Texas Roadhouse, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 27, 2022 (52 weeks); fiscal Q4 was 13 weeks. The filing’s financial tables provide annual results, not clear standalone Q4 results. Comparisons below are fiscal 2022 versus fiscal 2021.
Business context
The company operates Texas Roadhouse, Bubba’s 33 and Jaggers. At year-end, it had 697 restaurants: 597 company-operated and 100 franchised, across 49 states and 10 foreign countries. All domestic restaurants operated without COVID-related restrictions during 2022.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change / context |
|---|---|---|---|
| Total revenue | $4.015 billion | $3.464 billion | Up 15.9% |
| Net income attributable to Texas Roadhouse | $269.8 million | $245.3 million | Up 10.0% |
| Diluted EPS | $3.97 | $3.50 | Up 13.5%; benefited from share repurchases |
| Income from operations | $320.2 million; 8.0% of revenue | $297.2 million; 8.6% | Operating margin declined |
| Restaurant margin | $627.5 million; 15.7% of restaurant and other sales | $581.7 million; 16.9% | Margin rate fell despite higher dollars |
| Cash from operations | $511.7 million | $468.8 million | Up; company cited higher earnings and favorable working capital, partly offset by final $23 million deferred payroll-tax remittance |
| Capital expenditures | $246.1 million | $200.7 million | Higher restaurant construction, refurbishment and relocation spending |
| Cash and cash equivalents | $173.9 million | $335.6 million | Down $161.8 million year over year |
Food and beverage costs rose to 34.6% of restaurant and other sales from 33.6%; labor rose to 33.1% from 32.7%. The company reported 10.8% commodity inflation and 8.3% wage and other labor inflation in 2022. Restaurant margin is a company-defined non-GAAP measure.
At year-end, revolving-credit borrowings were $50 million, down from $100 million, with $233.5 million of availability net of letters of credit. The rate on outstanding borrowings was 5.21%, versus 0.98% a year earlier; the company was in compliance with credit-facility covenants. Operating lease liabilities were $703.4 million. Total contractual obligations were $1.463 billion, including $1.191 billion of undiscounted real-estate operating lease payments.
Material changes and notable items
- Comparable company restaurant sales increased 9.7%, versus 37.8% in 2021. In 2022, guest traffic rose 1.9% and average check rose 7.8%; menu price increases contributed to the check growth. To-go sales declined to 13.3% of restaurant sales from 17.1%.
- Restaurant sales growth was supported by 6.1% growth in company store weeks and new openings and franchise acquisitions. The company opened 23 restaurants and acquired eight domestic franchise restaurants during 2022.
- Texas Roadhouse segment margin rate declined to 16.0% from 16.9%; Bubba’s 33 declined to 12.7% from 16.6%. The company attributed margin pressure chiefly to commodity and labor inflation.
- 2022 included $1.6 million of net impairment and closure costs. Gift-card breakage estimate adjustments included a favorable $6.6 million impact to sales, partly offset by third-party gift-card fees.
- The company spent $212.9 million repurchasing 2.7 million shares and paid $124.1 million in shareholder dividends. Dividends declared were $1.84 per share, versus $1.20 in 2021.
Outlook, management commentary and risks
- For 2023, management expected commodity inflation of 5%–6% and wage and other labor inflation of 5%–6%. About 40% of forecast commodity costs were locked; the remainder was exposed to market prices.
- Management planned approximately 25–30 Texas Roadhouse and Bubba’s 33 company openings, three Jaggers company openings, and as many as nine Texas Roadhouse and three Jaggers franchise openings. It expected at least 6% store-week growth, approximately $265 million in capital expenditures and up to four relocations.
- Management expected a 2023 effective tax rate of approximately 14%. The board declared a quarterly dividend of $0.55 per share in February 2023, a 20% increase from the year-earlier quarterly rate.
- Key risks include food and supply cost inflation and availability—particularly beef sourced primarily from four suppliers—labor shortages and wage increases, competition and consumer spending, execution and cost of new openings, food safety, severe weather, and cybersecurity or information-system disruption. Results may fluctuate seasonally.
- The company reported effective disclosure controls and internal control over financial reporting; KPMG issued unqualified opinions on the financial statements and internal controls. KPMG identified assessment of potential long-lived-asset impairment indicators as a critical audit matter. The filing states no pending litigation it believed could materially adversely affect the business.
Important facts for investors to verify
- Standalone Q4 sales, earnings, margins and cash flow: the annual financial tables provided do not give a clear Q4-only value.
- Whether pricing and traffic can sustain sales growth while commodity and labor inflation continue to pressure restaurant margins.
- Execution, capital needs and returns for the 2023 opening plan, relocations, and the eight franchise restaurants acquired after year-end for approximately $39 million.
- Cash use and capital allocation, including dividends and repurchases, alongside the $50 million variable-rate debt balance and substantial lease obligations.
- Assumptions underlying gift-card breakage estimates, restaurant impairment tests and self-insurance reserves, which rely in part on management estimates.