Texas Roadhouse, Inc. [TXRH] Filings

10-Q 1 txrh-20240625x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 25, 2024

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

For the transition period from to

Commission File Number 000-50972

Texas Roadhouse, Inc.

(Exact name of registrant specified in its charter)

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

6040 Dutchmans Lane

Louisville, Kentucky 40205

(Address of principal executive offices) (Zip Code)

(502) 426-9984

(Registrant’s telephone number, including area code)

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


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

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

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

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

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

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

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

The number of shares of common stock outstanding were 66,676,650 on July 24, 2024.

Table of Contents

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements (Unaudited) — Texas Roadhouse, Inc. and Subsidiaries		3
Condensed Consolidated Balance Sheets — June 25, 2024 and December 26, 2023		3
Condensed Consolidated Statements of Income — For the 13 and 26 Weeks Ended June 25, 2024 and June 27, 2023		4
Condensed Consolidated Statements of Stockholders’ Equity — For the 13 and 26 Weeks Ended June 25, 2024 and June 27, 2023		5
Condensed Consolidated Statements of Cash Flows — For the 26 Weeks Ended June 25, 2024 and June 27, 2023		7
Notes to Condensed Consolidated Financial Statements		8
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3 — Quantitative and Qualitative Disclosures About Market Risk		27
Item 4 — Controls and Procedures		28

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings		29
Item 1A — Risk Factors		29
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 3 — Defaults Upon Senior Securities		29
Item 4 — Mine Safety Disclosures		29
Item 5 — Other Information		30
Item 6 — Exhibits		30

Signatures		31

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	June 25, 2024		December 26, 2023
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	197,454	$	104,246
Receivables, net of allowance for doubtful accounts of $27 at June 25, 2024 and $35 at December 26, 2023		68,599		175,474
Inventories, net		41,199		38,320
Prepaid income taxes		—		3,262
Prepaid expenses and other current assets		26,034		35,172
Total current assets		333,286		356,474
Property and equipment, net of accumulated depreciation of $1,155,242 at June 25, 2024 and $1,078,855 at December 26, 2023		1,523,393		1,474,722
Operating lease right-of-use assets, net		726,378		694,014
Goodwill		169,684		169,684
Intangible assets, net of accumulated amortization of $22,039 at June 25, 2024 and $20,929 at December 26, 2023		2,374		3,483
Other assets		106,796		94,999
Total assets	$	2,861,911	$	2,793,376
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of operating lease liabilities	$	28,308	$	27,411
Accounts payable		136,789		131,638
Deferred revenue-gift cards		250,485		373,913
Accrued wages		84,920		68,062
Income taxes payable		6,073		112
Accrued taxes and licenses		45,580		42,758
Other accrued liabilities		92,172		101,540
Total current liabilities		644,327		745,434
Operating lease liabilities, net of current portion		779,517		743,476
Restricted stock and other deposits		9,617		8,893
Deferred tax liabilities, net		17,733		23,104
Other liabilities		133,027		114,958
Total liabilities		1,584,221		1,635,865
Texas Roadhouse, Inc. and subsidiaries stockholders’ equity:
Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares issued or outstanding)		—		—
Common stock ($0.001 par value, 100,000,000 shares authorized, 66,727,898 and 66,789,464 shares issued and outstanding at June 25, 2024 and December 26, 2023, respectively)		67		67
Retained earnings		1,262,569		1,141,595
Total Texas Roadhouse, Inc. and subsidiaries stockholders’ equity		1,262,636		1,141,662
Noncontrolling interests		15,054		15,849
Total equity		1,277,690		1,157,511
Total liabilities and equity	$	2,861,911	$	2,793,376

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)


	13 Weeks Ended				26 Weeks Ended
	June 25, 2024		June 27, 2023		June 25, 2024		June 27, 2023
Revenue:
Restaurant and other sales	$	1,333,642	$	1,164,385	$	2,647,794	$	2,331,968
Franchise royalties and fees		7,560		6,818		14,625		13,591
Total revenue		1,341,202		1,171,203		2,662,419		2,345,559
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Food and beverage		436,001		401,204		881,092		811,915
Labor		438,212		391,337		865,759		777,156
Rent		19,956		17,996		39,381		35,824
Other operating		196,862		171,092		390,504		338,621
Pre-opening		6,202		5,671		14,297		11,048
Depreciation and amortization		42,915		37,413		84,408		73,640
Impairment and closure, net		90		78		291		133
General and administrative		58,148		51,000		110,743		100,865
Total costs and expenses		1,198,386		1,075,791		2,386,475		2,149,202
Income from operations		142,816		95,412		275,944		196,357
Interest income, net		1,683		996		3,091		2,234
Equity income from investments in unconsolidated affiliates		286		287		543		1,042
Income before taxes	$	144,785	$	96,695	$	279,578	$	199,633
Income tax expense		21,710		12,270		40,513		26,604
Net income including noncontrolling interests		123,075		84,425	$	239,065	$	173,029
Less: Net income attributable to noncontrolling interests		2,934		2,154		5,718		4,371
Net income attributable to Texas Roadhouse, Inc. and subsidiaries	$	120,141	$	82,271	$	233,347	$	168,658

