EMPLOYMENT AGREEMENT

Exhibit 10.16

Execution Version

EMPLOYMENT AGREEMENT
(Steven L. Ortiz)

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of December 26, 2007 by and between TEXAS ROADHOUSE, INC., a Delaware corporation (the "Company"), and STEVEN L. ORTIZ, a resident of the State of Texas ("Executive").

RECITALS

        A. The Executive is currently the Chief Operating Officer of the Company.

        B. The Company desires to continue the employment of Executive, and Executive wishes such employment as Chief Operating Officer of the Company, to be governed by the terms and conditions set forth in this Agreement.

AGREEMENT

        NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Executive set forth below, the Company and Executive, intending to be legally bound, agree as follows:

•         1.     Effective Date.     The terms and conditions of Executive's employment hereunder shall become effective upon December 26, 2007 (the " Effective Date ").

          2.     Employment.     Subject to all the terms and conditions of this Agreement, Executive's period of employment under this Agreement shall be the period commencing on the Effective Date and ending on January 7, 2011 (the " Third Anniversary Date "), which term, unless otherwise agreed to by the parties, shall be extended on the Third Anniversary Date and on each anniversary of that date thereafter, for a period of one year thereafter (which term together with any such extensions, if any, shall be hereinafter defined as the " Term "), unless the Executive's employment terminates earlier in accordance with Section 9 hereof. Thereafter, if Executive continues in the employ of the Company, the employment relationship shall continue to be at will, terminable by either Executive or the Company at any time and for any reason, with or without cause, and subject to such terms and conditions established by the Company from time to time.

          3.     Position and Duties.     

          (a)     Employment with the Company.     While Executive is employed by the Company during the Term, Executive shall be employed as the Chief Operating Officer of the Company, and such other titles as the Company may designate, and shall perform such duties and responsibilities as the Company shall assign to him from time to time, including duties and responsibilities relating to the Company's wholly-owned and partially owned subsidiaries and other affiliates.

          (b)     Performance of Duties and Responsibilities.     Executive shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment with the Company hereunder. While Executive is employed by the Company during the Term, Executive shall report to the Chairman of the Company or to such other person as designated by the Board of Directors of the Company (the " Board "). Executive hereby represents and confirms that he is under no contractual or legal commitments that would prevent him from fulfilling his duties and responsibilities as set forth in this Agreement. During his employment with the Company, Executive shall not accept other employment or engage in other material business activity, except as approved in writing by the Board. Executive may participate in charitable activities and personal investment activities to a reasonable extent, and he may serve as a director of business organizations as approved by the Board, so long as such activities and directorships do not interfere with the performance of his duties and responsibilities hereunder.

•         4.     Compensation.     

          (a)     Base Salary.     While Executive is employed by the Company during the Term, the Company shall pay to Executive a base salary at the rate of Four Hundred Sixty Thousand and no/100 Dollars ($460,000) per fiscal year, less deductions and withholdings, which base salary shall be paid in accordance with the Company's normal payroll policies and procedures. If the Executive's employment is extended beyond the Third Anniversary Date as provided in Section 2, then on or after the Third Anniversary Date, and annually thereafter, the Executive's base salary may be reviewed by the Compensation Committee of the Board to determine whether it should be increased.

          (b)     Incentive Bonus.     Commencing with the first full fiscal quarter of the Company's 2008 fiscal year and for each full fiscal quarter thereafter that Executive is employed by the Company during the Term, Executive shall be eligible for an annual incentive bonus, to be paid on a quarterly basis, based upon achievement of defined goals established by the Compensation Committee of the Board and in accordance with the terms of any incentive plan of the Company in effect from time to time (the " Incentive Bonus ").

  •           (i)  The level of achievement of the objectives each fiscal quarter and the amount payable as Incentive Bonus shall be determined in good faith by the Compensation Committee. Any Incentive Bonus earned for a fiscal quarter shall be paid to Executive on or before the 90 ^th  day following the last day of such fiscal quarter.

             (ii)  Subject to the achievement of the goals established by the Compensation Committee, as determined by the Compensation Committee, in fiscal year 2008, Executive shall be eligible for an annual target incentive bonus of $400,000. In fiscal year 2009, Executive shall be eligible for an annual target incentive bonus of $420,000. In fiscal year 2010, Executive shall be eligible for annual target incentive bonus of $441,000. Executive's eligibility for the increased target incentive bonus amounts in fiscal years 2009 and 2010 shall be conditioned upon an appropriate increase in the goals to be achieved each year, as determined by the Compensation Committee. If the Executive's employment is extended beyond the Third Anniversary Date as provided in Section 2, then on or after the Third Anniversary Date, and annually thereafter, the Executive's annual target incentive bonus may be reviewed by the Compensation Committee of the Board to determine whether it should be increased.

          (c)     Restricted Stock Awards.     

  •           (i)  Pursuant to Section 7 of the Texas Roadhouse, Inc. 2004 Equity Incentive Plan (the " Equity Incentive Plan ") in place on the Effective Date, on January 7, 2008 the Executive shall be granted a stock bonus award whereby the Executive has the conditional right to receive upon vesting 175,000 shares of the Company's Class A common stock (" Restricted Stock Units "), provided this Agreement has been fully executed by both the Executive and the Company. If it has not been fully executed by January 7, 2008, the Restricted Stock Units will be granted to the Executive on the date it is fully executed.

             (ii)  The Restricted Stock Units shall vest in four equal installments as follows provided the Executive continues to provide services to the Company, as provided in the Equity Incentive Plan, on such dates:

2

• •         The Restricted Stock Units award shall be evidenced by a separate stock bonus agreement as provided in Section 7(a) of the Equity Incentive Plan and shall incorporate by reference or otherwise the substance of the terms and conditions of Section 7(a) of the Equity Incentive Plan.

            (iii)  In the event of a termination of Executive's Employment by the Company other than for Cause (as defined below) or in the event of termination by Executive for Good Reason (as defined below) within 12 months following a Change of Control (as defined below), or prior to a Change of Control at the direction of a person who has entered into an agreement with the Company, the consummation of which will constitute a Change of Control, and contingent upon Executive's execution of a full release of claims in the manner set forth in Section 10(h), the Restricted Stock Units and all other options or stock awards granted under any stock option and stock incentive plans of the Company that are outstanding as of the date of termination shall become immediately vested, and in the case of stock options, shall immediately become exercisable in full and shall remain exercisable until the earlier of (A) two years after termination of Executive's employment by the Company or (B) the option expiration date as set forth in the applicable option agreement.

            (iv)  A " Change of Control" shall mean that one of the following events has taken place at any time during the Term:

    •         (A)  The stockholders of the Company approve one of the following:

      •          (I)  Any merger or statutory plan of exchange involving the Company (" Merger ") in which the Company is not the continuing or surviving corporation or pursuant to which the Common Stock, $0.001 par value (" Common Stock ") would be converted into cash, securities or other property, other than a Merger involving the Company in which the holders of Common Stock immediately prior to the Merger have substantially the same proportionate ownership of common stock of the surviving corporation after the Merger; or

                (II)  Any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company or the adoption of any plan or proposal for the liquidation or dissolution;

              (B)  During any period of 12 months or less, individuals who at the beginning of such period constituted a majority of the Board of Directors cease for any reason to constitute a majority thereof unless the nomination or election of such new directors was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period;

              (C)  A tender or exchange offer, other than one made by:

      •         (I)   the Company, or by

                (II)  W. Kent Taylor or any corporation, limited liability company, partnership, or other entity in which W. Kent Taylor (x) owns a direct or indirect ownership of 50% or more or (y) controls 50% or more of the voting power (collectively, the " Taylor Parties ")

      is made for the Common Stock (or securities convertible into Common Stock) and such offer results in a portion of those securities being purchased and the offeror after the consummation of the offer is the beneficial owner (as determined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the " Exchange Act ")), directly or indirectly, of securities representing in excess of the greater of (a) at least 20 percent of the voting power of outstanding securities of the Company or (b) the percentage of the voting power of the outstanding securities of the Company collectively held by all of the Taylor Parties; or

3

• • •         (D)  Any person other than a Taylor Party becomes the beneficial owner of securities representing in excess of the greater of (i) 20 percent of the aggregate voting power of the outstanding securities of the Company as disclosed in a report on Schedule 13D of the Exchange Act or (ii) the percentage of the voting power of the outstanding securities of the Company collectively held by all of the Taylor Parties.

            Notwithstanding anything in the foregoing to the contrary, no Change of Control shall be deemed to have occurred for purposes of this Agreement by virtue of any transaction which results in Executive, or a group of persons which includes Executive, acquiring, directly or indirectly, securities representing 20 percent or more of the voting power of outstanding securities of the Company.

             (v)  A termination by Executive for "Good Reason" shall mean a termination based on:

    •         (A)  the assignment to Executive of a different title or job responsibilities that result in a substantial decrease in the level of responsibility from those in effect immediately prior to the Change of Control;

              (B)  a reduction by the Company or the surviving company in Executive's base pay as in effect immediately prior to the Change of Control;

              (C)  a significant reduction by the Company or the surviving company in total benefits available to Executive under cash incentive, stock incentive and other employee benefit plans after the Change of Control compared to the total package of such benefits as in effect prior to the Change of Control;

              (D)  the requirement by the Company or the surviving company that Executive be based more than 50 miles from where Executive's office is located immediately prior to the Change of Control, except for required travel on company business to an extent substantially consistent with the business travel obligations which Executive undertook on behalf of the Company prior to the Change of Control; or

              (E)  the failure by the Company to obtain from any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company (" Successor ") the assent to this Agreement contemplated by Section 13(g) hereof.

          (d)     Benefits.     While Executive is employed by the Company during the Term, Executive shall be entitled to participate in all employee benefit plans and programs of the Company that are available to executive officers generally to the extent that Executive meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any particular employee benefit plan or program, and Executive's participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.

4

•         (e)     Expenses.     While Executive is employed by the Company during the Term, the Company shall reimburse Executive for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by him in the performance of his duties and responsibilities hereunder, subject to the Company's normal policies and procedures for expense verification and documentation.

          (f)     Vacations and Holidays.     Executive shall be entitled to be absent from his duties for the Company by reason of vacation for a period of four weeks per calendar year. Executive shall coordinate his vacation schedule with the Company so as not to impose an undue burden on the Company. In addition, Executive shall be entitled to such national and religious holidays as the Company shall approve for all of its employees from time to time.

          5.     Affiliated Entities.     As used in this Agreement, " Company " shall include the Company and each corporation, limited liability company, partnership, or other entity that is controlled by the Company, or is under common control with the Company (in each case "control" meaning the direct or indirect ownership of 50% or more of all outstanding equity interests), provided, however , that the Executive's title need not be identical for each of the affiliated entities nor the same as that for the Company.

          6.     Confidential Information.     Except as required in th