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Item 5. Market for Registrant’s Common Equity

2024-02-23 compared with 2023-02-24 · 170 added, 194 removed, 294 unchanged (55% of the section changed)

ITEM 5—MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the Nasdaq Global Select Market under the symbol TXRH.

The number of holders of record of our common stock as of February 14, 2024 was 158.

On February 14, 2023, our Board of Directors (the "Board") declared a quarterly dividend of $0.55 per share of common stock which will be distributed on March 24, 2023 to shareholders of record at the close of business on March 8, 2023.

The declaration and payment of cash dividends on our common stock is at the discretion of our Board, and any decision to declare a dividend will be based on a number of factors including, but not limited to, earnings, financial condition, applicable covenants under our amended credit facility and other contractual restrictions, or other factors deemed relevant.

On February 14, 2024, our Board declared a quarterly dividend of $0.61 per share of common stock which will be distributed on March 26, 2024 to shareholders of record at the close of business on March 13, 2024.

The declaration and payment of cash dividends on our common stock is at the discretion of our Board, and any decision to declare a dividend will be based on a number of factors including, but not limited to, earnings, financial condition, applicable covenants under our credit facility and other contractual restrictions, or other factors deemed relevant.

Unregistered Sales of Equity Securities

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On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.

This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 31, 2019 that authorized the Company to repurchase up to $250.0 million of our common stock.

This stock repurchase program has no expiration date.

All repurchases to date have been made through open market transactions.

In 2023, we paid $50.0 million to repurchase 455,026 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 13 week period ended December 27, 2022, we did not repurchase any shares of our common stock.

For the 13 weeks ended December 26, 2023, we paid $4.8 million to repurchase 40,707 shares of our common stock.

As of December 26, 2023, $116.9 million remains authorized for stock repurchases.

The following table includes information regarding purchases of our common stock made by us during the quarter ended December 26, 2023:

Maximum Number

(or Approximate

Dollar Value) of

Part of Publicly

Shares that May

Yet Be Purchased

Under the Plans

September 27 to October 24

October 25 to November 21

November 22 to December 26

Stock Performance Graph

The following graph sets forth the cumulative total shareholder return experienced by holders of the Company’s common stock compared to the cumulative total return of the broad market indices of the S&P 500 Index and Russell 3000 Index as well as the industry specific indices of the S&P Composite 1500 Restaurant Sub-Index and Russell 3000 Restaurant Index for the five year period ended December 27, 2022, the last trading day of our fiscal year.

The following graph sets forth the cumulative total shareholder return experienced by holders of the Company’s common stock compared to the cumulative total return of the S&P 500 Index as well as the industry specific S&P Composite 1500 Restaurant Sub-Index for the five year period ended December 26, 2023, the last trading day of our fiscal year.

The graph assumes the values of the investment in our common stock and each index was $100 on December 26, 2018 and the reinvestment of all dividends paid during the period of the securities comprising the indices.

Historically, we have presented the performance graph by comparing our cumulative total shareholder return against the Russell 3000 Index and Russell 3000 Restaurant Index.

In 2022, we transitioned to the S&P 500 Index and S&P Composite 1500 Restaurant Sub-Index as these are more widely utilized industry indices.

The performance graph below presents all the indices used for this transition year.

The stock price performance shown on the graph below does not indicate future performance.

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S&P Composite 1500 Restaurant Sub-Index

Russell 3000 Restaurant Index

ITEM 6— RESERVED

ITEM 7—MANAGEMENT’S DISCUSSIO N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSIO N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion and analysis below of the financial condition and results of operations for Texas Roadhouse, Inc.

(collectively, the "Company,"

"we,"

"our"

and/or "us") should be read in conjunction with the consolidated financial statements and the notes to such financial statements (pages F-1 to F-28), "Forward-looking Statements"

(page 3) and Risk Factors set forth in Item 1A.

(the "Company," "we," "our" and/or "us") should be read in conjunction with the consolidated financial statements and the notes to such financial statements (pages F-1 to F-29), "Forward-looking Statements" (page 3) and Risk Factors set forth in Item 1A.

For discussion and analysis of our financial condition and results of operations for fiscal year 2022 compared to fiscal year 2021, see Part II, Item 7 of our 2022 Form 10-K.

Texas Roadhouse, Inc.

is a growing restaurant company operating predominately in the casual dining segment.

is a growing restaurant company operating predominantly in the casual dining segment.

Our late founder, W.

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As of December 26, 2023, our 741 restaurants included:

● 597 "company restaurants,"

of which 577 were wholly-owned and 20 were majority- owned.

Of the 597 restaurants we owned and operated at the end of 2022, we operated 552 as Texas Roadhouse restaurants, 40 as Bubba’s 33 restaurants and five as Jaggers restaurants.

● 635 company restaurants, of which 615 were wholly-owned and 20 were majority- owned.

The results of operations of company restaurants are included in our consolidated statements of income and comprehensive income.

The portion of income attributable to noncontrolling interests in company restaurants that are majority-owned is reflected in the line item entitled "Net income attributable to noncontrolling interests"

in our consolidated statements of income and comprehensive income.

● 100 "franchise restaurants,"

23 of which we have a 5.0% to 10.0% ownership interest.

All of the franchise restaurants operated as Texas Roadhouse restaurants.

The income derived from our minority interests in these franchise restaurants is reported in the line item entitled "Equity income from investments in unconsolidated affiliates"

in our consolidated statements of income and comprehensive income.