Net income per common share attributable to Texas Roadhouse, Inc. and subsidiaries:
Basic	$	1.80	$	1.23	$	3.49	$	2.52
Diluted	$	1.79	$	1.22	$	3.48	$	2.51
Weighted average shares outstanding:
Basic		66,785		66,974		66,814		66,995
Diluted		67,044		67,229		67,077		67,261
Cash dividends declared per share	$	0.61	$	0.55	$	1.22	$	1.10

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)


	For the 13 Weeks Ended June 25, 2024
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, March 26, 2024	66,846,291	$	67	$	—	$	1,207,119	$	1,207,186	$	15,930	$	1,223,116
Net income	—		—		—		120,141		120,141		2,934		123,075
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,922)		(2,922)
Acquisition of noncontrolling interest, net of deferred taxes	—		—		(3,274)		—		(3,274)		(888)		(4,162)
Dividends declared ($0.61 per share)	—		—		—		(40,718)		(40,718)		—		(40,718)
Shares issued under share-based compensation plans including tax effects	63,525		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(19,514)		—		(3,356)		—		(3,356)		—		(3,356)
Repurchase of shares of common stock, including excise tax as applicable	(162,404)		—		(2,225)		(23,973)		(26,198)		—		(26,198)
Share-based compensation	—		—		8,855		—		8,855		—		8,855
Balance, June 25, 2024	66,727,898	$	67	$	—	$	1,262,569	$	1,262,636	$	15,054	$	1,277,690


	For the 13 Weeks Ended June 27, 2023
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, March 28, 2023	67,000,306	$	67	$	6,240	$	1,048,941	$	1,055,248	$	15,291	$	1,070,539
Net income	—		—		—		82,271		82,271		2,154		84,425
Distributions to noncontrolling interest holders	—		—		—		—		—		(2,177)		(2,177)
Dividends declared ($0.55 per share)	—		—		—		(36,820)		(36,820)		—		(36,820)
Shares issued under share-based compensation plans including tax effects	82,547		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(25,422)		—		(2,809)		—		(2,809)		—		(2,809)
Repurchase of shares of common stock, including excise tax as applicable	(213,975)		—		(12,021)		(11,477)		(23,498)		—		(23,498)
Share-based compensation	—		—		8,590		—		8,590		—		8,590
Balance, June 27, 2023	66,843,456	$	67	$	—	$	1,082,915	$	1,082,982	$	15,268	$	1,098,250

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

(unaudited)


	For the 26 Weeks Ended June 25, 2024
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 26, 2023	66,789,464	$	67	$	—	$	1,141,595	$	1,141,662	$	15,849	$	1,157,511
Net income	—		—		—		233,347		233,347		5,718		239,065
Distributions to noncontrolling interest holders	—		—		—		—		—		(5,625)		(5,625)
Acquisition of noncontrolling interest, net of deferred taxes	—		—		(3,274)		—		(3,274)		(888)		(4,162)
Dividends declared ($1.22 per share)	—		—		—		(81,509)		(81,509)		—		(81,509)
Shares issued under share-based compensation plans including tax effects	234,784		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(73,684)		—		(10,829)		—		(10,829)		—		(10,829)
Repurchase of shares of common stock, including excise tax as applicable	(222,666)		—		(4,275)		(30,864)		(35,139)		—		(35,139)
Share-based compensation	—		—		18,378		—		18,378		—		18,378
Balance, June 25, 2024	66,727,898	$	67	$	—	$	1,262,569	$	1,262,636	$	15,054	$	1,277,690


	For the 26 Weeks Ended June 27, 2023
								Total Texas
				Additional				Roadhouse, Inc.
		Par		Paid-in-		Retained		and		Noncontrolling
	Shares	Value		Capital		Earnings		Subsidiaries		Interests		Total
Balance, December 27, 2022	66,973,311	$	67	$	13,139	$	999,432	$	1,012,638	$	15,024	$	1,027,662
Net income	—		—		—		168,658		168,658		4,371		173,029
Distributions to noncontrolling interest holders	—		—		—		—		—		(4,127)		(4,127)
Dividends declared ($1.10 per share)	—		—		—		(73,698)		(73,698)		—		(73,698)
Shares issued under share-based compensation plans including tax effects	256,167		—		—		—		—		—		—
Indirect repurchase of shares for minimum tax withholdings	(79,296)		—		(8,239)		—		(8,239)		—		(8,239)
Repurchase of shares of common stock, including excise tax as applicable	(306,726)		—		(21,644)		(11,477)		(33,121)		—		(33,121)
Share-based compensation	—		—		16,744		—		16,744		—		16,744
Balance, June 27, 2023	66,843,456	$	67	$	—	$	1,082,915	$	1,082,982	$	15,268	$	1,098,250

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	26 Weeks Ended
	June 25, 2024		June 27, 2023
Cash flows from operating activities:
Net income including noncontrolling interests	$	239,065	$	173,029
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		84,408		73,640
Deferred income taxes		(4,254)		1,767
Loss on disposition of assets		1,646		3,475
Impairment and closure costs		26		39
Equity income from investments in unconsolidated affiliates		(543)		(1,042)
Distributions of income received from investments in unconsolidated affiliates		541		358
Provision for doubtful accounts		(8)		1
Share-based compensation expense		18,378		16,744
Changes in operating working capital, net of acquisitions:
Receivables		106,883		90,501
Inventories		(2,879)		303
Prepaid expenses and other current assets		9,138		5,111
Other assets		(10,377)		(10,119)
Accounts payable		11,293		14,365
Deferred revenue—gift cards		(123,428)		(110,436)
Accrued wages		16,858		12,620
Prepaid income taxes and income taxes payable		9,220		5,224
Accrued taxes and licenses		3,338		5,346
Other accrued liabilities		(3,540)		(7,624)
Operating lease right-of-use assets and lease liabilities		3,515		3,178
Other liabilities		18,067		11,753
Net cash provided by operating activities		377,347		288,233
Cash flows from investing activities:
Capital expenditures—property and equipment		(155,478)		(154,580)
Acquisition of franchise restaurants, net of cash acquired		—		(39,153)
Proceeds from sale of investments in unconsolidated affiliates		—		632
Proceeds from sale of property and equipment		197		—
Proceeds from sale leaseback transactions		9,126		7,097
Net cash used in investing activities		(146,155)		(186,004)
Cash flows from financing activities:
Payments on revolving credit facility		—		(50,000)
Distributions to noncontrolling interest holders		(5,625)		(4,127)
Acquisition of noncontrolling interest		(5,279)		—
Proceeds from restricted stock and other deposits, net		397		356
Indirect repurchase of shares for minimum tax withholdings		(10,829)		(8,239)
Repurchase of shares of common stock		(35,139)		(33,058)
Dividends paid to shareholders		(81,509)		(73,698)
Net cash used in financing activities		(137,984)		(168,766)
Net increase (decrease) in cash and cash equivalents		93,208		(66,537)
Cash and cash equivalents—beginning of period		104,246		173,861
Cash and cash equivalents—end of period	$	197,454	$	107,324
Supplemental disclosures of cash flow information:
Interest paid, net of amounts capitalized	$	454	$	638
Income taxes paid	$	35,768	$	19,613
Capital expenditures included in current liabilities	$	35,565	$	36,268

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Texas Roadhouse, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(tabular amounts in thousands, except per share data)

(unaudited)

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Texas Roadhouse, Inc., our wholly owned subsidiaries and subsidiaries in which we have a controlling interest (collectively, the "Company," "we," "our" and/or "us") as of June 25, 2024 and December 26, 2023 and for the 13 and 26 weeks ended June 25, 2024 and June 27, 2023.

The Company maintains three restaurant concepts operating as Texas Roadhouse, Bubba’s 33, and Jaggers. As of June 25, 2024, we owned and operated 650 restaurants and franchised an additional 112 restaurants in 49 states, one U.S. territory, and ten foreign countries. Of the 112 franchise restaurants, there were 59 domestic restaurants and 53 international restaurants, including one in a U.S. territory. As of June 27, 2023, we owned and operated 614 restaurants and franchised an additional 95 restaurants in 49 states and ten foreign countries. Of the 95 franchise restaurants, there were 54 domestic restaurants and 41 international restaurants.

As of June 25, 2024 and June 27, 2023, we owned a majority interest in 19 and 20 company restaurants, respectively. The operating results of these majority-owned restaurants are consolidated and the portion of income attributable to noncontrolling interests is reflected in the line item net income attributable to noncontrolling interests in our unaudited condensed consolidated statements of income.

As of June 25, 2024 and June 27, 2023, we owned a 5.0% to 10.0% equity interest in 20 domestic franchise restaurants. These unconsolidated restaurants are accounted for using the equity method. Our investments in these unconsolidated affiliates are included in other assets in our unaudited condensed consolidated balance sheets, and we record our percentage share of net income earned by these unconsolidated affiliates in our unaudited condensed consolidated statements of income under equity income from investments in unconsolidated affiliates. All significant intercompany balances and transactions for these unconsolidated restaurants as well as the entities whose accounts have been consolidated have been eliminated.

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

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our unaudited condensed consolidated financial statements for the periods presented. The unaudited condensed consolidated financial statements have been prepared in accordance with GAAP, except that certain information and footnotes have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission. Operating results for the 13 and 26 weeks ended June 25, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 26, 2023.

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

Table of Contents

(2) Recent Accounting Pronouncements

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

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

(3) Long-term Debt

We maintain a revolving credit facility (the "credit facility") with a syndicate of commercial lenders led by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The credit facility is an unsecured, revolving credit agreement and has a borrowing capacity of up to $300.0 million with the option to increase by an additional $200.0 million subject to certain limitations, including approval by the syndicate of commercial lenders. The credit facility has a maturity date of May 1, 2026.

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

As of June 25, 2024 and December 26, 2023, we had no outstanding borrowings under the credit facility and had $295.3 million of availability, net of $4.7 million of outstanding letters of credit.

The interest rate for the credit facility as of June 25, 2024 and June 27, 2023 was 6.21% and 6.07%, respectively.

The lenders’ obligation to extend credit pursuant to the credit facility depends on us maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio and a maximum consolidated leverage ratio. The credit facility permits us to incur additional secured or unsecured indebtedness, except for the incurrence of secured indebtedness that in the aggregate is equal to or greater than $125.0 million and 20% of our consolidated tangible net worth. We were in compliance with all financial covenants as of June 25, 2024.

Table of Contents

(4) Revenue

The following table disaggregates our revenue by major source:


	13 Weeks Ended				26 Weeks Ended
	June 25, 2024		June 27, 2023		June 25, 2024		June 27, 2023
Restaurant and other sales	$	1,333,642	$	1,164,385	$	2,647,794	$	2,331,968
Franchise royalties		6,945		6,045		13,793		12,064
Franchise fees		615		773		832		1,527
Total revenue	$	1,341,202	$	1,171,203	$	2,662,419	$	2,345,559

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


	13 Weeks Ended				26 Weeks Ended
	June 25, 2024		June 27, 2023		June 25, 2024		June 27, 2023
Beginning balance	$	266,482	$	240,729	$	373,913	$	335,403
Gift card activations, net of third-party fees		78,643		67,991		134,882		118,554
Gift card redemptions and breakage		(94,640)		(82,590)		(258,310)		(227,827)
Ending balance	$	250,485	$	226,130	$	250,485	$	226,130

We recognized restaurant sales of $46.1 million and $184.0 million for the 13 and 26 weeks ended June 25, 2024, respectively, related to amounts in deferred revenue as of December 26, 2023. We recognized restaurant sales of $45.5 million and $165.1 million for the 13 and 26 weeks ended June 27, 2023, respectively, related to amounts in deferred revenue as of December 27, 2022.

(5) Income Taxes

The effective tax rate was 15.0% and 12.7% for the 13 weeks ended June 25, 2024 and June 27, 2023, respectively. The effective tax rate was 14.5% and 13.3% for the 26 weeks ended June 25, 2024 and June 27, 2023, respectively. The increase in our tax rate for the 13 and 26 weeks ended June 25, 2024 as compared to the prior year periods was primarily due to a decrease in the impact of the FICA tip and work opportunity tax credits, which was driven by increased profitability.

(6)

Commitments and Contingencies

The estimated cost of completing capital project commitments at June 25, 2024 and December 26, 2023 was $258.9 million and $237.4 million, respectively.

As of June 25, 2024 and December 26, 2023, we were contingently liable for $9.9 million and $10.4 million, respectively, for seven lease guarantees. These amounts represent the maximum potential liability of future payments under the guarantees. In the event of default, the indemnity and default clauses in our assignment agreements govern our ability to pursue and recover damages incurred. No material liabilities have been recorded as of June 25, 2024 and December 26, 2023, as the likelihood of default was deemed to be less than probable and the fair value of the guarantees is not considered significant.

During the 13 and 26 weeks ended June 25, 2024 and June 27, 2023, we bought our beef primarily from four suppliers. Although there are a limited number of beef suppliers, we believe that other suppliers could provide a similar product on comparable terms. We have no material minimum purchase commitments with our vendors that extend beyond a year.

Table of Contents

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

(7) Acquisitions

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

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

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


Inventory	$	410
Other assets		293
Property and equipment		17,763
Operating lease right-of-use assets		4,775
Goodwill