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As filed with the Securities and Exchange Commission on July 19, 2004

Registration No. 333-115259

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

TEXAS ROADHOUSE, INC.
(Exact name of Registrant as specified in its charter)

Delaware	5812	20-1083890
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

6040 Dutchmans Lane, Suite 400
Louisville, Kentucky 40205
(502) 426-9984
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)

G.J. Hart
Chief Executive Officer
Texas Roadhouse, Inc.
6040 Dutchmans Lane, Suite 400
Louisville, Kentucky 40205
(502) 426-9984
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
William G. Strench James A. Giesel Frost Brown Todd LLC 400 West Market Street, Suite 3200 Louisville, Kentucky 40202	Christopher C. Paci John P. Berkery Shearman & Sterling LLP 599 Lexington Avenue New York, NY 10022-6069

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Prospectus           SUBJECT TO COMPLETION, DATED              , 2004

Shares

Texas Roadhouse, Inc.

Class A Common Stock

        Texas Roadhouse, Inc. is offering                        shares of Class A common stock and our founder and chairman is offering                        shares of Class A common stock. This is our initial public offering and no public market currently exists for our Class A common stock. We anticipate that the initial public offering price will be between $                      and $                              per share. We will not receive any of the proceeds from shares sold by any selling stockholder.

        We will apply to quote our Class A common stock on the Nasdaq National Market under the symbol "TXRH."

Investing in our Class A common stock involves a high degree of risk. See "Risk Factors" beginning on page 14.

	Per Share	Total
Offering price	$	$
Discounts and commissions to underwriters	$	$
Offering proceeds to us, before expenses	$	$
Offering proceeds to the selling stockholder	$	$

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

        Some of our stockholders have granted the underwriters the right to purchase up to            additional shares of Class A common stock to cover any over-allotments. The underwriters can exercise this right at any time within 30 days after the offering. The underwriters expect to deliver the shares of Class A common stock to investors on or about                        , 2004.

Banc of America Securities LLC RBC Capital Markets

SG Cowen & Co. Wachovia Securities

The date of this prospectus is                        , 2004.

[Inside Front Cover Graphics to be filed by Amendment. This would include our logo, pictures of food items, guests and employees, our menu and a map showing our restaurant locations.]

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We, the selling stockholders and the underwriters are not making offers to sell or seeking offers to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate as of the date on the front of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

"Texas Roadhouse," "Texasroadhouse.com" and the Texas Roadhouse logo are our registered trademarks. This prospectus also contains trademarks of companies other than Texas Roadhouse and use of these marks in this prospectus does not indicate an affiliation with or endorsement by these third parties.

TABLE OF CONTENTS

	Page
Summary	1
Risk Factors	14
Special Note Regarding Forward-Looking Statements	25
Market Data and Forecasts	26
Use of Proceeds	27
Dividend Policy	28
Capitalization	29
Dilution	31
Unaudited Condensed Pro Forma Combined Financial Statements	32
Selected Historical and Pro Forma Combined Financial and Operating Data	40
Management's Discussion and Analysis of Financial Condition and Results of Operations	45
Business	59
Management	72
Certain Relationships and Related Transactions	82
Principal and Selling Stockholders	87
Description of Capital Stock	89
Shares Eligible for Future Sale	93
Material U.S. Federal Tax Considerations for Non-U.S. Holders of Our Class A Common Stock	95
Underwriting	98
Legal Matters	102
Experts	102
Where You Can Find More Information	102
Index to Combined Financial Statements	F-1

SUMMARY

You should read the entire prospectus carefully, including "Risk Factors" and the combined financial statements and accompanying notes, before making an investment decision. In this prospectus, the terms "our company," "we," "our" and "us" refer to Texas Roadhouse, Inc. and its predecessors Texas Roadhouse Holdings LLC and entities under common control, and their successors, as described below under "—Background to the Offering."

Our Business

        Texas Roadhouse is a growing, moderately priced, full-service restaurant chain. Our founder and chairman, W. Kent Taylor, started the business in 1993. Our mission statement is "Legendary Food, Legendary Service." Our operating strategy is designed to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. As of March 30, 2004, 165 Texas Roadhouse restaurants were operating in 32 states. We owned and operated 89 restaurants in 24 states, and franchised and licensed an additional 76 restaurants in 18 states.

        We offer an assortment of specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. We also offer our customers, whom we call our guests, a selection of ribs, fish, chicken and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The majority of our entrees include two made-from-scratch side items, and we offer all our guests a free unlimited supply of roasted in-shell peanuts and made-from-scratch yeast rolls.

        We have successfully grown the total number of Texas Roadhouse restaurants over the past five years from 67 restaurants as of December 26, 1999 to 162 as of December 30, 2003, representing a 24.7% compounded annual growth rate. Over the same period, our revenue increased from $71.0 million to $286.5 million, income from operations increased from $7.1 million to $35.3 million and our net income increased from $4.4 million to $24.2 million, representing compounded annual growth rates of 41.7%, 49.3% and 53.2%, respectively.

Operating Strategy

        The operating strategy that underlies the growth of our concept is built on the following key components:

        Offering high quality, freshly prepared food.    A significant majority of our menu offerings consist of made-from-scratch entree and side items that are based on proprietary recipes and prepared daily at each restaurant. In addition we heavily invest in the training of and adherence to our recipe and quality standards.

        Focusing on dinner.    In a high percentage of our restaurants, we limit our operating hours to dinner only during the weekdays. We believe focusing on dinner allows our restaurant teams to offer higher quality, more consistent food and service to our guests and provides a better "quality-of-life" for our management teams, which allows us to attract and retain qualified management personnel.

        Offering attractive price points.    We offer our food and beverages at moderate price points which we believe are as low as or lower than those offered by our competitors. The per guest average check for the restaurants we owned and operated in 2003 was $13.53.

        Offering performance based manager compensation.    We believe we attract and retain talented, experienced, and highly motivated restaurant operators by offering performance based compensation programs to our restaurant mangers and area managers, who are called "managing partners" and "market partners," respectively.

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        Creating a fun and comfortable atmosphere.    Our restaurants feature a rustic southwestern lodge decor accentuated with hand-painted murals, neon signs, southwestern prints, rugs, and artifacts and jukeboxes, which continuously play upbeat country hits.

Long-Term Strategies to Grow Earnings Per Share

        Our long-term strategies with respect to increasing net income and earnings per share include the following:

        Expanding Our Restaurant Base.    We will continue to evaluate opportunities to develop Texas Roadhouse restaurants in existing and new markets and believe that our concept can support as many as 600 additional restaurants throughout the United States.

        Improving Restaurant Level Profitability.    We plan to increase restaurant level profitability through a combination of increased comparable restaurant sales and operating cost management.

        Leveraging Our Scalable Infrastructure.    We have made significant investments in our infrastructure over the past several years. As such, we believe that our general and administrative costs will increase at a slower growth rate than our revenue.

Risk Factors

        An investment in our Class A common stock involves a high degree of risk. You should carefully consider the following risks, as well as the risks discussed in "Risk Factors," before investing in our Class A common stock:

•

our ability to open new restaurants, secure sufficient new sites and manage our planned expansion;



•

our ability to maintain or improve average unit volumes and comparable restaurant sales growth;



•

the continued service of key management personnel including managing partners and market partners;



•

changes in consumer preferences or consumer discretionary spending;



•

health concerns regarding beef or other food products; and



•

the effect of competition in the restaurant industry.

In addition, our founder and chairman will beneficially own approximately    % of the voting power of our common stock after this offering and will be able to exert a controlling influence over all matters requiring stockholder approval, including the election of directors and significant business transactions.

Our Fiscal Year and Principal Office

        Our fiscal year consists of 52 or 53 weeks and ended on the last Sunday in December in fiscal years 1999, 2000 and 2001, and on the last Tuesday in December in fiscal years 2002 and 2003. Throughout this prospectus, our fiscal years are referred to as set forth below:

Fiscal Year Ended	Reference in This Prospectus
December 26, 1999	1999
December 31, 2000	2000
December 30, 2001	2001
December 31, 2002	2002
December 30, 2003	2003

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Fiscal year 2000 included 53 weeks and fiscal year 2002 included 52 weeks and 2 days as a consequence of the transition from a weekly period ending on a Sunday to a weekly period ending on a Tuesday. All other fiscal years shown included 52 weeks.

        Throughout this prospectus, the fiscal quarter ended April 1, 2003 is referred to as 2003 Q1 and the fiscal quarter ended March 30, 2004 is referred to as 2004 Q1. Each of the 2003 Q1 and the 2004 Q1 included 13 weeks.

        Our principal executive office is located at 6040 Dutchmans Lane, Suite 400, Louisville, Kentucky 40205, and our telephone number is (502) 426-9984. We maintain a website at www.texasroadhouse.com on which we will post all reports we file with the Securities and Exchange Commission under Section 13(a) of the Securities Exchange Act of 1934 after the closing of this offering. We also will post on this site our key corporate governance documents, including our board committee charters, our code of ethics and our principles of corporate governance. Information on our website is not, however, a part of this prospectus.

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Background to the Offering

        Before this offering, we conducted the Texas Roadhouse restaurant business through:

•

Texas Roadhouse Holdings LLC and its wholly-owned and majority-owned restaurants;



•

Texas Roadhouse Development Corporation, which holds the rights to franchise Texas Roadhouse restaurants;



•

Texas Roadhouse Management Corp., which provides management services to Texas Roadhouse Holdings LLC, Texas Roadhouse Development Corporation and certain license and franchise restaurants;



•

WKT Restaurant Corp., the managing member of Texas Roadhouse Holdings LLC and which owns the right to receive a one percent distribution on all sales of company and license Texas Roadhouse restaurants; and



•

certain controlled franchise restaurants;

all of which were entities under the common control of W. Kent Taylor, our founder and chairman. Our combined historical financial statements and related notes of Texas Roadhouse, Inc. that appear elsewhere in this prospectus reflect the combined operations and financial position of Texas Roadhouse Holdings LLC and the above affiliated entities. This prospectus does not include the financial statements of Texas Roadhouse, Inc. since, as described below, it has only recently been formed for the purpose of effectuating this offering and will become the parent of Texas Roadhouse Holdings LLC and the above affiliated entities. As of March 30, 2004, the operations that we conducted that are reflected in our combined financial statements consisted of 89 "company restaurants" that we owned and operated, of which 58 were wholly-owned and 31 were majority-owned or controlled by us. In addition, as of such date, there were 76 "franchise restaurants," of which 72 were franchise restaurants and four were license restaurants.

        Before the completion of this offering, we will have undertaken the following transactions that will result in all of our operations being combined under our new holding company, Texas Roadhouse, Inc.:

•

WKT Restaurant Corp. will have merged into Texas Roadhouse, Inc., with W. Kent Taylor, as the sole stockholder of WKT Restaurant Corp., receiving 2,217,000 shares of Class B common stock;



•

Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp. will become wholly-owned subsidiaries of Texas Roadhouse, Inc., with the equity holders of these entities receiving 15,750,256 shares of Class A common stock; and



•

Texas Roadhouse Development Corporation will become a wholly-owned subsidiary of Texas Roadhouse, Inc., with the equity holders receiving 1,970,000 shares of Class A common stock. Of these shares, W. Kent Taylor will receive 1,477,500 shares and the remaining equity holders will receive 492,500 shares.

        In addition, we will acquire all of the interests in one franchise restaurant in exchange for 121,783 shares of Class A common stock and the remaining equity interests in all 31 of our majority-owned or controlled company restaurants in exchange for 2,548,699 shares of Class A common stock. Of these shares, W. Kent Taylor will receive 564,436 shares and the remaining equity holders will receive 1,984,263 shares. As a result of all of these transactions, immediately before the completion of this offering:

•

20,390,738 shares of Class A common stock and 2,217,000 shares of Class B common stock will be outstanding (assuming an initial public offering price of $             per share and excluding any option exercises since March 30, 2004) and

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•

our company will have a total of 90 wholly-owned company restaurants and there will be 75 franchise restaurants (excluding any restaurants opened after March 30, 2004).

        None of the parties to the above transactions will receive cash in exchange for their interests in the respective entities. However, as described below under "Use of Proceeds" and on page 27, cash distributions will be made to the equity holders of the Texas Roadhouse Holdings LLC relating to its income for prior periods through the effective date of our corporate reorganization. As described under the caption "Certain Relationships and Related Transactions," nine of our directors, executive officers and 5% stockholders are equity holders of Texas Roadhouse Holdings LLC and/or the other predecessor entities, and as such, will receive cash and shares of Class A common stock and, with respect to Mr. Taylor only, Class B common stock in connection with these transactions. These individuals would be entitled to receive cash distributions totaling $            for periods through June 29, 2004, and shares of Class A and Class B common stock valued at $            , based on a value per share equal to an assumed initial offering price of $            per share of Class A common stock, which is the mid-point of the range set forth on the cover of this prospectus.

        Unlike our predecessor entities, Texas Roadhouse, Inc. will be a "C" corporation, and as such will be subject to federal and state income tax. We expect to record a cumulative net deferred tax liability and a corresponding charge to our provision for income taxes of approximately $5.2 million upon becoming a C corporation immediately before the closing of this offering.

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The Offering

Class A common stock offered by us			shares
Class A common stock offered by our founder and chairman			shares
Shares to be outstanding after this offering
	Class A common stock		shares
	Class B common stock		2,217,000 shares
		Total	shares
Voting rights			Holders of our Class A common stock and our Class B common stock will generally vote together as a single Class on all matters submitted to a vote of our stockholders. The holders of Class A common stock are entitled to one vote per share and the holders of Class B common stock are entitled to 10 votes per share. W. Kent Taylor, our founder and chairman, will be the only initial holder of Class B common stock. Upon the completion of this offering, W. Kent Taylor will own 2,217,000 shares of our Class B common stock and             shares of Class A common stock, representing approximately    % of the voting power of our outstanding common stock.
Conversion rights			Our Class B common stock is convertible as follows:
			•	upon the transfer of any share of Class B common stock to anyone other than W. Kent Taylor or any entity controlled by W. Kent Taylor, such share of Class B common stock will be automatically converted into one share of Class A common stock;
			•	all of the Class B common stock will automatically convert into Class A common stock on a one-for-one basis upon the earliest to occur of (i) August 15, 2009, i.e., approximately 5 years after the completion of this offering, (ii) the date upon which the number of shares of Class A and Class B common stock held or controlled by W. Kent Taylor represents less than 20.0% of the total number of shares of Class A and Class B common stock outstanding, or (iii) upon the death or disability of W. Kent Taylor; and
			•	at the election of the holders of Class B common stock, any share of Class B common stock may be converted into one share of Class A common stock.
Other common stock provisions			With the exception of voting rights and conversion rights, holders of Class A and Class B common stock generally have identical rights. See "Description of Capital Stock" for a description of the material terms of our common stock.

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Use of proceeds	We estimate that the net proceeds from this offering will be approximately $         million after deducting estimated underwriting discounts and commissions and expenses payable by us and assuming a public offering price of $            per share of Class A common stock, the midpoint of the range set forth on the cover of this prospectus. We will use these net proceeds:
	•	to repay approximately $         million of outstanding borrowings under our credit facility, including accrued interest thereon;
	•	to fund approximately $28.2 million of payments to our current equity holders of Texas Roadhouse Holdings LLC relating to its income for periods through March 30, 2004 and to fund additional payments relating to its undistributed income for the periods from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc.; and
	•	for general corporate purposes.
	We will not receive any of the proceeds from the sale of shares of our Class A common stock offered by any selling stockholder.
Proposed Nasdaq National Market symbol	"TXRH"

        Unless otherwise indicated, all of the information in this prospectus related to the number of shares of Class A common stock and Class B common stock to be outstanding after this offering:

•

gives effect to the combination of our operations under Texas Roadhouse, Inc. and the acquisition transactions as described under the caption "Summary—Background to the Offering;"



•

excludes 3,093,466 shares of Class A common stock issuable upon the exercise of stock options outstanding as of March 30, 2004, with a weighted average exercise price of $6.26 per share, a majority of which are currently exercisable, and excludes any option exercises since March 30, 2004; and



•

assumes an initial public offering price of $            per share of Class A common stock, which is the mid-point of the range set forth on the cover of this prospectus.

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Summary Historical and Pro Forma Combined Financial and Operating Data

        You should read the data set forth below in conjunction with our combined financial statements and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Condensed Pro Forma Combined Financial Statements" and other financial information appearing elsewhere in this prospectus. We based the pro forma adjustments on available information and on assumptions that we believe are reasonable under the circumstances. The unaudited pro forma, pro forma as adjusted and pro forma as further adjusted financial data do not purport to represent what our results of operations or financial position actually would have been if the transactions set forth below had occurred on the dates indicated or what our results of operations or financial position will be for future periods.

        Historical Combined Financial and Operating Data.    We derived the summary historical combined financial data as of and for the years 2001, 2002 and 2003 from our audited combined financial statements, which have been audited and reported upon by KPMG LLP, an independent registered public accounting firm. We derived the summary historical combined financial data as of and for 2003 Q1 and 2004 Q1 from our unaudited interim combined financial statements. In the opinion of management, our unaudited interim combined financial statements for 2003 Q1 and 2004 Q1 reflect all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States, the information for 2003 Q1 and 2004 Q1. The operating results of the interim periods are not necessarily indicative of results for a full year. Our audited combined financial statements and unaudited interim financial statements present the combined operations of Texas Roadhouse Holdings LLC and its wholly-owned and majority-owned restaurants, Texas Roadhouse Development Corporation, Texas Roadhouse Management Corp., WKT Restaurant Corp., and nine franchise restaurants, all of which were entities under the common control of W. Kent Taylor. Our historical results are not necessarily indicative of our results for any future period.

        Unaudited Pro Forma Combined Financial and Operating Data.    The pro forma data for all periods presented give effect to the combination of our operations under Texas Roadhouse, Inc., a new holding company that is a "C" corporation. All taxes on the income of Texas Roadhouse Holdings LLC were payable by its members. As a "C" corporation, we will be responsible for the payment of all federal and state corporate income taxes and, accordingly, the pro forma data give effect to the pro forma provision for income taxes. The pro forma share and net income per share data for all periods presented also give effect to the issuance of 18,708,168 shares of Class A common stock and 2,217,000 shares of Class B common stock in connection with the combination of our operations under Texas Roadhouse, Inc. The pro forma balance sheet data as of March 30, 2004 give effect to such issuance of Class A and Class B common stock and the accrual of a liability for unpaid distributions of $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004, in each case, in connection with the combination of our operations under Texas Roadhouse, Inc.

        The shares of Class A common stock referred to in the preceding paragraph include 1,477,500 shares and 564,436 shares to be issued to our majority stockholder in connection with the combination of Texas Roadhouse Development Corporation and nine franchise restaurants, respectively. The number of shares to be issued to our majority stockholder for his majority interest in Texas Roadhouse Development Corporation was calculated so as to be neither accretive nor dilutive to earnings per share. The number of shares to be issued to our majority stockholder for his controlling interest in the nine restaurants was determined using the acquisition formulas stated in the corresponding operating or partnership agreements. The shares of Class A common stock referred to in the preceding paragraph also include 15,750,256 outstanding shares of Texas Roadhouse Holdings LLC at March 30, 2004, plus 915,976 shares that give effect to the number of shares the proceeds from which would have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ended March 30, 2004.

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        Unaudited "Pro Forma as Adjusted for the Acquisition Transactions" Combined Financial and Operating Data.    The "Pro Forma as Adjusted for the Acquisition Transactions" combined financial data as of and for the year 2003 and 2004 Q1 give further effect to our acquisition of the remaining equity interests in all of our 31 majority-owned or controlled company restaurants and Texas Roadhouse Development Corporation and all of the equity interests in one franchise restaurant in exchange for an aggregate of 2,598,546 shares of our Class A common stock.

        The shares of Class A common stock referred to in the preceding paragraph include 1,984,263 shares to be issued to the remaining equity holders of the 31 majority-owned or controlled company restaurants, 492,500 shares to be issued to the remaining equity holders of Texas Roadhouse Development Corporation, and 121,783 shares to the equity holders of the one franchise restaurant. The number of shares issued to be to Mr. Taylor and others in connection with our acquisition of the equity interests in the one franchise restaurant and the remaining equity interests in the 31 majority-owned or controlled company restaurants is determined using the acquisition formulas stated in the corresponding operating or partnership agreements.

        Unaudited "Pro Forma as Further Adjusted for This Offering" Combined Financial and Operating Data.    The "Pro Forma as Further Adjusted for This Offering" combined financial data as of and for the year 2003 and the 2004 Q1 give further effect to:

•

our issuance and sale of             shares of Class A common stock in this offering at the assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus;



•

the application of the net proceeds from this offering, after deducting the underwriting discounts, commissions and estimated offering expenses payable by us, to:



•

repay outstanding borrowings under our credit facility, including accrued interest thereon, in the amount of approximately $         million; and



•

fund declared, but unpaid, distributions of approximately $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004;



•

changes in compensation related to new employment agreements with some of our executives; and



•

a cumulative net deferred tax liability of approximately $5.2 million.

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			Fiscal Year											Fiscal Quarter
														(Unaudited)
										Unaudited
			2001		2002		2003			Pro Forma As Adjusted For The Acquisition Transactions 2003			Pro Forma as Further Adjusted for This Offering 2003	2003 1Q		2004 1Q		Pro Forma As Adjusted For The Acquisition Transactions 2004 1Q		Pro Forma As Further Adjusted For This Offering 2004 1Q
			(in thousands, except per share data)
Combined Statements of Income:
Revenue:
	Restaurant sales		$	154,359	$	226,756	$	279,519		$	283,099		$	$	65,502	$	81,893	$	82,886	$
	Franchise royalties and fees			5,553		6,080		6,934			6,827				1,579		2,005		1,975
		Total revenue		159,912		232,836		286,453			289,926				67,081		83,898		84,861
Income from operations				14,377		27,300		35,328			35,780				8,286		10,995		11,120
Interest expense, net				3,649		4,212		4,350			4,350				974		1,027		1,027
Minority interest				2,899		5,168		6,704			—				1,773		1,959		—
Equity income (loss) from investments in unconsolidated affiliates				25		21		(61	)		(84	)			6		44		38
Other income				125		—		—			—				—		—		—
Net income			$	7,979	$	17,941	$	24,213		$	31,346		$	$	5,545	$	8,053	$	10,131	$
	Pro forma data (unaudited):
	Historical income before taxes		$	7,979	$	17,941	$	24,213		$	31,346		$	$	5,545	$	8,053	$	10,131	$
	Pro forma provision for income taxes(1)			2,826		6,420		8,790			11,379				2,013		2,851		3,591
	Net income adjusted for pro forma provision for income taxes		$	5,153	$	11,521	$	15,423		$	19,967		$	$	3,532	$	5,202	$	6,540	$
Net income adjusted for pro forma provision for income taxes per common share:
	Basic		$	0.26	$	0.59	$	0.75		$	0.86		$	$	0.18	$	0.25	$	0.28	$
	Diluted		$	0.26	$	0.55	$	0.71		$	0.82		$	$	0.17	$	0.24	$	0.26	$
Pro forma weighted average shares outstanding:(2)
	Basic			19,599		19,686		20,644			23,243				19,733		20,742		23,341
	Diluted			20,151		20,826		21,766			24,365				20,781		22,121		24,720

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		As of March 30, 2004
		(Unaudited)
		Historical		Pro Forma		Pro Forma as Adjusted for the Acquisition Transactions		Pro Forma as Further Adjusted for This Offering(2)(3)
		(in thousands)
Combined Balance Sheet Data:
	Cash and cash equivalents	$	7,690	$	7,690	$	8,174	$
	Total assets		154,010		154,010		197,987
	Long-term debt and obligations under capital leases, including current portion		65,869		65,869		65,869
	Total common stockholders' equity	$	42,183	$	14,031	$	63,383

		Fiscal Year														Fiscal Quarter
																(Unaudited)
											Unaudited
		2001			2002			2003			Pro Forma As Adjusted For The Acquisition Transactions 2003			Pro Forma as Further Adjusted for This Offering 2003		2003 1Q			2004 1Q			Pro Forma As Adjusted For The Acquisition Transactions 2004 1Q			Pro Forma As Further Adjusted For This Offering 2004 1Q
		(in thousands, except per share data)
Selected Operating Data:
Company restaurants:
	Number open at end of period		56			77			87			88					80			89			90
	Average unit volumes (4)	$	3,313		$	3,270		$	3,401		$	3,404		$		$	840		$	930		$	931		$
	Comparable restaurant sales growth (5)		1.5	%		3.7	%		3.4	%		3.5	%		%		0.7	%		10.4	%		10.4	%		%
EBITDA (6)(7)		$	16,650		$	29,029		$	37,125		$	44,314		$		$	8,548		$	11,429		$	13,521		$
EBITDA as a % of revenue			10.4	%		12.5	%		13.0	%		15.3	%		%		12.7	%		13.6	%		15.9	%		%
Net cash provided by operating activities		$	22,502		$	31,718		$	42,158		$	43,233		$		$	2,498		$	12,178		$	12,047		$
Net cash used in investing activities		$	(35,769	)	$	(32,764	)	$	(26,524	)	$	(26,530	)	$		$	(4,589	)	$	(8,606	)	$	(8,614	)	$
Net cash provided by (used in) financing activities		$	9,894		$	4,945		$	(17,722	)	$	(18,195	)	$		$	(2,497	)	$	(1,610	)	$	(1,744	)

(1)

The pro forma provision for income taxes gives effect to our reorganization as a "C" corporation. The adjustment is based upon the information shown in the table below. The combined state tax rate is our estimate of the average state tax rate we would have incurred based on the mix and volume of business we do in the states and the relevant apportionment factors for those states. The combined federal and state tax rates shown below give effect to the deductibility of state taxes at the federal level and to tip tax credits.

	Pro Forma
	2001		2002		2003		2003 Q1 (1)		2004 Q1 (1)
Effective federal tax rate	31.4	%	32.3	%	32.6	%	32.6	%	32.1	%
Combined state tax rate	4.0	%	3.5	%	3.7	%	3.7	%	3.3	%
Combined effective federal and state tax rate	35.4	%	35.8	%	36.3	%	36.3	%	35.4	%

(1)

For all pro forma data.

Upon becoming a "C" corporation, we will record a cumulative net deferred tax liability and corresponding charge to our income tax provision of approximately $5.2 million which is not reflected in the pro forma information.

11

(2)

The following table sets forth the calculation of pro forma weighted average shares outstanding (in thousands):

		52-Weeks Ended													13-Weeks Ended
		2001			2002			2003			Pro Forma As Adjusted For The Acquisition Transactions 2003			Pro Forma As Adjusted For This Offering 2003	2003 1Q			2004 1Q			Pro Forma As Adjusted For The Acquisition Transactions 2004 1Q			Pro Forma As Adjusted For This Offering 2004 1Q
Net income adjusted for pro forma income taxes		$	5,153		$	11,521		$	15,423		$	19,967		$	$	3,532		$	5,202		$	6,540		$
Basic EPS:
Weighted-average common shares outstanding:
Texas Roadhouse Holdings			14,909			15,209			15,469			15,469				15,325			15,567			15,567
Shares issued for distribution payable			—			—			916			916				—			916			916
Class B shares to Mr. Taylor			2,217			2,217			2,217			2,217				2,217			2,217			2,217
Class A shares to Mr. Taylor			2,473			2,260			2,042			2,042				2,191			2,042			2,042
Class A shares to remaining equity holders												2,599										2,599
	Total		19,599			19,686			20,644			23,243				19,733			20,742			23,341
Basic EPS		$	0.26		$	0.59		$	0.75		$	0.86		$	$	0.18		$	0.25		$	0.28		$
Diluted EPS:
Weighted-average common shares outstanding:
Shares assumed issued on exercise of dilutive share equivalents			2,084			2,775			3,133			3,133				3,027			3,113			3,113
Shares assumed purchased with proceeds of dilutive share equivalents			(1,532	)		(1,635	)		(2,011	)		(2,011	)			(1,979	)		(1,734	)		(1,734	)
Texas Roadhouse Holdings			14,909			15,209			15,469			15,469				15,325			15,567			15,567
Shares issued for distribution payable			—			—			916			916				—			916			916
Class B shares to Mr. Taylor			2,217			2,217			2,217			2,217				2,217			2,217			2,217
Class A shares to Mr. Taylor			2,473			2,260			2,042			2,042				2,191			2,042			2,042
Class A shares to remaining equity holders												2,599										2,599
Shares applicable to diluted earnings			20,151			20,826			21,766			24,365				20,781			22,121			24,720
Diluted EPS		$	0.26		$	0.55		$	0.71		$	0.82		$	$	0.17		$	0.24		$	0.26		$

(3)

We will also use a portion of the net proceeds of this offering to fund additional payments relating to the net income of Texas Roadhouse Holdings LLC for periods from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc. Through June 29, 2004, the amount of these additional payments would have been $             million.

(4)

Average unit volume represents the average annual restaurant sales for all company restaurants open for a full six months before the beginning of the period measured.

(5)

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a full six months before the beginning of the earlier fiscal period.

(6)

EBITDA consists of net income plus interest expense, plus income tax provision and plus depreciation and amortization. This term, as we define it, may not be comparable to a similarly titled measure used by other companies and is not a measure of performance presented in accordance with GAAP. We use EBITDA as a measure of operating performance, but we do not use it as a measure of liquidity. EBITDA should not be considered as a substitute for net income, net cash provided by or used in operations or other financial data prepared in accordance with GAAP, or as a measure of liquidity.

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We believe EBITDA is useful to an investor in evaluating our operating performance because:

•

it is a widely accepted financial indicator of a company's ability to service its debt and a variation of it is used in determining compliance with certain covenants under our credit facility and other loan agreements;



•

it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of our capital structure and the method by which assets were acquired; and



•

it helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing from our operating results the impact of our capital structure, primarily interest expense from our outstanding debt, and asset base, primarily depreciation and amortization of our property and equipment.

Our management uses EBITDA:

•

as a measurement of operating performance because it assists us in comparing our performance on a consistent basis, as it removes from our operating results the impact of our capital structure, which includes interest expense from our outstanding debt, and our asset base, which includes depreciation and amortization of our property and equipment; and



•

in presentations to the members of our board to enable our board to have the same consistent basis for measuring operating performance used by management.

The following table provides a reconciliation of net income to EBITDA:

	Fiscal Year									Fiscal Quarter
										(Unaudited)
							Unaudited
	2001		2002		2003		Pro Forma As Adjusted For The Acquisition Transactions 2003		Pro Forma as Further Adjusted for This Offering 2003	2003 1Q		2004 1Q		Pro Forma As Adjusted For The Acquisition Transactions 2004 1Q		Pro Forma As Further Adjusted For This Offering 2004 1Q
	(in thousands)
Net income adjusted for pro forma provision for income taxes	$	5,153	$	11,521	$	15,423	$	19,967	$	$	3,532	$	5,202	$	6,540	$
Provision for income taxes		2,826		6,420		8,790		11,379			2,013		2,851		3,591
Interest expense		3,649		4,212		4,350		4,350			974		1,027		1,027
Depreciation and amortization		5,022		6,876		8,562		8,618			2,029		2,349		2,363
EBITDA	$	16,650	$	29,029	$	37,125	$	44,314	$	$	8,548	$	11,429	$	13,521	$

(7)

EBITDA includes rent expense of $4.4 million, $5.1 million and $6.0 million for the years 2001, 2002, and 2003, respectively. For year 2003, "Pro Forma as Adjusted for the Acquisition Transactions" and "Pro Forma as Further Adjusted for This Offering," EBITDA includes rent expense of $6.2 million. For 2003 Q1 and 2004 Q1, EBITDA includes rent expense of $1.4 million and $1.6 million, respectively. For 2004 Q1, "Pro Forma as Adjusted for the Acquisition Transactions" and "Pro Forma as Further Adjusted for This Offering," EBITDA includes rent expense of $1.7 million.

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RISK FACTORS

An investment in our Class A common stock involves a high degree of risk. You should carefully read and consider the risks described below before deciding to invest in our Class A common stock. If any of the following risks actually occurs, our business, financial condition, results of operation or cash flows could be materially harmed. In any such case, the trading price of our Class A common stock could decline and you could lose all or part of your investment. When determining whether to buy our Class A common stock, you should also refer to the other information in this prospectus, including our combined financial statements and the related notes.

Risks Related to Our Business

If we fail to manage our growth effectively, it could harm our business.

        Failure to manage our growth effectively could harm our business. We have grown significantly since our inception and intend to grow substantially in the future. Our existing restaurant management systems, financial and management controls and information systems may not be adequate to support our planned expansion. Our ability to manage our growth effectively will require us to continue to enhance these systems, procedures and controls and to locate, hire, train and retain management and operating personnel. We cannot assure you that we will be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and on our existing infrastructure. If we are unable to manage our growth effectively, our business and operating results could be materially adversely impacted.

You should not rely on past increases in our average unit volumes or our comparable restaurant sales as an indication of our future results of operations because they may fluctuate significantly.

        A number of factors have historically affected, and will continue to affect, our average unit volumes and comparable restaurant sales, including, among other factors:

•

our ability to execute our business strategy effectively;



•

unusually strong initial sales performance by new restaurants;



•

competition;



•

consumer trends;



•

introduction of new menu items; and



•

general regional and national economic conditions.

        Our average unit volumes and comparable restaurant sales may not increase at rates achieved over the past several years. Changes in our average unit volumes and comparable restaurant sales could cause the price of our Class A common stock to fluctuate substantially.

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.

        Our objective is to grow our business and increase shareholder value by (1) expanding our base of company restaurants (and, to a lesser extent, franchise restaurants) that are profitable and (2) increasing sales and profits at existing restaurants. While both these methods of achieving our objective are important to us, historically the most significant means of achieving our objective has been through opening new restaurants and operating these restaurants on a profitable basis. We expect this to continue to be the case in the future.

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        We cannot assure you that we will be able to open new restaurants 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 materially adversely affect our growth strategy. One of our biggest challenges in executing our growth strategy is locating and securing an adequate supply of suitable new restaurant sites. Competition for suitable restaurant sites in our target markets is intense and we cannot assure you that we will be able to find sufficient suitable locations, or suitable purchase or lease terms, for our planned expansion in any future period. Our ability to open new restaurants will also depend on numerous other factors, some 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 and managing partners;



•

the availability of construction materials and labor;



•

our ability to control construction and development costs of new restaurants;



•

our ability to secure required governmental approvals and permits in a timely manner, or at all;



•

our ability to secure liquor licenses;



•

the cost and availability of capital to fund construction costs and pre-opening expenses; and



•

weather and acts of God.

        Once opened, we anticipate that our new restaurants will generally take several months to reach planned operating levels due to start-up inefficiencies typically associated with new restaurants. We cannot assure you that any restaurant we open will be profitable or obtain operating results similar to those of our existing restaurants. Our ability to operate new restaurants profitably will depend on numerous factors, some of which are beyond our control, including, but not limited to, the following:

•

competition;



•

consumer acceptance of our restaurants in new markets;



•

the ability of the market partner and the managing partner to execute our business strategy at the new restaurant;



•

general regional and national economic conditions;



•

changes in government regulation; and



•

road construction and other factors limiting access to the restaurant.

Our failure to successfully open new restaurants that are profitable in accordance with our growth strategy could harm our business and future prospects.

Our franchisees could take actions that could harm our business.

        Our franchisees are contractually obligated to operate their restaurants in accordance with Texas Roadhouse standards. We also provide training and support to franchisees. However, franchisees are independent third parties that we do not control, and the franchisees own, operate and oversee the daily operations of their restaurants. As a result, the ultimate success and quality of any franchise restaurant rests with the franchisee. If franchisees do not successfully operate restaurants in a manner consistent with our standards, the Texas Roadhouse image and reputation could be harmed, which in turn could adversely affect our business and operating results.

15

Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to a number of factors, some of which are beyond our control, resulting in a decline in our stock price.

        Our quarterly operating results may fluctuate significantly because of several factors, including:

•

the timing of new restaurant openings and related expenses;



•

restaurant operating costs for our newly-opened restaurants, which are often materially greater during the first several months of operation than thereafter;



•

labor availability and costs for hourly and management personnel;



•

profitability of our restaurants, especially in new markets;



•

changes in interest rates;



•

increases and decreases in average unit volumes and comparable restaurant sales;



•

impairment of long-lived assets, including goodwill, and any loss on restaurant closures;



•

general economic conditions, both nationally and locally;



•

negative publicity relating to the consumption of beef or other products we serve;



•

changes in consumer preferences and competitive conditions;



•

expansion to new markets;



•

increases in infrastructure costs; and



•

fluctuations in commodity prices.

        Our business is also subject to minor seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season of each year. 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. In the future, operating results may fall below the expectations of securities analysts and investors. In that event, the price of our Class A common stock would likely decrease.

If we lose the services of any of our key management personnel, our business could suffer.

        Our future success significantly depends on the continued services and performance of our key management personnel, particularly G. J. Hart, our chief executive officer; Scott M. Colosi, our chief financial officer; Steven L. Ortiz, our chief operating officer; and W. Kent Taylor, our founder and chairman. Our future performance will depend on our ability to motivate and retain these and other key officers and managers, particularly market partners and managing partners. Competition for these employees is intense. The loss of the services of members of our senior management or other key officers or managers or the inability to attract additional qualified personnel as needed could materially harm our business.

Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.

        We own certain common law trademark rights and a number of federal and international trademark and service mark registrations, including the Texas Roadhouse® name and logo, and proprietary rights relating to certain of our core menu offerings. We believe that our trademarks and

16

other proprietary rights are important to our success and our competitive position. We, therefore, devote appropriate resources to the protection of our trademarks and proprietary rights. The protective actions that we take, however, may not be enough to prevent unauthorized usage or imitation by others, which could harm our image, brand or competitive position and, if we commence litigation to enforce our rights, cause us to incur significant legal fees.

        We are not aware of any assertions that our trademarks or menu offerings infringe upon the proprietary rights of third parties, but we cannot assure you that third parties will not claim infringement by us in the future. Any such claim, whether or not it has merit, could be time-consuming, result in costly litigation, cause delays in introducing new menu items in the future or require us to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on our business, results of operations and financial condition.

We may need additional capital in the future and it may not be available on acceptable terms.

        The development of our business may require significant additional capital in the future to, among other things, fund our operations and growth strategy. We have historically relied upon bank financing and private sales of equity interests in certain restaurants to fund our operations. Going forward, we will continue to rely on bank financing and also expect to access the debt and equity capital markets. There can be no assurance, however, that these sources of financing will be available on terms favorable to us, or at all. Our ability to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance, investor sentiment and our ability to incur additional debt in compliance with agreements governing our outstanding debt. These factors may make the timing, amount, terms and conditions of additional financings unattractive to us. If we are unable to raise additional capital, our growth could be impeded.

Our existing credit facility limits our ability to incur additional debt.

        Our existing credit facility prohibits us from incurring additional debt outside the facility except for equipment financing up to $3 million, unsecured debt up to $500,000 and up to $15 million of debt incurred by majority-owned companies formed to own new restaurants. Additionally, the lenders' obligation to extend credit under the facility depends on our maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 1.10 to 1.00 and a maximum consolidated leverage ratio of 3.50 to 1.00 through June 29, 2004, 3.25 to 1.00 for the four quarters prior to June 28, 2005 and 3.00 to 1.00 for the four quarters prior to June 30, 2006.

        We have also entered into other loan agreements with other lenders to finance various restaurants which impose financial covenants. Our loan agreement for our Mesquite, Texas restaurant requires us to maintain a minimum consolidated fixed charge coverage ratio of 1.20 to 1.0. Our loan agreement with another lender for our Pasadena, Texas restaurant also requires a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00. Our loan agreement with a third lender for our New Philadelphia, Ohio restaurant requires a minimum fixed charge coverage ratio of 1.30 to 1.00. Finally, we have multiple loan agreements with a fourth lender for our restaurants located in Peoria, Arizona; Charlotte, North Carolina; Wilmington, North Carolina; Richmond, Virginia; and Cheyenne, Wyoming, each of which imposes a covenant to maintain a debt coverage ratio of 1.20 to 1.00. If we are unable to maintain these ratios, we would be unable to obtain additional financing from these lenders. Additionally, we would be in default of these loan agreements, which could result in a default under our existing credit facility, which in turn would limit our ability to secure additional funds under that facility. We are currently in compliance with all of our lenders' covenants. None of our other long-term loan agreements imposes financial covenants or otherwise limits our ability to borrow.

        We have accepted a commitment letter for a new $100.0 million five-year revolving credit facility which will replace our existing credit facility upon the completion of this offering. Our ability to incur

17

debt outside the facility will still be restricted, subject to some exceptions yet to be determined. The new facility will similarly impose financial covenants, including maintaining a minimum fixed charge coverage ratio of 1.50 to 1.00 and a maximum leverage ratio of 3.00 to 1.00. The lenders' obligation to extend credit under the new facility will depend upon our compliance with these covenants. The commitment of the lenders for the new facility is subject to the negotiation, execution and delivery of final loan documents, and there can be no assurance that the facility will be completed.

The acquisition of existing restaurants from our franchisees and licensees may have unanticipated consequences that could harm our business and our financial condition.

        We may seek to selectively acquire existing restaurants from our franchisees or licensees. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition terms if not already addressed in the franchise agreement, and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:

•

material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as the acquired restaurants are integrated into our operations;



•

risks associated with entering into markets or conducting operations where we have no or limited prior experience; and



•

the diversion of management's attention from other business concerns.

        Future acquisitions of existing restaurants from our franchisees or licensees, which may be accomplished through a cash purchase transaction, the issuance of shares of our Class A common stock or a combination of both, could have a dilutive impact on holders of our Class A common stock, and result in the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible assets, any of which could harm our business and financial condition.

Approximately 25% of our company restaurants are located in Texas and, as a result, we are sensitive to economic and other trends and developments in that state.

        As of March 30, 2004, we operated a total of 21 company restaurants in Texas. As a result, we are particularly susceptible to adverse trends and economic conditions in this state, including its labor market. In addition, given our geographic concentration in this state, negative publicity regarding any of our restaurants in Texas could have a material adverse effect on our business and operations, as could other occurrences in Texas such as local strikes, energy shortages or increases in energy prices, droughts, earthquakes, fires or other natural disasters.

Our expansion into new markets may present increased risks due to our unfamiliarity with the area.

        Some of our new restaurants will be located in areas where we have little or no meaningful experience. Those markets may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause our new restaurants to be less successful than restaurants in our existing markets. An additional risk of expanding into new markets is the lack of market awareness of the Texas Roadhouse® brand. Restaurants opened in new markets may open at lower average weekly sales volumes than restaurants opened in existing markets, and may have higher restaurant-level operating expense ratios than in existing markets. Sales at restaurants opened in new markets may take longer to reach average unit volumes, if at all, thereby affecting our overall profitability.

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Risks Relating to the Food Service Industry

Our business is affected by changes in consumer preferences and discretionary spending.

        Our success depends, in part, upon the popularity of our food products. Shifts in consumer preferences away from our restaurants or cuisine, particularly beef, would harm our business. 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 or during periods of uncertainty like that which followed the terrorist attacks on the United States on September 11, 2001. Any material decline in the amount of discretionary spending could have a material adverse effect on our sales, results of operations, business and financial condition.

Our success depends on our ability to compete with many food service businesses.

        The restaurant industry is intensely competitive and we compete with many well-established food service companies on the basis of taste, quality and price of products offered, guest service, atmosphere, location and overall guest experience. Our competitors include a large and diverse group of restaurant chains and individual restaurants that range from independent local operators that have opened restaurants in various markets to well-capitalized national restaurant companies. Many of our competitors or potential competitors have substantially greater financial and other resources than we do, which may allow them to react to changes in pricing, marketing and the casual dining restaurant industry better than we can. As our competitors expand their operations, we expect competition to intensify. We also compete with other restaurant chains and other retail businesses for quality site locations and hourly employees.

Changes in food and supply costs could adversely affect our results of operations.

        Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. Any increase in food prices, particularly proteins, could adversely affect our operating results. In addition, we are susceptible to increases in food costs as a result of factors beyond our control, such as weather conditions, food safety concerns, product recalls and government regulations. We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our operating results. In addition, because we provide a moderately priced product, we may not seek to or be able to pass along price increases to our guests.

        We currently purchase most of our beef from one of the largest beef suppliers in the country. If this vendor 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.

The food service industry is affected by litigation and publicity concerning food quality, health and other issues, which can cause guests to avoid our restaurants and result in significant liabilities or litigation costs.

        Food service businesses can be adversely affected by litigation and complaints from guests or government authorities resulting from food quality, illness, injury or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants. Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true, by discouraging guests from eating at our restaurants. We could also incur significant liabilities if a lawsuit or claim results in a decision against us or litigation costs regardless of the result.

        In June 2004, we voluntarily closed our Fort Collins, Colorado restaurant for two days while local health officials investigated reports from more than 200 customers and employees that had become ill

19

with flu-like symptoms after spending time in the restaurant on one Saturday. None of the persons interviewed was hospitalized. We understand that investigators for the local health authorities have concluded that the illnesses were caused by a norovirus. This is a common virus that is rapidly transmitted by person-to-person contact in enclosed spaces such as restaurants, nursing homes and hospitals, schools and day care centers and vacation settings including cruise ships. According to the Centers for Disease Control, an estimated 23 million cases of acute gastroenteritis annually are due to norovirus infection. Local health department officials were unable to determine the cause of the norovirus outbreak in our restaurant. To date, the incident has not had an adverse impact on any of our restaurants other than the one where it occurred, and no lawsuits or other proceedings have been initiated as a result of the incident. Continued adverse publicity or legal proceedings arising from the incident could harm our business.

Health concerns relating to the consumption of beef or other food products could affect consumer preferences and could negatively impact our results of operations.

        Like other restaurant chains, consumer preferences could be affected by health concerns about the consumption of beef, the key ingredient in many of our menu items, or negative publicity concerning food quality, illness and injury generally. In recent years there has been negative publicity concerning e-coli, hepatitis A, "mad cow" and "foot-and-mouth" disease. This negative publicity, as well as any other negative publicity concerning food products we serve, may adversely affect demand for our food and could result in a decrease in guest traffic to our restaurants. If we react to the negative publicity by changing our concept or our menu, we may lose guests who do not prefer the new concept or menu, and may not be able to attract sufficient new guests to produce the revenue needed to make our restaurants profitable. In addition, we may have different or additional competitors for our intended guests as a result of a change in our concept and may not be able to compete successfully against those competitors. A decrease in guest traffic to our restaurants as a result of these health concerns or negative publicity or as a result of a change in our menu or concept could materially harm our business.

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 managers and hourly employees. Increased labor costs due to competition, increased minimum wage or employee benefits costs or otherwise, would adversely impact our operating expenses. In addition, our success depends on our ability to attract, motivate and retain qualified employees, including restaurant managers and staff, to keep pace with our growth strategy. If we are unable to do so, our results of operations may be adversely affected.

We may not be able to obtain and maintain licenses and permits necessary to operate our restaurants and compliance with laws could adversely affect our operating results.

        The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these licenses, permits and approvals, including liquor licenses, could adversely affect our operating results. Difficulties or failure to obtain the required licenses and approvals could delay or result in our decision to cancel the opening of new restaurants. Local authorities may revoke, suspend or deny renewal of our liquor licenses if they determine that our conduct violates applicable regulations.

        In addition to our having to comply with these licensing requirements, various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime pay, unemployment tax rates, workers' compensation rates,

20

citizenship requirements and sales taxes. A number of factors could adversely affect our operating results, including:

•

additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits;



•

increased tax reporting and tax payment requirements for employees who receive gratuities;



•

a reduction in the number of states that allow gratuities to be credited toward minimum wage requirements; and



•

increased employee litigation including claims relating to the Fair Labor Standards Act.

        The federal Americans with Disabilities Act prohibits discrimination on the basis of disability in public accommodations and employment. Although our restaurants are designed to be accessible to the disabled, we could be required to make modifications to our restaurants to provide service to, or make reasonable accommodations for disabled persons.

Complaints or litigation may hurt us.

        Occasionally, our guests file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to our restaurants, or that we have problems with food quality or operations. We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims, claims from franchisees and claims alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters, or we could become subject to class action lawsuits related to these matters in the future. The restaurant industry has also been subject to a growing number of claims that the menus and actions of restaurant chains have led to the obesity of certain of their guests. In addition, we are subject to "dram shop" statutes. These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Recent litigation against restaurant chains has resulted in significant judgments, including punitive damages, under dram shop statutes. 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. Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment significantly in excess of our insurance coverage for any claims could materially adversely affect our financial condition or results of operations. Further, adverse publicity resulting from these allegations may materially adversely affect us and our restaurants.

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, such as losses due to natural disasters or acts of terrorism. Such damages could have a material adverse effect on our business and results of operations. In addition, we self-insure a significant portion of expected losses under our workers compensation, general liability and property insurance programs. Unanticipated changes in the actuarial assumptions and management estimates underlying our reserves for these losses could result in materially different amounts of expense under these programs, which could have a material adverse effect on our financial condition and results of operations.

21

Risks Related to This Offering

We cannot assure you that a market will develop for our Class A common stock or what the market price of our Class A common stock will be.

        Before this offering, there was no public trading market for our Class A common stock, and we cannot assure you that one will develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of Class A common stock at an attractive price or at all. We cannot predict the prices at which our Class A common stock will trade. The initial public offering price for our Class A common stock will be determined through negotiations with the underwriters and may not bear any relationship to the market price at which it will trade after this offering or to any other established criteria of our value. It is possible that in some future quarter our operating results may be below the expectations of public market analysts and investors and, as a result of these and other factors, the price of our Class A common stock may fall.

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. These provisions include, among other things, elimination of stockholder action by written consent, advance notice for raising business or making nominations at meetings and "blank check" preferred stock. Blank check preferred stock enables our board of directors, without approval of the Class A shareholders, to designate and issue additional series of preferred stock with such dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with no limitations on conversion as our board of directors may determine. The issuance of blank check preferred stock may adversely affect the voting and other rights of the holders of our common stock as our board of directors may designate and issue preferred stock with terms that are senior to our 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 stockholders receiving a premium over the market price for their Class A common stock. See "Description of Capital Stock."

        The Delaware General Corporation Law prohibits us from engaging in "business combinations" with "interested shareholders" (with some exceptions) unless such transaction is approved in a prescribed manner. The existence of this provision could have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for our common stock.

There may be an adverse effect on the value of our Class A common stock due to the disparate voting rights of our Class A common stock and our Class B common stock.

        The holders of our Class A common stock and Class B common stock generally have identical rights except that (1) on all matters to be voted on by stockholders, holders of our Class A common stock are entitled to one vote per share while holders of our Class B common stock are entitled to ten votes per share, and (2) holders of our Class A common stock are not entitled to vote on any alteration of the powers, preferences or special rights of the Class B common stock that would not adversely affect the holders of our Class A common stock. The difference in the voting rights of our Class A common stock and Class B common stock could adversely affect the value of the Class A common stock to the extent that any investor or potential future purchaser of our Class A common stock ascribes value to the superior voting rights of our Class B common stock. See "Description of Capital Stock" for a description of our common stock and rights associated with it.

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Approximately    % of our outstanding shares of Class A common stock may be sold into the public market in the future, which could depress our stock price.

        The    shares of Class A common stock sold in this offering (and any shares sold upon exercise of the underwriters' over-allotment option) will be freely tradable without restriction under the Securities Act of 1933, except for any shares held by our officers, directors and principal stockholders and shares sold under our directed share program. As of            , 2004, approximately an additional            shares of Class A common stock are currently freely tradable under Rule 144(k) under the Securities Act, unless any of such shares are purchased by one of our existing affiliates as that term is defined in Rule 144 under the Securities Act.

        As of            , 2004, approximately            shares of our common stock, including shares of both Class A and Class B common stock, which are outstanding and held by our affiliates, are subject to the volume and other limitations of Rule 144 under the Securities Act. At any time after six months from the closing of this offering, stockholders will have certain demand and piggyback rights to require us to register all of the shares that will be outstanding immediately before the closing of this offering.

        Approximately            shares of our common stock are subject to lock-up agreements under which the holders have agreed not to sell or otherwise dispose of any of their shares for a period of 180 days after the date of this prospectus without the prior written consent of Banc of America Securities LLC. In their sole discretion and at any time without notice, Banc of America Securities LLC may release all or any portion of the shares subject to the lock-up agreements. All of the shares subject to lock-up agreements will become available for sale in the public market immediately following expiration of the 180 day lock-up period, subject (to the extent applicable) to the holding period, volume and other limitations of Rule 144 under the Securities Act.

        Sales of substantial amounts of Class A common stock in the public market, or the perception that these sales may occur, could adversely affect the prevailing market price of our Class A common stock and our ability to raise capital through a public offering of our equity securities. See "Shares Eligible for Future Sale" which describes the circumstances under which restricted shares or shares held by affiliates may be sold in the public market.

Our founder and chairman will control our company and this control could inhibit potential changes of control.

        Following this offering, our founder and chairman, W. Kent Taylor, will beneficially own all of our outstanding shares of Class B common stock and             shares of Class A common stock, representing approximately            % of our voting power. As a result, Mr. Taylor will have the ability to control our management and affairs and the outcome of all matters requiring stockholder approval, including the election and removal of our entire board of directors, any merger, consolidation or sale of all or substantially all of our assets. The Class B common stock has ten votes per share, while Class A common stock, which is the stock we are offering in this prospectus, has one vote per share. While this dual-class structure is in effect, W. Kent Taylor would be able be able to control all matters submitted to our stockholders even if in the future he were to own significantly less than 50% of the equity of our company. This concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses. As a result, the market price of Class A common stock could be adversely affected.

Our founder and chairman will control our company and his interests may differ from your interests.

        As a result of W. Kent Taylor's controlling interest in our Company as described above, Mr. Taylor will be able to exercise a controlling influence over our business and affairs and will be able to unilaterally determine the outcome of any matter submitted to a vote of our stockholders. Mr. Taylor's

23

interests in our company may differ from the interests of our other stockholders, and Mr. Taylor could take actions or make decisions that are not in your best interests.

As a new investor, you will experience immediate and substantial dilution in net tangible book value.

        Investors purchasing shares of our Class A common stock in this offering will pay more for their shares than the amount paid by existing stockholders who acquired shares before this offering. Accordingly, if you purchase Class A common stock in this offering, you will incur immediate dilution in net tangible book value per share. If the holders of outstanding options exercise these options, you will incur further dilution. See "Dilution."

We have no plans to pay cash dividends.

        We do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. See "Dividend Policy."

As a holding company, we depend on distributions from our subsidiaries.

        We hold our restaurants and our other operating assets through wholly-owned subsidiaries. Because of our holding company structure, we depend upon distributions from our subsidiaries to meet our obligations. Our subsidiaries may pay distributions to Texas Roadhouse, Inc. only as long as those distributions would not cause the subsidiary's liabilities to exceed its assets or render the subsidiary unable to pay its obligations as they become due in the ordinary course of business. Restrictions on our ability to access operating cash flow from our operating subsidiaries could restrict our growth and make it more difficult to execute our business strategy.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains statements about future events and expectations that constitute forward-looking statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future financial and operating performance and growth plans, taking into account the information currently available to us. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the expectations of future results we express or imply in any forward-looking statements. In addition to the other factors discussed under "Risk Factors" elsewhere in this prospectus, factors that could contribute to these differences include, but are not limited to:

•

our ability to raise capital in the future;



•

our ability to successfully execute our growth strategy;



•

the continued service of key management personnel;



•

health concerns about our food products;



•

our ability to attract, motivate and retain qualified employees;



•

the impact of federal, state or local government regulations relating to our employees or the sale of food and alcoholic beverages;



•

the impact of litigation;



•

the cost of our principal food products;



•

labor shortages or increased labor costs;



•

changes in consumer preferences and demographic trends;



•

increasing competition in the casual dining segment of the restaurant industry;



•

our ability to successfully expand into new markets;



•

the rate of growth of general and administrative expenses associated with building a strengthened corporate infrastructure to support our growth initiatives;



•

negative publicity regarding food safety and health concerns;



•

our franchisees' adherence to our practices, policies and procedures;



•

potential fluctuation in our quarterly operating results due to seasonality and other factors;



•

supply and delivery shortages or interruptions;



•

inadequate protection of our intellectual property;



•

volatility of actuarially determined insurance losses and loss estimates;



•

adoption of new, or changes in existing, accounting policies and practices;



•

adverse weather conditions which impact guest traffic at our restaurants; and



•

adverse economic conditions.

        The words "believe," "may," "should," "anticipate," "estimate," "expect," "intend," "objective," "seek," "plan," "strive" or similar words, or the negatives of these words, identify forward-looking statements. We qualify any forward-looking statements entirely by these cautionary factors.

        Other risks, uncertainties and factors, including those discussed under "Risk Factors," could cause our actual results to differ materially from those projected in any forward-looking statements we make.

        We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

25

MARKET DATA AND FORECASTS

        In this prospectus, we use market data and industry forecasts that we have obtained from industry publications, including the National Restaurant Association, and other publicly available information. Industry publications generally state that the information they provide has been obtained from other sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified any of this information and therefore we also cannot guarantee the accuracy and completeness of such information. The industry forecasts we provided in this prospectus—particularly the growth rate in sales for the full-service restaurant industry, the full-service steak segment of the industry and the restaurant industry in general—are subject to numerous risks and uncertainties and actual results could be different from such predictions, perhaps significantly. Industry forecasts are also based on assumptions that events, trends and activities will occur. We have not independently verified the information and assumptions used in making these forecasts and, if the information and assumptions turn out to be wrong, then the forecasts will most likely be wrong as well.

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USE OF PROCEEDS

        We estimate that the net proceeds from our sale of            shares of Class A common stock in this offering, at an assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus, after deducting underwriting discounts, commissions and other estimated offering expenses payable by us, will be approximately $            million. We will not receive any proceeds from the sale of shares of Class A common stock offered by any selling stockholder. We intend to use the net proceeds from this offering as follows:

•

approximately $         million will be used to repay outstanding borrowings under our credit facility, including accrued interest thereon;



•

approximately $28.2 million will be used to fund a payment to our current equity holders of Texas Roadhouse Holdings LLC equal to their undistributed share of Texas Roadhouse Holdings LLC's income for periods through March 30, 2004 and additional funds will be used to fund payments based on its income from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc.; and



•

the remaining proceeds will be used for general corporate purposes.

        We entered into a $100.0 million credit facility with Bank of America, N.A., as Administrative Agent, Banc of America Securities LLC, as Co-Lead Arranger, and other lender parties on July 16, 2003. Banc of America Securities LLC is one of the underwriters in this offering, and Bank of America, N.A. is an affiliate of Banc of America Securities LLC. Loans under this facility bear interest at either: a base rate, which is the higher of the Federal Funds Rate plus 0.5%, or Bank of America's publicly announced variable prime rate; or a rate based on the Eurodollar rate, plus a margin of 1.50% to 2.50% for borrowings under the revolving credit portion of the facility or 1.75% to 2.75% for borrowings under the term loan portion of the facility. Loans under this facility mature on July 16, 2006. As of March 30, 2004, $54.3 million was outstanding under this facility. This indebtedness was incurred primarily to refinance existing indebtedness and to finance the construction of new restaurants.

