# Texas Roadhouse, Inc.: Form 10-Q for the period ended Sep 26, 2023

- Company: [Texas Roadhouse, Inc.](/companies/txrh.md) (CIK 1289460)
- Form: 10-Q
- Filed: 2023-11-03
- Accepted by EDGAR: Nov 3, 2023, 10:00 ET
- Period: 2023-09-26
- Accession: 0001558370-23-017520
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1289460/000155837023017520/txrh-20230926x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1289460/000155837023017520/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-26.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-06-28 to 2023-09-26 | $1.12bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-12-28 to 2023-09-26 | $3.47bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2023-06-28 to 2023-09-26 | $73.9m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-12-28 to 2023-09-26 | $270.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-06-28 to 2023-09-26 | $8.9m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-12-28 to 2023-09-26 | $35.5m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-06-28 to 2023-09-26 | $65.6m | us-gaap:ProfitLoss |
| Net income | 9 months, 2022-12-28 to 2023-09-26 | $238.7m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2023-06-28 to 2023-09-26 | $0.95 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-12-28 to 2023-09-26 | $3.46 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-06-28 to 2023-09-26 | $0.96 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-12-28 to 2023-09-26 | $3.47 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-06-28 to 2023-09-26 | 67,014,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-12-28 to 2023-09-26 | 67,179,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-12-28 to 2023-09-26 | $390.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-12-28 to 2023-09-26 | $243.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2022-12-28 to 2023-09-26 | $110.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2023-06-28 to 2023-09-26 | $12.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Share repurchases | 9 months, 2022-12-28 to 2023-09-26 | $45.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-26 | $69.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-26 | $181.5m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-26 | $2.55bn | us-gaap:Assets |
| Current liabilities | at 2023-09-26 | $561.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-26 | $1.43bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-26 | $0 | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2023-09-26 | $1.10bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 47,124 characters.

### 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 27, 2022, 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 restaurant concepts with 722 restaurants in 49 states and ten foreign countries. As of September 26, 2023, our 722 restaurants included:

- 623 company restaurants, of which 603 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 623 company restaurants, we operated 573 as Texas Roadhouse restaurants, 43 as Bubba’s 33 restaurants and seven as Jaggers restaurants.
- 99 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. Additionally, we provide various management services to these 20 franchise restaurants. Of the 99 franchise restaurants, 54 were domestic Texas Roadhouse restaurants, one was a domestic Jaggers restaurant and 44 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 51 of the 55 domestic franchise restaurants.

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

### Presentation of Financial and Operating Data

Throughout this report, the 13 weeks ended September 26, 2023, and September 27, 2022, are referred to as Q3 2023 and Q3 2022, respectively. The 39 weeks ended September 26, 2023, and September 27, 2022, are referred to as 2023 YTD and 2022 YTD, respectively. Fiscal years 2023 and 2022 are 52 weeks in length, while the quarters for those years are 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 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 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 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 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.

### 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/or 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, utilities, supplies, repairs and maintenance, outside services, property taxes, profit sharing incentive compensation for our restaurant managing partners and market partners and general liability insurance.
- *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 team 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 many 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 lease 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 software hosting fees, professional fees, group insurance, advertising expense, salary and share-based compensation expense related to executive officers, Support Center

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

- *Interest Income (Expense), Net.* Interest income (expense), net includes earnings on cash and cash equivalents and is reduced by interest expense on our debt or financing obligations including the amortization of loan fees net of capitalized interest.
- *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 sale of these affiliates. As of September 26, 2023, and September 27, 2022, we owned a 5.0% to 10.0% equity interest in 20 and 23 domestic franchise restaurants, respectively.
- *Net Income Attributable to Noncontrolling Interests.* 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.

### Q3 2023 Financial Highlights

Total revenue increased $128.5 million or 12.9% to $1,121.8 million in Q3 2023 compared to $993.3 million in Q3 2022 primarily due to an increase in store weeks and an increase in comparable restaurant sales. Store weeks and comparable restaurant sales increased 5.7% and 8.2%, respectively, at company restaurants in Q3 2023 compared to Q3 2022. The increase in store weeks was due to new store openings and the acquisition of franchise restaurants. The increase in comparable restaurant sales was due to an increase in guest traffic along with an increase in our per person average check.

Net income increased $1.5 million or 2.3% to $63.8 million in Q3 2023 compared to $62.3 million in Q3 2022 primarily due to higher restaurant margin dollars, as described below, and lower income tax expense partially offset by higher general and administrative expense and depreciation and amortization expense. Diluted earnings per share increased 2.6% to $0.95 in Q3 2023 from $0.93 in Q3 2022 primarily due to the increase in net income.

Restaurant margin dollars increased $10.8 million or 7.1% to $162.8 million in Q3 2023 compared to $152.0 million in Q3 2022 primarily due to higher sales. Restaurant margin, as a percentage of restaurant and other sales, decreased to 14.6% in Q3 2023 compared to 15.4% in Q3 2022. The decrease in restaurant margin, as a percentage of restaurant and other sales, was primarily due to commodity inflation, wage and other labor inflation and higher general liability insurance expense partially offset by higher sales.

We repurchased 107,593 shares of common stock for $12.1 million in Q3 2023. We also paid a quarterly dividend of $0.55 per share of common stock, which totaled $36.7 million in Q3 2023.

### Results of Operations

### (in thousands)

| ​ ​ ​ ​ ​ Consolidated Statements of Income: Revenue: | ​ ​ ​ ​ ​ ​ | ​ ​ 13 Weeks Ended September 26, 2023 $% ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ | ​ September 27, 2022 $% ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ 39 Weeks Ended September 26, 2023 $% ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ September 27, 2022 $% ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Restaurant and other sales | ​ | 1,115,224 | ​ | 99.4 | ​ | 986,999 | ​ | 99.4 | ​ | 3,447,192 | ​ | 99.4 | ​ | 2,986,028 | ​ | 99.4 |
| Franchise royalties and fees | ​ | 6,528 | ​ | 0.6 | ​ | 6,299 | ​ | 0.6 | ​ | 20,119 | ​ | 0.6 | ​ | 19,362 | ​ | 0.6 |
| Total revenue | ​ | 1,121,752 | ​ | 100.0 | ​ | 993,298 | ​ | 100.0 | ​ | 3,467,311 | ​ | 100.0 | ​ | 3,005,390 | ​ | 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 | ​ | 386,184 | ​ | 34.6 | ​ | 342,032 | ​ | 34.7 | ​ | 1,198,099 | ​ | 34.8 | ​ | 1,026,469 | ​ | 34.4 |
| Labor | ​ | 378,814 | ​ | 34.0 | ​ | 330,219 | ​ | 33.5 | ​ | 1,155,970 | ​ | 33.5 | ​ | 985,132 | ​ | 33.0 |
| Rent | ​ | 18,177 | ​ | 1.6 | ​ | 16,703 | ​ | 1.7 | ​ | 54,001 | ​ | 1.6 | ​ | 49,785 | ​ | 1.7 |
| Other operating | ​ | 169,225 | ​ | 15.2 | ​ | 146,036 | ​ | 14.8 | ​ | 507,846 | ​ | 14.7 | ​ | 442,714 | ​ | 14.8 |
| (As a percentage of total revenue) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Pre-opening | ​ | 8,663 | ​ | 0.8 | ​ | 5,701 | ​ | 0.6 | ​ | 19,711 | ​ | 0.6 | ​ | 15,315 | ​ | 0.5 |
| Depreciation and amortization | ​ | 39,124 | ​ | 3.5 | ​ | 33,735 | ​ | 3.4 | ​ | 112,764 | ​ | 3.3 | ​ | 101,775 | ​ | 3.4 |
| Impairment and closure, net | ​ | (2) | ​ | NM | ​ | 772 | ​ | NM | ​ | 131 | ​ | NM | ​ | 537 | ​ | NM |
| General and administrative | ​ | 47,708 | ​ | 4.3 | ​ | 42,812 | ​ | 4.3 | ​ | 148,573 | ​ | 4.3 | ​ | 132,319 | ​ | 4.4 |
| Total costs and expenses | ​ | 1,047,893 | ​ | 93.4 | ​ | 918,010 | ​ | 92.4 | ​ | 3,197,095 | ​ | 92.2 | ​ | 2,754,046 | ​ | 91.6 |
| Income from operations | ​ | 73,859 | ​ | 6.6 | ​ | 75,288 | ​ | 7.6 | ​ | 270,216 | ​ | 7.8 | ​ | 251,344 | ​ | 8.4 |
| Interest income (expense), net | ​ | 496 | ​ | NM | ​ | (85) | ​ | NM | ​ | 2,730 | ​ | 0.1 | ​ | (877) | ​ | NM |
| Equity income from investments in unconsolidated affiliates | ​ | 139 | ​ | NM | ​ | 190 | ​ | NM | ​ | 1,181 | ​ | NM | ​ | 1,069 | ​ | NM |
| Income before taxes | ​ | 74,494 | ​ | 6.6 | ​ | 75,393 | ​ | 7.6 | ​ | 274,127 | ​ | 7.9 | ​ | 251,536 | ​ | 8.4 |
| Income tax expense | ​ | 8,870 | ​ | 0.8 | ​ | 11,430 | ​ | 1.2 | ​ | 35,474 | ​ | 1.0 | ​ | 35,708 | ​ | 1.2 |
| Net income including noncontrolling interests | ​ | 65,624 | ​ | 5.9 | ​ | 63,963 | ​ | 6.4 | ​ | 238,653 | ​ | 6.9 | ​ | 215,828 | ​ | 7.2 |
| Net income attributable to noncontrolling interests | ​ | 1,836 | ​ | 0.2 | ​ | 1,635 | ​ | 0.2 | ​ | 6,207 | ​ | 0.2 | ​ | 5,879 | ​ | 0.2 |
| Net income attributable to Texas Roadhouse, Inc. and subsidiaries | ​ | 63,788 | ​ | 5.7 | ​ | 62,328 | ​ | 6.3 | ​ | 232,446 | ​ | 6.7 | ​ | 209,949 | ​ | 7.0 |