Additionally, we provide various management services to these 23 franchise restaurants, as well as five additional franchise restaurants in which we have no ownership interest.

Of the 100 franchise restaurants, 62 were domestic restaurants and 38 were international restaurants.

We have contractual arrangements that grant us the right to acquire at pre-determined formulas the remaining equity interests in 18 of the 20 majority-owned company restaurants and 58 of the 62 domestic franchise restaurants.

Throughout this report, we use the term "restaurants"

to include Texas Roadhouse and Bubba’s 33, unless otherwise noted.

The portion of income attributable to noncontrolling interests in company restaurants that are majority-owned is reflected in the line item net income attributable to noncontrolling interests in our consolidated statements of income and comprehensive income.

Of the 635 company restaurants, we operated 582 as Texas Roadhouse restaurants, 45 as Bubba’s 33 restaurants and eight as Jaggers restaurants.

● 106 franchise restaurants, of which 20 we have a 5.0% to 10.0% ownership interest.

The income derived from our minority interests in these franchise restaurants is reported in the line item equity income (loss) from investments in unconsolidated affiliates in our consolidated statements of income and comprehensive income.

Of the 106 franchise restaurants, 56 were domestic Texas Roadhouse restaurants, two were domestic Jaggers restaurants and 48 were international Texas Roadhouse restaurants.

We have contractual arrangements that grant us the right to acquire at pre-determined formulas the remaining interests in 18 of the 20 majority-owned company restaurants and 53 of the 58 domestic franchise restaurants.

Throughout this report, we use the term "restaurants" to include Texas Roadhouse and Bubba’s 33, unless otherwise noted.

Presentation of Financial and Operating Data

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Fiscal year 2023 and fiscal year 2022 were both 52 weeks in length, and the fourth quarters were both 13 weeks in length.

COVID-19 and Related Impacts

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 locations operated without restriction.

We also experienced and expect to continue to experience commodity inflation and certain food and supply shortages as well as a more competitive labor market.

To the extent these challenges persist, we will continue to experience increased costs.

Long-term Strategies to Grow Earnings Per Share and Create Shareholder Value

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We continue to evaluate opportunities to develop restaurants in existing markets and in new domestic and international markets.

Domestically, we remain focused primarily on markets

where we believe a significant demand for our restaurants exists because of population size, income levels, the presence of shopping and entertainment centers and a significant employment base.

Domestically, we remain focused primarily on markets where we believe a significant demand for our restaurants exists because of population size, income levels, the presence of shopping and entertainment centers and a significant employment base.

In addition, we continue to pursue opportunities to acquire domestic franchise locations to expand our company restaurant base.

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We have also entered into area development agreements for Jaggers, our fast-casual concept.

We expect our first Jaggers franchise restaurant to open in 2023.

In 2022, we opened 23 company restaurants while our franchise partners opened seven restaurants internationally.

The company restaurants included 18 Texas Roadhouse restaurants, four Bubba’s 33 restaurants, and one Jaggers restaurant.

In 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and three Jaggers company restaurants.

In addition, we expect as many as nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise openings in 2023.

In 2022, we completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of $33.1 million.

On our first day of fiscal year 2023, we completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of approximately $39.0 million.

We opened our first two Jaggers franchise restaurants in 2023.

In 2023, we opened 30 company restaurants while our franchise partners opened 15 restaurants.

The company restaurants included 22 Texas Roadhouse restaurants, five Bubba’s 33 restaurants, and three Jaggers

The franchise restaurants included ten international Texas Roadhouse restaurants, three domestic Texas Roadhouse restaurants and two domestic Jaggers restaurants.

In 2023, we also completed the acquisition of eight domestic franchise Texas Roadhouse restaurants for an aggregate purchase price of $39.1 million.

● Maintaining and/or Improving Restaurant Level Profitability.

We continue to focus on driving comparable restaurant sales to maintain or improve store level profitability.

We continue to focus on driving comparable restaurant sales to maintain or improve restaurant level profitability.

This includes a pricing strategy that balances the impacts of inflationary pressures with our long-term value positioning.

In terms of driving traffic at our restaurants, we remain focused on encouraging repeat visits by our guests and attracting new guests through our continued commitment to operational standards relating to food and service quality.

To attract new guests and increase the frequency of visits of our existing guests, we continue to drive various localized marketing programs, focus on speed of service, increase throughput by adding seats and parking at certain restaurants and continue to enhance the guest digital experience.

To attract new guests and increase the frequency of visits of our existing guests, we continue to drive various localized marketing programs, focus on speed of service and kitchen efficiency, increase throughput by adding seats and parking at certain restaurants and continue to enhance the guest digital experience.

At our high volume restaurants, we continue to look for opportunities to increase our dining room capacity by adding on to our existing building and/or to increase our parking capacity by leasing or purchasing property that adjoins our site.

We also continue to make a number of building modifications and/or expansions to existing restaurants in order to better accommodate our increased dine-in and to-go sales.

We also continue to make a number of building modifications and/or expansions to existing restaurants in order to better accommodate increased dine-in and to-go sales.

These modifications include room expansions which add additional guest seating, the addition of to-go areas and cooler expansions to accommodate higher inventory levels.

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We continue to evaluate opportunities to return capital to our shareholders, including the payment of dividends and repurchase of common stock.

In 2011, our Board of Directors (the "Board") declared our first quarterly dividend of $0.08 per share of common stock which has consistently grown over time.

In 2011, our Board declared our first quarterly dividend of $0.08 per share of common stock which has consistently grown over time.

In 2023, the Board declared a quarterly cash dividend of $0.55 per share of common stock.

On February 14, 2023, the Board declared a quarterly cash dividend of $0.55 per share of common stock, representing a 20% increase compared to the quarterly dividend declared in the prior year period.

On February 14, 2024, the Board declared a quarterly cash dividend of $0.61 per share of common stock, representing an 11% increase compared to the quarterly dividend declared in the prior year period.

In 2008, the Board approved our first stock repurchase program.

From inception through December 27, 2022, we have paid $633.5 million through our authorized stock repurchase programs to repurchase 21,041,442 shares of our common stock at an average price per share of $30.11.

On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.

In 2023, we paid $50.0 million to repurchase 455,026 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.

As of December 27, 2022, $166.9 million remains authorized for stock repurchases.

As of December 26, 2023, $116.9 million remained authorized for stock repurchases.

From inception through December 26, 2023, we have paid $683.5 million through our authorized stock repurchase programs to repurchase 21,496,468 shares of our common stock at an average price per share of $31.80.

Key Measures We Use To Evaluate Our Company

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● Comparable Restaurant Sales.

Comparable restaurant sales reflects the change in sales for all company restaurants over the same period of the prior year for the comparable restaurant base.

Comparable restaurant sales reflect the change in sales for all company restaurants across all concepts, unless otherwise noted, over the same period of the prior year for the comparable restaurant base.

We define the comparable restaurant base to include those restaurants open for a full 18 months before the beginning of the period measured excluding restaurants permanently closed during the period.

Comparable restaurant sales can be impacted by changes in guest traffic counts or by changes in the per person average check amount.

Comparable restaurant sales can be impacted by changes in guest traffic counts or by changes in the

per person average check amount.

Menu price changes, the mix of menu items sold and the mix of dine-in versus to-go sales can affect the per person average check amount.

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Average unit volume represents the average annual restaurant sales for Texas Roadhouse and Bubba’s 33 restaurants open for a full six months before the beginning of the period measured excluding sales of restaurants permanently closed during the period.

Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels lower than company average.

At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales levels higher than company average.

Historically, average unit volume growth is less than comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth levels lower than the company average.

At times, average unit volume growth may be more than comparable restaurant sales growth which indicates that newer restaurants are operating with sales growth levels higher than company average.

● Store Weeks and New Restaurant Openings.

Store weeks represent the number of weeks that all company restaurants, unless otherwise noted, were open during the reporting period.

Store weeks represent the number of weeks that all company restaurants across all concepts, unless otherwise noted, were open during the reporting period.

Store weeks include weeks in which a restaurant is temporarily closed.

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New restaurant openings reflect the number of restaurants opened during a particular fiscal period, excluding store relocations.

We consider store openings that occur simultaneous with a store closure in the same trade area to be a relocation.

We consider store openings that occur simultaneously with a store closure in the same trade area to be a relocation.

● Restaurant Margin.

Restaurant margin (in dollars and as a percentage of restaurant and other sales) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs.

Restaurant margin (in dollars, as a percentage of restaurant and other sales and per store week) represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent and other operating costs.

Restaurant margin is not a measurement determined in accordance with U.S.

generally accepted accounting principles ("GAAP") and should not be considered in isolation, or as an alternative, to income from operations.

This non-GAAP measure is not indicative of overall company performance and profitability in that this measure does not accrue directly to the benefit of shareholders due to the nature of the costs excluded.

Restaurant margin is widely regarded as a useful metric by which to evaluate core restaurant-level operating efficiency and performance over various reporting periods on a consistent basis.

In calculating restaurant margin, we exclude certain non-restaurant-level costs that support operations, including general and administrative expenses, but do not have a direct impact on core restaurant-level operational efficiency and performance.

We also exclude pre-opening expense as it occurs at irregular intervals and would impact comparability to prior period results.

We also exclude depreciation and amortization expense, substantially all of which relates to restaurant-level assets, as it represents a non-cash charge for the investment in our restaurants.

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.

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 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.

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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.

Other sales include the amortization of fees associated with our third-party gift card sales net of the amortization of gift card breakage income.

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 our consolidated statements of income and comprehensive income.

Other sales include the net impact of the amortization of third-party gift card fees and gift card breakage income, sales related to our non-royalty based retail products and content revenue related to our tabletop kiosk devices.

Franchise Royalties and Fees.

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Food and beverage costs consists of the costs of raw materials and ingredients used in the preparation of food and beverage products sold in our company restaurants.

Approximately half of our food and beverage costs relates to beef.

Approximately half of our food and beverage costs relate to beef.

Restaurant Labor Expenses.

Restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners and market partners.

Restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit sharing incentive compensation expenses earned by our restaurant managing partners and

market partners.

These profit sharing expenses are reflected in restaurant other operating expenses.

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Restaurant Other Operating Expenses.

Restaurant other operating expenses consist of all other restaurant- level operating costs, the major components of which are credit card fees, utilities, supplies, repairs and maintenance, equipment rent, property taxes, profit sharing incentive compensation for our restaurant managing partners and market partners and general liability insurance.

Restaurant other operating expenses consist of all other restaurant- level operating costs, the major components of which are credit card fees, profit sharing incentive compensation for our restaurant managing partners and market partners, utilities, supplies, general liability insurance, advertising, repairs and maintenance, property taxes and outside services.

