What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-02-28 compared with 2024-02-23 · 150 added, 133 removed, 331 unchanged (46% of the section changed)

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The number of holders of record of our common stock as of February 19, 2025 was 157.

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.

On February 19, 2025, our Board declared a quarterly dividend of $0.68 per share of common stock which will be distributed on April 1, 2025 to shareholders of record at the close of business on March 18, 2025.

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.

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From inception through December 31, 2024, we have paid $763.3 million through our authorized stock repurchase programs to repurchase 21,958,130 shares of our common stock at an average price per share of $34.76.

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.

On March 17, 2022, the Board approved a stock repurchase program for the repurchase of up to $300.0 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.

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:

The timing and amount of any repurchases through this program are determined by management under parameters approved by the Board, based on an evaluation of our stock price, market conditions, and other corporate considerations, including complying with Rule 10b5-1 trading arrangements under the Exchange Act.

In 2024, we paid $79.8 million, excluding excise taxes, to repurchase 461,662 shares of our common stock.

For the fourth quarter ended December 31, 2024, we paid $35.1 million, excluding excise taxes, to repurchase 182,748 shares of our common stock.

As of December 31, 2024, $37.1 million remained authorized for stock repurchases.

The following table includes information regarding purchases of our common stock, excluding the impact of excise taxes, made by us during the quarter ended December 31, 2024:

Maximum Number

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November 20 to December 31

On February 19, 2025, our Board approved a stock repurchase program for the repurchase of up to $500.0 million of our common stock.

Any repurchases under this plan will be made by the Company through open market transactions.

This stock repurchase program has no expiration date and replaces the previous stock repurchase program which was approved in 2022.

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 S&P 500 Index as well as the industry specific S&P Composite 1500 Restaurant Sub-Index for the five year period ended December 31, 2024, 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.

The graph assumes the values of the investment in our common stock and each index was $100 on January 1, 2020 and the reinvestment of all dividends paid during the period of the securities comprising the indices.

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

Comparison of Cumulative Total Return Since December 26, 2018

Comparison of Cumulative Total Return Since January 1, 2020

Texas Roadhouse, Inc.

S&P Composite 1500 Restaurant Sub-Index

ITEM 6 —RESERVED

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

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(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-27), "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.

Further, the discussion and analysis below generally discusses 2024 items and year-to-year comparisons between 2024 and 2023.

Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 are not included in this Annual Report on Form 10-K and can be found in "Management’s Discussion and Analysis of Financial Conditions and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 26, 2023, filed with the SEC on February 23, 2024.

Texas Roadhouse, Inc.

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Kent Taylor, started the business in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana.

Since then, we have grown to three concepts with 741 restaurants in 49 states and ten foreign countries.

Since then, we have grown to three concepts with 784 restaurants in 49 states, one U.S.

territory, and ten foreign countries.

As of December 31, 2024, our 784 restaurants included:

● 666 company restaurants, of which 647 were wholly-owned and 19 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 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.

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

Of the 666 company restaurants, we operated 608 as Texas Roadhouse restaurants, 49 as Bubba’s 33 restaurants, and nine as Jaggers restaurants.

● 118 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.

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

Of the 118 franchise restaurants, 56 were domestic Texas Roadhouse restaurants, four were domestic Jaggers restaurants, 57 were international Texas Roadhouse restaurants, including one restaurant in a U.S.

territory, and one was an international Jaggers restaurant.

We have contractual arrangements that grant us the right to acquire at pre-determined formulas the remaining equity interests in 17 of the 19 majority-owned company restaurants and 55 of the 60 domestic franchise restaurants.

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

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We operate on a fiscal year that ends on the last Tuesday in December.

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

Fiscal year 2024 was 53 weeks in length and, as such, the fourth quarter of fiscal 2024 was 14 weeks in length.

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

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

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We have entered into area development and franchise agreements for the development and operation of Texas Roadhouse restaurants in numerous foreign countries and one U.S.

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

We opened our first two Jaggers franchise restaurants in 2023.

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

In 2024, we opened 31 company restaurants while our franchise partners opened 14 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.

The company restaurants included 26 Texas Roadhouse restaurants, four Bubba’s 33 restaurants, and one Jaggers restaurant.

