NASDAQ_TXRH_2019

F-2

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates
to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way
our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.

Assessment of potential indicators of impairment of long-lived assets

As discussed in Notes 2 and 16 to the consolidated financial statements, the Company assesses long-lived assets

related to restaurants held and used in the business, including property and equipment and right-of- use assets,

for impairment whenever events or changes in circumstances indicate that the carrying amount of a restaurant

may not be recoverable. Trailing 12-month cash flows under predetermined amounts at the individual restaurant

level are the Company’s primary indicator that the carrying amount of a restaurant may not be recoverable. The

property and equipment, net of accumulated depreciation, balance as of December 31, 2019 was $1.06 billion,

or 53% of total assets. The operating lease right-of-use asset, net, balance as of December 31, 2019 was $500

million, or 25% of total assets.

We identified the assessment of the Company’s determination of potential indicators of impairment of long-

lived assets as a critical audit matter. There was subjectivity in identifying events or circumstances indicating

the carrying amount of an asset group may not be recoverable, including the determination of the cash flow

thresholds and the period of cash flows utilized to identify a potential impairment trigger.

The primary procedures we performed to address this critical audit matter included the following. We tested

certain internal controls over the Company’s process to determine and identify potential indicators of

impairment. We evaluated the cash flow thresholds and the period of cash flows utilized by the Company to

identify a potential impairment trigger. We tested that those restaurants with trailing 12-month cash flows were

evaluated for potential impairment triggers and we compared the trailing 12-month cash flows to historical

financial data. We assessed other events and circumstances that could have been indicative of a potential

impairment trigger.

/s/ KPMG LLP

We have served as the Company’s auditor since 1998.

Louisville, Kentucky
February 28, 2020