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 and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.

On average, approximately 70% of total pre-opening costs incurred per restaurant opening relate to the hiring and training of employees.

Pre- opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new or relocated restaurant and consist principally of opening and training team compensation and benefits, travel expenses, rent, food, beverage and other initial supplies and expenses.

The majority of pre-opening costs incurred relate to the hiring and training of employees due to the significant investment we make in training our people.

Pre-opening costs vary by location depending on a number of factors, including the size and physical layout of each location;

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the timing of the restaurant opening;

and the extent of unexpected delays, if any, in obtaining final licenses and permits to open the restaurants.

and the extent of unexpected delays, if any, in obtaining final licenses and permits to open each restaurant.

Depreciation and Amortization Expenses.

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General and Administrative Expenses.

General and administrative expenses are comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth.

This includes software hosting fees, professional fees, group insurance, advertising expense, salary and share-based compensation expense related to executive officers, Support Center employees and market partners and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.

Interest Expense, Net.

Interest expense, net includes interest expense on our debt or financing obligations including the amortization of loan fees reduced by earnings on cash and cash equivalents and capitalized interest.

Equity Income (loss) from Unconsolidated Affiliates.

Equity income (loss) includes our percentage share of net income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates.

December 27, 2022 and December 28, 2021, we owned a 5.0% to 10.0% equity interest in 23 and 24 domestic franchise restaurants, respectively.

Additionally, we had a 40% equity interest in four non- Texas Roadhouse restaurants as part of a joint venture agreement with a casual dining restaurant operator in China that we fully impaired in 2021.

General and administrative expenses comprise expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth.

This includes salary, incentive-based and share-based compensation expense related to executive officers and Support Center employees, salary and share-based compensation expense related to market partners, software hosting fees, professional fees, group insurance, advertising expense and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.

Interest Income (Expense), Net.

Interest income (expense), net includes earnings on cash and cash equivalents and is reduced by interest expense, net of capitalized interest, on our debt or financing obligations including the amortization of loan fees.

Equity Income from Investments in Unconsolidated Affiliates.

Equity income includes our percentage share of net income earned by unconsolidated affiliates and our share of any gain on the acquisition of these affiliates.

As of December 26, 2023 and December 27, 2022, we owned a 5.0% to 10.0% equity interest in 20 and 23 domestic franchise restaurants, respectively.

Net Income Attributable to Noncontrolling Interests.

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2023 Financial Highlights

Total revenue increased $551.0 million or 15.9% to $4.0 billion in 2022 compared to $3.5 billion in 2021 primarily due to an increase in store weeks and an increase in comparable restaurant sales.

Store weeks and comparable restaurant sales increased 6.1% and 9.7%, respectively, at company restaurants in 2022.

Total revenue increased $616.8 million or 15.4% to $4.6 billion in 2023 compared to $4.0 billion in 2022 primarily due to an increase in comparable restaurant sales and an increase in store weeks.

Comparable restaurant sales and store weeks increased 10.1% and 5.8%, respectively, at company restaurants in 2023.

The increase in comparable restaurant sales was due to an increase in guest traffic along with an increase in per person average check.

The increase in store weeks was due to new store openings and the acquisition of franchise restaurants.

The increase in comparable restaurant sales was due to an increase in per person average check and an increase in guest traffic.

Net income increased $24.5 million or 10.0% to $269.8 million in 2022 compared to $245.3 million in 2021 primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and administrative expenses and higher depreciation and amortization expense.

Diluted earnings per share increased 13.5% to $3.97 from $3.50 in the prior year due to the increase in net income and the benefit of share repurchases.

Net income increased $35.1 million or 13.0% to $304.9 million in 2023 compared to $269.8 million in 2022 primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and

administrative expenses and higher depreciation and amortization expenses.

Diluted earnings per share increased 14.3% to $4.54 from $3.97 in the prior year primarily due to the increase in net income.

Restaurant margin dollars increased $80.5 million or 12.8% to $708.0 million in 2023 compared to $627.5 million in 2022 primarily due to higher sales.

Restaurant margin, as a percentage of restaurant and other sales, decreased to 15.4% in 2023 compared to 15.7% in 2022.

The decrease in restaurant margin, as a percentage of restaurant and other sales, was due to commodity and wage and other labor inflation partially offset by higher sales.

The decrease in restaurant margin, as a percentage of restaurant and other sales, was due to commodity inflation, wage and other labor inflation and higher general liability insurance expense partially offset by higher sales.

We repurchased 455,026 shares of common stock for $50.0 million in 2023.

We also paid a quarterly dividend of $0.55 per share of common stock, which totaled $147.2 million.

Results of Operations

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Income from operations

Interest expense, net

Equity income (loss) from investments in unconsolidated affiliates

Interest income (expense), net

Equity income from investments in unconsolidated affiliates

Income before taxes

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Company openings

Company closings

Franchise openings - Domestic

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Company - Jaggers

Franchise - Texas Roadhouse - U.S.

Total company

Franchise - Texas Roadhouse - Domestic

Franchise - Jaggers - Domestic

Franchise - Texas Roadhouse - International

Total franchise

Restaurant and Other Sales

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The increase in store weeks was driven by the opening of new restaurants and the acquisition of franchise restaurants.

The increase in comparable restaurant sales growth was driven primarily by increases in our per person average check as shown in the table below.