The franchise restaurants included 11 international Texas Roadhouse restaurants, including one restaurant in a U.S.

territory, two domestic Jaggers restaurants, and our first international Jaggers restaurant.

● Maintaining and/or Improving Restaurant Level Profitability.

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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 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.

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To support our growth, we have made investments in our infrastructure across all critical functions, including the development of new strategic initiatives.

Whether we are able to leverage our infrastructure in future years by growing our general and administrative costs at a slower rate than our revenue will depend, in part, on our new restaurant openings, our comparable restaurant sales growth rate going forward and the level of investment we continue to make in our infrastructure.

Our ability to leverage our infrastructure in future years by growing our general and administrative costs at a slower rate than our revenue will depend, in part, on our new restaurant openings, our comparable restaurant sales growth rate going forward, and the level of investment we continue to make in our infrastructure.

● Returning Capital to Shareholders.

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

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

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 19, 2025, the Board declared a quarterly cash dividend of $0.68 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.

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.

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

On February 19, 2025, our Board approved a stock repurchase program for the repurchase of up to $500 million of our common stock.

This stock repurchase program has no expiration date and replaces the previous stock repurchase program of $300 million which was approved on March 17, 2022.

In 2024, we paid $79.8 million, excluding excise taxes, to repurchase 461,662 shares of our common stock.

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● Comparable Restaurant Sales.

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 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, if applicable.

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.

● Average Unit Volume.

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 growth levels lower than the company average.

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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 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.

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

We exclude pre-opening expenses as they occur at irregular intervals and would impact comparability to prior period results.

We exclude depreciation and amortization expenses, substantially all of which relate to restaurant-level assets, as they represent a non-cash charge for the investment in our restaurants.

We exclude impairment and closure expenses 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 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.

Other sales primarily include the net impact of the amortization of third-party gift card fees and gift card breakage income and content revenue related to our tabletop kiosk devices.

Franchise Royalties and Fees.

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Domestic and international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory.

Revenues related to our royalty-based retail products are also included within franchise royalties and fees.

Food and Beverage Costs.

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

Food and beverage costs consist 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 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, 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.

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

Pre-opening Expenses.

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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.

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, and the realized and unrealized holding gains and losses related to the investments in our deferred compensation plan.

Interest Income, Net.

Interest income, 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, as applicable.

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.

As of December 31, 2024 and December 26, 2023, we owned a 5.0% to 10.0% equity interest in 20 domestic franchise restaurants.

Net Income Attributable to Noncontrolling Interests.

Net income attributable to noncontrolling interests represents the portion of income attributable to the other owners of the majority- owned restaurants.

Our consolidated subsidiaries include 20 majority-owned restaurants for all periods presented.

Our consolidated subsidiaries include 19 and 20 majority-owned restaurants as of December 31, 2024 and December 26, 2023, respectively.

2024 Financial Highlights

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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.

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.

The increase in store weeks was due to new store openings and the benefit of the additional week in 2024.

The additional week added $114.7 million in revenue and a 2% benefit to store week growth.

Net income increased $128.7 million or 42.2% to $433.6 million in 2024 compared to $304.9 million in 2023 primarily due to higher restaurant margin dollars, as described below, partially offset by higher depreciation and amortization expenses and higher general and administrative expenses.

Diluted earnings per share increased 42.5% to $6.47 from $4.54 in the prior year primarily due to the increase in net income.

Diluted earnings per share growth was positively impacted by approximately 5% as a result of the additional week.

Restaurant margin dollars increased $207.8 million or 29.4% to $915.8 million in 2024 compared to $708.0 million in 2023 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 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.

Restaurant margin, as a percentage of restaurant and other sales, increased to 17.1% in 2024 compared to 15.4% in 2023.

The increase in restaurant margin, as a percentage of restaurant and other sales, was primarily driven by higher sales.

The benefit of a higher average guest check and labor productivity more than offset wage and other labor inflation of 4.6% and commodity inflation of 0.7%.

In addition, capital allocation spend in 2024 included capital expenditures of $354.3 million, dividends of $162.9 million, and repurchases of common stock of $79.8 million.