NM — Not meaningful

*(in thousands)*

| ​ ​ ​ ​ ​ | ​ ​ Reconciliation of Income from Operations to Restaurant Margin 13 Weeks Ended September 26, 2023 | ​ ​ | ​ ​ September 27, 2022 | ​ ​ ​ | ​ ​ 39 Weeks Ended September 26, 2023 | ​ ​ | ​ ​ September 27, 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Income from operations | $73,859 | ​ | $75,288 | ​ | $270,216 | ​ | $251,344 |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Less: | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Franchise royalties and fees | ​ 6,528 | ​ | ​ 6,299 | ​ | ​ 20,119 | ​ | ​ 19,362 |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Add: | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Pre-opening | ​ 8,663 | ​ | ​ 5,701 | ​ | ​ 19,711 | ​ | ​ 15,315 |
| Depreciation and amortization | ​ 39,124 | ​ | ​ 33,735 | ​ | ​ 112,764 | ​ | ​ 101,775 |
| Impairment and closure, net | ​ (2) | ​ | ​ 772 | ​ | ​ 131 | ​ | ​ 537 |
| General and administrative | ​ 47,708 | ​ | ​ 42,812 | ​ | ​ 148,573 | ​ | ​ 132,319 |
| Restaurant margin | $162,824 | ​ | $152,009 | ​ | $531,276 | ​ | $481,928 |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Restaurant margin $/store week | $20,272 | ​ | $20,001 | ​ | $22,237 | ​ | $21,332 |
| Restaurant margin (as a percentage of restaurant and other sales) | ​ 14.6% | ​ | ​ 15.4% | ​ | ​ 15.4% | ​ | ​ 16.1% |

See above for the definition of restaurant margin.

### Restaurant Unit Activity

| ​ ​ | ​ | ​ Total | ​ ​ | ​ Texas Roadhouse | ​ ​ | ​ Bubba's 33 | ​ | ​ Jaggers |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Balance at December 27, 2022 |  | 697 | ​ | 652 | ​ | 40 |  | 5 |
| Company openings |  | 18 | ​ | 13 | ​ | 3 | ​ | 2 |
| Company closings | ​ | — | ​ | — | ​ | — | ​ | — |
| Franchise openings - Domestic | ​ | 2 | ​ | 1 | ​ | — | ​ | 1 |
| Franchise openings - International |  | 6 | ​ | 6 | ​ | — | ​ | — |
| Franchise closings | ​ | (1) | ​ | (1) | ​ | — | ​ | — |
| Balance at September 26, 2023 |  | 722 | ​ | 671 | ​ | 43 |  | 8 |

| ​ ​ | ​ | ​ September 26, 2023 | ​ | ​ September 27, 2022 |
| --- | --- | ---: | --- | ---: |
| Company - Texas Roadhouse |  | 573 | ​ | 545 |
| Company - Bubba's 33 |  | 43 | ​ | 38 |
| Company - Jaggers |  | 7 | ​ | 4 |
| Franchise - Texas Roadhouse - Domestic |  | 54 | ​ | 62 |
| Franchise - Jaggers - Domestic | ​ | 1 | ​ | — |
| Franchise - Texas Roadhouse - International |  | 44 | ​ | 36 |
| Total |  | 722 |  | 685 |

### Q3 2023 compared to Q3 2022 and 2023 YTD compared to 2022 YTD

#### Restaurant and Other Sales

Restaurant and other sales increased 13.0% in Q3 2023 compared to Q3 2022 and 15.4% in 2023 YTD compared to 2022 YTD. 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.

| ​ ​ Company Restaurants: | ​ ​ | ​ ​ ​ Q3 2023 ​ ​ ​ | ​ ​ ​ Q3 2022 ​ ​ ​ | ​ ​ ​ 2023 YTD ​ ​ ​ | ​ ​ ​ 2022 YTD ​ ​ ​ | ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Increase in store weeks |  | ​ 5.7% | ​ 6.1% | ​ 5.8% | ​ 6.3% | ​ |
| Increase in average unit volume |  | ​ 7.8% | ​ 7.9% | ​ 9.7% | ​ 10.2% | ​ |
| Other(1) |  | ​ (0.1)% | ​ 0.2% | ​ 0.0% | ​ 0.5% | ​ |
| Total increase in restaurant sales |  | ​ 13.4% | ​ 14.2% | ​ 15.5% | ​ 17.0% | ​ |
| Other sales | ​ | ​ (0.4)% | ​ 0.2% | ​ (0.1)% | ​ 0.1% | ​ |
| Total increase in restaurant and other sales | ​ | ​ 13.0% | ​ 14.4% | ​ 15.4% | ​ 17.1% | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Store weeks |  | ​ 8,032 ​ | ​ 7,600 ​ | ​ 23,892 ​ | ​ 22,592 ​ | ​ |
| Comparable restaurant sales |  | ​ 8.2% | ​ 8.2% | ​ 10.1% | ​ 10.5% | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Texas Roadhouse restaurants: | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Store weeks | ​ | ​ 7,394 ​ | ​ 7,062 ​ | ​ 22,041 ​ | ​ 21,004 ​ | ​ |
| Comparable restaurant sales |  | ​ 8.4% | ​ 8.2% | ​ 10.3% | ​ 10.4% | ​ |
| Average unit volume (in thousands) | ​ | $1,840 ​ | $1,700 ​ | $5,753 ​ | $5,227 ​ | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Weekly sales by group: | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Comparable restaurants (542, 511, 527 and 499 units) | ​ | $141,675 ​ | $131,378 ​ | $147,832 ​ | $134,565 ​ | ​ |
| Average unit volume restaurants (18, 23, 22 and 20 units)(2) | ​ | $138,439 ​ | $125,421 ​ | $139,989 ​ | $129,283 ​ | ​ |
| Restaurants less than six months old (13, 11, 24 and 26 units) | ​ | $141,409 ​ | $143,801 ​ | $150,747 ​ | $136,358 ​ | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Bubba's 33 restaurants: | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Store weeks | ​ | ​ 547 ​ | ​ 486 ​ | ​ 1,593 ​ | ​ 1,433 ​ | ​ |
| Comparable restaurant sales | ​ | ​ 4.8% | ​ 6.2% | ​ 6.0% | ​ 11.6% | ​ |
| Average unit volume (in thousands) | ​ | $1,437 ​ | $1,395 ​ | $4,494 ​ | $4,243 ​ | ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Weekly sales by group: | ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ ​ ​ | ​ |
| Comparable restaurants (36, 31, 34 and 30 units) | ​ | $112,447 ​ | $104,669 ​ | $115,343 ​ | $108,692 ​ | ​ |
| Average unit volume restaurants (4, 5, 3 and 4 units)(2) | ​ | $93,012 ​ | $123,760 ​ | $113,926 ​ | $109,656 ​ | ​ |
| Restaurants less than six months old (3, 2, 6 and 4 units) | ​ | $129,941 ​ | $95,312 ​ | $116,281 ​ | $126,600 ​ | ​ |

23

(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 during the period.

(2) Average unit volume includes 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.

The increases in restaurant sales for Q3 2023 and 2023 YTD were primarily attributable to an increase in store weeks and an increase in comparable restaurant sales. The increases in store weeks were driven by the opening of new restaurants and the acquisition of franchise restaurants. The increases in comparable restaurant sales were driven by an increase in guest traffic count along with an increase in our per person average check as shown in the table below.

| ​ ​ | ​ ​ Q3 2023 | ​ ​ | ​ ​ Q3 2022 | ​ ​ | ​ ​ 2023 YTD | ​ ​ | ​ ​ 2022 YTD |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Guest traffic counts | 4.1% | ​ | 0.5% | ​ | 5.5% | ​ | 2.2% |
| Per person average check | 4.1% | ​ | 7.7% | ​ | 4.6% | ​ | 8.3% |
| Comparable restaurant sales growth | 8.2% | ​ | 8.2% | ​ | 10.1% | ​ | 10.5% |

The increase in Q3 2023 guest traffic counts was driven by an increase in dining room traffic. To-go sales as a percentage of restaurant sales were 12.3% for Q3 2023 compared to 12.6% for Q3 2022.

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

In 2023 YTD, we opened 16 Texas Roadhouse and Bubba’s 33 company restaurants and completed the acquisition of eight domestic franchise restaurants. In addition, we opened two Jaggers company restaurants in 2023 YTD. As of September 26, 2023, an additional 22 Texas Roadhouse and Bubba’s 33 company restaurants were under construction.

In total for 2023, we plan to open as many as 27 Texas Roadhouse and Bubba’s 33 company restaurants, and we expect store week growth of approximately 6% across all concepts, including the impact of the eight franchise restaurants acquired at the beginning of the fiscal year.

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

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. The net impact of these amounts was $1.4 million in Q3 2023 and $4.4 million in Q3 2022 and was $(7.2) million in 2023 YTD and $(4.2) million in 2022 YTD. The changes in Q3 2023 and Q3 2022 were driven by favorable adjustments recorded of $3.7 million and $6.6 million, respectively. These adjustments related to changes in our estimate of breakage due to a shift in our historic redemption patterns 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 $0.2 million or 3.6% in Q3 2023 compared to Q3 2022 and increased by $0.8 million or 3.9% in 2023 YTD compared with 2022 YTD. The increases in both periods were due to comparable restaurant sales growth and new store openings partially offset by decreased royalties related to the eight franchise restaurants that were acquired.

In 2023 YTD, our existing franchise partners opened one domestic Texas Roadhouse restaurant and six international Texas Roadhouse restaurants. The first Jaggers domestic franchise restaurant was also opened in Q3 2023. In addition, we had one Texas Roadhouse domestic franchise store close in 2023 YTD. In total for 2023, we expect as many as 14 international and domestic franchise openings including two Jaggers franchise openings.

#### Food and Beverage Costs

Food and beverage costs, as a percentage of restaurant and other sales, decreased to 34.6% in Q3 2023 compared to 34.7% in Q3 2022 and increased to 34.8% in 2023 YTD compared to 34.4% in 2022 YTD. The decrease in Q3 2023 was primarily driven by the benefit of a higher guest check partially offset by commodity inflation of 4.2% primarily due to higher beef costs. The increase in 2023 YTD compared to 2022 YTD was driven by commodity inflation of 6.3% due to higher costs across the basket partially offset by the benefit of a higher guest check.

In total for 2023, we expect commodity inflation of 5% to 6% for the year with prices locked for approximately 75% of our remaining forecasted costs and the remainder subject to floating market prices. In 2024, we expect commodity cost inflation of 5% to 6%.

#### Restaurant Labor Expenses

Restaurant labor expenses, as a percentage of restaurant and other sales, increased to 34.0% in Q3 2023 compared to 33.5% in Q3 2022 and increased to 33.5% in 2023 YTD compared to 33.0% in 2022 YTD. The increases in both periods were primarily due to wage and other labor inflation of 5.6% and 6.8% in Q3 2023 and 2023 YTD, respectively. 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 addition, there were increases in group insurance expense due to unfavorable claims experience of $1.5 million and $6.5 million in Q3 2023 and 2023 YTD, respectively, as compared to the prior year periods. These increases were partially offset by decreases in workers’ compensation expense due to favorable claims experience of $2.6 million and $3.1 million in Q3 2023 and 2023 YTD, respectively, as compared to the prior year periods, as well as the benefit of a higher guest check.

In total for 2023, we expect wage and other labor inflation of 6% to 7% for the year driven by labor market pressures, increases in state-mandated minimum and tipped wage rates and increased investment in our people. In 2024, we expect 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 1.6% in Q3 2023 compared to 1.7% in Q3 2022 and decreased to 1.6% in 2023 YTD compared to 1.7% in 2022 YTD. The decreases in both periods were primarily due to the increases in average unit volume and were partially offset by higher rent expense, as a percentage of restaurant and other sales, at our newer restaurants.

#### Restaurant Other Operating Expenses

Restaurant other operating expenses, as a percentage of restaurant and other sales, increased to 15.2% in Q3 2023 compared to 14.8% in Q3 2022 and decreased to 14.7% in 2023 YTD compared to 14.8% in 2022 YTD. The increase in Q3 2023 compared to Q3 2022 was driven by an increase in general liability insurance expense of $7.3 million, as compared to the prior year period, partially offset by an increase in average unit volume, lower supplies expense and lower incentive compensation expense. The increase in general liability insurance expense was due to unfavorable claims experience. The decrease in 2023 YTD compared to 2022 YTD was driven by an increase in average unit volume and lower supplies and incentive compensation expense partially offset by the increase in general liability insurance expense.

#### Pre-opening Expenses

Pre-opening expenses were $8.7 million in Q3 2023 compared to $5.7 million in Q3 2022 and $19.7 million in 2023 YTD compared to $15.3 million in 2022 YTD. Pre-opening costs will fluctuate from quarter to quarter based on 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 Expense

Depreciation and amortization expense, as a percentage of total revenue, increased to 3.5% in Q3 2023 compared to 3.4% in Q3 2022 and decreased to 3.3% in 2023 YTD compared to 3.4% in 2022 YTD. The increase in Q3 2023 compared to Q3 2022 was driven by higher depreciation at our newer restaurants partially offset by the increase in average unit volume. The decrease in 2023 YTD compared to 2022 YTD was primarily due to the increase in average unit volume partially offset by higher depreciation at our newer restaurants.

#### Impairment and Closure Costs, Net

Impairment and closure costs, net were not significant in Q3 2023 compared to $0.8 million in Q3 2022 and were $0.1 million in 2023 YTD compared to $0.5 million in 2022 YTD. For Q3 2022, impairment and closure costs, net included the impairment of an operating lease right-of-use asset at a restaurant that was relocated. For 2022 YTD, impairment and closure costs, net included the impairment of right-of-use assets at two restaurants that were relocated and a gain of $0.7 million associated with the sale of land and building on a site that was previously classified as assets held for sale.

#### General and Administrative Expenses

General and administrative expenses, as a percentage of total revenue, remained flat at 4.3% in Q3 2023 compared to Q3 2022 and decreased to 4.3% in 2023 YTD compared to 4.4% in 2022 YTD. In Q3 2023 compared to Q3 2022, activity included an increase in average unit volume, a decrease in restricted stock expense and a decrease in incentive compensation expense. These were offset by a favorable adjustment of $2.5 million recorded in Q3 2022 related to our managing partner conference held in Q2 2022 and increased software hosting fees driven by the development of a new human resources software. The decrease in 2023 YTD compared to 2022 YTD was primarily driven by an increase in average unit volume partially offset by a separation payout, net of restricted stock forfeitures of $2.6 million, related to the retirement of an executive officer in Q1 2023, and increased software hosting fees.

#### Interest Income (Expense), Net

Interest income (expense), net was $0.5 million and $(0.1) million in Q3 2023 and Q3 2022, respectively, and were $2.7 million and $(0.9) million in 2023 YTD and 2022 YTD, respectively. The increases in both periods were primarily driven by increased earnings on our cash and cash equivalents and decreased borrowings on our revolving credit facility.

#### Equity Income from Investments in Unconsolidated Affiliates

Equity income was $0.1 million in Q3 2023 compared to $0.2 million in Q3 2022 and was $1.2 million in 2023 YTD compared to $1.1 million in 2022 YTD. The decrease in Q3 2023 was primarily due to a decreased number of investments driven by acquisitions of four of these affiliates in Q1 2023. The increase in 2023 YTD was primarily due to a $0.6 million gain on the acquisition of four of these affiliates in Q1 2023 partially offset by a $0.3 million gain on the acquisition of one of these affiliates in Q2 2022.

#### Income Tax Expense

Our effective tax rate decreased to 11.9% in Q3 2023 compared to 15.2% in Q3 2022 and decreased to 12.9% in 2023 YTD compared to 14.2% in 2022 YTD. The decreases in both periods were primarily driven by increases in the tax benefits related to the FICA tip tax credit and stock compensation. For 2023, we expect an effective income tax rate of approximately 13% based on forecasted operating results. For 2024, we expect an effective tax rate of 14% to 15% based on forecasted operating results.

#### Segment Information

We manage our restaurant and franchising operations by concept and as a result have identified Texas Roadhouse, Bubba's 33, Jaggers and our retail initiatives as separate operating segments. Our reportable segments are Texas Roadhouse and Bubba's 33. The Texas Roadhouse reportable segment includes the results of our domestic company Texas Roadhouse restaurants and domestic and international franchise Texas Roadhouse restaurants. The Bubba's 33 reportable segment includes the results of our domestic company Bubba's 33 restaurants. Our remaining operating segments, which include the results of our domestic company and franchise Jaggers restaurants and the results of our retail initiatives, are included in Other.

Management uses restaurant margin as the primary measure for assessing performance of our segments. Restaurant margin (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. A reconciliation of income from operations to restaurant margin is included in the Results of Operations section above.

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

| ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended September 26, 2023 ​ September 27, 2022 |
| --- | ---: |
| Texas Roadhouse | $154,465 ​ 14.7% ​ $146,137 ​ 15.7% |
| Bubba's 33 | 7,499 ​ 12.3 ​ ​ 5,625 ​ 10.8 ​ |
| Other | 860 ​ 13.6 ​ ​ 247 ​ 7.4 ​ |
| Total | $162,824 ​ 14.6% ​ $152,009 ​ 15.4% |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| ​ | **39 Weeks Ended** |
| ​ | **September 26, 2023** **​** **September 27, 2022** |
| Texas Roadhouse | $503,660 ​ 15.5% ​ $460,655 ​ 16.3% |
| Bubba's 33 | 25,584 ​ 13.9 ​ ​ 20,993 ​ 13.3 ​ |
| Other | 2,032 ​ 11.2 ​ ​ 280 ​ 2.9 ​ |
| Total | $531,276 ​ 15.4% ​ $481,928 ​ 16.1% |
| ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |

For our Texas Roadhouse reportable segment, restaurant margin dollars increased $8.3 million or 5.7% in Q3 2023 and increased $43.0 million or 9.3% in 2023 YTD. The increases in both periods were due to higher sales, primarily driven by an increase in store weeks and an increase in comparable restaurant sales, which was partially offset by commodity and wage and other inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, decreased to 14.7% in Q3 2023 from 15.7% in Q3 2022 and decreased to 15.5% in 2023 YTD from 16.3% in 2022 YTD. The decreases in both periods were due to commodity and wage and other labor inflation which was partially offset by the benefit of higher sales.

For our Bubba’s 33 reportable segment, restaurant margin dollars increased $1.9 million or 33.3% in Q3 2023 and increased $4.6 million or 21.9% in 2023 YTD. The increases in both periods were due to higher sales, primarily driven by an increase in store weeks and an increase in comparable restaurant sales, and commodity deflation which was primarily offset by wage and other labor inflation. In addition, restaurant margin, as a percentage of restaurant and other sales, increased to 12.3% in Q3 2023 from 10.8% in Q3 2022 and increased to 13.9% in 2023 YTD from 13.3% in 2022 YTD. The increases in both periods were due to higher sales and commodity deflation driven by poultry partially offset by wage and other labor inflation.

### Liquidity and Capital Resources

The following table presents a summary of our net cash provided by (used in) operating, investing and financing activities (in thousands):

| ​ ​ ​ | ​ ​ | ​ ​ 39 Weeks Ended September 26, 2023 | ​ | ​ ​ September 27, 2022 |
| --- | --- | ---: | --- | ---: |
| Net cash provided by operating activities | ​ | $390,739 | ​ | $395,057 |
| Net cash used in investing activities | ​ | (273,519) | ​ | (195,607) |
| Net cash used in financing activities | ​ | (221,757) | ​ | (349,780) |
| Net decrease in cash and cash equivalents | ​ | $(104,537) | ​ | $(150,330) |

Net cash provided by operating activities was $390.7 million in 2023 YTD compared to $395.1 million in 2022 YTD. This decrease was primarily due to an unfavorable change in working capital partially offset by an increase in net income and non-cash items including depreciation and amortization.

Our operations have not required significant working capital and, like many restaurant companies, we have been able to operate with negative working capital, if necessary. Sales are primarily for cash, and restaurant operations do not require significant inventories or receivables. In addition, we receive trade credit for the purchase of food, beverages and supplies, thereby reducing the need for incremental working capital to support growth.

Net cash used in investing activities was $273.5 million in 2023 YTD compared to $195.6 million in 2022 YTD. 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.

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. We either lease our restaurant site locations under operating leases for periods of five to 30 years (including renewal periods) or purchase the land when appropriate. As of September 26, 2023, we had developed 156 of the 623 company restaurants on land that we own.

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

| ​ ​ ​ | ​ ​ | ​ ​ 39 Weeks Ended September 26, 2023 | ​ | ​ ​ September 27, 2022 |
| --- | --- | ---: | --- | ---: |
| New company restaurants | ​ | $138,124 | ​ | $99,249 |
| Refurbishment or expansion of existing restaurants | ​ | 88,580 | ​ | 60,404 |
| Relocation of existing restaurants | ​ | ​ 11,946 | ​ | ​ 11,965 |
| Capital expenditures related to Support Center office | ​ | ​ 5,245 | ​ | ​ 2,576 |
| Total capital expenditures | ​ | $243,895 | ​ | $174,194 |

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 opening new restaurants or relocating existing restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base. In 2023, we expect our capital expenditures to be approximately $340 million driven by our 2023 planned company restaurant openings, the acceleration of our 2024 development pipeline and continued refurbishment of our existing restaurants. 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.

As of September 26, 2023, the estimated cost of completing capital project commitments over the next 12 months was approximately $261.3 million. See note 6 to the unaudited condensed consolidated financial statements for a discussion of contractual obligations.

Net cash used in financing activities was $221.8 million in 2023 YTD compared to $349.8 million in 2022 YTD. The decrease is primarily due to a decrease in the amount of share repurchases partially offset by increased payments on our revolving credit facility as well as an increase in our quarterly dividend payments.

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 and replaced a previous stock repurchase program which was approved on May 31, 2019. All repurchases to date under our stock repurchase programs have been made through open market transactions.

During 2023 YTD and 2022 YTD, we paid $45.2 million and $212.9 million, respectively, to repurchase 414,319 shares and 2,734,005 shares, respectively, of our common stock. As of September 26, 2023, $121.7 million remained under our authorized stock repurchase program.

On May 11, 2023, our Board authorized the payment of a quarterly cash dividend of $0.55 per share of common stock compared to the quarterly dividend of $0.46 per share of common stock declared in 2022. The payment of quarterly dividends totaled $110.4 million and $93.3 million in 2023 YTD and 2022 YTD, respectively.

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.

As of September 26, 2023, we had no outstanding balance on the credit facility and had $287.7 million of availability, net of $12.3 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 YTD, 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 unaudited condensed consolidated balance sheet.

The interest rate for the credit facility as of September 26, 2023 and September 27, 2022 was 6.19% and 3.69%, respectively.

The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial covenants. We were in compliance with all financial covenants as of September 26, 2023.

### Guarantees

As of September 26, 2023 and December 27, 2022, we were contingently liable for $10.6 million and $11.3 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 September 26, 2023 and December 27, 2022 as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

## Market risk

As filed, 2,059 characters.

We are exposed to market risk from changes in interest rates on variable rate debt and changes in commodity prices. Our exposure to interest rate fluctuations is limited to our outstanding bank debt. The terms of the revolving credit facility (the "credit facility") require us to pay interest on outstanding borrowings at the Secured Overnight Financing Rate ("SOFR"), plus a fixed adjustment of 0.10%, plus a variable adjustment of 0.875% to 1.875% depending on our leverage ratio. As of September 26, 2023, we had no outstanding borrowings on our credit facility.

In an effort to secure high quality, low-cost ingredients used in the products sold in our restaurants, we employ various purchasing and pricing contract techniques. When purchasing certain types of commodities, we may be subject to prevailing market conditions resulting in unpredictable price volatility. For certain commodities, we may also enter into contracts that are either fixed price agreements or fixed volume agreements where the price is negotiated with reference to fluctuating market prices. We currently do not use financial instruments to hedge commodity prices. Extreme and/or long-term increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.

We are subject to business risk as our beef supply is highly dependent upon four vendors. If these vendors are unable to fulfill their obligations under their contracts, we may encounter supply shortages and/or higher costs to secure adequate supply and a possible loss of sales, any of which would harm our business. To date, we have been able to properly manage any supply shortages but have experienced increased costs.

## Controls and procedures

As filed, 964 characters.

### Evaluation of Disclosure Controls and Procedures

We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to, and as defined in, Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report. Based on the evaluation, performed under the supervision and with the participation of our management, including the Chief Executive Officer (the "CEO") and the Chief Financial Officer (the "CFO"), our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 26, 2023.

### Changes in Internal Control

There were no changes in the Company’s internal control over financial reporting that occurred during the 13 weeks ended September 26, 2023 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 377 characters.

Information regarding risk factors appears in our Annual Report on Form 10-K for the year ended December 27, 2022, under the heading "Special Note Regarding Forward-looking Statements" and in the Form 10-K Part I, Item 1A, Risk Factors. There have been no material changes from the risk factors previously disclosed in our Form 10-K for the fiscal year ended December 27, 2022.

Filed Nov 3, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-017520. Last ingested by Listed: Oct 24, 2026, 15:10 ET. No prices; not investment advice.