UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 26, 2024

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to

Commission File Number 000-50972

Texas Roadhouse, Inc.

(Exact name of registrant specified in its charter)

Delaware	20-1083890
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification Number)

6040 Dutchmans Lane

Louisville, Kentucky 40205

(Address of principal executive offices) (Zip Code)

(502) 426-9984

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TXRH	NASDAQ Global Select Market

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  ☒	Accelerated Filer  ☐	Non-accelerated Filer  ☐	Smaller Reporting Company  ☐
			Emerging Growth Company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐  No  ☒

The number of shares of common stock outstanding were 66,790,637 on April 24, 2024.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries	3
Condensed Consolidated Balance Sheets — March 26, 2024 and December 26, 2023	3
Condensed Consolidated Statements of Income — For the 13 Weeks Ended March 26, 2024 and March 28, 2023	4
Condensed Consolidated Statements of Stockholders’ Equity — For the 13 Weeks Ended March 26, 2024 and March 28, 2023	5
Condensed Consolidated Statements of Cash Flows — For the 13 Weeks Ended March 26, 2024 and March 28, 2023	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3 — Quantitative and Qualitative Disclosures About Market Risk	25
Item 4 — Controls and Procedures	25
PART II. OTHER INFORMATION
Item 1 — Legal Proceedings	27
Item 1A — Risk Factors	27
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3 — Defaults Upon Senior Securities	27
Item 4 — Mine Safety Disclosures	27
Item 5 — Other Information	28
Item 6 — Exhibits	28
Signatures	29

2

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	March 26, 2024		December 26, 2023
Assets
Current assets:
Cash and cash equivalents	$	213,428	$	104,246
Receivables, net of allowance for doubtful accounts of $45 at March 26, 2024 and $35 at December 26, 2023		53,906		175,474
Inventories, net		38,384		38,320
Prepaid income taxes		—		3,262
Prepaid expenses and other current assets		38,677		35,172
Total current assets		344,395		356,474
Property and equipment, net of accumulated depreciation of $1,117,520 at March 26, 2024 and $1,078,855 at December 26, 2023		1,499,860		1,474,722
Operating lease right-of-use assets, net		715,731		694,014
Goodwill		169,684		169,684
Intangible assets, net of accumulated amortization of $21,484 at March 26, 2024 and $20,929 at December 26, 2023		2,928		3,483
Other assets		97,803		94,999
Total assets	$	2,830,401	$	2,793,376
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	27,545	$	27,411
Accounts payable		140,287		131,638
Deferred revenue-gift cards		266,482		373,913
Accrued wages		85,781		68,062
Income taxes payable		14,957		112
Accrued taxes and licenses		45,757		42,758
Other accrued liabilities		105,619		101,540
Total current liabilities		686,428		745,434
Operating lease liabilities, net of current portion		766,516		743,476
Restricted stock and other deposits		9,414		8,893
Deferred tax liabilities, net		23,306		23,104
Other liabilities		121,621		114,958
Total liabilities		1,607,285		1,635,865
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:
Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding)		—		—
Common stock ($0.001 par value, 100,000,000 shares authorized, 66,846,291 and 66,789,464 shares issued and outstanding at March 26, 2024 and December 26, 2023, respectively)		67		67
Retained earnings		1,207,119		1,141,595
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		1,207,186		1,141,662
Noncontrolling interests		15,930		15,849
Total equity		1,223,116		1,157,511
Total liabilities and equity	$	2,830,401	$	2,793,376

See accompanying notes to condensed consolidated financial statements.

3

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Revenue:
Restaurant and other sales	$	1,314,152	$	1,167,583
Franchise royalties and fees		7,065		6,773
Total revenue		1,321,217		1,174,356
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage		445,091		410,711
Labor		427,547		385,819
Rent		19,425		17,828
Other operating		193,642		167,529
Pre-opening		8,095		5,377
Depreciation and amortization		41,493		36,227
Impairment and closure, net		201		55
General and administrative		52,595		49,865
Total costs and expenses		1,188,089		1,073,411
Income from operations		133,128		100,945
Interest income, net		1,408		1,238
Equity income from investments in unconsolidated affiliates		257		755
Income before taxes	$	134,793	$	102,938
Income tax expense		18,803		14,334
Net income including noncontrolling interests		115,990		88,604
Less: Net income attributable to noncontrolling interests		2,784		2,217
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	113,206	$	86,387
Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	1.69	$	1.29
Diluted	$	1.69	$	1.28
Weighted average shares outstanding:
Basic		66,843		67,016
Diluted		67,105		67,293
Cash dividends declared per share	$	0.61	$	0.55

See accompanying notes to condensed consolidated financial statements.

