ​ $ 28,862 ​ $ 831 ​ $ 581,732 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization $ 105,079 ​ $ 12,700 ​ $ 8,982 ​ $ 126,761 Segment assets ​ 1,874,620 ​ ​ 179,856 ​ ​ 457,476 ​ ​ 2,511,952 Capital expenditures ​ 167,746 ​ ​ 23,408 ​ ​ 9,538 ​ ​ 200,692 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended December 29, 2020 ​ Texas Roadhouse ​ Bubba's 33 ​ Other ​ Total Restaurant and other sales $ 2,267,815 ​ $ 106,981 ​ $ 5,381 ​ $ 2,380,177 Restaurant operating costs (excluding depreciation and amortization) ​ 2,011,517 ​ ​ 98,565 ​ ​ 4,455 ​ ​ 2,114,537 Restaurant margin $ 256,298 ​ $ 8,416 ​ $ 926 ​ $ 265,640 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization $ 98,485 ​ $ 12,036 ​ $ 7,356 ​ $ 117,877 Capital expenditures ​ 127,162 ​ ​ 13,833 ​ ​ 13,406 ​ ​ 154,401 ​ A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest expense, net and equity income (loss) from investments in unconsolidated affiliates to reportable segments. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ ​ December 27, 2022 ​ December 28, 2021 ​ December 29, 2020 ​ Restaurant margin ​ $ 627,501 ​ $ 581,732 ​ $ 265,640 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Add: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Franchise royalties and fees ​ ​ 26,128 ​ ​ 24,770 ​ ​ 17,946 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-opening ​ ​ 21,883 ​ ​ 24,335 ​ ​ 20,099 ​ Depreciation and amortization ​ ​ 137,237 ​ ​ 126,761 ​ ​ 117,877 ​ Impairment and closure, net ​ ​ 1,600 ​ ​ 734 ​ ​ 2,263 ​ General and administrative ​ ​ 172,712 ​ ​ 157,480 ​ ​ 119,503 ​ Income from operations ​ $ 320,197 ​ $ 297,192 ​ $ 23,844 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (20) Subsequent Events On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants. Pursuant to the terms of the acquisition agreements, we paid an aggregate purchase price of approximately $ 39.0 million. We expect to complete the preliminary purchase price allocations relating to these transactions in the first quarter of fiscal 2023. ​ F-28