The increase in comparable restaurant sales growth was driven by an increase in guest traffic count along with an increase in our per person average check as shown in the table below.

Guest traffic counts

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Comparable restaurant sales growth

The increase in 2022 guest traffic counts was due to an increase in dining room traffic partially offset by a decrease in to-go traffic.

The increase in dining room traffic counts was primarily driven by all of our company locations operating without capacity restrictions for the entire 2022 period.

To-go sales as a percentage of total restaurant sales were 13.3% in 2022 compared to 17.1% in 2021.

The increase in 2023 guest traffic counts was driven by an increase in dining room traffic.

To-go sales as a percentage of restaurant sales were 12.6% in 2023 compared to 13.3% in 2022 and average weekly to-go sales were $18,088 in 2023 compared to $17,504 in 2022.

Per person average check includes the benefit of menu price increases of approximately 2.2% and 2.7% implemented in Q2 2023 and Q4 2023, respectively, as well as increases of 3.2% and 2.9% implemented in Q2 2022 and Q4 2022, respectively.

In 2022, we opened 23 company restaurants, which included 18 Texas Roadhouse restaurants, four Bubba’s 33 restaurants and one Jaggers restaurant.

We also completed the acquisition of eight franchise restaurants.

In 2023, we plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants and three Jaggers company restaurants.

On December 28, 2022, the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.

In total, we expect store week growth of at least 6% in 2023, including the impact of the franchise restaurants acquired.

Other sales primarily represents the net impact of amortization of third-party gift card fees and gift card breakage income.

The net impact was ($6.4) million and ($6.1) million for 2022 and 2021, respectively.

The change was driven primarily by favorable adjustments of $6.6 million and $4.8 million recorded in 2022 and 2021, respectively.

These adjustments related to a change in our estimate of breakage due to a shift in our historic redemption pattern which indicated that the percentage of gift cards sold that are not expected to be redeemed had increased.

This shift in redemption patterns was primarily due to the increase in sales through our third-party gift card program.

As a result, we adjusted our expected breakage assumptions on unredeemed gift cards.

The adjustments were partially offset by an increase in amortization of third-party fees due to an increase in sales through our third-party gift card program.

In 2023, we opened 30 company restaurants, which included 22 Texas Roadhouse restaurants, five Bubba’s 33 restaurants and three Jaggers restaurants.

We also completed the acquisition of eight domestic Texas Roadhouse franchise restaurants.

In 2024, we expect store week growth of approximately 8% across all concepts, including a benefit of 2% from the 53 rd week.

The net impact of these amounts was $(12.7) million and $(6.4) million for 2023 and 2022, respectively.

The change was driven primarily by increased third-party gift card fee amortization from increased gift card sales and a decrease in our breakage adjustment recorded in 2023 of $3.7 million compared to $6.6 million recorded in 2022.

The breakage adjustment relates to a change in our estimate of breakage due to a shift in our historic redemption pattern which indicated that the percentage of gift cards sold that are not expected to be redeemed had increased.

Franchise Royalties and Fees

Franchise royalties and fees increased by $1.4 million or 5.5% compared to 2021 due to comparable restaurant sales growth and new store openings partially offset by decreased royalties related to the eight franchise acquisitions in 2022.

Franchise royalties and fees increased by $1.0 million or 3.8% compared to 2022 primarily due to comparable restaurant sales growth and new store openings partially offset by decreased royalties related to the eight franchise restaurants acquired in 2023.

Franchise comparable restaurant sales increased 9.6% in 2023.

In 2022, our franchise partners opened seven Texas Roadhouse international restaurants.

In 2023, we expect as many as nine Texas Roadhouse international and domestic franchise openings and three Jaggers domestic franchise openings.

In 2023, our existing franchise partners opened three domestic Texas Roadhouse restaurants and ten international Texas Roadhouse restaurants.

Additionally, our first two domestic Jaggers franchise restaurants opened in 2023.

Food and Beverage Costs

Food and beverage costs, as a percentage of restaurant and other sales, increased to 34.6% in 2022 from 33.6% in 2021 primarily due to commodity inflation partially offset by the benefit of a higher guest check.

Commodity inflation was 10.8% in 2022, with higher costs across the basket.

For 2023, we currently expect commodity cost inflation of 5% to 6% for the year with prices locked for approximately 40% of our forecasted costs and the remainder subject to floating market prices.

Food and beverage costs, as a percentage of restaurant and other sales, remained flat at 34.6% in both periods presented as the benefit of a higher guest check was offset by commodity inflation.

Commodity inflation was 5.6% in 2023 primarily due to higher beef costs.

For 2024, we currently expect commodity cost inflation of approximately 5% for the year with prices locked for approximately 40% of our forecasted costs and the remainder subject to floating market prices.

Restaurant Labor Expenses

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Wage and other labor inflation was primarily due to higher wage and benefit expense driven by labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people.

In addition, a higher mix of dining room sales versus to-go sales also contributed to the increase.

The increase was partially offset by the benefit of a higher guest check as well as a decrease in group insurance and workers’ compensation expense due to favorable claims experience of $7.2 million as compared to the prior year.

In addition, there was an increase in group insurance expense due to unfavorable claims experience of $7.6 million, as compared to the prior year period.

The increase was partially offset by a decrease in workers’ compensation expense due to favorable claims experience of $2.5 million, as compared to the prior year period, as well as the benefit of a higher guest check.