Results of Operations

(in thousands)

Fiscal Year Ended

December 31, 2024

December 26, 2023

(In thousands)

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Income from operations

Interest income (expense), net

Interest income, net

Equity income from investments in unconsolidated affiliates

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Reconciliation of Income from Operations to Restaurant Margin

($ In thousands, except restaurant margin $ per store week)

Fiscal Year Ended

(In thousands, except per store week)

December 31, 2024

December 26, 2023

Income from operations

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Franchise openings - International (1)

Franchise closings

Franchise closings - International

Balance at December 31, 2024

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Franchise - Texas Roadhouse - International (1)

Franchise - Jaggers - International

Total franchise

(1) Includes a U.S.

Restaurant and Other Sales

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Average unit volume (in thousands) (1)

Average unit volume, 2023 adjusted (in thousands) (3)

Weekly sales by group:

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Average unit volume (in thousands) (1)

Average unit volume, 2023 adjusted (in thousands) (3)

Weekly sales by group:

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Restaurants less than six months old (8 and 8 units)

(1) Includes the impact of the year-over-year change in sales volume of all Jaggers restaurants, along with Texas Roadhouse and Bubba’s 33 restaurants open less than six months before the beginning of the period measured and, if applicable, the impact of restaurants permanently closed or acquired during the period.

(1) Average unit volume restaurants include restaurants open a full six to 18 months before the beginning of the period measured, excluding sales from restaurants permanently closed during the period, if applicable.

(2) Includes the impact of the year-over-year change in sales volume of all Jaggers restaurants, along with Texas Roadhouse and Bubba’s 33 restaurants open less than six months before the beginning of the period measured and, if applicable, the impact of restaurants permanently closed or acquired during the period.

(3) For comparative purposes, 2023 was adjusted to include 53 weeks.

The increase in restaurant sales for 2024 was primarily attributable to an increase in store weeks and an increase in comparable restaurant sales.

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

The increase in store weeks was driven by the opening of new restaurants and the 2% benefit of the additional week in 2024.

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.

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Comparable restaurant sales growth

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 12.8% in 2024 compared to 12.6% in 2023 and average weekly to-go sales were $19,940 in 2024 compared to $18,088 in 2023.

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 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.

Per person average check for 2024 includes the benefit of menu price increases of approximately 2.2% and 0.9% implemented in Q2 2024 and Q4 2024, respectively.

We implemented menu price increases of approximately 2.2% and 2.7% in Q2 2023 and Q4 2023, respectively.

In addition, we plan to implement a menu price increase of approximately 1.4% in early April.

In 2024, we opened 31 company restaurants, which included 26 Texas Roadhouse restaurants, four Bubba’s 33 restaurants, and one Jaggers restaurant.

In 2024, we had store week growth of approximately 7.5% across all concepts, including a benefit of 2% from the additional week.

In 2025, we expect store week growth of approximately 5% across all concepts, including a benefit of 2% from the acquisition of 13 domestic franchise restaurants at the beginning of our 2025 fiscal year.

Other sales primarily include the net impact of the amortization of third-party gift card fees and gift card breakage income and content revenue related to our tabletop kiosk devices.

The net impact of these items was $(9.8) million and $(5.4) million for 2024 and 2023, 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 2024 of $0.6 million compared to $3.7 million recorded in 2023.

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.

The breakage adjustments relate to changes in our estimate of gift card 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 $1.0 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 royalties and fees increased by $4.4 million or 16.1% compared to 2023.

The increases were due to comparable franchise restaurant sales growth and new store openings partially offset by $1.5 million related to the reclassification of certain items that were reported in general and administrative expenses in our consolidated statement of income in 2023.

Franchise comparable restaurant sales increased 6.4% in 2024.

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.

In 2024, our franchise partners opened 11 international Texas Roadhouse restaurants, including one in a U.S.

territory, two domestic Jaggers restaurants, and one international Jaggers restaurant.

In addition, two international Texas Roadhouse restaurants closed during the year.

Food and Beverage Costs

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.

Food and beverage costs, as a percentage of restaurant and other sales, decreased to 33.4% in 2024 compared to 34.6% in 2023.

The decrease was primarily driven by the benefit of a higher average guest check partially offset by commodity inflation of 0.7% in 2024 primarily due to higher beef costs.

In 2025, we expect commodity inflation of 3% to 4% for the year with prices locked for approximately 40% of our forecasted costs and the remainder subject to floating market prices.

Restaurant Labor Expenses

Restaurant labor expense, as a percentage of restaurant and other sales, increased to 33.4% in 2023 compared to 33.1% in 2022.

This increase was primarily due to wage and other labor inflation of 6.6% in 2023.

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, 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 labor expenses, as a percentage of restaurant and other sales, decreased to 33.1% in 2024 compared to 33.4% in 2023.

The decrease was primarily driven by the benefit of a higher guest check and labor productivity partially offset by wage and other labor inflation of 4.6% in 2024.

Wage and other labor inflation was 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.

In 2025, we anticipate our labor costs will continue to be pressured by wage and other labor inflation of 4% to 5%.

Restaurant Rent Expense

Restaurant rent expense, as a percentage of restaurant and other sales, decreased to 1.5% in 2024 compared to 1.6% in 2023.

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.

The decrease was driven by the increase in average unit volume partially offset by higher rent expense at our newer restaurants.

Restaurant Other Operating Expenses

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 other operating expenses, as a percentage of restaurant and other sales, decreased to 14.9% in 2024 compared to 15.0% in 2023.

The decrease was driven by the increase in average unit volume partially offset by higher incentive compensation expense and higher general liability insurance expense.

The increase in incentive compensation expense was due to favorable operating results and the increase in general liability insurance expense was due to unfavorable claims experience and an increase in retention levels.

Restaurant Pre-opening Expenses

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 expenses were $28.1 million in 2024 compared to $29.2 million in 2023.

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.

Depreciation and Amortization Expenses

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 expense at our newer restaurants.

Depreciation and amortization expenses, as a percentage of revenue, were 3.3% in both 2024 and in 2023.

The increase in average unit volume was offset by higher depreciation expense at our newer restaurants.

Impairment and Closure Costs, Net

Impairment and closure costs, net were $1.2 million and $0.3 million in 2024 and 2023, respectively.

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 2024, impairment and closure costs, net included $0.8 million related to the impairment of a building at a previously relocated store and $0.4 million related to ongoing closure costs for stores which have been relocated.

In 2023, impairment and closure costs, net primarily related to ongoing closure costs for stores which have been relocated.

General and Administrative Expenses

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

General and administrative expenses, as a percentage of total revenue, decreased to 4.2% in 2024 compared to 4.3% in 2023.

The decrease was driven by the increase in average unit volume and a separation payout of $2.6 million in Q1 2023, related to the retirement of an executive officer, partially offset by higher restricted stock expense and incentive compensation expense.

The increase in restricted stock expense was primarily due to shifting our restricted stock grants from quarterly to annually.

Interest Income, Net

Interest income, net was $6.8 million in 2024 compared to $3.0 million in 2023.

The increase was driven by increased earnings on our cash and cash equivalents and decreased borrowings on our revolving credit facility in 2024.

Equity Income from Investments in Unconsolidated Affiliates

Equity income was $1.2 million in 2024 compared to $1.4 million in 2023.

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.

The decrease in 2024 was primarily driven by a $0.6 million gain on the acquisition of four of these affiliates in 2023 partially offset by increased earnings on these remaining affiliates.

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.

Our effective tax rate increased to 15.3% in 2024 compared to 12.5% in 2023.

The increase was driven by a decrease in the impact of the FICA tip tax credit, due to increased profitability.

In 2025, we expect an effective tax rate of 15% to 16% based on forecasted operating results.

Segment Information

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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 and franchise Jaggers restaurants and the results of our retail initiatives, are included in Other.

The Texas Roadhouse reportable segment includes the results of our company and franchise Texas Roadhouse restaurants.

The Bubba's 33 reportable segment includes the results of our company Bubba's 33 restaurants.

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

In addition, corporate-related assets, depreciation and amortization, and capital expenditures are also included in Other.

Management uses restaurant margin as the primary 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 that is included in Other.

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

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In our Texas Roadhouse reportable segment, restaurant margin dollars increased $193.8 million or 28.9% in 2024.

The increase was primarily due to higher sales which were partially offset by commodity and wage and other labor inflation.

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 inflation, driven by beef, and wage and other labor inflation which was partially offset by the benefit of higher sales.

The increase was primarily due to higher sales and improved labor productivity partially offset by wage and other labor inflation as well as higher general liability insurance expense.

In our Bubba’s 33 reportable segment, restaurant margin dollars increased $12.5 million or 36.8% in 2024.

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.

The increase was primarily due to higher sales and improved labor productivity partially offset by wage and other labor inflation.

Liquidity and Capital Resources

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Fiscal Year Ended

December 31, 2024

December 26, 2023

Net cash provided by operating activities

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Net cash used in financing activities

Net decrease in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net cash provided by operating activities was $753.6 million in 2024 compared to $565.0 million in 2023.

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

The increase was primarily 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.

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Net cash used in investing activities was $336.9 million in 2024 compared to $367.2 million in 2023.

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.

The decrease was primarily due to the acquisition of franchise stores in 2023 partially offset by an increase in capital expenditures in 2024.

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

We either lease our restaurant site locations under operating leases for periods generally of five to 30 years (including renewal periods) or purchase the land when appropriate.

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Fiscal Year Ended

December 31, 2024

December 26, 2023

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 restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base.

These requirements will include costs directly related to opening, maintaining, or relocating 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.

In 2025, we expect capital expenditures of approximately $400 million.

Net cash used in financing activities was $275.7 million in 2024 compared to $267.4 million in 2023.

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.

The increase is primarily due to an increase in share repurchases and an increase in our quarterly dividend payments partially offset by the $50 million repayment of our revolving credit facility in 2023.

On March 17, 2022, our Board approved a stock repurchase program for the repurchase of 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.

In 2023, we paid $50.0 million to repurchase 455,026 shares of our common stock.

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

In 2024, we paid $79.8 million, excluding excise taxes, to repurchase 461,662 shares of our common stock.

In 2023, we paid $50.0 million, excluding excise taxes, to repurchase 455,026 shares of our common stock.

As of December 31, 2024, $37.1 million remained under our authorized stock repurchase program.

On February 19, 2025, our Board approved a stock repurchase program for the repurchase of up to $500.0 million of our common stock.

Any repurchases under this plan will be made by the Company through open market transactions.

This stock repurchase program has no expiration date and replaces the previous stock repurchase program which was approved in 2022.

On February 14, 2024, our Board authorized the payment of a quarterly dividend of $0.61 per share of common stock compared to the quarterly dividend of $0.55 per share of common stock declared in 2023.

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

As of December 31, 2024, we had no outstanding borrowings under the credit facility and had $296.8 million of availability, net of $3.2 million of outstanding letters of credit.

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 31, 2024 and December 26, 2023 was 5.47% and 6.23%, respectively.

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Impairment of Long-lived Assets.

We evaluate 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, for impairment whenever events and circumstances indicate that the carrying amount of a restaurant may not be recoverable.

We evaluate long- lived assets 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, for impairment whenever events and 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.

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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.

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.

We limit assumptions about important factors such as trend of future operations and sales growth to those that are supportable based upon our plans for the restaurant and actual results at comparable restaurants.

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

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

In 2024, we recorded impairment and closure costs, net of $1.2 million which related to the impairment of a building at a previously relocated store and ongoing closure costs for stores which have relocated.

Refer to Note 17 in the consolidated financial statements for further discussion regarding impairment and closure costs recorded in 2024, 2023, and 2022.

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The fair value of the reporting unit may be based on several valuation approaches including capitalization of earnings, discounted cash flows, comparable public company market multiples, and comparable acquisition market multiples.

If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the fair value of the reporting unit.

At December 31, 2024, our Texas Roadhouse reporting unit had allocated goodwill of $169.7 million.

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Effects of 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 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.

During recent years, we have operated during periods of inflation, led primarily by wage and other labor inflation and commodity inflation.

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

Whether we are able and/or choose to continue to offset the effects of inflation will determine to what extent, if any, inflation affects our restaurant profitability in future periods.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity