What changed in Texas Roadhouse, Inc.'s 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Texas Roadhouse, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+94 added−305 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)
Top changes in Texas Roadhouse, Inc.'s 2023 10-K
94 paragraphs added · 305 removed · 80 edited across 1 sections
- Item 1A. Risk Factors+94 / −305 · 80 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
80 edited+14 added−225 removed94 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
80 edited+14 added−225 removed94 unchanged
2022 filing
2023 filing
Biggest changeOur success depends on our ability to attract, motivate and retain qualified employees to keep pace with our growth strategy. If we are unable to do so, our results of operations may also be adversely affected. Our objective to increase sales and profits at existing restaurants could be adversely affected by macroeconomic conditions.
Biggest changeOur distributors and suppliers also may be affected by higher minimum wage and benefit standards which could result in higher costs for goods and services supplied to us. Our success depends on our ability to attract, motivate and retain qualified employees to keep pace with our growth strategy.
In addition to the risks that we face in the United States, our international operations involve risks that could adversely affect our business, including: ● the need to adapt our concepts for specific cultural and language differences; ● new and different sources of competition; ● the ability to identify appropriate business partners; ● difficulties and costs associated with staffing and managing foreign operations; ● difficulties in adapting and sourcing product specifications for international restaurant locations; ● fluctuations in currency exchange rates, which could impact royalties, revenue and expenses of our international operations and expose us to foreign currency exchange rate risk; ● difficulties in complying with local laws, regulations, and customs in foreign jurisdictions; ● unexpected changes in regulatory requirements or tariffs on goods needed to construct and/or operate our restaurants; ● political or social unrest, economic instability and destabilization of a region; ● effects of actual or threatened terrorist attacks; ● health concerns from global pandemics; ● compliance with U.S. laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions; ● differences in the registration and/or enforceability of intellectual property and contract rights; ● adverse tax consequences; ● profit repatriation and other restrictions on the transfer of funds; and ● different and more stringent user protection, data protection, privacy and other laws.
In addition to the risks that we face in the United States, our international operations involve risks that could adversely affect our business, including: ● the need to adapt our concepts for specific cultural and language differences; ● new and different sources of competition; ● the ability to identify appropriate business partners; ● difficulties and costs associated with staffing and managing foreign operations; ● difficulties in adapting and sourcing product specifications for international restaurant locations; ● fluctuations in currency exchange rates, which could impact royalties, revenue and expenses of our international operations and expose us to foreign currency exchange rate risk; ● difficulties in complying with local laws, regulations and customs in foreign jurisdictions; ● unexpected changes in regulatory requirements or tariffs on goods needed to construct and/or operate our restaurants; 19 Table of Contents ● political or social unrest, economic instability and destabilization of a region; ● effects of actual or threatened terrorist attacks; ● health concerns from global pandemics; ● compliance with U.S. laws such as the Foreign Corrupt Practices Act, and similar laws in foreign jurisdictions; ● differences in the registration and/or enforceability of intellectual property and contract rights; ● adverse tax consequences; ● profit repatriation and other restrictions on the transfer of funds; and ● different and more stringent user protection, data protection, privacy and other laws.
Moreover, we operate in a very competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all these factors on our business, financial condition or results of operations.
Moreover, we operate in a very competitive and rapidly changing environment. New factors emerge from time to time and it is not possible to predict the impact of all these factors on our business, financial condition, results of operations or liquidity.
The loss of the services of members of our senior management team or other key officers or managers or the inability to attract additional qualified personnel as needed could significantly harm our business. In addition, our business could suffer from any actual or alleged misconduct of any of our key personnel.
The unplanned loss of the services of members of our senior management team or other key officers or managers or the inability to attract additional qualified personnel as needed could significantly harm our business. In addition, our business could suffer from any actual or alleged misconduct of any of our key personnel.
Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, financial market volatility, social unrest, government spending, a low or stagnant pace of economic recovery and growth, or other economic factors that may affect consumer spending or buying habits could adversely affect the demand for our products.
Recessionary economic cycles, higher interest rates, higher fuel and other energy costs, sustained labor inflation, increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, financial market volatility, social unrest, government spending, a low or stagnant pace of economic recovery and growth, or other economic factors that may affect consumer spending or buying habits could adversely affect the demand for our products.
In addition, if our security and information systems are compromised as a result of data corruption or loss, cyber-attack or a network security incident, or if our employees or vendors (or other persons or entities with which we do business with) fail to comply with such laws and regulations or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and result in a loss of guest confidence, which could adversely affect our results of operations and financial condition.
In addition, if our security and information systems are compromised as a result of data corruption or loss, cybersecurity incident or a network security incident, or if our employees or vendors (or other persons or entities with which we do business with) fail to comply with such laws and regulations or fail to meet industry standards and this information is obtained by unauthorized persons or used inappropriately, it could result in liabilities and penalties and could damage our reputation, cause interruption of normal business performance, cause us to incur substantial costs and result in a loss of guest confidence, which could adversely affect our results of operations and financial condition.
These provisions may make it more difficult or expensive for a third party to acquire a majority of our outstanding common stock. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock.
These provisions may make it more difficult or expensive for a third party to acquire a majority of our outstanding common stock. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy contest or other transaction that might otherwise result in our shareholders receiving a premium over the market price for their common stock.
If we experience decreased cash flow from operations, our ability to fund our operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected. In addition, these disruptions or a negative effect on our revenue could affect our ability to borrow or comply with our covenants under our amended revolving credit facility.
If we experience decreased cash flow from operations, our ability to fund our operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected. In addition, these disruptions or a negative effect on our revenue could affect our ability to borrow or comply with our covenants under our credit facility.
The amended revolving credit facility permits us to incur additional secured or unsecured indebtedness outside the revolving credit facility, 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 or circumstances where the incurrence of secured or unsecured indebtedness would prevent us from complying with our financial covenants.
The credit facility permits us to incur additional secured or unsecured indebtedness outside the credit facility, 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 or circumstances where the incurrence of secured or unsecured indebtedness would prevent us from complying with our financial covenants.
If we are unable to borrow additional capital or have sufficient liquidity to either repay or refinance the then outstanding balance at the expiration of our amended revolving credit facility, or upon violation of the covenants, our growth could be impeded and our financial performance could be significantly adversely affected.
If we are unable to borrow additional capital or have sufficient liquidity to either repay or refinance the then outstanding balance at the expiration of our credit facility, or upon violation of the covenants, our growth could be impeded and our financial performance could be significantly adversely affected.
Our ability to fund our operating plans and to implement our capital allocation strategies depends on sufficient cash flow from operations and/or other financing, including the use of funding under our amended revolving credit facility. We also may seek access to the debt and/or equity capital markets.
Our ability to fund our operating plans and to implement our capital allocation strategies depends on sufficient cash flow from operations and/or other financing, including the use of funding under our credit facility. We also may seek access to the debt and/or equity capital markets.
Evolving consumer and investor interest and preferences as well as governmental regulation may result in additional transparency, due diligence, reporting and specific target-setting with regard to our business and supply chain that could result in additional costs to comply with such demands.
Evolving consumer and investor interest and preferences as well as governmental regulation may result in additional disclosure, due diligence, reporting and specific target-setting with regard to our business and supply chain that could result in additional costs to comply with such demands.
In addition, given our geographic concentration in these states, negative publicity regarding any of our restaurants in either Texas or Florida could have a material adverse effect on our business and 21 Table of Contents operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics, local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, hurricanes, fires or other natural disasters.
In addition, given our geographic concentration in these states, negative publicity regarding any of our restaurants in either Texas or Florida could have a material adverse effect on our business and operations, as could other occurrences in either Texas or Florida such as health epidemics or pandemics, local strikes, energy shortages or extreme fluctuations in energy prices, droughts, earthquakes, hurricanes, fires or other natural disasters.
If we are unable to raise additional capital, our growth could be impeded. Our existing credit facility limits our ability to incur additional debt. The lenders’ obligation to extend credit under our amended revolving credit facility depends on our maintaining certain financial covenants.
If we are unable to raise additional capital, our growth could be impeded. Our existing credit facility limits our ability to incur additional debt. The lenders’ obligation to extend credit under our credit facility depends on our maintaining certain financial covenants.
Additionally, following a franchise acquisition, we may be required to incur substantial capital improvement costs to meet company standards, which could impact our return on such acquisition. Additionally, we may evaluate other means to leverage our competitive strengths, including the expansion of our products across other strategic initiatives or business opportunities (including retail initiatives utilizing our intellectual property).
Additionally, following a franchise acquisition, we may be required to incur substantial capital improvement costs to meet company standards, which could impact our return on such acquisition. 20 Table of Contents Additionally, we may evaluate other means to leverage our competitive strengths, including the expansion of our products across other strategic initiatives or business opportunities (including retail initiatives utilizing our intellectual property).
These decisions could limit or delay our overall long-term growth. Additionally, expansion and/or acquisition of new restaurant concepts might divert our management’s attention from other business concerns or initiatives and could have an adverse impact on our core Texas Roadhouse business. 19 Table of Contents Our expansion into international markets presents increased economic, political, regulatory and other risks.
These decisions could limit or delay our overall long-term growth. Additionally, expansion and/or acquisition of new restaurant concepts might divert our management’s attention from other business concerns or initiatives and could have an adverse impact on our core Texas Roadhouse business. Our expansion into international markets presents increased economic, political, regulatory and other risks.
A number of factors have historically affected, and will continue to affect, our average unit volume and comparable restaurant sales, including, among other factors: ● consumer awareness and understanding of our concepts; ● our ability to execute our business strategy effectively; 18 Table of Contents ● our ability to maintain and manage the increased levels of to-go sales at our restaurants; ● competition, from our competitors in the restaurant industry, our own restaurants, and/or other food service providers (such as delivery services and grocery stores); ● the impact of permanent changes in weather patterns that can cause inclement weather, natural disasters and other calamities; ● consumer trends and seasonality; ● our ability to increase menu prices without adversely impacting guest traffic counts or per person average check growth; ● introduction of new menu items; ● loss of parking and/or access rights due to government action (such as eminent domain actions) or through private transactions; ● government mandated dining room closures and/or dining rooms operating at limited capacity due to health epidemics or pandemics; ● negative publicity regarding food safety, health concerns, quality of service, and other food or beverage related matters, including the integrity of our or our suppliers’ food processing; ● general economic conditions, including an economic recession, which can affect restaurant traffic, local labor costs and prices we pay for the food and beverage products and other supplies we use; ● legislation that impacts our suppliers’ ability to maintain compliance with laws and regulations and impacts our ability to source product; and ● effects of actual or threatened terrorist attacks (including cyber and/or ransomware attacks).
A number of factors have historically affected, and will continue to affect, our average unit volume and comparable restaurant sales, including, among other factors: ● consumer awareness and understanding of our concepts; ● our ability to execute our business strategy effectively; ● our ability to maintain higher levels of to-go sales at our restaurants; ● competition, from our competitors in the restaurant industry, our own restaurants, and/or other food service providers (such as delivery services and grocery stores); ● the impact of permanent changes in weather patterns that can cause inclement weather, natural disasters and other calamities which impact guest traffic or product availability at our restaurants; ● consumer trends and seasonality; ● our ability to increase menu prices without adversely impacting guest traffic counts or per person average check growth; ● introduction of new menu items; ● loss of parking and/or access rights due to government action (such as eminent domain actions) or through private transactions; ● closures and/or dining rooms operating at limited capacity due to government mandated restaurant closures and/or limited availability of staff to meet our business standards; ● negative publicity regarding food safety, health concerns, quality of service, and other food or beverage related matters, including the integrity of our or our suppliers’ food processing; 18 Table of Contents ● general economic conditions, including an economic recession, which can affect restaurant traffic, local labor costs and prices we pay for the food and beverage products and other supplies we use; ● legislation that impacts our suppliers’ ability to maintain compliance with laws and regulations and impacts our ability to source product; and ● effects of actual or threatened terrorist attacks (including cyber and/or ransomware attacks).
Risks Related to Our Corporate Structure Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party. Our certificate of incorporation and by- laws contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board of Directors (the "Board").
Risks Related to Stock Ownership and Our Corporate Structure Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party. Our certificate of incorporation and by- laws contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board.
Payment of cash dividends on our common stock or repurchases of our common stock are subject to compliance with applicable laws and depends on, among other things, our results of operations, financial condition, level of indebtedness, capital requirements, business prospects, macro-economic conditions and other factors that our Board may deem relevant.
Payment of cash dividends on our common stock or repurchases of our common stock are subject to compliance with applicable laws and depends on, among other things, our results of operations, financial condition, level of 29 Table of Contents indebtedness, capital requirements, business prospects, macro-economic conditions and other factors that our Board may deem relevant.
In connection with the relocation, other operational changes, or closure of any restaurant, we may nonetheless be committed to perform on our obligations under the applicable lease including, among other things, paying the base rent and real estate taxes for the balance of the lease term.
In connection with the relocation, other operational changes or closure of any restaurant, we may nonetheless be committed to perform on our obligations under the applicable lease 21 Table of Contents including, among other things, paying the base rent and real estate taxes for the balance of the lease term.
The estimates of fair value are based upon the best information available as of the date of the assessment and incorporate management assumptions about expected future cash flows and contemplate other valuation measurements and techniques. 24 Table of Contents The estimates of fair value used in these analyses require the use of judgment, certain assumptions and estimates of future operating results.
The estimates of fair value are based upon the best information available as of the date of the assessment and incorporate management assumptions about expected future cash flows and contemplate other valuation measurements and techniques. The estimates of fair value used in these analyses require the use of judgment, certain assumptions and estimates of future operating results.
ITEM 1A. RISK FACTORS Careful consideration should be given to the risks described below. If any of the risks and uncertainties described in the cautionary factors described below actually occurs, our business, financial condition and results of operations, and the trading price of our common stock could be materially and adversely affected.
ITEM 1A. RISK FACTORS Careful consideration should be given to the risks described below. If any of the risks and uncertainties described in the cautionary factors described below actually occur, our business, financial condition, results of operations, liquidity and the trading price of our common stock could be materially and adversely affected.
Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in significantly different amounts of expense under these programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.
Unanticipated changes in our claims experience and/or the actuarial assumptions and management estimates underlying our reserves for these losses could result in significantly different amounts of expense under these programs, which could have a material adverse effect on our financial condition, results of operations and liquidity.
Failure to comply with the increased demands could result in public or investor scrutiny and/or litigation and could have an adverse effect on our business.
Failure to comply with the increased demands could result in consumer or investor scrutiny and/or litigation and could have an adverse effect on our business.
The use and handling, including security, of this information is regulated by privacy and data protection laws and regulations in various jurisdictions, as well as by certain third-party contracts, frameworks and industry standards, such as the Payment Card Industry Data Security Standard.
The use and handling, including security, of this information is regulated by privacy and data protection laws and regulations in 26 Table of Contents various jurisdictions, as well as by certain third-party contracts, frameworks and industry standards, such as the Payment Card Industry Data Security Standard.
If our guests become ill from food- borne illnesses, we could be forced to temporarily close some restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants, could subject us or our suppliers to a food recall.
If our guests become ill from food-borne illnesses, we could be forced to 28 Table of Contents temporarily close some restaurants. Furthermore, any instances of food contamination, whether or not at our restaurants, could subject us or our suppliers to a food recall.
Also, if we adjust pricing there is no assurance that we will realize the full benefit of any adjustment due to changes in our guests’ menu item selections and guest traffic. We currently purchase the majority of our beef from four beef suppliers with all of our beef coming from the United States or Canada.
Also, if we adjust pricing there is no assurance that we will realize the full benefit of any adjustment due to changes in our guests’ menu item selections and guest traffic. We currently purchase our beef primarily from four beef suppliers coming from the United States or Canada.
One of our biggest challenges in executing our growth strategy may be locating and securing an adequate supply of suitable new 17 Table of Contents restaurant sites that satisfy our financial targets. Competition for suitable restaurant sites in our target markets may be intense.
One of our biggest challenges in executing our growth strategy may be locating and securing an adequate supply of suitable new restaurant sites that satisfy our financial targets. Competition for suitable restaurant sites in our target markets may be intense.
The labeling and sourcing requirements and any negative publicity concerning any of the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to 28 Table of Contents our restaurants.
The labeling and sourcing requirements and any negative publicity concerning any of the food products we serve may adversely affect demand for our food and could result in a decrease in guest traffic to our restaurants.
However, food- borne illnesses and food safety issues occur in the food industry from time to time. Any report or publicity, whether true or not, linking us to instances of food- borne illness or other food safety issues, including food tampering or contamination, could adversely affect our concepts and reputation as well as our revenue and profits.
However, food- borne illnesses and food safety issues occur in the food industry from time to time. Any report or publicity, whether true or not, linking us to instances of food- borne illness or other food safety issues, including food tampering or contamination, could adversely affect our concepts and reputation as well as results of operations.
We compete with many well- established food service companies on the basis of taste, quality and price of products offered, guest service, atmosphere, location, take-out and delivery options and overall guest experience.
We compete with many well-established food service companies on the basis of taste, quality and price of products offered, guest service, atmosphere, location, take-out and delivery 27 Table of Contents options and overall guest experience.
Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives 20 Table of Contents (including retail initiatives utilizing our intellectual property or other brand extensions) to acquire or develop additional business channels or concepts, and/or change the business strategy regarding an existing concept.
Additionally, from time to time, we evaluate potential mergers, acquisitions, joint ventures or other strategic initiatives (including retail initiatives utilizing our intellectual property or other brand extensions) to acquire or develop additional business channels or concepts, and/or change the business strategy regarding an existing concept.
Our inability to register or protect our marks and other proprietary rights in foreign jurisdictions could adversely affect our competitive position in international markets. 22 Table of Contents We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their proprietary rights.
Our inability to register or protect our marks and other proprietary rights in foreign jurisdictions could adversely affect our competitive position in international markets. We cannot assure you that third parties will not claim that our trademarks or menu offerings infringe upon their proprietary rights.
In addition, as we implement new technology platforms to improve the overall guest experience, there can be no guarantees that these platforms will operate as reliably or be as operationally impactful as intended.
In addition, as we implement new technology platforms to improve productivity and overall guest experience, there can be no guarantees that these platforms will operate as reliably or be as operationally impactful as intended.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our results of operations.
If we are unable to maintain these covenants, we would be unable to obtain additional financing under this amended revolving credit facility.
If we are unable to maintain these covenants, we would be unable to obtain additional financing under this credit facility.
Also, our success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income. Accordingly, we may experience declines in sales during economic downturns, pandemics or other periods of uncertainty.
Additionally, our success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions, including high inflationary periods, and the availability of discretionary income. Accordingly, we may experience declines in sales during economic downturns, pandemics or other periods of uncertainty.
In addition to the novel coronavirus that causes COVID-19, the United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and H1N1.
In addition, the United States and other countries have experienced, or may experience in the future, outbreaks of viruses, such as COVID-19, Hepatitis A, Norovirus, Ebola, Avian Flu, SARS and H1N1.
A significant accounting error correction, financial reporting failure or material weakness in internal control over financial reporting could cause results in our consolidated financial statements that do not accurately reflect our financial condition, a loss of investor confidence and subsequent decline in the market price of our common stock, increase our costs and regulatory scrutiny, and lead to litigation or result in negative publicity that could damage our reputation. 30 Table of Contents ITEM 1B—UNRESOLVED STAFF COMMENTS None.
A significant accounting error correction, financial reporting failure or material weakness in internal control over financial reporting could cause results in our consolidated financial statements that do not accurately reflect our financial condition, a loss of investor confidence and subsequent decline in the market price of our common stock, increase our costs and regulatory scrutiny, and lead to litigation or result in negative publicity that could damage our reputation.
Our ability to open new restaurants that are profitable will also depend on numerous other factors, many of which are beyond our control, including, but not limited to, the following: ● our ability to hire, train and retain qualified operating personnel, especially market partners, managing partners, and/or other restaurant management personnel who can execute our business strategy and maintain our culture and brand standards; ● our ability to negotiate suitable purchase or lease terms to execute our business strategy; ● the availability of construction materials, equipment and labor; ● our ability to control construction and development costs of new restaurants (including increased site, supply chain and distribution costs); ● our ability to secure required governmental approvals and permits in a timely manner, or at all; ● road construction and other factors limiting access to the restaurant; ● delays by our landlord or other developers in constructing other parts of a development adjacent to our premises in a timely manner; ● redevelopment of other parts of a development adjacent to our premises that affect the parking available for our restaurant; ● our ability to secure liquor licenses, or at all; ● general economic conditions, including an economic recession; ● changes in federal, state and/or local tax laws; ● the cost and availability of capital to fund construction costs and pre-opening expenses; and ● the impact of inclement weather, natural disasters and other calamities.
Our ability to open new restaurants that are profitable will also depend on numerous other factors, many of which are beyond our control, including, but not limited to, the following: ● our ability to hire, train and retain qualified operating personnel, especially market partners, managing partners, and/or other restaurant management personnel who can execute our business strategy and maintain our culture and brand standards; ● our ability to negotiate suitable purchase or lease terms to execute our business strategy; ● the availability and cost of construction materials, equipment and labor; 17 Table of Contents ● our ability to control construction and development costs of new restaurants (including increased site, supply chain and distribution costs); ● our ability to secure required governmental approvals and permits in a timely manner, or at all; ● road construction and other factors limiting access to the restaurant; ● delays by our landlord or other developers in constructing other parts of a development adjacent to our premises in a timely manner; ● redevelopment of other parts of a development adjacent to our premises that affect the parking available for our restaurant; ● our ability to secure liquor licenses; ● competitive and economic conditions, consumer tastes and discretionary spending patterns that are different from and more difficult to predict or satisfy than in our existing markets; ● changes in federal, state and/or local tax laws; ● the cost and availability of capital to fund construction costs and pre-opening expenses; and ● the impact of inclement weather, natural disasters and other calamities.
In 2022, approximately 85% of our transactions were by credit or debit cards. In addition, certain of our vendors receive and/or maintain certain personal, financial and other information about our employees and guests on our behalf.
We receive and maintain certain personal, financial or other information about our guests, vendors and employees. In 2023, approximately 88% of our transactions were by credit or debit cards. In addition, certain of our vendors receive and/or maintain certain personal, financial and other information about our employees and guests on our behalf.
As of December 27, 2022, our operations include 38 Texas Roadhouse franchise restaurants in ten countries outside the United States, and we expect to have further international expansion in the future with one or more of our concepts.
As of December 26, 2023, our operations include 48 Texas Roadhouse franchise restaurants in ten countries outside the United States, and we expect to have further international expansion in the future with one or more of our concepts.
We review the value of our goodwill on an annual basis and also when events or changes in circumstances indicate that the carrying value of goodwill or other intangible assets may exceed the fair value of such assets.
We review the value of our goodwill on an annual basis and also when events or changes in circumstances indicate that the carrying value of goodwill may exceed its fair value.
Approximately 21% of our company restaurants are located in Texas and Florida and, as a result, we are sensitive to economic and other trends and developments in those states. As of December 27, 2022, we operated a total of 81 company restaurants in Texas and 44 company restaurants in Florida.
Approximately 21% of our company restaurants are located in Texas and Florida and, as a result, we are sensitive to economic and other trends and developments in those states. As of December 26, 2023, we operated a total of 87 company restaurants in Texas and 44 company restaurants in Florida.
Our business could be adversely affected by our inability to respond to or effectively manage social media. As part of our marketing strategy, we utilize social media platforms to promote our concepts and attract and retain guests. Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand relevance.
As part of our marketing strategy, we utilize social media platforms to promote our concepts and attract and retain guests. Our strategy may not be successful, resulting in expenses incurred without improvement in guest traffic or brand relevance.
These concepts may have lower brand awareness and less operating experience than most Texas Roadhouse restaurants. In addition, they may have a higher initial investment cost and/or a lower per person average check amount. As a result, the development and/or acquisition of new restaurant concepts may not contribute to our average unit volume growth and/or profitability in an incremental way.
In addition, they may have a higher initial investment cost and/or a lower per person average check amount. As a result, the development and/or acquisition of new restaurant concepts may not contribute to our average unit volume growth and/or profitability in an incremental way.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operations and exposure to administrative and other legal claims. 25 Table of Contents We outsource certain business processes to third-party vendors that subject us to risks, including disruptions in business and increased costs.
However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support field operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operations and exposure to administrative and other legal claims.
To the extent that a virus is food- borne, future outbreaks may adversely affect the price and availability of certain food products and cause our guests to eat less of a product which may have a significant adverse effect on our business.
To the extent that a virus is food- borne, future outbreaks may adversely affect the price and availability of certain food products and cause our guests to eat less of a product which may have a significant adverse effect on our business. Our business could be adversely affected by our inability to respond to or effectively manage social media.
Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting and training our restaurant managers and hourly employees.
Our business could be adversely affected by increased labor costs or labor shortages. Labor is a primary component in the cost of operating our business. We devote significant resources to recruiting and training our restaurant managers and hourly employees.
We anticipate that additional legislation significantly increasing minimum and/or tipped wage standards will be enacted in future periods and in other jurisdictions. In addition, regulatory actions which result in changes to healthcare eligibility, design and cost structure could occur. Any increases in minimum and/or tipped wages or increases in employee benefits costs will result in higher labor costs.
We anticipate that additional legislation increasing minimum and/or tipped wage standards will be enacted in future periods either federally or in state and local jurisdictions. In addition, regulatory actions which result in changes to healthcare eligibility, design and cost structure could occur.
Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure to litigation which could result in significant judgments, including punitive and liquidated damages, and injunctive relief.
Additionally, we are subject to Securities and Exchange Commission ("SEC") and NASDAQ reporting and disclosure requirements. Inconsistent standards imposed by governmental authorities can adversely affect our business and increase our exposure to litigation which could result in significant judgments, including punitive and liquidated damages, and injunctive relief.
As a result, we may be required to relocate or close a restaurant, which could subject us to construction and other costs and risks, and may have an adverse effect on our operating performance.
As a result, we may be required to relocate or close a restaurant, which could subject us to construction and other costs and risks and may have an adverse effect on our results of operations. We may be required to record additional impairment charges in the future.
The development and/or acquisition of new restaurant concepts may not contribute to our growth. The development of new restaurant concepts, including Bubba’s 33 and Jaggers, created internally or acquired as a part of our other strategic initiatives may not be as successful as our experience in the development of the Texas Roadhouse concept.
The development of new restaurant concepts, including Bubba’s 33 and Jaggers, created internally or acquired as a part of our other strategic initiatives may not be as successful as our experience in the development of the Texas Roadhouse concept. These concepts may have lower brand awareness and less operating experience than most Texas Roadhouse restaurants.
Changes in consumer preferences and discretionary spending could adversely affect our business. Our success depends, in part, upon the popularity of our food products. Continued social concerns or shifts in consumer preferences away from our restaurants or food offerings, particularly beef, could harm our business.
Our success depends, in part, upon the popularity of our food products. Continued social concerns or shifts in consumer preferences away from our restaurants or food offerings, particularly beef, could harm our business. Consumer preferences regarding food sourcing in response to environmental or welfare concerns could also harm our business.
In addition, we self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, cybersecurity and property insurance programs.
Such damages could have a material adverse effect on our business, results of operations and/or liquidity. In addition, we self- insure a significant portion of expected losses under our health, workers’ compensation, general liability, employment practices liability, cybersecurity and property insurance programs.
Any material decline in the amount of discretionary spending could have a material adverse effect on our business, results of operations, financial condition or liquidity. We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance with governmental laws and regulations could adversely affect our operating results.
All of these factors could have a material adverse impact on our business, results of operations, financial condition or liquidity. 22 Table of Contents Risks Related to Government Regulation and Litigation We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance with governmental laws and regulations could adversely affect our operating results.
While we maintain relationships with additional suppliers, if any of these vendors were unable to fulfill its obligations under its contracts, we could encounter supply shortages and incur higher costs to secure adequate supplies, either of which would harm our business. Our business could be adversely affected by increased labor costs or labor shortages.
While we maintain relationships with additional suppliers, if any of these vendors were unable to fulfill its obligations under its contracts, we could encounter supply shortages and/or incur higher costs to secure adequate supplies, either of which would harm our business. Our success depends on our ability to compete with many food service businesses. The restaurant industry is intensely competitive.
As our business needs continue to evolve, these systems will require upgrading and maintenance over time, consequently requiring significant future commitments of resources and capital. Additionally, as we become increasingly reliant on digital ordering and payment as a sales channel, our business could be negatively impacted if we are unable to successfully implement, execute or maintain our consumer-facing digital initiatives.
Additionally, as we become 25 Table of Contents increasingly reliant on digital ordering and payment as a sales channel, our business could be negatively impacted if we are unable to successfully implement, execute or maintain our consumer-facing digital initiatives.
Further, adverse publicity resulting from these claims may hurt our business. 23 Table of Contents Our current insurance may not provide adequate levels of coverage against claims. We currently maintain insurance customary for businesses of our size and type.
Further, adverse publicity resulting from these claims may hurt our business. Our current insurance may not provide adequate levels of coverage against claims. We currently maintain insurance customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure.
Any significant increases in income tax rates, changes in income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our financial results. We may be required to record additional impairment charges in the future.
Any significant increases in income tax rates, changes in and/or interpretations of income tax laws or unfavorable resolution of tax matters could have a material adverse impact on our results of operations, financial condition or liquidity.
The existence of this provision could have an anti-takeover effect with respect to transactions not approved in advance by the Board, including discouraging attempts that might result in a premium over the market price for our common stock. 29 Table of Contents There can be no assurance that we will continue to pay dividends on our common stock or repurchase our common stock up to the maximum amounts permitted under our previously announced repurchase program.
The existence of this provision could have an anti-takeover effect with respect to transactions not approved in advance by the Board, including discouraging attempts that might result in a premium over the market price for our common stock.
Our operating margin will be adversely affected to the extent that we are unable or are unwilling to offset any increase in these labor costs through higher prices on our products. Our distributors and suppliers also may be affected by higher minimum wage and benefit standards which could result in higher costs for goods and services supplied to us.
Any increases in minimum and/or tipped wages or increases in employee benefits costs will result in sustained higher labor costs. Our operating margin will be adversely affected to the extent that we are unable or are unwilling to offset any increase in these labor costs through higher prices on our products.
As a result, our quarterly operating results and comparable restaurant sales may fluctuate as a result of seasonality. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and comparable, restaurant sales for any particular future period may decrease.
Holidays, changes in weather, severe weather and similar conditions may impact sales volumes seasonally in some operating regions. Accordingly, results for one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and comparable restaurant sales for any particular future period may decrease.
Risks Related to Information Technology and Privacy We rely heavily on information technology, and any material failure, weakness, ransomware or interruption could prevent us from effectively operating our business. We rely heavily on information systems in all aspects of our operations, including point-of- sale systems, digital apps, financial systems, marketing programs, e-commerce and various other processes and transactions.
We rely heavily on information systems in all aspects of our operations, including point-of- sale systems, digital apps, financial systems, marketing programs, e-commerce and various other processes and transactions.
Additionally, the opening of a new restaurant could negatively impact sales at one or more of our existing nearby restaurants, which could adversely affect our financial performance.
Our localized marketing strategy may not result in brand awareness and guest engagement. Additionally, the opening of a new restaurant could negatively impact sales at one or more of our existing nearby restaurants, which could adversely affect our results of operations.
We may incur increased costs to comply with increasingly demanding privacy laws and regulations. We could also be subject to government enforcement actions, private litigation and adverse publicity including reputational damage and loss of guest confidence. We receive and maintain certain personal, financial or other information about our guests, vendors and employees.
We may incur increased costs to comply with increasingly demanding privacy laws and regulations and such compliance may impede the development and offering of new products or services and may adversely impact the guest experience. We could also be subject to government enforcement actions, private litigation and adverse publicity including reputational damage and loss of guest confidence.
Failure to achieve and maintain effective internal control over financial reporting may negatively impact our business and our financial results. The Company is responsible for establishing and maintaining effective internal control over financial reporting. Despite its inherent limitations, effective internal control over financial reporting helps provide reasonable assurance regarding the reliability of financial reporting for external purposes.
Despite its inherent limitations, effective internal control over financial reporting helps provide reasonable assurance regarding the reliability of financial reporting for external purposes.
New, modified and existing privacy and data protection laws and regulations may result in significant costs and compliance challenges and adversely affect our business and financial condition. These privacy laws and regulations, which are constantly evolving, may be interpreted by regulatory authorities in new and differing manners and such interpretations may be inconsistent among jurisdictions.
New, modified and existing privacy and data protection laws and regulations may result in significant costs and compliance challenges and adversely affect our business and financial condition.
Litigation involving our relationship with franchisees and the legal distinction between our franchisees and us for employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our franchisees and subject us to incremental liability for their actions.
Because a plaintiff may seek punitive damages, which may not be covered by insurance, this type of action could have an adverse impact on our financial condition and results of operations. 23 Table of Contents Litigation involving our relationship with franchisees and the legal distinction between our franchisees and us for employment law purposes, if determined adversely, could increase costs, negatively impact the business prospects of our franchisees and subject us to incremental liability for their actions.
If actual results differ from our estimates or assumptions, additional impairment charges may be required in the future. If impairment charges are significant, our results of operations could be adversely affected. Failure to retain the services of our key management personnel, or to successfully execute succession planning and attract additional qualified personnel could harm our business.
If actual results differ from our estimates or assumptions, additional impairment charges may be required in the future. If impairment charges are significant, our results of operations could be adversely affected. Risks Related to Consumer Discretionary Spending and Macroeconomic Conditions Changes in consumer preferences and discretionary spending could adversely affect our business.
Our average unit volume and comparable restaurant sales may not increase at rates achieved in the past, which may affect our sales growth and will continue to be a critical factor affecting our profitability. In addition, changes in our average unit volume and comparable restaurant sales could cause the price of our common stock to significantly fluctuate.
Our average unit volume and comparable restaurant sales may not increase at rates achieved in the past, which may affect our sales growth and will continue to be a critical factor affecting our profitability. Our business is also subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the winter months of each year.
Hardware, software or other applications we develop and procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems and facilities through fraud, trickery or other forms of deceiving our employees or vendors.
Hardware, software or other applications we develop and procure from third parties or vendor’s third-party applications could be subject to vulnerabilities or cybersecurity incidents or may contain defects in design or manufacture or other problems that could unexpectedly compromise information security.
Establishing targets or making other public commitments due to these demands, without a full or complete understanding of the cost or operational impact of changes in our supply chain or operating model, could also adversely affect our business and financial condition. We are subject to increasing legal complexity and could be party to litigation that could adversely affect us.
Establishing targets or making other public commitments due to these demands, without a full or complete understanding of the cost or operational impact of changes in our supply chain or operating model, could also adversely affect our business and financial condition. 24 Table of Contents Risks Related to Human Capital Failure to retain the services of our key management personnel, or to successfully execute succession planning and attract additional qualified personnel could harm our business.
Increasing legal complexity will continue to affect our operations and results.
We are subject to increasing legal complexity and could be party to litigation that could adversely affect us. Increasing legal complexity will continue to affect our operations and results.
In addition, if there are malfunctions or other problems with our processing vendors, billing software or payment processing systems, it may cause interruption of normal business performance. Risks Related to the Restaurant Industry Changes in food and supply costs and/or availability of products could adversely affect our results of operations.
Risks Related to the Restaurant Industry Changes in food and supply costs and/or availability of products could adversely affect our results of operations.
We cannot assure you that we will be able to open new restaurants that are profitable in accordance with our expansion plans. We have experienced delays in opening some of our restaurants in the past and may experience delays in the future. Delays or failures in opening new restaurants could adversely affect our growth strategy.
We have experienced delays in opening some of our restaurants in the past and may experience delays in the future. These delays impact the timing of new restaurant openings and the related pre-opening expenses. Delays or failures in opening new restaurants could adversely affect our growth strategy.
In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of our common stock could decrease. Our growth strategy, which primarily depends on our ability to open new restaurants that are profitable, is subject to many factors, some of which are beyond our control.
In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of our common stock could decrease. The development and/or acquisition of new restaurant concepts may not contribute to our growth.
Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure. Any such claim or proceeding could cause us to incur significant unplanned expenses in excess of our insurance coverage, which could have a material impact on our financial condition and results of operations.
Any such claim or proceeding could cause us to incur significant unplanned expenses in excess of our insurance coverage, which could have a material impact on our financial condition and results of operations. In addition, if there are malfunctions or other problems with our processing vendors, billing software or payment processing systems, it may cause interruption of normal business performance.
Changes in tax laws and unanticipated tax liabilities could adversely affect our financial results. We are primarily subject to income and other taxes in the United States.
We are primarily subject to federal, state and local income and other taxes in the United States.
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.
Failure to achieve and maintain effective internal control over financial reporting may negatively impact our business and our financial results. The Company is responsible for establishing and maintaining effective internal control over financial reporting. This includes establishing controls around the adoption of new, or changes in existing, accounting policies and practices.
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