In 2024, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of 4% to 5% driven by labor market pressures, increases in state-mandated minimum and tipped wages and increased investment in our people.

Restaurant Rent Expense

Restaurant rent expense, as a percentage of restaurant and other sales, remained flat at 1.7% in both periods presented.

The increase in average unit volume was offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.

Restaurant rent expense, as a percentage of restaurant and other sales, decreased to 1.6% in 2023 compared to 1.7% in 2022.

The decrease was primarily due to an increase in average unit volume and was partially offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.

Restaurant Other Operating Expenses

Restaurant other operating expenses, as a percentage of restaurant and other sales, decreased to 14.9% in 2022 compared to 15.1% in 2021.

The decrease was primarily due to the increase in average unit volume and lower supplies and bonus expense partially offset by higher credit card charges and repair and maintenance costs.

Restaurant other operating expenses, as a percentage of restaurant and other sales, increased to 15.0% in 2023 compared to 14.9% in 2022.

The increase was primarily due to higher general liability insurance expense partially offset by an increase in average unit volume and lower supplies expense.

The increase in general liability insurance expense in 2023 was due to unfavorable claims experience and increased retention levels which resulted in additional expense of $9.8 million as compared to 2022 which included a benefit of $4.9 million.

Restaurant Pre-opening Expenses

Pre-opening expenses were $21.9 million in 2022 compared to $24.3 million in 2021.

Pre-opening expenses were $29.2 million in 2023 compared to $21.9 million in 2022 driven by an increase in the number and timing of new restaurant openings.

Pre-opening costs will fluctuate from period to period based on the specific pre-opening costs incurred for each restaurant, the number and timing of restaurant openings and the number and timing of restaurant managers hired.

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Depreciation and amortization expenses, as a percentage of revenue, decreased to 3.3% in 2023 compared to 3.4% in 2022.

The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation at new restaurants and increased amortization of intangible assets generated from franchise restaurant acquisitions.

The decrease was primarily due to the increase in average unit volume partially offset by higher depreciation expense at our newer restaurants.

Impairment and Closure Costs, Net

Impairment and closure costs, net were $0.3 million and $1.6 million in 2023 and 2022, respectively.

In 2022, impairment and closure costs, net included $1.7 million related to the impairment of land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing closure costs.

In 2023, impairment and closure costs, net primarily related to ongoing closure costs of relocated stores.

In 2022, impairment and closure costs, net included $1.7 million related to the impairment of land, building and operating lease right-of-use assets at three restaurants, two of which 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.

In 2021, impairment and closure costs, net included the impairment of the fixed assets and operating lease right-of-use assets at two restaurants, both of which have relocated.

General and Administrative Expenses

General and administrative expenses, as a percentage of total revenue, decreased to 4.3% in 2022 compared to 4.5% in 2021.

The decrease was primarily driven by the increase in average unit volume and lower legal settlement expense partially offset by increased managing partner conference expense of $2.5 million.

Interest Expense, Net

Interest expense was $0.1 million in 2022 compared to $3.7 million in 2021.

The decrease was primarily driven by increased earnings on our cash and cash equivalents and decreased borrowings on our amended revolving credit facility.

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.

For 2023, we expect our effective tax rate to be approximately 14% based on forecasted operating results, excluding the impact of any legislative changes enacted.

General and administrative expenses, as a percentage of total revenue, remained flat at 4.3% in both periods presented.

A separation payout, net of restricted stock forfeitures, of $2.6 million related to the retirement of an executive officer in the first quarter of 2023, and increased software hosting fees were offset by an increase in average unit volume.

Interest Income (Expense), Net

Interest income (expense), net was $3.0 million in 2023 compared to $(0.1) million in 2022.

The increase was primarily driven by increased earnings on our cash and cash equivalents and decreased borrowings on our credit facility.

Equity Income from Unconsolidated Affiliates

Equity income was $1.4 million in 2023 compared to $1.2 million in 2022.

The increase was primarily due to a $0.6 million gain on the acquisition of four of these affiliates in 2023 as compared to a $0.3 million gain on the acquisition of one of these affiliates in 2022.

Income Tax Expense

Our effective tax rate decreased to 12.5% in 2023 compared to 13.6% in 2022.

The decrease was primarily due to an increase in the FICA tip tax credit and an increase in excess tax benefits related to share-based compensation.

For 2024, we expect an effective tax rate of approximately 14% based on forecasted operating results.

Segment Information

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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.

Management uses restaurant margin as the measure for assessing performance of our segments.

Our remaining operating segments, which include the results of our domestic company and franchise Jaggers restaurants and the results of our retail initiatives, are included in Other.

Management uses restaurant margin as the primary measure for assessing performance of our segments.

Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives.

Restaurant margin is used by our chief operating decision maker ( "CODM"

) to evaluate restaurant-level operating efficiency and performance.

Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives that is included in Other.

Restaurant margin is used by our chief operating decision maker to evaluate restaurant-level operating efficiency and performance.

A reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.

The following table presents a summary of restaurant margin by segment (in thousands):

52 Weeks Ended

Fiscal Year Ended

December 26, 2023

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In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 15.5% in 2023 from 16.0% in 2022.

Restaurant margin was negatively impacted by commodity and wage and other labor inflation which was partially offset by the benefit of an increase in comparable restaurant sales.

In our Bubba’s 33 reportable segment, restaurant margin dollars decreased $1.9 million or 6.7% in 2022.