        Of the $28.2 million of payments we will make to our current equity holders of Texas Roadhouse Holdings LLC, our executive officers, directors and 5% stockholders, including affiliates, will receive the amounts set forth below:

Name	Payment
W. Kent Taylor (Chairman of the Company)	$	15,745,000
G. J. Hart (Chief Executive Officer)	$	192,000
Steven L. Ortiz (Chief Operating Officer)	$	18,000
Scott M. Colosi (Chief Financial Officer)		—
Sheila C. Brown (General Counsel, Corporate Secretary)	$	1,000
Amar Desai	$	1,842,000
John D. Rhodes	$	1,866,000
Mehendra Patel	$	1,842,000
George S. Rich	$	2,052,000

        Our executive officers, directors and 5% stockholders will also receive their proportionate share of the additional payments we will make to the equity holders of Texas Roadhouse Holdings LLC relating to its income from March 31, 2004 through the effective date of the combination of our operations under Texas Roadhouse, Inc. Through June 29, 2004, the total amount of these additional payments would have been $         million.

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DIVIDEND POLICY

        Our predecessor companies paid aggregate distributions to their equity holders in 2002, 2003 and 2004 Q1 of $13.9 million, $21.7 million and $6.1 million, respectively. These distributions were made monthly except for Texas Roadhouse Holdings LLC, which made its distributions quarterly. These predecessor companies will continue to make distributions in respect of their income from March 31, 2004 to the effective date of their combination under Texas Roadhouse, Inc. Through June 29, 2004, the amount of these additional distributions would have been $             million.

        In addition, immediately before the completion of this offering, we will make a payment of approximately $28.2 million to members of Texas Roadhouse Holdings LLC before the reorganization, representing distributions of $2.0 million, $3.7 million, $9.6 million, $9.3 million and $3.6 million that have been declared, but not paid, in respect of the net income of Texas Roadhouse Holdings LLC for the years 2000, 2001, 2002 and 2003 and the 2004 Q1, respectively. We will make additional payments in respect of its net income from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc., which will occur immediately before the completion of this offering. Through June 29, 2004, the amount of these additional payments would have been $             million.

        Upon the effective date of the combination, we intend to retain our future earnings, if any, to finance the future development and operation of our business. Accordingly, we do not anticipate paying any dividends on our common stock in the foreseeable future.

        Any future changes in our dividend policy will be made at the discretion of our board of directors and will depend on then existing conditions, including our financial condition, results of operations, applicable covenants under our new credit facility and other contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.

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CAPITALIZATION

        The following table sets forth our capitalization as of March 30, 2004:

•

on a historical basis;



•

on a pro forma basis to give effect to the issuance of shares of Class A and Class B common stock and to record a liability for accrued but unpaid distributions of $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004, in each case, in connection with the combination of our operations under Texas Roadhouse, Inc.;



•

on a "Pro Forma as Adjusted for the Acquisition Transactions" basis to give further effect to our acquisition of the remaining equity interests in all of our 31 majority-owned or controlled company restaurants and Texas Roadhouse Development Corporation and all of the equity interests in one franchise restaurant in exchange for shares of our Class A common stock; and



•

on a "Pro Forma as Further Adjusted for This Offering" basis to give further effect to:



(i)

our issuance and sale of            shares of Class A common stock in this offering at the assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus;



(ii)

the application of the net proceeds from this offering, after deducting the underwriting discounts, commissions and estimated offering expenses payable by us, to:



(a)

repay outstanding borrowings under our credit facility, including accrued interest thereon, in the amount of approximately $         million; and



(b)

fund unpaid distributions to equity holders of Texas Roadhouse Holdings LLC of approximately $28.2 million relating to its net income for periods through March 30, 2004; and



(iii)

a cumulative net deferred tax liability of approximately $5.2 million.

        You should read this table in conjunction with the sections of this prospectus captioned "Use of Proceeds," "Summary Historical and Pro Forma Combined Financial and Operating Data," "Unaudited Condensed Pro Forma Combined Financial Statements," "Selected Historical and Pro Forma Combined Financial and Other Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as our combined financial statements and related notes included elsewhere in this prospectus.

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			As of March 30, 2004
			Unaudited
			Historical		Pro Forma			Pro Forma as Adjusted for the Acquisition Transactions			Pro Forma as Further Adjusted for This Offering
			(in thousands)
Cash and cash equivalents(1)			$	7,690	$	7,690		$	8,174		$
Debt and capital leases outstanding:
	Current maturities of long-term debt			8,009		8,009			8,009
	Current maturities of obligations under capital leases			179		179			179
	Long-term debt, excluding current maturities			56,773		56,773			56,773
	Obligations under capital leases, excluding current maturities			908		908			908
		Total debt and capital leases outstanding		65,869		65,869			65,869			—
Deferred tax liability, net				—		—			—
Minority interest				5,737		5,737			—			—
Members'/Stockholders' equity(2):
	Members equity			42,183		—			—			—
	Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares outstanding or issued)			—		—			—			—
	Class A common stock ($0.001 par value, 100,000,000 shares authorized; no shares outstanding, historical; 18,708,168 shares outstanding, pro forma; and 21,306,731 shares outstanding, pro forma as adjusted;             shares outstanding, pro forma as further adjusted)			—		19			21
	Class B common stock ($0.001 par value, 8,000,000 shares authorized; no shares outstanding, historical; 2,217,000 shares outstanding, pro forma; and 2,217,000 shares outstanding, pro forma as adjusted; 2,217,000 shares outstanding, pro forma as further adjusted)			—		2			2
	Additional paid-in capital			—		14,461			63,807
	Retained earnings			—		(168	)		(164	)
	Accumulated other comprehensive income			—		(283	)		(283	)
	Total members'/stockholders' equity(3)			42,183		14,031			63,383
Total debt and members'/stockholders' equity			$	113,789	$	85,637		$	129,252		$

(1)

We will also use a portion of the net proceeds of this offering to fund additional distributions relating to the net income of Texas Roadhouse Holdings LLC for periods from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc. Through June 29, 2004, the amount of these additional distributions would have been $            .

(2)

Excludes 3,093,466 shares of Class A common stock issuable on the exercise of stock options outstanding as of March 30, 2004.

(3)

We will make a distribution of approximately $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its undistributed net income for periods through March 30, 2004. The $28.2 million liability was recorded in the pro forma amounts and will be paid from the net proceeds from this offering, as reflected in the pro forma as further adjusted for this offering amounts. In accordance with SEC guidance, additional Class A shares of 915,976 have been included in the calculation of pro forma share and net income per share data for year 2003 and 2004 Q1. These additional shares give effect to the number of shares whose proceeds would have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ended March 30, 2004 which would have totaled $17.4 million.

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DILUTION

        Dilution is the amount by which the initial offering price paid by the purchasers of Class A common stock in this offering exceeds the net tangible book value per share of common stock following this offering. Our pro forma as adjusted net tangible book value per share represents our tangible assets (total assets less intangible assets), less our total liabilities, divided by the number of shares of our common stock outstanding as of March 30, 2004 after giving effect to all of the transactions described above under "Summary Historical and Pro Forma Combined Financial and Operating Data—Unaudited Pro Forma as Adjusted for the Acquisition Transactions." As of March 30, 2004, our pro forma as adjusted net tangible book value was approximately $                   million, or $                  per share of common stock. After giving effect to such pro forma adjustments and the sale of      shares of Class A common stock by us at the assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus, and the use of proceeds therefrom as described above under "Summary Historical and Pro Forma Combined Financial and Operating Data—Unaudited Pro Forma as Further Adjusted for This Offering," our pro forma as further adjusted net tangible book value at March 30, 2004 would have been approximately $             million, or $            per share of common stock, representing an immediate increase in the net tangible book value of $            per share to existing stockholders and an immediate dilution in the net tangible book value of $            per share to the investors who purchase our Class A common stock in this offering. The sale of shares by our selling stockholder in this offering does not affect our net tangible book value. The following table illustrates this per share dilution:

Assumed initial public offering price per share		$
Pro forma as adjusted net tangible book value per share as of March 30, 2004	$
Increase in pro forma as adjusted net tangible book value per share attributable to new investors
Pro Forma as further adjusted net tangible book value per share
Dilution per share to new investors	$	$

        The following table summarizes, on a pro forma as further adjusted basis, as of March 30, 2004, the difference between existing stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by our existing stockholders and by the investors purchasing shares of common stock in this offering. The calculation below is based on an assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

	Shares Purchased			Total Consideration
							Average Price Per Share
	Number	%		Amount	%
Existing stockholders							$
New investors							$
Total		100	%		100	%

        The share amounts in this table exclude            shares of our Class A common stock that were subject to outstanding options as of March 30, 2004 at a weighted average exercise price of $            per share. To the extent that any options are exercised, there will be further dilution to new investors. If all of our outstanding options as of March 30, 2004 had been exercised, the pro forma as further adjusted net tangible book value per share after this offering would be $            per share, representing an immediate decrease in the pro forma as further adjusted net tangible book value to our new investors of $            per share.

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UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS

        The following unaudited condensed pro forma combined financial statements present transactions that will take place in connection with this offering. We based the pro forma adjustments on available information and on assumptions that we believe are reasonable under the circumstances. The unaudited pro forma, pro forma as adjusted and pro forma as further adjusted financial data do not purport to represent what our results of operations or financial position actually would have been if the transactions set forth below had occurred on the dates indicated or what our results of operations or financial position will be for future periods.

        Historical Combined Financial and Operating Data.    We derived the summary historical combined financial data as of and for the year 2003 from our audited combined financial statements and 2004 Q1 from our unaudited interim combined financial statements. In the opinion of management, our unaudited interim combined financial statements for 2004 Q1 reflect all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States, the information for 2004 Q1. The operating results of the interim periods are not necessarily indicative of results for a full year. Our audited combined financial statements and unaudited interim financial statements present the combined operations of Texas Roadhouse Holdings LLC and its wholly-owned and majority-owned restaurants, Texas Roadhouse Development Corporation, Texas Roadhouse Management Corp., WKT Restaurant Corp., and nine franchise restaurants, all of which were entities under the common control of W. Kent Taylor. Our historical results are not necessarily indicative of our results for any future period.

        Unaudited Pro Forma Combined Financial and Operating Data.    The pro forma combined financial data as of and for the year 2003 and 2004 Q1, give effect to the combination of our operations under Texas Roadhouse, Inc., a new holding company that is a "C" corporation. All taxes on the income of Texas Roadhouse Holdings LLC were payable by its members. As a "C" corporation, we will be responsible for the payment of all federal and state corporate income taxes and, accordingly, the pro forma data give effect to the pro forma provision for income taxes. The pro forma share and net income per share data for all periods presented also give effect to the issuance of 18,708,168 shares of Class A common stock and 2,217,000 shares of Class B common stock in connection with the combination of our operations under Texas Roadhouse, Inc. The pro forma balance sheet data as of March 30, 2004 give effect to such issuance of Class A and Class B common stock and the accrual of a liability for unpaid distributions of $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004, in each case, in connection with the combination of our operations under Texas Roadhouse, Inc.

        The shares of Class A common stock referred to in the preceding paragraph include 1,477,500 shares and 564,436 shares to be issued to our majority stockholder in connection with the combination of Texas Roadhouse Development Corporation and nine franchise restaurants, respectively. The number of shares to be issued to our majority stockholder for his majority interest in Texas Roadhouse Development Corporation was calculated so as to be neither accretive nor dilutive to earnings per share. The number of shares to be issued to our majority stockholder for his controlling interest in the nine restaurants was determined using the acquisition formulas stated in the corresponding operating or partnership agreements. The shares of Class A common stock referred to in the preceding paragraph also include 15,750,256 outstanding shares of Texas Roadhouse Holdings LLC at March 30, 2004, plus 915,976 shares that give effect to the number of shares the proceeds from which would have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ended March 30, 2004.

        Unaudited "Pro Forma as Adjusted for the Acquisition Transactions" Combined Financial and Operating Data.    The "Pro Forma as Adjusted for the Acquisition Transactions" combined financial data as of and for the year 2003 and 2004 Q1 give further effect to our acquisition of the remaining

32

equity interests in all of our 31 majority-owned or controlled company restaurants and Texas Roadhouse Development Corporation and all of the equity interests in one franchise restaurant in exchange for an aggregate of 2,598,546 shares of our Class A common stock.

        The shares of Class A common stock referred to in the preceding paragraph include 1,984,263 shares to be issued to the remaining equity holders of the 31 majority-owned or controlled company restaurants, 492,500 shares to be issued to the remaining equity holders of Texas Roadhouse Development Corporation, and 121,783 shares to the equity holders of the one franchise restaurant. The number of shares issued to Mr. Taylor and others in connection with our acquisition of the equity interests in the one franchise restaurant and the remaining equity interests in the 31 majority-owned or controlled company restaurants is determined using the acquisition formulas stated in the corresponding operating or partnership agreements.

        Unaudited "Pro Forma as Further Adjusted for This Offering" Combined Financial and Operating Data.    The "Pro Forma as Further Adjusted for This Offering" combined financial data as of and for the year 2003 and 2004 Q1 give further effect to:

•

our issuance and sale of             shares of Class A common stock in this offering at the assumed initial public offering price of $            per share, which is the mid-point of the range set forth on the cover page of this prospectus;



•

the application of the net proceeds from this offering, after deducting the underwriting discounts, commissions and estimated offering expenses payable by us, to:



•

repay outstanding borrowings under our credit facility, including accrued interest thereon, in the amount of approximately $         million; and



•

fund declared, but unpaid, distributions of approximately $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004;



•

changes in compensation related to new employment agreements with some of our executives; and



•

a cumulative net deferred tax liability of approximately $5.2 million.

33

UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 30, 2004
(in thousands)

		Historical		Pro Forma Adjustments			Pro Forma		Pro Forma Adjustments for the Acquisition Transactions			Pro Forma as Adjusted for the Acquisition Transactions		Pro Forma Adjustments for this Offering	Pro Forma as Further Adjusted for This Offering
Current Assets:
	Cash and cash equivalents	$	7,690	$	—		$	7,690	$	484	(5)	$	8,174
	Receivables, net		6,843		—			6,843		(115	)(5)(7)		6,728
	Inventories		3,612		—			3,612		17	(5)		3,629
	Prepaid expenses		2,448		—			2,448		3	(5)		2,451
	Other current assets		36		—			36		—			36
Total current assets			20,629		—			20,629		389			21,018
Property and equipment, net			129,261		—			129,261		211	(5)		129,472
Goodwill			2,190		—			2,190		43,373	(5)		45,563
Other assets			1,930		—			1,930		4	(5)		1,934
Total assets		$	154,010	$	—		$	154,010	$	43,977		$	197,987
Current liabilities:
	Distributions payable	$	—	$	28,152	(1)	$	28,152	$	—		$	28,152
	Current maturities of long-term debt		8,009		—			8,009		—			8,009
	Short term bank revolver		3,500		—			3,500					3,500
	Accounts payable		14,536		—			14,536		135	(5)(7)		14,671
	Deferred revenue—gift certificates		6,928		—			6,928		130	(5)		7,058
	Accrued wages		2,290		—			2,290		13	(5)		2,303
	Other current liabilities		5,784		—			5,784		84	(5)		5,868
Total current liabilities			41,047		28,152			69,199		362			69,561
Long-term debt, excluding current maturities			56,773		—			56,773		—			56,773
Deferred tax liability, net			—		—			—		—			—
Other liabilities			8,270		—			8,270		—			8,270
Total liabilities			106,090		28,152			134,242		362			134,604
Minority interest in consolidated subsidiaries			5,737		—			5,737		(5,737	)(5)		—
Members' equity			42,183		(28,152	)		14,031		49,352	(5)		63,383
Total liabilities and members' equity		$	154,010	$	—		$	154,010	$	43,977		$	197,987

See accompanying notes

34

UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT
OF INCOME FOR FISCAL YEAR 2003
(in thousands, except per share data)

			Historical			Pro Forma Adjustments			Pro Forma			Pro Forma Adjustments for the Acquisition Transactions			Pro Forma as Adjusted for the Acquisition Transactions			Pro Forma Adjustments for this Offering		Pro Forma as Further Adjusted for This Offering
Revenue:
	Restaurant sales		$	279,519		$	—		$	279,519		$	3,580	(6)	$	283,099		$		$
	Franchise royalties and fees			6,934			—			6,934			(107)	(8)		6,827
		Total revenue	$	286,453		$	—		$	286,453		$	3,473	(6)	$	289,926		$		$
Costs and expenses:
	Restaurant operating costs:
		Cost of sales		91,904			—			91,904			1,156			93,060
		Labor		78,070			—			78,070			947			79,017
		Rent		6,005			—			6,005			186			6,191
		Other operating		47,382			—			47,382			661			48,043
	Pre-opening			2,571			—			2,571			—			2,571
	Depreciation and amortization			8,562			—			8,562			56			8,618
	General and administrative			16,631			—			16,631			15			16,646
Total costs and expenses				251,125						251,125			3,021			254,146
Income from operations			$	35,328		$	—		$	35,328		$	452	(6)	$	35,780		$	—	$
Interest expense, net				4,350			—			4,350			—			4,350
Minority interest				6,704			—			6,704			(6,704	)(10)		—			—		—
Equity income (loss) from investments in unconsolidated affiliates				(61	)		—			(61	)		(23)	(9)		(84	)
Other income				—			—			—			—			—
Income before taxes			$	24,213		$	—		$	24,213		$	7,133		$	31,346
Provision for income taxes				—			8,790	(3)		8,790			2,589	(3)		11,379
Net income			$	24,213		$	(8,790	)	$	15,423		$	4,544		$	19,967		$		$
Net income per common share(4),(5)
	Basic								$	0.75					$	0.86		$		$
	Diluted								$	0.71					$	0.82		$		$
Weighted average shares outstanding(2)(4)
	Basic									20,644			2,599	(5)		23,243
	Diluted									21,766			2,599	(5)		24,365

See accompanying notes

35

UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT
OF INCOME FOR QUARTER ENDED MARCH 30, 2004
(in thousands, except per share data)

			Historical		Pro Forma Adjustments			Pro Forma		Pro Forma Adjustments for the Acquisition Transactions			Pro Forma as Adjusted for the Acquisition Transactions		Pro Forma Adjustments for this Offering	Pro Forma as Further Adjusted for This Offering
Revenue:
	Restaurant sales		$	81,893	$	—		$	81,893	$	993	(6)	$	82,886	$	$
	Franchise royalties and fees			2,005		—			2,005		(30	)(8)		1,975
		Total revenue	$	83,898	$	—		$	83,898	$	963	(6)	$	84,861	$	$
Costs and expenses:
	Restaurant operating costs:
		Cost of sales		28,173					28,173		341			28,514
		Labor expenses		22,275					22,275		255			22,530
		Rent expense		1,623					1,623		47			1,670
		Other operating expense		13,334					13,334		177			13,511
	Pre-opening expenses			896					896		—			896
	Depreciation and amortization			2,349					2,349		14			2,363
	General and administrative			4,253					4,253		4			4,257
Total costs and expenses				72,903					72,903		838			73,741
Income from operations			$	10,995	$	—		$	10,995	$	125	(6)	$	11,120	$	$
Interest expense, net				1,027		—			1,027		—			1,027
Minority interest				1,959		—			1,959		(1,959	)(10)		—
Equity income (loss) from investments in unconsolidated affiliates				44		—			44			(7)(9)		38
Other income				—		—			—		—			—
Income before taxes			$	8,053	$	—		$	8,053	$	2,078		$	10,131	$	$
Provision for income taxes				—		2,851	(3)		2,851		740	(3)		3,591
Net income			$	8,053	$	(2,851	)	$	5,202	$	1,338		$	6,540	$	$
Net income per common share(4),(5)
	Basic							$	0.25				$	0.28	$	$
	Diluted							$	0.24				$	0.26	$	$
Weighted average shares outstanding(2)(4)
	Basic								20,742		2,599	(5)		23,341
	Diluted								22,121		2,599	(5)		24,720

See accompanying notes

36

NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS

(1)

The pro forma adjustment for distributions payable on the balance sheet as of March 30, 2004 of $28.2 million gives effect to the accrual of a liability for unpaid distributions to equity holders of Texas Roadhouse Holdings LLC relating to its net income for the periods through March 30, 2004. Additional distributions relating to its income for the periods from March 31, 2004 to the effective date of the combination under Texas Roadhouse, Inc. will also be paid. In accordance with SEC guidance, additional Class A shares of 915,976 have been included in the calculation of pro forma share and net income per share data for year 2003 and 2004 Q1. These additional shares give effect to the number of shares the proceeds from which have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC, which would have totaled $17.4 million for the twelve months ended March 30, 2004.

(2)

The following table sets forth the calculation of pro forma weighted average shares outstanding (in thousands):

	2003			Pro Forma As Adjusted For The Acquisition Transactions 2003			Pro Forma As Adjusted For This Offering 2003	2004 1Q			Pro Forma As Adjusted For The Acquisition Transactions 2004 1Q			Pro Forma As Adjusted For This Offering 2004 1Q
Net Income adjusted for pro forma income taxes	$	15,423		$	19,967		$	$	5,202		$	6,540		$
Basic EPS:
Weighted-average common shares outstanding:
Texas Roadhouse Holdings		15,469			15,469				15,567			15,567
Shares issued for distribution payable		916			916				916			916
Class B shares to Mr. Taylor		2,217			2,217				2,217			2,217
Class A shares to Mr. Taylor		2,042			2,042				2,042			2,042
Class A shares to remaining equity holders					2,599							2,599
Total		20,644			23,243				20,742			23,341
Basic EPS	$	0.75		$	0.86		$	$	0.25		$	0.28		$
Diluted EPS:
Weighted-average common shares outstanding:
Shares assumed issued on exercise of dilutive share equivalents		3,133			3,133				3,113			3,113
Shares assumed purchased with proceeds of dilutive share equivalents		(2,011	)		(2,011	)			(1,734	)		(1,734	)
Texas Roadhouse Holdings		15,469			15,469				15,567			15,567
Shares issued for distribution payable		916			916				916			916
Class B shares to Mr. Taylor		2,217			2,217				2,217			2,217
Class A shares to Mr. Taylor		2,042			2,042				2,042			2,042
Class A shares to remaining equity holders					2,599							2,599
Shares applicable to diluted earnings		21,766			24,365				22,121			24,720
Diluted EPS	$	0.71		$	0.82		$	$	0.24		$	0.26		$

(3)

The pro forma provision for income taxes gives effect to our reorganization as a "C" corporation through the merger of Texas Roadhouse Holdings LLC into a wholly owned subsidiary of Texas

37

Roadhouse, Inc. The adjustment is based upon the information shown in the table below. The combined state tax rate is our estimate of the average state tax rate we would have incurred based on the mix and volume of business we do in the states and the relevant apportionment factors for those states. The combined federal and state tax rates shown below give effect to the deductibility of state taxes at the federal level and to tip tax credits.

	Pro Forma
	2003		2004 Q1 (1)
Effective federal tax rate	32.6	%	32.1	%
Combined state tax rate	3.7	%	3.3	%
Combined effective federal and state tax rate	36.3	%	35.4	%

(1)

For all pro forma data.

Upon becoming a "C" corporation, we will record a cumulative net deferred tax liability and corresponding charge to our income tax provision of approximately $5.2 million which is not reflected in the pro forma information.

(4)

Under the terms of an agreement associated with the formation of Texas Roadhouse, Inc., our majority shareholder will contribute all of the shares of WKT Restaurant Corp., which receives a one percent distribution on all sales of company and license Texas Roadhouse restaurants, in exchange for 2,217,000 shares of Texas Roadhouse, Inc. Class B common stock. The number of shares to be issued was calculated so as to be neither accretive nor dilutive to earnings per share. The shares expected to be issued have been reflected in the calculation of pro forma share and net income per share.

The pro forma share and net income per share data for 2003 and 2004 Q1 also give effect to the issuance of shares of Class A common stock to our majority stockholder in connection with the combination of our operations under Texas Roadhouse, Inc. The weighted average shares outstanding shown under "Pro Forma 2003" and Pro Forma 2004 Q1" include 2,041,936 shares in connection with the combination of our operations. The calculations of these shares are based on contractually agreed upon formulas, which take into consideration the entity's net income with certain adjustments.

In addition to the shares expected to be issued to our majority stockholder in connection with the above transactions, the accompanying calculations of pro forma share and net income per share data also include the outstanding shares of Texas Roadhouse Holdings LLC. At December 30, 2003 and March 30, 2004, the outstanding shares of Texas Roadhouse Holdings LLC were 15,646,409 and 15,750,256, respectively.

(5)

The "Pro Forma Adjustments for the Acquisition Transactions 2004 Q1", as shown in our March 30, 2004 combined balance sheet data, give further effect to our acquisition of the remaining equity interests in all of our 31 majority-owned or controlled company restaurants and Texas Roadhouse Development Corporation and all of the equity interests in one franchise restaurant in exchange for an aggregate of 2,598,546 shares of Texas Roadhouse, Inc. Class A common stock. The number of shares to be issued in exchange for the controlling interest in Texas Roadhouse Development Corporation was calculated so as to be neither accretive nor dilutive to earnings per share. The number of shares to be issued in connection with the other acquisitions was calculated using predetermined acquisition formulas as required by each entity's operating or partnership agreement. These transactions will be accounted for as step acquisitions using the purchase method as defined in FASB Statement No. 141, "Business Combinations." Assuming a purchase price of $49.4 million and our preliminary estimates of the fair value of net assets acquired, $43.4 million of goodwill will be generated by the acquisitions. The purchase price of

38

$49.4 million was calculated using an assumed initial offering price of $19.00 per share. These acquisitions, which are expected to be accretive to earnings, are consistent with our long-term strategy to increase net income and earnings per share.

The purchase price was allocated as follows:

Current assets	$	389
Property and equipment, net		211
Goodwill		43,373
Other assets		4
Elimination of minority interest in consolidated subsidiaries		5,737
Current liabilities		(362	)
	$	49,352

Additionally, a step up in the basis of certain assets and liabilities of the acquired entities will be recorded based on the fair market value of the minority interests' portion of such assets and liabilities at the date of acquisition.

The shares expected to be issued have been reflected in the calculation of pro forma share and net income per share data.

(6)

This adjustment reflects the statement of income activity for the one franchise restaurant we acquired. This one franchise restaurant had revenue of $3.6 million and $1.0 million and income from operations of $452,000 and $125,000 for 2003 and 2004 Q1, respectively.

(7)

This adjustment reflects the elimination of Accounts Receivable from the one franchise restaurant acquired reflected in the combined financial statements.

(8)

This adjustment reflects the elimination of franchise royalties received from the one franchise restaurant acquired.

(9)

This adjustment reflects the elimination of the equity income previously recorded for the one franchise restaurant acquired.

(10)

This adjustment reflects the elimination of the minority interest of $6.7 million and $2.0 million, for 2003 and 2004 Q1, respectively, of the 31 majority owned or controlled company restaurants and Texas Roadhouse Development Corporation.

39

SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL AND OPERATING DATA

        You should read the data set forth below in conjunction with our combined financial statements and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information appearing elsewhere in this prospectus. We based the pro forma adjustments on available information and on assumptions that we believe are reasonable under the circumstances. The unaudited pro forma financial data do not purport to represent what our results of operations or financial position actually would have been if the combination of our operations under Texas Roadhouse, Inc. had occurred on the dates indicated or what our results of operations or financial position will be for future periods.

        Historical Combined Financial and Operating Data.    We derived the selected historical combined financial data as of and for each of the years 1999 through 2003 from our audited combined financial statements, which have been audited and reported upon by KPMG LLP, an independent registered public accounting firm. We derived the selected historical combined financial data as of and for 2003 Q1 and 2004 Q1 from our unaudited interim financial statements. In the opinion of management, our unaudited interim financial statements for 2003 Q1 and 2004 Q1 reflect all adjustments necessary to present fairly, in accordance with accounting principles generally accepted in the United States, the information for 2003 Q1 and 2004 Q1. The operating results of the interim periods are not necessarily indicative of results for a full year. Our audited combined financial statements and unaudited interim combined financial statements present the combined operations of Texas Roadhouse Holdings LLC and its wholly-owned and majority-owned restaurants, Texas Roadhouse Development Corporation, Texas Roadhouse Management Corp., WKT Restaurant Corp., and nine franchise restaurants, all of which were entities under the common control of Mr. Taylor. Our historical results are not necessarily indicative of our results for any future period.

        Unaudited Pro Forma Combined Financial and Operating Data.    The pro forma combined statement of income data for all periods presented give effect to the combination of our operations under Texas Roadhouse, Inc., a new holding company that is a "C" corporation. All taxes on the income of Texas Roadhouse Holdings LLC were payable by its members. As a "C" corporation, we will be responsible for the payment of all federal and state corporate income taxes and, accordingly, the pro forma combined statement of income data also give effect to the pro forma provision for income tax expense. The pro forma share and net income per share data for all periods presented give effect to the issuance of shares of Class A and Class B common stock in connection with the combination of our operations under Texas Roadhouse, Inc. The pro forma balance sheet data as of March 30, 2004 give effect to such issuance of 18,708,168 shares Class A common stock and 2,217,000 shares of Class B common stock and the accrual of a liability for unpaid distributions of $28.2 million to equity holders of Texas Roadhouse Holdings LLC relating to its net income for periods through March 30, 2004, in each case, in connection with the combination of our operations under Texas Roadhouse, Inc.

        The shares of Class A common stock referred to in the preceding paragraph include 1,477,500 shares and 564,436 shares to be issued to our majority stockholder in connection with the combination of Texas Roadhouse Development Corporation and nine franchise restaurants, respectively. The number of shares to be issued to our majority stockholder for his majority interest in Texas Roadhouse Development Corporation was calculated so as to be neither accretive nor dilutive to earnings per share. The number of shares to be issued to our majority stockholder for his controlling interest in the nine restaurants was determined using the acquisition formulas stated in the corresponding operating or partnership agreements. The shares of Class A common stock referred to in the preceding paragraph also include 15,750,256 outstanding shares of Texas Roadhouse Holdings LLC at March 30, 2004, plus 915,976 shares that give effect to the number of shares the proceeds from which would have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ended March 30, 2004.

40

				Fiscal Year											Fiscal Quarter
															(Unaudited)
				1999		2000		2001		2002		2003			2003 1Q		2004 1Q
				(in thousands, except unit and per share data)
Combined Statements of Income:
Revenues:
	Restaurant sales			$	68,330	$	111,739	$	154,359	$	226,756	$	279,519		$	65,502	$	81,893
	Franchise royalties and fees				2,648		4,027		5,553		6,080		6,934			1,579		2,005
			Total revenues		70,978		115,766		159,912		232,836		286,453			67,081		83,898
Costs and expenses:
	Restaurant operating costs:
		Cost of sales			23,276		38,422		53,342		74,351		91,904			21,233		28,173
		Labor			19,787		32,048		43,607		64,506		78,070			18,342		22,275
		Rent			1,962		3,401		4,410		5,125		6,005			1,429		1,623
		Other operating			9,859		16,505		24,379		36,237		47,382			10,606		13,334
	Pre-opening				2,512		3,322		3,640		4,808		2,571			657		896
	Depreciation and amortization				2,042		3,150		5,022		6,876		8,562			2,029		2,349
	General and administrative				4,437		7,466		11,135		13,633		16,631			4,499		4,253
			Total costs and expenses		63,875		104,314		145,535		205,536		251,125			58,795		72,903
Income from operations					7,103		11,452		14,377		27,300		35,328			8,286		10,995
Interest expense, net					1,654		2,546		3,649		4,212		4,350			974		1,027
Minority interest					1,070		2,503		2,899		5,168		6,704			1,773		1,959
Equity income (loss) from investments in unconsolidated affiliates					—		25		25		21		(61	)		6		44
Other income					—		—		125		—		—			—
Net income				$	4,379	$	6,428	$	7,979	$	17,941	$	24,213		$	5,545	$	8,053
Pro forma data (unaudited):
	Historical income before taxes			$	4,379	$	6,428	$	7,979	$	17,941	$	24,213		$	5,545	$	8,053
	Pro forma provision for income taxes(1)				1,546		2,149		2,826		6,420	$	8,790			2,013		2,851
Net income adjusted for pro forma provision for income taxes				$	2,833	$	4,279	$	5,153	$	11,521	$	15,423		$	3,532	$	5,202
Net income adjusted for pro forma provision for income taxes per common share:
	Basic			$	0.13	$	0.21	$	0.26	$	0.59	$	0.75		$	0.18	$	0.25
	Diluted			$	0.13	$	0.21	$	0.26	$	0.55	$	0.71		$	0.17	$	0.24
Pro forma weighted average shares outstanding(2):
	Basic				21,149		20,140		19,599		19,686		20,644			19,733		20,742
	Diluted				21,280		20,447		20,151		20,826		21,766			20,781		22,121

	Fiscal Year										Fiscal Quarter
											(Unaudited)
	1999		2000		2001		2002		2003		2004 1Q		Pro Forma 2004 1Q
	(in thousands, except per share data, restaurant-related data and footnotes)
Combined Balance Sheet Data:
Total current assets(3)	$	7,971	$	12,468	$	9,392	$	15,399	$	20,974	$	20,629	$	20,629
Total assets(3)		45,642		70,064		96,428		128,527		148,193		154,010		154,010
Total current liabilities		9,536		23,170		29,215		30,850		40,573		41,047		69,199
Total liabilities		33,228		54,692		75,238		95,690		104,606		106,090		134,242
Minority interest		2,187		3,150		4,655		5,850		5,685		5,737		5,737
Total members' equity		10,227		12,222		16,535		26,987		37,902		42,183		14,031

41

		Fiscal Year															Fiscal Quarter
																	(Unaudited)
		1999			2000			2001			2002			2003			2003 1Q			2004 1Q
		(in thousands, except per share data, restaurant-related data and footnotes)
Selected Operating Data:
Company Restaurants:
	Number open at end of period		29			44			56			77			87			80			89
	Average unit volumes(4)	$	3,118		$	3,312		$	3,313		$	3,270		$	3,401		$	840		$	930
	Comparable restaurant sales growth(5)		1.2	%		9.4	%		1.5	%		3.7	%		3.4	%		0.7	%		10.4	%
EBITDA(6)(7)		$	8,075		$	12,124		$	16,650		$	29,029		$	37,125		$	8,548		$	11,429
EBITDA as a % of revenue			11.4	%		10.5	%		10.4	%		12.5	%		13.0	%		12.7	%		13.6	%
Net cash provided by operating activities		$			$			$	22,502		$	31,718		$	42,158		$	2,498		$	12,178
Net cash used in investing activities		$			$			$	(35,769	)	$	(32,764	)	$	(26,524	)	$	(4,589	)	$	(8,606	)
Net cash provided by (used in) financing activities		$			$			$	9,894		$	4,945		$	(17,722	)	$	(2,497	)	$	(1,610	)

(1)

The pro forma provision for income taxes gives effect to our reorganization as a "C" corporation. The adjustment is based upon the information shown in the table below. The combined state tax rate is our estimate of the average state tax rate we would have incurred based on the mix and volume of business we do in the states and the relevant apportionment factors for those states. The combined federal and state tax rates shown below give effect to the deductibility of state taxes at the federal level and to tip tax credits.

	1999		2000		2001		2002		2003		2003 Q1		2004 Q1
Effective federal tax rate	31.4	%	29.5	%	31.4	%	32.3	%	32.6	%	32.6	%	32.1	%
Combined state tax rate	3.9	%	3.9	%	4.0	%	3.5	%	3.7	%	3.7	%	3.3	%
Combined effective federal and state tax rate	35.3	%	33.4	%	35.4	%	35.8	%	36.3	%	36.3	%	35.4	%

Upon becoming a "C" corporation, we will record a cumulative net deferred tax liability and corresponding charge to our income tax provision of approximately $5.2 million which is not reflected in the pro forma information.

(2)

The following table sets forth the calculation of pro forma weighted average shares outstanding (in thousands):

		52-Weeks Ended										13-Weeks Ended
		December 26, 1999		December 31, 2000		December 30, 2001		December 31, 2002		December 30, 2003		April 1, 2003		March 30, 2004
Net income adjusted for pro forma income taxes		$	2,833		4,279	$	5,153	$	11,521	$	15,423	$	3,532	$	5,202
Basic EPS:
Weighted-average common shares outstanding:
Texas Roadhouse Holdings			16,138		15,328		14,909		15,209		15,469		15,325		15,567
Shares issued for distribution payable			—		—		—		—		916		—		916
Class B shares to Mr. Taylor			2,217		2,217		2,217		2,217		2,217		2,217		2,217
Class A shares to Mr. Taylor			2,794		2,595		2,473		2,260		2,042		2,191		2,042
	Total		21,149		20,140		19,599		19,686		20,644		19,733		20,742
Basic EPS		$	0.13	$	0.21	$	0.26	$	0.59	$	0.75	$	0.18	$	0.25

42

Diluted EPS:
Weighted-average common shares outstanding:
Shares assumed issued on exercise of dilutive share equivalents		518			1,626			2,084			2,775			3,133			3,027			3,113
Shares assumed purchased with proceeds of dilutive share equivalents		(387	)		(1,319	)		(1,532	)		(1,635	)		(2,011	)		(1,979	)		(1,734	)
Texas Roadhouse Holdings		16,138			15,328			14,909			15,209			15,469			15,325			15,567
Shares issued for distribution payable		—			—			—			—			916			—			916
Class B shares to Mr. Taylor		2,217			2,217			2,217			2,217			2,217			2,217			2,217
Class A shares to Mr. Taylor		2,794			2,595			2,473			2,260			2,042			2,191			2,042
Shares applicable to diluted earnings		21,280			20,447			20,151			20,826			21,766			20,781			22,121
Diluted EPS	$	0.13		$	0.21		$	0.26		$	0.55		$	0.71		$	0.17		$	0.24

(3)

We will also use a portion of the net proceeds of this offering to fund additional distributions relating to the net income of Texas Roadhouse Holdings LLC for the periods from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc. Through June 29, 2004, the amount of these additional distributions would have been $                        .

(4)

Average unit volume represents the average annual restaurant sales for all company restaurants open for a full six months before the beginning of the period measured.

(5)

Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a full six months before the beginning of the earlier fiscal period.

(6)

EBITDA consists of net income plus interest expense, plus income tax provision and plus depreciation and amortization. This term, as we define it, may not be comparable to a similarly titled measure used by other companies and is not a measure of performance presented in accordance with GAAP. We use EBITDA as a measure of operating performance, but we do not use it as a measure of liquidity. EBITDA should not be considered as a substitute for net income, net cash provided by or used in operations or other financial data prepared in accordance with GAAP, or as a measure of liquidity.

We believe EBITDA is useful to an investor in evaluating our operating performance because:

•

it is a widely accepted financial indicator of a company's ability to service its debt and a variation of it is used in determining compliance with certain covenants under our credit facility and other loan agreements;



•

it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, and to present a meaningful measure of corporate performance exclusive of our capital structure and the method by which assets were acquired; and



•

it helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing from our operating results the impact of our capital structure, primarily interest expense from our outstanding debt, and asset base, primarily depreciation and amortization of our property and equipment.

Our management uses EBITDA:

•

as a measurement of operating performance because it assists us in comparing our performance on a consistent basis, as it removes from our operating results the impact of our capital structure, which includes interest expense from our outstanding debt, and our asset base, which includes depreciation and amortization of our property and equipment; and



•

in presentations to the members of our board to enable our board to have the same consistent basis for measuring operating performance used by management.

43

The following table provides a reconciliation of net income to EBITDA:

	Fiscal Year										Fiscal Quarter
											(Unaudited)
	1999		2000		2001		2002		2003		2003 1Q		2004 1Q
	(in thousands, except unit and per share data)
Net income adjusted for pro forma provision for income taxes	$	2,833	$	4,279	$	5,153	$	11,521	$	15,423	$	3,532	$	5,202
Provision for income taxes		1,546		2,149		2,826		6,420		8,790		2,013		2,851
Interest expense		1,654		2,546		3,649		4,212		4,350		974		1,027
Depreciation and amortization		2,042		3,150		5,022		6,876		8,562		2,029		2,349
EBITDA	$	8,075	$	12,124	$	16,650	$	29,029	$	37,125	$	8,548	$	11,429

(7)

EBITDA includes rent expense of $2.0 million, $3.4 million, $4.4 million, $5.1 million and $6.0 million for the years 1999, 2000, 2001, 2002 and 2003, respectively. For 2003 Q1 and 2004 Q1, EBITDA includes rent expense of $1.4 million and $1.6 million, respectively.

44

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Company

        Texas Roadhouse is a growing, moderately priced, full-service restaurant chain. Our founder and chairman, W. Kent Taylor, started the business in 1993. Our mission statement is "Legendary Food, Legendary Service." Our operating strategy is designed to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. As of March 30, 2004, 165 Texas Roadhouse restaurants were operating in 32 states. We owned and operated 89 restaurants in 24 states, and franchised and licensed an additional 76 restaurants in 18 states.

        The first Texas Roadhouse restaurant opened in Clarksville, Indiana in February 1993. As of March 30, 2004, we had opened 168 Texas Roadhouse restaurants. Of those, only three had closed, all of which were opened in 1994 before we developed our prototype restaurant and changed our site analysis and selection process. As of March 30, 2004, 165 Texas Roadhouse restaurants were in existence including:

•

89 "company restaurants," of which 58 were wholly-owned and 31 were majority-owned or controlled by us. The results of operations of company restaurants are included in our combined operating results. The portion of income attributable to minority interests in company restaurants that are not wholly-owned is reflected in the line item entitled "Minority interest" in our combined statements of income.



•

76 "franchise restaurants," of which 72 were franchise restaurants and four were license restaurants. We have a 10.0% ownership interest in two franchise restaurants, a 5.0% ownership interest in six franchise restaurants, and a 1.0% ownership in one franchise restaurant. The income derived from our minority interests in these franchise restaurants is reported in the line item entitled "Equity income from investments in unconsolidated subsidiaries" in our combined statements of income. Additionally, we provide various management services to ten franchise restaurants.

        Pursuant to contractual arrangements, we have the right, upon becoming a public company, to acquire at pre-determined valuation formulas (i) the remaining equity interests in all 31 of our majority-owned or controlled company restaurants and (ii) 49 of the franchise restaurants. In connection with this offering, we are exercising this buyout right with respect to all 31 of such company restaurants and one such franchise restaurant.

Presentation of Financial and Operating Data

        We operated through 2001 on a fiscal year, which ended on the last Sunday in December. Beginning with fiscal year 2002, for operational reasons, we changed our fiscal year end to the last Tuesday in December. This change resulted in fiscal year 2002 consisting of 52 weeks and two days as compared to fiscal years 2001 and 2003, both of which were 52 weeks in length. The extra two days in 2002 were not significant to our results of operations. Our quarters are 13 weeks in length.

        We conducted the Texas Roadhouse restaurant business through:

•

Texas Roadhouse Holdings LLC and its wholly-owned and majority-owned restaurants;



•

Texas Roadhouse Development Corporation, which holds the rights to franchise Texas Roadhouse restaurants;



•

Texas Roadhouse Management Corp., which provides management services to Texas Roadhouse Holdings LLC, Texas Roadhouse Development Corporation and certain license and franchise restaurants;



•

WKT Restaurant Corp., the managing member of Texas Roadhouse Holdings LLC; and

45

•

certain controlled franchise restaurants,

all of which were entities under the common control of W. Kent Taylor, our founder and chairman. Our combined historical financial statements and financial data of our company reflect the combined operations and financial position of Texas Roadhouse Holdings LLC and the above affiliated entities.

        Before the completion of this offering, we will have undertaken the following transactions that will result in all of our operations being combined under our new holdings company, Texas Roadhouse, Inc.:

•

WKT Restaurant Corp., which owns the right to receive a 1% distribution on all sales of company and license Texas Roadhouse restaurants, will have merged into Texas Roadhouse, Inc., with W. Kent Taylor, as the sole stockholder of, WKT Restaurant Corp., receiving 2,217,000 shares of Class B common stock in exchange for his WKT shares;



•

Texas Roadhouse Holdings LLC and Texas Roadhouse Management Corp. will become wholly-owned subsidiaries of Texas Roadhouse, Inc., with the equity holders of these entities receiving 15,750,256 shares of Class A common stock; and



•

Texas Roadhouse Development Corporation will become a wholly-owned subsidiary of Texas Roadhouse, Inc., with W. Kent Taylor receiving 1,477,500 shares of Class A common stock and the remaining equity holders receiving 492,500 shares of Class A common stock.

        In addition, we will acquire all of the equity interests in one franchise restaurant in exchange for 121,783 shares of Class A common stock and the remaining equity interests in all 31 of our majority-owned or controlled company restaurants in exchange for 2,548,699 shares of Class A common stock of which W. Kent Taylor will receive 564,436 shares and the remaining equity holders will receive 1,984,263 shares. As a result of all of these transactions, immediately before the completion of this offering:

•

20,390,738 shares of Class A common stock and 2,217,000 shares of Class B common stock will be outstanding (assuming an initial offering price of $            per share and excluding any option exercises since March 30, 2004) and



•

our company will have a total of 90 wholly-owned company restaurants and there will be 75 franchisee restaurants, excluding restaurants which open after March 30, 2004.

        None of the parties to the above transactions will receive cash in exchange for their interests in the respective entities. However, as described below under "Use of Proceeds," cash distributions will be made to the equity holders of the Texas Roadhouse Holdings LLC relating to its income for periods prior to the effective date of our corporate reorganization.

        Going forward, these transactions will have the following effect on our financial position and results of operations:

•

first, unlike Texas Roadhouse Holdings LLC, Texas Roadhouse, Inc., as a C corporation, will be subject to state and federal income tax;



•

second, upon becoming a "C" corporation, we will record a cumulative net deferred tax liability and a corresponding charge to our provision for income taxes of approximately $5.2 million which is not reflected in the pro forma combined financial data set forth elsewhere in this prospectus;



•

third, as a result of acquiring all of the remaining interests in our majority-owned or controlled restaurants, all of our 90 company restaurants will be wholly-owned by us, which will eliminate the provision for minority interest in our financial statements.

46

Long-Term Strategies to Grow Earnings Per Share

        Our long-term strategies with respect to increasing net income and earnings per share include the following:

        Expanding Our Restaurant Base.    We will continue to evaluate opportunities to develop Texas Roadhouse restaurants in existing and new markets. We will remain focused primarily on mid-sized markets where we believe there exists a significant demand for our restaurants because of population size, income levels and the presence of shopping and entertainment centers and a significant employment base. Restaurants that we owned and operated for the full 6 months before the beginning of 2003 generated average unit volumes of $3.4 million for 2003. Our average cash investment to develop and open a new restaurant, including the cost of land and pre-opening expenses, is $2.5 million to $3.0 million. Our ability to expand our restaurant base is influenced by factors beyond our control and therefore we may not be able to achieve our anticipated growth. See "Risk Factors—Risks Related to Our Business."

        Improving Restaurant Level Profitability.    We plan to increase restaurant level profitability through a combination of increased comparable restaurant sales and operating cost management.

        Leveraging Our Scalable Infrastructure.    Over the past several years, we have made significant investments in our infrastructure, including information systems, real estate, human resources, legal, marketing and operations. As a result, we believe that our general and administrative costs will increase at a slower growth rate than our revenue.

Key Operating Personnel

        Key personnel who have a significant impact on the performance of our restaurants include managing and market partners. Each company restaurant has one managing partner who serves as the general manager. Market partners provide supervisory services to up to 14 managing partners and their respective management teams. Market partners also assist with our site selection process and recruitment of new management teams. The managing partner of each company restaurant and their corresponding market partners are required, as a condition of employment, to sign a multi-year employment agreement. The annual compensation of our managing and market partners includes a base salary plus a percentage of the pre-tax net income of the restaurant(s) they operate or supervise. In 2003, the average annual bonus as a percentage of total compensation for managing and market partners was 54% and 75%, respectively. Managing and market partners are eligible to participate in our stock option plan and are required to make deposits of $25,000 and $50,000, respectively towards the exercise price of such options.

Key Measures We Use To Evaluate Our Company

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

        Number of Restaurant Openings.    Number of restaurant openings reflects the number of restaurants opened during a particular fiscal period. For company restaurant openings we incur pre-opening costs, which are defined below, before the restaurant opening. Typically new restaurants open with an initial start-up period of higher than normalized sales volumes, which decrease to a steady level approximately three to six months after opening. However, although sales volumes are generally higher, so are initial costs, resulting in restaurant operating margins that are generally lower during the start-up period of operation and increase to a steady level approximately three to six months after opening.

        Comparable Restaurant Sales Growth.    Comparable restaurant sales growth reflects the change in year-over-year sales for the comparable restaurant base. We define the comparable restaurant base to include those restaurants open for a full six months before the beginning of the earlier fiscal period.

47

Comparable restaurant sales growth can be generated by an increase in guest traffic counts or by increases in the per person average check amount. Menu price changes and the mix of menu items sold can affect the per person average check amount.

        Average Unit Volume.    Average unit volume represents the average annual restaurant sales for all company restaurants open for a full six months before the beginning of the period measured. Growth in average unit volumes in excess of comparable restaurant sales growth is generally an indication that newer restaurants are operating with sales levels in excess of the system average. Conversely, growth in average unit volumes less than growth in comparable restaurant sales growth is generally an indication that newer restaurants are operating with sales levels lower than the system average.

        Net Income Margin.    Net income margin represents net income as a percentage of revenue.

        Store Weeks.    Store weeks represent the number of weeks that our company restaurants were open during the year.

        Per Person Average Check.    Per person average check represents restaurant sales divided by the number of guests served. We consider each sale of an entree to be a single guest served.

Other Key Definitions

        Restaurant Sales.    Restaurant sales include gross food and beverage sales, net of promotions and discounts.

        Franchise Royalties and Fees.    Franchisees typically pay a $40,000 initial franchise fee for each new restaurant. Franchise royalties consist of royalties in the amount of 2.0% to 4.0% of gross sales paid to us by our franchisees.

        Restaurant Cost of Sales.    Restaurant cost of sales consists of food and beverage costs.

        Restaurant Labor Expenses.    Restaurant labor expenses include all direct and indirect labor costs incurred in operations except for profit sharing incentive compensation expenses earned by our managing and market partners. These profit sharing expenses are reflected in restaurant other operating expenses.

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

        Restaurant Other Operating Expenses.    Restaurant other operating expenses consist of all other restaurant-level operating costs, the major components of which are utilities, supplies, advertising, repair and maintenance and other expenses. Profit sharing allocations to market partners and managing partners are also included in restaurant other operating expenses.

        Restaurant Pre-opening Expenses.    Restaurant pre-opening expenses, which are charged to operations as incurred, consist of expenses incurred before the opening of a new restaurant and are comprised principally of training and opening team salaries, travel expenses, and food, beverage and other initial supplies and expenses.

        General and Administrative Expenses.    General and administrative expenses ("G&A") is comprised of expenses associated with corporate and administrative functions that support development and restaurant operations and provide an infrastructure to support future growth. Supervision and accounting fees received from certain franchise restaurants and license restaurants are offset against general and administrative expenses.

        Depreciation and Amortization Expenses.    Depreciation and amortization expenses ("D&A") includes the depreciation of fixed assets and, for 2001 only, the amortization of goodwill associated with

48

the acquisition of the ownership interests in the three original restaurants. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, issued by the Financial Accounting Standards Board in July 2001, we ceased amortizing our goodwill as of the beginning of 2002. We perform periodic assessments of whether our goodwill is impaired and make an earnings charge only if such impairment exists.

        Interest Expense, Net.    Interest expense includes the cost of our debt obligations including the amortization of loan fees.

        Minority Interest.    Our combined subsidiaries at December 30, 2003 included 31 majority-owned or controlled restaurants and Texas Roadhouse Development Corporation. Minority interest represents the portion of income attributable to the other owners of the majority-owned or controlled restaurants and Texas Roadhouse Development Corporation.

        Equity Income from Unconsolidated Affiliates.    We own a 10.0% equity interest in two franchise restaurants, a 5.0% interest in six franchise restaurants, and a 1.0% equity interest in one franchise restaurant. Equity income from unconsolidated affiliates represents our percentage share of net income earned by these unconsolidated affiliates.

Results of Operations

				Fiscal Year													Fiscal Quarter
				2001				2002				2003					2003 Q1				2004 Q1
				$		%		$		%		$			%		$		%		$		%
				(in thousands)
Combined Statements of Income:
Revenue:
	Restaurant sales			$	154,359	96.5	%	$	226,756	97.4	%	$	279,519		97.6	%	$	65,502	97.6	%	$	81,893	97.6	%
	Franchise royalties and fees				5,553	3.5			6,080	2.6			6,934		2.4			1,579	2.4			2,005	2.4
			Total revenue	$	159,912	100.0	%	$	232,836	100.0	%	$	286,453		100.0	%		67,081	100.00	%		83,898	100.00	%
Costs and expenses:
	(As a percentage of restaurant sales)
	Restaurant operating costs:
		Cost of sales			53,342	34.6			74,351	32.8			91,904		32.9			21,233	32.4	%		28,173	34.4	%
		Labor			43,607	28.3			64,506	28.4			78,070		27.9			18,342	28.0			22,275	27.2
		Rent			4,410	2.9			5,125	2.3			6,005		2.1			1,429	2.2			1,623	2.0
		Other operating			24,379	15.8			36,237	16.0			47,382		17.0			10,606	16.2			13,334	16.3
	(As a percentage of total revenue)
	Pre-opening				3,640	2.3			4,808	2.1			2,571		0.9			657	1.0			896	1.1
	Depreciation and amortization				5,022	3.1			6,876	3.0			8,562		3.0			2,029	3.0			2,349	2.8
	General and administrative				11,135	7.0			13,633	5.9			16,631		5.8			4,499	6.7			4,253	5.1
			Total costs and expenses	$	145,535	91.0	%	$	205,536	88.3	%	$	251,125		87.7	%		58,795	87.6	%		72,903	86.9	%
Income from operations					14,377	9.0			27,300	11.7			35,328		12.3			8,286	12.4			10,995	13.1
Interest expense, net					3,649	(2.3	)		4,212	(1.8	)		4,350		(1.5	)		974	1.5			1,027	1.2
Minority interest					2,899	(1.8	)		5,168	(2.2	)		6,704		(2.3	%)		1,773	2.6			1,959	2.3
Equity income (loss) from investments in unconsolidated affiliates					25	0.0			21	0.0			(61	)	0.0			6	0.0			44	0.0
Other income					125	0.1			—	0.0			—		0.0			—	0.0			—	0.0
Net income				$	7,979	5.0	%	$	17,941	7.7	%	$	24,213		8.5	%	$	5,545	8.3	%	$	8,053	9.6	%

49

Restaurant Unit Activity

	Company		Franchise		Total
Balance at December 31, 2000	44		48		92
Openings	13		15		28
Acquisitions (Dispositions)	(1	)	1		—
Closures	—		—		—
Balance at December 30, 2001	56		64		120
Openings	20		2		22
Acquisitions (Dispositions)	1		(1	)	—
Closures	—		—		—
Balance at December 31, 2002	77		65		142
Openings	10		10		20
Acquisitions (Dispositions)	—		—		—
Closures	—		—		—
Balance at December 30, 2003	87		75		162
Openings	2		1		3
Acquisitions (Dispositions)	—		—		—
Closures	—		—		—
Balance at March 30, 2004	89		76		165

2004 Q1 (13 weeks) Compared to 2003 Q1 (13 weeks)

        Restaurant Sales.    Restaurant sales increased by 25.0% in first quarter 2004 as compared to first quarter 2003. This increase was primarily attributable to the opening of new restaurants and comparable restaurant sales growth. The following table summarizes additional factors that influenced the changes in restaurant sales at company restaurants for the first quarters of 2004 and 2003.

		2003 Q1			2004 Q1
Company Restaurants
	Store Weeks		611			871
	Comparable restaurant sales growth		0.7	%		10.4	%
	Average unit volumes (in thousands)	$	840		$	930
	Average per person check	$	13.65		$	13.48

        Franchise Royalties and Fees.    Franchise royalties and fees increased by $426,000, or by 27.0%, from first quarter 2003 to first quarter 2004. This increase was primarily attributable to the opening of new franchise restaurants and comparable restaurant sales growth. Franchise restaurant count activity is shown in the Restaurant Unit Activity table.

        Restaurant Cost of Sales.    Restaurant cost of sales increased as a percentage of restaurant sales to 34.4% in first quarter 2004 from 32.4% in first quarter 2003. This increase was primarily due to the higher cost of beef and pork ribs.

        Restaurant Labor Expenses.    Restaurant labor expenses, as a percentage of restaurant sales, decreased to 27.2% in first quarter 2004 from 28.0% in first quarter 2003. The percentage of sales benefit generated from comparable restaurant sales growth more than offset modest wage rate inflation.

        Restaurant Rent Expense.    Restaurant rent expense, as a percentage of restaurant sales, decreased to 2.0% in first quarter 2004 from 2.2% in first quarter 2003. During 2003, a higher percentage of our

50

restaurants, versus what we have done historically, were developed on owned versus leased properties. Additionally, this decrease was due to the benefit generated from comparable restaurant sales growth.

        Restaurant Other Operating Expenses.    Restaurant operating expenses, as a percentage of restaurant sales, increased to 16.3% in first quarter 2004 from 16.2% in same period of 2003. Increased spending on supplies and repair and maintenance were the primary drivers of this increase.

        Restaurant Pre-opening Expenses.    Pre-opening expenses in first quarter 2004 increased to $0.9 million from $0.7 million in first quarter 2003. While three restaurants opened in first quarter 2003 compared to two restaurants in the first quarter of 2004, more restaurants were under construction in the first quarter of 2004, resulting in higher pre-opening costs from restaurants under construction. We generally begin incurring pre-opening expenses four months before the opening of a restaurant.

        Depreciation.    Depreciation, as a percentage of revenue, declined to 2.9% in the first quarter of 2004 from 3.0% in the first quarter of 2003. The decrease was due primarily to the percentage of revenue benefit generated from comparable restaurant sales growth.

        General and Administrative Expenses.    G&A expenses decreased in first quarter 2004 to $4.3 million (5.1% of revenue) from $4.5 million (6.7% of revenue) in first quarter 2003. This decrease was due to the timing of our annual conference. The conference occurred in the first quarter of 2003 versus the second quarter of 2004. Excluding the 2003 conference expense of $0.8 million, G&A expenses increased in first quarter 2004 by $0.6 million. This increase was primarily due to infrastructure additions including executive, supervisory, operational and training personnel put into place to accommodate our growth plans.

        Interest Expense, Net.    Interest expense increased in the first quarter 2004 to $1.0 million from $974,000 in first quarter 2003. The increase was due to additional debt incurred for new restaurant openings that was partially offset by the decrease in the average interest rates charged against our outstanding borrowings.

        Minority Interest.    The minority interest deducted from income in first quarter 2004 increased to $2.0 million from $1.8 million in first quarter 2003. The increase was due to improved operating results from the 31 majority-owned or controlled consolidated company restaurants.

        Equity Income from Unconsolidated Affiliates.    In first quarter 2004, we reported income of $44,000 from unconsolidated affiliates compared to income of $6,000 reported in first quarter 2003. This increase was due to seven additional franchise restaurants which were opened after first quarter 2003.

2003 (52 weeks) Compared to 2002 (52 weeks) and 2002 (52 weeks) Compared to 2001 (52 weeks)

        Restaurant Sales.    Restaurant sales increased by 23.3% in 2003 as compared to 2002 and by 46.9% in 2002 as compared to 2001. The increases in 2003 and 2002 were primarily attributable to the opening of new restaurants. The following table summarizes additional factors that influenced the changes in restaurant sales at company restaurants for 2003 and 2002.

		2001			2002			2003
Company Restaurants
	Store weeks		2,490			3,528			4,234
	Comparable restaurant sales growth		1.5	%		3.7	%		3.4	%
	Average unit volumes (in thousands)	$	3,313		$	3,270		$	3,401
	Average per person check	$	12.46		$	13.05		$	13.53

        Franchise Royalties and Fees.    Franchise royalties and fees increased by $854,000, or by 14.0%, in 2003 as compared to 2002. This increase was primarily attributable to the opening of new franchise restaurants. Franchise restaurant count activity is shown in the Restaurant Unit Activity table. Royalties

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and fees increased by $527,000, or by 9.5%, in 2002 as compared to 2001. This increase was primarily attributable to the opening of new restaurants and comparable restaurant sales growth.

        Restaurant Cost of Sales.    Restaurant cost of sales increased slightly as a percentage of restaurant sales to 32.9% in 2003 from 32.8% in 2002. This increase was primarily due to the higher cost of pork ribs. Restaurant cost of sales decreased as a percentage of restaurant sales to 32.8% in 2002 from 34.6% in 2001. This decrease was primarily due to the lower cost of beef and chicken. Although the market prices of those items actually increased during 2002, we negotiated fixed prices with our vendors for those items in late 2001 at a time when the market prices were considerably lower.

        Restaurant Labor Expenses.    Restaurant labor expenses, as a percentage of restaurant sales, decreased from 28.4% in 2002 to 27.9% in 2003. The percentage of sales benefit generated from comparable sales growth more than offset modest wage rate inflation. Restaurant labor expenses, as a percentage of sales, remained primarily stable between 2001 and 2002.

        Restaurant Rent Expense.    Restaurant rent expense, as a percentage of restaurant sales, decreased to 2.1% in 2003 from 2.3% in 2002 and from 2.9% in 2001. During 2002 and 2003, a higher percentage of our restaurants, versus what we have done historically, were developed on owned versus leased properties.

        Restaurant Other Operating Expenses.    Restaurant other operating expenses increased as a percentage of restaurant sales to 17.0% in 2003 from 16.0% in 2002. Increased spending on equipment leases, supplies, and repair and maintenance combined with inflation in utilities, particularly natural gas, were the primary drivers of this increase. Restaurant other operating expenses increased as a percentage of restaurant sales to 16.0% in 2002 from 15.8% in 2001. Increased spending on equipment leases was the primary driver.

        Restaurant Pre-Opening Expenses.    Restaurant pre-opening expenses in 2003 decreased to $2.6 million from $4.8 million in 2002. This decrease was due to the opening of fewer restaurants in 2003 as compared to 2002. Pre-opening expenses in 2002 increased to $4.8 million from $3.6 million in 2001. This increase was due to opening additional restaurants in 2002 as compared to 2001.

        Depreciation and Amortization Expenses.    D&A, as a percentage of revenue, remained constant at 3.0% for 2003 as compared to 2002. D&A, as a percentage of revenue, fell slightly to 3.0% in 2002 versus 3.1% in 2001.

        General and Administrative Expenses.    G&A expenses increased in 2003 to $16.6 million (5.8% of revenue) from $13.6 million (5.9% of revenue) in 2002. G&A expenses increased in 2002 to $13.6 million (5.9% of revenue) from $11.1 million (7.0% of revenue) in 2001. For both years, the cost increases were primarily due to infrastructure additions including executive, supervisory, operational, systems, and training personnel put into place during the last two fiscal years to accommodate our growth plans.

        Before this offering, some of our executive officers earned compensation at rates significantly below market levels and we paid no salary or bonus compensation to our chairman. These executives were compensated through the payment of certain royalties and distributions earned on their respective investments in our restaurants. With the completion of this offering, we will purchase these royalty rights and the equity interests of a portion of restaurant investments held by our executive officers. With the completion of this offering, our annual G&A will be approximately $3.0 to $3.5 million higher than it would have otherwise been, reflecting increases in executive compensation and other expenses, including public company compliance, audit, director and officers insurance coverage and director compensation expenses.

        Interest Expense, Net.    Interest expense increased slightly in 2003 to $4.4 million from $4.2 million in 2002. In July 2003 we completed a $100.0 million, three year credit facility that enabled us to

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refinance 80.0% of our existing debt at much lower rates of interest and provide us with roughly $50.0 million of available financing to fund the development of new restaurants. Interest expense included the write-off of approximately $332,000 of loan fees related to the refinanced debt. This increase was partially offset by a reduction in interest rates on approximately $47.6 million of the refinanced debt. We have been able to borrow at steadily decreasing interest rates due both to the favorable interest environment and to our steadily improving earnings and resulting creditworthiness. The weighted average interest rate for our installment loans decreased from 5.88% at December 31, 2002 to 4.59% at December 30, 2003. Interest expense increased in 2002 to $4.2 million from $3.6 million in 2001. The increase was due to $14.8 million in additional debt. The increase in interest expense attributable to new debt was partially offset by a reduction in interest rates on approximately $11.2 million of debt which was refinanced during the year. The weighted average interest rate for our installment loans decreased from 8.08% at December 30, 2001 to 5.88% at December 31, 2002. With the completion of this offering, our interest expense will significantly decrease as we pay down a substantial portion of our outstanding debt.

        Minority Interest.    The minority interest deducted from income in 2003 increased to $6.7 million from $5.2 million in 2002. The increase was primarily due to an increase in majority-owned restaurant store weeks resulting from the addition of seven majority-owned or controlled restaurants which opened in 2002. The minority interest deducted from income in 2002 increased to $5.2 million from $2.9 million in 2001. The increase was primarily due to an increase in majority-owned or controlled restaurant store weeks resulting from the addition of seven majority-owned or controlled restaurants, which opened in 2001.

        Equity Income from Unconsolidated Affiliates.    In 2003, we reported a loss of $61,000 from unconsolidated affiliates compared to income of $21,000 reported in 2002. In 2003, seven franchise restaurants opened in which we owned either a 5.0% or 10.0% interest. Primarily due to pre-opening expenses, new restaurants take three to six months to become profitable; hence, these new restaurants produced net losses in 2003. While we expect to add a few franchise restaurants in 2004 in which we will have a small ownership interest, we expect to report income for the equity income from unconsolidated affiliates line in 2004 as the aforementioned 2003 restaurant openings report profits in 2004.

        Other Income.    During 2001, we sold a 50.0% interest in a majority-owned restaurant to the restaurant's minority owners.

        Net Income Margin.    Net income margin increased from 7.7% in 2002 to 8.5% in 2003. Lower pre-opening expenses were the key driver of this increase. Net income margin increased from 5.0% in 2001 to 7.7% in 2002. Increased restaurant operating margin and G&A leverage were the key components of this increase.

Liquidity and Capital Resources

        The following table presents a summary of our net cash provided by operating, investing and financing activities:

	Fiscal Year									Fiscal Quarter
	December 30, 2001			December 31, 2002			December 30, 2003			April 1, 2003			March 30, 2004
	(in thousands)
Net cash provided by operating activities	$	22,502		$	31,718		$	42,158		$	2,498		$	12,178
Net cash used in investing activities		(35,769	)		(32,764	)		(26,524	)		(4,589	)		(8,606	)
Net cash provided by (used in) financing activities		9,894			4,945			(17,722	)		(2,497	)		(1,610	)
Net increase (decrease) in cash	$	(3,373	)	$	3,899		$	(2,088	)	$	(4,588	)	$	1,962

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

        We require capital principally for the development of new company restaurants and the refurbishment of existing restaurants. Capital expenditures totaled approximately $26.9 million, $34.7 million and $35.9 million for the years ended December 30, 2003, December 31, 2002, and December 30, 2001, respectively. We either lease our restaurant site locations under operating leases for periods of five to 30 years (including renewal periods) or purchase the land where it is cost effective. As of March 30, 2004, there were 44 restaurants developed on land which we owned.

        We have also required cash to pay distributions to our equity holders. Our predecessor companies paid aggregate distributions to their equity holders in 2002 and 2003 of $13.9 million and $21.7 million, respectively. These predecessor companies will continue to make distributions in respect of their income from December 31, 2003 through the effective date of their combination under Texas Roadhouse, Inc. Through June 29, 2004, the amount of these additional distributions would have been $             million.

        Additionally, immediately before the completion of this offering, we will make a distribution of approximately $28.2 million to those of our existing stockholders who were formerly members of Texas Roadhouse Holdings LLC, representing distributions which have been declared, but not paid, in respect of the income of Texas Roadhouse Holdings LLC through March 30, 2004. We will make additional distributions in respect of its income from March 31, 2004 to the effective date of the combination of our operations under Texas Roadhouse, Inc. which will occur immediately before the completion of this offering. Through June 29, 2004, the amount of these additional distributions would have been $             million.

        Upon the effective date of the combination, we intend to retain our future earnings, if any, to finance the future development and operation of our business. Accordingly, we do not anticipate paying any dividends on our common stock in the foreseeable future.

        In 2003, we used cash on hand, borrowings under our credit facility and net cash provided by operating activities to fund capital expenditures and distributions. In addition, we were able to reduce our debt by approximately $1.2 million in 2003 as compared to 2002.

        In July 2003, we completed a $100.0 million, three year credit facility that enabled us to refinance 80.0% of our existing debt at much lower rates of interest and provide us with roughly $50.0 million of available financing to fund the development of new restaurants. The terms of the facility require us to pay interest on outstanding borrowings at LIBOR plus a margin of 1.50% to 2.75% (depending on our leverage ratio) and pay a commitment fee of 0.25% per year on any unused portion of the facility. Our facility prohibits us from incurring additional debt outside the facility except for equipment financing up to $3.0 million, unsecured debt up to $500,000 and up to $15.0 million of debt incurred by majority-owned companies formed to own new restaurants. Additionally, the lenders' obligations to extend credit under the facility depends on our maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 1.10 to 1.00 and a maximum consolidated leverage ratio of 3.50 to 1.00 through June 29, 2004, 3.25 to 1.00 for the four quarters prior to June 28, 2005 and 3.00 to 1.00 for the four quarters prior to June 30, 2006. We have also entered into other loan agreements with other lenders to finance various restaurants which impose financial covenants. Our loan agreement for our Mesquite, Texas restaurant requires us to maintain a minimum consolidated fixed charge coverage ratio of 1.20 to 1.0. Our loan agreement with another lender for our Pasadena, Texas restaurant also requires a minimum consolidated fixed charge coverage ratio of 1.20 to 1.00. Our loan agreement with a third lender for our New Philadelphia, Ohio restaurant requires a minimum fixed charge coverage ratio of 1.30 to 1.00. Finally, we have multiple loan agreements with a fourth lender for our restaurants

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located in Peoria, Arizona; Charlotte, North Carolina; Wilmington, North Carolina; Richmond, Virginia; and Cheyenne, Wyoming, each of which imposes a covenant to maintain a debt coverage ratio of 1.20 to 1.00. If we are unable to maintain these ratios, we would be unable to obtain additional financing from these lenders. Additionally, we would be in default of these loan agreements, which could result in a default under our existing credit facility, which in turn would limit our ability to secure additional funds under that facility. We are currently in compliance with all of our lenders' covenants. None of our other long-term loan agreements impose financial covenants or otherwise limit our ability to borrow.

        At December 30, 2003, we had $50.2 million of borrowings outstanding under our credit facility and $47.0 million of availability net of $1.4 million of outstanding letters of credit. In addition, we had various other notes payable totaling $14.1 million with interest rates ranging from 4.2% to 10.8%. Each of these notes relate to the financing of specific restaurants. Our total weighted average effective interest rate for 2003 was 4.6%. At March 30, 2004, our borrowings under our credit facility increased to $54.3 million, with $41.5 million of availability net of $1.4 million of outstanding letters of credit. Our various other notes payable decreased at March 30, 2004 to $14.0 million.

        In 2003, we entered into a fixed rate swap agreement for $31.2 million of the outstanding debt under our credit facility to limit the variability of a portion of our interest payments. This swap changes the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of this interest rate swap, we receive variable interest rate payments and make fixed interest rate payments, thereby creating the equivalent of fixed-rate debt. In connection with the completion of this offering, we expect to terminate this arrangement. Upon termination, any amounts recorded in accumulated other comprehensive income for the swap will be reclassified to interest expense. As of March 30, 2004, approximately $283,000 of unrealized loss on the swap was recorded in accumulated other comprehensive income.

        Our future capital requirements will primarily depend on the number of new restaurants we open and the timing of those openings within a given fiscal year. These requirements will include costs directly related to opening new restaurants and may also include costs necessary to ensure that our infrastructure is able to support a larger restaurant base. In 2004 and 2005, we expect our capital expenditures to be approximately $40.0 million to $50.0 million, and $50.0 million to $60.0 million, respectively, substantially all of which will relate to planned restaurant openings. We intend to satisfy our capital requirements over the next 18 months with cash on hand, net cash provided by operating activities and funds available under our credit facility.

        In June 2004, we accepted a commitment letter for a new $100.0 million five-year revolving credit facility which will replace our existing credit facility upon the completion of this offering. The terms of the new facility will require us to pay interest on outstanding borrowings at LIBOR plus a margin of 0.75% to 1.50% (depending on our leverage ratio) and to pay a commitment fee of 0.15% per year on any unused portion of the facility. Our ability to incur debt outside the facility will still be restricted, subject to some exceptions which are to be determined. The new facility will similarly impose financial covenants, including maintaining a minimum fixed charge coverage ratio of 1.50 to 1.00 and a maximum leverage ratio of 3.00 to 1.00. The lenders' obligation to extend credit under the new facility will depend upon our compliance with these covenants. The commitment of the lenders for the new facility is subject to the negotiation, execution and delivery of final loan documents.

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Contractual Obligations

        The following table summarizes the amount of payments due under specified contractual obligations as of December 30, 2003:

		Payments Due by Period
		Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
		(in thousands)
Long-term debt obligations		$	64,313	$	8,059	$	47,636	$	3,018	$	5,600
Capital lease obligations			1,716		305		473		234		704
Operating lease obligations			79,077		8,509		16,659		12,634		41,275
Capital obligations			22,602		22,602		—		—		—
	Total contractual obligations	$	167,708	$	39,475	$	64,768	$	15,886	$	47,579

        See Notes 3 and 6 to the combined financial statements for details of contractual obligations. Capital obligations represents the estimated cost of completing capital project commitments. There were no material changes in the amount of payments due under specified contractual obligations as of March 30, 2004.

Off-Balance Sheet Arrangements

        Except for operating leases (primarily restaurant leases), we do not have any off-balance sheet arrangements.

Guarantees

        We entered into real estate lease agreements for franchise restaurants located in Everett, MA and Longmont, CO prior to our granting franchise rights for those restaurants. We have subsequently assigned the leases to the franchisees, but we remain contingently liable if a franchisee defaults under the terms of a lease. The Longmont lease expires in May 2014 and the Everett lease expires in February 2018.

Recent Accounting Pronouncements

        See Note 2 in the accompanying combined financial statements.

Critical Accounting Policies and Estimates

        The above discussion and analysis of our financial condition and results of operations are based upon our combined financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. Our significant accounting policies are described in Note 2 to the accompanying combined financial statements. Critical accounting policies are those that we believe are most important to portraying our financial condition and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments or uncertainties regarding the application of these policies may result in materially different amounts being reported under different conditions or using different assumptions. We consider the following policies to be the most critical in understanding the judgments that are involved in preparing the combined financial statements.

        Impairment of Long-Lived Assets.    We evaluate the carrying value of individual restaurants for impairment annually or when events or circumstances indicate these assets might be impaired. In making these judgments, we consider the period of time since the restaurant was opened and the trend

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of operations and expectations for future sales growth. For a restaurant selected for review, we estimate the future estimated cash flows from operating the restaurant over its estimated useful life. In determining future cash flows, significant estimates are made by us with respect to future operating results of each restaurant. Our judgments and estimates related to the expected useful lives of long-lived assets are affected by factors such as changes in economic conditions and changes in operating performance. As we assess the ongoing expected cash flows and carrying amounts of our long-lived assets, these factors could cause us to realize a material impairment charge.

        If assets are determined to be impaired, we would measure the impairment charge by calculating the amount by which the asset carrying amount exceeds its fair value. The determination of asset fair value is also subject to significant judgment. If these assumptions change in the future, we may be required to record impairment charges for these assets.

        In our impairment evaluations for 2001, 2002, 2003 we concluded that no impairment charge was necessary. Additionally, in our most recent impairment analysis for long-lived assets, no additional impairment charge would have resulted even if there were a permanent 10.0% reduction in revenue in our restaurants.

        Goodwill.    The implied fair value of goodwill is determined by allocating the fair value of the reporting unit, which we consider to be at the restaurant level, in a manner similar to a purchase price allocation, in accordance with SFAS No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value. The determination of impairment consists of two steps. First, we determine the fair value of the reporting unit and compare it to its carrying amount. Fair value is determined based on discounted cash flows. Second, if the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of the goodwill.

        The most significant assumptions we use in this analysis are those made in estimating future cash flows. In estimating future cash flows, we use the assumptions from our strategic plan for items such as sales growth and operating costs. If our assumptions used in performing the impairment test prove inaccurate, the fair value of the restaurants may ultimately prove to be significantly lower, thereby causing the carrying value to exceed the fair value and indicating impairment has occurred. We concluded that no impairment charge was required for the years ended December 31, 2002 and December 30, 2003, as well as the quarter ended March 30, 2004.

        Insurance Reserves.    We self-insure a significant portion of expected losses under our workers compensation, general liability and property insurance programs. We purchase insurance for individual claims that exceed the amounts listed below:

Workers Compensation	$	250,000
General Liability	$	100,000
Property	$	50,000

        We record a liability for all unresolved claims and for an estimate of incurred but not reported claims at the anticipated cost to us based on estimates provided by a third party administrator and insurance company. Our estimated liability is not discounted and is based on a number of assumptions and factors regarding economic conditions, the frequency and severity of claims and claim development history and settlement practices. Because we began our self-insurance program in 2002, we rely on actuarial observations of historical claim development for the industry which we believe is representative of our history. In the future, if our experience is significantly different than the industry, we will adjust our reserve, and our future self-insurance expenses may rise. Our estimates since 2002

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have been accurate and no significant adjustment to the reserve has been made. Our assumptions are closely reviewed, monitored, and adjusted when warranted by changing circumstances.

Effects of Inflation

        We do not believe inflation has had a significant effect on our operations during the past several years. We generally have been able to substantially offset increases in our restaurant and operating costs resulting from inflation by altering our menu, increasing menu prices or making other adjustments.

Quantitative and Qualitative Disclosures About Market Risk

        We are exposed to market risk from changes in interest rates on debt and changes in commodity prices. Our exposure to interest rate fluctuations is limited to our outstanding bank debt. At December 30, 2003, outstanding borrowings under our revolving lines of credit bear interest at approximately 150 to 275 basis points (depending on our leverage ratios) over the 30, 60, 90 or 180 day London Interbank Offered Rate. The weighted average effective interest rate on the $50.2 million outstanding balance under these lines at December 30, 2003 was 3.7%. In addition, we had various other notes payable totaling $14.1 million with interest rates ranging from 4.2% to 10.8%. The weighted average effective interest rate on the $54.3 million outstanding balance under these lines at March 30, 2004 was 3.7%. Our various other notes payable totalling $14.0 million at March 30, 2004 had interest rates ranging from 4.2% to 10.8%. Each of these notes relate to the financing of specific restaurants. Our total weighted average effective interest rate for 2003 and 2004 Q1 was 4.6% and 4.5%, respectively.

        In 2003, we entered into a fixed rate swap agreement for $31.2 million of the outstanding debt under our credit facility to limit the variability of a portion of our interest payments. These swaps change the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the interest rate swaps, we receive variable interest rate payments and make fixed interest rate payments, thereby creating the equivalent of fixed-rate debt. In addition, approximately $8.0 million of the $14.1 million outstanding of notes payable are fixed rate notes. Hence, at March 30, 2004, approximately $25.1 million of our total debt outstanding was floating or variable. Should interest rates based on these borrowings increase by one percentage point, our estimated annual interest expense would increase by approximately $250,000 over the amounts reported for the year ended December 30, 2003.

        Many of the ingredients used in the products sold in our restaurants are commodities that are subject to unpredictable price volatility. Although we attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients, there are no established fixed price markets for certain commodities such as produce and cheese and we are subject to prevailing market conditions when purchasing those types of commodities. For commodities that are purchased under fixed price contracts, the prices are based on prevailing market prices at the time the contract is entered into and do not fluctuate during the contract period. We do not use financial instruments to hedge commodity prices because these purchase arrangements help control the ultimate cost paid. Extreme and/or long term increases in commodity prices could adversely affect our future results, especially if we are unable, primarily due to competitive reasons, to increase menu prices. Additionally, if there is a time lag between the increasing commodity prices and our ability to increase menu prices or, if we believe the commodity price increase to be short in duration and we choose not to pass on the cost increases, our short-term financial results could be negatively affected.

        We are subject to business risk as our beef supply is highly dependent upon four vendors. We currently purchase most of our beef from one of the largest beef suppliers in the country. If this vendor was unable to fulfill its obligations under its contracts, we may encounter supply shortages and incur higher costs to secure adequate supplies, any of which would harm our business.

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BUSINESS

General

        Texas Roadhouse is a growing, moderately priced, full-service restaurant chain. Our founder and chairman, W. Kent Taylor, started the business in 1993. Our mission statement is "Legendary Food, Legendary Service." Our operating strategy is designed to position each of our restaurants as the local hometown destination for a broad segment of consumers seeking high quality, affordable meals served with friendly, attentive service. As of March 30, 2004, 165 Texas Roadhouse restaurants were operating in 32 states. We owned and operated 89 restaurants in 24 states, and franchised and licensed an additional 76 restaurants in 18 states.

        We offer an assortment of specially seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. We also offer our guests a selection of ribs, fish, chicken and vegetable plates, and an assortment of hamburgers, salads and sandwiches. The majority of our entrees include two made-from-scratch side items, and we offer all our guests a free unlimited supply of roasted in-shell peanuts and made-from-scratch yeast rolls.

        We have successfully grown the total number of Texas Roadhouse company and franchise restaurants over the past five years from 67 restaurants in 1999 to 162 restaurants as of the end of 2003, representing a 24.7% compounded annual growth rate. Over the same period, our revenue increased from $71.0 million to $286.5 million, our income from operations increased from $7.1 million to $35.3 million, and our net income increased from $4.4 million to $24.2 million, representing compounded annual growth rates of 41.7%, 49.3% and 53.2%, respectively.

Restaurant Industry Overview

        According to the National Restaurant Association, or NRA, the restaurant industry represents approximately 4.0% of the United States' gross domestic product. The NRA forecasts that restaurant industry sales will continue to rise in 2004, reaching $440.1 billion. The NRA estimates that the industry today encompasses approximately 878,000 restaurants, and this number is expected to grow to over 1.0 million by 2010.

        The NRA also estimates that:

•

total sales in the restaurant industry for 2003 exceeded $420 billion, marking 12 consecutive years of growth;



•

sales in the full-service segment of the U.S. restaurant industry grew approximately 7.9% between 2001 and 2003, reaching over $150 billion in 2003; and



•

sales at full-service restaurants in the United States will increase approximately 4.6% in 2004 to $158 billion.

        Technomic, Inc., a national consulting and research firm, forecasts sales at U.S. full-service restaurants, such as Texas Roadhouse, to grow at a compounded annual rate of 5.5% from 2002 through 2007, compared to forecasted compounded annual growth of 5.0% for the total U.S. restaurant industry for the same period. According to Technomic, the varied menu category within the full-service restaurant segment of the U.S. restaurant industry is projected to grow at an 8.5% compounded annual growth rate from 2002 through 2007. In 2002, the full-service steak segment accounted for 7.5% of sales within the full-service category and 3.8% of sales within the total restaurant industry. Technomic estimates that this segment will grow at a compounded annual rate of 7.0% from 2002 through 2007.

        Within the consumer food industry, studies show that there has been a steady shift away from the consumption of "food-at-home" towards the purchase of "food-away-from-home" over the past

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50 years. According to the NRA, "food-away-from-home" is expected to represent in excess of 50.0% of all food purchases made by consumers by 2010.

        We believe that this growth in purchases of "food-away-from-home" is attributable to, among other things, the following demographic, economic and lifestyle trends:

•

the rise in the number of women in the workplace;



•

an increase in dual-income families;



•

the aging of the U.S. population; and



•

an increased willingness by consumers to pay for the convenience of meals prepared outside their homes.

        We believe these trends have contributed to an increased demand for full-service dining and that this demand will continue to increase.

Operating Strategy

        The operating strategy that underlies the growth of our concept is built on the following key components:

•

Offering high quality, freshly prepared food.    We place a great deal of emphasis on ensuring our guests receive high quality, freshly prepared food. We have developed proprietary recipes to provide consistency in quality and taste throughout all restaurants. We require that a management level employee inspect every entrée before it leaves the kitchen to confirm it matches the guest's order and meets our standards for quality, appearance and presentation. Finally, we employ a team of product coaches whose sole function is to provide continual, hands-on training and education to our kitchen staffs for the purpose of assuring uniform adherence to recipes, food preparation procedures, food safety standards, food appearance, freshness and portion size.



•

Focusing on dinner.    In a high percentage of our restaurants, we limit our operating hours to dinner only during the weekdays. By focusing on dinner, our restaurant teams have to prepare for and manage only one shift per day during the week. We believe this allows our restaurant teams to offer higher quality, more consistent food and service to our guests. We believe the dinner focus provides a better "quality-of-life" for our management teams and, therefore, is a key ingredient in attracting and retaining talented and experienced management personnel. We also focus on keeping our table-to-server ratios low to allow our servers to truly focus on their guests and serve their needs in a personal, individualized manner.



•

Offering attractive price points.    We offer our food and beverages at moderate price points that are as low as or lower than those offered by our competitors. Within each menu category, we offer a choice of several price points with the goal of fulfilling each guest's budget and value expectations. For example, our steak entrees, which include the choice of two side items, range from $7.99 for our 6-ounce sirloin to $17.99 for our 18-ounce porterhouse. The per guest average check for the restaurants we owned and operated in 2003 was $13.53. Our per guest average check is highly influenced by our weekday dinner only focus.



•

Offering performance-based manager compensation.    We offer a performance-based compensation program to our restaurant managers and area managers, who are called "managing partners" and "market partners" respectively. Each of these partners earns a base salary plus a performance bonus, which represents a percentage of their respective restaurant's pre-tax net income. In 2003, performance bonuses represented 54% and 75% of the total cash compensation earned by managing and market partners respectively. By providing our partners with a

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significant stake in the success of our restaurants, we believe that we are able to attract and retain talented, experienced, and highly motivated managing and market partners.

•

Creating a fun and comfortable atmosphere.    We believe the atmosphere we establish in our restaurants is a key component for fostering repeat business. Our restaurants feature a rustic southwestern lodge décor accentuated with hand-painted murals, neon signs, and southwestern prints, rugs, and artifacts. Additionally, we offer jukeboxes, which continuously play upbeat country hits, and in-house entertainment such as line dancing and birthday celebrations.

Unit Prototype and Economics

        We designed our prototype Texas Roadhouse to provide a relaxed atmosphere and maximize restaurant sales. The Texas Roadhouse prototypical restaurant consists of a freestanding building with approximately 6,300 to 6,900 square feet of space constructed on sites of approximately 1.7 to 2.0 acres, with seating at approximately 56 tables for a total of 239 guests, including 15 bar seats, and parking for approximately 150 automobiles. Our current prototype is adaptable to in-line locations such as spaces within an enclosed mall or a shopping center.

        The total cash cost of developing the current prototype Texas Roadhouse restaurant in which we own the land is $2.5 to $3.0 million. This cost includes $600,000 to $1.0 million for land, $1.0 million to $1.1 million for building and site construction, approximately $630,000 for furniture, fixtures, signage and equipment, and approximately $240,000 for pre-opening costs. When we lease the land, the total cash cost of developing our prototype restaurant is between $1.9 million and $2.1 million. As of March 30, 2004, we owned 44 properties and leased 45 properties.

        Our average unit volume for 2003 was $3.4 million. The time required for a new restaurant to reach a steady level of cash flow is approximately three to six months.

Growth Strategy

        Our long-term strategies with respect to increasing net income and earnings per share include the following:

        Expanding Our Restaurant Base.    We target mid-sized trade areas that we believe include significant opportunities for potential guests because of population size, income levels, and the presence of shopping, entertainment centers and a significant employment base. We also target smaller markets where we believe the appeal of our concept, together with fewer competing casual dining restaurants, provides an attractive opportunity for success. We continually evaluate our market selection criteria and alter them when necessary to reflect new data acquired in conjunction with executing our growth strategy. We expect that approximately three-quarters of our growth in the next several years will be in markets where we have an existing market partner. The remainder will be in markets where we have yet to hire a market partner. Each year, for the next several years, we expect to hire one or two additional market partners. We typically develop one to two restaurants during the first year of a new market partner's employment with us.

        In 2004, we plan to open 15 to 17 additional company restaurants. All but two of these will be in markets where we have an existing market partner. We have either begun construction or have sites currently under contract for purchase or lease for all of these restaurants.

        We may, at our discretion, add franchise stores primarily with franchisees who have demonstrated prior success with the Texas Roadhouse or other restaurant concepts and in markets in which the franchisee demonstrates superior knowledge of the demographics and restaurant operating conditions. We believe that our concept and brand can support as many as 600 additional company or franchise restaurants throughout the United States.

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        Improving Restaurant Level Profitability.    We plan to increase restaurant level profitability through a combination of increased comparable restaurant sales and operating cost management.

        Leveraging Our Scalable Infrastructure.    Over the past several years, we have made significant investments in our infrastructure, including information systems, real estate, human resources, legal, marketing and operations. As a result, we believe that our general and administrative costs will increase at a slower growth rate than our revenue.

Site Selection

        We continue to develop and refine our site selection process. In analyzing each prospective site, management devotes significant time and resources to the evaluation of local market demographics, population density, household income levels and site-specific characteristics such as visibility, accessibility, traffic generators, proximity of other retail activities, traffic counts and parking. Our management works actively with real estate brokers in target markets to select high quality sites and to maintain and regularly update our database of potential sites. Management typically requires three to nine months to locate, approve and control a restaurant site and typically three to ten additional months to obtain necessary permits. Upon receipt of permits, it requires approximately four months to construct, equip and open a restaurant.

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Existing Restaurant Locations

        As of March 30, 2004, we had 89 company restaurants and 76 franchise restaurants in 32 states as shown in the chart below.

	Number of Restaurants
	Company	Franchise	Total
Arizona	3	—	3
California	—	1	1
Colorado	7	2	9
Delaware	1	—	1
Florida	1	5	6
Georgia	—	6	6
Idaho	2	—	2
Illinois	4	—	4
Indiana	3	14	17
Iowa	3	—	3
Kansas	1	—	1
Kentucky	4	4	8
Louisiana	2	—	2
Maryland	—	4	4
Massachusetts	3	1	4
Michigan	4	2	6
Missouri	—	1	1
Montana	—	1	1
New Hampshire	1	—	1
New York	1	—	1
North Carolina	8	—	8
Ohio	4	11	15
Oklahoma	3	—	3
Pennsylvania	5	4	9
South Carolina	—	6	6
Tennessee	—	8	8
Texas	21	3	24
Utah	1	—	1
Virginia	4	—	4
West Virginia	—	2	2
Wisconsin	2	1	3
Wyoming	1	—	1
Total	89	76	165

Food

        Menu.    Texas Roadhouse restaurants offer a wide variety of menu items at attractive prices that are designed to appeal to a broad range of consumer tastes. Our dinner entrée prices range from $6.99 to $17.99. We offer a broad assortment of specially seasoned and aged steaks, including 6 and 8 oz. Filets; 6, 8, 11 and 16 oz. Sirloins; and 10 and 12 oz. Rib-eyes, hand-cut daily on the premises and cooked over open gas-fired grills. We also offer our guests a selection of fish, chicken and vegetable plates, and an assortment of hamburgers, salads and sandwiches. Most entrée prices include made-from-scratch yeast rolls and two of the following made from scratch sides: baked potato, sweet

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potato, steak fries, mashed potatoes, house or Caesar salad, green beans, chili, seasoned rice, baked beans and steamed vegetables. Our menu allows guests to customize their meals by ordering steaks that are "smothered" either in cheese, onions, gravy or mushrooms and baked potatoes "loaded" with cheese and bacon. Other menu items include specialty appetizers such as the "Cactus Blossom," "Rib Appetizer," and "Chicken Critters" (chicken tenders). We also provide a "12 & Under" menu for children that includes a sirloin steak, Chicken Critters, cheeseburger, hot dog and macaroni and cheese, all served with a beverage for under $4.00.

        Almost all of our restaurants feature a full bar that offers an extensive selection of draft and bottled beer. Managing partners are encouraged to tailor their beer selection to include regional brands and microbrews. We serve a selection of major brands of liquor and wine, as well as frozen margaritas. Alcoholic beverages accounted for 12.4% of restaurant sales at Texas Roadhouse in 2003.

        We have maintained a consistent menu over time, with a selection of approximately 60 menu items. We continually review our menu to consider enhancements to existing menu items or the introduction of new items. We change our menu only after guest feedback and an extensive study of the operational and economic implications. To maintain our high levels of food quality and service, we generally remove one menu item for every new menu item introduced, so as to facilitate our ability to execute high quality meals on a focused range of menu items.

        Food Quality.    We are committed to serving a varied menu of high-quality, great tasting food items, with an emphasis on freshness. We have developed proprietary recipes to ensure consistency in quality and taste throughout all restaurants and provide a unique flavor experience to our guests. At each restaurant, a fully trained meat cutter hand cuts our steaks and other restaurant team members prepare all side items and yeast rolls from scratch in the restaurants daily. We assign individual kitchen employees to the preparation of designated food items in order to focus on quality, consistency, and speed. Additionally, every entrée is inspected by a manager before it leaves the kitchen to ensure it matches the guest's order and meets our standards for quality, appearance and presentation.

        We employ a team of product coaches whose sole function is to provide continual, hands-on training and education to the kitchen staffs in all Texas Roadhouse restaurants for the purpose of assuring uniform adherence to recipes, food preparation procedures, food safety standards, food appearance, freshness and portion size. The team currently consists of 20 product coaches, each handling an average of nine restaurants. We expect to maintain a comparable ratio of product coaches to restaurants as we continue to grow.

        Purchasing.    Our purchasing philosophy is designed to consistently supply fresh, quality products to the restaurants at competitive prices while maximizing operating efficiencies. We negotiate directly with suppliers for substantially all food and beverage products to ensure consistent quality and freshness and obtain competitive prices. Certain products, such as dairy products and selected produce, are purchased locally to assure freshness.

        Food and supplies are ordered by, and shipped directly to, the restaurants, as we do not maintain a central product warehouse or commissary. We strive to qualify more than one supplier for all key food items and believe that beef of comparable quality as well as all other essential food and beverage products are available, upon short notice, from alternative qualified suppliers.

        Food Safety.    Food safety is of utmost importance to Texas Roadhouse. We currently employ several programs to ensure adherence to proper food preparation procedures and food safety standards. Texas Roadhouse has an established Quality Assurance department whose function is to develop, enforce and maintain programs designed to ensure strict adherence to food safety guidelines. Where required, all food items purchased from qualified vendors have been inspected by reputable, outside inspection services confirming that the vendor is compliant with FDA and USDA guidelines.

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        Each product coach is required to perform a sanitation audit on two stores each month and send the results to our Quality Assurance department for review. Furthermore, though it is typically required for food manufacturers and not for restaurants, Texas Roadhouse has developed a HAACP (Hazard Analysis and Critical Points) plan that specifies food handling and sanitation procedures for all menu items. To reinforce the importance of food safety, all HAACP points are printed in bold type on each recipe.

Service

        Guest Satisfaction.    Through the use of guest surveys, our website "texasroadhouse.com," a toll-free guest response telephone line and personal interaction in the restaurant, we receive valuable feedback from guests and, through prompt responses, demonstrate a continuing dedication to guest satisfaction. Additionally, we employ an outside service to administer a "Secret Shopper" program whereby trained individuals periodically dine and comprehensively evaluate the guest experience at each of our restaurants. Particular attention is given to food and service quality, cleanliness, staff attitude and teamwork, and manager visibility and interaction. The resulting reports are used for follow up training feedback to both staff and management.

        Atmosphere.    The atmosphere of Texas Roadhouse restaurants is intended to appeal to broad segments of the population, children and adults, families, couples, single adults and business persons. Substantially all Texas Roadhouse restaurants are of our prototype design, reflecting a rustic southwestern lodge atmosphere, featuring an exterior of rough-hewn cedar siding and corrugated metal. The interiors feature pine floors and are decorated with hand-painted murals, neon signs, southwestern prints and rugs and artifacts. The restaurants contain jukeboxes that continuously play upbeat country hits. Guests may also view a display-cooking grill and a meat cooler displaying fresh cut steaks, and may wait for seating in either a spacious, comfortable waiting area or a southwestern style bar. While waiting for a table, guests can enjoy complimentary roasted in-shell peanuts and watch as cooks prepare steaks and other entrees on the gas-fired grills. Immediately upon being seated at a table, guests can enjoy made-from-scratch yeast rolls along with the peanuts.

People

        Management and Employees.    Each of our restaurants has one managing partner, one kitchen manager and one service manager, and in some cases an additional assistant manager. The managing partner of each restaurant has primary responsibility for the day-to-day operations of the entire restaurant and is responsible for maintaining the standards of quality and performance established by us. We use market partners to supervise the operation of our restaurants including the continuing development of each restaurant's management team. Through regular visits to the restaurants, the market partners ensure adherence to all aspects of our concept, strategy and standards of quality. To further assure adherence to our standards of quality and to achieve uniform execution throughout the system, we employ product coaches who regularly visit the restaurants to assist in training of both new and existing employees and to grade food quality. The attentive service and high quality food, which results from each restaurant having a managing partner, two to three managers and the hands-on assistance of a product coach, are critical to our success.

        Training and Development.    All restaurant employees are required to complete varying degrees of training before and during employment. Our detailed training program emphasizes our operating strategy, procedures and standards and is conducted individually at Texas Roadhouse restaurants and in groups in Louisville, Kentucky.

        All managing and market partners are required to have significant experience in the full-service restaurant industry and are generally hired six to twelve months before their placement in a new or existing restaurant to allow time to fully train in all aspects of restaurant operations. All managing

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partners are required to complete a comprehensive 16-week training course, which includes training for every position in the restaurant. Other management team members, including kitchen and service managers, are required to complete a similar, slightly shorter course. All trainees are validated at pre-determined points in training by either a product coach or a training manager.

        A number of our restaurants have been certified as training centers by our training department. This certification confirms that the training center adheres to established operating procedures and guidelines. Additionally, each restaurant is staffed with training coordinators responsible for ongoing daily training needs.

        For new restaurant openings, a full team of designated trainers, each specializing in a specific restaurant position, is deployed to the restaurant at least ten days before opening. Formal employee training begins seven days before opening, and follows a uniform, comprehensive training course as directed by a training manager.

Marketing

        Our marketing strategy aims to promote the Texas Roadhouse brand, while retaining a localized focus, to:

•

increase comparable restaurant sales by attracting new guests to our restaurants, while increasing the frequency of visits by our current guests;



•

support new restaurant openings to achieve restaurant sales and operating margin goals; and



•

communicate and promote the uniqueness, appeal, quality and consistency of our brand.

        We accomplish these objectives through three major initiatives.

        In-Restaurant Marketing.    A significant portion of our marketing fund is spent in communicating with our guests while they are in our restaurants through point of purchase materials. We believe special promotions such as Valentine's Day and Mother's Day, as well as our annual "Rib Fest," drive significant repeat business. In addition, our mascot, Andy Armadillo, provides our guests with a familiar and easily identifiable face.

        Local Restaurant Area Marketing.    Given our strategy to be a neighborhood destination, local area marketing is integral in developing brand awareness in each market. We allocate roughly 50% of all marketing dollars for local restaurant area marketing. To enhance our visibility in new markets, we deliver free food to local businesses in connection with new store openings. Managing partners are encouraged to participate in creative community-based marketing, such as hosting local radio or television programs. We also engage in a variety of promotional activities, such as contributing time, money and complimentary meals to charitable, civic and cultural programs. For instance, our involvement with the Special Olympics, a local Little League baseball team, a local church or the Armed Forces, shows our "Legendary Care, Concern and Support" for our communities. We leverage the corresponding recognition in our public relations and marketing efforts to communicate our corporate values and mission statement to our guests. We employ marketing coordinators at the restaurant and market level to develop and execute the majority of the local marketing strategies.

        Advertising.    Although our restaurant concept is not media driven, to build brand awareness we spend a limited amount of our marketing dollars on various advertising channels, including billboard, print, radio and television. These advertisements are designed to reflect "Legendary Food, Legendary Service," as well as our fun and welcoming restaurant environment.

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Restaurant Franchise Arrangements

        Franchise Restaurants.    As of March 30, 2004, we had 19 franchisees that operated 76 restaurants in 18 states. Franchise rights are granted for specific restaurants, and we do not grant any rights to develop a territory. Approximately 70% of our franchise restaurants are operated by seven franchisees. No franchisee operates more than 10 restaurants. In 2003, 10 franchise restaurants were opened and we expect 11 to 13 franchise restaurants to open in 2004.

        Our standard franchise agreement has a term of 10 years with two renewal options for an additional five years each if certain conditions are satisfied. Our current form of franchise agreement requires the franchisee to pay a royalty fee of 4.0% of gross restaurant sales. The royalty fee varies depending on when the agreements were entered into and range from 2.0% of gross sales to the current 4.0% fee. "Gross sales" means the total selling price of all services and products related to the restaurant. Gross sales do not include:

•

employee discounts or other discounts;



•

tips or gratuities paid directly to employees by guests;



•

any federal, state, municipal or other sales, value added or retailer's excise taxes; or



•

adjustments for net returns on salable goods and discounts allowed to guests on sales.

        Franchisees are required to spend a minimum of 2.0% of their restaurant's gross sales on local advertising or promotional activities. Franchisees are required to pay 0.3% of gross sales to a national advertising and marketing fund for the development of advertising materials, system-wide promotions and related marketing efforts, which amount is credited against the local advertising spending requirement. We have the ability under our agreements to increase the required national advertising and marketing fund contribution up to 2.5% of gross sales. We may also charge a marketing fee of 0.5% of gross sales, which we may use for market research and to develop system-wide promotional and advertising materials. A franchisee's total required advertising contribution or spending will not be more than 3.0% of gross sales.

        A franchise agreement may be terminated if the franchisee defaults in the performance of any of its obligations under the franchise agreement, including its obligations to operate the restaurant in strict accordance with our standards and specifications. A franchise agreement may also be terminated if a franchisee dies, becomes disabled or becomes insolvent, fails to make its required payments, creates a threat to the public health or safety, ceases to operate the restaurant, or misuses the Texas Roadhouse trademarks.

        Our standard franchise agreement gives us the right, but not the obligation, to compel a franchisee to transfer its assets to us in exchange for shares of our stock, or to convert its equity interests into shares of our stock. The amount of shares that a franchisee would receive is based on a formula that is included in the franchise agreement.

        Franchise Compliance Assurance.    We have instituted a comprehensive system to ensure the selection of quality franchisees and compliance with our systems and standards, both during the development and operating of franchise restaurants. After a preliminary franchise agreement is signed, we actively work with and monitor our franchisees to ensure successful franchise operations as well as compliance with the Texas Roadhouse standards and procedures. During the restaurant development phase, we approve the selection of restaurant sites and make available copies of our prototype building plans to franchisees. During construction, we review the building for compliance with our standards. We provide training to the managing partner and up to three other managers of a franchisee's first restaurant. We also provide trainers for a period of 12 to 15 days to assist in the opening of every franchise restaurant. Finally, on an ongoing basis, we conduct reviews on all franchise restaurants to determine their level of effectiveness in executing our concept at a variety of operational levels. Our

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franchisees are required to follow the same standards and procedures regarding equipment, food purchases and food preparation as we maintain in our company restaurants. Reviews are conducted by seasoned operations teams, and focus on key areas including health, safety and execution proficiency.

        To continuously improve our communications with franchisees and the consistency of the brand, we maintain a business development council that includes representatives of our franchisees. The council's functions are advisory. Its members review and comment on proposed advertising campaigns and materials and budget expenditures. In addition, several times each year we solicit feedback and insights on specific topics from the broad group of franchisees and then get together with them to discuss and share their insights. These gatherings are an effort to attain a high level of franchisee participation and to assure the system is evolving in a positive direction through the exchange of best practices.

        Management Services.    We provide management services to seven of the franchise restaurants in which we or our founder have an ownership interest. Such management services include accounting, operational supervision, human resources, training, and food, beverage and equipment consulting for which we receive monthly fees of up to 2.5% of gross sales. We also make available to these restaurants certain legal services through outside sources on a pass-through cost basis. We also provide restaurant employees on a pass-through cost basis to three franchise restaurants in which we have an ownership interest. In addition, we receive a monthly fee of $1,250 from three franchise restaurants for providing payroll and accounting services.

Management Information Systems and Restaurant Reporting

        All of our company restaurants use computerized management information systems, which are designed to improve operating efficiencies, provide restaurant and Support Center management with timely access to financial and operating data and reduce administrative time and expense. With our current information systems, we have the ability to generate reports showing weekly and period-to-date numbers on a company-wide, regional or individual restaurant basis. Together, this enables us to closely monitor sales, food and beverage costs and labor and operating expenses at each of our restaurants. We have created reports that provide comparative information that enables both restaurant and Support Center management to supervise the financial and operational performance of our restaurants and to recognize and understand trends in the business. Our accounting department prepares monthly profit and loss statements, which provide a detailed analysis of sales and costs, and which are compared both to the restaurant-prepared reports and to prior periods. We have implemented satellite technology at the restaurant level, which serves as a communication link between the restaurants and our Support Center as well as our credit and gift card processor. We are in the process of implementing technology that will interface every restaurant management information system with the management information systems at our Support Center. When these improvements are in place, restaurant level data will automatically be posted and compiled into our Support Center accounting and other information systems. We believe our management information systems are and will continue to be scalable to support our restaurant expansion plans.

Competition

        Competition in the restaurant industry is intense. Texas Roadhouse restaurants compete with mid-priced, full-service, casual dining restaurants primarily on the basis of taste, quality and price of the food offered, service, atmosphere, location and overall dining experience. Our competitors include a large and diverse group of restaurants that range from independent local operators to well-capitalized national restaurant chains. Although we believe that we compete favorably with respect to each of the above factors, other restaurants operate with concepts that compete for the same casual dining guests as we do, with the number of casual dining restaurants emphasizing steaks increasing in recent years. We also compete with other restaurants and retail establishments for quality site locations and restaurant-level employees.

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Seasonality

        Our business is subject to minor seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season of each year.

Properties

        Our Support Center is located in Louisville, Kentucky. We occupy this facility under a lease with Paragon Centre Holdings, LLC, a limited liability company in which we have a minority ownership position. We currently lease 34,055 square feet. Our lease expires on March 31, 2014. We have rights to expand our leased space as additional space in the building becomes available. We have an option to renew the lease for an additional five years. Of the 89 company restaurants in operation as of March 30, 2004, 44 locations are owned and 45 are leased, as shown in the following table.

Location		State	Opening Date	Owned/ Leased
1.	Clarksville	Indiana	February 1993	Leased
2.	Gainesville	Florida	November 1993	Leased
3.	Louisville	Kentucky	August 1996	Owned
4.	New Philadelphia	Ohio	September 1996	Leased
5.	Louisville	Kentucky	October 1996	Leased
6.	Elizabethtown	Kentucky	May 1997	Leased
7.	Grand Junction	Colorado	October 1997	Leased
8.	Grand Prairie	Texas	January 1998	Leased
9.	Cedar Falls	Iowa	March 1998	Leased
10.	Killeen	Texas	April 1998	Owned
11.	Thornton	Colorado	May 1998	Leased
12.	Lancaster	Pennsylvania	June 1998	Leased
13.	Salt Lake City	Utah	June 1998	Leased
14.	Texarkana	Texas	June 1998	Owned
15.	Abilene	Texas	September 1998	Owned
16.	Shively	Kentucky	September 1998	Leased
17.	Champaign	Illinois	October 1998	Owned
18.	Fayetteville	North Carolina	October 1998	Leased
19.	Pueblo	Colorado	October 1998	Owned
20.	Decatur	Illinois	May 1999	Leased
21.	Greeley	Colorado	June 1999	Owned
22.	Waco	Texas	June 1999	Owned
23.	Fort Wayne	Indiana	July 1999	Owned
24.	Hickory	North Carolina	September 1999	Leased
25.	Lansing	Michigan	September 1999	Owned
26.	Boise	Idaho	October 1999	Leased
27.	Pasadena	Texas	November 1999	Owned
28.	Gastonia	North Carolina	December 1999	Leased
29.	Idaho Falls	Idaho	December 1999	Leased
30.	Aurora	Colorado	March 2000	Leased
31.	Cedar Rapids	Iowa	May 2000	Leased
32.	Concord	North Carolina	May 2000	Leased
33.	College Station	Texas	June 2000	Leased
34.	Joliet	Illinois	July 2000	Leased
35.	Live Oak	Texas	September 2000	Owned
36.	Arvada	Colorado	September 2000	Leased
37.	Mesquite	Texas	October 2000	Leased
38.	Wilmington	North Carolina	October 2000	Owned
39.	Dickson City	Pennsylvania	November 2000	Leased

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40.	Fort Collins	Colorado	November 2000	Owned
41.	Peoria	Arizona	December 2000	Owned
42.	Houston	Texas	December 2000	Owned
43.	Mesa	Arizona	December 2000	Leased
44.	Pineville	North Carolina	December 2000	Owned
45.	Brooklyn	Ohio	April 2001	Leased
46.	Elyria	Ohio	June 2001	Leased
47.	Reading	Pennsylvania	June 2001	Owned
48.	Tyler	Texas	June 2001	Leased
49.	Richmond	Virginia	July 2001	Owned
50.	Elkhart	Indiana	August 2001	Owned
51.	Corpus Christi	Texas	August 2001	Owned
52.	Oklahoma City	Oklahoma	September 2001	Leased
53.	Cheyenne	Wyoming	December 2001	Owned
54.	West Phoenix	Arizona	December 2001	Owned
55.	N. Dartmouth	Massachusetts	December 2001	Leased
56.	Friendswood	Texas	December 2001	Leased
57.	York	Pennsylvania	December 2001	Owned
58.	Toledo	Ohio	February 2002	Owned
59.	Davenport	Iowa	February 2002	Owned
60.	Methuen	Massachusetts	February 2002	Owned
61.	Kenosha	Wisconsin	March 2002	Leased
62.	Sterling Heights	Michigan	March 2002	Owned
63.	East Peoria	Illinois	April 2002	Leased
64.	Bear	Delaware	April 2002	Owned
65.	Lynchburg	Virginia	May 2002	Owned
66.	N. Oklahoma City	Oklahoma	June 2002	Leased
67.	Asheville	North Carolina	June 2002	Leased
68.	Madison Heights	Michigan	June 2002	Leased
69.	Harvey	Louisiana	July 2002	Leased
70.	Christiansburg	Virginia	July 2002	Leased
71.	San Antonio	Texas	August 2002	Owned
72.	Lubbock	Texas	August 2002	Owned
73.	Roseville	Michigan	August 2002	Leased
74.	Conroe	Texas	September 2002	Owned
75.	Tulsa	Oklahoma	September 2002	Leased
76.	Denton	Texas	October 2002	Owned
77.	Amarillo	Texas	December 2002	Owned
78.	Fort Worth	Texas	February 2003	Owned
79.	Lake Charles	Louisiana	March 2003	Owned
80.	Brockton	Massachusetts	March 2003	Leased
81.	McAllen	Texas	June 2003	Owned
82.	Nashua	New Hampshire	August 2003	Owned
83.	Erie	Pennsylvania	September 2003	Owned
84.	Green Bay	Wisconsin	September 2003	Owned
85.	Olathe	Kansas	September 2003	Owned
86.	Vestal	New York	November 2003	Leased
87.	Wichita Falls	Texas	December 2003	Owned
88.	Yorktown	Virginia	March 2004	Owned
89.	Durham	North Carolina	March 2004	Leased

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Employees

        As of March 30, 2004, the Company employed approximately 9,700 people, of whom 163 were executive and administrative personnel, 395 were restaurant management personnel and the remainder were hourly restaurant personnel. Many of our hourly restaurant employees work part-time. None of our employees are covered by a collective bargaining agreement.

Trademarks

        Our registered trademarks and service marks include, among others, the marks "Texas Roadhouse®" and our stylized logo set forth on the front and back pages of this prospectus. We have registered all of our marks with the United States Patent and Trademark Office. We have registered or have registrations pending for our most significant trademarks and service marks in ten foreign jurisdictions including the European Union. To better protect our brand, we have also registered the Internet domain name "www.texasroadhouse.com." We believe that our trademarks, service marks, and other proprietary rights have significant value and are important to our brand-building efforts and the marketing of our restaurant concept.

Government Regulation

        We are subject to a variety of federal, state and local laws. Each of our restaurants is subject to permitting, licensing and regulation by a number of government authorities, relating to alcoholic beverage control, health, safety, sanitation, building and fire codes, and to compliance with the applicable zoning, land use and environmental laws and regulations. Difficulties in obtaining or failure to obtain required licenses or approvals could delay or prevent the development of a new restaurant in a particular area.

        In 2003, 12.4% of our restaurant sales were attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations affect numerous aspects of restaurant operations, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages.

        The failure of a restaurant to obtain or retain liquor or food service licenses would have a material adverse effect on the restaurant's operations. To reduce this risk, each company restaurant is operated in accordance with procedures intended to assure compliance with applicable codes and regulations.

        We are subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our existing $1.0 million comprehensive general liability insurance, as well an excess umbrella coverage of $50.0 million per occurrence, with no deductible.

        Our restaurant operations are also subject to federal and state laws governing such matters as the minimum hourly wage, unemployment tax rates, sales tax and similar matters, over which we have no control. Significant numbers of our service, food preparation and other personnel are paid at rates related to the federal minimum wage (which currently is $5.15 per hour), and further increases in the minimum wage could increase our labor costs.

Litigation

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

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MANAGEMENT

Executive Officers and Directors

        Set forth below are the name, age, position and a brief account of the business experience of each of our executive officers and director as of the date of this prospectus:

Name	Age	Position
W. Kent Taylor	48	Chairman of the Company
G. J. Hart	46	Chief Executive Officer
Steven L. Ortiz	46	Chief Operating Officer
Scott M. Colosi	39	Chief Financial Officer
Sheila C. Brown	51	General Counsel, Corporate Secretary

W. Kent Taylor.  Mr. Taylor is our founder and, since 2000, Chief Executive Officer. Upon the completion of the offering, Mr. Taylor will become Chairman of the Company, an executive position. Before his founding of our concept, Mr. Taylor founded and co-owned Buckhead Bar and Grill in Louisville, Kentucky. Mr. Taylor has over 20 years of experience in the restaurant industry.

G. J. Hart.  Mr. Hart has served as our President since May 15, 2000. Upon the completion of the offering, Mr. Hart will become Chief Executive Officer. From October 1995 until May 2000, Mr. Hart was President of Al Copeland Investments in Metairie, Louisiana, a privately held business consisting of four restaurant concepts, hotels, gaming, entertainment and food processing operations. From June 1991 to September 1995, Mr. Hart was President of TriFoods International, Inc., a producer of prepared food products. Mr. Hart has over 25 years of experience in the food industry.

Steven L. Ortiz.  Mr. Ortiz has served as our Executive Vice President of Operations since May 2001. Upon the completion of the offering, Mr. Ortiz will become Chief Operating Officer. Mr. Ortiz joined our company in 1996 as a Market Partner in which capacity he was responsible for developing and starting new Texas Roadhouse restaurants in Texas. From 1982 to 1996, Mr. Ortiz was employed by Bennigan's Restaurants in various capacities, including General Manager, Area Director and Regional Vice President. Mr. Ortiz has over 20 years of experience in the restaurant industry.

Scott M. Colosi.  Mr. Colosi has served as our Chief Financial Officer since September 2002. From 1992 until September 2002, Mr. Colosi was employed by YUM! Brands, Inc., owner of the KFC, Pizza Hut, and Taco Bell brands. During this time, Mr. Colosi served in various financial positions and, immediately prior to joining us, was Director of Investor Relations. Mr. Colosi has 17 years of experience in the restaurant industry.

Sheila C. Brown.  Ms. Brown has served as our General Counsel and Secretary since November 2001. From August 2000 to November 2001, Ms. Brown was our Director of Property Acquisition and, from September 1998 to August 2000, Development Coordinator, in which capacity Ms. Brown was responsible for our real estate development activities. Ms. Brown has over 20 years of experience in the restaurant industry.

Board Composition

        Upon the completion of this offering, our bylaws will provide for a board of directors consisting of not less than two nor more than 15 members. W. Kent Taylor is currently our sole director. We are currently in discussions with potential candidates for membership on our board of directors, and we expect to have a board consisting of five members upon the closing of this offering. Our board will be divided into three classes, each serving staggered three-year terms.

•

The term of our Class I directors will expire at our annual meeting in 2005;



•

The term of our Class II directors will expire at our annual meeting in 2006; and



•

The term of our Class III directors will expire at our annual meeting in 2007.

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        As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective terms. Each officer is elected by the board of directors and serves at its discretion.

        Because of Mr. Taylor's controlling ownership position that results from his holdings of Class B common stock, we will not be subject to the director independence requirements applicable to most Nasdaq National Market companies following the completion of this offering. However, the majority of our directors will be independent.

Board Committees

        After the offering, our board of directors will establish standing committees in connection with the discharge of its responsibilities. These committees will include an audit committee, a compensation committee and a nominating and governance committee. The board of directors will also establish such other committees as it deems appropriate, in accordance with applicable law and regulations and our certificate of incorporation and bylaws.

        Audit Committee.    Our board of directors will establish an audit committee that will assist our board in monitoring the integrity of the financial statements, the independent auditor's qualifications and independence, the performance of our internal audit function and independent auditors and our compliance with legal and regulatory requirements. All of the members of the audit committee will be independent, as determined in accordance with the rules of the Nasdaq National Market and relevant federal securities laws and regulations.

        Compensation Committee.    We expect that members of the compensation committee will be appointed promptly following the completion of this offering. All of the members of the compensation committee will be independent, as determined in accordance with the terms of the Nasdaq National Market and any relevant federal securities laws and regulations. The compensation committee will have overall responsibility for evaluating and approving our executive officer incentive compensation, benefit, severance, equity-based or other compensation plans, policies and programs. The compensation committee will also be responsible for producing an annual report on executive compensation for inclusion in our proxy statement.

        Nominating and Governance Committee.    We expect that the members of the nominating and governance committee will be appointed promptly following the completion of this offering. All of the members of the nominating and governance committee will be independent, as determined in accordance with the rules of the Nasdaq National Market and any relevant federal securities laws and regulations. The nominating and governance committee will assist our board of directors in promoting our best interests and the best interests of our stockholders through the implementation of sound corporate governance principles and practices. In furtherance of this purpose, the nominating and governance committee will identify individuals qualified to become board members and recommend to our board of directors the director nominees for the next annual meeting of stockholders. It will also review the qualifications and independence of the members of our board of directors and its various committees on a regular basis and make any recommendations the committee members may deem appropriate from time to time concerning any recommended changes in the composition of our board.

Compensation Committee Interlocks and Insider Participation

        Upon the completion of this offering, none of our executive officers will serve on the compensation committee or board of directors of any other company of which any of the members of our compensation committee or any of our directors is an executive officer. While serving as one of our officers, Mr. Taylor will not serve as a member of our compensation committee.

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Limitation of Liability and Indemnification

        Our certificate of incorporation and bylaws limit the liability of directors to the maximum extent permitted by Delaware law. Specifically, a director will not be personally liable for monetary damages for breach of fiduciary duty as a director, except liability for:

•

any breach of their duty of loyalty to us or our stockholders;



•

acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law;



•

unlawful payments of dividends or unlawful stock repurchases or redemptions; or



•

any transaction from which the director derived an improper personal benefit.

        The limitation of liability does not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.

        Our bylaws provide that we will indemnify our directors and officers and may indemnify our employees and other agents to the fullest extent permitted by law. We believe that indemnification under our bylaws covers at least negligence and gross negligence on the part of indemnified parties. Our bylaws also provide that we shall advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding and we may advance expenses incurred by our employees or other agents in advance of the final disposition of any action or proceeding. Our bylaws also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in his or her capacity as an officer, director, employee or other agent. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by the board of directors. These agreements provide for the indemnification of directors and officers to the fullest extent permitted by Delaware law, whether or not expressly provided for in our bylaws, and set forth the process by which claims for indemnification are considered. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain the services of highly qualified persons as directors and officers.

        The limited liability and indemnification provisions in our certificate of incorporation, bylaws and indemnification agreements may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty and may reduce the likelihood of derivative litigation against our directors and officers, even though a derivative action, if successful, might otherwise benefit us and our stockholders. A stockholder's investment in us may be adversely affected to the extent we pay the costs of settlement or damage awards against our directors and officers under these indemnification provisions.

        At present, there is no pending litigation or proceeding involving any director, officer or employee in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted for directors, officers and controlling persons of us pursuant to the foregoing provisions or otherwise, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

Compensation of Independent Directors

        During the time we operated as a limited liability company, none of the members of our board of advisors received any compensation for serving on our board of advisors until October 2003, at which time, non-employee members began receiving $1,000 for each board meeting attended. Following the

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completion of this offering, directors of our company who are also employees will not receive any additional compensation for serving on the board of directors or any of its committees.

        Non-employee directors will each receive an annual fee of $12,500. The chairperson of the audit committee will receive an additional annual fee of $7,500. Each non-employee director will receive $2,000 for each meeting he or she attends in person and $500 for each meeting he or she participates in telephonically. Additionally, each non-employee director will receive $1,000 for each committee meeting he or she attends. Each non-employee director will receive a one-time option grant to purchase 20,000 shares of our Class A common stock upon the later to occur of his or her initial appointment or election to the board of directors or the completion of this offering. These non-employee director options will become exercisable in 25% increments annually beginning one year from the grant date.

Executive Compensation

        The compensation of our executive officers is currently determined by the manager of Holdings and, after completion of this offering, will be determined by the compensation committee we will establish after the completion of this offering. In determining compensation levels, the compensation committee will consider the executive officers' performance, the market compensation level for comparable positions, our performance goals and objectives and other relevant information. In addition, we intend to compensate our executive officers and key employees with stock options or other types of equity incentives. Please see "Employee Plans—2004 Equity Incentive Plan" for a description of the plan under which these options may be granted.

        The following table sets forth the total compensation paid or accrued during the year ended December 30, 2003 for W. Kent Taylor, our Chief Executive Officer during such year, and each of our four other most highly compensated executive officers whose combined salary and bonus exceeded $100,000 during the periods noted below for services rendered to us in all capacities. In this prospectus we may refer to these officers, together with the Chief Executive Officer, as our "named executive officers." In accordance with the rules of the SEC, the compensation described in this table does not include (a) medical, group life insurance or other benefits received by the named executive officers that are available generally to all of our salaried employees, or (b) perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or 10% of the officer's salary and bonus disclosed in this table.

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Summary Compensation Table

						Long-term Compensation Awards
	Annual Compensation
Name and Principal Position				Other Annual Compensation ($)(1)			All Other Compensation ($)
	Year	Salary ($)	Bonus ($)			Options (#)
W. Kent Taylor Chief Executive Officer	2003	—	—	—		—	—
G.J. Hart President	2003	338,679	127,975	—		—	—
Steven L. Ortiz Executive Vice President of Operations	2003	—	174,858	100,000	(2)	24,129	—
Scott M. Colosi Chief Financial Officer	2003	179,615	80,725	—		—	—
Sheila C. Brown General Counsel, Corporate Secretary	2003	93,269	29,575	—		7,343	—

(1)

In accordance with the rules of the SEC, the compensation described in this table does not include(s) medical, group life insurance or other benefits received by the named executive officers that are available generally to all of our salaried employees, or (b) perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or 10% of the officer's salary and bonus disclosed in this table.

(2)

Mr. Ortiz received payments of $100,000 in 2003 for restaurant management fees.

Option Grants in Last Fiscal Year

        The following table sets forth information concerning the stock option grants made to our named executive officers during 2003. The exercise price per share for the options was equal to the fair market value of the Class A common stock as of the grant date as determined by an independent appraisal. The options expire on the tenth anniversary of the grant date. Potential realizable value is calculated net of exercise prices and before taxes based on the assumption that our Class A common stock as valued using the assumed initial offering price of $        per share appreciates at the annual rate shown, compounded annually, from the date of grant until the expiration of the option term. The potential realizable value is calculated based on the requirements of the SEC and does not reflect our estimate of future stock price growth. Actual gains, if any, on stock option exercises will depend on the future performance of our Class A common stock and the date on which the options are exercised. We have prepared this table as if the combination of our operations under Texas Roadhouse, Inc. had already occurred at the time that the option grants were made.

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	Individual Grants
	Number of Securities Underlying Options Granted (#)						Potential Realizable Value at Assumed Annual Rate of Stock Price Appreciation For Option Term
		Percent of Total Options Granted to Employees in 2003
				Exercise Price per Share
Name and Principal Position						Expiration Date
							5%		10%
W. Kent Taylor Chief Executive Officer	—	0.0	%		NA	NA		NA		NA
G.J. Hart President	—	0.0	%		NA	NA		NA		NA
Steven L. Ortiz Executive Vice President of Operations	8,724 5,467 5,117 4,821	1.9 1.2 1.1 1.1	% % % %	$ $ $ $	9.30 9.60 10.55 10.75	1/1/2013 4/2/2013 7/2/2013 10/1/2013	$ $ $ $	188,866 116,715 104,382 97,379	$ $ $ $	348,795 216,937 198,187 185,758
Scott M. Colosi Chief Financial Officer	—	0.0	%		NA	NA		NA		NA
Sheila C. Brown General Counsel, Corporate Secretary	2,813 1,523 1,523 1,484	0.6 0.3 0.3 0.3	% % % %	$ $ $ $	9.30 9.60 10.55 10.75	1/1/2013 4/2/2013 7/2/2013 10/1/2013	$ $ $ $	60,899 32,515 31,068 29,975	$ $ $ $	112,467 60,434 58,987 57,180

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

        The following table sets forth information regarding exercisable and unexercisable stock options held as of December 30, 2003 by each of the named executive officers. The value of unexercised in-the-money option represents the total gain which would be realized if all in-the-money options held at December 30, 2003 were exercised, determined by multiplying the number of shares underlying the options by the difference between the assumed initial offering price of $   per share and the per share option exercise price. An option is in-the-money if the fair market value of the underlying shares exceeds the exercise price of the option. We have prepared this table as if the combination of our operations under Texas Roadhouse, Inc. had already occurred at the time that the option grants were made.

Name and Principal Position	Shares Acquired on Exercise (#)	Value Realized ($)(1)		Number of Securities Underlying Unexercised Options as of December 30, 2003 (#) Exercisable/Unexercisable	Value of Unexercised In-The-Money Options as of December 30, 2003 ($) Exercisable/Unexercisable
W. Kent Taylor Chief Executive Officer	—		NA	—		—
G. J. Hart President	—		NA	690,000/210,000	$	10,683,537/$3,242,358
Steven L. Ortiz Executive Vice President of Operations	19,872	$	304,371	103,878/24,129	$	1,014,838/$219,025
Scott M. Colosi Chief Financial Officer	—		NA	0/150,000	$	0/$1,623,000
Sheila C. Brown General Counsel, Corporate Secretary	1,770	$	27,885	29,070/7,343	$	335,716/$66,715

(1)

The value realized is the difference between the assumed initial offering price of $   per share and the exercise price of the shares.

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Employment Agreements

        In July 2004, we entered into employment agreements with each of W. Kent Taylor, G. J. Hart, Steven L. Ortiz, Scott M. Colosi and Sheila C. Brown, each of which commences upon the completion of this offering and continues until the end of the twelfth full fiscal quarter thereafter. Each officer has agreed not to compete with us during the term of his employment and for a period of two years following his termination of employment.

        Pursuant to the terms of Mr. Taylor's Employment Agreement, Mr. Taylor will serve as our Chairman and receive, among other things: (1) an annual base salary of $300,000, and (2) an annual performance bonus of up to $200,000.

        Pursuant to the terms of Mr. Hart's Employment Agreement, Mr. Hart will serve as our Chief Executive Officer and receive, among other things: (1) an annual base salary of $500,000, (2) an annual performance bonus of up to $300,000 and (3) additional options under our 2004 Equity Incentive Plan to purchase an aggregate of 165,000 shares of our Class A common stock.

        Pursuant to the terms of Mr. Ortiz' Employment Agreement, Mr. Ortiz will serve as our Chief Operating Officer and receive, among other things: (1) an annual base salary of $400,000, (2) an annual performance bonus of up to $200,000 and (3) additional options under our 2004 Equity Incentive Plan to purchase an aggregate of 120,000 shares of our Class A common stock.

        Pursuant to the terms of Mr. Colosi's Employment Agreement, Mr. Colosi will serve as our Chief Financial Officer and receive, among other things: (1) an initial annual base salary of $210,000, (2) an annual performance bonus of up to $115,000 and (3) additional options under our 2004 Equity Incentive Plan to purchase an aggregate of 50,000 shares of our Class A common stock.

        Pursuant to the terms of Ms. Brown's Employment Agreement, Ms. Brown will serve as our General Counsel and Corporate Secretary and receive, among other things: (1) an initial annual base salary of $120,000, and (2) an annual performance bonus of up to $40,000.

        No severance will be paid to Mr. Taylor, Mr. Hart or Mr. Ortiz upon termination of employment. If we terminate Mr. Colosi's or Ms. Brown's employment without cause before the end of the term, and if Mr. Colosi or Ms. Brown signs a release of all claims against us, we will pay a severance payment equal to the officer's then current base salary for a period of 180 days in addition to 50% of the performance bonus earned by the officer during the last four full fiscal quarters of employment with us, which payment will be prorated (for the number of days remaining in the quarter) if the termination occurs during the last fiscal quarter of the term.

        The employment agreements with the officers other than Mr. Taylor provide that if there is a change of control of the company and the officer's employment is terminated other than for "cause," or if the officer resigns because he is required to move, the company successor does not agree to be bound by the agreement, or the officer's duties, pay or total benefits are reduced, (1) all of officer's unvested stock options will vest and be immediately exercisable and (2) the officer will receive an additional amount in cash necessary to pay any tax owed by the officer in connection with the severance payments.

Employee Plans

2004 Equity Incentive Plan

        Our board of directors adopted our 2004 Equity Incentive Plan in May 2004, and our stockholders approved it in May 2004, to be effective upon the completion of the offering. The incentive plan is an amendment and restatement of our Texas Roadhouse Management Corp. Stock Option Plan.

        Administration.    The board of directors administers the incentive plan unless it delegates administration to a committee. The board of directors has the authority to construe, interpret and amend the incentive plan as well as to determine:

•

the grant recipients;



•

the grant dates;

78

•

the number of shares subject to the award;



•

the exercisability and vesting of the award;



•

the exercise price;



•

the type of consideration; and



•

the other terms of the award.

        Share Reserve.    We have reserved a total of            shares of our Class A common stock for issuance under the incentive plan. On January 1 of each year during the term of the plan, beginning on January 1, 2005 through and including January 1, 2014, the number of shares in the reserve automatically will be increased by the lesser of:

•

5.0% of our then-outstanding shares on a fully-diluted basis, or



•

shares of Class A common stock.

        However, the automatic increase is subject to reduction by the board of directors. If the recipient of a stock award does not purchase the shares subject to his or her stock award before the stock award expires or otherwise terminates, the shares that are not purchased again become available for issuance under the incentive plan.

        Eligibility and Types of Awards.    The board of directors may grant incentive stock options that qualify under Section 422 of the Internal Revenue Code to our employees and to the employees of our affiliates. The board of directors may also grant non-statutory stock options, stock bonuses and rights to acquire restricted stock to our employees, directors and consultants as well as to the employees, directors and consultants of our affiliates.

        Section 162(m).    Section 162(m) of the Internal Revenue Code, among other things, denies a deduction to publicly held corporations for compensation paid to the Chief Executive Officer and the four highest compensated officers in a taxable year to the extent that the compensation for each officer exceeds $1.0 million. When we become subject to Section 162(m), in order to prevent options granted under the incentive plan from being included in compensation, the board of directors may not grant options under the incentive plan to an employee covering an aggregate of more than 2,000,000 shares in any calendar year.

        Option Terms.    The board of directors may grant incentive stock options with an exercise price of not less than the fair market value of a share of our Class A common stock on the grant date. The board of directors may grant non-statutory stock options with an exercise price not less than 85.0% of the fair market value of a share of our Class A common stock on the grant date.

        The maximum option term is ten years. Subject to this limitation, the board of directors may provide for exercise periods of any length in individual option grants. However, generally an option terminates three months after the option holder's service to our affiliates and to us terminates. If this termination is due to the option holder's disability, the exercise period generally is extended to 12 months. If this termination is due to the option holder's death or if the option holder dies within three months after his or her service terminates, the exercise period generally also is extended to 12 months following the option holder's death.

        The board of directors may provide for the transferability of non-statutory stock options but not incentive stock options. However, the option holder may designate a beneficiary to exercise either type of option following the option holder's death. If the option holder does not designate a beneficiary, the option holder's option rights will pass by his or her will or by the laws of descent and distribution.

        Terms of Other Stock Awards.    The board of directors determines the purchase price of other stock awards. However, the board of directors may award stock bonuses in consideration of past services without a purchase payment. Shares that we sell or award under the incentive plan may, but need not be, restricted and subject to a repurchase option in our favor in accordance with a vesting schedule that the board of directors determines. The board of directors, however, may accelerate the vesting of the restricted stock.

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        Other Provisions.    Transactions not involving our receipt of consideration, including a merger, consolidation, reorganization, stock dividend, and stock split, may change the class and number of shares subject to the incentive plan and to outstanding awards. In that event, the board of directors will appropriately adjust the incentive plan as to the class and the maximum number of shares subject to the incentive plan, to the annual increase to the shares subject to the incentive plan, and to the Section 162(m) limit. It also will adjust outstanding awards as to the class, number of shares and price per share subject to the awards.

        If we dissolve or liquidate, then outstanding stock awards will terminate immediately before this event. However, we treat outstanding stock awards differently in the following situations:

•

a sale of substantially all of our assets;



•

a merger or consolidation in which we are not the surviving corporation;



•

a reverse merger in which we are the surviving corporation but the shares of our common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or



•

a sale of at least 50.0% of the outstanding securities of the company.

        In these situations, the surviving entity may either assume or replace all outstanding awards under the incentive plan. If the surviving entity does not assume or replace outstanding awards, then generally the vesting and exercisability of the awards will accelerate.

        Business Criteria.    The compensation committee will use one or more of the following business criteria in establishing performance goals for awards intended to comply with Section 162(m) of the Internal Revenue Code granted to covered employees:

•

total shareholder return;



•

total shareholder return as compared to total return (on a comparable basis) of a publicly available index such as, but not limited to, the Standard & Poor's 500 Stock Index;



•

net income;



•

book value;



•

pretax earnings;



•

earnings before interest expense and taxes;



•

earnings before interest, taxes, depreciation and amortization;



•

pretax operating earnings after interest expense and before bonuses, service fees and extraordinary or special items;



•

operating margin;



•

earnings per share;



•

return on equity;



•

return on capital;



•

return on assets;



•

return on investment;



•

operating earnings;



•

working capital;



•

ratio of debt to stockholders' equity; and



•

revenue.

        The board of directors may also reduce the exercise price of outstanding options, cancel options and regrant in their place either options, stock or cash, and take other actions to reprice options under the incentive plan.

        Stock Awards Granted.    As of March 30, 2004, options to purchase 3,093,466 shares of our Class A common stock at a weighted average exercise price of $6.26 were outstanding; with            shares of

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our Class A common stock remaining available for future grant. As of March 30, 2004, the board of directors had not granted any stock bonuses or restricted stock under the incentive plan.

        Plan Termination.    The incentive plan will terminate in 2014 unless the board of directors terminates it sooner.

        Adjustments for Stock Dividends and Similar Events.    The compensation committee will make appropriate adjustments in outstanding awards and the number of shares of our Class A common stock available for issuance under the equity incentive plan, including the individual limitations on awards, to reflect common stock dividends, stock splits, spin-offs and other similar events.

        Plan Termination.    The board of directors may terminate the purchase plan at any time after the end of an offering. Unless sooner terminated, the purchase plan will terminate on the tenth anniversary of the date the purchase plan is adopted by the board or when all shares subject to the purchase plan have been issued.

401(k) Plan

        We sponsor the Texas Roadhouse Management Corp. 401(k) Plan, referred to as the 401(k) Plan, a defined contribution plan intended to qualify under Section 401 of the Internal Revenue Code. All non-highly compensated full-time salaried employees who are at least 21 years old are eligible to participate. Participants may make pre-tax contributions to the 401(k) Plan of up to 100.0% of their eligible earnings, subject to a statutorily prescribed annual limit. We do not currently make matching contributions to the 401(k) Plan. Each participant is fully vested in his or her contributions. Contributions by the participants or by us to the 401(k) Plan, and the income earned on such contributions, are generally not taxable to the participants until withdrawn. Contributions by us, if any, are generally deductible by us when made. All contributions are held in trust as required by law. Individual participants may direct the trustee to invest their accounts in authorized investment alternatives.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions With Restaurants in Which Related Parties Have an Interest

        Immediately before the completion of this offering, we will complete a tax free combination of our operations under Texas Roadhouse, Inc. in which, among other things, we will acquire all of the equity interests in one franchise restaurant in exchange for 121,783 shares of Class A common stock and the remaining equity interests in all 31 of our majority-owned or controlled company restaurants in exchange for 2,548,699 shares of Class A common stock, of which W. Kent Taylor will receive 564,436 shares. Of these 31 restaurants, listed below are the 26 restaurants in which certain of our executive officers and 5% stockholders identified below, or their family members, have an interest. Also as set forth below, beginning in 2003, we loaned funds that we borrowed under our credit facility to 12 of these restaurants that were majority-owned or controlled by us. The restaurants borrowed the funds to refinance their real estate and equipment purchases. The loans bear interest at rates that are equal to those paid by us on such funds. As set forth below, the outstanding loan balances as of December 30, 2003 totaled $14.2 million.

Restaurant	Outstanding Loan Balance as of December 30, 2003		Related Party and Ownership %
Amarillo, TX	$	1,382,633	Steven L. Ortiz (42.4%)
Boise, ID		—	W. Kent Taylor (50.0%)
Cheyenne, WY		—	W. Kent Taylor (40.0%)
College Station, TX		—	Steven L. Ortiz (27.2%)
Conroe, TX		1,295,237	Steven L. Ortiz (34.9%)
Corpus Christi, TX		1,171,503	Steven L. Ortiz (29.1%)
Denton, TX		1,505,202	Steven L. Ortiz (37.9%)
East Peoria, IL		—	Amar Desai (47.4%)
Elkhart, IN		1,208,239	G. J. Hart (45.0%)
Elyria, OH		458,423	W. Kent Taylor (47.5%) G. J. Hart (47.5%)
Fort Wayne, IN		—	W. Kent Taylor (55.0%)
Friendswood, TX		1,091,143	Steven L. Ortiz (42.4%)
Grand Junction, CO		—	W. Kent Taylor (9.9%)
Grand Prairie, TX		—	Steven L. Ortiz (22.4%)
Houston, TX		1,469,755	Steven L. Ortiz (27.1%)
Lansing, MI		—	W. Kent Taylor (70.0%)
Live Oak, TX		—	Steven L. Ortiz (24.7%)
Longview, TX		—	Steven L. Ortiz (49.6%)
Lubbock, TX		—	W. Kent Taylor (47.5%) Steven L. Ortiz (37.5%)
Lynchburg, VA		1,407,658	G. J. Hart (31.0%) George S. Rich (9.0%)
Mesquite, TX		—	W. Kent Taylor (37.5%) G. J. Hart (10.0%) John D. Rhodes (42.8%)
New Philadelphia, OH		—	W. Kent Taylor (50.1%)
Richmond, VA		1,299,607	G. J. Hart (45.0%)
Texarkana, TX		892,973	Steven L. Ortiz (25.8%)
Tyler, TX		990,837	Steven L. Ortiz (27.4%)
Waco, TX		—	W. Kent Taylor (40.0%) Steven L. Ortiz (10.0%)

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        In exchange for the equity interests in the above restaurants, we will issue shares of our Class A common stock to W. Kent Taylor (         shares), G. J. Hart (         shares), Steven L. Ortiz (         shares), John D. Rhodes (         shares), Amar Desai (         shares) and George S. Rich (         shares).

        As part of the combination, we will also issue             shares of our Class A common stock to the equity holders of Texas Roadhouse Holdings LLC, which include, among others, the executive officers, directors and 5% stockholders listed below, in exchange for their membership shares in Texas Roadhouse Holdings LLC. None of the equity holders of Texas Roadhouse Holdings LLC will receive cash in exchange for their equity interests; however, cash payments will be made to such equity holders for unpaid distributions relating to the undistributed income of Texas Roadhouse Holdings LLC for periods prior to the effective date of the combination of our operations under Texas Roadhouse, Inc. We will make a cash distribution of $28.2 million, relating to the income of Texas Roadhouse Holdings LLC for periods through March 30, 2004. The following table sets forth the number of shares of Class A common stock our executive officers, directors, 5% stockholders and affiliates will receive in exchange for their membership interests in Texas Roadhouse Holdings LLC, as well as the amount of cash such persons will receive from the $28.2 million cash payment relating to the undistributed income of Texas Roadhouse Holdings LLC for the periods through March 30, 2004.

Name	Shares	Payment
W. Kent Taylor (Chairman of the Company)		$	15,745,000
G. J. Hart (Chief Executive Officer)		$	192,000
Steven L. Ortiz (Chief Operating Officer)		$	18,000
Scott M. Colosi (Chief Financial Officer)			—
Sheila C. Brown (General Counsel, Corporate Secretary)		$	1,000
Amar Desai		$	1,842,000
John D. Rhodes		$	1,866,000
Mehendra Patel		$	1,842,000
George S. Rich		$	2,052,000

        Our executive officers, directors and 5% stockholders will also receive their proportionate share of the additional payments we will make to the equity holders of Texas Roadhouse Holdings LLC relating to its income from March 31, 2004 through the effective date of the combination of our operations under Texas Roadhouse, Inc. Through June 29, 2004, the total amount of these additional distributions would have been $             million.

        In addition, as part of the combination, we will:

•

acquire Texas Roadhouse Development Corporation from its stockholders in exchange for 1,970,000 shares of our Class A common stock, including 1,477,500 shares to W. Kent Taylor and an aggregate of 492,500 shares to three of our 5% stockholders and their family members;



•

acquire WKT Restaurant Corp., which owns the right to receive a one percent distribution on all sales of Company and license Texas Roadhouse restaurants, from W. Kent Taylor in exchange for 2,217,000 shares of our Class B common stock; and



•

acquire Texas Roadhouse Management Corp. from its stockholders in exchange for             shares of Class A common stock, including 3 shares to W. Kent Taylor, 57,018 shares to Steven L. Ortiz and 2,399 shares to Sheila C. Brown.

        In connection with the combination, we will grant registration rights to W. Kent Taylor and some of our stockholders as described under "Shares Eligible for Future Sale."

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Management Services

        Before our combination, Texas Roadhouse Development Corporation, which has the right to franchise Texas Roadhouse restaurants, was owned by W. Kent Taylor and three of our 5% stockholders and their family members. Texas Roadhouse Holdings LLC, through Texas Roadhouse Management Corp., provided management services to Texas Roadhouse Development Corporation for a fee equal to the net income of Texas Roadhouse Development Corporation after required distributions to the stockholders. One percent of the gross sales of all restaurants franchised by Texas Roadhouse Development Corporation is required to be distributed to the shareholders. The management fee totaled $3.8 million, $4.2 million and $4.9 million for 2001, 2002 and 2003 respectively.

        Before our combination, W. Kent Taylor owned all of the outstanding voting shares of Texas Roadhouse Management Corp. which provides management services to us and our affiliated entities. In 2001, 2002 and 2003, we paid Texas Roadhouse Management Corp. $72.8 million, $103.6 million and $136.6 million, respectively, all of which represented a passthrough of Texas Roadhouse Management Corp.'s costs of providing such services.

Grants of Franchise or License Rights

        We have licensed or franchised restaurants to companies owned by the executive officers, directors and 5% stockholders listed below. The licensing or franchise fees paid by these companies to us range from 0.0% to 4.0% of restaurant sales. None of these restaurants will be acquired by us in the combination.

					Fees Paid to Us
Restaurant		Initial Franchise Fee
	Name and Ownership (%)			Royalty Rate	2001		2002		2003
					(in thousands)
Billings, MT	W. Kent Taylor (55.0%) Scott M. Colosi (2.0%)		0	3.5%	$	—	$	—	$	27.0
Brownsville, TX	W. Kent Taylor (30.0%) G.J. Hart (30.0%) Steven L. Ortiz (30.0%)		0	3.5%		—		—		91.1
Everett, MA	W. Kent Taylor (59.0%) George S. Rich (2.0%)		0	3.5%		—		—		160.8
Longmont, CO	W. Kent Taylor (47.5%)		0	3.5%		—		—		—
Melbourne, FL	W. Kent Taylor (34.0%)		0	0		78.6		83.8		85.7
Muncie, IN	W. Kent Taylor (9.9%)		0	$50,000/year		—		—		—
Port Arthur, TX	W. Kent Taylor (30.0%) G. J. Hart (30.0%) Steven L. Ortiz (30.0%) Scott M. Colosi (3.0%)		0	3.5%		—		—		7.9
Hiram, GA	Amar Desai (90.0%)	$	25,000	2.5%		—		10.0		111.5
Marietta, GA	Amar Desai (90.0%)	$	25,000	2.5%		—		—		22.6
Fort Wright, KY	George S. Rich (6.0%)	$	40,000	4.0%		—		—		10.0
Paducah, KY	George S. Rich (2.0%)	$	40,000	3.5%		78.3		106.4		113.2

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        We have entered into preliminary franchise agreements or commitments with the following executive officers, directors and 5% stockholders to develop restaurants that have not opened as of the date of this prospectus.

Restaurant	Name and Ownership (%)	Initial Franchise Fee		Royalty Rate
Bossier City, LA	Steven L. Ortiz (95.0%)		0	3.5	%
Memphis, TN	Amar Desai (90.0%)	$	25,000	2.5	%
Missoula, MT	W. Kent Taylor (95.0%)		0	3.5	%
McKinney, TX	G. J. Hart (30.0%) Steven L. Ortiz (30.0%) Scott M. Colosi (2.0%)		0	3.5	%
Montgomeryville, PA	John D. Rhodes (90.0%)	$	25,000	2.5	%
New Berlin, WI	G. J. Hart (30.0%) Steven L. Ortiz (30.0%) Scott M. Colosi (2.0%)		0	3.5	%
New Orleans, LA	G. J. Hart (85.0%) Scott M. Colosi (10.0%)		0	3.5	%
Omaha, NE	G. J. Hart (85.0%) Scott M. Colosi (10.0%)		0	3.5	%
Temple, TX	Steven L. Ortiz (95.0%)		0	3.5	%
Wichita, KS	W. Kent Taylor (50.1%)		0	3.5	%

        The terms of such preliminary franchise agreements or commitments provide for initial franchise fees of between $0 and $25,000 and royalties of between 2.5% and 3.5% of restaurant sales. Through March 30, 2004, we have received no payments from these franchise restaurants as none were due. After the completion of this offering, the executive officers will not be granted any additional franchise rights.

        The franchise agreements and preliminary franchise agreements that we have entered into with our executive officers, directors and 5% stockholders contain the same terms and conditions as those agreements that we enter into with our other franchisees, with the exception of the initial franchise fees and the royalty rates. A preliminary agreement for a franchise may be terminated if the franchisee does not identify and obtain our approval of its restaurant management personnel, locate and obtain our approval of a suitable site for the restaurant or does not demonstrate to us that it has secured necessary capital and financing to develop the restaurant. Once a franchise agreement has been entered into, it may be terminated if the franchisee defaults in the performance of any of its obligations under the agreement, including its obligations to operate the restaurant in strict accordance with our standards and specifications. A franchise agreement may also be terminated if a franchisee dies, becomes disabled or becomes insolvent, fails to make its required payments, creates a threat to the public health or safety, ceases to operate the restaurant, or misuses the Texas Roadhouse trademarks.

Other Related Transactions

        W. Kent Taylor owns a substantial interest in Buffalo Construction, Inc., a restaurant construction business that provides services to us and other restaurant companies. In 2001, 2002, 2003 and 2004 Q1, we made payments to Buffalo Construction, Inc. totaling $13.4 million, $20.4 million, $15.0 million and $5.2 million respectively, for such services. At the completion of this offering, Mr. Taylor will sell his entire ownership interest in Buffalo Construction, Inc.

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        The Longview, Texas restaurant, which is being acquired by us in connection with the completion of this offering, leases the land and restaurant building from an entity controlled by Steven L. Ortiz, our Chief Operating Officer. The lease is for 15 years and will terminate in November 2014. The lease can be renewed for two additional periods of five years each. Rent is currently $15,541 per month and will increase by 5% on each of the 6^th and 11^th anniversary dates of the lease. The lease can be terminated if the tenant fails to pay the rent on a timely basis, fails to maintain the insurance specified in the lease, fails to maintain the building and property or becomes insolvent. Total rent payments in each of the years 2001, 2002 and 2003 were $186,492, and $46,623 for 2004 Q1.

        Our Elizabethtown, Kentucky restaurant leases the land and restaurant building from an entity which is owned by W. Kent Taylor and three of our 5% stockholders. The lease is for 10 years and will terminate on March 31, 2007. The lease can be renewed for three additional periods of five years each. Rent throughout the term is $12,200 per month. The lease can be terminated if the tenant fails to pay rent on a timely basis, fails to maintain insurance, abandons the property or becomes insolvent. Total rent payments were approximately $146,400 in each of the years 2001, 2002 and 2003 and $36,600 in 2004 Q1.

        We employ Juli Miller Hart, the wife of G.J. Hart, our Chief Executive Officer, as Director of Public Relations for which she was paid total compensation of $132,800 for services rendered in 2003 and $107,800 for services rendered in 2002. Ms. Hart reports to W. Kent Taylor who conducts her performance reviews and determines her compensation.

        WKT Restaurant Corp. which is owned by W. Kent Taylor received royalties of $1.4 million, $2.1 million and $2.6 million in 2001, 2002 and 2003, respectively, as well as $773,000 in 2004 Q1 that it was entitled to receive as consideration for its contribution of the Texas Roadhouse operating system and concept to Texas Roadhouse Holdings LLC. WKT Restaurant Corp. has merged into Texas Roadhouse, Inc., which issued 2,217,000 shares of our Class B common stock to Mr. Taylor.

        John D. Rhodes is a director and substantial stockholder of Confluent Inc. which provided certain business intelligence services to us from January 2002 through February 2004 for which it was paid an aggregate of $91,000. These business services included generating marketing analysis using their proprietary software and data provided by the Company.

        We entered into real estate lease agreements for franchise restaurants located in Everett, MA and Longmont, CO prior to our granting franchise rights for those restaurants. We have subsequently assigned the leases to the franchisees, but we remain contingently liable if a franchisee defaults under the terms of a lease. The Longmont lease expires in May 2014 and the Everett lease expires in February 2018.

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PRINCIPAL AND SELLING STOCKHOLDERS

        The following tables set forth information known to us regarding beneficial ownership of our common stock as of April 30, 2004, and as adjusted to reflect our corporate reorganization, by:

•

each person known by us to be the beneficial owner of more than 5% of either class of our common stock;



•

each of the selling stockholders;



•

each named executive officer;



•

each of our directors; and



•

all of our executive officers and directors as a group.

        Unless otherwise noted below, and subject to applicable community property laws, to our knowledge, each person has sole voting and investment power over the shares shown as beneficially owned, except to the extent authority is shared by spouses under applicable law and except as set forth in the footnotes to the table.

        The number of shares beneficially owned by each shareholder is determined under rules promulgated by the SEC and assumes the underwriters do not exercise their over-allotment option. The information does not necessarily indicate beneficial ownership for any other purpose. Under these rules, the number of shares of common stock deemed outstanding includes shares issuable upon exercise of options held by the respective person or group that may be exercised within 60 days after April 30, 2004. For purposes of calculating each person's or group's percentage ownership, stock options exercisable within 60 days after April 30, 2004 are included for that person or group but not the stock options of any other person or group.

        As of April 30, 2004, after giving effect to the combination of our operations under Texas Roadhouse, Inc., there would have been            shares of Class A common stock and            shares of Class B common stock outstanding.

	Before the Offering						Following the Offering
					Beneficial Ownership of Common Stock						Beneficial Ownership of Common Stock(3)
	Class A Common Stock		Class B Common Stock(2)				Class A Common Stock		Class B Common Stock(2)
Beneficial Owner(1)					Economic Interest (%)	Voting Power (%)					Economic Interest (%)	Voting Power (%)
	Shares	Percent	Shares	Percent			Shares	Percent	Shares	Percent
W. Kent Taylor**
John D. Rhodes
Amar Desai
Mehendra Patel
George S. Rich
G.J. Hart
Steven L. Ortiz
Scott M. Colosi
Sheila C. Brown
All Executive Officers and Directors as a Group (9 persons)

*

Less than 1% of the class.

**

Selling stockholder.

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(1)

Unless otherwise indicated in the footnotes, the address of each of the beneficial owners identified is c/o Texas Roadhouse, Inc., 6040 Dutchmans Lane, Suite 400, Louisville, Kentucky 40205.

(2)

Share numbers and percentages reflect amount after this offering.

(3)

These numbers do not take into account any exercise of the underwriters' over-allotment option. This option has been granted by some of our stockholders, as follows:

•

Up to                        shares of our Class A common stock from                        of the                        shares of Class A common stock he individually holds;

•

Up to                        shares of our Class A common stock from                        of the                        shares of Class A common stock he individually holds;

•

Up to                        shares of our Class A common stock from                        of the                        shares of Class A common stock he individually holds;

•

Up to                        shares of our Class A common stock from                        of the                        shares of Class A common stock he individually holds; and

•

Up to                        shares of our Class A common stock from                        of the                        shares of Class A common stock he individually holds.

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DESCRIPTION OF CAPITAL STOCK

        The following description of our capital stock and provisions of our certificate of incorporation and bylaws are summaries and are qualified by reference to the terms of these documents. Copies of these documents have been filed with the SEC as exhibits to the registration statement of which this prospectus forms a part.

        Our authorized capital stock consists of 100,000,000 shares of Class A common stock, par value $0.001 per share, 8,000,000 shares of Class B common stock, par value $0.001 per share and 1,000,000 shares of preferred stock, par value $0.001 per share.

Common Stock

        Of the authorized shares of common stock, after giving effect to this offering and the combination of our operations under Texas Roadhouse, Inc., on the closing date there will be outstanding:

•

shares of Class A common stock; and



•

shares of Class B common stock, all of which will be held by W. Kent Taylor.

        The common stock to be outstanding after this offering excludes shares of Class A common stock issuable upon the exercise of stock options. The material terms and provisions of our certificate of incorporation affecting the relative rights of the Class A common stock and the Class B common stock are described below. The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to the certificate of incorporation and bylaws filed with the registration statement of which this prospectus forms a part, and to the Delaware General Corporation Law.

Dividends

        Subject to the rights of the holders of any preferred stock that may be outstanding, holders of Class A common stock are entitled to receive, share for share with holders of Class B common stock, dividends as may be declared by our board of directors out of funds legally available to pay dividends, and, in the event of liquidation, to share pro rata with the holders of Class B common stock in any distribution of our assets after payment or providing for the payment of liabilities and the liquidation preference of any outstanding preferred stock.

Voting Rights

        Except as required by Delaware law or except as otherwise provided in our certificate of incorporation, Class A common stock and Class B common stock will vote together as a single class on all matters presented to a vote of stockholders, including the election of directors. Each holder of Class A common stock is entitled to one vote for each share held of record on the applicable record date for all of these matters. Holders of Class A common stock have no cumulative voting rights or preemptive rights to purchase or subscribe for any stock or other securities, and there are no conversion rights or redemption or sinking fund provisions with respect to Class A common stock. All outstanding shares of Class A common stock are, and the shares of Class A common stock offered in this prospectus will be when issued, fully paid and nonassessable. Additionally, our certificate of incorporation requires that we reserve and keep available out of authorized but unissued Class A common stock, solely for conversion of shares of Class B common stock, sufficient shares to convert all outstanding shares of Class B common stock.

        Class B common stock is identical in all respects to Class A common stock, except with respect to voting and conversion rights. Class A common stock and Class B common stock will vote together as a single class on all matters presented to a vote of stockholders, including the election of directors. Each

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holder of Class B common stock is entitled to ten votes for each share held of record on the applicable record date for all of these matters. W. Kent Taylor, or other entities controlled by him, will be the only holders of shares of Class B common stock.

Conversion Rights

        Each share of our Class B common stock is automatically convertible into one share of Class A common stock upon the earliest of:

•

the date such share ceases to be beneficially owned, as such term is defined under Section 13(d) of the Securities Exchange Act of 1934, as amended, by W. Kent Taylor;



•

the date that W. Kent Taylor ceases to beneficially own at least 20% of the outstanding shares of our common stock;



•

the death or permanent disability of W. Kent Taylor; and



•

August 15, 2009.

        In addition, each share of Class B common stock may be converted at any time into one share of Class A common stock at the option of the holder. The one-to-one conversion ratio will be equitably preserved in the event of any stock dividend, stock split or combination or merger, consolidation or other reorganization of Texas Roadhouse with another entity.

Preferred Stock

        Upon completion of this offering, our board of directors is authorized, without further vote or action by the stockholders, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our board of directors, which may include, but are not limited to, dividend rights, voting rights, redemption and sinking fund provisions, liquidation preferences, conversion rights and preemptive rights.

        Upon completion of this offering, our board of directors has the authority to issue preferred stock and to determine its rights and preferences in order to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desired flexibility in connection with possible acquisitions and other corporate purposes, could adversely affect the voting power or other rights of the holders of our common stock, and could make it more difficult for a third party to acquire, or could discourage a third party from attempting to acquire, a majority of our outstanding common stock. We have no present plans to issue any shares of preferred stock.

Transfer Agent

        We have appointed National City Bank as transfer agent and registrar for shares of our common stock.

Delaware Law and Certain Charter and Bylaw Provisions

        We are subject to the provisions of Section 203 of the General Corporation Law of Delaware. In general, the statute prohibits a publicly held Delaware corporation from engaging in a "business combination" with "interested" stockholders for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes certain mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to exceptions, an "interested" stockholder is a person who, alone or together with his affiliates and associates, owns, or

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within the prior three years did own, 15.0% or more of the corporation's voting stock. The statutory restrictions will not apply to a business combination between our company and W. Kent Taylor because Mr. Taylor became an interested stockholder before our company became subject to Section 203. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors, including discouraging attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

        Our bylaws provide that:

•

any action required or permitted to be taken by the stockholders at an annual meeting or special meeting of stockholders may only be taken if it is properly brought before such meeting; and



•

special meetings of the stockholders may be called by our board of directors, the chairman of our board of directors, our Chief Executive Officer or our President and shall be called by our Secretary at the written request of at least 50.0% in voting power of all capital stock outstanding and entitled to cast votes at the meeting.

        Our bylaws provide that, in order for any stockholder business (other than stockholder nominations of directors) to be considered "properly brought" before a meeting, a stockholder must comply with requirements regarding advance notice to us. For business to be properly brought before a meeting by a stockholder, it must be a proper matter for stockholder action under the Delaware General Corporation Law, the stockholder must have given timely notice thereof in writing to our Secretary, and the notice must comply with the procedures set forth in our bylaws. A stockholder's notice, to be timely, must be delivered to or mailed and received at our principal executive offices, not less than 120 calendar days before the one year anniversary of the date of our proxy statement issued in connection with the prior year's annual meeting in the case of an annual meeting, and not less than 60 calendar days before the meeting in the case of a special meeting; provided, however, that if a public announcement of the date of the special meeting is not given at least 70 days before the scheduled date for the special meeting, then a stockholder's notice will be timely if it is received at our principal executive offices within 10 days following the date public notice of the meeting date is first given, whether by press release or other public filing.

        Our bylaws also provide that subject to the rights of holders of any class or series of capital stock then outstanding, nominations for the election or re-election of directors at a meeting of the stockholders may be made by any stockholder entitled to vote in the election of directors generally who complies with the procedures set forth in our bylaws and who is a stockholder of record at the time notice is delivered to our Secretary. Any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election or re-election as directors at an annual meeting only if timely notice of the stockholder's intent to make such a nomination has been given in writing to our Secretary. To be timely, a stockholder's notice must be delivered to or mailed and received at our principal executive offices not less than 120 calendar days before the one year anniversary of the date of our proxy statement issued in connection with the prior year's annual meeting in the case of an annual meeting, and not less than 60 calendar days before the meeting in the case of a special meeting; provided, however, that if a public announcement of the date of the special meeting is not given at least 70 days before the scheduled date for the special meeting, then a stockholder's notice will be timely if it is received at our principal executive offices within 10 days following the date public notice of the meeting date is first given, whether by press release or other public filing.

        The purpose of requiring stockholders to give us advance notice of nominations and other stockholder business is to afford our board of directors a meaningful opportunity to consider the qualifications of the proposed nominees and the advisability of the other proposed business and, to the extent deemed necessary or desirable by our board of directors, to inform stockholders and make recommendations about such qualifications or business, as well as to provide a more orderly procedure

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for conducting meetings of stockholders. Although our bylaws do not give our board of directors any power to disapprove stockholder nominations for the election of directors or proposals for action, they may have the effect of precluding a contest for the election of directors or the consideration of stockholder proposals if proper procedures are not followed and of discouraging or deterring a third party from conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal without regard to whether consideration of such nominees or proposals might be harmful or beneficial to us and our stockholders. These provisions could also delay stockholder actions that are favored by the holders of a majority of our outstanding voting securities until the next stockholders' meeting.

        As discussed above, our Class B common stock has ten votes per share, while Class A common stock, which is the class of stock we are selling in this offering and which will be the only class of stock that is publicly traded, has one vote per share. After the offering, 100% of our Class B common stock will be controlled by W. Kent Taylor, representing             % of the voting power of our outstanding capital stock. Until our dual class structure terminates, W. Kent Taylor will be able to control all matters submitted to our stockholders for approval even if he owns significantly less than 50% of the number of shares of our outstanding common stock. This concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that other stockholders may view as beneficial.

Limitation of Liability and Indemnification of Officers and Directors

        Our bylaws provide indemnification, including advancement of expenses, to the fullest extent permitted under applicable law to any person made or threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative by reason of the fact that such person is or was a director or officer of Texas Roadhouse, Inc. or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust, or other enterprise, including service with respect to an employee benefit plan.

        Our certificate of incorporation provides that our directors will not be personally liable to us or our stockholders for monetary damages for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or unlawful stock repurchases as provided in Section 174 of the Delaware General Corporation Law or derived an improper personal benefit from their action as directors. This provision does not limit or eliminate our rights or the rights of any stockholder to seek nonmonetary relief such as an injunction or rescission in the event of a breach of a director's duty of care. In addition, this provision does not limit the directors' responsibilities under Delaware law or any other laws, such as the federal securities laws. Finally, this provision applies to an officer of a corporation only if he or she is a director of the corporation and is acting in his capacity as director, and does not apply to the officers of the corporation who are not directors.

        We have obtained insurance that insures our directors and officers against certain losses and which insures us against our obligations to indemnify the directors and officers, and we intend to obtain greater coverage. We also intend to enter into indemnification agreements with our directors and executive officers.

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SHARES ELIGIBLE FOR FUTURE SALE

        Upon completion of this offering and our corporate reorganization and assuming an initial public offering price of $            per share of Class A common stock, the midpoint of the range set forth on the cover of this prospectus, we will have            shares of Class A common stock outstanding. If the underwriters exercise their over-allotment option in full, we will have a total of            shares of our Class A common stock outstanding. Additionally, we will have            shares of Class B common stock outstanding, which may be converted into shares of Class A common stock. All of the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, unless such shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. All of the remaining shares of Class A and Class B common stock held by existing stockholders are "restricted securities" as that term is defined in Rule 144 under the Securities Act, described below. Approximately            of these shares are subject to lock-up agreements as described below and commencing 180 days after the date of this prospectus will be freely tradeable subject to applicable holding period, volume and other limitations under Rule 144.

        Before this offering, there has been no public market for shares of our Class A common stock. No predictions can be made as to the effect, if any, that sales of shares of our Class A common stock from time to time, or the availability of shares of our Class A common stock for future sale, may have on the market price for shares of our Class A common stock. Sales of substantial amounts of Class A common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our Class A common stock and could impair our future ability to obtain capital through an offering of equity securities.

Sales of Restricted Securities

        Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 144(k) promulgated under the Securities Act, each of which is summarized below.

        Rule 144.    In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus a person who has beneficially owned restricted shares for at least one year and has complied with the requirements described below would be entitled to sell a specified number of shares within any three-month period. That number of shares cannot exceed the greater of one percent of the number of shares of common stock then outstanding, which will equal approximately    shares immediately after this offering, or the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 reporting the sale. Sales under Rule 144 are also restricted by manner of sale provisions, notice requirements and the availability of current public information about us. Rule 144 provides that our affiliates who are selling shares of our common stock that are not restricted shares must comply with the same restrictions applicable to restricted shares with the exception of the holding period requirement.

        Rule 144(k).    Under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than one of our affiliates, is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. Accordingly, unless otherwise restricted, these shares may be sold upon the expiration of the lock-up period described below.

        Lock-up Agreements.    We, our directors and executive officers, most of our existing stockholders and the holders of our options have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of Class A common stock,

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and those holders of stock and options may not, directly or indirectly, offer, sell, contract to sell, pledge or otherwise dispose of or hedge any Class A common stock or securities convertible into or exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC for a period of 180 days from the date of this prospectus.

        The Rule 144 holding period for approximately         restricted shares should be deemed not to commence until closing of this offering as a result of the combination of our operations under our new holding company, and, accordingly such shares would not be available for sale in the public market pursuant to Rule 144 until after one year following the date of our issuance of these shares upon such closing. The holding period for an additional         restricted shares may be deemed to have commenced more than two years prior to the closing of this offering and thus unless held by affiliates or subject to lock-up agreements would be available for sale in the public market. We intend to seek guidance from the SEC as to the determination of the commencement date of the holding period for such shares.

Registration Statements

        We intend to file a registration statement on Form S-8 under the Securities Act promptly following the offering to register up to           shares of our Class A common stock underlying outstanding stock options or reserved for issuance under our 2004 Equity Incentive Plan. This registration statement will become effective upon filing, and shares covered by it will be eligible for sale in the public market immediately after its effective date, subject to Rule 144 volume limitations applicable to affiliates and the lock-up agreements described above.

Registration Rights

        Subject to limitations contained in the registration rights agreement that we, W. Kent Taylor and other stockholders have become parties to in connection with the combination of our operations under Texas Roadhouse, Inc., at any time beginning 180 days after the date of this prospectus, the parties to the registration rights agreement may require that we use our best efforts to register up to            of their shares of Class A common stock for resale pursuant to an underwritten public offering. In addition, if we register any of our securities either for our own account or for the account of other security holders, the parties to the registration rights agreement will be entitled to include their shares of Class A common stock in the registration, subject to the ability of the underwriters to limit the number of shares included in the offering. Registration of such shares under the Securities Act would, except for shares purchased by affiliates, result in such shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of such registration.

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK

        The following discussion of certain U.S. federal income and estate tax considerations relevant to Non-U.S. Holders of our Class A common stock is for general information only.

        As used in this prospectus, the term "Non-U.S. Holder" is a beneficial owner of our Class A common stock other than:

•

a citizen or resident of the United States;



•

a corporation or other entity taxable as a corporation under U.S. federal income tax laws created or organized in or under the laws of the United States or of any state of the United States or the District of Columbia;



•

an estate the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or



•

a trust subject to the primary supervision of a U.S. court and the control of one or more U.S. persons, or a trust that has validly elected to be treated as a domestic trust under applicable Treasury regulations.

        If a partnership, including any entity treated as a partnership for U.S. federal income tax purposes, is a holder of our Class A common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A holder that is a partnership, and partners in such partnership, should consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of our Class A common stock.

        This discussion does not consider:

•

U.S. federal income, estate or gift tax consequences other than as expressly set forth below;



•

any state, local or foreign tax consequences;



•

the tax consequences to the stockholders, beneficiaries or holders of other beneficial interests in a Non-U.S. Holder;



•

special tax rules that may apply to selected Non-U.S. Holders, including without limitation, partnerships or other pass-through entities for U.S. federal income tax purposes, banks or other financial institutions, insurance companies, dealers or traders in securities, tax-exempt entities and certain former citizens or residents of the United States;



•

special tax rules that may apply to a Non-U.S. Holder that holds our Class A common stock as part of a "straddle," "hedge" or "conversion transaction;" or



•

a Non-U.S. Holder that does not hold our Class A common stock as a capital asset within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the "Code").

        The following discussion is based on provisions of the Code, applicable Treasury regulations and administrative and judicial interpretations thereof, all as of the date of this prospectus, and all of which are subject to change, retroactively or prospectively. We have not requested a ruling from the U.S. Internal Revenue Service or an opinion of counsel with respect to the U.S. federal income tax consequences of the purchase or ownership of our Class A common stock to a Non-U.S. Holder. There can be no assurance that the U.S. Internal Revenue Service will not take a position contrary to such statements or that any such contrary position taken by the U.S. Internal Revenue Service would not be sustained.

        YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR

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SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Dividends

        We do not anticipate paying cash dividends on our Class A common stock in the foreseeable future. See "Dividend Policy." If distributions are paid on shares of our Class A common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, it will constitute a return of capital that is applied against and reduces, but not below zero, a Non-U.S. Holder's adjusted tax basis in our Class A common stock. Any remainder will constitute gain on the Class A common stock. The dividends on our Class A common stock paid to a Non-U.S. Holder generally will be subject to withholding of U.S. federal income tax at a 30% rate on the gross amount of the dividend or such lower rate as may be provided by an applicable income tax treaty.

        Dividends that are effectively connected with a Non-U.S. Holder's conduct of a trade or business in the United States or attributable to a permanent establishment or a fixed base in the United States under an applicable income tax treaty, known as "U.S. trade or business income," are generally not subject to the 30% withholding tax if the Non-U.S. Holder files the appropriate U.S. Internal Revenue Service form with the payor. However, such U.S. trade or business income, net of specified deductions and credits, generally is taxed at the same graduated rates as applicable to U.S. persons. Any U.S. trade or business income received by a Non-U.S. Holder that is a corporation may also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as specified by an applicable income tax treaty.

        A Non-U.S. Holder who claims the benefit of an applicable income tax treaty generally will be required to satisfy applicable certification and other requirements before the distribution date. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

        A Non-U.S. Holder of our Class A common stock that is eligible for a reduced rate of U.S. federal withholding tax or other exclusion from withholding under an income tax treaty but that did not timely provide required certifications or other requirements, or that has received a distribution subject to withholding in excess of the amount properly treated as a dividend, may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for refund with the U.S. Internal Revenue Service.

Gain on Disposition of Class A Common Stock

        A Non-U.S. Holder generally will not be subject to U.S. federal income tax in respect of gain recognized on a disposition of our Class A common stock unless:

•

the gain is U.S. trade or business income, in which case such gain generally will be taxed in the same manner as gains of U.S. persons, and such gain may also be subject to the branch profits tax in the case of a corporate Non-U.S. Holder;



•

the Non-U.S. Holder is an individual who holds our Class A common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment), is present in the United States for more than 182 days in the taxable year of the disposition and meets certain other requirements;

96

•

the Non-U.S. Holder is subject to tax pursuant to the provisions of the Code applicable to certain former citizens or residents of the United States; or



•

we are or have been a "U.S. real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. Holder held our Class A common stock.

        Generally, a corporation is a "U.S. real property holding corporation" if the fair market value of its "U.S. real property interests" equals or exceeds 50.0% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The tax relating to stock in a "U.S. real property holding corporation" generally will not apply to a Non-U.S. Holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5.0% or less of our Class A common stock, provided that our Class A common stock was regularly traded on an established securities market. We believe we have never been, are not currently and are not likely to become a U.S. real property holding corporation for U.S. federal income tax purposes. However, since we own a significant amount of real property interests and may acquire such interests in the future, no assurance can be given that we will not become a U.S. real property holding corporation in the future.

Federal Estate Tax

        Class A common stock owned or treated as owned by an individual who is a Non-U.S. Holder at the time of death will be included in the individual's gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise.

Information Reporting and Backup Withholding Tax

        We must report annually to the U.S. Internal Revenue Service and to each Non-U.S. Holder the amount of dividends paid to that holder and the tax withheld with respect to those dividends. Copies of the information returns reporting those dividends and the amount of tax withheld may also be made available to the tax authorities in the country in which the Non-U.S. Holder is a resident under the provisions of an applicable income tax treaty or agreement.

        U.S. federal backup withholding, currently at a 28.0% rate, generally will not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a Non-U.S. Holder if the holder has provided the required certification that it is not a U.S. person or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a U.S. person that is not an exempt recipient.

        Payments of the proceeds from a disposition effected outside the United States by or through a non-U.S. broker generally will not be subject to information reporting or backup withholding. However, information reporting, but generally not backup withholding, generally will apply to such a payment if the broker has certain connections with the United States unless the broker has documentary evidence in its records that the beneficial owner is a Non-U.S. Holder and specified conditions are met or an exemption is otherwise established.

        Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. Holder that result in an overpayment of taxes generally will be refunded, or credited against the holder's U.S. federal income tax liability, if any, provided that the required information is timely furnished to the U.S. Internal Revenue Service.

        Non-U.S. Holders should consult their own tax advisors regarding application of backup withholding in their particular circumstance and the availability of, and procedure for obtaining, an exemption from backup withholding under current U.S. Treasury regulations.

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UNDERWRITING

        We and W. Kent Taylor, the primary selling stockholder, are offering the shares of Class A common stock described in this prospectus through a number of underwriters. Banc of America Securities LLC, RBC Capital Markets Corporation, SG Cowen & Co., LLC and Wachovia Capital Markets, Inc. are the representatives of the underwriters. We, Mr. Taylor, and certain other selling stockholders (who will only sell their shares of Class A common stock under this offering pursuant to an over-allotment option granted to the underwriters), have entered into an underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, we and the primary selling stockholder have agreed to sell to the underwriters, and each underwriter has agreed to purchase, the number of shares of Class A common stock listed next to its name in the following table:

Underwriter		Number of Shares
Banc of America Securities LLC
RBC Capital Markets Corporation
SG Cowen & Co., LLC
Wachovia Capital Markets, Inc.
	Total

        The underwriting agreement is subject to a number of terms and conditions and provides that the underwriters must buy all of the shares if they buy any of them. The underwriters will sell the shares to the public when and if the underwriters buy the shares from us and the primary selling stockholder.

        The selling stockholders will be deemed to be "underwriters" with respect to this offering within the meaning of the Securities Act. As a result, any profits on the sale of the shares of common stock by the selling stockholders may be deemed to be underwriting discounts and commissions under the Securities Act. Underwriters in this offering may be subject to statutory liabilities including, but not limited to, those of Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.

        The underwriters initially will offer the shares to the public at the price specified on the cover page of this prospectus. The underwriters may allow a concession of not more than $                              per share to selected dealers. The underwriters may also allow, and those dealers may re-allow, a concession of not more than $                               per share to some other dealers. If all the shares are not sold at the public offering price, the underwriters may change the public offering price and the other selling terms; however, any such changes would not result in any change to the offering proceeds received, or underwriting compensation paid, by us or the number of shares outstanding. The Class A common stock is offered subject to a number of conditions, including:

•

receipt and acceptance of the shares of our Class A common stock by the underwriters upon satisfaction or waiver of all conditions to their purchase in accordance with the underwriting agreement; and



•

the underwriters' right to reject orders from prospective investors in whole or in part.

        Over-Allotment Option.    The selling stockholders (including the primary selling stockholder) have granted the underwriters an over-allotment option to buy up to            additional shares of our Class A common stock at the same price per share as they are paying for the shares shown in the table above. These additional shares would cover sales of shares by the underwriters that exceed the total number of shares shown in the table above. The underwriters may exercise this option at any time within 30 days after the date of this prospectus. To the extent that the underwriters exercise this option, each underwriter will purchase additional shares from such selling stockholders in approximately the same

98

proportion as it purchased the shares shown in the table above. If purchased, the additional shares will be sold by the underwriters on the same terms as those on which the other shares are sold. We will pay the expenses associated with the exercise of this option.

        Availability of Prospectus Online.    A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters participating in this offering or on the netroadshow.com website. Other than the prospectus in electronic format, the information on any such web site, or accessible through any such web site, is not part of the prospectus.

        Discount and Commissions.    The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us and by the selling stockholders. These amounts are shown assuming no exercise and full exercise of the underwriters' option to purchase additional shares.

		Paid by Us		Paid by the Selling Stockholders
		No Exercise	Full Exercise	No Exercise	Full Exercise
Per Share		$	$	$	$
	Total	$	$	$	$

        We estimate that the expenses of the offering to be paid by us, not including underwriting discounts and commissions, will be approximately $                  .

        Listing.    We expect our Class A common stock to be approved for quotation on the Nasdaq National Market under the symbol "TXRH."

        Stabilization.    In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our Class A common stock, including:

•

stabilizing transactions;



•

short sales;



•

syndicate covering transactions;



•

imposition of penalty bids; and



•

purchases to cover positions created by short sales.

        Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our Class A common stock while this offering is in progress. Stabilizing transactions may include making short sales of our Class A common stock, which involves the sale by the underwriters of a greater number of shares of Class A common stock than they are required to purchase in this offering, and purchasing shares of Class A common stock from us or on the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' over-allotment option referred to above, or may be "naked" shorts, which are short positions in excess of that amount. Syndicate covering transactions involve purchases of our Class A common stock in the open market after the distribution has been completed in order to cover syndicate short positions.

        The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the over-allotment option.

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        A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the Class A common stock in the open market that could adversely affect investors who purchased in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

        The representatives also may impose a penalty bid on underwriters and dealers participating in the offering. This means that the representatives may reclaim from any syndicate members or other dealers participating in the offering the underwriting discount, commissions or the selling concession on shares sold by them and purchased by the representatives in stabilizing or short covering transactions.

        These activities may have the effect of raising or maintaining the market price of our Class A common stock or preventing or retarding a decline in the market price of our Class A common stock. As a result of these activities, the price of our Class A common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the Nasdaq National Market, in the over-the counter market or otherwise.

        The underwriters have informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess of 5% of the shares of Class A common stock being offered.

        IPO Pricing.    Before this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between us and the representatives of the underwriters. Among the factors to be considered in these negotiations are:

•

the history of, and prospects for, our company and the industry in which we compete;



•

our past and present financial performance;



•

an assessment of our management;



•

the present state of our development;



•

the prospects for our future earnings;



•

the prevailing conditions of the applicable United States securities market at the time of this offering;



•

market valuations of publicly traded companies that we and the representatives of the underwriters believe to be comparable to us; and



•

other factors deemed relevant.

        The estimated initial public offering price range set forth on the cover of this preliminary prospectus is subject to change as a result of market conditions and other factors.

        Qualified Independent Underwriter.    Because we anticipate that some of the underwriters or their affiliates will receive more than 10% of the net proceeds of this offering in connection with our application of the net proceeds, those underwriters may be deemed to have a "conflict of interest" under Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities Dealers. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 2720 of the Conduct Rules. In accordance with this rule, the initial public offering price will be no higher than that recommended by a "qualified independent underwriter" meeting certain standards. In accordance with this requirement, SG Cowen & Co., LLC has assumed the responsibilities of acting as a qualified independent underwriter and will recommend a price in compliance with the requirements of Rule 2720. SG Cowen & Co., LLC, in its role as qualified independent underwriter, has performed due diligence investigations and reviewed and participated in the preparation of this prospectus and the registration statement of which this prospectus is a part. SG Cowen & Co., LLC will receive no

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compensation for acting in this capacity; however, we and certain of the selling stockholders have agreed to indemnify SG Cowen & Co., LLC for acting as a qualified independent underwriter against specified liabilities under the Securities Act. Furthermore, under Rule 2720, with respect to those customer accounts over which the underwriters have discretionary control, the underwriters will not execute any transaction in the shares of Class A common stock being offered in connection with this offering without first obtaining the prior written approval of such customer.

        Lock-up Agreements.    We, our directors, executive officers and existing stockholders who in the aggregate beneficially own in excess of            % of the currently outstanding shares have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of Class A common stock, and those holders of common stock may not, directly or indirectly, offer, sell, contract to sell, pledge or otherwise dispose of or hedge any common stock or securities convertible into or exchangeable for shares of Class A common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC for a period of 180 days from the date of this prospectus. This consent may be given at any time without public notice. In addition, during this 180 day period, we have also agreed not to file any registration statement for, and each of our officers and stockholders has agreed not to make any demand for, or exercise any right of, the registration of, any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for Class A common stock without the prior written consent of Banc of America Securities LLC.

        Directed Share Program.    At our request, the underwriters have reserved for sale to our employees, franchisees and their employees, stockholders, majority-owned restaurant partners, directors and family members, friends and business associates of our directors and executive officers at the initial public offering price up to 5% of the shares of Class A common stock being offered by this prospectus. The sale of the reserved shares to these purchasers will be made by Banc of America Securities LLC. The purchasers of these shares may be subject to a lock-up agreement with us. We do not know if our employees, franchisees and their employees, stockholders, majority-owned restaurant partners, directors and family members, friends and business associates of our directors and executive officers will choose to purchase all or any portion of the reserved shares, but any purchases they do make will reduce the number of shares available to the general public. If all of these reserved shares are not purchased, the underwriters will offer the remainder to the general public on the same terms as the other shares offered by this prospectus.

        Indemnification.    We and the selling stockholders will indemnify the underwriters and the qualified independent underwriter against some liabilities, including liabilities under the Securities Act. If we and the selling stockholders are unable to provide this indemnification, we will contribute to payments the underwriters may be required to make in respect of those liabilities. We will similarly indemnify the selling stockholders against some liabilities, including liabilities as underwriters under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments the selling stockholders may be required to make in respect of those liabilities.

        Conflicts/Affiliates.    The underwriters and their affiliates may in the future provide various investment banking, commercial banking and other financial services for us and our affiliates for which services they may receive customary fees. Banc of America Securities LLC, one of the underwriters in this offering, served as a co-lead arranger of our credit facility. In addition, Bank of America, N.A., an affiliate of Banc of America Securities LLC, is also a lender under the facility. As of March 30, 2004, $54.3 million was outstanding under this facility. As a lender under the facility, Bank of America, N.A. will receive a portion of the proceeds from this offering in connection with our repayment of outstanding indebtedness under the facility. In connection with our proposed new credit facility, we have received commitments from Bank of America, N.A., Royal Bank of Canada and Wachovia Bank, N.A., affiliates of Banc of America Securities LLC, RBC Capital Markets and Wachovia Securities, respectively, all of whom are underwriters of this offering.

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LEGAL MATTERS

        The validity of the shares of Class A common stock offered hereby will be passed upon for us by Frost Brown Todd LLC, Louisville, Kentucky. As of the date of this prospectus, certain attorneys of Frost Brown Todd LLC hold an aggregate of            shares of our Class A common stock. The underwriters in this offering were represented by Shearman & Sterling LLP, New York, New York.

EXPERTS

        The combined financial statements of Texas Roadhouse Holdings LLC and entities under common control as of December 31, 2002 and December 30, 2003, and for each of the fiscal years in the three-year period ended December 30, 2003, have been included herein and in the registration statement in reliance on reports of KPMG LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of Class A common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information with respect to Texas Roadhouse, Inc. and the Class A common stock offered hereby, please refer to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.

        A copy of the registration statement and the exhibits and schedules filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 450 Fifth Street, N.W., Room 1200, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov.

        Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act, and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above. We also intend to furnish our stockholders with annual reports containing our financial statements audited by an independent registered public accounting firm and quarterly reports containing our unaudited financial information. We maintain a website at www.Texasroadhouse.com. You may access our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. The reference to our web address does not constitute incorporation by reference of the information contained at this site.

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INDEX TO COMBINED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-2
Combined Balance Sheets	F-3
Combined Statements of Income	F-4
Combined Statements of Members' Equity and Comprehensive Income	F-5
Combined Statements of Cash Flows	F-6
Notes to Combined Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Manager of
Texas Roadhouse Holdings LLC and Entities Under Common Control

        We have audited the accompanying combined balance sheets of Texas Roadhouse Holdings LLC and entities under common control as of December 31, 2002 and December 30, 2003, and the related combined statements of income, members' equity and comprehensive income and cash flows for each of the years in the three-year period ended December 30, 2003. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Texas Roadhouse Holdings LLC and entities under common control as of December 31, 2002 and December 30, 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 30, 2003, in conformity with accounting principles generally accepted in the United States of America.

        As discussed in note 2 to the combined financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, in 2002.

/s/  KPMG LLP    
Louisville, Kentucky
April 26, 2004,
except as to Notes 13 and 14,
which are as of July 16, 2004

F-2

Texas Roadhouse Holdings LLC and Entities Under Common Control

Combined Balance Sheets

(in thousands, except share and per share data)

			December 31, 2002		December 30, 2003		March 30, 2004		Pro Forma March 30, 2004
							(Unaudited)		(Unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	7,816	$	5,728	$	7,690	$	7,690
	Receivables, net of allowance for doubtful accounts of $47, $18 and $18 in 2002, 2003 and 2004, respectively			4,258		10,473		6,843		6,843
	Inventories			1,787		3,505		3,612		3,612
	Prepaid expenses			1,495		1,232		2,448		2,448
	Other current assets			43		36		36		36
Total current assets				15,399		20,974		20,629		20,629
Property and equipment, net				110,151		123,051		129,261		129,261
Goodwill				2,190		2,190		2,190		2,190
Other assets				787		1,978		1,930		1,930
Total assets			$	128,527	$	148,193	$	154,010	$	154,010
Liabilities and Members' Equity
Current liabilities:
	Distributions payable		$	—	$	—	$	—	$	28,152
	Current maturities of long-term debt			6,415		8,059		8,009		8,009
	Current maturities of obligations under capital leases			286		221		179		179
	Short term bank revolver			—		—		3,500		3,500
	Accounts payable			7,381		11,570		14,536		14,536
	Deferred revenue—gift certificates			7,364		10,885		6,928		6,928
	Accrued wages			4,975		4,182		2,290		2,290
	Accrued taxes and licenses			3,033		3,546		3,726		3,726
	Other accrued liabilities			1,396		2,110		1,879		1,879
Total current liabilities				30,850		40,573		41,047		69,199
Long-term debt, excluding current maturities				59,094		56,254		56,773		56,773
Obligations under capital leases, excluding current maturities				1,095		914		908		908
Stock option deposits				2,090		2,455		2,485		2,485
Deferred rent				1,182		1,405		1,475		1,475
Other liabilities				1,379		3,005		3,402		3,402
Total liabilities				95,690		104,606		106,090		134,242
Minority interest in consolidated subsidiaries				5,850		5,685		5,737		5,737
Members' equity
		Members' equity		26,987		37,902		42,183		—
		Preferred stock ($0.001 par value, 1,000,000 shares authorized; no shares outstanding or issued)		—		—		—		—
		Common stock, Class A, ($0.001 par value, 100,000,000 shares authorized, 18,708,168 shares issued and outstanding)		—		—		—		19
		Common stock, Class B, ($0.001 par value, 8,000,000 shares authorized, 2,217,000 shares issued and outstanding)		—		—		—		2
		Additional paid in capital		—		—		—		14,461
		Retained earnings		—		—		—		(168	)
		Accumulated other comprehensive loss		—		—		—		(283	)
		Total members' equity		26,987		37,902		42,183		14,031
Total liabilities and members' equity			$	128,527	$	148,193	$	154,010	$	154,010

See accompanying notes to combined financial statements.

F-3

Texas Roadhouse Holdings LLC and Entities Under Common Control

Combined Statements of Income

(in thousands, except per share data)

			52-Weeks Ended							13-Weeks Ended
			December 30, 2001		December 31, 2002		December 30, 2003			April 1, 2003		March 30, 2004
										(unaudited)
Revenue:
		Restaurant sales	$	154,359	$	226,756	$	279,519		$	65,502	$	81,893
		Franchise royalties and fees		5,553		6,080		6,934			1,579		2,005
Total revenue				159,912		232,836		286,453			67,081		83,898
Costs and expenses:
	Restaurant operating costs:
		Cost of sales		53,342		74,351		91,904			21,233		28,173
		Labor		43,607		64,506		78,070			18,342		22,275
		Rent		4,410		5,125		6,005			1,429		1,623
		Other operating		24,379		36,237		47,382			10,606		13,334
	Pre-opening			3,640		4,808		2,571			657		896
	Depreciation and amortization			5,022		6,876		8,562			2,029		2,349
	General and administrative			11,135		13,633		16,631			4,499		4,253
Total costs and expenses				145,535		205,536		251,125			58,795		72,903
Income from operations				14,377		27,300		35,328			8,286		10,995
Interest expense, net				3,649		4,212		4,350			974		1,027
Minority interest				2,899		5,168		6,704			1,773		1,959
Equity income (loss) from investments in unconsolidated affiliates				25		21		(61	)		6		44
Other income				125		—		—			—		—
Net income			$	7,979	$	17,941	$	24,213		$	5,545	$	8,053
Pro forma data (unaudited):
	Historical income before taxes		$	7,979	$	17,941	$	24,213		$	5,545	$	8,053
	Pro forma provision for income taxes			2,826		6,420		8,790			2,013	$	2,851
	Net income adjusted for pro forma provision for income taxes		$	5,153	$	11,521	$	15,423		$	3,532	$	5,202
Net income adjusted for pro forma provision for income taxes per common share:
	Basic		$	0.26	$	0.59	$	0.75		$	0.18	$	0.25
	Diluted		$	0.26	$	0.55	$	0.71		$	0.17	$	0.24
Pro forma weighted average shares outstanding:
	Basic			19,599		19,686		20,644			19,733		20,742
	Diluted			20,151		20,826		21,766			20,781		22,121

See accompanying notes to combined financial statements.

F-4

Texas Roadhouse Holdings LLC and Entities Under Common Control

Combined Statements of Members' Equity and Comprehensive Income

($ in thousands)

			Shares	Paid in Capital		Note Receivable- Stockholders			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, December 31, 2000			15,112,917	$	10,918	$	(201	)	$	1,492		$	13		$	12,222
Comprehensive income:
	Unrealized loss on available-for-sale securities		—		—		—			—			(7	)		(7	)
	Net income		—		—		—			7,979			—			7,979
		Total comprehensive income														7,972
Distributions to members			—		—		—			(4,421	)		—			(4,421	)
Capital contributions by majority stockholder			8,750		407		—			—			—			407
Minority interest liquidation adjustments			—		263		—			—			—			263
Repayment of note receivable-stockholders			—		—		92			—			—			92
Balance, December 30, 2001			15,121,667	$	11,588	$	(109	)	$	5,050		$	6		$	16,535
Net income			—		—		—		$	17,941			—		$	17,941
Exercise of stock options			189,546		342		—			—			—			342
Distributions to members			—		—		—			(8,265	)		—			(8,265	)
Capital contribution by majority stockholder			4,750		300		—			—			—			300
Minority interest liquidation adjustments			—		33		—			—			—			33
Repayment of note receivable-stockholders			—		—		101			—			—			101
Balance, December 31, 2002			15,315,963	$	12,263	$	(8	)	$	14,726		$	6		$	26,987
Comprehensive income:
	Unrealized loss on derivative		—	$	—	$	—		$	—		$	(165	)	$	(165	)
	Unrealized loss on available-for-sale securities		—		—		—			—			(6	)		(6	)
	Net income		—		—		—			24,213			—			24,213
		Total comprehensive income														24,042
Exercise of stock options			368,147		1,429		—			—			—			1,429
Distributions to members			—		—		—			(14,784	)		—			(14,784	)
Minority interest liquidation adjustments			—		220		—			—			—			220
Repayment of note receivable-stockholders			—		—		8			—			—			8
Balance, December 30, 2003			15,684,110	$	13,912	$	—		$	24,155		$	(165	)	$	37,902
Comprehensive income:
	Unrealized loss on derivative		—	$	—	$	—		$	—		$	(118	)	$	(118	)
	Net income		—		—		—			8,053			—			8,053
		Total comprehensive income														7,935
Exercise of stock options			103,847		570		—			—			—			570
Distributions to members			—		—		—			(4,224	)		—			(4,224	)
Balance, March 30, 2004 (unaudited)			15,787,957	$	14,482	$	—		$	27,984		$	(283	)	$	42,183

See accompanying notes to combined financial statements.

F-5

Texas Roadhouse Holdings LLC and Entities Under Common Control

Combined Statements of Cash Flows

(in thousands)

				52-Weeks Ended									13-Weeks Ended
				December 30, 2001			December 31, 2002			December 30, 2003			April 1, 2003			March 30, 2004
													(Unaudited)
Cash flows from operating activities:
	Net income			$	7,979		$	17,941		$	24,213		$	5,545		$	8,053
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			5,022			6,876			8,562			2,029			2,349
		Gain on sale of majority interest in consolidated affiliate			(125	)		—			—			—			—
		Loss on disposal of assets			20			58			121			30			47
		Minority interest			2,899			5,168			6,704			1,773			1,959
		Equity income (loss) from investments in unconsolidated affiliates			(25	)		(21	)		61			(6	)		(44	)
		Distributions received from investments in unconsolidated affiliates			28			22			46			7			36
		Provision for doubtful accounts			54			190			100			—			—
		(Increase) decrease in receivables			(3	)		(824	)		(6,315	)		(1,219	)		3,630
		Decrease (increase) in inventories			3			(854	)		(1,718	)		(71	)		(107	)
		(Increase) decrease in prepaid expenses and other current assets			(580	)		(599	)		264			206			(1,216	)
		Decrease (increase) in other assets			58			67			486			(225	)		56
		Increase (decrease) in accounts payable			4,443			(3,334	)		4,189			(744	)		2,966
		Increase (decrease) in deferred revenue—gift certificates			1,783			2,663			3,521			(2,743	)		(3,957	)
		Increase (decrease) in accrued wages			476			2,723			(793	)		(2,984	)		(1,892	)
		Increase (decrease) in accrued taxes and licenses			553			(447	)		514			104			180
		(Decrease) increase in accrued other liabilities			(218	)		1,516			549			448			(231	)
		Increase in deferred rent			288			301			223			41			70
		(Decrease) increase in other liabilities			(153	)		272			1,431			307			279
			Net cash provided by operating activities		22,502			31,718			42,158			2,498			12,178
Cash flows from investing activities:
	Capital expenditures—property and equipment				(35,857	)		(34,696	)		(26,882	)		(4,590	)		(8,608	)
	Proceeds from sale-leaseback transactions				—			1,992			—			—			—
	Proceeds from sale of property and equipment				163			—			358			1			2
	Payment for additional ownership interest in joint venture				—			(60	)		—			—			—
	Payment for investment in license restaurant				(75	)		—			—			—			—
			Net cash used in investing activities		(35,769	)		(32,764	)		(26,524	)		(4,589	)		(8,606	)

F-6

Cash flows from financing activities:
	Repayments of note payable to bank			(1,457	)		(5,048	)		—			—			—
	Proceeds from short term bank revolver			624			—			—			3,116			3,500
	Proceeds from issuance of long-term debt			17,821			38,512			59,130			—			4,075
	Proceeds from minority interest contributions and other			2,776			1,476			—			—			—
	Repayment of stock option deposits			(125	)		(98	)		(263	)		(44	)		(100	)
	Proceeds from stock option deposits			407			674			958			150			180
	Principal payments on long-term debt			(2,237	)		(17,126	)		(55,082	)		(1,321	)		(3,606	)
	Proceeds from repayment of notes receivable-stockholders			92			101			8			8			—
	Principal payments on capital lease obligations			(262	)		(255	)		(246	)		(60	)		(48	)
	Proceeds from capital contributions by majority stockholder			407			300			—			—			—
	Payments for debt issuance costs			(131	)		(38	)		(1,673	)		—			—
	Proceeds from exercise of stock options			—			341			1,099			397			520
	Maturity of restricted cash			200			—			—			—			—
	Distributions to minority interest holders			(3,800	)		(5,629	)		(6,869	)		(1,622	)		(1,907	)
	Distributions to members			(4,421	)		(8,265	)		(14,784	)		(3,121	)		(4,224	)
		Net cash provided by (used in) financing activities		9,894			4,945			(17,722	)		(2,497	)		(1,610	)
		Net (decrease) increase in cash		(3,373	)		3,899			(2,088	)		—(4,588	)		1,962
Cash and cash equivalents—beginning of year				7,290			3,917			7,816			7,816			5,728
Cash and cash equivalents—end of year			$	3,917		$	7,816		$	5,728		$	3,228		$	7,690
Cash paid during the year—interest, net of amounts capitalized			$	3,556		$	3,631		$	3,426		$	972		$	1,189

See accompanying notes to combined financial statements.

F-7

Texas Roadhouse Holdings LLC and Entities Under Common Control

Notes to Combined Financial Statements

(Tabular amounts in thousands, except share and per share data)

(1)    Description of Business

        The accompanying combined financial statements include the accounts of Texas Roadhouse Holdings LLC, its wholly-owned and majority-owned subsidiaries, Texas Roadhouse Development Corporation ("TRDC"), WKT Restaurant Corp., Texas Roadhouse Management Corp., and six license and three franchise restaurants, all of which are under common control by one controlling shareholder (collectively, "Texas Roadhouse Holdings LLC and Entities Under Common Control" or the "Company"). The controlling shareholder has the unilateral ability to implement major operating and financial policies for the combining entities. Texas Roadhouse Holdings LLC and its combined subsidiaries (collectively, "Holdings"), operate Texas Roadhouse restaurants. Holdings also provides supervisory and administrative services for certain other license and franchise restaurants. TRDC sells franchise rights and collects the franchise royalties and fees. WKT Restaurant Corp. is the managing member of Holdings. Texas Roadhouse Management Corp. provides management services to Holdings, TRDC and certain franchise and license restaurants. At December 30, 2003 and December 31, 2002, there were 162 and 142 Texas Roadhouse restaurants operating in 32 and 28 states, respectively. Of the 162 restaurants operating at December 30, 2003, (i) 87 were Company restaurants, of which 56 were wholly-owned restaurants and 31 were majority-owned or controlled restaurants, (ii) 71 were franchise restaurants, and (iii) 4 were license restaurants. Of the 87 Company restaurants, 21 are located in Texas. Of the 142 restaurants operating at December 31, 2002, (i) 77 were Company restaurants, of which 46 were wholly-owned restaurants, and 31 were majority-owned or controlled restaurants, (ii) 65 were franchise restaurants, and (iii) 4 were license restaurants. Of the 77 Company restaurants, 18 were located in Texas.

        Holdings began operating April 1, 1997 as a limited liability company. It issued shares to its members in exchange for cash and, in a series of concurrent transactions, issued shares to the owners of certain predecessor entities for the acquisition of three Texas Roadhouse restaurants and to W. Kent Taylor for the acquisition of the Texas Roadhouse operating system, trademarks, and management rights. These transactions were accounted for as purchases and resulted in the recording of approximately $2.4 million in goodwill.

(2)    Summary of Significant Accounting Policies

(a)

Principles of Combination

At December 31, 2002 and December 30, 2003, the Company had a minority ownership in one and nine franchise restaurants, respectively. These unconsolidated restaurants are accounted for using the equity method because the Company exercises significant influence over the operating and financial policies of these entities based on the rights granted to the Company under each entity's operating or partnership agreement. As described in Note (1) above, the accompanying combined financial statements include the accounts of six license and three additional franchise restaurants, all of which are under common control by one controlling shareholder, who has the unilateral ability to implement major operating and financial policies of the restaurants.

All significant intercompany balances and transactions for these unconsolidated restaurants as well as the companies whose accounts have been combined have been eliminated.

F-8

(b)

Unaudited Interim Financial Statements




The interim financial statements of the Company for the 13 weeks ended April 1, 2003 and March 30, 2004 included herein, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. In the opinion of management, the accompanying unaudited interim financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 30, 2004 and results of its operations and its cash flows for the 13 weeks ended April 1, 2003 and March 30, 2004. The interim results of operations for the 13 weeks ended April 1, 2003 and March 30, 2004, respectively, are not necessarily indicative of the results that may be achieved for the full year.



(c)

Fiscal Year




The Company utilizes a 52 or 53 week accounting period that ends on the last Tuesday in December. Beginning with fiscal year 2002, for operational reasons, the Company changed its fiscal year end from the last Sunday in December to the last Tuesday in December. This change resulted in fiscal year 2002 consisting of 52 weeks and two days as compared to fiscal years 2001 and 2003, which were both 52 weeks in length. The Company utilizes a 13 week accounting period for quarterly reporting purposes.



(d)

Cash and Cash Equivalents




For purposes of the combined statements of cash flows, the Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents.



(e)

Receivables




Receivables consist principally of amounts due from certain franchise and license stores for reimbursement of pre-opening and other expenses, amounts due for royalty fees from franchise stores, and credit card receivables.






Receivables are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The Company determines the allowance based on historical write-off experience. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 90 days and a specified amount are reviewed individually for collectibility. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.



(f)

Inventories




Inventories, consisting principally of food, beverages, and supplies, are valued at the lower of first-in, first-out cost or market. The Company purchases its products from a number of

F-9

suppliers and believes there are alternative suppliers. The Company has no minimum purchase commitments with its vendors.

(g)

Pre-opening Expenses




Pre-opening expenses are charged to operations as incurred. These costs include wages, benefits, travel and lodging for the training and opening management teams, and food, beverage and other restaurant operating expenses incurred prior to a restaurant opening for business.



(h)

Property and Equipment




Property and equipment are stated at cost. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed over the estimated useful lives of the related assets using the straight-line method.






The estimated useful lives are:

Land improvements	15 years
Buildings and leasehold improvements	10-25 years
Equipment and smallwares	3-10 years
Furniture and fixtures	3-10 years

The Company leases land, buildings and/or certain equipment for several of its restaurants under noncancelable lease agreements. The Company's land and building leases typically have initial terms ranging from 10 to 15 years, and contain renewal options for one or more 5-year periods. Leasehold improvements are amortized over the term of the applicable lease or their useful lives, whichever is shorter.



(i)

Goodwill




Goodwill represents the excess of cost over fair value of assets of businesses acquired. The Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142"), as of December 31, 2001. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. Goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value. This determination is made at the reporting unit level and consists of two steps. First, the Company determines the fair value of a reporting unit and compares it to its carrying amount. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of the goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS No. 141, Business Combinations. The residual fair value after this allocation is the implied fair value of

F-10

the reporting unit goodwill. There were no changes to the carrying amount of goodwill for the years ended December 31, 2002 or December 30, 2003. SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets ("SFAS No. 144").




Before the adoption of SFAS No. 142, goodwill was amortized on a straight-line basis over 40 years and assessed for recoverability by determining whether the amortization of the goodwill balance over its remaining life could be recovered through undiscounted future operating cash flows of the acquired operations.






Amortization expense related to goodwill was $61,000 for the year ended December 30, 2001. The following table reconciles previously reported net income as if the provisions of SFAS No. 142 were in effect in 2001:

Reported net income		$	7,979
Add back goodwill amortization			61
	Adjusted net income	$	8,040

(j)

Other Assets




Other assets consist primarily of costs related to the issuance of debt. The debt issuance costs are being amortized to interest expense over the term of the related debt.



(k)

Impairment of Long-Lived Assets




The Company adopted SFAS No. 144 on December 31, 2001. The adoption of SFAS No. 144 did not affect the Company's combined financial statements.






In accordance with SFAS No. 144, long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the combined balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the combined balance sheet.



(l)

Segment Reporting




As of December 30, 2003, the Company operated 87 Texas Roadhouse restaurants each as a single operating segment. The restaurants operate exclusively in the U.S. within the casual dining industry, providing similar products to similar customers. The restaurants also possess

F-11

similar pricing structures, resulting in similar long-term expected financial performance characteristics. Revenues from external customers are derived principally from food and beverage sales. The Company does not rely on any major customers as a source of revenue. The Company has aggregated its operations into a single reportable segment.

(m)

Revenue Recognition




Revenue from restaurant sales is recognized when food and beverage products are sold. Deferred revenue primarily represents the Company's liability for gift cards and certificates that have been sold, but not yet redeemed, and is recorded at the expected redemption value. The Company does not adjust the liability for any estimation of unused gift cards. When the gift cards and certificates are redeemed, the Company recognizes restaurant sales and reduces the deferred revenue.






The Company franchises Texas Roadhouse restaurants. The Company executes franchise agreements for each franchise restaurant which sets out the terms of our arrangement with the franchisee. Its franchise agreements typically require the franchisee to pay an initial, non-refundable fee and continuing fees based upon a percentage of sales. Subject to the Company's approval and payment of a renewal fee, a franchisee may generally renew the franchise agreement upon its expiration. The Company collects ongoing royalties of 2.0% to 4.0% of sales from franchise restaurants. These ongoing royalties are reflected in the accompanying combined statements of income as franchise royalties and fees. The Company recognizes initial franchise fees as revenue after performing substantially all initial services or conditions required by the franchise agreement, which is generally upon the opening of a restaurant. The Company received initial franchise fees of $600,000, $80,000, $210,000, $40,000 and $40,000 for the years ended December 30, 2001, December 31, 2002, December 31, 2003 and the quarters ended April 1, 2003 and March 30, 2004, respectively. Continuing franchise royalties are recognized as revenue as the fees are earned. The Company also performs supervisory and administrative services for certain franchise and license restaurants for which it receives management fees, which are recognized as the services are performed. Revenue from supervisory and administrative services is recorded as a reduction of general and administrative expenses on the accompanying combined statements of income. Total revenue recorded for supervisory and administrative services for the years ended December 30, 2001, December 31, 2002, and December 30, 2003 was approximately $157,000, $118,000 and $255,000, respectively. Total revenue recorded for supervisory and administrative services for the quarters ended April 1, 2003 and March 30, 2004 was approximately $23,000 and $124,000, respectively.



(n)

Income Taxes




The Company files partnership returns for Federal and state income tax purposes. Accordingly, no provision has been made for Federal and state taxes since these taxes are the responsibility of the members.






The reported amounts of the Company's assets and liabilities exceeded the tax basis of those assets and liabilities by approximately $10.4 million and $13.0 million at December 31, 2002 and December 30, 2003, respectively.

F-12

(o)

Advertising




The Company has a system-wide marketing and advertising fund. Company and franchise restaurants are required to remit a designated portion of sales, currently 0.3%, to a separate advertising fund that is used for marketing and advertising efforts throughout the restaurant system. Company contributions to the fund are expensed as incurred.






Advertising costs amounted to approximately $1,737,000, $2,047,000 and $2,493,000 for the years ended December 30, 2001, December 31, 2002 and December 30, 2003, respectively. Advertising costs amounted to approximately $549,000 and $636,000 for the quarters ended April 1, 2003 and March 30, 2004, respectively.



(p)

Rent




Certain of the Company's operating leases contain predetermined fixed escalations of the minimum rent during the original term of the lease. For these leases, the Company recognizes the related rent expense on a straight-line basis over the life of the lease and records the difference between the amounts charged to operations and amounts paid as deferred rent.






Additionally, certain of the Company's operating leases contain clauses that provide for additional contingent rent based on a percentage of sales greater than certain specified target amounts. The Company recognizes contingent rent expense prior to the achievement of the specified target that triggers the contingent rent, provided achievement of that target is considered probable.



(q)

Use of Estimates




Management of the Company has 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 combined financial statements and the reporting of revenue and expenses during the period to prepare these combined financial statements in conformity with accounting principles generally accepted in the United States of America. Significant items subject to such estimates and assumptions include the carrying amount of property and equipment, goodwill, and obligations related to workers' compensation insurance. Actual results could differ from those estimates.



(r)

Comprehensive Income




SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income consists of net income and net unrealized gains (losses) on securities and derivatives and is presented in the combined statements of members' equity and comprehensive income.



(s)

Stock Option Plan




The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including Financial Accounting Standards Board

F-13

("FASB") Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, Accounting for Stock-Based Compensation, ("SFAS No. 123") and SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of SFAS No. 123, established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by existing accounting standards, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123, as amended. The following table illustrates the effect on net income if the fair-value-based method had been applied to all outstanding and unvested awards in each period.

		52-Weeks Ended									13-Weeks Ended
		December 30, 2001			December 31, 2002			December 30, 2003			April 1, 2003			March 30, 2004
Net income, as reported		$	7,979		$	17,941		$	24,213		$	5,545		$	8,053
Deduct total stock-based-employee compensation expense determined under fair-value-based method for all rewards			(551	)		(930	)		(933	)		(323	)		(173	)
	Pro forma net income	$	7,428		$	17,011		$	23,280		$	5,222		$	7,880

The per share weighted average fair value of stock options granted during 2001, 2002 and 2003 was $1.00, $1.24 and $1.27, respectively using the Black Scholes option-pricing model (excluding a volatility assumption) with the following weighted average assumptions:

	52-Weeks Ended						13-Weeks Ended
	December 30, 2001		December 31, 2002		December 30, 2003		April 1, 2003		March 30, 2004
Risk-free interest rate	4.67	%	3.81	%	2.82	%	2.78	%	3.25	%
Expected life (years)	5.0		5.0		5.0		5.0		5.0
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%	0.0	%

(t)

Fair Value of Financial Instruments




At December 31, 2002 and December 30, 2003, the fair value of cash and cash equivalents, accounts receivable, and accounts payable approximated their carrying value based on the short-term nature of these instruments. The fair value of the Company's long-term debt and debt-related derivative instruments is estimated based on the current rates offered to the Company for instruments of similar terms and maturities. The carrying amounts and related

F-14

estimated fair values for the Company's debt and debt-related derivative instruments are as follows:

		December 31, 2002				December 30, 2003						March 30, 2004
		Carrying Amount		Fair Value		Carrying Amount			Fair Value			Carrying Amount			Fair Value
Installment loans		$	65,509	$	66,866	$	14,126		$	15,877		$	13,957		$	15,582
Term loans			—		—		14,987			14,987			13,625			13,625
Revolver			—		—		35,200			35,200			37,200			37,200
Debt-related derivative:
	Open contract in a net liability position		—		—		(165	)		(165	)		(283	)		(283	)

(u)

Derivative Instruments and Hedging Activities




The Company accounts for derivatives and hedging activities in accordance with SFAS No. 133, Accounting for Derivative Instruments and Certain Hedging Activities, as amended, which requires that all derivative instruments be recorded on the combined balance sheet at their respective fair values.






The Company has entered in a derivative contract to manage its interest rate exposure on its debt instruments. On the date the derivative contract was entered into, the Company designated the derivative as a hedge of the variability of cash flows to be paid related to a recognized liability (cash-flow hedge). For the hedging relationship, the Company has formally documented the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the item, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed, and a description of the method of measuring ineffectiveness. This process included linking the derivative that is designated as a cash-flow hedge to a specific liability on the combined balance sheet. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivative that is used in the hedging transaction is highly effective in offsetting changes in the cash flows of the hedged item. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash-flow hedge are recorded in other comprehensive income to the extent that the derivative is effective as a hedge, until earnings are affected by the variability in cash flows of the designated hedged item. The ineffective portion of the change in fair value of a derivative instrument that qualifies as a cash-flow hedge is reported in earnings.

The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative is dedesignated as a hedging instrument, because it is unlikely that a forecasted transaction will occur, or management determines that the designation of the derivative as a hedging instrument is no longer appropriate.

F-15

When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur, the Company continues to carry the derivative on the combined balance sheet at its fair value with subsequent changes in fair value included in earnings, and gains and losses that were accumulated in other comprehensive income are recognized immediately in earnings. In all other situations in which hedge accounting is discontinued, the Company continues to carry the derivative at its fair value on the combined balance sheet and recognizes any subsequent changes in its fair value in earnings.

(v)

Recently Issued Accounting Standards




In December 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities ("FIN 46R"), which addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. The Company will be required to apply FIN 46R to variable interests in variable interest entities (VIEs) created after December 30, 2003. For variable interests in VIEs created before January 1, 2004, the Interpretation is effective for the Company for the quarter ended March 30, 2004. For any VIEs that must be combined under FIN 46R that were created before January 1, 2004, the assets, liabilities and noncontrolling interests of the VIE initially would be measured at their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change. If determining the carrying amounts is not practicable, fair value at the date FIN 46R first applies may be used to measure the assets, liabilities and noncontrolling interest of the VIE.






FIN 46R excludes from its scope businesses (as defined by FIN 46R) unless certain conditions exist. We believe the franchise entities which operate our restaurants meet the definition of a business. Thus, we are currently evaluating whether any conditions exist that would subject any of our franchisees to the provisions of FIN 46R, requiring us to determine if they are VIEs, and if so, whether we have a controlling financial interest in the entity. We do not possess any ownership interests in our franchisees other than our investment in various unconsolidated affiliates accounted for under the equity method. Additionally, we generally do not provide financial support to our franchisees in a typical franchise relationship. As a result of the adoption of FIN 46R, we did not consolidate any franchise entities.






The Company's majority-owned or controlled restaurant entities are currently combined. These entities would be considered variable interest entities under the provisions of FIN 46R, and the Company believes it will continue to combine them upon adoption of that interpretation. The Company's maximum exposure to loss as a result of its involvement with these entities is estimated to be the investment in the entities and the minority interests' portion of debt to the Company and totals approximately $8.4 million and $8.2 million at December 30, 2003 and March 30, 2004, respectively.






SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, was issued in May 2003. This Statement establishes standards for the classification and measurement of certain financial instruments with characteristics of both

F-16

liabilities and equity. The Statement also includes required disclosures for financial instruments within its scope. For the Company, the Statement was effective for instruments entered into or modified after May 31, 2003 and otherwise will be effective as of December 31, 2003, except for mandatorily redeemable financial instruments. For certain mandatorily redeemable financial instruments, the Statement will be effective for the Company on December 29, 2004. The effective date has been deferred indefinitely for certain other types of mandatorily redeemable financial instruments. The Company currently does not have any financial instruments that are within the scope of this Statement.

(3)    Long-term Debt

        Long-term debt consisted of the following:

	December 31, 2002		December 30, 2003		March 30, 2004
Installment loans, due 2003-2026	$	65,509	$	14,126	$	13,957
Term loans, due in equal quarterly installments through June 2006		—		14,987		13,625
Revolver, due July 2006		—		35,200		37,200
		65,509		64,313		64,782
Less current maturities		6,415		8,059		8,009
	$	59,094	$	56,254	$	56,773

        Maturities of long-term debt at December 30, 2003, excluding capital leases, are as follows:

2004	$	8,059
2005		6,899
2006		40,737
2007		2,234
2008		784
Thereafter		5,600
	$	64,313

        During 2002, Holdings entered into several installment loans with financial institutions to finance land, buildings, and equipment of new restaurants. The weighted average interest rates for installment loans outstanding at December 31, 2002 and December 30, 2003 were 5.88% and 7.70%, respectively. The debt is secured by certain land, buildings, and equipment.

        In July 2003, Holdings completed a $100 million three year syndicated banking arrangement (the "credit facility"), the proceeds of which were used to refinance approximately 80.0% of the existing debt. The credit facility includes approximately $50 million of available financing (the "revolver") to fund development of new restaurants. The terms of this credit facility require Holdings to pay interest

F-17

on outstanding term and revolver borrowings at LIBOR plus a margin of 1.50% to 2.75%, plus a commitment fee of 0.25% per year on any unused portion of the credit facility. The weighted average interest rate for term loans outstanding at December 30, 2003 was 3.93%. The weighted average interest rate for the revolver at December 30, 2003 was 3.63%. The debt is secured by certain land, buildings, and equipment.

        Certain debt agreements require compliance with financial covenants including minimum debt service coverages and maximum debt to worth ratios. The existing credit facility prohibits the Company from incurring additional debt outside the facility except for equipment financing up to $3 million, unsecured debt up to $500,000 and up to $15 million of debt incurred by majority-owned companies formed to own new restaurants. Additionally, the lenders' obligation to extend credit under the facility depends on our maintaining certain financial covenants, including a minimum consolidated fixed charge coverage ratio of 1.10 to 1.00 and a maximum consolidated leverage ratio of 3.25 to 1.00 for the four quarters prior to June 28, 2005 and 3.00 to 1.00 for the four quarters prior to June 30, 2006. The existing credit facility allows the Company to pay distributions related to the taxable income of Holdings to its members without restriction. It also allows the Company to pay the difference between the tax-related distributions and the distributions equivalent to 50% of net cash flow provided that no event of default has occurred or would result from the payment and that the Company's consolidated fixed charge coverage ratio is greater than 1.10 to 1.00. The Company is currently in compliance with such covenants.

(4)    Derivative Instruments and Hedging Activities

        The Company has an interest-rate-related derivative instrument to manage its exposure on its debt facility. The Company does not enter into derivative instruments for any purpose other than cash-flow-hedging purposes. That is, the Company does not speculate using derivative instruments.

        By using the derivative financial instrument to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not posses credit risk.

        Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

        The Company assesses interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate cash flow risk attributable to both the Company's outstanding or forecasted debt obligations as well as the Company's offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including cash flow sensitivity analysis, to estimate the expected impact of changes in interest rates on the Company's future cash flows.

F-18

        The Company uses variable-rate debt to finance a portion of its operations. The debt obligations expose the Company to variability in interest payments due to changes in interest rates. Management believes that it is prudent to limit the variability of a portion of its interest payments. To meet this objective, management entered into an interest rate swap agreement during 2003 with a notional amount of approximately $31.2 million to manage fluctuations in cash flows resulting from interest rate risk. This swap changes the variable-rate cash flow exposure on a portion of the credit facility to fixed cash flows. Under the terms of the interest rate swap, the Company receives variable interest rate payments and makes fixed interest rate payments, thereby creating the equivalent of fixed-rate debt for the portion of debt hedged.

        Changes in the fair value of the interest rate swap designated as an hedging instrument that effectively offsets the variability of cash flows associated with variable-rate, long-term debt obligations are reported in accumulated other comprehensive income. These amounts subsequently are reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings. For the year ended December 30, 2003, the Company did not reclassify any amount into interest expense.

        As of December 30, 2003, approximately $36,000 of deferred losses on derivative instruments accumulated in other comprehensive income is expected to be reclassified to earnings during the next 12 months. Transactions and events expected to occur over the next twelve months that will necessitate reclassifying these derivatives losses to earnings include the repricing of variable-rate debt. There were no cash flow hedges discontinued during 2003.

(5)    Property and Equipment, Net

        Property and equipment were as follows:

	December 31, 2002			December 30, 2003			March 30, 2004
Land and improvements	$	22,457		$	29,043		$	31,142
Buildings and leasehold improvements		63,730			69,878			72,364
Equipment and smallwares		26,777			31,972			33,257
Furniture and fixtures		9,950			11,622			11,958
Construction in progress		3,901			4,906			7,202
Liquor licenses		797			899			900
		127,612			148,320			156,823
Accumulated depreciation and amortization		(17,461	)		(25,269	)		(27,562	)
	$	110,151		$	123,051		$	129,261

        The amount of interest capitalized in connection with restaurant construction was approximately $453,000, $407,000 and $227,000 for the years ended December 30, 2001, December 31, 2002 and December 30, 2003, respectively, and $78,000 and $59,000 for the quarters ended April 1, 2003 and March 30, 2004, respectively.

F-19

(6)    Leases

        The following is a schedule of future minimum lease payments required for capital leases and operating leases that have initial or remaining noncancelable terms in excess of one year as of December 30, 2003:

		Capital leases		Operating leases
2004		$	305	$	8,509
2005			285		8,616
2006			188		8,043
2007			117		6,589
2008			117		6,045
Thereafter			704		41,275
	Total		1,716	$	79,077
Less amount representing interest ranging from 9.6% to 11.4%			581
	Present value of minimum capital lease payments		1,135
Less current maturities of obligations under capital leases			221
	Obligations under capital leases, excluding current maturities	$	914

        Capitalized lease assets, primarily building and equipment, with an original cost of approximately $2.0 million are being amortized on a straight-line basis over the applicable lease terms and interest expense is recognized on the outstanding obligations. The total accumulated amortization of property and equipment held under capital leases totaled approximately $913,000, $999,000 and $1,007,000 at December 31, 2002, December 30, 2003 and March 30, 2004, respectively.

        The Company previously financed a portion of its restaurant development program through sale-leaseback transactions. Proceeds from sale-leaseback transactions totaled approximately $7.3 million in 2002. The properties, which related to land and buildings for four restaurants, were sold at net book value during 2002. One of the resulting leases is being accounted for as an operating lease. The other three sale-leasebacks were accounted for as financings and reflected as debt in the combined balance sheet as of December 31, 2002 due to liens held by the buyer/lessor on certain personal property within the restaurants. The amount reflected as debt as of December 31, 2002 was approximately $5.3 million.

        During 2003, in connection with the new credit facility (see note 3) and the liens associated with the credit facility, the leases previously accounted for as financings qualified for sale-leaseback accounting and are now accounted for as operating leases. The Company deferred a gain of approximately $195,000 which is reflected in other liabilities in the accompanying combined balance sheet as of December 30, 2003 and will be amortized to rent expense over the remaining lease term.

F-20

        Rent expense for operating leases consisted of the following:

		52-weeks Ended						13-weeks Ended
		December 30, 2001		December 31, 2002		December 30, 2003		April 1, 2003		March 30, 2004
Minimum rent—occupancy		$	4,062	$	4,715	$	5,588	$	1,323	$	1,519
Contingent rent			348		410		417		106		104
	Rent expense, occupancy	$	4,410		5,125		6,005		1,429		1,623
Minimum rent—equipment			631		1,647		2,706		474		527
	Rent expense	$	5,041	$	6,772	$	8,711	$	1,903	$	2,150

        Equipment rent expense is included in other operating expenses in the accompanying combined statements of income.

(7)    Members' Equity

        The shares as shown in the Company's combined statements of members' equity and Comprehensive Income reflect the share activity of Texas Roadhouse Holdings LLC and W. Kent Taylor's ownership interests in the other entities under common control. Of the 15,684,110 shares shown at December 30, 2003, 15,646,409 are Texas Roadhouse Holdings LLC shares and 37,701 are shares issued to Mr. Taylor for his equity contribution to the entities combined under common control and not to Texas Roadhouse Holdings LLC. Additionally, the share activity for 2002 and 2003 reflect 189,546 and 368,147 shares that Texas Roadhouse Holdings LLC issued for the exercise of stock options.

        In connection with the proposed public offering as described in note 14, the Company will undertake a series of transactions that will result in Texas Roadhouse Holdings LLC, its wholly owned and majority-owned restaurants, and the other entities under common control being combined under Texas Roadhouse, Inc. The shares described above will be exchanged for shares of Class A and Class B common stock of Texas Roadhouse, Inc.

(8)    Commitments and Contingencies

        The estimated cost of completing capital project commitments at December 30, 2003 and March 30, 2004 was approximately $22.6 million and $19.3 million, respectively.

        The Company entered into real estate lease agreements for franchise restaurants located in Everett, MA and Longmont, CO prior to granting franchise rights for those restaurants. The Company has subsequently assigned the leases to the franchises, but remains contingently liable if a franchisee defaults. Under the terms of the lease, the Longmont lease was assigned in October 2003 and expires

F-21

in May 2014, while the Everett lease was assigned in September 2002 and expires in February 2018. As the fair value of the guarantees is not considered significant, no liability has been recorded.

        The Company is involved in various claims and legal actions arising in the normal course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on the Company's combined results of operations, financial position or liquidity.

        The Company currently buys most of its beef from one supplier. Although there are a limited number of beef suppliers, management believes that other suppliers could provide similar product on comparable terms. A change in suppliers, however, could cause supply shortages and a possible loss of sales, which would affect operating results adversely.

(9)    Other Comprehensive Income

        The accumulated balances for each classification of other comprehensive income are as follows:

	December 31, 2002		December 30, 2003			March 30, 2004
Unrealized gain on security	$	6	$	—		$	—
Unrealized loss on derivative instruments		—		(165	)		(283	)
	$	6	$	(165	)	$	(283	)

(10)    Stock Option Plan

        In 1997 Texas Roadhouse Management Corp. adopted a stock option plan (the "Plan") for eligible employees. The Plan provides for granting of options to purchase shares of common stock at an exercise price not less than the fair value of the stock on the date of grant. Options are exercisable at various periods ranging from one to ten years from the date of grant. Texas Roadhouse Management Corp. requires certain of its eligible employees to make refundable deposits to be applied to the exercise price of the options. These deposits are classified as stock option deposits in the accompanying combined balance sheets.

F-22

        Stock option activity during the periods indicated, is as follows:

		Number of shares		Weighted average exercise price
Balance at December 31, 2000		1,752,564		$	3.25
	Granted	544,947			5.04
	Expired	(57,003	)		3.23
	Exercised	—			—
Balance at December 30, 2001		2,240,508			3.69
	Granted	1,174,341			7.73
	Expired	(71,676	)		5.73
	Exercised	(189,546	)		1.81
Balance at December 31, 2002		3,153,627			5.24
	Granted	458,674			10.03
	Expired	(130,033	)		6.38
	Exercised	(368,972	)		3.88
Balance at December 30, 2003		3,113,296		$	6.06

        The following table presents summarized information about stock options outstanding and exercisable at December 30, 2003:

		Options outstanding			Options exercisable
Range of exercise prices	Options	Weighted average remaining contractual life	Weighted average exercise price		Options	Weighted average exercise price
$2.50 -  3.40	122,696	5.24	$	2.91	112,577	$	2.89
3.48 -  5.37	1,565,127	6.57		4.04	1,143,825		4.00
5.87 -  9.30	1,099,150	8.54		8.01	479,771		7.74
9.60 - 10.75	326,323	9.51		10.32	—		—
	3,113,296				1,736,173

(11)    Related Party Transactions

        W. Kent Taylor owns a substantial interest in Buffalo Construction, Inc., a restaurant construction business which provides services to the Company and other restaurant companies. The Company paid Buffalo Construction, Inc. amounts totaling $13.4 million, $20.4 million and $15.0 million during 2001, 2002 and 2003, respectively. The Company paid Buffalo Construction Inc. amounts totaling $3.9 million and $5.3 million during the first quarter of 2003 and 2004, respectively.

        The Longview, Texas restaurant, which is being acquired by the Company in connection with the completion of this offering, leases the land and restaurant building from an entity controlled by Steven

F-23

L. Ortiz, our Chief Operating Officer. The lease is for 15 years and will terminate in November 2014. The lease can be renewed for two additional periods of five years each. Rent is currently $15,541 per month and will increase by 5% on each of the 6^th and 11^th anniversary dates of the lease. The lease can be terminated if the tenant fails to pay the rent on a timely basis, fails to maintain the insurance specified in the lease, fails to maintain the building or property or becomes insolvent. Total rent payments in each of the years 2001, 2002 and 2003 were $186,492 and $46,623 in each of the first quarters of 2003 and 2004.

        One restaurant is currently leased from an entity owned by W. Kent Taylor and three other stockholders. The lease is for 10 years and will terminate on March 31, 2007. The lease can be renewed for three additional periods of five years each. Rent throughout the term is $12,200 per month. The lease can be terminated if the tenant fails to pay rent on a timely basis, fails to maintain insurance, abandons the property or becomes insolvent. Rent expense for this restaurant was approximately $146,400 in each of the years 2001 through 2003, and $36,600 in each of the first quarters of 2003 and 2004.

        The Company has nine license and franchise restaurants owned in whole or part by certain officers, directors and stockholders of the Company. These nine entities paid the Company fees of $157,000, $200,000, and $630,000 during the years ended December 30, 2001, December 31, 2002 and December 30, 2003, respectively. These nine entities paid the Company fees of $60,000 and $322,000 during the quarters ended April 1, 2003 and March 30, 2004, respectively.

        The Company employs Juli Miller Hart, the wife of G.J. Hart, the Company's Chief Executive Officer, as Director of Public Relations. Ms. Hart reports to W. Kent Taylor who conducts her performance reviews and determines her compensation.

        WKT Restaurant Corp., which is owned by W. Kent Taylor, received royalties of $1.4 million, $2.1 million and $2.6 million in 2001, 2002 and 2003, as well as $598,000 and $773,000 in the first quarters of 2003 and 2004, that it was entitled to receive as consideration for its contribution of the Texas Roadhouse operating system and concept to Texas Roadhouse Holdings, LLC. After the completion of the offering, as more fully described in note 14, WKT Restaurant Corp. will no longer receive such royalties. These royalties were classified as distributions in the Company's Combined Statement of Members' Equity and Comprehensive Income.

        John D. Rhodes, a stockholder, is a director and substantial stockholder of Confluent Inc., which provided certain business intelligence services to the Company through February 2004 for which it was paid an aggregate of $91,000. Services included generating marketing analysis using their proprietary software program and data provided by the Company.

(12)    Pro forma Adjustments (unaudited)

        Immediately before the Company's reorganization as a C corporation, the Company will make a distribution of approximately $28.2 million to Holdings members, representing undistributed income for periods through March 30, 2004. This distribution is shown on the accompanying pro forma combined balance sheet as distributions payable. In accordance with SEC guidance, 915,976 additional Class A shares have been included in the calculation of pro forma share and net income per share data for year 2003 and 2004 Q1. The addition of these shares, the value of which would be $17.4 million using an

F-24

assumed initial offering price of $19 per share, gives effect to the sale of the number of additional shares that would have been necessary to pay the distributions in excess of the undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ended March 30, 2004. The distribution in excess of undistributed net income of Texas Roadhouse Holdings LLC for the twelve months ending March 30, 2004, was calculated as follows:

Distributions payable	$	28,152
Net income		20,223
Distributions paid		9,475
Income in excess of distributions	$	10,748
Distributions in excess of undistributed income	$	17,404

        In connection with the reorganization as a C corporation, a pro forma income tax provision has been calculated as if the Company were taxable at an estimated combined effective income tax rate of 35.4% for the year ended March 30, 2004 and included in the accompanying pro forma combined statement of income. The pro forma income tax provision does not include an adjustment to establish a deferred tax liability related to the $5.2 million excess of the reported amounts the Company's assets and liabilities over the tax basis of those assets and liabilities at March 30, 2004.

        Under the terms of an agreement associated with the formation of Texas Roadhouse Inc., W. Kent Taylor will contribute all of his interests in WKT Restaurant Corp., which owns the right to receive a one percent distribution on all sales of company and license Texas Roadhouse restaurants, in exchange for 2,217,000 shares of Texas Roadhouse, Inc. Class B common stock. The shares expected to be issued and the related distribution have been reflected in the accompanying pro forma combined balance sheet and calculation of pro forma net income per share. The shares reflected in the accompanying calculation of pro forma net income per share vary during the periods presented due to the changes in measurement period and the relative proportion of the component entities' net income used in the acquisition formulas provided under the corresponding operating or partnership agreements. These calculations are based on the net income of the six license restaurants and three franchise restaurants for the period presented.

        Mr. Taylor will also receive 1,477,500 shares of Texas Roadhouse, Inc. Class A common stock in exchange for his shares in TRDC, and approximately 564,436 shares of Texas Roadhouse, Inc. Class A common stock in exchange for his shares in the six license restaurants and three franchise restaurants. The shares expected to be issued have been reflected in the accompanying calculation of pro forma net income per share.

        The number of shares issued to Mr. Taylor for his majority interest in WKT Restaurant Corp. and TRDC was calculated so as to be neither accretive nor dilutive to earnings per share. The number of shares issued to Mr. Taylor for his controlling interest in nine restaurants was determined using the acquisition formulas stated in the corresponding operating or partnership agreements.

        In addition to the shares expected to be issued to W. Kent Taylor in connection with the above transactions, the accompanying calculations of pro forma net income per share also include the weighted average outstanding shares of 15,469,156 and 15,566,784 of Texas Roadhouse Holdings LLC,

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at December 30, 2003 and March 30, 2004, respectively. The diluted earnings per share calculations show the effect of the weighted average stock options outstanding from the Company's stock option plan as discussed in note 10.

        The following table sets forth the calculation of pro forma weighted average shares outstanding (in thousands) as presented in the accompanying combined statements of income:

		52-Weeks Ended									13-Weeks Ended
		December 30, 2001			December 31, 2002			December 30, 2003			April 1, 2003			March 30, 2004
Net income adjusted for pro forma income taxes		$	5,153		$	11,521		$	15,423		$	3,532		$	5,202
Basic EPS:
Weighted-average common shares outstanding:
Texas Roadhouse Holdings			14,909			15,209			15,469			15,325			15,567
Shares issued for distribution payable			—			—			916			—			916
Class B shares to Mr. Taylor			2,217			2,217			2,217			2,217			2,217
Class A shares to Mr. Taylor			2,473			2,260			2,042			2,191			2,042
	Total		19,599			19,686			20,644			19,733			20,742
Basic EPS		$	0.26		$	0.59		$	0.75		$	0.18		$	0.25
Diluted EPS:
Weighted-average common shares outstanding:
Shares assumed issued on exercise of dilutive share equivalents			2,084			2,775			3,133			3,027			3,113
Shares assumed purchased with proceeds of dilutive share equivalents			(1,532	)		(1,635	)		(2,011	)		(1,979	)		(1,734	)
Texas Roadhouse Holdings			14,909			15,209			15,469			15,325			15,567
Shares issued for distribution payable			—			—			916			—			916
Class B shares to Mr. Taylor			2,217			2,217			2,217			2,217			2,217
Class A shares to Mr. Taylor			2,473			2,260			2,042			2,191			2,042
Shares applicable to diluted earnings			20,151			20,826			21,766			20,781			22,121
Diluted EPS		$	0.26		$	0.55		$	0.71		$	0.17		$	0.24

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(13)    Employment Agreements

        In July 2004, the Company entered into three-year employment agreements with certain executive officers subject to completing and closing an initial public offering on or before September 1, 2004. The agreements articulate compensation arrangements including salary and bonus amounts, certain non-compete provisions, and termination rights. The aggregate annual compensation and maximum annual performance bonus to be paid each year under the terms of these agreements is $1.53 million and $855,000, respectively.

(14)    Subsequent Events

        The Company has authorized the filing of a registration statement with the Securities and Exchange Commission (SEC) that would permit the sale of shares of Texas Roadhouse, Inc.'s Class A common stock in a proposed initial public offering.

        Immediately before the completion of this offering, the Company will become a "C" corporation through the merger of Texas Roadhouse Holdings LLC into a wholly owned subsidiary of Texas Roadhouse, Inc. Concurrently with this merger, the Company will acquire the equity interest of Texas Roadhouse Development Corporation and of Texas Roadhouse Management Corp. through mergers of those companies with wholly-owned subsidiaries of the Company. The Company will acquire the remaining equity interests in all 31 of its majority-owned or controlled company restaurants, and the entire equity interests in one franchise restaurant, through mergers of those 32 companies with wholly-owned subsidiaries of Texas Roadhouse Holdings LLC. The Company will issue 2,598,546 shares of Class A common stock to the equity owners of the merged companies. These shares are calculated using predetermined acquisition formulas as required by each entity's operating or partnership agreement. These transactions will be accounted for as step acquisitions using the purchase method as defined in FASB Statement No. 141, "Business Combinations." Assuming a purchase price of $49.4 million and our preliminary estimates of the fair value of net assets acquired, $43.4 million of goodwill will be generated by the acquisitions. The purchase price of $49.4 million was calculated using an assumed initial offering price of $19 per share. These acquisitions, which are expected to be accretive to earnings, are consistent with our long-term strategy to increase net income and earnings per share. As a result, immediately before the completion of this offering, (i) the Company will have a total of 90 company restaurants, all of which will be wholly-owned and (ii) there will be a total of 75 franchise restaurants. The Company will record a cumulative net deferred tax liability of $5.2 million and a corresponding charge to its provision for income taxes upon becoming a "C" Corporation immediately before the closing of this offering.

        Following this offering, the Company's founder and chairman, W. Kent Taylor, will own 2,217,000 of the Company's outstanding shares of Class B common stock. The Class B common stock has ten votes per share, while Class A common stock, has one vote per share. As a result, Mr. Taylor will have the ability to control the Company's management and affairs and the outcome of all matters requiring stockholder approval, including the election and removal of its entire board of directors, any merger, consolidation or sale of all or substantially all of its assets. Mr. Taylor would continue to be able to control all matters submitted to the Company's stockholders even if in the future he were to own significantly less than 50% of the equity of the Company due to his Class B shares.

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                                                                        Shares

Texas Roadhouse, Inc.

Class A Common Stock

Prospectus
                  , 2004

Banc of America Securities LLC

RBC Capital Markets

SG Cowen & Co.

Wachovia Securities

        Until            , 2004 all dealers that buy, sell or trade our Class A common stock may be required to deliver a prospectus, regardless of whether they are participating in this offering. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

        The following table shows the costs and expenses, other than underwriting discounts and commissions, payable in connection with the sale and distribution of the securities being registered. The registrant will pay all of these amounts. All amounts except the SEC registration fee are estimated.

SEC Registration Fee	$	29,141
Accounting Fees and Expenses
Legal Fees and Expenses (excluding Blue Sky)
Printing and Engraving Fees and Expenses
Blue Sky Fees and Expenses
Transfer Agent and Registrar Fees and Expenses
Nasdaq National Market Listing Fee
NASD Filing Fee
Director and Officer Liability Insurance
Miscellaneous
Total	$

Item 14. Indemnification of Directors and Officers

        Section 145 of the Delaware General Corporation Law permits a corporation to include in its charter documents, and in agreements between the corporation and its directors and officers, provisions expanding the scope of indemnification beyond that specifically provided by the current law.

        The Certificate of Incorporation and Bylaws of the registrant provide that the registrant shall indemnify our directors and officers, and may indemnify its employees and agents, to the fullest extent permitted by Delaware law.

        Section 102(b)(7) of the Delaware General Corporation Law permits corporations to eliminate or limit the personal liability of their directors by adding to the certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director for (a) any breach of any director's duty of loyalty to the corporation or its stockholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) payment of dividends or repurchases or redemptions of stock other than from lawfully available funds, or (d) any transaction from which the director derived an improper personal benefit.

        Article VI of the registrant's Certificate of Incorporation provides that:

"[n]o director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director; provided, however, that the foregoing shall not eliminate or limit the liability of a director (a) for any breach of the director's duty of loyalty to the Corporation or its stockholders; (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (c) under Section 174 of the General Corporation Law of the State of Delaware; or (d) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of the State of Delaware shall be amended to permit further elimination or limitation of the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of the State of Delaware as so amended. Any repeal or modification of

II-1

this Article VI by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omission occurring prior to, such repeal or modification."

        In addition, the registrant intends to enter into indemnification agreements with each of its directors and executive officers. These indemnification agreements will provide for the indemnification of directors and executive officers of the registrant to the fullest extent permitted by Delaware law, whether or not expressly provided for in our Bylaws, and set forth the process by which claims for indemnification are considered.

        Reference is also made to Section 8 of the Underwriting Agreement contained in Exhibit 1.1 hereto, indemnifying officers and directors against certain liabilities.

Item 15. Recent Sales of Unregistered Securities

        Except as set forth below, in the three years preceding the filing of this registration statement, the registrant has not issued any securities that were not registered under the Securities Act.

        In May 2004, upon the incorporation of the registrant, the registrant issued 1,000 shares of Class A common stock to W. Kent Taylor in exchange for $1,000.

        In May 2004, the registrant issued 2,217,000 shares of Class B common stock in connection with the merger of WKT Restaurant Corp. into the registrant.

        Upon the consummation of the acquisitions, which will take place immediately before the closing of the offering contemplated by this registration statement:

•

the registrant will issue an aggregate of 20,390,738 shares of Class A common stock in exchange for all the outstanding equity interests of Texas Roadhouse Holdings LLC, Texas Roadhouse Management Corp., 31 majority-owned or controlled Texas Roadhouse restaurants and one franchise restaurant;

•

all outstanding options issued by Texas Roadhouse Management Corp. will automatically be converted into options to acquire shares of Class A common stock of the registrant.

        The foregoing sales of securities were made, or will be made, in reliance upon the exemption from the registration provisions of the Securities Act provided for by Section 4(2) thereof for transactions not involving a public offering. All of the foregoing securities are deemed restricted securities for the purposes of the Securities Act.

Item 16. Exhibits and Financial Statement Schedules

(a)

Exhibits

        The Exhibit Index filed herewith is incorporated herein by reference.

(b)

Financial Statement Schedules

        None.

Item 17. Undertakings

        The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions referenced in Item 14 of this registration statement or otherwise, the registrant has been advised that in the opinion

II-2

of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        The undersigned registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Louisville, Commonwealth of Kentucky, on July 19, 2004.

TEXAS ROADHOUSE, INC.
By:	/s/  G. J. HART G. J. Hart Chief Executive Officer

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities on July 19, 2004.

Signature	Title
* W. Kent Taylor	Chairman of the Company and Board
/s/  G. J. HART G. J. Hart	Chief Executive Officer (Principal Executive Officer)
* Scott M. Colosi	Chief Financial Officer (Principal Financial Officer)
* Tonya Robinson	Controller (Principal Accounting Officer)

*

G. J. Hart, by signing his name hereto, does hereby sign this document on behalf of each of the above-named officers and/or directors of the Registrant pursuant to powers of attorney duly executed by such persons.

By: /s/  G. J. HART G. J. Hart
Attorney-in-Fact

II-4

EXHIBIT INDEX

Exhibit No.	Description
1.1	Form of Underwriting Agreement.*
3.1	Certificate of Incorporation of the Registrant.**
3.2	Form of Amended and Restated Certificate of Incorporation of Registrant to be filed prior to the closing of the Offering.*
3.3	Bylaws of the Registrant.**
4.1	Master Transaction Agreement, dated as of May     , 2004, among Registrant and others*
4.2	Form of specimen certificate representing Class A common stock of Registrant.*
4.3	Registration Rights Agreement, dated as of May            , 2004, among Registrant and others.*
5.1	Opinion of Frost Brown Todd LLC as to the legality of the securities being registered.*
10.1	Amended and Restated Office Lease Agreement (One Paragon Centre), dated as of August 15, 2003, by and between Paragon Centre Associates, LLC and Texas Roadhouse Holdings LLC, as amended.**
10.2	Amended and Restated Office Lease Agreement (Two Paragon Centre), dated as of August 15, 2003, by and between Paragon Centre Associates, LLC and Texas Roadhouse Holdings LLC, as amended.**
10.3	Credit Agreement, dated as of July 16, 2003 among Texas Roadhouse Holdings LLC, Bank of America, N.A., for itself as a lender and as an agent for the benefit of the other lenders, Bank of America Securities LLC, as Co-Lead Arranger for the lenders and itself as a lender, and National City Bank of Kentucky, as Co-Lead Arranger and as Syndication Agent, and the other financial institutions as lenders.**
10.4	Employment Agreement, dated as of May 5, 2004, between Registrant and G.J. Hart.**
10.5	Employment Agreement, dated as of May 5, 2004, between Registrant and Scott M. Colosi.**
10.6	Employment Agreement, dated as of May 5, 2004, between Registrant and Steven L. Ortiz.**
10.7	Employment Agreement, dated as of May 5, 2004, between Registrant and W. Kent Taylor.**
10.8	Employment Agreement, dated as of May 5, 2004, between Registrant and Sheila C. Brown.*
10.9	Form of Director and Executive Officer Indemnification Agreement.*
10.10	Form of Limited Partnership Agreement and Operating Agreement for company-managed Texas Roadhouse restaurants, including schedule of the owners of such restaurants and the interests held by directors, executive officers and 5% stockholders who are parties
10.11	2004 Equity Incentive Plan.*
10.12	Lease Agreement dated as of April 1, 1997, by and between Texas Roadhouse of Elizabethtown, LLC and Texas Roadhouse Holdings LLC**
10.13	Lease Agreement dated as of November 1999, by and between TEAS II, LLC and Texas Roadhouse Holdings LLC**
10.14	Form of Franchise Agreement and Preliminary Agreement for a Texas Roadhouse Restaurant Franchise, including schedule of directors, executive officers and 5% stockholders which have entered into either agreement.**
21.1	List of Subsidiaries.*
23.1	Consent of Frost Brown Todd LLC (included in Exhibit 5.1).*
23.2	Consent of KPMG LLP.
24.1	Power of Attorney (included on signature page).**

*

To be filed by amendment.

**

Filed previously.

QuickLinks

TABLE OF CONTENTS
SUMMARY
Our Business
Risk Factors
Our Fiscal Year and Principal Office
Background to the Offering
The Offering
Summary Historical and Pro Forma Combined Financial and Operating Data
RISK FACTORS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
MARKET DATA AND FORECASTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET AS OF MARCH 30, 2004 (in thousands)
UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME FOR FISCAL YEAR 2003 (in thousands, except per share data)
UNAUDITED CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME FOR QUARTER ENDED MARCH 30, 2004 (in thousands, except per share data)
NOTES TO UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL AND OPERATING DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
Summary Compensation Table
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PRINCIPAL AND SELLING STOCKHOLDERS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF OUR CLASS A COMMON STOCK
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO COMBINED FINANCIAL STATEMENTS
Texas Roadhouse Holdings LLC and Entities Under Common Control Combined Balance Sheets (in thousands, except share and per share data)
Texas Roadhouse Holdings LLC and Entities Under Common Control Combined Statements of Income (in thousands, except per share data)
Texas Roadhouse Holdings LLC and Entities Under Common Control Combined Statements of Members' Equity and Comprehensive Income ($ in thousands)
Texas Roadhouse Holdings LLC and Entities Under Common Control Combined Statements of Cash Flows (in thousands)
Texas Roadhouse Holdings LLC and Entities Under Common Control Notes to Combined Financial Statements (Tabular amounts in thousands, except share and per share data)
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
EXHIBIT INDEX

EX-10.10

                                                                   Exhibit 10.10

                               OPERATING AGREEMENT

                                       FOR

                              --------------------


                    Dated
                         ------------------------------



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                           
ARTICLE 1 - FORMATION..........................................................1

ARTICLE 2 - NAME...............................................................1

ARTICLE 3 - DEFINITIONS........................................................1

ARTICLE 4 - BUSINESS OF THE COMPANY............................................3

ARTICLE 5 - THE MEMBERS........................................................3

   5.1   INITIAL MEMBERS.......................................................3
   5.2   ADDITIONAL MEMBERS....................................................3
   5.3   AUTHORITY AND POWER OF MEMBERS........................................4
   5.4   NO LIABILITY OF MEMBERS OR MANAGERS...................................4
   5.5   TITLE TO PROPERTY.....................................................4
   5.6   REMOVAL OF MEMBERS....................................................4

ARTICLE 6 - PRINCIPAL OFFICE...................................................4

ARTICLE 7 - TERM...............................................................4

ARTICLE 8 - CAPITAL AND CONTRIBUTIONS..........................................4

   8.1   INITIAL CONTRIBUTIONS.................................................4
   8.2   ADDITIONAL CONTRIBUTIONS..............................................4
   8.3   INTEREST ON CAPITAL...................................................5
   8.4   CAPITAL ACCOUNTS......................................................5
   8.5   WITHDRAWAL AND RETURN OF CAPITAL......................................5
   8.6   REVALUATION OF COMPANY PROPERTY.......................................5

ARTICLE 9 - DISTRIBUTIONS......................................................5

   9.1   DISTRIBUTIONS TO THE MEMBERS..........................................5
   9.2   TIMING OF DISTRIBUTIONS...............................................5

ARTICLE 10 - ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES.................6

   10.1  ALLOCATIONS TO THE MEMBERS GENERALLY..................................6
   10.2  LIMITATION ON LOSSES..................................................6
   10.3  QUALIFIED INCOME OFFSET...............................................6
   10.4  MINIMUM GAIN CHARGEBACK...............................................6
   10.5  CURATIVE ALLOCATIONS..................................................7
   10.6  NO RESTORATION OF DEFICIT CAPITAL ACCOUNTS............................7
   10.7  CONTRIBUTED PROPERTY..................................................7
   10.8  DIVISION AMONG MEMBERS................................................7

ARTICLE 11 - BOOKS OF ACCOUNT, RECORDS AND REPORTS.............................8

   11.1  RESPONSIBILITY FOR BOOKS OF ACCOUNT AND RECORDS.......................8
   11.2  REPORTS TO THE MEMBERS................................................8
   11.3  ADDITIONAL REPORTS....................................................8

ARTICLE 12 - FISCAL YEAR.......................................................8

ARTICLE 13 - THE COMPANY'S FUNDS...............................................8

   14.1  AUTHORITY OF THE MANAGER..............................................9
   14.2  TIME DEVOTED TO THE COMPANY; OTHER ACTIVITIES........................10
   14.3  LOANS TO OR BY THE MANAGER...........................................10
   14.4  LIABILITY OF THE MANAGER.............................................10
   14.5  INDEMNIFICATION OF THE MANAGER.......................................10


                                        i


                                                                           
   14.6  RIGHT OF THIRD PARTIES TO RELY ON AUTHORITY OF THE MANAGER...........11
   14.7  RELATED PARTY TRANSACTIONS...........................................12
   14.8  OTHER MATTERS CONCERNING THE MANAGER.................................13
   14.9  LIMITATIONS ON AUTHORITY.............................................13
   14.10 OFFICERS.............................................................13
   14.11 SHARE OPTIONS........................................................13

ARTICLE 15 - REPRESENTATIONS AND WARRANTIES OF THE MEMBERS....................14

ARTICLE 16 - TRANSFER OF SHARES...............................................14

   16.1  TRANSFER OF SHARES...................................................14
   16.2  RECOGNITION BY COMPANY OF TRANSFERS..................................14
   16.3  RESTRICTIONS ON TRANSFER.............................................15
   16.4  ADMISSION OF TRANSFEREES AS MEMBERS..................................16
   16.5  HOLDERS OF SHARES WHO ARE NOT MEMBERS................................17
   16.6  TERMINATION AS A MEMBER..............................................17
   16.7  RIGHT TO VOTE........................................................17
   16.8  TRANSFER BY THE MANAGER; WITHDRAWAL OF THE MANAGER...................17
   16.9  INITIAL PUBLIC OFFERING LOCK-UP......................................17
   16.10 RIGHT TO DEAL EXCLUSIVELY WITH MEMBERS...............................18
   16.11 GO ALONG OBLIGATIONS.................................................18
   16.12 CO-SALE OBLIGATIONS UPON THE SALE OF THE MANAGER.....................22
   16.13 OTHER TRANSACTIONS...................................................24

ARTICLE 17 - DISSOLUTION OF THE COMPANY.......................................24

ARTICLE 18 - CONFIDENTIALITY AND NON-COMPETITION..............................24

   18.1  CONFIDENTIALITY......................................................24
   18.2  COMPETITION, ETC.....................................................25
   18.3  APPLICATION TO EQUITY OWNERS.........................................26

ARTICLE 19 - WINDING UP; LIQUIDATING DISTRIBUTIONS; TERMINATION...............26

   19.1  WINDING UP...........................................................26
   19.2  LIQUIDATING DISTRIBUTIONS............................................26
   19.3  RIGHTS OF THE MEMBERS................................................26
   19.4  TERMINATION..........................................................26

ARTICLE 20 - SPECIAL POWER OF ATTORNEY........................................26

   20.1  GRANTING OF POWER OF ATTORNEY........................................26
   20.2  NATURE OF POWER OF ATTORNEY..........................................27

ARTICLE 21 - MISCELLANEOUS....................................................28

   21.1  NOTICES..............................................................28
   21.2  GOVERNING LAW........................................................28
   21.3  BENEFIT AND BINDING EFFECT...........................................28
   21.4  PRONOUNS AND NUMBER..................................................28
   21.5  HEADINGS; ANNEXES AND SCHEDULES......................................28
   21.6  PARTIAL ENFORCEABILITY...............................................28
   21.7  PREVIOUS AGREEMENTS..................................................28
   21.8  CERTIFICATES.........................................................28
   21.9  ENFORCEMENT..........................................................28
   21.10 SCOPE................................................................29
   21.11 NO WAIVER............................................................29
   21.12 AMENDMENTS...........................................................29
   21.13 NO THIRD PARTY BENEFICIARY...........................................29



                                       ii


                                                                        
   21.14 COUNTERPARTS.........................................................29
   21.15 PARTITION............................................................29

   

                                       iii


                               OPERATING AGREEMENT
                                       FOR

      This is an Operating Agreement for ______________________ (the "Company"),
dated as of _____________, among Texas Roadhouse Holdings LLC ("Holdings"), and
the persons listed on Exhibit A hereto (each an "Individual Member" and
collectively with Holdings, the "Members").

                              ARTICLE 1 - FORMATION

      The Members hereby form a Limited Liability Company pursuant to the
Kentucky Limited Liability Company Act, effective as of the filing of the
Company's Articles of Organization with the Kentucky Secretary of State. The
Members hereby ratify and approve the filing of the Company's Articles of
Organization, the receipt of the form of which each Member hereby acknowledges.
The Manager shall from time to time execute or cause to be executed all such
certificates or other documents or cause to be done all such filing, recording,
publishing or other acts as may be necessary or appropriate to comply with the
requirements for the formation and operation of a limited liability company
under the Act. The rights and duties of the Manager and the Members shall be as
provided in the Act, except as modified by this Agreement. The Company shall
also be qualified to do business in such other states as the manager from
time-to-time deems appropriate.

                                ARTICLE 2 - NAME

      The business of the Company shall be conducted under the name
"____________________, LLC."

                             ARTICLE 3 - DEFINITIONS

      The following terms and phrases used in this Agreement shall have the
following meanings:

      "ACT" shall mean the Kentucky Limited Liability Company Act, KRS Chapter
275.

      "AFFILIATE" or a Person "AFFILIATED WITH" a Member or other specified
Person (collectively referred to as the "SPECIFIED PERSON") shall mean (i) a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under the control of the Member or other Specified
Person; (ii) a Person of which the Member or other Specified Person is an
officer, director, member or partner or is the beneficial owner of 10% or more
of any class of equity security or interest; (iii) any trust or estate in which
the Member or other Specified Person has a beneficial interest or as to which
the Member or other Specified Person serves as a trustee or in another fiduciary
capacity; and (iv) any spouse, parent, child, brother or sister of the Member or
other specified person. The term "CONTROL" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership, by contract or otherwise.

                                        1


      "AGREEMENT" shall mean this Operating Agreement, as amended, modified or
supplemented from time to time.

      "CAPITAL ACCOUNT" shall mean the individual account maintained for each
Member by the Company, calculated pursuant to Section 8.4.

      "CAPITAL CONTRIBUTION" shall mean the money and the fair market value of
property (net of liabilities assumed by the Company or to which the property is
subject) contributed to the Company by a Member, and as set forth on ANNEX A.
ANNEX A shall set forth the agreed upon fair market value of each of the assets
(other than cash) contributed to the capital of the Company as determined by the
contributing Member and the Company.

      "CAPITAL RATIO" shall mean the Capital Account of a member divided by the
total shares owned by such member.

      "CODE" or "IRC" shall mean the Internal Revenue Code of 1986, as amended,
modified or rescinded from time to time, or any similar provision of succeeding
law.

      "INCAPACITY" or "INCAPACITATED" shall mean the adjudicated incompetency or
death of an individual Member, or dissolution of the entity comprising any
Member.

      "INDIVIDUAL MEMBERS" shall mean all of the Members other than the Manager.

      "MANAGER" shall mean Texas Roadhouse Holdings LLC, and any additional or
replacement Managers designated by the Manager.

      "NET CASH FLOW" shall mean, with respect to any period, all cash revenues
of the Company from business operations during that period (including, without
limitation, interest or other earnings on the funds of the Company) LESS the sum
of the following to the extent made from those cash revenues:

            (i)   All principal and interest payments on any indebtedness of the
Company, including loans made by the Manager pursuant to Section 14.3;

            (ii)  All cash expenses incurred incident to the operation of the
Company's business; and

            (iii) Funds set aside as reserves for contingencies, working
capital, debt service, taxes, insurance or other costs and expenses incident to
the conduct of the Company's business which the Manager deems reasonably
necessary or appropriate.

      "PARTICIPATING PERCENTAGE" for any Member shall mean the number of Shares
held by such Person divided by the number of outstanding Shares. Distributions
or allocations made in proportion to or in accordance with the Participating
Percentages of the Members shall be based upon relative Participating
Percentages as of the record date for distributions and in accordance with IRC
Sections 706 (c) AND (d).

                                        2


      "PERSON" shall mean an individual, corporation, partnership, limited
liability company, joint stock company, trust, association, unincorporated
entity, or any division thereof.

      "SHARES" shall mean the units (a) in which interests in the Company's Net
Profits, Net Losses and distributions allocated to Members are divided, and (b)
in which the right to vote on, or consent to, or otherwise participate in, any
decision or action by the Members granted pursuant to this Agreement or the Act
are divided.

      "TAXABLE INCOME" and "TAX LOSSES," respectively, shall mean the net income
or net losses of the Company as determined for federal income tax purposes, and
all items required to be separately stated BY IRC Sections 702 AND 703 and the
Treasury Regulations promulgated thereunder.

      "TRANSFER" shall mean any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether voluntary or
involuntary, and whether during the lifetime of the Person involved or upon or
after his death, including, but not limited to, any transfer by operation of
law, by court order, by judicial process, or by foreclosure, levy, or
attachment.

                       ARTICLE 4 - BUSINESS OF THE COMPANY

      The business of the Company shall be to develop, own, and operate a
franchised casual steakhouse restaurant (the "Restaurant") known as Texas
Roadhouse which will be located in ___________________, and carrying on any and
all activities related thereto including entering into a Franchise Agreement
with Texas Roadhouse Development Corporation (the "Franchise Agreement"). The
Company's business shall be only as specified in this Article 4. Except as
otherwise provided in this Agreement, the Company shall not engage in any other
activity or business and no Member shall have any authority to hold himself out
as a general agent of the Company in any other business or activity. It is the
intention of the Members that the Company's be treated as a partnership for
federal, state and local income tax purposes, and the Members agree not to take
any position or make any election, in a tax return or otherwise, inconsistent
with such treatment; PROVIDED, HOWEVER, the filing of federal, state and local
tax returns shall not be construed to create a partnership (other than for tax
purposes) among the Members.

                             ARTICLE 5 - THE MEMBERS

      5.1   INITIAL MEMBERS. The names, business addresses and Share ownership
of the Members are set forth on ANNEX A.

      5.2   ADDITIONAL MEMBERS. The Company may admit additional Members from
time-to-time at the discretion of the Manager, upon the terms and for the
consideration determined by the Manager; provided, however, the admission of any
additional Member shall not reduce the Participating Percentage of any existing
Member without that existing Member's consent. ANNEX A shall be amended to
reflect any changes in the Company's membership. A prerequisite to admission to
membership in this Company shall be the written agreement by the additional
Member to be bound by the terms of this Agreement.

                                        3


      5.3   AUTHORITY AND POWER OF MEMBERS. No Member shall have the power or
authority to bind the Company unless the Member has been authorized in writing
by the Manager to act as an agent of the Company. Actions of the Members shall
be taken by the affirmative vote of Members holding a majority of the
Participating Percentages, unless otherwise provided in this Agreement. The vote
requirement in the preceding sentence shall supersede any unanimous vote
requirement set forth in the Act. Action of the Members may be taken at a
meeting or by written action of the Members holding a majority of the
Participating Percentages. Meetings may be called by any Member upon at least
three business days prior written notice to the other Members. Notice may also
be communicated in person by telephone. Meetings may be held by any means of
communication by which all Members participating may simultaneously hear each
other during the meeting.

      5.4   NO LIABILITY OF MEMBERS OR MANAGERS. No Member or Manager shall have
personal liability for the obligations or liabilities of the Company. Except as
otherwise specifically provided in this Agreement, no Member, after his
admission to the Company, shall be obligated to contribute additional funds or
property, or loan money, to the Company.

      5.5   TITLE TO PROPERTY. All real and personal property owned by the
Company shall be owned by the Company as an entity and no Member shall have any
ownership interest in such property in his individual name or right, and each
Member's interest in the Company shall be personal property for all purposes.
Except as otherwise provided in this Agreement, the Company shall hold all of
its real and personal property in the name of the Company and not in the name of
any Member.

      5.6   REMOVAL OF MEMBERS. Except as provided in Article 16, no Member
shall be removed from membership in the Company without such Member's consent.

                          ARTICLE 6 - PRINCIPAL OFFICE

      The principal office and place of business of the Company shall be located
at 6040 Dutchmans Lane, Suite 400, Louisville, Kentucky 40205. The Company may
have such other or additional offices as the Manager deems advisable.

                                ARTICLE 7 - TERM

      The term of the Company began on the date the Company's Articles of
Organization were filed with the Kentucky Secretary of State, and shall continue
until dissolved in accordance with the terms of this Agreement.

                      ARTICLE 8 - CAPITAL AND CONTRIBUTIONS

      8.1   INITIAL CONTRIBUTIONS. Concurrently with the execution of this
Operating Agreement, the members shall make capital contributions set forth on
ANNEX A.

      8.2   ADDITIONAL CONTRIBUTIONS. The Members shall not be required to make
additional Capital Contributions without the unanimous consent of the Members.
ANNEX A shall be amended to reflect any additional Capital Contributions.

                                        4


      8.3   INTEREST ON CAPITAL. No Member shall be paid interest on any Capital
Contribution or Capital Account.

      8.4   CAPITAL ACCOUNTS. A separate Capital Account shall be maintained by
the Company for each Member in accordance with Treas. Reg. 1.704-1(b)(2)(iv).
There shall be credited to each Member's Capital Account: (i) the amount of
money contributed by such Member to the Company; (ii) the fair market value of
property contributed by such Member to the Company (net of liabilities secured
by such contributed property that the Company is considered to assume or take
subject to under IRC 752); and (iii) allocations to such Member of Company
income and gain (or items thereof), including income and gain exempt from tax
and income and gain, as computed for book purposes, in accordance with Treas.
Reg. 1.704-1(b)(2)(iv)(g). Each Member's Capital Account shall be decreased by:
(i) the amount of money distributed to such Member by the Company; (ii) the fair
market value of property distributed to such Member by the Company (net of
liabilities secured by such distributed property that such Member is considered
to assume or take subject to under IRC 752); (iii) allocations to such Member of
expenditures of the Company described in IRC 705(a)(2)(B); and (iv) allocations
of loss and deduction (or items thereof) including loss or deduction, computed
for book purposes, as described in Treas. Reg. 1.704-1(b)(2)(iv)(g).

      8.5   WITHDRAWAL AND RETURN OF CAPITAL. Except as expressly provided in
this Agreement, including Section 9.1 with respect to distributions of Net Cash
Flow, no Member shall be entitled to withdraw any part of such Member's Capital
Contributions or Capital Account, or to receive any distribution from the
Company.

      8.6   REVALUATION OF COMPANY PROPERTY. If there shall occur (i) an
acquisition of Shares from the Company for more than a de minimis Capital
Contribution, or (ii) a distribution (other than a de minimis distribution) to a
Member in redemption of his Shares, then the Company shall revalue the assets of
the Company at their then fair market value and adjust the Capital Accounts in
the same manner as provided in Section 18.1 in the case of a property
distribution. Pursuant to this Section 8.6, the Capital Accounts of the
Individual Members are adjusted to the amounts set forth on ANNEX A as of the
date hereof. If there is a reallocation pursuant to this Section 8.6, then
Capital Accounts shall thereafter be adjusted for allocations of depreciation
(cost recovery) and gain or loss in accordance with the provisions of Treas.
Reg. 1.704-1(b)(2)(iv)(f) and (g), and the Members' distributive shares of
depreciation (cost recovery) and gain or loss shall thereafter be computed in
accordance with the principles of IRC 704(c) and the regulations promulgated
thereunder using the traditional method with curative allocations within the
meaning of Treas. Reg. 1.704-3(c).

                            ARTICLE 9 - DISTRIBUTIONS

      9.1   DISTRIBUTIONS TO THE MEMBERS. The Company's Net Cash Flow shall be
distributed to the Members in accordance with the Participating Percentages.

      9.2   TIMING OF DISTRIBUTIONS. Distributions of Net Cash Flow shall be
made monthly, to the extent possible, within 30 days after the end of each
month.

                                        5


         ARTICLE 10 - ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES

      10.1  ALLOCATIONS TO THE MEMBERS GENERALLY.

            (a)   Except as otherwise provided herein, Taxable Income and Tax
Losses, and the allocations required by the definition if the term Capital
Account, shall be allocated among the Members in accordance with their
Participating Percentages.

            (b)   Notwithstanding the provisions of Section 10.1 (a), in the
taxable year in which there is a sale or other disposition of all, or
substantially all, of the assets of the Company, gain (and to the extent
necessary to equalize the Capital Ratios of all Members, gross income) shall be
allocated first to Members having the lowest Capital Ratio until the Capital
Ratios of such Members equal the Capital Ratios of those Members having the next
lowest Capital Ratios, and continuing in such manner (i.e., making the Capital
Ratios owned by those Members then having the lowest Capital Ratios equal the
Capital Ratios of those members then having the next lowest Capital Ratios, and
so on) until the Capital Ratios of all Members are equal."

      10.2  LIMITATION ON LOSSES. Notwithstanding the general allocation of
Taxable Income and Tax Losses described in Section 10.1, no Member shall be
allocated Tax Losses in excess of the aggregate of such Member's positive
Capital Account balance, Company Minimum Gain (within the meaning of Treas. Reg.
1.704-2(b)(2)), and Member Nonrecourse Minimum Gain (within the meaning of
Treas. Reg. 1.704-2(i)(3)), until such time as no Member has a positive Capital
Account balance, whereupon subsequent allocations of Tax Losses shall again be
allocated among the Members in accordance with their Participating Percentages.
Furthermore, no Member shall be allocated Tax Losses where it is reasonably
anticipated that such Member's Capital Account shall be negative at the end of
the fiscal year in which the Tax Losses arise or at the end of the subsequent
fiscal year, as a result of distributions of Net Cash Flow during such periods,
until such time as no Member would have a positive Capital Account balance after
such reasonably anticipated distributions of Net Cash Flow, whereupon subsequent
allocations of Tax Losses shall again be allocated among the Members in
accordance with their Participating Percentages. Tax Losses not allocated to a
Member under this Section 10.2 shall be reallocated among those Members with
positive Capital Account balances in accordance with their Participating
Percentages.

      10.3  QUALIFIED INCOME OFFSET. If a Member receives any adjustment,
allocation, or distribution described in Treas. Reg. 1.704-1(b)(2)(ii)(d)(4),
(5), or (6), then items of Taxable Income shall be specially allocated to such
Member in an amount and manner sufficient to eliminate the deficit balance in
such Member's Capital Account as quickly as possible. It is the intention of the
parties that this provision constitute a "qualified income offset" within the
meaning of Treas. Reg. 1.704-1(b)(2)(ii)(d), and this provision shall be so
construed.

      10.4  MINIMUM GAIN CHARGEBACK. If there is a net decrease in the Company's
Minimum Gain (within the meaning of Treas. Reg. 1.704-2(b)(2)) or Member
Nonrecourse Minimum Gain (within the meaning of Treas. Reg. 1.704-2(i)(3))
during any fiscal year of the Company, each Member shall be specially allocated,
before any other allocations under this Article 10, items of income and gain for
such fiscal year (and subsequent fiscal years, if necessary) in an amount equal
to such Member's share (determined in accordance with Treas. Reg. 1.704-2(g) and
1.704-2(i)(5), as applicable) of the net decrease in the Company's

                                        6


Minimum Gain or Member Nonrecourse Debt Minimum Gain, as applicable, for such
fiscal year, provided, however, that no such allocation shall be required if any
of the exceptions set forth in Treas. Reg. 1.704-2(f) apply. It is the intention
of the parties that this provision constitute a "minimum gain chargeback" within
the meaning of Treas. Reg. 1.704-2(f) and 1.704-2(i)(4), and this provision
shall be so construed. Notwithstanding anything in this Agreement to the
contrary, the Company's partner nonrecourse deductions (within the meaning of
Treas. Reg. 1.704-2(i)(2)) shall be allocated solely to the Member who has the
economic risk of loss with respect to the partner nonrecourse liability related
thereto in accordance with the provisions of Treas. Reg. 1.704-2(i)(1).

      10.5  CURATIVE ALLOCATIONS. The allocations set forth in Sections 10.2
through 10.4 are intended to comply with certain requirements of the Treasury
Regulations (the "REGULATORY ALLOCATIONS"). It is the intent of the Members
that, to the extent possible, all Regulatory Allocations shall be offset either
with other Regulatory Allocations or with special allocations of other items of
Taxable Income or Tax Losses pursuant to this Section 10.5. Therefore,
notwithstanding any other provision of this Article 10 (other than the
Regulatory Allocations), the Manager shall make such offsetting special
allocations of Taxable Income and Tax Losses in whatever manner the Manager
determines appropriate so that, after such offsetting allocations are made, each
Member's Capital Account balance is, to the extent possible, equal to the
Capital Account balance such Member would have had if the Regulatory Allocations
were not part of the Agreement and all Taxable Income and Tax Losses were
allocated pursuant to Section 10.1.

      10.6  NO RESTORATION OF DEFICIT CAPITAL ACCOUNTS. No Member shall be
required under any circumstances (either during the period of the Company's
operation or upon the Company's dissolution and termination) to restore a
deficit in such Member's Capital Account or, except as explicitly provided in
this Agreement, otherwise make any contribution of cash or property to the
Company without such Member's consent, which may be withheld in such Member's
sole and absolute discretion.

      10.7  CONTRIBUTED PROPERTY. In accordance with the rules of IRC 704(i) and
the Treasury Regulations promulgated thereunder, items of income, gain, loss,
and deduction with respect to any property contributed to the capital of the
Company shall, solely for tax purposes, be allocated among the Members so as to
take account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its fair market value at the time of
contribution.

      10.8  DIVISION AMONG MEMBERS. If there is a change in the number of Shares
held by a Member during a fiscal year of the Company, any allocations pursuant
to this Article 10 shall be made so as to take into account the varying
interests of the Members during the period to which the allocation relates,
using the interim closing of the books method for determining such allocations,
or upon the unanimous agreement of the Members (including any former Member
affected by such allocations), using any method for determining such allocations
that is provided in IRC 706(d) and the Treasury Regulations promulgated
thereunder.

                                        7


               ARTICLE 11 - BOOKS OF ACCOUNT, RECORDS AND REPORTS

      11.1  RESPONSIBILITY FOR BOOKS OF ACCOUNT AND RECORDS. Proper and complete
books of account and records shall be kept by the Manager in which shall be
entered fully and accurately all transactions and other matters relative to the
Company's business as are usually entered into books of account and records
maintained by persons engaged in businesses of a like character, including,
without limitation, a Capital Account for each Member. The Company's books of
account and records shall be prepared in accordance with generally accepted
accounting principles, consistently applied. The books of account and records
shall, at all times, be maintained at the principal place of business of the
Company, and shall be open to the inspection and examination of the Members or
their duly authorized representatives during reasonable business hours, and any
Member may, at such Member's own expense, examine and make copies of the books
of account and records of the Company.

      11.2  REPORTS TO THE MEMBERS. As soon as practicable in the particular
case, the Manager shall deliver or cause to be delivered the following reports
to each Member:

            (a)   After the end of each fiscal year, such information concerning
the Company as shall be necessary for the preparation by a Member of such
Member's income tax or other tax returns;

            (b)   An unaudited statement setting forth, as of the end of and for
each fiscal year, a profit and loss statement and a balance sheet of the
Company; and

            (c)   Other information as, in the judgment of the Manager, shall be
reasonably necessary for the Members to be advised of the results of the
Company's operations.

      11.3  ADDITIONAL REPORTS. The Manager may prepare or cause to be prepared,
and deliver or cause to be delivered to the Members from time to time during
each fiscal year, in connection with distributions or otherwise, unaudited
statements showing the results of the Company's operations for any period and
from the beginning of the fiscal year to the date of that unaudited statement.

                            ARTICLE 12 - FISCAL YEAR

      The fiscal year of the Company shall end on the last Tuesday of each year
or such other date as designated by the Manager.

                        ARTICLE 13 - THE COMPANY'S FUNDS

      The Company's funds shall be deposited in such bank account(s), or
invested in such interest-bearing or non-interest-bearing investments, as shall
be designated by the Manager. All withdrawals from any such bank account(s)
shall be made by the Manager. The Company's funds shall be held in the name of
the Company and shall not be commingled with those of any other Person.

                                        8


                     ARTICLE 14 - MANAGEMENT OF THE COMPANY

      14.1  AUTHORITY OF THE MANAGER. The business and affairs of the Company
shall be managed by its Manager; provided, however, the Manager and the
Individual Members shall at all time comply with the Franchise Agreement. Except
to the extent delegated by the Manager to any officer of the Company pursuant to
Section 14.10 hereof, the Manager shall have the exclusive authority as to the
management and control of the business of the Company. In addition to the powers
now or hereafter granted a manager of a limited liability company under the Act
or granted the Manager under any other provisions of this Agreement, but subject
to any express limitations set forth in this Agreement, the Manager shall have
full power and authority to do all things that it considers necessary, proper,
or desirable to conduct the business of the Company, including (without
limitation) the power and authority (without the vote or consent of any Member):
(a) to negotiate and execute on behalf of the Company any contracts under such
terms and obligations as it, in its sole and absolute discretion, considers in
the best interest of the Company and necessary, appropriate, or desirable for
the conduct of the activities of the Company or the implementation of its powers
or the Company's objectives under this Agreement; (b) to perform all obligations
of the Company and to enforce all rights of the Company under the terms and
conditions of all contracts and agreements entered into by the Company; (c) to
employ and compensate and dismiss from employment any and all employees, agents,
independent contractors, brokers, attorneys, and accountants; (d) to obtain
property and/or services from the Manager and/or its Affiliates; (e) to lease or
license all or any portion of the assets of the Company for any Company purpose
and to acquire, dispose, sell, transfer, exchange, mortgage, pledge, encumber,
or hypothecate any or all of the assets of the Company; (f) to use or loan any
of the assets of the Company (including, without limitation, cash on hand) for
any purpose or on any terms it sees fit; (g) to borrow money on behalf of the
Company or cause the Company to borrow money (including, without limitation,
causing the Company to borrow money from the Manager or any Affiliate of the
Manager); (h) to assume debt obligations related in any way to the assets of the
Company; (i) to repay, in whole or in part, refinance, modify, consolidate, or
extend any debt obligations of the Company; (j) to acquire and maintain
insurance covering any or all assets of the Company and its activities; (k) to
control any matters affecting the rights and obligations of the Company
(including the conduct of litigation and other incurring of legal expense, and
to settle claims and litigation); (l) to distribute Company assets to the
Members; (m) to form any further limited liability companies, limited or general
partnerships, joint ventures, trusts, corporations, or other relationships it
deems desirable in furtherance of the Company's objectives; (n) to do all acts
and things necessary or desirable to accomplish the objectives of the Company;
(o) to apply for and obtain any governmental approvals or certificates with
respect to the operations of the Company or the ownership or use of its
properties or assets (including, without limitation, alcoholic beverage permits
from applicable state and local authorities); (p) to admit additional Members or
assignees or transferees of Members to the Company pursuant to Section 5.2 or
Section 16.4 hereof; (q) to submit a Company claim or liability to arbitration;
(r) to take any action on the part of the Company and the Members necessary to
merge the Company with and into, or transfer substantially all the assets of the
Company to, or transfer all of the Shares held by Members to, another entity
pursuant to Sections 16.11, 16.12 or 16.13 hereof; (s) to issue additional
Shares from time to time for such consideration and on such terms and conditions
as are approved by the Manager; and (t) to execute, acknowledge, deliver, file,
and record any and all instruments or documents affecting any and all of the
foregoing. Each Member agrees that the consent by the Manager to such admission
of Members from time to time or to the submission of a

                                        9


Company claim or liability to arbitration shall constitute the consent of such
Member to such admission or submission. Any and all acts heretofore taken by the
Manager that are permitted under this Section 14.1 are hereby ratified and
confirmed by the Members as the acts and deeds of the Company.

      14.2  TIME DEVOTED TO THE COMPANY; OTHER ACTIVITIES. The Manager shall
devote sufficient time to Company business as it in its sole discretion deems
necessary to effectively supervise Company business and affairs in an efficient
manner; but nothing in this Agreement shall preclude the employment of any
officer, agent, third party, or Affiliate to manage or provide other services
with respect to the Company's assets or business subject to the control of the
Manager, provided the Manager in all instances retains general control over the
operations of the Company.

      14.3  LOANS TO OR BY THE MANAGER. If either the Manager or an Affiliate of
the Manager loans funds to the Company, the Manager or such Affiliate may not
charge the Company interest greater than the lesser of (i) the Manager's or such
Affiliate's actual interest cost; (ii) the highest lawful rate; or (iii) the
rate that would be charged the Company (without reference to the Manager's or
such Affiliate's financial abilities or guaranties) by unrelated banks on
comparable loans for the same purpose; and the Manager or such Affiliate shall
not charge the Company points or other financing charges or fees in any amount
greater than the financing charges or fees actually incurred by the Manager or
such Affiliate in connection with the loan to the Company. The Company may loan
funds to the Manager or an Affiliate of the Manager provided the Company charges
the Manager or such Affiliate interest at a rate not less than the lesser of (i)
the Company's actual interest cost including points or other financing charges;
(ii) the highest lawful rate; or (iii) the rate that would be charged the
Manager or such Affiliate (without reference to the Manager's or such
Affiliates' financial abilities or guaranties) by unrelated banks on comparable
loans for the same purpose.

      14.4  LIABILITY OF THE MANAGER. To the extent permitted by applicable law,
the Manager (which for the purpose of this Section 14.4 shall include any
Affiliate of the Manager or a director, officer, employee, agent, manager,
member, or shareholder of the Company, the Manager or their respective
Affiliates) shall not be liable, responsible, or accountable in damages or
otherwise to the Company or any Member for any action taken or failure to act
based upon errors of judgment or other fault in connection with the business
affairs of the Company except for action taken with wanton disregard or failure
to act performed or omitted in bad faith or in willful or intentional
misconduct.

      14.5  INDEMNIFICATION OF THE MANAGER. The Company shall indemnify and hold
harmless the Manager (which for the purposes of this Section 14.5 shall include
any Affiliate of the Manager or a director, officer, member, or shareholder of
the Company, the Manager or their respective Affiliates and, in the discretion
of the Manager, any officer, employee, manager or agent of the Company, the
Manager or their respective Affiliates) to the fullest extent permitted by
applicable law. Without limiting the obligation of the Company to indemnify the
Manager as specified in the preceding sentence, to the extent permitted by
applicable law, the Company shall indemnify the Manager as follows:

                                       10


            (a)   The Company shall indemnify the Manager if it is, was, or is
threatened to be made a named defendant or respondent in a proceeding because
the Manager is or was the manager of the Company.

            (b)   The Company shall pay or reimburse, in advance of the final
disposition of the proceeding, reasonable expenses incurred by the Manager who
was, is, or will be threatened to be made a named defendant or respondent in a
proceeding.

            (c)   The Manager may cause the Company to purchase and maintain
insurance or other arrangements on behalf of the Manager against any liability
asserted against the Manager and incurred by the Manager in that capacity or
arising out of the Manager's status in that capacity, regardless of whether the
Company would have the power to indemnify the Manager against that liability
under this Section 14.5.

            (d)   To the extent permitted by then applicable law and subject to
the remaining provisions of this Section 14.5, the parties hereto recognize,
acknowledge, and agree that the Manager may be indemnified in accordance with
the provisions of this Section 14.5 in proceedings involving the simple or gross
negligence of the Manager.

            (e)   It is the intent of this Section 14.5 that the Company
indemnify the Manager to the maximum extent permitted by law.

      14.6  RIGHT OF THIRD PARTIES TO RELY ON AUTHORITY OF THE MANAGER.
Notwithstanding any other provision of this Agreement to the contrary, no lender
or purchaser, including any purchaser of property of the Company, shall be
required to look to the application of proceeds thereunder or to verify any
representation by the Manager as to the extent of the interest in the assets of
the Company that the Manager is entitled to encumber, sell, or otherwise use;
and any such lender or purchaser shall be entitled to rely exclusively on the
representations of the Manager as to its authority to enter into such financing
or sale arrangements and shall be entitled to deal with the Manager as if it
were the sole party in interest therein, both legally and beneficially. Each
Member and assignee hereby waives any and all defenses or other remedies that
may be available against any such lender, purchaser, or other Person to contest,
negate, or disaffirm any action of the Manager in connection with any such sale
or financing. In no event shall any Person dealing with the Manager or the
Manager's representative with respect to any business or property of the Company
be obligated to ascertain that the terms of this Agreement have been complied
with, and each such Person shall not be obligated to inquire into the necessity
or expedience of any act or action of the Manager or the Manager's
representative; and every contract, agreement, deed, mortgage, security
agreement, promissory note, or other instrument or document executed by the
Manager or the Manager's representative with respect to any business or property
of the Company shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution
and/or delivery thereof, this Agreement was in full force and effect; (b) such
instrument or document was duly executed in accordance with the terms and
provisions of this Agreement and is binding upon the Company; and (c) the
Manager or the Manager's representative was duly authorized and empowered to
execute and deliver any and every such instrument or document for and on behalf
of the Company.

                                       11


      14.7  RELATED PARTY TRANSACTIONS.

            (a)   Except to the extent limited by any written employment or
engagement agreement, the Manager, the Members and their respective Affiliates
may engage in, or possess an interest in, other business ventures of any nature
and description, independently or with others, whether or not such activities
are competitive with those of the Company. Neither the Company, nor any Member
shall have any rights by virtue of this Agreement in and to such independent
ventures, or to the income or profits derived therefrom. None of the Manager,
any Member nor any of their respective Affiliates shall be obligated to present
to the Company or to any Member any particular business opportunity of a
character which, if presented to the Company or Member, could be taken by the
Company or such Member and the Manager and each of its Affiliates shall have the
right to take for its or his own account, or to recommend to others, any such
particular business opportunity to the exclusion of the Company and any other
Members.

            (b)   The fact that the Manager and each of its Affiliates is
directly or indirectly interested in or connected with any Person employed or
engaged by the Company to render or perform a service, or to or from whom the
Company may purchase, sell or lease property, shall not prohibit the Company
from employing such Person or from otherwise dealing with it or him, and neither
the Company, nor any Members shall have any rights in or to any income or
profits derived therefrom. None of such transactions will necessarily be the
result of arm's-length negotiations, be subject to any fiduciary or other
duties, or require, or be subject to, the consideration, consent or approval of
any of the Members. Such arrangements, agreements and transactions will be
structured without a bidding or openly competitive process and, therefore, may
not be, in all respects, competitive with or comparable to arrangements,
agreements or transactions which might be available with, through, or from
unrelated parties. Specifically, but not by way of limitation of the foregoing,
the Members acknowledge that the Company may enter into a management agreement
with the Manager providing for the payment, in the aggregate, of an annual fee
of up to 3.5% of the Company's gross sales.

            (c)   With respect to any transaction between the Manager or any
Affiliate of the Manager, on the one hand, and the Company or any other Member,
or any assignee, on the other hand, that notwithstanding the provisions of this
Agreement would be void or voidable, or that would subject any Person to
liability, under the Act or any other applicable law, rule, or regulation unless
it were "fair" to the Company or the other Member, or any assignee, as the case
may be, the Members hereby agree that such transaction shall be considered
"fair" if the material facts as to the transaction are disclosed or are known to
(i) the other Members and the transaction is approved or ratified by those
Members owning more than fifty percent (50%) of the Participating Percentages
then owned by the Members (excluding any Members having an interest in such
transaction and any Members having Affiliates with interests in such
transaction); or (ii) an independent appraisal firm is appointed by the Company
and it determines that the transaction is fair.

                                       12


      14.8  OTHER MATTERS CONCERNING THE MANAGER.

            (a)   The Manager may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.

            (b)   The Manager may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other consultants and
advisers selected by it, and any opinion or advice of any such Person as to
matters which the Manager believes to be within such Person's professional or
expert competence shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by the Manager hereunder in
good faith and in accordance with such opinion or advice.

      14.9  LIMITATIONS ON AUTHORITY. The authority of the Manager over the
conduct of the affairs and business of the Company shall be subject only to such
limitations as are expressly stated in this Agreement or imposed by applicable
law. Without limiting the generality of the first sentence of this Section 14.9,
the Manager shall not be empowered or authorized to:

            (a)   do any act in contravention of this Agreement;

            (b)   possess property or assign any rights in specific property on
behalf of the Company other than for a Company purpose; or

            (c)   require any Member to make any contribution to the capital of
the Company without such Member's consent.

      14.10 OFFICERS. The Manager shall have authority to appoint the following
officers of the Company: (a) a President, (b) one or more Vice Presidents, (c) a
Chief Financial Officer, (d) a Secretary, and (e) one or more Assistant
Secretaries. Each of the officers shall act under the overall supervision and
direction of the Manager and shall have the powers and duties that would be
customary for such a position if the Company were a corporation. Further, the
Manager may appoint such other officers and assistants to officers as it from
time to time deems necessary. Any two or more offices may be held by the same
person.

      14.11 SHARE OPTIONS. Holdings agrees that it will permit all managing
partners, kitchen managers and service managers of the Restaurant to participate
in the Texas Roadhouse Management Corp. Stock Option Plan on the same terms and
conditions that market partners, kitchen managers and service managers of Texas
Roadhouse restaurants owned directly or indirectly by Holdings are entitled to
participate in such plan.

                                       13


           ARTICLE 15 - REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

      Each Member warrants, represents, agrees and acknowledges upon each
issuance of Shares to such Member: (A) that he has adequate means of providing
for his own current needs and foreseeable future contingencies, and anticipates
no need now or in the foreseeable future to sell his Shares; (B) that he is
acquiring his Shares for his own account as a long-term investment and without a
present view to make any distribution, resale or fractionalization thereof; (c)
that he and his independent counselors have such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the investment involved in his acquisition of his Shares and they
have evaluated the same; (D) that he is able to bear the economic risks of such
investment; (E) that he and his independent counselors have made such
investigation of the Company (including its business prospects and financial
condition), had access to all information regarding the Company and had an
opportunity to ask all of the questions regarding the Company as they deem
necessary to fully evaluate his investment therein; (F) that in connection with
his acquisition of the Shares he has been fully informed by his independent
counsel as to the applicability of the requirements of the Securities Act of
1933 (the "Securities Act") and all applicable state securities or "blue sky"
laws to his Shares; and (G) that he understands that (1) his Shares are not
registered under the Securities Act or any state securities law, (2) there is no
market for his Shares and that he will be unable to transfer his Shares unless
they are so registered or unless the transfer complies with an exemption from
such registration (evidence of which must be satisfactory to counsel for the
Company), (3) such Shares cannot be expected to be readily transferred or
liquidated; and (4) his acquisition of Shares involves a high degree of risk.

                         ARTICLE 16 - TRANSFER OF SHARES

      16.1  TRANSFER OF SHARES. Shares are transferable only on the books of the
Company. A Member may not Transfer any or all of his Shares unless he has
complied with the provisions of Section 16.3 hereof and has obtained the prior
written consent of the Manager, which consent may not be withheld unless such
Transfer would violate applicable law or the Transfer is to a Person affiliated
with a competitor of the Company or any of its Affiliates; provided, however,
that any Member may transfer his Shares to any other Member without the consent
of the Manager. The Company may charge a fee, not exceeding the actual and
reasonable expenses incurred in such transfer and in no event in excess of
$500.00, to defray the cost of effecting the transfer.

      16.2  RECOGNITION BY COMPANY OF TRANSFERS. In the event a holder of Shares
Transfers any or all of his Shares, such Transfer shall be recognized by the
Company for the purpose of distributing Net Cash Flow, liquidating distributions
and returns of capital and allocating Taxable Income and Tax Losses, and any
other items in the nature of income, gain, expense or loss, as of the first day
of the month following receipt and processing by the Company of a duly executed,
acknowledged and certified counterpart of the assigning instrument.

                                       14


      16.3  RESTRICTIONS ON TRANSFER.

            (a)  (i)  No Transfer of Shares may be made unless the holder who
desires to Transfer his Shares (the "Transferor"), prior to such Transfer, gives
the Company written notice of such desire ("Notice of Transfer"), which notice
shall specify the number of Shares to be transferred, the identity of the
proposed transferee, the purchase price for the Shares and the terms for payment
of such price ("Purchase Price"). Any purported Notice of Transfer that does not
comply with the requirements of this Section shall be null and void and of no
effect hereunder. Upon receipt of a proper Notice of Transfer, the Company or
Manager shall thereupon have the right to acquire all of the Transferor's Shares
or such number of the Transferor's Shares as is specified in the Notice of
Transfer, on terms identical to the Purchase Price or proportionately identical
if the Company elects to purchase all of his Shares. In the event the Purchase
Price contains terms, which the Company cannot reasonably duplicate, the Company
shall have the right to substitute the reasonable cash equivalent thereof.

                  (ii)  The Company or Manager shall exercise the right of first
refusal contained herein by mailing written notice thereof ("Notice of
Election") to the Transferor within thirty (30) days of the date of the receipt
of the Notice of Transfer. In the event the Company fails to mail the Notice of
Election to the Transferor within such thirty (30) day period, the purchase
option contained herein shall lapse. In the event the Company timely exercises
the purchase option contained herein, the Company shall mail written notice to
the Transferor of whether the Company has elected to purchase all of the Shares
of the Transferor or such portion as was specified in the Notice of Transfer, if
less; such notice to be mailed within ten (10) days of the mailing of the Notice
of Election.

                  (iii) The closing for any purchase hereunder shall be
consummated and closed at the Company's principal office on a date and at a time
designated by the Company in a notice to the Transferor, provided such
consummation and closing date shall occur within sixty (60) days from the date
of mailing of the Notice of Election. At such closing the Transferor shall
execute and deliver all documents and instruments as are necessary and
appropriate to effectuate the transfer of the Transferor's Shares to the Company
in accordance with the terms of the Notice of Transfer and the Company shall
deliver the Purchase Price. In the event the Transferor has any outstanding
debts to the Company, such debts, including any accrued interest, shall be
repaid in full from the Purchase Price at closing.

                  (iv)  In the event the Company or Manager does not elect
pursuant to this Section 16.3(a) to exercise the purchase option specified
herein, or in the event the closing for any purchase pursuant to this Section
16.3(a) does not occur within the time limits specified therein, then the
Transferor shall be free to transfer the exact number of his Shares as was
specified in the Notice of Transfer to the person or entity identified in the
Notice of Transfer in exchange for the exact Purchase Price as was specified in
the Notice of Transfer, provided, however, that the closing and consummation of
such transfer shall occur within one hundred twenty (120) days after the date of
mailing of the Notice of Transfer and provided further that such transfer must
comply with all other requirements of this Article 16. In the event such
transfer is not so closed and consummated within such period, the purchase
option granted to the Company in this Section 16.3(a) shall again be exercisable
and the Transferor shall make no Transfer of any of his Shares, or any right,
title or interest therein, until he has again complied with all terms and
provisions of this Article. In the event the Company does not elect pursuant to

                                       15


this Section 16.3(a) to exercise the purchase option contained herein and the
Transferor makes a permitted Transfer in compliance with the terms and
provisions of this Article, then the person or entity to whom such Shares are
transferred shall nevertheless acquire such Shares subject to the restrictions
imposed on such Shares under this Article 16 as to further transfers of such
Shares, and provided further that any such transferee shall agree in writing to
be bound by all terms and provisions of this Agreement.

                  (v)   The Company or Manager may assign its right of first
refusal under this Section 16.3(a) to the Members other than the Transferor in
proportion to their Participating Percentages if the Company does not desire to
exercise such right.

            (b)   Notwithstanding Section 16.1 hereof, no Transfer of Shares may
be made unless such Transfer would not (i) when added to the total of all other
Transfers of Shares within the preceding 12 months, result in the Company being
considered terminated within the meaning of section 708 of the Code, or (ii)
cause the Company to lose its status as a partnership for federal income tax
purposes.

            (c)   No Transfer shall be recognized if prohibited by law,
including the Securities Act and the securities law of any state applicable to
the Transfer. The Manager, in its discretion, may require an opinion of the
transferor's counsel, satisfactory to the Manager in its discretion, that such
Transfer would not violate the Securities Act and the securities law of any
state applicable to the Transfer (including any investor suitability standards
applicable to the transferee or the Shares to be transferred).

      16.4  ADMISSION OF TRANSFEREES AS MEMBERS. Any transferee of Shares shall
become a Member and each admitted Member by his execution of this Agreement does
hereby consent to such admission when all of the following conditions are
satisfied:

            (a)   The fully executed and acknowledged written instrument of
transfer has been submitted to the Manager as provided in Section 16.1 hereof;

            (b)   The transferor and the transferee have executed and
acknowledged such other instruments as the Manager deems necessary or desirable
to effect such admission, including (i) an acceptance and adoption by the
transferee of all of the terms and provisions of this Agreement through the
execution of a counterpart hereof, and (ii) a power-of-attorney, the form and
content of which shall be provided by the Manager;

            (c)   Any transfer fee, referred to in Section 16.1 hereof, which
has been charged has been paid in full;

            (d)   Satisfaction of the restrictions on Transfer contained in
Section 16.3 hereof; and

            (e)   This Agreement has been amended to reflect the admission of a
Member in accordance with this Agreement and the Act. The Agreement shall be
amended no less frequently than the first day of each calendar quarter to admit
transferee Members.

                                       16


      16.5  HOLDERS OF SHARES WHO ARE NOT MEMBERS. A Person who holds Shares but
who has not been admitted as a Member as provided in Section 16.4 hereof shall
be subject to all of the obligations imposed on Members hereunder and shall be
entitled (a) to allocations of Taxable Income and Tax Losses and any other items
in the nature of income, gain, expenses and losses as provided in Article 10
hereof, (b) to distributions of Net Cash Flow and liquidating distributions as
provided in Article 9 and Section 18.2 hereof, and (c) to Transfer his Shares as
provided in Section 16.1 hereof.

      16.6  TERMINATION AS A MEMBER. Upon the Incapacity of an individual
Member, his personal representative shall have all the rights of a Member for
the purpose of settling or managing his estate or property and such power as the
Incapacitated Member possessed to Transfer his Shares as provided in Section
16.1 above. Upon the Incapacity of a Member that is not an individual, the
authorized representative of such entity shall have all the rights of a Member
for the purpose of effecting the orderly winding up and disposition of the
business of such entity, and such power as such entity possessed to Transfer its
Shares as provided in Section 16.1 above. No representative described in this
Section 16.6 shall have any power or right to demand or obtain any such
Incapacitated Member's share of any Company assets or the value thereof.

      16.7  RIGHT TO VOTE. In the event the approval of the Members shall be
required pursuant to any provision of this Agreement or of the Act, a holder of
Shares which has been transferred pursuant to Section 16.2 hereof, but for which
the transferee thereof has not been admitted as a Member pursuant to Section
16.4 hereof, shall not be entitled to vote thereon and the Shares shall not be
counted as Shares then outstanding for purposes of obtaining the requisite
approval.

      16.8  TRANSFER BY THE MANAGER; WITHDRAWAL OF THE MANAGER.

            (a)   The Manager may Transfer all or a portion of its Shares
without obtaining the prior consent of the Members. The transferee shall in the
discretion of the Manager become a Manager of the Company. Notice of any
transfer shall be given to the Members by the transferring Manager.

            (b)   The Members and the transferring Manager agree to execute an
amendment to this Agreement and any other documents or instruments in form
satisfactory to the Manager such as may be necessary or required by law to
recognize such Transfer by the Manager. Pursuant to such amendment the
transferee shall accept, adopt and approve in writing all of the terms and
provisions of this Agreement.

            (c)   The Manager has the power to retire or withdraw from the
Company with or without cause at any time.

      16.9  INITIAL PUBLIC OFFERING LOCK-UP. Each Member irrevocably agrees
that, without the prior written consent of the Manager or its successor, he will
not Transfer any of his Shares or any securities received in exchange for his
Shares, for a period of one year after the effective date of the registration
statement filed with the Securities and Exchange Commission relating to

                                       17


the initial public offering of any securities of the Manager or the successor of
either unless a shorter period is permitted by the Manager or its successor.

      16.10 RIGHT TO DEAL EXCLUSIVELY WITH MEMBERS. For all purposes of this
Agreement, the Manager shall be entitled to deal with each Member as the sole
party in interest with respect to his Shares in the Company, regardless of any
actual knowledge the Manager may have to the contrary; provided, however, that
(a) as to any transferee of Shares of whom the Manager has actual knowledge, the
Manager may distribute to such transferee the share of Net Cash Flow,
liquidating distributions, or return of the contribution to the capital of the
Company, to which his transferor would otherwise be entitled, and (b) a
transferee, for federal income tax purposes only and to the extent required by
law, shall be a member and charged with the items of income, gain, loss,
deduction, or credit to which his transferor would otherwise be entitled.

      16.11 GO ALONG OBLIGATIONS. On or after eighteen (18) months following the
opening date of the Restaurant, at any time after the Manager has entered into
an agreement to sell substantially all of its assets or common shares to, or
merge or otherwise combine with, any entity (the "Public Company") that has
made, or entered into an agreement or letter of intent for, a public offering
("Public Offering") of any of the Public Company's capital stock (the "Public
Shares") pursuant to a registration statement filed under the Securities Act,
the Manager shall have the right (which right shall continue after the Public
Offering and which right may be assigned to the Public Company), at its option
and election, to (i) require the Company to transfer its assets, subject to its
liabilities, to the Public Company in exchange for the right to receive Public
Shares, or (ii) to require the Individual Members to exchange their Shares for,
or convert their Shares into, Public Shares through a sale, merger or other
transaction designated by the Manager or the Public Company (in either case, a
"Roll-Up"), and the Company or the Individual Members, as applicable, shall be
obligated to transfer such assets, or exchange or convert such Shares for Public
Shares, on the following basis:

            A.    In a Roll-Up in which the Company will receive Public Shares,
the Company shall be entitled to receive 60% of that number of Public Shares
that bears the same relationship to the total number of Public Shares that will
be outstanding immediately after the Roll-Up (excluding the Public Shares to be
issued to the Company and to franchisees of Texas Roadhouse Development
Corporation ("Franchisees") that will be acquired in transactions concurrently
with the Roll-Up) as the Adjusted Pre-Tax Earnings (as defined below) during the
Measurement Period (as defined below) bears to the Public Company Pro Forma
Adjusted Pre-Tax Earnings (as defined below) during the Measurement Period,
subject to adjustment in accordance with Section 16.11C.

            In a Roll-Up in which the Members will directly receive Public
Shares, the Individual Members shall be entitled to receive 57% (i.e., 60% x
95%) of that number of Public Shares that bears the same relationship to the
total number of Public Shares that will be outstanding immediately after the
Roll-Up (excluding the Public Shares to be issued to the Individual Members and
to Franchisees that will be acquired in transactions concurrently with the
Roll-Up) as the Individual Members' Adjusted Pre-Tax Earnings (as defined below)
during the Measurement Period bears to the Public Company Pro Forma Adjusted
Pre-Tax Earnings during the Measurement Period, subject to adjustment in
accordance with Section 16.11C. Any Public Shares to be distributed to the
Individual Members shall be allocated based on their relative Participating
Percentages.

                                       18


            B.    As used herein,

                  (1)   "Adjusted Pre-Tax Earnings" means that amount, as
calculated according to GAAP and in the same manner as the pre-tax earnings of
other stores operated by the Manager or the Public Company, equal to the store
level pre-tax earnings of the Restaurant, (taking into account accrued but
unpaid rent), as adjusted by adding back any deductions for management fees,
accounting fees and other general and administrative expenses, pre-opening
expenses with respect to the Restaurant, interest on Excess Mortgage Debt (as
defined in Section 16.11.C) and interest on Equipment Debt (as defined in
Section 16.11.C) and by subtracting the amount, if any, that the total
compensation paid to the general manager of the Restaurant, during the
measurement period is less than the sum of (a) $45,000 (proportionately adjusted
for measurement periods of less than one year), and (b) 10% of the store level
pre-tax earnings of the Restaurant, during the measurement period and the amount
by which current annualized interest payments (proportionately adjusted for
measurement periods of less than one year) on any Mortgage Debt (as defined in
Section 16.11C) incurred since the commencement of the Measurement Period
exceeds the actual interest payments made on Mortgage Debt during the
Measurement Period (the "Interest Shortfall").

                  (2)   "Individual Members' Adjusted Pre-Tax Earnings" means
95% of that amount, as calculated according to GAAP and in the same manner the
pre-tax earnings of other as stores operated by the Manager or the Public
Company, equal to the store level pre-tax earnings of the Restaurant, (taking
into account accrued but unpaid rent), as adjusted by adding back any deductions
for management fees, accounting fees and other general and administrative
expenses, pre-opening expenses with respect to the Restaurant, interest on
Excess Mortgage Debt and interest on Equipment Debt and by subtracting the
amount, if any, that the total compensation paid to the general manager of the
Restaurant during the measurement period is less than the sum of (a) $45,000
(proportionately adjusted for measurement periods of less than one year) plus
(b) 10% of the store level pre-tax earnings of the Restaurant during the
measurement period and the amount of any Interest Shortfall.

                  (3)   "Public Company Pro Forma Adjusted Pre-Tax Earnings"
means (a) with respect to any Roll-Up occurring after the Public Offering, the
pre-tax income of the Public Company, as adjusted by adding back general and
administrative expenses, nonrecurring items, and restaurant pre-opening expenses
for the Public Company and (b) with respect to any Roll-Up occurring in
connection with the Public Offering, the pro forma combined pre-tax income of
the Public Company and all Texas Roadhouse restaurant operations (excluding the
earnings of all Franchisees whether or not such operations are to be acquired in
transactions concurrently with the Roll-Up) to be acquired by the Public Company
in connection with the Public Offering (the "Additional Restaurants"), as
adjusted by adding back general and administrative expenses, nonrecurring items,
and restaurant pre-opening expenses for the Public Company and for the
Additional Restaurants and subtracting the earnings attributable to the minority
interest in the Company held by the Individual Members.

                  (4)   "Measurement Period" means the four full calendar
quarters prior to the delivery of the Roll-Up Notice (as defined in Section
16.11.C); provided that, if the Restaurant has been open for five full fiscal
months but less than 14 full fiscal months, Adjusted Pre-Tax Earnings or the
Individual Members' Adjusted Pre-Tax Earnings as the case may be,

                                       19


shall be calculated on an annualized basis based upon the number of full fiscal
months open (excluding the first two full fiscal months open); and further
provided that if the Restaurant has not opened or has been open for less than
five full fiscal months, then Adjusted Pre-Tax Earnings or the Individual
Members' Adjusted Pre-Tax Earnings, as the case may be, shall be deemed to be
the simple average adjusted pre-tax earnings (calculated in the same manner as
the Adjusted Pre-Tax Earnings of the Company) of all other restaurants owned in
whole or in part by the Manager or the Public Company that have been open for
the four full calendar quarters prior to the delivery of the Roll-Up Notice.

            C.    The Manager or the Public Company shall exercise its right
under this Section 16.11 by delivering written notice thereof (the "Roll-Up
Notice") to the Company at least twenty (20) days prior to consummation of the
Roll-Up. If the Roll-Up Notice is delivered prior to the Public Offering, the
Roll-Up shall occur simultaneously with and shall be contingent upon the closing
of the Public Offering. The number of Public Shares to be issued to the Company
or the Individual Members, as applicable, pursuant to this Section 16.11 shall
be reduced by 100%, in the case of the Company, and 95%, in the case of the
Individual Members, of the quotient of (1) the sum (the "Adjustment Amount") as
of the closing of the Roll-Up of (a) the positive amount (the "Excess Mortgage
Debt"), if any, by which (i) all mortgage debt ("Mortgage Debt") secured by the
Company's land, building and improvements exceeds (ii) the sum of 85% of the
fair market value of the land, building and improvements of the Company secured
by the Mortgage Debt, (b) the positive amount, if any, by which the current
liabilities of the Company (other than Equipment Debt and Mortgage Debt) exceeds
the current assets of the Company, and (c) the amount of any indebtedness
secured by equipment owned by the Company ("Equipment Debt"), and (2) the Fair
Market Value of the Public Shares. "Fair Market Value" shall mean the initial
public offering price of the Public Shares if the Roll-Up occurs on or prior to
the Public Offering date or the average closing price of the Public Shares on
the five trading days immediately prior to the Roll-Up if the Roll-Up occurs
after the Public Offering. In connection with the Roll-Up, the Company and the
Individual Members shall execute a Purchase Agreement containing customary terms
and all other documents and instruments reasonably necessary, and shall
otherwise cooperate fully with the Manager and the Public Company, to effect the
Roll-Up.

            D.    The following calculation demonstrates the foregoing formula:

                  (1)   ASSUMPTIONS:

                        (A)   Public Company Pro Forma Adjusted Pre-Tax Earnings
                              - $20,000,000

                        (B)   Adjusted Pre-Tax Earnings of the Company -
                              $500,000

                        (C)   Individual Members' Adjusted Pre-Tax Earnings =
                              $500,000 x 95% = $475,000.

                        (D)   Total outstanding Public Shares immediately after
                              the Roll-Up - 10,000,000

                        (E)   Mortgage Debt - $900,000

                                       20


                        (F)   Fair market value of the Company's land, building
                              and improvements - $1,000,000

                        (G)   Current liabilities - $120,000

                        (H)   Current assets - $100,000

                        (I)   Equipment Debt - $100,000

                        (J)   Fair Market Value of Public Shares - $20.00

                  (2)   CALCULATION WHERE PUBLIC SHARES ARE ISSUED TO THE
                        COMPANY:

                        I.    Ratio of Adjusted Pre-Tax Earnings of the Company
                              to the Public Company Pro Forma Adjusted Pre-Tax
                              Earnings during the Measurement Period: $500,000 /
                              $20,000,000 = 2.5%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Public Shares - ($50,000 + $20,000 +
                              $100,000) / $20.00 = 8,500

                        VI.   Number of Public Shares to be received by the
                              Company - (10,000,000 x 2.5% x 60%) - 8,500 =
                              141,500

                        VII.  Allocation of Public Shares

                              Manager - 5% x 141,500 = 7,075
                              Individual Members - 95% x 141,500 = 134,425

                  (3)   CALCULATION WHERE PUBLIC SHARES ARE ISSUED TO THE
                        INDIVIDUAL MEMBERS:

                        I.    Ratio of Individual Members Adjusted Pre-Tax
                              Earnings of the Company to the Public Company Pro
                              Forma Adjusted Pre-Tax Earnings during the
                              Measurement Period: $475,000 / $20,000,000 =
                              2.375%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                                       21


                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Public Shares - ($50,000 + $20,000 +
                              $100,000) x 95% / $20.00 = 8,075

                        VI.   Number of Public Shares to be received by the
                              Individual Members - (10,000,000 x 2.375% x 60%) -
                              8,075 = 134,425

      16.12 CO-SALE OBLIGATIONS UPON THE SALE OF THE MANAGER. In the event that
the Manager or the Public Company (as applicable, the "Seller") or the
shareholders of the Seller enters into an agreement ("Sale Agreement") for the
sale of the Manager or its shares or assets to, or the merger of the Seller with
and into, any person (an "Unaffiliated Buyer") who is unaffiliated with the
Seller (a "Sale"), then the Seller shall have the right to require the sale of
all of the Shares held by the Individual Members to, or the merger of the
Company with and into, such Unaffiliated Buyer. To exercise such co-sale rights,
the Seller must deliver written notice (the "Sale Notice") to the Individual
Members within 15 days of the date the Sale Agreement is executed. Such sale by
the Individual Members shall be on the same terms and conditions as are
applicable to the Seller except that the consideration to be paid to the
Individual Members shall collectively be equal to 57% (i.e., 60% x 95% of the
consideration that bears the same relationship to the total consideration to be
received by the Seller or the shareholders of the Seller in connection with the
transaction as the Adjusted Pre-Tax Earnings (as defined in Section 16.11B) of
the Company during the Sale Measurement Period (as defined below) bears to the
Seller Pro Forma Adjusted Pre-Tax Earnings (as defined below) during the Sale
Measurement Period. The consideration to be distributed to the Individual
Members shall be allocated based on their relative Participating Percentages.

      "Seller Pro Forma Adjusted Pre-Tax Earnings" means the pre-tax income of
the Seller, as adjusted by adding back general and administrative expenses,
nonrecurring items and restaurant pre-opening expenses for the Seller.

      "Sale Measurement Period" shall mean the four full calendar quarters
preceding the execution of the Sale Agreement; provided that, if the Restaurant
has been open for five full fiscal months but less than fourteen full fiscal
months, the Adjusted Pre-Tax Earnings of the Company shall be calculated on an
annualized basis based upon the number of full fiscal months open (excluding the
first two full fiscal months open); and further provided that if the Restaurant
has not opened or has been open for less than five full fiscal months, then
Adjusted Pre-Tax Earnings shall be deemed to be the simple average adjusted
pre-tax earnings (calculated in the same manner as the Adjusted Pre-Tax Earnings
of the Company) of all other restaurants owned in whole or in part by the Seller
that have been open for the four full calendar quarters prior to the delivery of
the Sale Notice.

      The consideration to be paid to the Individual Members pursuant to this
Section 16.13 shall be reduced by 95% of the Adjustment Amount. In connection
with the Sale, the Individual

                                       22


Members shall execute such agreements containing customary terms and all other
documents and instruments reasonably necessary, and shall otherwise cooperate
fully with the Seller to effect the Sale.

            D.    The following calculation demonstrates the foregoing formula:

                  (1)   ASSUMPTIONS:

                        (A)   Seller Pro Forma Adjusted Pre-Tax Earnings -
                              $20,000,000

                        (B)   Adjusted Pre-Tax Earnings of the Company -
                              $500,000

                        (C)   Total consideration to be paid to the Seller -
                              $200,000,000

                        (D)   Mortgage Debt - $900,000

                        (E)   Fair market value of the Company's land, building
                              and improvements - $1,000,000

                        (F)   Current liabilities - $120,000

                        (G)   Current assets - $100,000

                        (H)   Equipment Debt - $100,000

                  (2)   CALCULATION:

                        I.    Ratio of Adjusted Pre-Tax Earnings of the Company
                              to the Seller Pro Forma Adjusted Pre-Tax Earnings
                              of the Public Company during the Measurement
                              Period: $500,000 / $20,000,000 = 2.5%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Consideration = $50,000 + $20,000 +
                              $100,000 = $170,000

                        VI.   Consideration to be received by the Individual
                              Members - (($200,000,000 x 2.5% x 60%) - $170,000)
                              x 95% = $2,688,500

                                       23


      16.13 OTHER TRANSACTIONS. Except as contemplated by Section 16.11 or
Section 16.12, the Seller shall have the authority to cause the sale of the
Company to, or the merger of the Company into, an Unaffiliated Buyer without the
consent of any other holders of Shares regardless of the consideration to be
paid to such holders or to the Company in such transaction.

                     ARTICLE 17 - DISSOLUTION OF THE COMPANY

      The happening of any one of the following events, as provided below, shall
cause a dissolution of the Company:

            (a)   Upon the sale or other disposition of all or substantially all
of the assets of the Company;

            (b)   Upon the written consent by all of the Members authorizing the
dissolution of the Company; or

            (c)   Upon the expiration of the Company's term pursuant to
Article 7.

      Except as provided in this Article 17, no event of disassociation of a
Member or a Manager under the Act or event of dissolution under the Act shall
cause a dissolution of the Company. Notwithstanding anything in this Agreement
to the contrary, if an impending event of disassociation of a Member will result
in there being only one remaining Member of the Company and such remaining
Member desires to continue the business of the Company, then the Company shall
admit an additional Member to the Company, on such terms and conditions as are
determined by such remaining Member, effective as of the occurrence of the event
of disassociation of the second Member from the Company.

                ARTICLE 18 - CONFIDENTIALITY AND NON-COMPETITION

      18.1  CONFIDENTIALITY. Each Member hereby covenants, agrees and
acknowledges as follows:

            (a)   Each Member's ownership of Shares hereunder creates a
relationship of confidence and trust between the Member and the Company with
respect to certain information pertaining to the business of the Company and its
Affiliates or pertaining to the business of any supplier to the Company or its
Affiliates which may be made known to the Member by the Company or any of its
Affiliates or by any supplier to the Company or any of its Affiliates or learned
by the Member during the period of his ownership of Shares.

            (b)   Each Member agrees that he will not without the prior written
consent of the Manager use for his benefit or disclose at any time while a
Member, or thereafter, except to the extent required by the performance by him
of any duties he may have as an employee of the Company, any information
obtained or developed by him while a Member of the Company with respect to any
actual or potential suppliers, products, services, employees, financial affairs,
applications or methods of marketing, service or procurement of the Company or
any of its Affiliates, or any confidential matter regarding the business of the
Company or any of its Affiliates that, except information that at the time is
generally known to the public other than as a result of disclosure by him not
permitted hereunder (collectively, "Confidential Information").

                                       24


            (c)   Each Member agrees that when he ceases to be a member of the
Company, such Member shall forthwith return to the Company all documents and
papers relating to Confidential Information and other physical property in his
possession belonging to the Company or any of its Affiliates.

      18.2  COMPETITION, ETC. While a Member of the Company:

            (a)   Each Member will not make any statement or perform any act
intended to advance an interest of any existing or prospective competitor of the
Company or any of its Affiliates in any way that will or may injure an interest
of the Company or any of its Affiliates in its relationship and dealings with
existing or potential suppliers or customers, or solicit or encourage any
employee of the Company or any of its Affiliates to do any act that is disloyal
to the Company or any of its Affiliates, inconsistent with the interest of the
Company or any of its Affiliate's interests or in violation of any provision of
this Agreement;

            (b)   Each Member will not make any statement or perform any act
intended to cause any existing or potential customers or clients of the Company
or any of its Affiliates to make use of the services or purchase the products of
any existing or future business in which the Member has or expects to acquire a
proprietary interest or in which the Member is or expects to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise, if such services or products in any way compete with the
services or products sold or provided or expected to be sold or provided by the
Company or any of its Affiliates to any existing or potential customer or
client;

            (c)   Each Member will not directly or indirectly (as an employee,
officer, director, manager, consultant, independent contractor, advisor or
otherwise) engage in competition with, or acquire any proprietary interest in,
perform any services for, lend his name to, participate in or be connected with
any steakhouse restaurant located within 30 miles of a Texas Roadhouse
restaurant.

            (d)   Each Member will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company or any of its Affiliates;
and

      In connection with the foregoing provisions of this Section 18.2, each
Member represents that his experience, capabilities and circumstances are such
that such provisions will not prevent him from earning a livelihood. Each Member
further agrees that the limitations set forth in this Section 18.2 (including,
without limitation, any time or territorial limitations) are reasonable and
properly required for the adequate protection of the businesses of the Company
and its Affiliates.

      For purposes of this Section 18.2, proprietary interest in a business is
ownership, whether through direct or indirect stock holdings or otherwise, of
one percent (1%) or more of such business. Each Member shall be deemed to expect
to acquire a proprietary interest in a business or to be made an employee,
officer, director, manager, consultant, independent contractor, advisor or
otherwise of such business if such possibility has been discussed with any
officer, director, employee, agent, or promoter of such business.

                                       25


      18.3  APPLICATION TO EQUITY OWNERS. For purposes of this Article 18, the
term "Member" shall be deemed to refer to any equity owner of any entity that
beneficially owns any Shares.

         ARTICLE 19 - WINDING UP; LIQUIDATING DISTRIBUTIONS; TERMINATION

      19.1  WINDING UP. In the event of the dissolution of the Company for any
reason, then the Manager shall commence to wind up the affairs of the Company
and to liquidate the Company's assets. The Members shall continue to share
profits and losses during the period of liquidation in accordance with Article
10. The Manager shall determine whether the Company's assets are to be sold or
distributed to the Members in dissolution of the Company. If the Company's
assets are distributed to the Members, then all such assets shall be valued at
their then fair market value as determined by the Manager and the difference, if
any, of such fair market value over (or under) the adjusted basis of such assets
to the Company shall be credited (or charged) to the Capital Accounts of the
Members in accordance with Article 10. Fair market value shall be used for
purposes of determining the amount of any distribution to a Member pursuant to
Section 18.2.

      19.2  LIQUIDATING DISTRIBUTIONS. Subject to the right of the Manager to
set up such cash reserves as may be deemed reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Company, the proceeds
of the liquidation and any other funds of the Company shall be distributed to:

            (a)   Creditors, in the order of priority as provided by law;
including, to the extent permitted by law, Members who are creditors;

            (b)   The Members as creditors, to the extent they did not receive
distributions pursuant to Section 18.2(a), and to Members in satisfaction of the
Company's liability for distributions under KRS 275.210; and

            (c)   The Members in proportion to their respective Capital Accounts
AFTER adjustment for gain or loss with respect to the disposition of the
Company's assets incident to the dissolution of the Company and the winding up
of its affairs, whether or not the distribution occurs prior to the dissolution
of the Company.

      19.3  RIGHTS OF THE MEMBERS. Each Member shall look solely to the
Company's assets for all distributions with respect to the Company, his Capital
Contribution (including the return thereof), and share of profits, and shall
have no recourse therefor (upon dissolution or otherwise) against any other
Member.

      19.4  TERMINATION. Upon complete liquidation of the Company and
distribution of all Company funds, the Company shall terminate.

                     ARTICLE 20 - SPECIAL POWER OF ATTORNEY

      20.1  GRANTING OF POWER OF ATTORNEY. Concurrently with the execution of
written acceptance and adoption of the provisions of this Agreement, each Member
grants to the

                                       26


Manager a special power of attorney constituting and appointing the Manager as
the attorney-in-fact for such Member, with power and authority to act in his
name and on his behalf to approve, execute, acknowledge and swear to in the
execution, acknowledgment and filing of documents required for the operation of
the Company or for the Company to take any action contemplated by this
Agreement, which shall include, by way of illustration but not of limitation,
the following:

            (a)   Any separate articles or certificates of limited liability
company, as well as any amendments to the foregoing which, under the laws of the
Commonwealth of Kentucky or the laws of any other state, are required to be
filed or which the Manager deems to be advisable to file;

            (b)   Any instruments or documents necessary to effect a transfer of
Shares held by any Member or sale of the Company's assets pursuant to Article 16
of this Agreement or to evidence a Member's consent to any transaction
contemplated by Article 16;

            (c)   Any other instrument or document which may be required to be
filed by the Company under the laws of any state or by any governmental agency,
or which the Manager deems advisable to file; and

            (d)   Any instrument or document which may be required to effect the
continuation of the Company, the admission of an additional or substituted
Member, or the dissolution and termination of the Company (provided such
continuation, admission or dissolution and termination are in accordance with
the terms of this Agreement).

      20.2  NATURE OF POWER OF ATTORNEY. The special power of attorney to be
concurrently granted by each Member:

            (a)   Is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death or dissolution of the granting Member, and
is limited to those matters herein set forth;

            (b)   May be exercised by the Manager acting alone for each Member
by a facsimile signature of the Manager or by listing all of the Members
executing any instrument with a single signature of the Manager acting as an
attorney-in-fact for all of them; and

            (c)   Shall survive an assignment by a Member of all or any portion
of such Member's Shares except that, where the assignee of Shares owned by a
Member has been approved by the Members for admission to the Company as a
substituted Member, the special power of attorney shall survive such assignment
for the sole purpose of enabling the Manager to execute, acknowledge and file
any instrument or document necessary to effect such substitution.

                                       27


                           ARTICLE 21 - MISCELLANEOUS

      21.1  NOTICES. All notices, approvals, consents and demands required or
permitted under this Agreement shall be in writing and sent by hand delivery,
facsimile, overnight mail, certified mail or registered mail, postage prepaid,
to the Members and the Manager at their addresses as shown from time to time on
the records of the Company, and shall be deemed given when delivered by hand
delivery, transmitted by facsimile or mailed by overnight, certified or
registered mail. Any Member or the Manager may specify a different address by
notifying the other Members and the Manager and the Company in writing of the
different address.

      21.2  GOVERNING LAW. This Agreement and the rights of the parties to this
Agreement shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Kentucky, without regard to or application of its conflicts
of law principles.

      21.3  BENEFIT AND BINDING EFFECT. Except as otherwise specifically
provided in this Agreement, this Agreement shall be binding upon and shall inure
to the benefit of the parties to this Agreement, and their legal
representatives, heirs, administrators, executors, successors and permitted
assigns. Except as otherwise specifically provided in this Agreement, the
Manager may not assign his rights and obligations under this Agreement to any
Person other than an Affiliate of, or successor to, the Manager without the
unanimous consent of the Members.

      21.4  PRONOUNS AND NUMBER. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in either the masculine,
feminine or neuter gender shall include the masculine, feminine and neuter
gender.

      21.5  HEADINGS; ANNEXES AND SCHEDULES. The headings contained in this
Agreement are inserted only as a matter of convenience, and in no way define,
limit or extend the scope or intent of this Agreement or any provision of this
Agreement. The Annexes to this Agreement are incorporated into this Agreement by
this reference and expressly made a part of this Agreement.

      21.6  PARTIAL ENFORCEABILITY. If any provision of this Agreement, or the
application of any provision to any Person or circumstance, shall be held
invalid, illegal or unenforceable, then the remainder of this Agreement, or the
application of that provision to Persons or circumstances other than those with
respect to which it is held invalid, illegal or unenforceable, shall not be
affected thereby.

      21.7  PREVIOUS AGREEMENTS. This Agreement shall supersede all previous
agreements of the parties to this Agreement with respect to the matters to which
this Agreement pertains other than the Franchise Agreement. In the event of a
conflict between this Agreement and the Franchise Agreement, the terms of the
Franchise Agreement shall prevail.

      21.8  CERTIFICATES. Shares in the Company may be evidenced by
certificates.

      21.9  ENFORCEMENT. In the event of a breach or threatened breach by a
Member or the Manager of any of the provisions of this Agreement, the Company
shall be entitled to obtain a temporary restraining order and temporary and
permanent injunctive relief without the necessity of proving actual damages by
reason of such breach or threatened breach, and to the extent

                                       28


permissible under the applicable statutes and rules of procedure, a temporary
injunction or restraining order may be granted immediately upon the commencement
of any such suit and without notice. Nothing in this Agreement may be construed
as prohibiting the Company from pursuing any other remedy or remedies, including
without limitation, the recovery of damages. The Company shall have the right to
set off any such damages against any amounts otherwise payable by it to the
Member or the Manager under this Agreement or otherwise. Each Member and the
Manager further covenants and agrees to indemnify and hold the Company harmless
from and against all costs and expenses, including legal or other professional
fees and expenses incurred by the Company in connection with or arising out of
any proceeding instituted by the Company against the Member or the Manager to
enforce the terms and provisions of this Agreement if the Company is successful
in whole or in part in such proceeding.

      21.10 SCOPE. If any one or more of the provisions of this Agreement shall
for any reason be held to be excessively broad as to time, duration,
geographical scope, activity, or subject, each such provision shall be
construed, by limiting and reducing it, so as to be enforceable to the extent
compatible with applicable law then in force.

      21.11 NO WAIVER. No waiver by any party to this Agreement at any time of a
breach by any other party of any provision of this Agreement to be performed by
such other party shall be deemed a waiver of any similar or dissimilar
provisions of this Agreement at the same or any prior or subsequent time.

      21.12 AMENDMENTS. Any amendments to this Agreement or the Articles of
Organization shall be in writing and shall be approved by Members holding more
than 50% of the Participating Percentages, except that any amendment materially
affecting the rights or obligations of any group of Members shall require the
consent of the holders of more than 50% of the Participating Percentages of such
Members.

      21.13 NO THIRD PARTY BENEFICIARY. The rights of the Manager under Sections
16.11 through 16.13 may be assigned to the Public Company. Except for the Public
Company, it is specifically agreed between the parties executing this Agreement
that it is not intended by any of the provisions of the Agreement to make the
public, or any member thereof, a third party beneficiary under this Agreement,
or to authorize anyone not a party to this Agreement to maintain a suit for
damages pursuant to the terms or provisions of this Agreement. The duties,
obligations, and responsibilities of the parties to this Agreement with respect
to third parties shall remain as imposed by law.

      21.14 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

      21.15 PARTITION. The Members agree that the Company's assets are not and
will not be suitable for partition. Accordingly, each of the Members irrevocably
waives any and all right such Member may have to maintain any action for
partition of any of the Company's assets. No Member shall have any right to any
specific assets of the Company upon the liquidation of, or any distribution
from, the Company.

                                       29


IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

                              TEXAS ROADHOUSE HOLDINGS LLC
                              By:  WKT Restaurant Corp., Manager

                              ---------------------------------------------
                              By:
                                 ------------------------------------------

                                       30


                               SIGNATURE PAGE FOR
             OPERATING AGREEMENT OF ___________________________, LLC


                ------------------------------------------------


                ------------------------------------------------


                ------------------------------------------------


                ------------------------------------------------


                ------------------------------------------------


                ------------------------------------------------

                                       31


                         ANNEX A TO OPERATING AGREEMENT



MEMBER NAME                          CAPITAL                     CAPITAL
AND ADDRESS                        CONTRIBUTION       SHARES     ACCOUNT
- --------------------------------------------------------------------------
                                                        
Texas Roadhouse Holdings LLC
6040 Dutchmans Lane
Suite 400
Louisville, KY 40205


                                       32


                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                           ---------------------------


                              Dated
                                   ---------------



                                TABLE OF CONTENTS




                                                                                                            PAGE
                                                                                                            ----
                                                                                                           
Article 1 - FORMATION..........................................................................................1
Article 2 - NAME...............................................................................................1
Article 3 - DEFINITIONS........................................................................................1
Article 4 - BUSINESS OF THE PARTNERSHIP........................................................................3
Article 5 - THE PARTNERS.......................................................................................3
        5.1    INITIAL PARTNERS................................................................................3
        5.2    ADDITIONAL PARTNERS.............................................................................3
        5.3    AUTHORITY AND POWER OF LIMITED PARTNERS.........................................................4
        5.4    NO LIABILITY OF PARTNERS........................................................................4
        5.5    TITLE TO PROPERTY...............................................................................4
        5.6    REMOVAL OF PARTNERS.............................................................................4
        5.7    REMOVAL OR WITHDRAWAL OF GENERAL PARTNER........................................................4
Article 6 - PRINCIPAL OFFICE...................................................................................4
Article 7 - TERM...............................................................................................5
Article 8 - CAPITAL AND CONTRIBUTIONS..........................................................................5
        8.1    INITIAL CONTRIBUTIONS...........................................................................5
        8.2    ADDITIONAL CONTRIBUTIONS........................................................................5
        8.3    INTEREST ON CAPITAL.............................................................................5
        8.4    CAPITAL ACCOUNTS................................................................................5
        8.5    WITHDRAWAL AND RETURN OF CAPITAL................................................................5
        8.6    REVALUATION OF PARTNERSHIP PROPERTY.............................................................5
Article 9 - DISTRIBUTIONS......................................................................................6
        9.1    DISTRIBUTIONS TO THE PARTNERS...................................................................6
        9.2    TIMING OF DISTRIBUTIONS.........................................................................6
Article 10 - ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES.................................................6
        10.1   ALLOCATIONS TO THE PARTNERS GENERALLY...........................................................6
        10.2   LIMITATION ON LOSSES............................................................................6
        10.3   QUALIFIED INCOME OFFSET.........................................................................6
        10.4   MINIMUM GAIN CHARGEBACK.........................................................................7
        10.5   CURATIVE ALLOCATIONS............................................................................7
        10.6   NO RESTORATION OF DEFICIT CAPITAL ACCOUNTS......................................................7
        10.7   CONTRIBUTED PROPERTY............................................................................7
        10.8   DIVISION AMONG PARTNERS.........................................................................7
Article 11 - BOOKS OF ACCOUNT, RECORDS AND REPORTS.............................................................8
        11.1   RESPONSIBILITY FOR BOOKS OF ACCOUNT AND RECORDS.................................................8
        11.2   REPORTS TO THE PARTNERS.........................................................................8
        11.3   ADDITIONAL REPORTS..............................................................................8
Article 12 - FISCAL YEAR.......................................................................................8
Article 13 - THE PARTNERSHIP'S FUNDS...........................................................................9
Article 14 - MANAGEMENT OF THE PARTNERSHIP.....................................................................9
        14.1   AUTHORITY OF THE GENERAL PARTNER................................................................9
        14.2   TIME DEVOTED TO THE PARTNERSHIP; OTHER ACTIVITIES..............................................10
        14.3   LOANS TO OR BY THE GENERAL PARTNER.............................................................10
        14.4   LIABILITY OF THE GENERAL PARTNER...............................................................10
        14.5   INDEMNIFICATION OF THE GENERAL PARTNER.........................................................11
        14.6   RIGHT OF THIRD PARTIES TO RELY ON AUTHORITY OF THE GENERAL PARTNER.............................11
        14.7   RELATED PARTY TRANSACTIONS.....................................................................12




                                                                                                        
        14.8   OTHER MATTERS CONCERNING THE GENERAL PARTNER...................................................13
        14.9   LIMITATIONS ON AUTHORITY.......................................................................13
        14.10  OFFICERS.......................................................................................13
        14.11  UNIT OPTIONS...................................................................................14
Article 15 - REPRESENTATIONS AND WARRANTIES OF THE PARTNERS...................................................14
Article 16 - TRANSFER OF UNITS................................................................................14
        16.1   TRANSFER OF UNITS..............................................................................14
        16.2   RECOGNITION BY PARTNERSHIP OF TRANSFERS........................................................14
        16.3   RESTRICTIONS ON TRANSFER.......................................................................15
        16.4   ADMISSION OF TRANSFEREES AS PARTNERS...........................................................17
        16.5   HOLDERS OF UNITS WHO ARE NOT PARTNERS..........................................................17
        16.6   TERMINATION AS A PARTNER.......................................................................17
        16.7   RIGHT TO VOTE..................................................................................17
        16.8   TRANSFER BY THE GENERAL PARTNER; WITHDRAWAL OF THE GENERAL PARTNER.............................18
        16.9   INITIAL PUBLIC OFFERING LOCK-UP................................................................18
        16.10  RIGHT TO DEAL EXCLUSIVELY WITH PARTNERS........................................................18
        16.11  GO-ALONG OBLIGATIONS...........................................................................18
        16.12  CO-SALE OBLIGATIONS............................................................................23
        16.13  OTHER TRANSACTIONS.............................................................................24
Article 17 - DISSOLUTION OF THE PARTNERSHIP...................................................................25
Article 18 - CONFIDENTIALITY AND NON-COMPETITION..............................................................25
        18.1   CONFIDENTIALITY................................................................................25
        18.2   COMPETITION, ETC...............................................................................26
        18.3   APPLICATION TO EQUITY OWNERS...................................................................27
Article 19 - WINDING UP; LIQUIDATING DISTRIBUTIONS; TERMINATION...............................................27
        19.1   WINDING UP.....................................................................................27
        19.2   LIQUIDATING DISTRIBUTIONS......................................................................27
        19.3   RIGHTS OF THE PARTNERS.........................................................................27
        19.4   TERMINATION....................................................................................27
Article 20 - SPECIAL POWER OF ATTORNEY........................................................................28
        20.1   GRANTING OF POWER OF ATTORNEY..................................................................28
        20.2   NATURE OF POWER OF ATTORNEY....................................................................28
Article 21 - MISCELLANEOUS....................................................................................29
        21.1   NOTICES........................................................................................29
        21.2   GOVERNING LAW..................................................................................29
        21.3   BENEFIT AND BINDING EFFECT.....................................................................29
        21.4   PRONOUNS AND NUMBER............................................................................29
        21.5   HEADINGS; ANNEXES AND SCHEDULES................................................................29
        21.6   PARTIAL ENFORCEABILITY.........................................................................29
        21.7   PREVIOUS AGREEMENTS............................................................................29
        21.8   CERTIFICATES...................................................................................29
        21.9   ENFORCEMENT....................................................................................30
        21.10  SCOPE..........................................................................................30
        21.11  NO WAIVER......................................................................................30
        21.12  AMENDMENTS.....................................................................................30
        21.13  NO THIRD PARTY BENEFICIARY.....................................................................30
        21.14  COUNTERPARTS...................................................................................30
        21.15  PARTITION......................................................................................31



                                       ii


                        AGREEMENT OF LIMITED PARTNERSHIP
                         OF ____________________________

      This is an Agreement of Limited Partnership of __________________________
(the "Partnership"), dated as of ________________, among Texas Roadhouse
Holdings LLC (referred to as "Holdings" or "General Partner"), and the persons
listed on Annex A hereto (each a "Limited Partner" and collectively with
Holdings the "Partners").

                              ARTICLE 1 - FORMATION

      The Partners hereby confirm the prior formation of the Partnership
pursuant to the Kentucky Uniform Limited Partnership Act, effective as of the
filing of the Partnership's Certificate of Limited Partnership with the Kentucky
Secretary of State. The Partners hereby ratify and approve the filing of the
Partnership's Certificate of Limited Partnership, the receipt of the form of
which each Partner hereby acknowledges. The Partners shall from time to time
execute or cause to be executed all such certificates or other documents or
cause to be done all such filing, recording, publishing or other acts as may be
necessary or appropriate to comply with the requirements for the formation and
operation of a limited partnership under the Act. The rights and duties of the
Partners shall be as provided in the Act, except as modified by this Agreement.
The Partnership shall also be qualified to do business in such other states as
the General Partner from time to time deems appropriate.

                                ARTICLE 2 - NAME

      The business of the Partnership shall be conducted under the name
"____________________________"

                             ARTICLE 3 - DEFINITIONS

      The following terms and phrases used in this Agreement shall have the
following meanings:

      "ACT" shall mean the Kentucky Uniform Limited Partnership Act, KRS Chapter
362.401 ET. SEQ.

      "AFFILIATE" or a Person "AFFILIATED WITH" a Partner or other specified
Person (collectively referred to as the "SPECIFIED PERSON") shall mean (i) a
person that directly, or indirectly through one or more intermediaries, or in
combination with any other Partner, controls or is controlled by, or is under
the control of the Partner or other Specified Person; (ii) a Person of which the
Partner or other Specified Person is an officer, director, member or partner or
is the beneficial owner of 10% or more of any class of equity security or
interest; (iii) any trust or estate in which the Partner or other Specified
Person has a beneficial interest or as to which the Partner or other Specified
Person serves as a trustee or in another fiduciary capacity; and (iv) any
spouse, parent, child, brother or sister of the Partner or other Specified
Person. The term "CONTROL" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through ownership, by contract or otherwise.



      "AGREEMENT" shall mean this Agreement of Limited Partnership, as amended,
modified or supplemented from time to time.

      "CAPITAL ACCOUNT" shall mean the individual account maintained for each
Partner by the Partnership, calculated pursuant to Section 8.4.

      "CAPITAL CONTRIBUTION" shall mean the money and the fair market value of
property (net of liabilities assumed by the Partnership or to which the property
is subject) contributed to the Partnership by a Partner, and as set forth on
ANNEX A. ANNEX A shall set forth the agreed upon fair market value of each of
the assets (other than cash) contributed to the capital of the Partnership as
determined by the contributing Partner and the Partnership.

      "CODE" or "IRC" shall mean the Internal Revenue Code of 1986, as amended,
modified or rescinded from time to time, or any similar provision of succeeding
law.

      "GENERAL PARTNER" shall mean Texas Roadhouse Holdings LLC and its
successors and assigns.

      "INCAPACITY" or "INCAPACITATED" shall mean the adjudicated incompetency or
death of an individual Partner, or dissolution of the entity comprising any
Partner.

      "INTEREST" shall mean the entire ownership interest (which may, either for
his Capital Account or for his share of Taxable Income and Tax Losses, be
expressed as a percentage) of a Partner in the Partnership, including the rights
and obligations of the Partner under this Agreement and the Act.

      "LIMITED PARTNER" shall mean those Partners identified as Limited Partners
as set forth on Annex A and any other Person who executes this Agreement as a
Limited Partner.

      "NET CASH FLOW" shall mean, with respect to any period, all cash revenues
of the Partnership from business operations during that period (including,
without limitation, interest or other earnings on the funds of the Partnership)
LESS the sum of the following to the extent made from those cash revenues:

            (i)   All principal and interest payments on any indebtedness of the
Partnership, including loans made by the General Partner pursuant to Section
14.3;

            (ii)  All cash expenses incurred incident to the operation of the
Partnership's business; and

            (iii) Funds set aside as reserves for contingencies, working
capital, debt service, taxes, insurance or other costs and expenses incident to
the conduct of the Partnership's business which the General Partner deems
reasonably necessary or appropriate.

      "PARTNERS" means both the General Partner and the Limited Partners.

                                        2


      "PARTICIPATING PERCENTAGE" for any Partner shall mean the number of Shares
held by such Person divided by the number of outstanding Shares. Distributions
or allocations made in proportion to or in accordance with the Participating
Percentages of the Partners shall be based upon relative Participating
Percentages as of the record date for distributions and in accordance with IRC
Sections 706(c) and (d).

      "PERSON" shall mean an individual, corporation, partnership, limited
liability company, joint stock company, trust, association, unincorporated
entity, or any division thereof.

      "SHARES" shall mean the units (a) in which interests in the Partnership's
Net Profits, Net Losses and Distributions allocated to Partners are divided, and
(b) in which the right to vote on, or consent to, or otherwise participate in,
any decision or action by the Partners granted pursuant to this Agreement or the
Act are divided.

      "TAXABLE INCOME" and "TAX LOSSES," respectively, shall mean the net income
or net losses of the Partnership as determined for federal income tax purposes,
and all items required to be separately stated by IRC Sections 702 and 703 and
the Treasury Regulations promulgated thereunder.

      "TRANSFER" shall mean any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether voluntary or
involuntary, and whether during the lifetime of the Person involved or upon or
after his death, including, but not limited to, any transfer by operation of
law, by court order, by divorce decree, by judicial process, or by foreclosure,
levy, or attachment.

                     ARTICLE 4 - BUSINESS OF THE PARTNERSHIP

      The business of the Partnership shall be to own and operate a franchise
casual steakhouse restaurant (the "Restaurant") known as Texas Roadhouse which
will be located in __________, Texas, and carrying on any and all activities
related thereto, including entering into a Franchise Agreement with Texas
Roadhouse Development Corporation (the "Franchise "Agreement"). The
Partnership's business shall be only as specified in this Article 4. Except as
otherwise provided in this Agreement, the Partnership shall not engage in any
other activity or business and no Limited Partner shall have any authority to
hold himself out as a general agent of the Partnership in any other business or
activity.

                            ARTICLE 5 - THE PARTNERS

      5.1   INITIAL PARTNERS. The names, business addresses and Share ownership
of the Partners are set forth on ANNEX A.

      5.2   ADDITIONAL PARTNERS. The General Partner may admit additional
Partners from time-to-time at the discretion of the General Partner, upon the
terms and for the consideration determined by the General Partner; provided,
however, the admission of any additional Partner shall not reduce the
Participating Percentage of any existing Partner without that existing

                                        3


Partner's consent. ANNEX A shall be amended to reflect any changes in the
Partnership's ownership. A prerequisite to admission to partnership in this
Partnership shall be the written agreement by the additional Partner to be bound
by the terms of this Agreement.

      5.3   AUTHORITY AND POWER OF LIMITED PARTNERS. No Limited Partner shall
have the power or authority to bind the Partnership. Actions of the Partners
shall be taken by the affirmative vote of Partners holding a majority of the
Participating Percentages, unless otherwise provided in this Agreement. The vote
requirement in the preceding sentence shall supersede any unanimous vote
requirement set forth in the Act. Action of the Partners may be taken at a
meeting or by written action of the Partners holding a majority of the
Participating Percentages. Meetings may be called by any Partner upon at least
three business days prior written notice to the other Partners. Notice may also
be communicated in person by telephone. Meetings may be held by any means of
communication by which all Partners participating may simultaneously hear each
other during the meeting.

      5.4   NO LIABILITY OF PARTNERS. No Partner shall have personal liability
for the obligations or liabilities of the Partnership unless such Partner agrees
to assume such personal liability pursuant to a written agreement with a third
party. Except as otherwise specifically provided in this Agreement, no Partner,
after his admission to the Partnership, shall be obligated to contribute
additional funds or property, or loan money, to the Partnership.

      5.5   TITLE TO PROPERTY. All real and personal property owned by the
Partnership shall be owned by the Partnership as an entity and no Partner shall
have any ownership interest in such property in his individual name or right,
and each Partner's interest in the Partnership shall be personal property for
all purposes. Except as otherwise provided in this Agreement, the Partnership
shall hold all of its real and personal property in the name of the Partnership
and not in the name of any Partner.

      5.6   REMOVAL OF PARTNERS. Except as provided in Article 16, no Partner
shall be removed from partnership in the Partnership without such Partner's
consent.

      5.7   REMOVAL OR WITHDRAWAL OF GENERAL PARTNER. The Limited Partners shall
have no right to remove the General Partner or to terminate any of the General
Partner's management powers, duties or responsibilities. The General Partner
shall have the power and the right to withdraw from the Partnership with or
without cause at any time without liability to the Limited Partners.

                          ARTICLE 6 - PRINCIPAL OFFICE

      The principal office and place of business of the Partnership shall be
located at 6040 Dutchmans Lane, Suite 400, Louisville, Kentucky 40205. The
Partnership may have such other or additional offices as the General Partner
deems advisable.

                                        4


                                ARTICLE 7 - TERM

      The term of the Partnership began on the date the Partnership's
Certificate of Limited Partnership was filed with the Kentucky Secretary of
State, and shall continue until dissolved in accordance with the terms of this
Agreement.

                      ARTICLE 8 - CAPITAL AND CONTRIBUTIONS

      8.1   INITIAL CONTRIBUTIONS. The Partners have previously made the Capital
Contributions set forth opposite their names on ANNEX A.

      8.2   ADDITIONAL CONTRIBUTIONS. Without the unanimous consent of all of
the Partners, the Partners shall not be required to make additional Capital
Contributions. ANNEX A shall be amended to reflect any additional Capital
Contributions.

      8.3   INTEREST ON CAPITAL. No Partner shall be paid interest on any
Capital Contribution or Capital Account.

      8.4   CAPITAL ACCOUNTS. A separate Capital Account shall be maintained by
the Partnership for each Partner in accordance with Treas. Reg. Section
1.704-1(b)(2)(iv). There shall be credited to each Partner's Capital Account:
(i) the amount of money contributed by such Partner to the Partnership; (ii) the
fair market value of property contributed by such Partner to the Partnership
(net of liabilities secured by such contributed property that the Partnership is
considered to assume or take subject to under IRC Section 752); and (iii)
allocations to such Partner of Partnership income and gain (or items thereof),
including income and gain exempt from tax, and income and gain, as computed for
book purposes, in accordance with Treas. Reg. Section 1.704-1(b)(2)(iv)(g). Each
Partner's Capital Account shall be decreased by: (i) the amount of money
distributed to such Partner by the Partnership; (ii) the fair market value of
property distributed to such Partner by the Partnership (net of liabilities
secured by such distributed property that such Partner is considered to assume
or take subject to under IRC Section 752); (iii) allocations to such Partner of
expenditures of the Partnership described in IRC Section 705(a)(2)(B); and (iv)
allocations of loss and deduction (or items thereof) including loss or
deduction, computed for book purposes, as described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g).

      8.5   WITHDRAWAL AND RETURN OF CAPITAL. Except as expressly provided in
this Agreement, including Section 9.1 with respect to distributions of Net Cash
Flow, no Partner shall be entitled to withdraw any part of such Partner's
Capital Contributions or Capital Account, or to receive any distribution from
the Partnership.

      8.6   REVALUATION OF PARTNERSHIP PROPERTY. If there shall occur (i) an
acquisition of Shares from the Partnership for more than a de minimis Capital
Contribution, or (ii) a distribution (other than a de minimis distribution) to a
Partner in redemption of his Shares, then the Partnership shall revalue the
assets of the Partnership at their then fair market value and adjust the Capital
Accounts in the same manner as provided in Section 18.1 in the case of a
property distribution. Pursuant to this Section 8.6, the Capital Accounts of the
Partners are adjusted to the amounts set forth on ANNEX A as of the date hereof.
If there is a reallocation

                                        5


pursuant to this Section 8.6, then Capital Accounts shall thereafter be adjusted
for allocations of depreciation (cost recovery) and gain or loss in accordance
with the provisions of Treas. Reg. Sections 1.704-1(b)(2)(iv)(f) and (g), and
the Partners' distributive Shares of depreciation (cost recovery) and gain or
loss shall thereafter be computed in accordance with the principles of IRC
Section 704(c) and the regulations promulgated thereunder using the traditional
method with curative allocations within the meaning of Treas. Reg. Section
1.704-3(c).

                            ARTICLE 9 - DISTRIBUTIONS

      9.1   DISTRIBUTIONS TO THE PARTNERS. The Partnership's Net Cash Flow shall
be distributed to the Partners in accordance with the Participating Percentages.

      9.2   TIMING OF DISTRIBUTIONS. Distributions of Net Cash Flow shall be
made monthly, to the extent possible, within 30 days after the end of each
month.

         ARTICLE 10 - ALLOCATION OF PROFITS AND LOSSES FOR TAX PURPOSES

      10.1  ALLOCATIONS TO THE PARTNERS GENERALLY. Taxable Income and Tax Losses
shall be allocated among the Partners in accordance with their Participating
Percentages.

      10.2  LIMITATION ON LOSSES. Notwithstanding the general allocation of
Taxable Income and Tax Losses described in Section 10.1, no Partner shall be
allocated Tax Losses in excess of the aggregate of such Partner's positive
Capital Account balance, Partnership Minimum Gain (within the meaning of Treas.
Reg. Section 1.704-2(b)(2)), and Partner Nonrecourse Minimum Gain (within the
meaning of Treas. Reg. Section 1.704-2(i)(3)), until such time as no Partner has
a positive Capital Account balance, whereupon subsequent allocations of Tax
Losses shall again be allocated among the Partners in accordance with their
Participating Percentages. Furthermore, no Partner shall be allocated Tax Losses
where it is reasonably anticipated that such Partner's Capital Account shall be
negative at the end of the fiscal year in which the Tax Losses arise or at the
end of the subsequent fiscal year, as a result of distributions of Net Cash Flow
during such periods, until such time as no Partner would have a positive Capital
Account balance after such reasonably anticipated distributions of Net Cash
Flow, whereupon subsequent allocations of Tax Losses shall again be allocated
among the Partners in accordance with their Participating Percentages. Tax
Losses not allocated to a Partner under this Section 10.2 shall be reallocated
among those Partners with positive Capital Account balances in accordance with
their Participating Percentages.

      10.3  QUALIFIED INCOME OFFSET. If a Partner receives any adjustment,
allocation, or distribution described in Treas. Reg. Sections
1.704-1(b)(2)(ii)(d)(4), (5), or (6), then items of Taxable Income shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate the deficit balance in such Partner's Capital Account as quickly as
possible. It is the intention of the parties that this provision constitute a
"qualified income offset" within the meaning of Treas. Reg. Section
1.704-1(b)(2)(ii)(d), and this provision shall be so construed.

                                        6


      10.4  MINIMUM GAIN CHARGEBACK. If there is a net decrease in the
Partnership's Minimum Gain (within the meaning of Treas. Reg. Section
1.704-2(b)(2)) or Partner Nonrecourse Minimum Gain (within the meaning of Treas.
Reg. Section 1.704-2(i)(3)) during any fiscal year of the Partnership, each
Partner shall be specially allocated, before any other allocations under this
Article 10, items of income and gain for such fiscal year (and subsequent fiscal
years, if necessary) in an amount equal to such Partner's share (determined in
accordance with Treas. Reg. Sections 1.704-2(g) and 1.704-2(i)(5), as
applicable) of the net decrease in the Partnership's Minimum Gain or Partner
Nonrecourse Debt Minimum Gain, as applicable, for such fiscal year, provided,
however, that no such allocation shall be required if any of the exceptions set
forth in Treas. Reg. Section 1.704-2(f) apply. It is the intention of the
parties that this provision constitute a "minimum gain chargeback" within the
meaning of Treas. Reg. Sections 1.704-2(f) and 1.704-2(i)(4), and this provision
shall be so construed. Notwithstanding anything in this Agreement to the
contrary, the Partnership's Partner nonrecourse deductions (within the meaning
of Treas. Reg. Section 1.704-2(i)(2)) shall be allocated solely to the Partner
who has the economic risk of loss with respect to the Partner nonrecourse
liability related thereto in accordance with the provisions of Treas. Reg.
Section 1.704-2(i)(1).

      10.5  CURATIVE ALLOCATIONS. The allocations set forth in Sections 10.2
through 10.4 are intended to comply with certain requirements of the Treasury
Regulations (the "REGULATORY ALLOCATIONS"). It is the intent of the Partners
that, to the extent possible, all Regulatory Allocations shall be offset either
with other Regulatory Allocations or with special allocations of other items of
Taxable Income or Tax Losses pursuant to this Section 10.5. Therefore,
notwithstanding any other provision of this Article 10 (other than the
Regulatory Allocations), the General Partner shall make such offsetting special
allocations of Taxable Income and Tax Losses in whatever manner the General
Partner determines appropriate so that, after such offsetting allocations are
made, each Partner's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Partner would have had if the Regulatory
Allocations were not part of the Agreement and all Taxable Income and Tax Losses
were allocated pursuant to Section 10.1.

      10.6  NO RESTORATION OF DEFICIT CAPITAL ACCOUNTS. No Partner shall be
required under any circumstances (either during the period of the Partnership's
operation or upon the Partnership's dissolution and termination) to restore a
deficit in such Partner's Capital Account or, except as explicitly provided in
this Agreement, otherwise make any contribution of cash or property to the
Partnership without such Partner's consent, which may be withheld in such
Partner's sole and absolute discretion.

      10.7  CONTRIBUTED PROPERTY. In accordance with the rules of IRC Section
704(c) and the Treasury Regulations promulgated thereunder, items of income,
gain, loss, and deduction with respect to any property contributed to the
capital of the Partnership shall, solely for tax purposes, be allocated among
the Partners so as to take account of any variation between the adjusted basis
of such property to the Partnership for federal income tax purposes and its fair
market value at the time of contribution.

      10.8  DIVISION AMONG PARTNERS. If there is a change in the number of
Shares held by a Partner during a fiscal year of the Partnership, any
allocations pursuant to this Article 10 shall be

                                        7


made so as to take into account the varying interests of the Partners during the
period to which the allocation relates, using, at the discretion of the General
Partner, the interim closing of the books method for determining such
allocations, or upon the unanimous agreement of the Partners (including any
former Partner affected by such allocations) using any method for determining
such allocations that is provided in IRC Section 706(d) and the Treasury
Regulations promulgated thereunder.

               ARTICLE 11 - BOOKS OF ACCOUNT, RECORDS AND REPORTS

      11.1  RESPONSIBILITY FOR BOOKS OF ACCOUNT AND RECORDS. Proper and complete
books of account and records shall be kept by the General Partner in which shall
be entered fully and accurately all transactions and other matters relative to
the Partnership's business as are usually entered into books of account and
records maintained by persons engaged in businesses of a like character,
including, without limitation, a Capital Account for each Partner. The
Partnership's books of account and records shall be prepared in accordance with
generally accepted accounting principles, consistently applied. The books of
account and records shall, at all times, be maintained at the principal place of
business of the Partnership, and shall be open to the inspection and examination
of the Partners or their duly authorized representatives during reasonable
business hours, and any Partner may, at such Partner's own expense, examine and
make copies of the books of account and records of the Partnership.

      11.2  REPORTS TO THE PARTNERS. As soon as practicable in the particular
case, the General Partner shall deliver or cause to be delivered the following
reports to each Partner:

            (a)   After the end of each fiscal year, such information concerning
the Partnership as shall be necessary for the preparation by a Partner of such
Partner's income tax or other tax returns;

            (b)   An unaudited statement setting forth, as of the end of and for
each fiscal year, a profit and loss statement and a balance sheet of the
Partnership; and

            (c)   Other information as, in the judgment of the General Partner,
shall be reasonably necessary for the Partners to be advised of the results of
the Partnership's operations.

      11.3  ADDITIONAL REPORTS. The General Partner may prepare or cause to be
prepared, and deliver or cause to be delivered to the Partners from time to time
during each fiscal year, in connection with distributions or otherwise,
unaudited statements showing the results of the Partnership's operations for any
period and from the beginning of the fiscal year to the date of that unaudited
statement.

                            ARTICLE 12 - FISCAL YEAR

      The fiscal year of the Partnership shall end on the last Tuesday of each
year or such other date as designated by the General Partner.

                                        8


                      ARTICLE 13 - THE PARTNERSHIP'S FUNDS

      The Partnership's funds shall be deposited in such bank account(s), or
invested in such interest-bearing or non-interest-bearing investments, as shall
be designated by the General Partner. All withdrawals from any such bank
account(s) shall be made by the General Partner or persons designated by the
General Partner. The Partnership's funds shall be held in the name of the
Partnership and shall not be commingled with those of any other Person.

                   ARTICLE 14 - MANAGEMENT OF THE PARTNERSHIP

      14.1  AUTHORITY OF THE GENERAL PARTNER. The business and affairs of the
Partnership shall be managed by its General Partner; provided, however, the
General Partner and the Limited Partners shall at all times comply with the
Franchise Agreement. Except to the extent delegated by the General Partner to
any officer of the Partnership pursuant to Section 14.10 hereof, the General
Partner shall have the exclusive authority as to the management and control of
the business of the Partnership. In addition to the powers now or hereafter
granted a General Partner of a limited partnership under the Act or granted the
General Partner under any other provisions of this Agreement, but subject to any
express limitations set forth in this Agreement, the General Partner shall have
full power and authority to do all things that it considers necessary, proper,
or desirable to conduct the business of the Partnership, including (without
limitation) the power and authority (without the vote or consent of any
Partner): (a) to negotiate and execute on behalf of the Partnership any
contracts under such terms and obligations as it, in its sole and absolute
discretion, considers in the best interest of the Partnership and necessary,
appropriate, or desirable for the conduct of the activities of the Partnership
or the implementation of its powers or the Partnership's objectives under this
Agreement; (b) to perform all obligations of the Partnership and to enforce all
rights of the Partnership under the terms and conditions of all contracts and
agreements entered into by the Partnership; (c) to employ and compensate and
dismiss from employment any and all employees, agents, independent contractors,
brokers, attorneys, and accountants; (d) to obtain property and/or services from
the General Partner and/or its Affiliates; (e) to lease or license all or any
portion of the assets of the Partnership for any Partnership purpose and to
acquire, dispose, sell, transfer, exchange, mortgage, pledge, encumber, or
hypothecate any or all of the assets of the Partnership; (f) to use or loan any
of the assets of the Partnership (including, without limitation, cash on hand)
for any purpose or on any terms it sees fit; (g) to borrow money on behalf of
the Partnership or cause the Partnership to borrow money (including, without
limitation, causing the Partnership to borrow money from the General Partner or
any Affiliate of the General Partner); (h) to assume debt obligations related in
any way to the assets of the Partnership; (i) to repay, in whole or in part,
refinance, modify, consolidate, or extend any debt obligations of the
Partnership; (j) to acquire and maintain insurance covering any or all assets of
the Partnership and its activities; (k) to control any matters affecting the
rights and obligations of the Partnership (including the conduct of litigation
and other incurring of legal expense, and to settle claims and litigation); (l)
to distribute Partnership assets to the Partners; (m) to form any further
limited liability companies, limited or general partnerships, joint ventures,
trusts, corporations, or other relationships it deems desirable in furtherance
of the Partnership's objectives; (n) to do all acts and things necessary or
desirable to accomplish the objectives of the Partnership; (o) to apply for and
obtain any governmental approvals or certificates with respect to the operations
of the Partnership or the ownership or use

                                        9


of its properties or assets (including, without limitation, alcoholic beverage
permits from applicable state and local authorities); (p) to admit additional
Partners or assignees or transferees of Partners to the Partnership pursuant to
Section 5.2 or Section 16.4 hereof; (q) to submit a Partnership claim or
liability to arbitration; (r) to take any action on the part of the Partnership
and the Partners necessary to merge the Partnership with and into, or transfer
substantially all the assets of the Partnership to, or transfer all of the
Shares held by Partners to, another entity pursuant to Sections 16.11, 16.12 or
16.13 hereof; (s) to issue additional Shares from time to time for such
consideration and on such terms and conditions as are approved by the General
Partner; and (t) to execute, acknowledge, deliver, file, and record any and all
instruments or documents affecting any and all of the foregoing. Each Partner
agrees that the consent by the General Partner to such admission of Partners
from time to time or to the submission of a Partnership claim or liability to
arbitration shall constitute the consent of such Partner to such admission or
submission. Any and all acts heretofore taken by the General Partner that are
permitted under this Section 14.1 are hereby ratified and confirmed by the
Partners as the acts and deeds of the Partnership.

      14.2  TIME DEVOTED TO THE PARTNERSHIP; OTHER ACTIVITIES. The General
Partner shall devote sufficient time to Partnership business as it in its sole
discretion deems necessary to effectively supervise Partnership business and
affairs in an efficient manner; but nothing in this Agreement shall preclude the
employment of any officer, agent, third party, or Affiliate to manage or provide
other services with respect to the Partnership's assets or business subject to
the control of the General Partner, provided the General Partner in all
instances retains general control over the operations of the Partnership.

      14.3  LOANS TO OR BY THE GENERAL PARTNER. If either the General Partner or
an Affiliate of the General Partner loans funds to the Partnership, the General
Partner or such Affiliate may not charge the Partnership interest greater than
the lesser of (i) the General Partner's or such Affiliate's actual interest
cost; (ii) the highest lawful rate; or (iii) the rate that would be charged the
Partnership (without reference to the General Partner's or such Affiliate's
financial abilities or guaranties) by unrelated banks on comparable loans for
the same purpose; and the General Partner or such Affiliate shall not charge the
Partnership points or other financing charges or fees in any amount greater than
the financing charges or fees actually incurred by the General Partner or such
Affiliate in connection with the loan to the Partnership. The Partnership may
loan funds to the General Partner or an Affiliate of the General Partner
provided the Partnership charges the General Partner or such Affiliate interest
at a rate not less than (i) the Partnership's actual interest cost including
points or other financing charges; (ii) the highest lawful rate; or (iii) the
rate that would be charged the General Partner, or such Affiliate (without
reference to the General Partner's or such Affiliates' financial abilities or
guaranties) by unrelated banks on comparable loans for the same purpose.

      14.4  LIABILITY OF THE GENERAL PARTNER. To the extent permitted by
applicable law, the General Partner (which for the purpose of this Section 14.4
shall include any Affiliate of the General Partner or a director, officer,
employee, agent, Partner, or Shareholder of the Partnership, the General Partner
or their respective Affiliates) shall not be liable, responsible, or accountable
in damages or otherwise to the Partnership or any Partner for any action taken
or failure to act based upon errors of judgment or other fault in connection
with the business affairs

                                       10


of the Partnership except for action taken with wanton disregard or failure to
act performed or omitted in bad faith or in willful or intentional misconduct.

      14.5  INDEMNIFICATION OF THE GENERAL PARTNER. The Partnership shall
indemnify and hold harmless the General Partner (which for the purposes of this
Section 14.5 shall include any Affiliate of the General Partner or a director,
officer, employee, agent, manager, member, shareholder, Partner, or Shareholder
of the Partnership, the General Partner or their respective Affiliates) to the
fullest extent permitted by applicable law. Without limiting the obligation of
the Partnership to indemnify the General Partner as specified in the preceding
sentence, to the extent permitted by applicable law, the Partnership shall
indemnify the General Partner as follows:

            (a)   The Partnership shall indemnify the General Partner if it is,
was, or is threatened to be made a named defendant or respondent in a proceeding
because the General Partner is or was the General Partner of the Partnership.

            (b)   The Partnership shall pay or reimburse, in advance of the
final disposition of the proceeding, reasonable expenses incurred by the General
Partner who was, is, or will be threatened to be made a named defendant or
respondent in a proceeding.

            (c)   The General Partner may cause the Partnership to purchase and
maintain insurance or other arrangements on behalf of the General Partner
against any liability asserted against the General Partner and incurred by the
General Partner in that capacity or arising out of the General Partner's status
in that capacity, regardless of whether the Partnership would have the power to
indemnify the General Partner against that liability under this Section 14.5.

            (d)   To the extent permitted by then applicable law and subject to
the remaining provisions of this Section 14.5, the parties hereto recognize,
acknowledge, and agree that the General Partner may be indemnified in accordance
with the provisions of this Section 14.5 in proceedings involving the simple or
gross negligence of the General Partner.

            (e)   It is the intent of this Section 14.5 that the Partnership
indemnify the General Partner to the maximum extent permitted by law.

      14.6  RIGHT OF THIRD PARTIES TO RELY ON AUTHORITY OF THE GENERAL PARTNER.
Notwithstanding any other provision of this Agreement to the contrary, no lender
or purchaser, including any purchaser of property of the Partnership, shall be
required to look to the application of proceeds thereunder or to verify any
representation by the General Partner as to the extent of the interest in the
assets of the Partnership that the General Partner is entitled to encumber,
sell, or otherwise use; and any such lender or purchaser shall be entitled to
rely exclusively on the representations of the General Partner as to its
authority to enter into such financing or sale arrangements and shall be
entitled to deal with the General Partner as if it were the sole party in
interest therein, both legally and beneficially. Each Partner and assignee
hereby waives any and all defenses or other remedies that may be available
against any such lender, purchaser, or other Person to contest, negate, or
disaffirm any action of the General Partner in connection with any such sale or
financing. In no event shall any Person dealing with the

                                       11


General Partner or the General Partner's representative with respect to any
business or property of the Partnership be obligated to ascertain that the terms
of this Agreement have been complied with, and each such Person shall not be
obligated to inquire into the necessity or expedience of any act or action of
the General Partner or the General Partner's representative; and every contract,
agreement, deed, mortgage, security agreement, promissory note, or other
instrument or document executed by the General Partner or the General Partner's
representative with respect to any business or property of the Partnership shall
be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (a) at the time of the execution and/or delivery
thereof, this Agreement was in full force and effect; (b) such instrument or
document was duly executed in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership; and (c) the General Partner or
the General Partner's representative was duly authorized and empowered to
execute and deliver any and every such instrument or document for and on behalf
of the Partnership.

      14.7  RELATED PARTY TRANSACTIONS.

            (a)   Except to the extent limited by any written employment or
engagement agreement, the General Partner, the Partners and their respective
Affiliates may engage in, or possess an interest in, other business ventures of
any nature and description, independently or with others, whether or not such
activities are competitive with those of the Partnership. Neither the
Partnership, nor any Partner shall have any rights by virtue of this Agreement
in and to such independent ventures, or to the income or profits derived
therefrom. None of the General Partner, any Partner nor any of their respective
Affiliates shall be obligated to present to the Partnership or to any Partner
any particular business opportunity of a character which, if presented to the
Partnership or Partner, could be taken by the Partnership or such Partner and
the General Partner and each of its Affiliates shall have the right to take for
its or his own account, or to recommend to others, any such particular business
opportunity to the exclusion of the Partnership and any other Partners.

            (b)   The fact that the General Partner or any of its Affiliates is
directly or indirectly interested in or connected with any Person employed or
engaged by the Partnership to render or perform a service, or to or from whom
the Partnership may purchase, sell or lease property, shall not prohibit the
Partnership from employing such Person or from otherwise dealing with it or him,
and neither the Partnership, nor any Partners shall have any rights in or to any
income or profits derived therefrom. None of such transactions will necessarily
be the result of arm's-length negotiations, be subject to any fiduciary or other
duties, or require, or be subject to, the consideration, consent or approval of
any of the Partners. Such arrangements, agreements and transactions will be
structured without a bidding or openly competitive process and, therefore, may
not be, in all respects, competitive with or comparable to arrangements,
agreements or transactions which might be available with, through, or from
unrelated parties. Specifically, but not by way of limitation of the foregoing,
the Partners acknowledge that the Partnership may enter into a management
agreement with the General Partner providing for the payment, in the aggregate,
of an annual fee of up to 3.5% of the Partnership's gross sales.

            (c)   With respect to any transaction between the General Partner or
any Affiliate of the General Partner, on the one hand, and the Partnership or
any other Partner, on the

                                       12


other hand, that notwithstanding the provisions of this Agreement would be void
or voidable, or that would subject any Person to liability, under the Act or any
other applicable law, rule, or regulation unless it were "fair" to the
Partnership or the other Partner, or any assignee, as the case may be, the
Partners hereby agree that such transaction shall be considered "fair" if the
material facts as to the transaction are disclosed or are known to (i) the other
Partners and the transaction is approved or ratified by those Partners owning
more than fifty percent (50%) of the Participating Percentages then owned by the
Partners (excluding any Partners having an interest in such transaction and any
Partners having Affiliates with interests in such transaction); or (ii) an
independent appraisal firm is appointed by the Partnership and it determines
that the transaction is fair.

      14.8  OTHER MATTERS CONCERNING THE GENERAL PARTNER.

            (a)   The General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.

            (b)   The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any opinion or advice of any such
Person as to matters which the General Partner believes to be within such
Person's professional or expert competence shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the General Partner hereunder in good faith and in accordance with
such opinion or advice.

      14.9  LIMITATIONS ON AUTHORITY. The authority of the General Partner
over the conduct of the affairs and business of the Partnership shall be subject
only to such limitations as are expressly stated in this Agreement or imposed by
applicable law. Without limiting the generality of the first sentence of this
Section 14.9, the General Partner shall not be empowered or authorized to:

            (a)   do any act in contravention of this Agreement;

            (b)   possess property or assign any rights in specific property on
behalf of the Partnership other than for a Partnership purpose; or

            (c)   require any Partner to make any contribution to the capital of
the Partnership without such Partner's consent.

      14.10 OFFICERS. The General Partner shall have authority to appoint the
following officers of the Partnership: (a) a President, (b) one or more Vice
Presidents, (c) a Chief Financial Officer, (d) a Secretary, and (e) one or more
Assistant Secretaries. Each of the officers shall act under the overall
supervision and direction of the General Partner and shall have the powers and
duties that would be customary for such a position if the Partnership were a
corporation. Further, the General Partner may appoint such other officers and
assistants to officers as it from time to time deems necessary. Any two or more
offices may be held by the same person.

                                       13


      14.11 SHARE OPTIONS. Holdings agrees that it will permit all managing
partners, kitchen managers and service managers of the Restaurant to participate
in the Texas Roadhouse Management Corp. Stock Option Plan on the same terms and
conditions that managing partners, kitchen managers and service managers of
Texas Roadhouse restaurants owned directly or indirectly by Holdings are
entitled to participate in such plan.

           ARTICLE 15 - REPRESENTATIONS AND WARRANTIES OF THE PARTNERS

      Each Partner warrants, represents, agrees and acknowledges upon each
issuance of Shares to such Partner: (A) that he has adequate means of providing
for his own current needs and foreseeable future contingencies, and anticipates
no need now or in the foreseeable future to sell his Shares; (B) that he is
acquiring his Shares for his own account as a long-term investment and without a
present view to make any distribution, resale or fractionalization thereof; (C)
that he and his independent counselors have such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the investment involved in his acquisition of his Shares and they
have evaluated the same; (D) that he is able to bear the economic risks of such
investment; (E) that he and his independent counselors have made such
investigation of the Partnership (including its business prospects and financial
condition), had access to all information regarding the Partnership and had an
opportunity to ask all of the questions regarding the Partnership as they deem
necessary to fully evaluate his investment therein; (F) that in connection with
his acquisition of the Shares he has been fully informed by his independent
counsel as to the applicability of the requirements of the Securities Act of
1933, as amended (the "Securities Act") and all applicable state securities or
"blue sky" laws to his Shares; and (G) that he understands that (1) his Shares
are not registered under the Securities Act or any state securities law, (2)
there is no market for his Shares and that he will be unable to transfer his
Shares unless they are so registered or unless the transfer complies with an
exemption from such registration (evidence of which must be satisfactory to the
Partnership), (3) such Shares cannot be expected to be readily transferred or
liquidated; and (4) his acquisition of Shares involves a high degree of risk.

                         ARTICLE 16 - TRANSFER OF SHARES

      16.1  TRANSFER OF SHARES. Shares are transferable only on the books of the
Partnership. A Partner may not Transfer any or all of his Shares unless he has
complied with the provisions of Section 16.3 hereof and has obtained the prior
written consent of the General Partner, which consent may not be withheld unless
such Transfer would violate applicable law or the Transfer is to a Person
affiliated with a competitor of the Partnership or any of its Affiliates;
provided, however, that any Partner may transfer his Shares to any other Partner
without the consent of the General Partner. The Partnership may charge a fee,
not exceeding the actual and reasonable expenses incurred in such transfer and
in no event in excess of $500.00, to defray the cost of effecting the transfer.

      16.2  RECOGNITION BY PARTNERSHIP OF TRANSFERS. In the event a holder of
Shares Transfers any or all of his Shares, such Transfer shall be recognized by
the Partnership for the purpose of distributing Net Cash Flow, liquidating
distributions and returns of capital and

                                       14


allocating Taxable Income and Tax Losses, and any other items in the nature of
income, gain, expense or loss, as of the first day of the month following
receipt and processing by the Partnership of a duly executed, acknowledged and
certified counterpart of the instrument of transfer.

      16.3  RESTRICTIONS ON TRANSFER.

            (a)  (i)  No Transfer of Shares may be made unless the holder who
desires to Transfer his Shares (the "Transferor"), prior to such Transfer, gives
the Partnership written notice of such desire ("Notice of Transfer"), which
notice shall specify the number and class of Shares to be transferred, the
identity of the proposed transferee, the purchase price for the Shares and the
terms for payment of such price ("Purchase Price"). With respect to any Transfer
made without consideration, the Purchase Price shall be deemed to be equal to
the Book Value Per Share (as defined in Section 16.3(d)) multiplied by the
number of Shares proposed to be Transferred. Any purported Notice of Transfer
that does not comply with the requirements of this Section shall be null and
void and of no effect hereunder. Upon receipt of a proper Notice of Transfer,
the Partnership shall thereupon have the right to acquire all of the
Transferor's Shares or such number of the Transferor's Shares as is specified in
the Notice of Transfer, on terms identical to the Purchase Price or
proportionately identical if the Partnership elects to purchase all of his
Shares. In the event the Purchase Price contains terms which the Partnership
cannot reasonably duplicate, the Partnership shall have the right to substitute
the reasonable cash equivalent thereof.

                  (ii)  The Partnership shall exercise the right of first
refusal contained herein by mailing written notice thereof ("Notice of
Election") to the Transferor within thirty (30) days of the date of the receipt
of the Notice of Transfer. In the event the Partnership fails to mail the Notice
of Election to the Transferor within such thirty (30) day period, the purchase
option contained herein shall lapse. In the event the Partnership timely
exercises the purchase option contained herein, the Partnership shall mail
written notice to the Transferor of whether the Partnership has elected to
purchase all of the Shares of the Transferor or such portion as was specified in
the Notice of Transfer, if less. Such notice shall be mailed within ten (10)
days of the mailing of the Notice of Election.

                  (iii) The closing for any purchase hereunder shall be
consummated and closed at the Partnership's principal office on a date and at a
time designated by the Partnership in a notice to the Transferor, provided such
consummation and closing date shall occur within sixty (60) days from the date
of mailing of the Notice of Election. At such closing, the Transferor shall
execute and deliver all documents and instruments as are necessary and
appropriate to effectuate the transfer of the Transferor's Shares to the
Partnership in accordance with the terms of the Notice of Transfer and the
Partnership shall deliver the Purchase Price. In the event the Transferor has
any outstanding debts to the Partnership, such debts, including any accrued
interest, shall be repaid in full from the Purchase Price at closing.

                  (iv)  In the event the Partnership does not elect pursuant to
this Section 16.3(a) to exercise the purchase option specified herein, or in the
event the closing for any purchase pursuant to this Section 16.3(a) does not
occur within the time limits specified therein, then the Transferor shall be
free to transfer the exact number of his Shares as was specified in the

                                       15


Notice of Transfer to the person or entity identified in the Notice of Transfer
in exchange for the exact Purchase Price as was specified in the Notice of
Transfer, provided, however, that the closing and consummation of such transfer
shall occur within one hundred twenty (120) days after the date of mailing of
the Notice of Transfer and provided further that such transfer must comply with
all other requirements of this Article 16. In the event such transfer is not so
closed and consummated within such period, the purchase option granted to the
Partnership in this Section 16.3(a) shall again be exercisable and the
Transferor shall make no Transfer of any of his Shares, or any right, title or
interest therein, until he has again complied with all terms and provisions of
this Article. In the event the Partnership does not elect pursuant to this
Section 16.3(a) to exercise the purchase option contained herein and the
Transferor makes a permitted Transfer in compliance with the terms and
provisions of this Article, then the person or entity to whom such Shares are
transferred shall nevertheless acquire such Shares subject to the restrictions
imposed on such Shares under this Article 16 as to further transfers of such
Shares, and provided further that any such transferee shall agree in writing to
be bound by all terms and provisions of this Agreement as a condition to the
Transfer to the transferee.

                  (v)   The Partnership may assign its right of first refusal
under this Section 16.3(a) to the Partners other than the Transferor in
proportion to their relative Participating Percentages if the Partnership does
not desire to exercise such right.

            (b)   Notwithstanding Section 16.1 hereof, no Transfer of Shares may
be made unless such Transfer would not (i) when added to the total of all other
Transfers of Shares within the preceding 12 months, result in the Partnership
being considered terminated within the meaning of section 708 of the Code, or
(ii) cause the Partnership to lose its status as a partnership for federal
income tax purposes.

            (c)   No Transfer shall be recognized if prohibited by law,
including the Securities Act and the securities law of any state applicable to
the Transfer. The General Partner, in its discretion, may require an opinion of
the transferor's counsel, satisfactory to the General Partner in its discretion,
that such Transfer would not violate the Securities Act and the securities law
of any state applicable to the Transfer (including any investor suitability
standards applicable to the transferee or the Shares to be transferred).

            (d)   In addition to any other rights of the Partnership under this
Section 16.3, in the event that any Shares held by any Partner or any interest
in such Shares shall be Transferred to any Person (an "Involuntary Transferee")
in one or more transactions in an involuntary transfer by court order, by
divorce decree, by judicial process, or by foreclosure, levy or attachment
(other than upon death), then the Partnership shall have the right during the
180-day period following the Partnership 's receipt of notice of such Transfer
to repurchase such Shares at a purchase price equal to the Net Book Value of the
Partnership multiplied by the Participating Percentage represented by such
Shares ("Book Value Per Share"). "Net Book Value of the Partnership" shall mean
the total assets of the Partnership minus the total liabilities of the
Partnership. Such purchase shall be effective immediately, and the Shares
automatically canceled, upon delivery of a notice of purchase and the applicable
purchase price to the Involuntary Transferee.

                                       16


      16.4  ADMISSION OF TRANSFEREES AS PARTNERS. Any transferee of Shares
shall become a General Partner or Limited Partner, as the case may be, and each
admitted Partner by his execution of this Agreement does hereby consent to such
admission when all of the following conditions are satisfied:

            (a)   The fully executed and acknowledged written instrument of
transfer has been submitted to the General Partner as provided in Section 16
hereof;

            (b)   The transferor and the transferee have executed and
acknowledged such other instruments as the General Partner deems necessary or
desirable to effect such admission, including (i) an acceptance and adoption by
the transferee of all of the terms and provisions of this Agreement through the
execution of a counterpart hereof, and (ii) a power-of-attorney, the form and
content of which shall be provided by the General Partner;

            (c)   Any transfer fee, referred to in Section 16.1 hereof, which
has been charged has been paid in full;

            (d)   Satisfaction of the restrictions on Transfer contained in
Section 16.3 hereof; and

            (e)   This Agreement has been amended to reflect the admission of a
Partner in accordance with this Agreement and the Act. At the discretion of the
General Partner, the Agreement shall be amended no less frequently than the
first day of each fiscal quarter to admit transferee Partners.

      16.5  HOLDERS OF SHARES WHO ARE NOT PARTNERS. A Person who holds Shares
but who has not been admitted as a Partner as provided in Section 16.4 hereof
shall be subject to all of the obligations imposed on Partners hereunder and
shall be entitled (a) to allocations of Taxable Income and Tax Losses and any
other items in the nature of income, gain, expenses and losses as provided in
Article 10 hereof, (b) to distributions of Net Cash Flow and liquidating
distributions as provided in Article 9 and Section 18.2 hereof, and (c) to
Transfer his Shares as provided in Section 16.1 hereof.

      16.6  TERMINATION AS A PARTNER. Upon the Incapacity of an individual
Partner, his personal representative shall have all the rights of a Partner for
the purpose of settling or managing his estate or property and such power as the
Incapacitated Partner possessed to Transfer his Shares as provided in Section
16.1 above. Upon the Incapacity of a Partner that is not an individual, the
authorized representative of such entity shall have all the rights of a Partner
for the purpose of effecting the orderly winding up and disposition of the
business of such entity, and such power as such entity possessed to Transfer its
Shares as provided in Section 16.1 above. No representative described in this
Section 16.6 shall have any power or right to demand or obtain any such
Incapacitated Partner's Share of any Partnership assets or the value thereof.

      16.7  RIGHT TO VOTE. In the event the approval of the Partners shall be
required pursuant to any provision of this Agreement or of the Act, a holder of
Shares which have been transferred pursuant to Section 16.2 hereof, but for
which the transferee thereof has not been

                                       17


admitted as a Partner pursuant to Section 16.4 hereof, shall not be entitled to
vote thereon and the Units shall not be counted as Shares then outstanding for
purposes of obtaining the requisite approval.

      16.8  TRANSFER BY THE GENERAL PARTNER; WITHDRAWAL OF THE GENERAL
PARTNER.

            (a)   The General Partner may Transfer all or a portion of its
Shares without obtaining the prior consent of the Partners. Notice of any
transfer shall be given to the Partners by the transferring General Partner.

            (b)   The Partners and the transferring General Partner agree to
execute an amendment to this Agreement and any other documents or instruments in
form satisfactory to the General Partner such as may be necessary or required by
law to recognize such Transfer by the General Partner. Pursuant to such
amendment the transferee shall accept, adopt and approve in writing all of the
terms and provisions of this Agreement.

            (c)   The General Partner has the power to retire or withdraw from
the Partnership with or without cause at any time.

      16.9  INITIAL PUBLIC OFFERING LOCK-UP. Each Partner irrevocably agrees
that, without the prior written consent of the General Partner or its successor,
he will not Transfer any of his Shares or any securities received in exchange
for his Shares, for a period of one year after the effective date of the
registration statement filed with the Securities and Exchange Commission
relating to the initial public offering of any securities of the General Partner
or the successor of either unless a shorter period is permitted by the
underwriter(s) of such offering.

      16.10 RIGHT TO DEAL EXCLUSIVELY WITH PARTNERS. For all purposes of this
Agreement, the General Partner shall be entitled to deal with each Partner as
the sole party in interest with respect to his Shares in the Partnership,
regardless of any actual knowledge the General Partner may have to the contrary;
provided, however, that (a) as to any transferee of Shares of whom the General
Partner has actual knowledge, the General Partner may distribute to such
transferee the share of Net Cash Flow, liquidating distributions, or return of
the contribution to the capital of the Partnership, to which his transferor
would otherwise be entitled, and (b) a transferee, for federal income tax
purposes only and to the extent required by law, shall be a Partner and charged
with the items of income, gain, loss, deduction, or credit to which his
transferor would otherwise be entitled.

      16.11 GO-ALONG OBLIGATIONS. On or after eighteen (18) months following
the opening date of the Restaurant, at any time after the General Partner has
entered into an agreement to sell substantially all of its assets or Shares to,
or merge or otherwise combine with, any entity (the "Public Company") that has
made, or entered into an agreement or letter of intent for, a public offering
("Public Offering") of any of the Public Company's capital stock (the "Public
Shares") pursuant to a registration statement filed under the Securities Act,
the General Partner shall have the right (which right shall continue after the
Public Offering and which right may be assigned to the Public Company), at its
option and election, to (i) require the Partnership to transfer its assets,
subject to its liabilities, to the Public Company in exchange for the right to
receive Public

                                       18


Shares, or (ii) to require the Limited Partners to exchange their Shares for, or
convert their Shares into, Public Shares through a sale, merger or other
transaction designated by the General Partner or the Public Company (in either
case, a "Roll-Up"), and the Partnership or the Limited Partners, as applicable,
shall be obligated to transfer such assets, or exchange or convert such Shares
for Public Shares, on the following basis:

            A.    In a Roll-Up in which the Partnership will receive Public
Shares, the Partnership shall be entitled to receive 60% of that number of
Public Shares that bears the same relationship to the total number of Public
Shares that will be outstanding immediately after the Roll-Up (excluding the
Public Shares to be issued to the Partnership and to franchisees of Texas
Roadhouse Development Corporation ("Franchisees") that will be acquired in
transactions concurrently with the Roll-Up) as the Adjusted Pre-Tax Earnings (as
defined below) of the Partnership during the Measurement Period (as defined
below) bears to the Public Company Pro Forma Adjusted Pre-Tax Earnings (as
defined below) during the Measurement Period, subject to adjustment in
accordance with Section 16.11C.

            In a Roll-Up in which the Partners will directly receive Public
Shares, the Limited Partners shall be entitled to receive 59.4% (i.e., 60% x
99%) of that number of Public Shares that bears the same relationship to the
total number of Public Shares that will be outstanding immediately after the
Roll-Up (excluding the Public Shares to be issued to the Limited Partners and to
Franchisees that will be acquired in transactions concurrently with the Roll-Up)
as the Limited Partners' Adjusted Pre-Tax Earnings (as defined below) during the
Measurement Period bears to the Public Company Pro Forma Adjusted Pre-Tax
Earnings during the Measurement Period, subject to adjustment in accordance with
Section 16.11C. Any Public Shares to be distributed to the Limited Partners
shall be allocated based on their relative Participating Percentages.

            B.    As used herein,

                  (1)   "Adjusted Pre-Tax Earnings" means that amount, as
calculated according to GAAP and in the same manner as the pre-tax earnings of
other stores operated by the General Partner or the Public Company, equal to the
store level pre-tax earnings of the Restaurant, after deductions for accrued but
unpaid rent, as adjusted by adding back any deductions for management fees,
accounting fees and other general and administrative expenses, pre-opening
expenses with respect to the Restaurant, interest on Excess Mortgage Debt (as
defined in Section 16.11.C) and interest on Equipment Debt (as defined in
Section 16.11.C) and by subtracting the amount, if any, that the total
compensation paid to the general manager of the Restaurant is less than the sum
of (a) $45,000 and (b) 10% of the store level pre-tax earnings of the Restaurant
and the amount by which current annualized interest payments on any Mortgage
Debt (as defined in Section 16.11C) incurred since the commencement of the
Measurement Period exceeds the actual interest payments made on Mortgage Debt
during the Measurement Period (the "Interest Shortfall").

                  (2)   "Limited Partners' Adjusted Pre-Tax Earnings" means 99%
of that amount, as calculated according to GAAP and in the same manner as stores
operated by the General Partner or the Public Company, equal to the store level
pre-tax earnings of the

                                       19


Restaurant after deductions for accrued but unpaid rent, as adjusted by adding
back any deductions for management fees, accounting fees and other general and
administrative expenses, pre-opening expenses with respect to the Restaurant,
interest on Excess Mortgage Debt and interest on Equipment Debt and by
subtracting the amount, if any, that the total compensation paid to the general
manager of the Restaurant is less than the sum of (a) $45,000 plus (b) 10% of
the store level pre-tax earnings of the Restaurant and the amount of any
Interest Shortfall.

                  (3)   "Public Company Pro Forma Adjusted Pre-Tax Earnings"
means (a) with respect to any Roll-Up occurring after the Public Offering, the
pre-tax income of the Public Company, as adjusted by adding back general and
administrative expenses, nonrecurring items, and restaurant pre-opening expenses
for the Public Company and (b) with respect to any Roll-Up occurring in
connection with the Public Offering, the pro forma combined pre-tax income of
the Public Company and all Texas Roadhouse restaurant operations (excluding the
earnings of all Franchisees whether or not such operations are to be acquired in
transactions concurrently with the Roll-Up) to be acquired by the Public Company
in connection with the Public Offering (the "Additional Restaurants"), as
adjusted by adding back general and administrative expenses, nonrecurring items,
and restaurant pre-opening expenses for the Public Company and for the
Additional Restaurants and subtracting the earnings attributable to the minority
interest in the Partnership held by the Limited Partners.

                  (4)   "Measurement Period" means the four full calendar
quarters prior to the delivery of the Roll-Up Notice (as defined in Section
16.11.C); provided that, if the Restaurant has been open for five (5) full
fiscal months but less than Fourteen (14) full fiscal months, Adjusted Pre-Tax
Earnings or the Limited Partners' Adjusted Pre-Tax Earnings as the case may be,
shall be calculated on an annualized basis based upon the number of full fiscal
months open (excluding the first two full fiscal months open); and further
provided that if the Restaurant has not opened or has been open for less than
five (5) full fiscal months, then Adjusted Pre-Tax Earnings or the Limited
Partners' Adjusted Pre-Tax Earnings, as the case may be, shall be deemed to be
the simple average adjusted pre-tax earnings (calculated in the same manner as
the Adjusted Pre-Tax Earnings of the Partnership) of all other restaurants owned
in whole or in part by the General Partner or the Public Company that have been
open for the four (4) full calendar quarters prior to the delivery of the
Roll-Up Notice.

            C.    The General Partner or the Public Company shall exercise its
right under this Section 16.11 by delivering written notice thereof (the
"Roll-Up Notice") to the Partnership at least twenty (20) days prior to
consummation of the Roll-Up. If the Roll-Up Notice is delivered prior to the
Public Offering, the Roll-Up shall occur simultaneously with and shall be
contingent upon the closing of the Public Offering. The number of Public Shares
to be issued to the Partnership or the Limited Partners, as applicable, pursuant
to this Section 16.11 shall be reduced by 100%, in the case of the Partnership,
and 99%, in the case of the Limited Partners, of the quotient of (1) the sum
(the "Adjustment Amount") of (a) the positive amount (the "Excess Mortgage
Debt"), if any, by which (i) all mortgage debt ("Mortgage Debt") secured by the
Partnership's land, building and improvements exceeds (ii) the sum of 85% of the
fair market value of the land, building and improvements of the Partnership
secured by the Mortgage Debt, (b) the positive amount, if any, by which the
current liabilities of the Partnership (other than Equipment Debt and Mortgage
Debt) exceeds the current assets of the Partnership, and (c) the

                                       20


amount of any indebtedness secured by equipment owned by the Partnership
("Equipment Debt"), and (d) if the Restaurant has not opened, the Partnership's
good faith estimate of all future expenses that will be incurred to complete the
development of the Restaurant through the Opening Date, and (2) the Fair Market
Value of the Public Shares. "Fair Market Value" shall mean the initial public
offering price of the Public Shares if the Roll-Up occurs on or prior to the
Public Offering date or the average closing price of the Public Shares on the
five trading days immediately prior to the Roll-Up if the Roll-Up occurs after
the Public Offering. In connection with the Roll-Up, the Partnership and the
Limited Partners shall execute a Purchase Agreement containing customary terms
and all other documents and instruments reasonably necessary, and shall
otherwise cooperate fully with the General Partner and the Public Company, to
effect the Roll-Up.

            D.    The following calculation demonstrates the foregoing formula:

                  (1)   ASSUMPTIONS:

                        (A)   Public Company Pro Forma Adjusted Pre-Tax Earnings
                        - $20,000,000

                        (B)   Adjusted Pre-Tax Earnings of the Partnership -
                              $500,000

                        (C)   Limited Partners' Adjusted Pre-Tax Earnings =
                              $500,000 x 99% = $495,000.

                        (D)   Total outstanding Public Shares immediately after
                              the Roll-Up - 10,000,000

                        (E)   Mortgage Debt - $900,000

                        (F)   Fair market value of the Partnership's land,
                              building and improvements - $1,000,000

                        (G)   Current liabilities - $120,000

                        (H)   Current assets - $100,000

                        (I)   Equipment Debt - $100,000

                        (J)   Fair Market Value of Public Shares - $20.00

                                       21


                  (2)   CALCULATION WHERE PUBLIC SHARES ARE ISSUED TO THE
                        PARTNERSHIP:

                        I.    Relationship of Adjusted Pre-Tax Earnings of the
                              Partnership to the Public Company Pro Forma
                              Adjusted Pre-Tax Earnings during the Measurement
                              Period: $500,000 DIVIDED BY $20,000,000 = 2.5%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Public Shares - ($50,000 + $20,000 +
                              $100,000) DIVIDED BY $20.00 = 8,500

                        VI.   Number of Public Shares to be received by the
                              Partnership - (10,000,000 x 2.5% x 60%) - 8,500 =
                              141,500

                        VII.  Allocation of Public Shares

                              General Partner - 1% x 141,500 = 1,415
                              Limited Partners - 99% x 141,500 = 140,085

                  (3)   CALCULATION WHERE PUBLIC SHARES ARE ISSUED TO THE
                        INDIVIDUAL PARTNERS:

                        I.    Relationship of Limited Partners Adjusted Pre-Tax
                              Earnings of the Partnership to the Public Company
                              Pro Forma Adjusted Pre-Tax Earnings during the
                              Measurement Period: $495,000 DIVIDED BY
                              $20,000,000 = 2.475%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Public Shares - ($50,000 + $20,000 +
                              $100,000) x 99% DIVIDED BY $20.00 = 8,415.

                                       22


                        VI.   Number of Public Shares to be received by the
                              Limited Partners - (10,000,000 x 2.475% x 60%) -
                              8,415 = 140,085.

      16.12 CO-SALE OBLIGATIONS. In the event that the General Partner or the
Public Company (as applicable, the "Seller") or the shareholders of the Seller
enters into an agreement ("Sale Agreement") for the sale of the General Partner
or its Shares or assets to, or the merger of the Seller with and into, any
person (an "Unaffiliated Buyer") who is unaffiliated with the Seller (a "Sale"),
then the Seller shall have the right to require the sale of all of the Shares
held by the Limited Partners to, or the merger of the Partnership with and into,
such Unaffiliated Buyer. To exercise such co-sale rights, the Seller must
deliver written notice (the "Sale Notice") to the Limited Partners within 15
days of the date the Sale Agreement is executed. Such sale by the Limited
Partners shall be on the same terms and conditions as are applicable to the
Seller except that the consideration to be paid to the Limited Partners shall
collectively be equal to 59.4% (i.e., 60% x 99% of the consideration that bears
the same relationship to the total consideration to be received by the Seller or
the shareholders of the Seller in connection with the transaction as the
Adjusted Pre-Tax Earnings (as defined in Section 16.11B) of the Partnership
during the Sale Measurement Period (as defined below) bears to the Seller Pro
Forma Adjusted Pre-Tax Earnings (as defined below) during the Sale Measurement
Period. The consideration to be distributed to the Limited Partners shall be
allocated based on their relative Participating Percentages.

      "Seller Pro Forma Adjusted Pre-Tax Earnings" means the pre-tax income of
the Seller, as adjusted by adding back general and administrative expenses,
nonrecurring items and restaurant pre-opening expenses for the Seller.

      "Sale Measurement Period" shall mean the four full calendar quarters
preceding the execution of the Sale Agreement; provided that, if the Restaurant
has been open for five full fiscal months but less than fourteen full fiscal
months, the Adjusted Pre-Tax Earnings of the Partnership shall be calculated on
an annualized basis based upon the number of full fiscal months open (excluding
the first two full fiscal months open); and further provided that if the
Restaurant has not opened or has been open for less than five full fiscal
months, then Adjusted Pre-Tax Earnings shall be deemed to be the simple average
adjusted pre-tax earnings (calculated in the same manner as the Adjusted Pre-Tax
Earnings of the Restaurant) of all other restaurants owned in whole or in part
by the Seller that have been open for the four full calendar quarters prior to
the delivery of the Sale Notice.

      The consideration to be paid to the Limited Partners pursuant to this
Section 16.13 shall be reduced by 99% of the Adjustment Amount. In connection
with the Sale, the Limited Partners shall execute such agreements containing
customary terms and all other documents and instruments reasonably necessary,
and shall otherwise cooperate fully with the Seller to effect the Sale.

                                       23


            A.    The following calculation demonstrates the foregoing formula:

                  (1)   ASSUMPTIONS:

                        (A)   Seller Pro Forma Adjusted Pre-Tax Earnings -
                              $20,000,000

                        (B)   Adjusted Pre-Tax Earnings of the Partnership -
                              $500,000

                        (C)   Total consideration to be paid to the Seller -
                              $200,000,000

                        (D)   Mortgage Debt - $900,000

                        (E)   Fair market value of the Partnership's land,
                              building and improvements - $1,000,000

                        (F)   Current liabilities - $120,000

                        (G)   Current assets - $100,000

                        (H)   Equipment Debt - $100,000

                  (2)   CALCULATION:

                        I.    Relationship of Adjusted Pre-Tax Earnings of the
                              Partnership to the Seller Pro Forma Adjusted
                              Pre-Tax Earnings of the Public Company during the
                              Measurement Period: $500,000 DIVIDED BY
                              $20,000,000 = 2.5%

                        II.   Excess Mortgage Debt - $900,000 - ($1,000,000 x
                              85%) = $50,000

                        III.  Current Liabilities - Current Assets - $120,000 -
                              $100,000 = $20,000

                        IV.   Equipment Debt - $100,000

                        V.    Reduction in Consideration = $50,000 + $20,000 +
                              $100,000 = $170,000

                        VI.   Consideration to be received by the Limited
                              Partners - (($200,000,000 x 2.5% x 60%) -
                              $170,000) x 99% = $2,801,700.

      16.13 OTHER TRANSACTIONS. Except as contemplated by Section 16.11 or
16.12, the Seller shall have the authority to cause the sale of the Partnership
to, or the merger of the Partnership into, an Unaffiliated Buyer without the
consent of any other holders of Shares

                                       24


regardless of the consideration to be paid to such holders or to the Partnership
in such transaction.

                   ARTICLE 17 - DISSOLUTION OF THE PARTNERSHIP

      The happening of any one of the following events, as provided below, shall
cause a dissolution of the Partnership:

            (a)   Upon the sale or other disposition of all or substantially all
of the assets of the Partnership;

            (b)   Upon the written consent by all of the Partners authorizing
the dissolution of the Partnership; or

            (c)   Upon the expiration of the Partnership's term pursuant to
Article 7.

      Except as provided in this Article 17, no event of disassociation of a
Partner or a General Partner under the Act or event of dissolution under the Act
shall cause a dissolution of the Partnership.

                ARTICLE 18 - CONFIDENTIALITY AND NON-COMPETITION

      18.1  CONFIDENTIALITY. Each Partner hereby covenants, agrees and
acknowledges as follows:

            (a)   Each Partner's ownership of Shares hereunder creates a
relationship of confidence and trust between the Partner and the Partnership
with respect to certain information pertaining to the business of the
Partnership and its Affiliates or pertaining to the business of any supplier to
the Partnership or its Affiliates which may be made known to the Partner by the
Partnership or any of its Affiliates or by any supplier to the Partnership or
any of its Affiliates or learned by the Partner during the period of his
ownership of Shares.

            (b)   Each Partner agrees that he will not without the prior written
consent of the General Partner use for his benefit or disclose at any time while
a Partner, or thereafter, except to the extent required by the performance by
him of any duties he may have as an employee of the Partnership, any information
obtained or developed by him while a Partner of the Partnership with respect to
any actual or potential suppliers, products, services, employees, financial
affairs, applications or methods of marketing, service or procurement of the
Partnership or any of its Affiliates, or any confidential matter regarding the
business of the Partnership or any of its Affiliates that, except information
that at the time is generally known to the public other than as a result of
disclosure by him not permitted hereunder (collectively, "Confidential
Information").

            (c)   Each Partner agrees that when he ceases to be a Partner of the
Partnership, such Partner shall forthwith return to the Partnership all
documents and papers relating to

                                       25


Confidential Information and other physical property in his possession belonging
to the Partnership or any of its Affiliates.

      18.2  COMPETITION, ETC. While a Partner of the Partnership:

            (a)   Each Partner will not make any statement or perform any act
intended to advance an interest of any existing or prospective competitor of the
Partnership or any of its Affiliates in any way that will or may injure an
interest of the Partnership or any of its Affiliates in its relationship and
dealings with existing or potential suppliers or customers, or solicit or
encourage any employee of the Partnership or any of its Affiliates to do any act
that is disloyal to the Partnership or any of its Affiliates, inconsistent with
the interest of the Partnership or any of its Affiliate's interests or in
violation of any provision of this Agreement;

            (b)   Each Partner will not make any statement or perform any act
intended to cause any existing or potential customers or clients of the
Partnership or any of its Affiliates to make use of the services or purchase the
products of any existing or future business in which the Partner has or expects
to acquire a proprietary interest or in which the Partner is or expects to be
made an employee, officer, director, manager, consultant, independent
contractor, advisor or otherwise, if such services or products in any way
compete with the services or products sold or provided or expected to be sold or
provided by the Partnership or any of its Affiliates to any existing or
potential customer or client;

            (c)   Each Partner will not directly or indirectly (as an employee,
officer, director, manager, consultant, independent contractor, advisor or
otherwise) engage in competition with, or acquire any proprietary interest in,
perform any services for, lend his name to, participate in or be connected with
any steakhouse restaurant located within 30 miles of a Texas Roadhouse
restaurant.

            (d)   Each Partner will not directly or indirectly solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Partnership or any of its
Affiliates; and

      In connection with the foregoing provisions of this Section 18.2, each
Partner represents that his experience, capabilities and circumstances are such
that such provisions will not prevent him from earning a livelihood. Each
Partner further agrees that the limitations set forth in this Section 18.2
(including, without limitation, any time or territorial limitations) are
reasonable and properly required for the adequate protection of the businesses
of the Partnership and its Affiliates.

      For purposes of this Section 18.2, proprietary interest in a business is
ownership, whether through direct or indirect stock holdings or otherwise, of
one percent (1%) or more of such business. Each Partner shall be deemed to
expect to acquire a proprietary interest in a business or to be made an
employee, officer, director, manager, consultant, independent contractor,
advisor or otherwise of such business if such possibility has been discussed
with any officer, director, employee, agent, or promoter of such business.

                                       26


      18.3  APPLICATION TO EQUITY OWNERS. For purposes of this Article 18, the
term "Partner" shall be deemed to refer to any equity owner of any entity that
beneficially owns any Shares.

         ARTICLE 19 - WINDING UP; LIQUIDATING DISTRIBUTIONS; TERMINATION

      19.1  WINDING UP. In the event of the dissolution of the Partnership for
any reason, then the General Partner shall commence to wind up the affairs of
the Partnership and to liquidate the Partnership's assets. The Partners shall
continue to share Taxable Income and Tax Losses during the period of liquidation
in accordance with Article 10. The General Partner shall determine whether the
Partnership's assets are to be sold or distributed to the Partners in
dissolution of the Partnership. If the Partnership's assets are distributed to
the Partners, then all such assets shall be valued at their then fair market
value as determined by the General Partner and the difference, if any, of such
fair market value over (or under) the adjusted basis of such assets to the
Partnership shall be credited (or charged) to the Capital Accounts of the
Partners in accordance with Article 10. Fair market value shall be used for
purposes of determining the amount of any distribution to a Partner pursuant to
Section 19.2.

      19.2  LIQUIDATING DISTRIBUTIONS. Subject to the right of the General
Partner to set up such cash reserves as may be deemed reasonably necessary for
any contingent or unforeseen liabilities or obligations of the Partnership, the
proceeds of the liquidation and any other funds of the Partnership shall be
distributed to:

                  (a)   Creditors, in the order of priority as provided by law;
including, to the extent permitted by law, Partners who are creditors; and

                  (b)   The Partners as creditors, to the extent they did not
receive distributions pursuant to Section 19.2(a); and

                  (c)   The Partners in proportion to their respective Capital
Accounts AFTER adjustment for gain or loss with respect to the disposition of
the Partnership's assets incident to the dissolution of the Partnership and the
winding up of its affairs, whether or not the distribution occurs prior to the
dissolution of the Partnership.

      19.3  RIGHTS OF THE PARTNERS. Each Partner shall look solely to the
Partnership's assets for all distributions with respect to the Partnership, his
Capital Contribution (including the return thereof), and share of profits, and
shall have no recourse therefor (upon dissolution or otherwise) against any
other Partner.

      19.4  TERMINATION. Upon complete liquidation of the Partnership and
distribution of all Partnership funds, the Partnership shall terminate.

                                       27


                     ARTICLE 20 - SPECIAL POWER OF ATTORNEY

      20.1  GRANTING OF POWER OF ATTORNEY. Concurrently with the execution of
written acceptance and adoption of the provisions of this Agreement, each
Partner grants to the General Partner a special power of attorney constituting
and appointing the General Partner as the attorney-in-fact for such Partner,
with power and authority to act in his name and on his behalf to approve,
execute, acknowledge and swear to in the execution, acknowledgment and filing of
documents required for the operation of the Partnership or for the Partnership
to take any action contemplated by this Agreement, which shall include, by way
of illustration but not of limitation, the following:

            (a)   Any separate articles or certificates of limited liability
company, as well as any amendments to the foregoing which, under the laws of the
Commonwealth of Kentucky or the laws of any other state, are required to be
filed or which the General Partner deems to be advisable to file;

            (b)   Any instruments or documents necessary to effect a transfer of
Shares held by any Partner or sale of the Partnership's assets pursuant to
Article 16 of this Agreement or to evidence a Partner's consent to any
transaction contemplated by Article 16;

            (c)   Any other instrument or document which may be required to be
filed by the Partnership under the laws of any state or by any governmental
agency, or which the General Partner deems advisable to file; and

            (d)   Any instrument or document which may be required to effect the
continuation of the Partnership, the admission of an additional or substituted
Partner, or the dissolution and termination of the Partnership (provided such
continuation, admission or dissolution and termination are in accordance with
the terms of this Agreement).

      20.2  NATURE OF POWER OF ATTORNEY. The special power of attorney to be
concurrently granted by each Partner:

            (a)   Is a special power of attorney coupled with an interest, is
irrevocable, shall survive the death or dissolution of the granting Partner, and
is limited to those matters herein set forth;

            (b)   May be exercised by the General Partner acting alone for each
Partner by a facsimile signature of the General Partner or by listing all of the
Partners executing any instrument with a single signature of the General Partner
acting as an attorney-in-fact for all of them; and

            (c)   Shall survive an assignment by a Partner of all or any portion
of such Partner's Shares except that, where the assignee of Shares owned by a
Partner has been approved by the Partners for admission to the Partnership as a
substituted Partner, the special power of attorney shall survive such assignment
for the sole purpose of enabling the General Partner to execute, acknowledge and
file any instrument or document necessary to effect such substitution.

                                       28


                           ARTICLE 21 - MISCELLANEOUS

      21.1  NOTICES. All notices, approvals, consents and demands required or
permitted under this Agreement shall be in writing and sent by hand delivery,
facsimile, overnight mail, certified mail or registered mail, postage prepaid,
to the Partners and the General Partner at their addresses as shown from time to
time on the records of the Partnership, and shall be deemed given when delivered
by hand delivery, transmitted by facsimile or mailed by overnight, certified or
registered mail. Any Partner or the General Partner may specify a different
address by notifying the General Partner and the Partnership in writing of the
different address.

      21.2  GOVERNING LAW. This Agreement and the rights of the parties to this
Agreement shall be governed by and interpreted in accordance with the laws of
the Commonwealth of Kentucky, without regard to or application of its conflicts
of law principles.

      21.3  BENEFIT AND BINDING EFFECT. Except as otherwise specifically
provided in this Agreement, this Agreement shall be binding upon and shall inure
to the benefit of the parties to this Agreement, and their legal
representatives, heirs, administrators, executors, successors and permitted
assigns. Except as otherwise specifically provided in this Agreement, the
General Partner may not assign his rights and obligations under this Agreement
to any Person other than an Affiliate of, or successor to, the General Partner
without the unanimous consent of the Partners.

      21.4  PRONOUNS AND NUMBER. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall include
the singular and the plural, and pronouns stated in any of the masculine,
feminine or neuter gender shall include the masculine, feminine and neuter
gender.

      21.5  HEADINGS; ANNEXES AND SCHEDULES. The headings contained in this
Agreement are inserted only as a matter of convenience, and in no way define,
limit or extend the scope or intent of this Agreement or any provision of this
Agreement. The Annexes to this Agreement are incorporated into this Agreement by
this reference and expressly made a part of this Agreement.

      21.6  PARTIAL ENFORCEABILITY. If any provision of this Agreement, or the
application of any provision to any Person or circumstance, shall be held
invalid, illegal or unenforceable, then the remainder of this Agreement, or the
application of that provision to Persons or circumstances other than those with
respect to which it is held invalid, illegal or unenforceable, shall not be
affected thereby.

      21.7  PREVIOUS AGREEMENTS. This Agreement shall supersede all previous
agreements of the parties to this Agreement with respect to the matters to which
this Agreement pertains other than the Franchise Agreement. In the event of a
conflict between this Agreement and the Franchise Agreement, the terms of the
Franchise Agreement shall prevail.

      21.8  CERTIFICATES. Shares in the Partnership may be evidenced by
certificates.

                                       29


      21.9  ENFORCEMENT. In the event of a breach or threatened breach by a
Partner or the General Partner of any of the provisions of this Agreement, the
Partnership shall be entitled to obtain a temporary restraining order and
temporary and permanent injunctive relief without the necessity of proving
actual damages by reason of such breach or threatened breach, and to the extent
permissible under the applicable statutes and rules of procedure, a temporary
injunction or restraining order may be granted immediately upon the commencement
of any such suit and without notice. Nothing in this Agreement may be construed
as prohibiting the Partnership from pursuing any other remedy or remedies,
including without limitation, the recovery of damages. The Partnership shall
have the right to set off any such damages against any amounts otherwise payable
by it to the Partner or the General Partner under this Agreement or otherwise.
Each Partner and the General Partner further covenants and agrees to indemnify
and hold the Partnership harmless from and against all costs and expenses,
including legal or other professional fees and expenses incurred by the
Partnership in connection with or arising out of any proceeding instituted by
the Partnership against the Partner or the General Partner to enforce the terms
and provisions of this Agreement if the Partnership is successful in whole or in
part in such proceeding.

      21.10 SCOPE. If any one or more of the provisions of this Agreement shall
for any reason be held to be excessively broad as to time, duration,
geographical scope, activity, or subject, each such provision shall be
construed, by limiting and reducing it, so as to be enforceable to the extent
compatible with applicable law then in force.

      21.11 NO WAIVER. No waiver by any party to this Agreement at any time of a
breach by any other party of any provision of this Agreement to be performed by
such other party shall be deemed a waiver of any similar or dissimilar
provisions of this Agreement at the same or any prior or subsequent time.

      21.12 AMENDMENTS. Any amendments to this Agreement or the Certificate of
Limited Partnership shall be in writing and shall be approved by Partners
holding more than 50% of the Participating Percentages, except that any
amendment materially affecting the rights or obligations of any group of
Partners shall require the consent of the holders of more than 50% of the
Participating Percentages of such Partners.

      21.13 NO THIRD PARTY BENEFICIARY. The rights of the General Partner under
Sections 16.11 through 16.13 may be assigned to the Public Company. Except for
the Public Company, it is specifically agreed between the parties executing this
Agreement that it is not intended by any of the provisions of the Agreement to
make the public, or any Partner thereof, a third party beneficiary under this
Agreement, or to authorize anyone not a party to this Agreement to maintain a
suit for damages pursuant to the terms or provisions of this Agreement. The
duties, obligations, and responsibilities of the parties to this Agreement with
respect to third parties shall remain as imposed by law.

      21.14 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

                                       30


      21.15 PARTITION. The Partners agree that the Partnership's assets are not
and will not be suitable for partition. Accordingly, each of the Partners
irrevocably waives any and all right such Partner may have to maintain any
action for partition of any of the Partnership's assets. No Partner shall have
any right to any specific assets of the Partnership upon the liquidation of, or
any distribution from, the Partnership.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

                                   "GENERAL PARTNER"
                                   TEXAS ROADHOUSE HOLDINGS LLC


                                   By: WKT Restaurant Corp., its Manager


                                   -----------------------------------------
                                   By:
                                      --------------------------------------

                                       31


                    ANNEX A TO LIMITED PARTNERSHIP AGREEMENT

                             (as of _______________)



   PARTNER NAME AND ADDRESS       CAPITAL CONTRIBUTION    SHARES    CAPITAL ACCOUNT
- -----------------------------------------------------------------------------------
                                                           
GENERAL PARTNER                                            100
Texas Roadhouse Holdings LLC
6040 Dutchmans Lane, Suite 400
Louisville, KY  40205

LIMITED PARTNERS
Texas Roadhouse of Texas, LLC
6040 Dutchmans Lane, Suite 400
Louisville, KY 40205


                                       32


                               SIGNATURE PAGE FOR
                        LIMITED PARTNERSHIP AGREEMENT OF


                      ------------------------------------


                      ------------------------------------


                      ------------------------------------


                      ------------------------------------

                                       33




                                                        PERCENTAGE
                                                            OF         ACTUAL          PERCENTAGE OWNED BY
                                      RESTAURANT         HOLDINGS'   MANAGEMENT        EXECUTIVE OFFICERS,
ENTITY NAME                           LOCATION           INTEREST   FEE CHARGED     DIRECTORS & 5% STOCKHOLDERS
- ---------------------------------------------------------------------------------------------------------------
                                                                                 
Roadhouse of Longmont, LLC            Longmont, CO           5%        0.5%                  47.5%

Texas Roadhouse of Hiram, LLC         Hiram, GA             10%          2%                    90%

Texas Roadhouse of Marietta, LLC      Marietta, GA          10%          2%                    90%

Texas Roadhouse of Everett, LLC       Everett, MA            5%        0.5%                    61%

Texas Roadhouse of Billings, LLC      Billings, MT           5%        0.5%                    57%

Texas Roadhouse of Brownsville, Ltd.  Brownsville, TX        5%        0.5%                    90%

Texas Roadhouse of Port Arthur, Ltd.  Port Arthur, TX        5%        0.5%                    93%

EX-23.2

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Exhibit 23.2

Consent of Independent Registered
Public Accounting Firm

The Manager of
Texas Roadhouse Holdings LLC and Entities Under Common Control

        We consent to the use of our report included herein and to the reference to our firm under the headings "Experts," "Summary—Summary Historical and Pro Forma Combined Financial and Operating Data—Historical Combined Financial and Operating Data" and "Selected Historical and Pro Forma Combined Financial and Operating Data—Historical Combined Financial and Operating Data" in the prospectus. Our report refers to the adoption of the provisions of the Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," in 2002.

/s/  KPMG LLP     
Louisville, Kentucky
July 19, 2004

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Exhibit 23.2

Consent of Independent Registered Public Accounting Firm