4

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)

	For the 13 Weeks Ended March 26, 2024
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 26, 2023	66,789,464	$	67	$	—	$	1,141,595	$	1,141,662	$	15,849	$	1,157,511
Net income	—		—		—		113,206		113,206		2,784		115,990
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,703)		(2,703)
Dividends declared ($0.61 per share)	—		—		—		(40,791)		(40,791)		—		(40,791)
Shares issued under share-based compensation plans including tax effects	171,259		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(54,170)		—		(7,473)		—		(7,473)		—		(7,473)
Repurchase of shares of common stock, including excise tax as applicable	(60,262)		—		(2,050)		(6,891)		(8,941)		—		(8,941)
Share-based compensation	—		—		9,523		—		9,523		—		9,523
Balance, March 26, 2024	66,846,291	$	67	$	—	$	1,207,119	$	1,207,186	$	15,930	$	1,223,116
	For the 13 Weeks Ended March 28, 2023
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 27, 2022	66,973,311	$	67	$	13,139	$	999,432	$	1,012,638	$	15,024	$	1,027,662
Net income	—		—		—		86,387		86,387		2,217		88,604
Distributions to noncontrolling interest holders	—		—		—		—		—		(1,950)		(1,950)
Dividends declared ($0.55 per share)	—		—		—		(36,878)		(36,878)		—		(36,878)
Shares issued under share-based compensation plans including tax effects	173,620		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(53,874)		—		(5,430)		—		(5,430)		—		(5,430)
Repurchase of shares of common stock, including excise tax as applicable	(92,751)		—		(9,623)		—		(9,623)		—		(9,623)
Share-based compensation	—		—		8,154		—		8,154		—		8,154
Balance, March 28, 2023	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539

See accompanying notes to condensed consolidated financial statements.

5

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Cash flows from operating activities:
Net income including noncontrolling interests	$	115,990	$	88,604
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		41,493		36,227
Deferred income taxes		202		2,988
Loss on disposition of assets		369		1,223
Impairment and closure costs		(8)		—
Equity income from investments in unconsolidated affiliates		(257)		(755)
Distributions of income received from investments in unconsolidated affiliates		238		170
Provision for doubtful accounts		9		28
Share-based compensation expense		9,523		8,154
Changes in operating working capital, net of acquisitions:
Receivables		121,558		109,483
Inventories		(64)		1,612
Prepaid expenses and other current assets		(3,505)		(3,224)
Other assets		(1,212)		(2,265)
Accounts payable		13,946		10,418
Deferred revenue—gift cards		(107,431)		(95,838)
Accrued wages		17,719		11,609
Prepaid income taxes and income taxes payable		18,105		10,381
Accrued taxes and licenses		3,515		3,137
Other accrued liabilities		5,973		3,044
Operating lease right-of-use assets and lease liabilities		614		1,090
Other liabilities		6,662		2,895
Net cash provided by operating activities		243,439		188,981
Cash flows from investing activities:
Capital expenditures—property and equipment		(77,672)		(66,733)
Acquisition of franchise restaurants, net of cash acquired		—		(39,111)
Proceeds from sale of investments in unconsolidated affiliates		—		472
Proceeds from sale of property and equipment		202		—
Proceeds from sale leaseback transactions		2,778		2,072
Net cash used in investing activities		(74,692)		(103,300)
Cash flows from financing activities:
Payments on revolving credit facility		—		(50,000)
Distributions to noncontrolling interest holders		(2,703)		(1,950)
Proceeds from restricted stock and other deposits, net		343		482
Indirect repurchase of shares for minimum tax withholdings		(7,473)		(5,430)
Repurchase of shares of common stock		(8,941)		(9,623)
Dividends paid to shareholders		(40,791)		(36,878)
Net cash used in financing activities		(59,565)		(103,399)
Net increase (decrease) in cash and cash equivalents		109,182		(17,718)
Cash and cash equivalents—beginning of period		104,246		173,861
Cash and cash equivalents—end of period	$	213,428	$	156,143
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	238	$	411
Income taxes paid	$	497	$	965
Capital expenditures included in current liabilities	$	39,817	$	30,908

See accompanying notes to condensed consolidated financial statements.

6

Texas Roadhouse, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(tabular amounts in thousands, except per share data)

(unaudited)

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Texas Roadhouse, Inc., our wholly owned subsidiaries and subsidiaries in which we have a controlling interest (collectively, the "Company," "we," "our" and/or "us") as of March 26, 2024 and December 26, 2023 and for the 13 weeks ended March 26, 2024 and March 28, 2023.

The Company maintains three restaurant concepts operating as Texas Roadhouse, Bubba’s 33, and Jaggers. As of March 26, 2024, we owned and operated 644 restaurants and franchised an additional 109 restaurants in 49 states and ten foreign countries. Of the 109 franchise restaurants, there were 59 domestic restaurants and 50 international restaurants. As of March 26, 2023, we owned and operated 611 restaurants and franchised an additional 93 restaurants in 49 states and ten foreign countries. Of the 93 franchise restaurants, there were 54 domestic restaurants and 39 international restaurants.

As of March 26, 2024 and March 28, 2023, we owned a majority interest in 20 company restaurants. The operating results of these majority-owned restaurants are consolidated and the portion of income attributable to noncontrolling interests is reflected in the line item net income attributable to noncontrolling interests in our unaudited condensed consolidated statements of income.

As of March 26, 2024 and March 28, 2023, we owned a 5.0% to 10.0% equity interest in 20 and 19 domestic franchise restaurants, respectively. These unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in other assets in our unaudited condensed consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our unaudited condensed consolidated statements of income under equity income from investments in unconsolidated affiliates. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, and the reporting of revenue and expenses during the periods to prepare these unaudited condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"). Significant items subject to such estimates and assumptions include the valuation of property and equipment, goodwill, lease liabilities and right-of-use assets, obligations related to insurance reserves, legal reserves, income taxes, and gift card breakage. Actual results could differ from those estimates.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our consolidated financial statements for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP, except that certain information and footnotes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Operating results for the 13 weeks ended March 26, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2023.

Our significant interim accounting policies include the recognition of income taxes using an estimated annual effective tax rate.

7

(2) Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure. This ASU primarily provides enhanced disclosures about significant segment expenses including requiring segment disclosures to include a description of other segment items by reportable segment and any additional measures of a segment’s profit or loss used by the chief operating decision maker ("CODM") when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods as well as the title of the CODM and an explanation of how the CODM uses the reported measure of segment profit or loss in assessing performance and allocating resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently assessing the impact of this new standard on our segment reporting disclosures and expect to provide additional detail and disclosures under this new guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU primarily provides enhanced disclosures about an entity’s income tax including requiring consistent categories and greater disaggregation of the information included in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The amendments in this update are effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025. We are currently assessing the impact of this new standard on our income tax disclosures and expect to provide additional detail and disclosures under this new guidance.

(3)   Long-term Debt

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 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.

We are required to pay interest on outstanding borrowings at the Term Secured Overnight Financing Rate ("SOFR"), plus a fixed adjustment of 0.10% and a variable adjustment of 0.875% to 1.875% depending on our leverage ratio.

As of March 26, 2024 and December 26, 2023, we had no outstanding borrowings under the credit facility and had $295.3 million of availability, net of $4.7 million of outstanding letters of credit.

The interest rate for the credit facility as of March 26, 2024 and March 28, 2023 was 6.20% and 5.47%, 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 March 26, 2024.

8

(4) Revenue

The following table disaggregates our revenue by major source:

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Restaurant and other sales	$	1,314,152	$	1,167,583
Franchise royalties		6,848		6,019
Franchise fees		217		754
Total revenue	$	1,321,217	$	1,174,356

The following table presents a rollforward of deferred revenue-gift cards:

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Beginning balance	$	373,913	$	335,403
Gift card activations, net of third-party fees		56,239		50,563
Gift card redemptions and breakage		(163,670)		(145,237)
Ending balance	$	266,482	$	240,729

We recognized restaurant sales of $137.9 million for the 13 weeks ended March 26, 2024 related to amounts in deferred revenue as of December 26, 2023. We recognized restaurant sales of $119.6 million for the 13 weeks ended March 28, 2023 related to amounts in deferred revenue as of December 27, 2022.

(5) Income Taxes

The effective tax rate was 13.9% for the 13 weeks ended March 26, 2024 and March 28, 2023. During the 13 weeks ended March 26, 2024, a decrease in the benefit of the FICA tip and work opportunity tax credits, which was driven by increased profitability, was offset by an increase in the excess tax benefits related to stock compensation.

(6) Commitments and Contingencies

The estimated cost of completing capital project commitments at March 26, 2024 and December 26, 2023 was $236.5 million and $237.4 million, respectively.

As of March 26, 2024 and December 26, 2023, we were contingently liable for $10.1 million and $10.4 million, respectively, for seven lease guarantees. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of March 26, 2024 and December 26, 2023, as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

During the 13 weeks ended March 26, 2024 and March 28, 2023, we bought our beef primarily from four suppliers. Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. We have no material minimum purchase commitments with our vendors that extend beyond a year.

Occasionally, we are a defendant in litigation arising in the ordinary course of business, including "slip and fall" accidents, employment related claims, claims related to our service of alcohol, and claims from guests or employees alleging illness, injury or food quality, health or operational concerns.  None of these types of litigation, most of which are covered by insurance at varying retention levels, has had a material adverse effect on us and, as of the date of this report, we are not party to any litigation that we believe could have a material adverse effect on our business.

9

(7)   Acquisitions

On December 28, 2022, the first day of the 2023 fiscal year, we completed the acquisition of eight franchise Texas Roadhouse restaurants located in Maryland and Delaware, including four in which we previously held a 5.0% equity interest. Pursuant to the terms of the acquisition agreements, we paid a total purchase price of $39.1 million, net of cash acquired, for 100% of the entities. The transactions in which we held an equity interest were accounted for as step acquisitions, and we recorded a gain of $0.6 million on our previous investments in equity income from investments in unconsolidated affiliates in the unaudited condensed consolidated statements of income.

These transactions were accounted for using the acquisition method as defined in Accounting Standards Codification 805, Business Combinations. These acquisitions are consistent with our long-term strategy to increase net income and earnings per share.

The following table summarizes the consideration paid for these acquisitions and the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date, which are adjusted for final measurement-period adjustments.

Inventory	$	410
Other assets		293
Property and equipment		17,763
Operating lease right-of-use assets		4,775
Goodwill		20,067
Intangible assets		1,700
Deferred revenue-gift cards		(1,164)
Current portion of operating lease liabilities		(110)
Operating lease liabilities, net of current portion		(4,665)
	$	39,069

Intangible assets represent reacquired franchise rights which are being amortized over a weighted-average useful life of 2.2 years. We expect all of the goodwill will be deductible for tax purposes and believe the resulting amount of goodwill reflects the benefit of sales and unit growth opportunities as well as the benefit of the assembled workforce of the acquired restaurants.

(8)   Related Party Transactions

As of March 26, 2024 and March 28, 2023, we had four franchise restaurants and one majority-owned company restaurant owned in part by a current officer of the Company. We recognized revenue of $0.5 million for both of the 13 weeks ended March 26, 2024 and March 28, 2023, respectively, related to the four franchise restaurants.

(9)   Earnings Per Share

The share and net income per share data for all periods presented are based on the historical weighted-average shares outstanding.  The diluted earnings per share calculations show the effect of the weighted-average restricted stock units from our equity incentive plans. Performance stock units are not included in the diluted earnings per share calculation until the performance-based criteria have been met.

For all periods presented, the weighted-average shares of nonvested stock units that were outstanding but not included in the computation of diluted earnings per share because they would have had an anti-dilutive effect were not significant.

10

The following table sets forth the calculation of earnings per share and weighted-average shares outstanding as presented in the accompanying unaudited condensed consolidated statements of income:

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	113,206	$	86,387
Basic EPS:
Weighted-average common shares outstanding		66,843		67,016
Basic EPS	$	1.69	$	1.29
Diluted EPS:
Weighted-average common shares outstanding		66,843		67,016
Dilutive effect of nonvested stock units		262		277
Shares-diluted		67,105		67,293
Diluted EPS	$	1.69	$	1.28

(10) Fair Value Measurements

At March 26, 2024 and December 26, 2023, the fair values of cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying values based on the short-term nature of these instruments. There were no transfers among levels within the fair value hierarchy during the 13 weeks ended March 26, 2024.

The following table presents the fair values for our financial assets and liabilities measured on a recurring basis:

	Fair Value Measurements
	Level	March 26, 2024		March 28, 2023
Deferred compensation plan—assets	1	$	84,200	$	64,682
Deferred compensation plan—liabilities	1	$	(84,200)	$	(64,476)

We report the accounts of the deferred compensation plan in other assets and the corresponding liability in other liabilities in our unaudited condensed consolidated balance sheets. These investments are considered trading securities and are reported at fair value based on quoted market prices. The realized and unrealized holding gains and losses related to these investments, as well as the offsetting compensation expense, are recorded in general and administrative expense in the unaudited condensed consolidated statements of income.

(11) Stock Repurchase Program

On March 17, 2022, our Board of Directors (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. All repurchases to date under our stock repurchase programs have been made through open market transactions. The timing and the amount of any repurchases are determined by management under parameters established by the Board, based on an evaluation of our stock price, market conditions, and other corporate considerations, including complying with Rule 10b5-1 trading arrangements under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

For the 13 weeks ended March 26, 2024, we paid $8.9 million to repurchase 60,262 shares of our common stock. For the 13 weeks ended March 28, 2023, we paid $9.6 million to repurchase 92,751 shares of our common stock. As of March 26, 2024, $107.9 million remained under our authorized stock repurchase program.

(12) Segment Information

We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba’s 33, Jaggers, and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba’s 33. The Texas Roadhouse reportable segment includes the results of our domestic company

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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. In addition, corporate-related segment 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 represents restaurant and other sales less restaurant-level operating costs, including food and beverage costs, labor, rent, and other operating costs. Restaurant margin also includes sales and operating costs related to our non-royalty based retail initiatives. Restaurant margin is used by our CODM to evaluate restaurant-level operating efficiency and performance.

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.

Restaurant and other sales for all operating segments are derived primarily from food and beverage sales. We do not rely on any major customer as a source of sales and the customers and assets of our reportable segments are located predominantly in the United States. There are no material transactions between reportable segments.

The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP:

	For the 13 Weeks Ended March 26, 2024
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,236,138	$	70,650	$	7,364	$	1,314,152
Restaurant operating costs (excluding depreciation and amortization)		1,020,925		58,480		6,300		1,085,705
Restaurant margin	$	215,213	$	12,170	$	1,064	$	228,447
Depreciation and amortization	$	34,756	$	3,867	$	2,870	$	41,493
Capital expenditures		67,830		7,960		1,882		77,672
	For the 13 Weeks Ended March 28, 2023
	Texas Roadhouse		Bubba's 33		Other		Total
Restaurant and other sales	$	1,100,926	$	61,369	$	5,288	$	1,167,583
Restaurant operating costs (excluding depreciation and amortization)		923,936		52,916		5,035		981,887
Restaurant margin	$	176,990	$	8,453	$	253	$	185,696
Depreciation and amortization	$	29,888	$	3,447	$	2,892	$	36,227
Capital expenditures		57,137		6,255		3,341		66,733

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A reconciliation of restaurant margin to income from operations is presented below. We do not allocate interest income, net and equity income from investments in unconsolidated affiliates to reportable segments.

	13 Weeks Ended
	March 26, 2024		March 28, 2023
Restaurant margin	$	228,447	$	185,696
Add:
Franchise royalties and fees		7,065		6,773
Less:
Pre-opening		8,095		5,377
Depreciation and amortization		41,493		36,227
Impairment and closure, net		201		55
General and administrative		52,595		49,865
Income from operations	$	133,128	$	100,945

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT

This report contains forward-looking statements based on our current expectations, estimates, and projections about our industry and certain assumptions made by us. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will", and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. The section entitled "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 26, 2023, and in Part II, Item 1A in this Form 10-Q, along with disclosures in our other Securities and Exchange Commission ("SEC") filings discuss some of the important risk factors that may affect our business, results of operations, or financial condition. You should carefully consider those risks, in addition to the other information in this report, and in our other filings with the SEC, before deciding to invest in our Company or to maintain or increase your investment. We undertake no obligation to revise or update publicly any forward-looking statements, except as may be required by applicable law. The information contained in this Form 10-Q is not a complete description of our business or the risks associated with an investment in our common stock. We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the SEC that discuss our business in greater detail and advise interested parties of certain risks, uncertainties, and other factors that may affect our business, results of operations, or financial condition.

Our Company

Texas Roadhouse, Inc. is a growing restaurant company operating predominantly in the casual dining segment. Our late founder, W. Kent Taylor, started the Company in 1993 with the opening of the first Texas Roadhouse restaurant in Clarksville, Indiana. Since then, we have grown to three concepts with 753 restaurants in 49 states and ten foreign countries. As of March 26, 2024, our 753 restaurants included:

● 644 company restaurants, of which 624 were wholly-owned and 20 were majority-owned.  The results of operations of company restaurants are included in our unaudited condensed consolidated statements of 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 unaudited condensed consolidated statements of income. Of the 644 company restaurants, we operated 591 as Texas Roadhouse restaurants, 45 as Bubba’s 33 restaurants, and eight as Jaggers restaurants.

● 109 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 from investments in unconsolidated affiliates in our unaudited condensed consolidated statements of income. Of the 109 franchise restaurants, 56 were domestic Texas Roadhouse restaurants, three were domestic Jaggers restaurants, and 50 were international Texas Roadhouse 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 54 of the 59 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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Presentation of Financial and Operating Data

Throughout this report, the 13 weeks ended March 26, 2024 and March 28, 2023, are referred to as Q1 2024 and Q1 2023, respectively. Fiscal year 2024 will be 53 weeks in length, while the fourth quarter will be 14 weeks in length. Fiscal year 2023 was 52 weeks in length, while the quarters were 13 weeks in length.

Key Measures We Use to Evaluate Our Company

Key measures we use to evaluate and assess our business include the following:

● 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. 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 quarterly or 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. 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 the company average.

● Store Weeks and New Restaurant Openings.  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. Store week growth is driven by new restaurant openings and franchise acquisitions. New restaurant openings reflect the number of restaurants opened during a particular fiscal period, excluding store relocations. 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, 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 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. A reconciliation of income from operations to restaurant margin is included in the Results of Operations section below.

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Other Key Definitions

● Restaurant and Other Sales.  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 unaudited condensed consolidated statements of 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.  Franchise royalties consist of royalties, as defined in our franchise agreement, paid to us by our domestic and international franchisees. Domestic and international franchisees also typically pay an initial franchise fee and/or development fee for each new restaurant or territory.

● Food and Beverage Costs.  Food and beverage costs 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. These profit sharing expenses are reflected in restaurant other operating expenses. Restaurant labor expenses also include share-based compensation expense related to restaurant-level employees.

● Restaurant Rent Expense.  Restaurant rent expense includes all rent, except pre-opening rent, associated with the leasing of real estate and includes base, percentage, and straight-line rent expense.

● 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.

● 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 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; the number of management and hourly employees required to operate each restaurant; the availability of qualified restaurant staff members; the cost of travel and lodging for different geographic areas; the timing of the restaurant opening; and the extent of unexpected delays, if any, in obtaining final licenses and permits to open each restaurant.

● Depreciation and Amortization Expenses.  Depreciation and amortization expenses include the depreciation of fixed assets and amortization of intangibles with definite lives, substantially all of which relates to restaurant-level assets.

● Impairment and Closure Costs, Net. Impairment and closure costs, net include any impairment of long-lived assets, including property and equipment, operating lease right-of-use assets, and goodwill, and expenses associated with the closure of a restaurant. Closure costs also include any gains or losses associated with a relocated restaurant or the sale of a closed restaurant and/or assets held for sale as well as costs associated with closed or relocated restaurants.

● General and Administrative Expenses. 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

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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, 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 March 26, 2024, and March 28, 2023, we owned a 5.0% to 10.0% equity interest in 20 and 19 domestic franchise restaurants, respectively.

● 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.

Q1 2024 Financial Highlights

Total revenue increased $146.9 million or 12.5% to $1,321.2 million in Q1 2024 compared to $1,174.4 million in Q1 2023 primarily due to an increase in comparable restaurant sales and store weeks. Comparable restaurant sales and store weeks increased 8.4% and 4.9%, respectively, at company restaurants in Q1 2024 compared to Q1 2023. The increase in comparable restaurant sales was due to an increase in guest traffic along with an increase in our per person average check. The increase in store weeks was due to new store openings.

Net income increased $26.8 million or 31.0% to $113.2 million in Q1 2024 compared to $86.4 million in Q1 2023 primarily due to higher restaurant margin dollars, as described below, partially offset by higher general and administrative, pre-opening, and depreciation and amortization expenses. Diluted earnings per share increased 31.4% to $1.69 in Q1 2024 from $1.28 in Q1 2023 primarily due to the increase in net income.

Restaurant margin dollars increased $42.8 million or 23.0% to $228.4 million in Q1 2024 compared to $185.7 million in Q1 2023 primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, increased to 17.4% in Q1 2024 compared to 15.9% in Q1 2023.  The increase in restaurant margin, as a percentage of restaurant and other sales, was driven by higher sales partially offset by higher general liability insurance expense. The benefit of a higher average guest check and labor productivity more than offset wage and other labor inflation of 4.3% and commodity inflation of 0.9%.

In addition, we incurred $77.7 million of capital expenditures, paid dividends of $40.8 million, and repurchased $8.9 million of common stock.

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Results of Operations

(in thousands)

	13 Weeks Ended
	March 26, 2024		March 28, 2023
	$	%	$	%
Condensed Consolidated Statements of Income:
Revenue:
Restaurant and other sales	1,314,152	99.5	1,167,583	99.4
Franchise royalties and fees	7,065	0.5	6,773	0.6
Total revenue	1,321,217	100.0	1,174,356	100.0
Costs and expenses:
(As a percentage of restaurant and other sales)
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage	445,091	33.9	410,711	35.2
Labor	427,547	32.5	385,819	33.0
Rent	19,425	1.5	17,828	1.5
Other operating	193,642	14.7	167,529	14.3
(As a percentage of total revenue)
Pre-opening	8,095	0.6	5,377	0.5
Depreciation and amortization	41,493	3.1	36,227	3.1
Impairment and closure, net	201	NM	55	NM
General and administrative	52,595	4.0	49,865	4.2
Total costs and expenses	1,188,089	89.9	1,073,411	91.4
Income from operations	133,128	10.1	100,945	8.6
Interest income, net	1,408	0.1	1,238	0.1
Equity income from investments in unconsolidated affiliates	257	NM	755	0.1
Income before taxes	134,793	10.2	102,938	8.8
Income tax expense	18,803	1.4	14,334	1.2
Net income including noncontrolling interests	115,990	8.8	88,604	7.5
Net income attributable to noncontrolling interests	2,784	0.2	2,217	0.2
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	113,206	8.6	86,387	7.4

NM — Not meaningful

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	Reconciliation of Income from Operations to Restaurant Margin
	(in thousands)
	13 Weeks Ended
	March 26, 2024		March 28, 2023
Income from operations	$	133,128	$	100,945
Less:
Franchise royalties and fees		7,065		6,773
Add:
Pre-opening		8,095		5,377
Depreciation and amortization		41,493		36,227
Impairment and closure, net		201		55
General and administrative		52,595		49,865
Restaurant margin	$	228,447	$	185,696
Restaurant margin $/store week	$	27,577	$	23,505
Restaurant margin (as a percentage of restaurant and other sales)		17.4%		15.9%

See above for the definition of restaurant margin.

Restaurant Unit Activity

	Total	Texas Roadhouse	Bubba's 33	Jaggers
Balance at December 26, 2023	741	686	45	10
Company openings	9	9	—	—
Franchise openings - Domestic	1	—	—	1
Franchise openings - International	2	2	—	—
Balance at March 26, 2024	753	697	45	11

	March 26, 2024	March 28, 2023
Company - Texas Roadhouse	591	564
Company - Bubba's 33	45	40
Company - Jaggers	8	7
Total company	644	611
Franchise - Texas Roadhouse - Domestic	56	54
Franchise - Jaggers - Domestic	3	—
Franchise - Texas Roadhouse - International	50	39
Total franchise	109	93
Total	753	704

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Q1 2024 compared to Q1 2023

Restaurant and Other Sales 

Restaurant and other sales increased 12.6% in Q1 2024 compared to Q1 2023. The following table summarizes certain key drivers and/or attributes of restaurant sales at company restaurants for the periods presented. Company restaurant count activity is shown in the restaurant unit activity table above.

	Q1 2024			Q1 2023
Company Restaurants:
Increase in store weeks		4.9	%		6.0	%
Increase in average unit volume		7.7	%		12.5	%
Other (1)		—	%		0.4	%
Total increase in restaurant sales		12.6	%		18.9	%
Other sales		—	%		0.1	%
Total increase in restaurant and other sales		12.6	%		19.0	%
Store weeks		8,284