In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 12.7% in 2022 from 16.6% in 2021.

These decreases were primarily driven by commodity and wage and other labor inflation which was partially offset by the benefit of an increase in comparable restaurant sales.

Restaurant margin was negatively impacted by commodity inflation, driven by beef, and wage and other labor inflation which was partially offset by the benefit of higher sales.

In our Bubba’s 33 reportable segment, restaurant margin dollars increased $7.0 million or 26.0% in 2023.

In addition, restaurant margin, as a percentage of restaurant and other sales, increased to 13.7% in 2023 from 12.7% in 2022.

These increases were primarily due to higher sales and commodity deflation, driven by poultry, partially offset by wage and other labor inflation.

Liquidity and Capital Resources

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Net cash provided by operating activities was $565.0 million in 2023 compared to $511.7 million in 2022.

This increase was primarily due to an increase in net income, an increase in non-cash items such as depreciation and amortization and a favorable increase in working capital.

The favorable increase in working capital was partially offset by the final remittance of our deferred payroll tax liability of $23.0 million related to the Coronavirus Aid, Relief, and Economic Security Act.

Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital.

This increase was due to an increase in net income, an increase in depreciation and amortization expense and a favorable change in working capital.

Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital, if necessary.

Sales are primarily for cash, and restaurant operations do not require significant inventories or receivables.

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Net cash used in investing activities was $367.2 million in 2023 compared to $263.7 million in 2022.

The increase was due to the acquisition of eight franchise restaurants for a net purchase price of $33.1 million as well as an increase in capital expenditures, primarily driven by an increase in new company restaurant construction and refurbishments and relocations of existing restaurants.

The increase was primarily due to higher capital expenditures, driven by the new company restaurants pipeline and the refurbishment of existing restaurants.

The increase in the new company restaurants pipeline is primarily due to an increase in new locations currently under construction and higher average development costs per location.

The increase in the refurbishment of existing restaurants is primarily due to increased maintenance needs driven by the high sales volumes at our restaurants.

We require capital principally for the development of new company restaurants, the refurbishment or relocation of existing restaurants and the acquisition of franchise restaurants, if any.

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The following table presents a summary of capital expenditures (in thousands):

Fiscal Year Ended

New company restaurants

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Our future capital requirements will primarily depend on the number and mix of new restaurants we open, the timing of those openings and the restaurant prototype developed in a given fiscal year.

These requirements will include costs directly related to new restaurant construction costs or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.

In 2023, we expect our capital expenditures to be approximately $265 million as we currently plan to open approximately 25 to 30 Texas Roadhouse and Bubba’s 33 company restaurants.

We also expect to have as many as four relocations in 2023.

In addition, on the first day of our 2023 fiscal year, we completed the acquisition of eight domestic franchise restaurants for an aggregate purchase price of approximately $39.0 million.

We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by operating activities, and if needed, funds available under our amended credit facility.

These requirements will include costs directly related to new restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.

We intend to satisfy our capital requirements over the next 12 months with cash on hand, net cash provided by operating activities, and if needed, funds available under our revolving credit facility.

In 2024, we expect our capital expenditures to be $340 million to $350 million.

Net cash used in financing activities was $267.4 million in 2023 compared to $409.8 million in 2022.

The increase is primarily due to the significant increases in share repurchases and our dividend payment.

These increases were partially offset by a decrease in repayments made on our amended revolving credit facility.

On March 17, 2022, the Board approved a stock repurchase program under which we may repurchase up to $300.0 million of our common stock.

This stock repurchase program has no expiration date and replaced a previous stock repurchase program which was approved on May 31, 2019.

The decrease is primarily due to a decrease in the amount of share repurchases partially offset by an increase in our quarterly dividend payments.

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.

All repurchases to date under our stock repurchase programs have been made through open market transactions.

The timing and amount of any repurchases will be determined by management under parameters established by the Board, based on an evaluation of our stock price, market conditions and other corporate considerations.

In 2023, we paid $50.0 million to repurchase 455,026 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.

In 2022, we paid $212.9 million to repurchase 2,734,005 shares of our common stock.

As of December 26, 2023, $116.9 million remained under our authorized stock repurchase program.

On February 17, 2022, our Board authorized the payment of a quarterly dividend of $0.46 per share of common stock.

The payment of dividends totaled $124.1 million and $83.7 million in 2022 and 2021, respectively.

On February 14, 2023, our Board authorized the payment of a quarterly dividend of $0.55 per share of common stock compared to the quarterly dividend of $0.46 per share of common stock declared in 2022.

The payment of quarterly dividends totaled $147.2 million and $124.1 million in 2023 and 2022, respectively.

On February 14, 2024, our Board declared a quarterly cash dividend of $0.61 per share of common stock.

We paid distributions of $8.0 million and $7.8 million in 2023 and 2022, respectively, to equity holders of our majority-owned company restaurants.

On May 4, 2021, we entered into an agreement to amend our revolving credit facility with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A.

We maintain a revolving credit facility (the "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.

The terms of the amendment require us to pay interest on outstanding borrowings at the London Interbank Offered Rate ("LIBOR") plus a margin of 0.875% to 1.875% and pay a commitment fee of 0.125% to 0.30% per year on any unused portion of the amended revolving credit facility, in each case depending on our leverage ratio.

The agreement also provides an Alternate Base Rate that may be substituted for LIBOR.

As of December 27, 2022, we had $50.0 million outstanding on the amended revolving credit facility and $233.5 million of availability, net of $16.5 million of outstanding letters of credit.

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.

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.

The credit facility is 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 credit facility has a maturity date of May 1, 2026.

As of December 26, 2023, we had no outstanding balance on the credit facility and had $295.3 million of availability, net of $4.7 million of outstanding letters of credit.

As of December 27, 2022, we had $50.0 million outstanding on the credit facility, which was repaid in 2023, and $233.5 million of availability, net of $16.5 million of outstanding letters of credit.

The outstanding amount as of December 27, 2022 is included as long-term debt on our consolidated balance sheet.

The interest rate for the credit facility as of December 26, 2023 and December 27, 2022 was 6.23% and 5.21%, respectively.

The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio.

The credit facility permits us to incur additional secured or unsecured indebtedness, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth.

We were in compliance with all financial covenants as of December 26, 2023.

Contractual Obligations

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Payments Due by Period

Long-term debt obligation, including current maturities

Obligations under finance leases

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Total contractual obligations(2)

(1) Includes interest on our revolving credit facility and interest on our financing leases.

We used the interest rate on our amended revolving credit facility as of December 27, 2022 for our variable rate debt and assumed $50.0 million remains outstanding on our amended revolving credit facility through the respective maturity for all borrowings.

We assumed a constant interest rate until maturity on our financing leases.

(1) Includes interest on our financing leases and assumes a constant interest rate until maturity.

(2) Unrecognized tax benefits under Accounting Standards Codification 740, Income Taxes, are not significant and excluded from this amount.

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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.

No material liabilities have been recorded as of December 26, 2023 or 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.

Critical Accounting Policies and Estimates

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Under our policies, trailing 12- month cash flow results under a predetermined amount at the individual restaurant level signals a potential impairment.

In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over its estimated useful life, which is usually a period of 25 years.

In our evaluation of restaurants that do not meet the cash flow threshold, we estimate future undiscounted cash flows from operating the restaurant over the remaining useful life of the primary asset, which is the building or the operating lease right-of-use asset.

In the estimation of future cash flows, we consider the period of time the restaurant has been open, the trend of operations over such period and future periods and expectations for future sales growth.

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As we assess the ongoing expected cash flows and carrying amounts of our long- lived assets, these factors could cause us to realize a material impairment charge.

Based on our reviews performed on the cash flows of our restaurants, the carrying amount associated with restaurants deemed at risk for impairment is not material to our consolidated financial statements.

If assets are determined to be impaired, we measure the impairment charge by calculating the amount by which the asset carrying amount exceeds its estimated fair value.

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If these assumptions change in the future, we may be required to record impairment charges for these assets.

In 2022, we recorded impairment and closure costs, net of $1.6 million.

This included $1.7 million related to the impairment of land, building and operating lease right-of-use assets at three restaurants, two of which have relocated and $0.6 million related to ongoing closure costs.

This was partially offset by a gain of $0.7 million associated with the sale of land and building that was previously classified as assets held for sale.

Refer to Note 17 in the consolidated financial statements for further discussion regarding closures and impairments recorded in 2022, 2021 and 2020.

In 2023, we recorded impairment and closure costs, net of $0.3 million related to ongoing closure costs of relocated stores.

Refer to Note 17 in the consolidated financial statements for further discussion regarding impairment and closure costs recorded in 2023, 2022 and 2021.

Goodwill is tested annually for impairment and is tested more frequently if events and circumstances indicate that the asset might be impaired.

An impairment loss is recognized to the extent that the carrying amount exceeds the fair value of the reporting unit.

An impairment loss is recognized to the extent that the carrying amount exceeds the fair value of the reporting unit, up to the amount of goodwill recorded.

Goodwill is required to 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.

An entity may first assess qualitative factors

in order to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

Our reporting units are at the concept level.

An entity may first assess qualitative factors in order to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

The entity may also elect to bypass the qualitative assessment and determine the fair value of the reporting unit and compare it to its carrying amount.

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No other reporting units had goodwill balances.

In 2021, due to a change in our management reporting structure, we changed the designation of our operating segment and reporting unit to be at the concept level from the restaurant level.

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.

In performing the qualitative assessment, we reviewed factors such as macroeconomic conditions, industry and market considerations, cost factors, changes in management or key personnel, sustained decreases in share price and the overall financial performance of the Company’s reporting units at the concept level.

As a result of the qualitative assessment, no indicators of impairment were identified, and no additional indicators of impairment were identified through the end of the fourth quarter that would require additional testing.

Changes in circumstances existing at the measurement date or at other times in the future could result in an impairment loss.

Refer to Note 17 in the consolidated financial statements for further discussion regarding closures and impairments recorded, if any.

Effects of Inflation

We are currently operating in a period of high inflation, led primarily by commodity cost and wage and other labor inflation.

During recent years, we have operated during periods of high inflation, led primarily by commodity cost and wage

and other labor inflation.

Commodity cost inflation is due to increased costs incurred by our vendors related to increased labor, transportation, packaging, and raw materials costs.

Wage and other labor inflation is driven by higher wage and benefit expense due to by labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people.

Wage and other labor inflation is driven by higher wage and benefit expense due to labor market pressures along with increases in state-mandated minimum and tipped wage rates and increased investment in our people.

Some of the impacts of inflation have been offset by menu price increases and other adjustments made during the year.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity