Cheesecake Factory Incorporated Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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👉 More detailed insights
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Is Cheesecake Factory Incorporated a Top Scorer Stock based on the Dividend, High-Growth-Investing or Leverman Strategy?
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $4.80b | Revenue (TTM) = $3.88b
Market Cap = $4.80b | Estimated Revenue = $4.09b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $5.17b | Revenue (TTM) = $3.88b
Enterprise Value = $5.17b | Forward Revenue = $4.09b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
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Cheesecake Factory Incorporated Stock Analysis
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27 Analysts have issued a Cheesecake Factory Incorporated forecast:
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Barclays 19th Annual Global Consumer Staples Conference
11 days ago
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Cheesecake Factory Incorporated — Barclays 19th Annual Global Consumer Staples Conference
1. Question Answer
Good morning, and thank you for joining us. My name is Jeff Bernstein, and I'm the Restaurant and Food Service Distribution Analyst at Barclays.
I did recently pre-announce my plans to retire, which is actually happening at the end of this month. So I guess I'm the official outgoing analyst with the next analyst still to be named, but it's bittersweet, I guess they threw me a party to say goodbye. So this is great.
But I want to welcome all to Day 1 of our 19th Annual Global Consumer Conference. And I think even more importantly, this is the first year where we have combined our two consumer conferences. So we've got the Back-to-School Consumer Staples Conference, which has historically held this spot, and we have our Eat, Sleep, Play, Shop Consumer Discretionary Conference.
So within my world, we have 14 Restaurant and Food Service Distributors here with us. That's the most we've ever had. I think the combination of Staple and Discretionary is going to work really well. Of those today, we have Cheesecake, BJ's Restaurants and Kurasushi. Tomorrow, we have Bloomin' and Dine Brands and First Watch Restaurant Brands, Sysco, Texas Roadhouse, Wendy's, U.S. Foods, Yum! and Wingstop. And then day 3 all by themselves, we have Performance Food Group.
We hope you find the next 3 days a good use of time and we get to chat in the hall between meetings. But at this point, I'd love to introduce our first presenting restaurant company, which is the Cheesecake Factory. So with us on stage this morning from Calabasas Hills, California, we have Matt Clark, to my immediate right. He's the CEO. We have Etienne Marcus, to his right, who's the VP of Finance and IR.
By way of background, if it's possible for those not familiar, the Cheesecake Factory U.S. portfolio is led by 220 or so Cheesecake Factory restaurants and 50 North Italia units, along with 40 flower child fast casual units and they have other brands in their portfolio as well. So it is a portfolio company.
Looking at 2026, and again, we are moving our way through it quite quickly, but their guidance projects total revenues of approximately $4 billion and an updated net income margin of roughly 5.4%. They're opening up to 26 new units this year. That kind of aligns with management's long-term growth for 7% unit growth.
So we want to thank Cheesecake Factory very much for joining us. I will kick it off with some questions. And hopefully, you have a chance to see Cheesecake if not now, but otherwise throughout the whole of today. So, thank you very much for joining us this morning as our first restaurant company here.
Well, thank you for having us, and thank you for being a great partner for many years. We wish you only the best as you move to the next part of your journey.
Thank you. I'll still be visiting Cheesecake. So we'll never be apart.
I guess, for life.
I guess, for life. So I had a couple of broader consumer discretionary questions because I think you have a pretty good look at what's going on with the consumer. And I'd love to just start with that maybe the health of the consumer broadly and maybe by cohort. Just wondering like what do you even look at to assess and whether you see any change in trend, whether it's by age group or by income or by ethnicity, like how you would assess the current environment?
Well, I think for our namesake concept as well as the rest of our portfolio, it's been strong, right? I think that the consumer has money to spend maybe they're a little bit more discerning with where they spend it. And so you've got to execute well. You've got to meet them where they're at with the value proposition for whatever that means for you, right? Obviously, with Cheesecake Factory, part of that is the large portions, for example, you still have to have price points that matter, though.
So I think it is a winnable scenario, albeit not easy. We do track a lot of data and we, I think, have a benefit of having multiple types of concepts in many geographies. We do see ourselves continuing to attract, I think, importantly, younger guests. So I know there's been some concern about that cohort, for example, but particularly with the launch of our Apple Cheesecake factory earlier this year as well as some of the social media that we've been doing, we know we're bringing in new younger guests as well as continuing to refill the funnel across the broad demographic. So I think it's steady.
I think there's market share to be had, but I think that restaurants in general, are performing as well as any consumer sector and probably casual dining better than most as I think what guests are really looking for is experiences. And we provide great experiential dining opportunities for people to come together and have a little escape from life and our own recent research points directly to that.
That's great and very encouraging, obviously. And as you think about the broader restaurant industry, there's always talk of the battle between food at home and now we're with our Staples brethren right upstairs. So I won't speak too loud, but versus food-away-from-home, we've always said that food-away-from-home is going to continue to take share from food-at-home. But do you think the most recent value focus across the industry has given that upper hand to food-away-from-home or often, we hear the Staple sale, people are trading down into food-at-home at this point.
Yes. I think -- I mean we like to believe that we're more staple like than we've ever been before, right? If you look at the long-term trends of where consumers are spending their share of wallet, that continues to increase for food-away-from-home, we joke about the fact that people don't know how to cook anymore. But they also grew up watching the food channel and all of those attributes about socialization, you even see that in mall traffic today that the younger guests want to go back to the mall to have those social events.
So I think there's multiple contributing factors. I think you're right, Jeff, on the value piece, A lot of that is optics, but that first view that a guest might have to say, can I afford to go out to? I feel like the company is respecting my price points, they usually trade up right? But it's about making sure that the choice is -- the consumer has that choice when they come into our restaurants as they can decide, do they want to have a piece of Cheesecake or do they just want to have a salad and the free bread, and that's their choice for that day. So I think value has been important. But I also think there's a huge experiential component that's also continuing to go on and publicly grow.
Yes. right. In terms of -- and you've been in the seat for quite a while, investor misunderstanding, like, what questions do you get, whether it's today or over the past year that surprises you, whether it's or questions that you don't get that you say, you know what, you should be asking about this aspect of our business. Like what surprises you either way?
Well, I think the biggest surprise, if you go back a year or 9 months, when we're in the middle of a government shutdown and traffic was pressured. It was about where is the recovery? Can you get to positive traffic. And now I would say it is surprising in my long tenure here. The question is, well, how much traffic can you get and how sustainable is it, right? And so the dynamic has completely shifted. And I think a lot of that is what we're doing and a little bit of that is some spark from social media. And so they want to understand our investors want to understand how much of it is in your control, where can it be in the future?
And all of the attributes around sort of the growth algorithm sort of permanently shifting to the upside, and we certainly see that in some of the investor response to the stock. So I think that's great and it's a different platform. And I think that we're also getting many, many questions around Flower Child, and you brought them up. And certainly a tremendous growth opportunity for the company. And what may be investors, they probably understand but underappreciate is that we're only going to grow at the pace that makes sense for us for Flower Child, whether that's from a site selection perspective, or a labor perspective that we want to have the right management teams in place. And so I think we're continuously reeducating. Wall Street just loves growth, and we want to make sure that it's quality growth.
On the Flower Child results, well, you probably don't get too many -- pretty many questions about it. Were incredible recently. So congratulations. Anything to mention on the GLP-1 topic, I mean, again, we're with staple investors and just more and more people who are on some sort of version of it to help them reduce calorie counts. And I would think that Cheesecake would say, well, probably the most vulnerable considering we have such abundant portions and delicious Cheesecake. Are you getting more questions? Do you think there's more concern ahead? Or how are you positioned?
Well, you would remember, you were around when calorie counts went on the menu in the first place. And everybody, so that was the demise of Cheesecake Factory back then, right? And in fact, all we've seen is the order rate of Cheesecakes go up over time. And again, what our research says and what we read sort of more generically as well, is that guests choose how to allocate not only their money, but their calories. And maybe they're going to skip a couple of snacks, but they're going to save those calories up because when they go out on Thursday night to the Cheesecake Factory, they want to have the full experience.
So many of you might know, we have a SkinnyLuscious menu, which is probably as big as many restaurants total menu, and it's all under 590 calories. I think that would be a good indicator. If we thought our guests was skewing more towards low cal smaller portions. But in fact, it's about the same percentage of sales as it always has been. So we don't think that for our occasions, that's a big component of how our guests decide to spend their money and consume the Cheesecake Factory.
All right. Lastly, just from a bigger picture perspective, as we are now in September, I'm sure you guys are thinking about calendar '27. Is there something in particular that you'd say that this is the next big exciting thing going at Cheesecake Factory, whether it's front of house, back of house or AI or just like what's the topic du jour as we look to next year?
Well, I think we have some fun and interesting add-ons to our existing programs, whether it's menu innovation, the rewards program or the app that we feel like will continue to fuel and sustain the comp growth we've seen at Cheesecake Factory. But in our historical approach, we're not going to tell anybody about those. But they're in the pipeline. I think the thing that's exciting, too, is that we will step up Flower Child growth. I think it will be a meaningful step up probably into that 20% to 25% growth range that investors are looking for. We feel great about where that pipeline is. So we've got a real clear road map for continued value creation for our investors.
Got you. Matt, as we think about specifics kind of diving in, I mean, the comp growth, and I think it was past quarter was close to 6% comps, which is incredible for a company that usually can't get into the restaurant to be able to drive that with close to 3 points of traffic, and I think you said trends accelerated into the third quarter when you shared that with us.
So not to say you're necessarily going to -- I don't want any comments, but the third quarter, if you can't provide that. But anything you would say are key drivers, whether it's I mean I think you talked about operations and staff retention, culinary, like how would you prioritize what has been the biggest drivers of your most recent acceleration?
Okay. Well, I would say, we believe that we are more in control of our ability to drive traffic and ticket than we have been in quite a while. I think that the overall marketing program, if you dial back 3 years when we launched rewards, it was a tipping point for us to spend and invest more, but also to get the data and to connect with our guests. And so we've continued to move that program forward. We've heightened that with the app this year, which gives us a whole other level. And it also engages the guest more. We're seeing rewards pick up. We're seeing engagement at the 30- and 60- and 90-day critical time marks for a new gas increase.
So all of those things are positive. And we've really integrated that with the two foundational components of our company. which is operational excellence and menu innovation. And so we're more willing to talk about the menu today, and we're more willing to engage in social media today and have a more confident and playful tone with the way that we're going about that, we're talking about things like more is more, right, we're embracing the large portions we're showing ginormous pieces of chocolate cake, which are then getting picked up on social media and then we're engaging with them. And so I think that, that third leg of the stool is really kind of a new story for Cheesecake Factory to figure it out, to embrace that and to propel the other two sort of core components. And I think that's what's making the difference.
I know Cheesecake has always kind of taken a slow and steady approach to these new initiatives saying, let's wait and see how they go, and then we don't get a lot of data on them in the early days, which has there been any the concerns you had about any of those things have any of those actually come to fruition? Or thus far, have all of your newer technology initiatives played out the way you would have expected?
Maybe better I think that it's always hard to know going into it. When we did the rewards program, we did a lot of research. I mean, we're big on data. And we wanted to understand what was working and what wasn't working for the guests. And the #1 thing that our guests told us was, well, you should have an app. And we felt like pre-COVID that maybe the casual dining wasn't ready for it, but that coming out of it, that the sort of digital natives really did want that and they would use the space on their phone for an app for some place that they're going to go once a quarter, which is kind of interesting.
And so it was about this time last year, we said, okay, we just got the research back and Rewards is going well, but we need that sort of spark and we said we want to have an app in 6 months and the development team went to work, and we launched it. And it was way better than we thought and the adoption and the engagement piece of that. So I think that in addition to sort of our new approach to media combined has been really the spark to the flywheel.
That's great. You haven't shared any metrics specific to app specific or along those lines?
We have not. We have not. Maybe in the future, but my IR team tells me probably not yet, they're shaking their heads.
Yes. Okay. The other big driver of top line, presumably even bigger if you can get 7% unit growth, although your comp growth have been coming close. So that's great to have a race there. But -- so I think you said 26 new units this year, kind of that 7% long-term target. I think you just said you can get into the 25% range for Flower Child that only 40 or so units. But 10 units on 40, that's a lot of unit growth. I'm just wondering where each brand fits. It sounds like Flower Child is the lead horse, but how you think about the positioning of each brand and what it takes to move to the top of the list in terms of how many units they could get?
Well, Flower Child certainly has the best unit economics, right? So in terms of disciplined capital allocation, that's our #1 priority. It's about a 33% cash on cash. It's got the largest TAM. It fits in any geography, smaller cities, bigger cities. We know that when we densify what we've done in Dallas and Phoenix. The performance is actually better because awareness has increased. So that sits at the top. If you really think about sort of Cheesecake Factory, it's going to be 5 or so units, plus or minus a year, sort of as a more mature vehicle, but we'll open as many as we can. There are great sites, we'll go there.
And the risk profile of opening a Cheesecake Factory is very, very low, right? So from a returns perspective, we know exactly what we're going to get. North has had a little bit of a bumpier ride with comps. We're reinvesting in that concept. We believe in the long term. The last three openings have been the strongest that we've ever had, and we continue to learn and develop and find space for that. So we'll continue to maybe slow that down a little bit next year as there are some trade-offs. And then we continue to test portability of a couple of the Fox concepts that we really like, the Henry and Culinary Dropout. And so we've got a very good overall runway for the next 2 to 3 years, probably the strongest real estate road map that we've had.
Right for those that aren't as familiar with Flower Child, the 32nd pitch on that is fist-casual (sic) [ fast-casual ], but fully customized for exactly what you want.
Yes, we like to call it the Cheesecake Factory fast-casual, right? So it's not an assembly line. It's a scratch kitchen, and you can see it being made when you go in there. And it's got a huge defensible moat because not only does it have the price point of fast-casual, the breadth of the menu, it's got to vibe in the restaurant. So if you think about the 4 quadrants of business potential, it's pretty evenly split. We're about a little over 40% dinner versus a little under 60% lunch, which for fast-casual is very differentiated. We're just about evenly split off-premise and on-premise, which was also incredibly differentiated. And so we really think that there's the same store as Cheesecake Factory. We compete against everybody and nobody. And so it's a great value proposition. We find that it's also very friendly for families. You can get something healthy for your kids that taste great as well, and you can get it to go or you can go there.
Just to go back to flower Child a little bit on the growth. I think the other area that we've been focused on to make sure that we're ready for the 25% growth is we've been investing in the real estate team, making sure that we have a healthy pipeline, which we feel pretty good about. The other piece is on the operational side, making sure that we have management ready. That's the gating factor for that concept in terms of how fast we can grow. And so we've been ensuring that we have a good pipeline of managers and so that we're ready to execute on that higher level of growth.
If there was ever a downside, I feel like when investors are always pushing for more growth. It's just what's too fast? Do you typically take -- I mean you have a big portfolio now do you take managers from a Cheesecake and move it over or you have to develop a Flower Child manager to then move on? Like how do you assure that units is manageable on?
They're typically grown in from the concept right? It is different -- it is a differentiated concept. And so we've been taking people up from the pipeline inside of the Flower Child.
That's great. And then in terms of the restaurant, you actually just mentioned you said it was a bumpier road for North Italia and you're investing in it. So what's the biggest -- what have you found to be the biggest -- I mean, when you're big brother is Cheesecake Factory, I'm sure North Italia has big shoes to fill. But like what's been the biggest challenge that you see you can overcome in the short and long term?
Well, I think coming out of the hyperinflation post-COVID that we all took pricing and we took pricing at North a little bit later, but in the last couple of years, it was elevated. And I think that, in general, what we've seen is consumers, again, as we talked about what's Cheesecake and Flower you've got to give them options. You've got to put them in control. We probably across some psychological barriers, and we need to sort of broaden those menus to have some anchor price points and make sure that we're bringing in guests of all cohorts.
The NPS score importantly, at North is about 7 points higher than Cheesecake. So we know that the guests that are going in are having a great experience. But as an example, we'll roll out a new happy hour program, right? We're we can compete at a price point that isn't discounting because that's not who we are. But in bringing the guests to experience a North Italia at a price that is affordable for anybody. And then if we win them over, maybe they'll come back for one, two dinner in a different time period, right? And so we're going to do some menu architecture. And then we're also just going to widen the funnel of some media. So what we've seen at Cheesecake Factory has really been working. We're going to take some of those and really test two pretty big markets but at a measurable higher spend.
It seems like that was always what Cheesecake, it was never going to be a national advertised brand. Do you ever do any connect the dots for consumers, the Cheesecake-North Italia, same family?
We really don't. Because we really want North to be more believed those to be your local Italian restaurant, right? And so there's a cohort that loves chains because of the consistency and the predictability. And there's a cohort that wants to go to some place that nobody has discovered. And so we try to keep the brands separate.
Got it. shifting from the top line to more of the margin and cost side of things. The restaurant margin at the core Cheesecake, I think it reached a decade high approaching like 20% or so. Flower Child in that 20% range as well. How do you think about your primary margin drivers? I mean I think most would dream of 20%, and they'd say, let's just hold 20%, others say, we could go higher than that. So how do you think about whether it's commodities or labor or leveraging your greater sales? Like what's the biggest opportunity on the margin front either for our brand or for the portfolio?
Well, maybe I'll start off with the commodity side and then you can jump in on some of the initiatives too. But I would frame up, inflation is very manageable at this stage. If I just drill into COGS a little bit more. The reality is Cheesecake Factory benefits from the broad basket that we have. And so none of the categories really move us up or down too much and it gets manageable from that standpoint. That said, we're not immune to beef prices, they've been elevated. The good news for us is dairy has really been favorable. And so that's really offset the inflation that comes from beef. We said low single digit for the back half of the year. I think labor has also been very constructive for us. Very stable. Inflation there has been low to mid-single digit for some period of time. And we anticipate that to be about the same here going forward.
So if you take that backdrop, right, we've taken less price this year than last year. And we've reinvested in the menu with lower price points that bring that actual realized price point down another 1 point, 1.5 point. So we're effectively in the eyes of the consumer under 2%. So we'll continue to reinvest in the menu that way. And we've always said, look, if we get to 18% margins for an annualized basis because Q2 is seasonally high, that we'll just invest to drive traffic.
Those margins, I think there's an economic push and pull point. We want to make sure the consumer gets everything they're coming in for. And we have opportunities, right, in our other concepts in North and FRC to bring the aggregate margin up as well as leverage G&A to continue to drive aggregate EBIT margins higher.
Is there a -- like, I think within your long-term guidance is a suggestion for a certain amount of margin expansion every year. In fact, as I think about it, we talk a lot about the restaurant margin, you guys focused a lot on the net income margin. So how do you think about restaurant margin getting to net income margin I guess, presumably from a G&A perspective.
It's about the same, like in totality, if you think about the 4-wall margin improvement of 25 to 36 points a year. that should flow through. Maybe there's a little bit of gain from G&A as well, but then you have a little bit higher tax rate if you're more profitable. So net income margin at the same sort of 25 to 30 basis points.
Got it. And you think, well, you haven't given guidance yet, looking at '27, it doesn't seem like there's a big differential in commodities and labor in that low, maybe mid-single-digit range on both those line items?
I think right now, typically, the contracting season is the fourth quarter. So we're just about to enter that. And as crazy as it seems the U.S. food industry is pretty archaic and it still holds to that sort of annualized process there. I think the one we're watching a little bit more is obviously labor. Which, as Etienne mentioned, has been constructive for us. And I think for the industry as well. But certainly, we're not adding to the labor pool and the political climate right now. And so, we have to make sure we continue with our amazing retention. I think that will be a key important driver as we go forward.
And do you share -- I mean it seems like your retention at Cheesecake in the border portfolio tends to be a competitive advantage of yours. What does that sit relative to the industry and your ability to sustain that industry-leading low turnover?
Yes. I mean we see that through, is it black box or white box or whatever the data set is? Yes, we're best-in-class. Both at the manager and staffing level. We've been sustaining that at that level now. We improved for a couple of years. We got to that level, we're sustaining it. And what we're talking about with investors now is reinvesting in our staff. And discretionary bonus income might be higher in some of those areas where we know that our talent is really looked at and people try to poach all of that. And we're going to make sure that we do what we need to do as comps continue to outperform and we get the flow through going to put some of that back into the business and our people.
Got it. And the menu pricing, I think you touched on that. So it's effectively, it's 2% or less based on the lower-priced menu options and bowls, presumably. And I guess you're seeing that, that's driving value perception that you believe that to be below where the industry is running from a menu pricing perspective at this point.
I just saw a report this week or maybe end of last week that was talking about value perception and we had markedly improved in the past 12 months. And so we know that the guests and the rewards program, they come in and order a bowl, which is under $20, it's bigger portion sizes of fast casual, again, table service, free bread, that they're more likely to come back and order that bowl again or a similar product. So and on the BiTEs, which are roughly $10 mini appetizers as we rolled out numerous legs of that, it's been additive each time. So the guests to really see that as something differentiated. It's fun and it's affordable. And so both of those are really working great.
And presumably, you take some learnings from a Cheesecake value, and that's what you're talking about bringing over to North Italia?
For sure, for sure, exactly. And we know also -- we talk about it, but it's a competitive moat because we have more menu items than anybody. Our competitors don't really want to add another category with 20 items again, right? So we know it's not easily replicated.
I don't know if we could bring investors into the kitchen. I mean I've been into a Cheesecake Factory Kitchen. I cannot believe, it could generate $13 million, $14 million of volume in our restaurant, well scratch cooking is incredible.
If they put on a chef coat.
What?
If they put on a chef coat.
I think they do. Busy season comes. But in the corporate cost, so the G&A, I think it's as a percentage of sales, the leverage opportunity there. We didn't talk about AI, but everyone would like to bring it up. I'm assuming you're going to take a slower approach to AI as you might have taken with other things. But what do you think is the opportunity for economies of scale across the brands from a G&A perspective.
Well, I think the most important part for us is the growth right? And so as we've ramped up the comp on Cheesecake Factory, as we continue to accelerate the unit growth, our top line outlook is improving. And so we will get the leverage. We've talked about been a little bit elusive because of the growth piece of it, but I think we feel really confident in the next couple of years to achieve that mark just on leverage alone.
I think AI is in the early innings. We are looking at some places. I think marketing is one which may not be a savings, but more an efficiency driver and a productivity driver. That's the flywheel, get more comps coming in the door. We're looking at a big project with supply chain. There's probably some opportunities there. When we think about like true back of house, whether it's HR, finance, et cetera, I think that's where we'll look to say, can we just hold head count hold expenses flat and grow, right, and get some efficiencies with that. But that will take a little bit more time. Ultimately, we're still not that big of a company when you think about the G&A infrastructure.
In the marketing, I know without -- not necessarily national, but what does that marketing sit? And how much -- it seems like it's proven to be quite effective for you. So where do you think that marketing spend or however you think about it goes over the next few years?
Yes, it's been growing a little bit from the past couple of years as we've invested into the rewards program and some of the social media investments as well. I think today, we're sitting for Cheesecake Factory at about 1.2%. At this stage, that's sort of how we're thinking about going forward. That said, if these investments continue to reap benefits and drive traffic, there is a chance that maybe we'll evaluate that and maybe increase it a little bit reinvest back into that.
I guess it's a good problem to have. The confidence level that if you ratchet up marketing, it drives more traffic. I would think a Cheesecake operator would say hold up, we've got a lot of traffic. So how do you balance can you handle a lot more traffic? Or is there certain ways to market it to come in at different times of the day or different days of the week to kind of balance it out better.
Well, I think with the rewards program, that's what we're doing, right? We're trying to drive traffic into those dayparts, where we have more capacity. That said, the reality is if we look pre-pandemic, our traffic today on-premise is probably down 10% to 15% from where it was. And so there is growth there is capacity to be had, and we can always build shoulders. Look, we have stores today or restaurants today that are doing $16 million, $18 million in average footprint, and our system average is $12.5 million, $13 million. So there's capacity. So good problem to have.
So traffic could be down 10% -- and restaurant traffic would be down 10% to 15% as a system on average from its peak and you're comping and your AUVs. So we just forget the pricing component of it, I guess, on the to-go mix or whatnot, but that's a tremendous opportunity if your traffic is still down 10-plus percent.
And at this point, we're fully recovered margin, right? And so we're in a good spot overall.
That's great. International doesn't get much discussion. Yet, I know it's been a strong lever for you and there's margin accretion and these now being licensed stores. So it's kind of a different dynamic overseas. But can you talk about the pros and cons, how the international business is going and your outlook over the next couple of years?
Yes. Our partners are great, really doing well, even navigating the Middle East and thriving. And we would love to open more, but we've always said there's two things you have to have for Cheesecake Factory International. You've got to have a lot of money because it's a huge investment and a long horizon. And you've got to have good operations, right? So we typically get inbound one or the other somebody has a lot of money, but they've never opened a restaurant. And we're not interested in taking our resources and going into another country or vice versa.
So we're very happy. It will continue to be like 3 to 4 unit growth kind of pace and the operators are fantastic, but we just haven't found the fourth operator that has the attributes that we're really looking for.
Right? I remember back in the day, it was always a $0.01 per store per year, I believe, was kind of like that. Is there something that you talk about now in terms of what international contributes.
It's probably similar to that. I think that they are comping up and it is on a real detrimental revenue basis. So it's probably increased a little bit over time on those bases, but it's been remarkably consistent for all of them, we are actually 1 of their lead growth initiatives in restaurant space because they really figured out the returns profile. And so again, it's also about real estate. One of the things that happened during COVID is that international real estate was much more challenging than the U.S., particularly in places like China and the Middle East. And so I think as they get their feet underground a little bit, we may see some more projects come up in those two areas. And with Alsea in Mexico, they're really on pace to open 2 or 3 a year.
Got it. And the idea of bringing licensing into the U.S., there's not enough benefit. You're very happy to be domestic company-operated internationalize.
That's right. And it's also control. We want to have that much control over the business. And every facet of it. And so yes, we'll continue to only be domestic company-owned.
So we're not going to see a licensed cheesecake at an airport anytime?
We looked at that model once upon a time. But again, you're giving up control amongst many facets to an operator that could be a couple of miles away from a Cheesecake Factory. And so that's just not something that we were interested in doing. I think we also have tremendous growth opportunities within the portfolio already. And so when we look at the returns and the use of company resources, we've got plenty of irons in the fire.
Right. And then speaking of company resources from a financial perspective, the capital allocation topic, I know you run a little over $200 million in CapEx or at least that's this year's number. Can you talk about the outlook for CapEx on this accelerated growth and how you think about the balance sheet more broadly in that environment of acceleration?
The CapEx today, 2/3 of it is going towards unit growth. And I do probably over time, continue to grow as unit growth, right, come into it with unit growth. Our philosophy is that was being to maintain the fleet, the existing restaurants looking like new. And that's probably about 1/3 of the CapEx. That will continue to be about the same going forward. But I think the free cash flow that we're generating today with the performance is more than going to be able to pay for the increased CapEx over time.
And then the return profile between think dividends, $15 or so million, but share purchases could be pushing $10 million. Like how do you -- what's the discussion like on what's the best use of that capital excess of the CapEx?
Yes. I mean, again, I think that just goes to one more point of. It's a good problem to have that we're analyzing, right? I mean the stock run-up has paused our 10b5-1, the board reevaluates capital allocation on a regular basis. Right now, our sort of goal is to earn into all of those things, and then we'll figure it out. And if we have $250 million of cash on the balance sheet, we'll figure out how to deploy it. But our key objective is to have more restaurants. We could choose one item it has to grow EBITDA over time and maintain a strong balance sheet and plenty of liquidity.
That's great. Well, I think we've exhausted our time, but we wanted to thank everyone in the room and everyone on the webcast for joining us with The Cheesecake Factory this morning. So Matt, Etienne, Ariel and the audience here, thank you very much. Hopefully, you have a great day.
Thank you, Jeff.
Thank you, sir.
Cheesecake Factory Incorporated — Barclays 19th Annual Global Consumer Staples Conference
Management framed a traffic-led recovery driven by rewards/app and social media, with Flower Child set to be the primary growth engine.
🎯 Key Message
- Core thesis: Same-store sales (comps) recovery is being sustained by a stronger value perception, rewards/app engagement and social-media-driven demand.
- Growth focus: Flower Child is prioritized for rapid expansion (targeting ~20–25% unit growth) while Cheesecake Factory openings stay conservative.
- Profit posture: Margins are healthy; company will reinvest incremental gains into marketing, menu and frontline employees to drive more traffic.
📌 Strategic Highlights
- Brand mix: Portfolio includes ~220 Cheesecake Factory restaurants, ~50 North Italia and ~40 Flower Child units; Flower Child has the best unit economics (~33% cash-on-cash return).
- Digital & marketing: Rewards program plus a newly launched app and targeted social media are the primary levers for repeat visits and time-of-day demand shaping.
- Capital allocation: CapEx (~$200M this year) is ~2/3 new units, ~1/3 maintenance; free cash flow expected to fund growth while board evaluates buybacks/dividends.
🔎 New Information
- 2026 snapshot: Management referenced ~ $4.0B revenue and ~5.4% net income margin guidance for 2026 and 26 openings this year.
- Marketing cadence: Cheesecake marketing sits around 1.2% of sales today; app adoption described as "better than expected" but no metrics disclosed.
- International: Slow, license-based growth (3–4 units/year) remains intentional; U.S. expansion remains primary.
❓ Analyst Q&A
- Consumer health: Management sees resilient spending and younger guest pickup; GLP-1 (weight-loss/diabetes drugs) not yet impacting Cheesecake occasions.
- Comp drivers: Priorities are rewards/app engagement, menu innovation and operational execution; social-media visuals helped drive traffic.
- Margins & costs: Commodities manageable (dairy tailwind vs. elevated beef), labor stable; company will trade some pricing for value to sustain traffic.
- Scaling risks: Flower Child growth gated by site pipeline and manager availability; company building real estate and operations capacity.
⚡ Bottom Line
- Investor impact: The story is constructive: traffic-led comps plus scalable fast-casual growth (Flower Child) provide a clear multi-year runway, with disciplined capital allocation and room to reinvest margins into further demand generation. Key risks include labor/commodity shifts and execution of faster Flower Child rollout.
Cheesecake Factory Incorporated — Q2 2026 Earnings Call
1. Management Discussion
Hello, everyone. Thank you for joining us, and welcome to The Cheesecake Factory, Inc. Earnings Call for Q2 of 2026. [Operator Instructions]
I will now hand the conference over to Etienne Marcus, VP of Finance and Investor Relations. Etienne, please go ahead.
Good afternoon, and welcome to our second quarter fiscal 2026 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Matt Clark, our Executive Vice President and Chief Financial Officer.
Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at [email protected] and in our filings with the Securities and Exchange Commission. All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements.
In addition, during this conference call, we will be presenting results on an adjusted basis, which excludes acquisition-related items, impairment of assets and lease termination expenses and other items. Explanations of the use of our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described.
David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our second quarter financial results and provide commentary on our financial outlook before opening the call up to questions. With that, I'll turn the call over to David Overton.
Thank you, Etienne. We delivered an outstanding second quarter with revenue, margins and earnings all exceeding our expectations. Quarterly revenue surpassed $1 billion for the first time, and adjusted diluted earnings per share increased 24% year-over-year. The Cheesecake Factory restaurants led our performance, delivering comparable sales growth of 5.8% and positive traffic.
Our strong top line sales this quarter reflect disciplined execution across our restaurants. As a result, traffic trends improved, and we captured market share. The increase in sales, along with gains in labor productivity and food efficiency drove solid flow-through, increasing The Cheesecake Factory's restaurant level margin to 20%, its highest level in a decade.
One of the key drivers of this momentum has been the positive response to our recent menu additions, demonstrating the strength of our culinary innovation. Our new offerings highlight the breadth and relevance of our menu, helping to drive frequency, attract new guests and reinforce value through innovation rather than discounting. Later this week, we will celebrate National Cheesecake Day with the debut of our Brownie Crunch Choc-a-Lot Cheesecake. We're especially excited about this year's flavor and believe it will resonate well with our guests.
Turning to development. We opened four restaurants during the second quarter, including two North Italia locations, a Flower Child and a Henry. Subsequent to quarter end, we opened one Cheesecake Factory location. We remain on track to open as many as 26 restaurants this year, consistent with our longer-term objective of 7% annual unit growth. In summary, we delivered a record-setting quarter and entered the second half of the year from a position of strength.
Our success remains rooted in the fundamentals that have defined us for decades, exceptional hospitality, high-quality food and memorable dining experiences. We are building on that foundation with menu innovation, deeper guest engagement through our rewards program and operational excellence across our restaurants. Our results demonstrate that our strategy is working and reinforce our confidence in our ability to drive growth and create shareholder value. With that, I will now hand the call over to David Gordon to provide an operational update.
Thank you, David. As David highlighted, Cheesecake Factory delivered positive traffic in the second quarter, increasing 2.7% from the prior year and meaningfully outperforming the Black Box Casual Dining Index by 350 basis points. This performance contributed to average weekly sales reaching a new all-time high, elevating our already industry-leading annualized unit volumes above $13.5 million.
We believe these results reflect our strategic focus on three key areas: First, best-in-class operational execution and industry-leading retention; second, ongoing menu innovation; and third, the continued growth and evolution of our Cheesecake Rewards program. Since launching three years ago, the program has become an increasingly effective driver of guest loyalty and frequency, supported by a growing member base, enhanced digital capabilities and more personalized engagement.
Starting with operations. Our teams remain intensely focused on executing at a high level every day from food quality and pace of service to hospitality and overall guest experience. Industry-leading retention among both our management and hourly teams creates greater consistency in our restaurants and helps us deliver a high-quality experience for our guests. We believe our experienced teams, stable staffing and commitment to operational excellence are key contributors to our strong guest satisfaction and loyalty as well as our continued sales outperformance.
Next, culinary innovation remains a core pillar of our strategy. Our twice yearly menu updates keep our offerings fresh, relevant and aligned with evolving guest preferences. Combined with consistent execution, these innovations help drive sales and traffic. Our recently introduced Bowls are a great example as guests who have ordered from this new category are visiting more frequently, reinforcing the importance of continued menu innovation.
Moving on to Cheesecake Rewards. We're extremely pleased with the successful launch and early performance of the app. Guest adoption exceeded our expectations, driving strong member acquisition and engagement and creating a powerful new channel for direct communication. The app is already providing valuable insights into guest behavior and enabling us to deliver increasingly personalized targeted offers to drive incremental visits and improve marketing efficiency. Strong member growth, positive guest feedback and rising engagement reinforce our confidence in the platform as a meaningful long-term growth driver.
During the quarter, we also increased our marketing activity, leveraging social media, influencer partnerships, targeted digital campaigns and key promotional moments to amplify awareness of our menu innovation and rewards offerings. This coordinated approach across marketing, operations and technology helps strengthen guest engagement and brand visibility. Looking ahead, we believe the combination of operational excellence, continued menu innovation, growing rewards engagement and increasingly sophisticated marketing capabilities position us well to sustain momentum and deliver long-term profitable growth.
I'll now turn to performance of our other concepts. North Italia's second quarter annualized AUVs totaled $7.9 million and comparable sales declined 3%. We continue to see healthy demand in new restaurants with both locations opened during the quarter, generating average weekly sales well above $200,000. Through the first half of the year, retention has improved among both management and hourly teams.
Against the competitive industry backdrop, we're building on strategies and learnings that have proven effective at The Cheesecake Factory and Flower Child to develop targeted initiatives to drive improvement in North Italia. These include more value-oriented menu offerings and accessible price points, such as lower-priced pasta options and lunch specials to enhance affordability and strengthen guest perception of value. We are also increasing targeted marketing to build brand awareness and drive conversion. At the local level, we are expanding our marketing efforts through in-mall digital advertising, restaurant weeks and community events. We plan to test these initiatives during the second half of the year.
While we believe they can support more sustainable traffic, improvement will take time, and we expect some variability in traffic trends over the next several quarters as we begin to see the impact of these efforts. Our focus is on strengthening the brand for durable long-term growth.
Restaurant-level profit margin for the adjusted mature North Italia locations was 15.6% for the quarter versus 18.2% for the prior year. The change reflects sales deleverage and higher commodity inflation.
Flower Child continued to perform exceptionally well and once again meaningfully outpaced the fast casual segment. Second quarter comparable sales increased 13% for a 2-year comp sales increase of 17%. This sales performance translated to annualized AUVs of $5.3 million. Restaurant level profit margin for the adjusted mature Flower Child locations was 20.1% in the quarter.
Flower Child's performance reflects the strength of its unique positioning within fast casual. It's made-from-scratch menu is both health forward and craveable with a broad range of offerings at accessible price points, complemented by thoughtfully designed restaurants that provide a more elevated experience than traditional fast casual. Combined with disciplined execution in our restaurants, these attributes are driving repeat visits, traffic growth and impressive sales results.
We're continuing to build on the concepts talent pipeline and operating capabilities while leveraging The Cheesecake Factory's scale, systems and expertise to support its expansion. We remain very excited about the opportunity ahead and Flower Child's potential for meaningful long-term growth.
And lastly, we opened another location of the Henry in Wilmette, a suburb of Chicago to solve the demand with average weekly sales trending at $200,000 for the first six weeks for an annualized AUV of over $10 million. And with that, let me turn the call over to Matt for our financial review.
Thank you, David. Let me first provide a high-level recap of our second quarter results versus our expectations I outlined last quarter.
Total revenues were over $1 billion, meaningfully above the high end of the range we provided. Adjusted net income margin was 6.8% and adjusted diluted earnings per share was $1.44, both finishing well above our expectations. And we returned $25 million to our shareholders in the form of dividends and stock repurchases. We also generated record quarterly net income of $68 million, up 25% year-over-year and record adjusted EBITDA of $118 million, up 18%, underscoring the strength of our earnings performance.
Now turning to some more specific details around the quarter. Second quarter total sales at The Cheesecake Factory restaurants were $729.5 million, up 7% from the prior year. Total sales for North Italia were $98.4 million, up 8% from the prior year period. Other FRC sales totaled $104 million, up 15% from the prior year, and sales per operating week were $142,100. Flower Child sales totaled $56.6 million, up 18% from the prior year, and sales per operating week were $101,300. And external bakery sales were $15.4 million.
Now moving to year-over-year expense variance commentary. Specifically, cost of sales increased 20 basis points, primarily driven by higher beef, produce and seafood costs, partially offset by lower dairy costs. Labor as a percent of sales declined 80 basis points, primarily driven by sales leverage and associated productivity gains. Other operating expenses decreased 30 basis points, driven by sales leverage and insurance, partially offset by higher marketing spend.
G&A increased 30 basis points from the prior year, primarily due to higher legal costs and stock-based compensation expense. Depreciation remained relatively flat as a percent of sales. Preopening costs were $7 million in the quarter compared to $9 million in the prior year period. We opened four restaurants during the second quarter versus eight restaurants in the second quarter of 2025. And in the second quarter, we recorded a pretax net expense of $1.4 million, primarily related to FRC acquisition-related expenses. Second quarter GAAP diluted net income per share was $1.41. Adjusted diluted net income per share was $1.44.
Now turning to our balance sheet and capital allocation. We ended the quarter with total available liquidity of $561.7 million, including a cash balance of $195.2 million and $366.5 million available on our revolving credit facility. During the quarter, we repaid the remaining $69 million principal amount on the convertible senior notes that were due in June 2026. As a result, our debt outstanding at quarter end consisted entirely of $575 million principal amount of our 2% convertible senior notes due 2030.
CapEx totaled approximately $43 million during the second quarter for new unit development and maintenance. During the quarter, we completed approximately $9.3 million in share repurchases and returned $15.7 million to shareholders via our dividend.
Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q3 and full year 2026. Our assumptions factor in everything we know as of today, including net restaurant counts, quarter-to-date trends, our expectations for the weeks ahead and anticipated impacts associated with holiday shifts. Specifically, for Q3, we anticipate total revenues to be between $980 million and $990 million.
Next, at this time, we expect effective commodity inflation of low single digits for Q3 as our broad market basket remains stable. We are modeling net total labor inflation of low to mid-single digits when factoring in the latest trends in wage rates and minimum wage increases as well as other components of labor.
G&A is estimated to be between $63 million and $64 million. Depreciation is estimated to be $29 million and preopening expenses to be $10 million to $11 million to support six openings in the quarter. Based on these assumptions, we would anticipate adjusted net income margin to be about 4.3% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 13% to 14% and weighted average diluted shares outstanding of approximately 3% to 4% higher than prior year, primarily reflecting convertible note dilution and increased stock-based compensation dilution associated with a higher share price.
Now for the full year. Based on similar assumptions and no material operating or consumer disruptions, we now anticipate total revenues for fiscal 2026 to be approximately $4 billion at the midpoint of our estimates. We currently estimate total inflation across our commodity basket, labor and other operating expenses to be in the low to mid-single-digit range and fairly consistent across the quarters. We are estimating G&A to be about 6.4% of sales. Depreciation is expected to be about $116 million for the year. And given our unit growth expectations, we are estimating preopening expenses to be approximately $35 million to $36 million. Based on these assumptions, we would expect full year net income margin to be approximately 5.4% at the sales estimate provided.
For modeling purposes, we are assuming a tax rate of approximately 11% and weighted average shares outstanding of 49.5 million, primarily reflecting convertible note dilution and increased stock-based compensation dilution associated with a higher share price. As a reminder, the fourth quarter of 2025 included a onetime gift card breakage benefit in The Cheesecake Factory segment revenue.
With regard to development, we remain on track to open as many as 26 new restaurants in 2026, including six in the third quarter, with the remaining openings expected in the fourth quarter. For the full year, this includes as many as five to six Cheesecake Factories six to seven North Italias, seven Flower Childs and as many as seven FRC restaurants. And we would anticipate approximately $210 million in cash CapEx to support unit development as well as required maintenance on our restaurants. Note, this CapEx range includes some new restaurant construction expenses, which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows.
In closing, our record second quarter revenue and net income and substantial operating cash flow, together with continued margin expansion, demonstrate the strength of our business. Exceptional execution continues to support high guest satisfaction, while menu innovation, our rewards program and marketing efforts are increasing awareness and driving traffic.
Our comparable sales and traffic outperformance reflects healthy demand. complemented by successful new restaurant openings, impressive off-premise performance and a robust development pipeline. These strengths continue to drive the sustained momentum we are seeing across the business. Our cash generation and healthy balance sheet provide the financial flexibility to continue investing in our business while returning capital to shareholders.
Looking ahead, we believe our differentiated concepts, seasoned operators and disciplined business model provide a strong foundation for profitable growth and long-term value creation. With that said, we'll take your questions.
[Operator Instructions] Your first question comes from the line of Jon Tower with Citi.
2. Question Answer
Maybe just a quick clarification and then a question. Matt, I think you had said in the prepared remarks, the net interest margin target for the year was 5.4% on the midpoint of the range you discussed. The slide deck that you guys published this afternoon, I think, was closer to 5%. So I just want to make sure that I heard you correctly.
We unfortunately caught that slide deck error and we'll repost it. 5.4% just for everybody on the line, it is 5.4%.
Okay. Great. And maybe, obviously, it's great to see The Cheesecake Factory brand get back to positive traffic growth in the period. I'm curious how much you would attribute that to maybe a short-term lift related to the launch of the app and that coming out and obviously, potentially having a very strong early on redemption. I believe there was a Cheesecake, pre-sliced Cheesecake that you signed up to the rewards program through the app early on versus you have quite a few other things going on in your business.
And importantly, I'm also curious if you could speak to how -- whether or not you're seeing younger guests come through the door more consistently than what you've seen in the past and maybe benchmarking that against the industry.
Sure, Jon. This is David Gordon. Thanks for the question. I think that there's a few factors at play. One, I think we've had terrific momentum moving into the quarter. I think all three of the items that I touched on in my prepared remarks, number one, starting with just really strong, good, consistent operations by our operations teams continues to be a focus that I think our guests are appreciating. And that, in combination with the strong industry-leading retention, our restaurants are as stable as ever. So kudos to the operations team. I think that we always like to talk about that first because delicious memorable food and strong hospitality is the foundation of everything at Cheesecake Factory.
Secondly, the culinary innovation that's happened for the past couple of quarters with the bites and the bowls has been very compelling and great offerings for guests from the flavor profiles to the price points. And I think we're seeing the benefits of that, and we'll continue down that menu innovation path. And to your point on Cheesecake Rewards, certainly, there was a good amount of lift from the app launch. We did our best to launch that in a way that we thought was the most appropriate and got us some terrific awareness but ongoing, we continue to see terrific engagement from guests that have downloaded the app and are appreciating all the benefits from making reservations.
You mentioned the complementary birthday slice, tracking their rewards and being able to engage with the reward when they're in the restaurant and redeem much more -- easily. The seamless online ordering platform that is now built into the app has been greatly appreciated. So I think all of those elements are creating a bit of a flywheel and the team is executing well against that. We definitely are seeing a pickup in younger guests in some of our own internal research that we've looked at. We know that younger guests are returning to malls. There's been a lot that's been written about that, and we're benefiting from that.
But I also think our engagement in our social channels has been very, very strong. And you may have seen some of the more recent activity over the past quarter. Some of that planned and some of that unplanned. And that certainly is resonating. Those younger consumer guests are seeing that, and I think we're benefiting from that as well.
Your next question comes from the line of Brian Vaccaro with Raymond James.
Thank you guys on the meaningful comp acceleration at Cheesecake. Could you provide a little more color on the monthly cadence that you saw through the quarter? And Matt, maybe you could give us the mix and price dynamics. But beyond just some quantification, could you provide a little more color on the levers that you're pulling in social media channels specifically? And any metrics you can share around social media engagement, impressions, et cetera, to help us frame how much that could be up year-on-year?
Sure, Brian. This is Matt. I'll start with some of the data side of it. Specifically in the quarter for Cheesecake, pricing was 3.0%. Traffic was a positive 2.7% and then mix was almost 0, it's 0.1% positive. So pretty much balanced out.
With respect to the trends throughout the quarter, we did see a modest acceleration in the back half compared to the first half, which I think also speaks to what David Gordon was saying about the positive flywheel and not just being based on the launch of the app and the free giveaway, which ended in early May. And so we exited at a better rate than what the average is. And our expectations in the guidance that we provided calls for that slightly elevated rate to continue through the third quarter.
And I think some of that also has been aided by, as you mentioned, the viral activity on social media. We have seen data points that on a unit basis, were well above the average in casual dining, maybe 2 to 3x in terms of mentions on social media. And so certainly, that's playing a part, David. I don't know if there's other components, but we know that we've had a couple of hit products out there that people might have seen. One of them is named after Linda Candiotti, who's a famous executive with the company and been with David for all these years. And it's about eating her fudge cake with your hands in the car. And it sounds a little bit corny, but it drives real traffic. We can measure that, and we're seeing it across a couple of other menu hacks as well. So it is identifiable. It is measurable and it is supporting the overall trend in the business.
Yes, I have seen some of those. So thank you for highlighting that. And if I could just ask a quick follow-up just on the updated annual margin guidance. Could you just walk us through some of the key line items, COGS, labor, and other OpEx and any unusual lumpiness that we should be mindful of in either Q3 or Q4?
Yes. Let me start by re-reminding everybody about the Q4 gift card breakage last time. We did see some of the modeling doesn't necessarily pick that up. And so if you're comparing to GAAP, make sure you go back and reconcile on a non-GAAP table when you're doing your modeling in that regard in Q4 specifically. When you look at the overall margin for the full year, with the guidance we provided, we're taking up that four-wall improvement from previously, we said about 25 basis points. Now it's about 60 basis points. About half of the improvement coming from the commodities and about half from labor, so 30 and 30 with about flat on other OpEx.
And one of the reasons that continues to be flattish is because with the positive results that we're getting, we're taking the opportunity to reinvest in the business and continuing to build on our marketing successes. And so we'll look to invest to build even more sales in the future.
Your next question comes from the line of Andy Barish with Jefferies.
Nice results. And just on that last comment, Matty, are you willing to share kind of where you are on marketing expense as a percentage of sales within that line, just given it hasn't been a big focus in the past for the brand?
Sure, sure. We sort of think about it, Andy, and this is Matt again, in totality, right? So we don't separate out the components of it and rewards is embedded in the number, but it's about 1.2%. So over time, it has moved up a little bit. And I think also since we're growing sales, we've got a bigger opportunity there as well.
Got it. And then just finally, any commentary on sort of World Cup given you're in all of the markets it was and then into July, any thoughts on the momentum in the business that you're willing to share with us?
Interestingly, I mean, we did track this at a very, very detailed level, Andy, because we knew we were going to get the question. And there was almost no discernible difference between specific markets in totality. There were some one-off locations where clearly they were by a hotel where there were a lot of fans. But broadly across the country, the comp outperformance was in every region. And so very, very little differentiation. And we're also glad that the World Cup was done before our call because we know that it really wasn't impacting it based on the trends that we're seeing now too as well.
Your next question comes from the line of Lauren Silberman with Deutsche Bank.
Congrats on the quarter, just really impressive comps. A lot of contributing factors, social media innovation, rewards ops. I guess when did you start to see the inflection? It's just been a material improvement with the best comps in years, and it looks like you could be implying something like 7% comps in Q3 and mid-singles in Q4. I guess am I doing that right? And it's not even just like monthly, I guess, just underlying when did you start to see the real change with the flywheel?
Yes. I mean this is Matt. And as David Gordon noted, there were many contributing factors. I mean if you think even going back into Q1 on a weather-adjusted basis, we were already seeing some of those results, right? Like we were improving month-to-month and on an adjusted basis, Cake would have been between 2.5% and 3%. And so clearly, the momentum had already started.
I think it's fair to say then that the launch of the app was a catalyst and because it drove significant downloads early on, I think we were like #3 on the app list for a day behind just a couple of the massive AI companies. And that was a piece that I think rippled through for a period of time. But it was very closely aligned with the timing with some of the social activity and some of the new media campaigns that we did.
So I don't think that I would single it out only, but that in totality, it was a highly orchestrated effort by our company to get that inflection point. And like I said about the quarter, we did see a modest acceleration in the second half. And so all of those initiatives are sticky, right? It wasn't just the free slice of Cheesecake its. Now we're seeing increased number of reservations. We're seeing increased activation amongst that, we're still acquiring new guests through the app. So I think it really was in total.
Great. Your stock is also outperforming some of these AI companies. So kudos to that. And then just a follow-up, I guess, are you guys ordering anything -- or are you seeing any differences in how customers are ordering from your menu or different parts of the menu with the increased traffic?
Lauren, this is David. Really nothing unique other than maybe some outside ordering of some of those items that we talked about that are showing up in social media channels, whether that's a couple of desserts or a couple of entrees that have been very popular over the past month when people are sort of hacking those items, we see some of that activity. But outside of that, ordering patterns are very consistent. Dessert as a percentage of sales, very consistent, beverage incident rates consistent. So consistent in restaurant across daypart and really across geography.
Great. And then just final one from a mix perspective, now back to kind of flattish. Is that your expectation as we think through the back half of the year?
Yes. I would say that's right. And going back to the menu ordering question, as we've increased even the number of BCE offerings, we've seen that incident rate move up. And so that's been a real positive. As we've noted before, I think it's very interesting, we're at 3% pricing, but in effect, it's a little bit under 2% based on the price points of the bowls, but it's being completely made up for on a one-for-one basis with the increased ordering rate of Bites. So working exactly as we had hoped and planned it would.
Your next question comes from the line of Drew North with Baird.
I wanted to ask a follow-up on Cheesecake Factory and maybe a follow-up to Lauren's question on how we should be thinking about pricing in the back half, maybe between Q3 and Q4? And maybe bigger picture, if the traffic momentum in the business would change how you think about the opportunity to reinvest in the consumer by pricing further below inflation, maybe exiting this year or into next? And any perspective on your philosophy there would be helpful.
Yes. So we'll be just under 3% in Q3, and that's just related to some timing year-over-year. And then Q4, we'll be at 3%. And as I noted, it's really below 2% when you think about the investments we're already making. And certainly, we'll continue to evaluate all of the options. The pricing really is only to offset the inflation, which if you look at the core costs are right in that bucket that we're at 3%.
But we take it twice a year. We evaluate the business conditions at those points in time, and we'll continue to invest in always, whether it's in price points or in marketing or making sure that our restaurants are fully staffed to execute, as David Gordon mentioned upfront.
That's helpful. And maybe just one more from me. With you operating a portfolio of brands, I thought it might be interesting to know what insights or learnings you may be taking from the recent successes at Cheesecake Factory and what might be or might not be applicable to other brands. So maybe if you could just add some context as to what you think could work at North Italia or some of your other concepts or what might be unique to Cheesecake Factory and the recent success?
Sure, Drew. This is David Gordon. I think that's a very relevant question. We've been learning across the ecosystem of concepts for eight years now, everything from service and hospitality systems and processes that work at Cheesecake Factory that we've now begun to implement in some of the other concepts to even some of the more recent learnings at Cheesecake around the value on the menu and some of the marketing approach that we're now going to take to North and look at how we can ensure that guests understand the value propositions at North as much as I think they're starting to understand at Cheesecake Factory for the past couple of quarters.
A lot of the people practices at Cheesecake Factory are things that we've talked about and implemented with Flower Child and North as we position those concepts for growth, talked about having the right type of talent to enable growth and execute at a very high level of new restaurant openings. And -- we've had so much experience of that at Cheesecake Factory for the past 40-plus years and using those same systems and people practices have really enabled us to be ready to ramp up what we want to do at Flower Child and have some strong consistent growth because we have a long-term outlook on North Italia as well.
So those are just a few areas. I could go on with supply chain and technology updates. I think we've done a really good job over the past 12 months, really leveraging the scale of Cheesecake and empowering the teams at FRC to take on some of the systems and processes that we know work well for strong, consistent execution.
Your next question comes from Sara Senatore with Bank of America.
I guess maybe two questions, if I may. It seems to be the trend. I wanted to ask one about like sort of the -- again, the culinary innovation. It sounds like a lot of what you referred to are things that have been on the menu for a while, which I guess is consistent with you saying kind of the flywheel. But I wanted to confirm that, that was the case, the Bowls and the Bites, and it really has to do with more of the -- maybe some of the app or the social media attention really driving take-up for some of the menu items as opposed to something brand new.
And I guess related to that, there's sort of a view that sometimes social media attention can be transitory. Have you done anything in terms of like standing up a social media listening team or something new that kind of gives you confidence that this type of momentum can sustain? We certainly have seen that with other casual diners, but just kind of curious about the infrastructure.
Sure, Sara. This is David Gordon again. Just to remind everyone that we changed the menu at Cheesecake Factory every six months. So we put on new Bites and Bowls about six months ago, and we're launching a new menu right now. It's rolling out across the country through September, and it has some new Bites and Bowls on it, but it also has some new entree items that are in the "regular menu as well."
I think one of the things we've done for the past couple of years now when we launched Bites and Bowls was put a lot of those menu items on a separate menu so the guests could see them outside of the main menu, and that really helped with the awareness. And our plan is to continue to do that over time. And if we find delicious Bites and Bowls that we want to put on the menu, we will put them on. But we'll also search across every other category on the menu to make sure that the innovation is not just on Bites and Bowls, but it's whatever the culinary trends may be in America, we can put those items on the menu, and we're excited to be able to do that. That's been the hallmark of Cheesecake Factory since its founding.
As far as the marketing team, we have a very strong foundation today of social listening, whether that's within our own internal team or external teams that we have in place that are listening to what's being set out there about Cheesecake Factory, reinvesting in that conversation to keep it going in the ways that we think are most valuable for us and not just resting on our laurels or any one point in time of something being the hot topic for any particular month or particular quarter. We think that we have a very strong team in place to continue the conversation and make sure that it's resonating with guests, and we're getting the type of attention and awareness that we think will continue our success moving forward.
Great. Sorry, just on the trends, I guess, any thoughts on macro? I know Matt has in the past kind of talked about the environment feeling better or worse or where you've seen maybe slower -- hard to think that it might be slowing given your trends, but any thoughts on that would be helpful.
Yes. I think that the environment is better than we anticipated when we started the year. The underlying job growth has been stable enough to keep unemployment at the same rate. I do think there is a little bit of inflationary pressure, and we still adhere to some of the commentary around a K-economy and certainly our concepts, Cheesecake Factory particularly benefits from a higher consumer than average.
I also think though, it's just a very bifurcated performance environment where if you're executing well, you have strong business fundamentals, you have your key operations teams in place to deliver on the promise to the guest and you have innovative menu and marketing that there is share to be taken. There's opportunity there. And I think we're benefiting from all of those things because it's not a high-growth environment. It's just maybe a little more stable than we had anticipated.
Your next question comes from the line of Brian Harbour with Morgan Stanley.
Curious what like the rewards program, like what the usage is there? And also, I guess, the app more recently. Are there any stats you could provide around percent of customers that are using those or anything you could say about that?
Brian, this is David. Unfortunately, we're still not talking about any specific numbers. Fortunately, we feel really good about what those numbers are. And we feel good about the level of engagement, the amount of sign-ups we're seeing, people using the app on a regular basis. So we're positive, and I wouldn't anticipate we'll be sharing any of those numbers anytime soon. We'll continue to track them. If and when that time comes, we'll certainly share them with you.
Okay. What would you attribute kind of Flower Child's performance to, right? It's remained quite strong, I think, much better than like the fast casual segment. But I know there's -- it's a bit of a fast casual plus type of concept. Any -- is that performance pretty consistent across the store base? Or what would you attribute that to?
Yes, that's a great question. Certainly, it's across the new markets and existing markets and really across all geographies. And -- we continue to believe that Flower Child is very differentiated from your typical fast casual that guests are appreciating the vast menu choices and also the very value-added oriented price points that whether eating a Mother Earth Bowl at $13, $14.95 or deciding to get a protein plate. I think it's meeting guests also for many different need states when it comes to going out to eat, right? It could be a quick lunch, could be sitting down at dinner. We talk frequently about the dinner mix being much more than your typical fast casual, closer to 30%, 35%, which is unique for a fast casual. The 55% off-premise mix continues to be very, very steady. The teams are executing there very, very well.
And I think the dine-in experience, the highly designed restaurants and the higher touch of service that people really, really appreciate today that we're bringing them their food. It's being served by a server. We're clearing their plates. It's being served on real plate wear. I think is appreciated today that people want experiential dining even in that fast casual setting, and that's playing out at Flower Child. So we continue to be very positive on it and would anticipate that continue to be the trend over time.
Brian, this is Matt. The only thing I would add to that, which I think is a real positive for the growth opportunity that we see with Flower Child. In those markets where we have a little bit more densification, we actually have slightly stronger sales as the brand awareness grows and you get more repeat visitation. So we have no concerns about continuing to move into existing markets and continuing to build the brand presence in those because we see slightly better performance when we're able to do that.
Your next question comes from the line of Dennis Geiger with UBS.
Curious if anything more to share on the new customers that you've been attracting. I know there was a question earlier on the younger customer. But curious more broadly as it relates to the new customers, anything that you would call out on how they're using the brand different than your core existing customer? And maybe it's a little early here, but do you have a sense for repeat frequency yet with that newer customer?
I think it's a little bit early, as you said. We are looking at the associate demographic information. But if you think about relatively speaking, the inflection being over the last 4, 5, 6 months, we're still in the evaluatory stage. I mean, as you would expect, the initial glimpses of the data show that we continue to attract an incredibly wide portfolio of guests, a wide demographic. We have increasingly higher engagement, and I think that's reflected in the trends because we are seeing slightly better frequency. We know that the new menu items are part of that and helping to drive frequency, and we know the rewards is part of that and helping to drive frequency.
But as David has noted a couple of times, while we haven't shared the exact number, a significant percentage of the app downloads are also from guests that were not in the rewards program. And so we are attracting those guests. We tend to attract higher technology savvy, higher income guests, and we would anticipate that, that's what the data will continue to show.
And as we continue to have more of that data, we'll be able to have a more personalized approach with how we're communicating with those guests in a life cycle management style to get them to repeat and come back and come visit us maybe the time when they haven't before and keep them top of mind -- Cheesecake top of mind from an awareness standpoint, and the app really allows us to do that.
Very helpful, guys. And then just a quick second question. Just within your guidance for the third quarter, I think we can maybe loosely back into it. But just given all the focus on the core Cheesecake strength, any thought with respect to maybe level setting comp expectations for the core Cheesecake brand in the third quarter, how you're thinking about that within the context of the revenue guidance?
Yes. I mean the back half of the second quarter modestly accelerated above what the average was, and that's essentially what's incorporated into our third quarter guidance.
Your next question comes from Jeffrey Farmer with Gordon Haskett.
Just bigger picture in terms of thinking about the segment or the casual dining segment as a whole, which factors beyond sort of favorable income and age demographics. Do you think have really been driving some of this broader relative same-store sales strength that the segment has seen?
I think that the value equation in the consumer's mind has pivoted a little bit and the price points have compressed. So you see casual dining like we're doing making sure that you have a price point across all spectrums that's approachable for those guests that might have thought about a different type of occasion. And then those guests are realizing they get a full experience, right, and service in a sit-down restaurant versus potentially a drive-thru or effectively just picking it up. And so you look at the totality of that and what people want to do in their life and get those little indulgences, those little like mini vacations for an hour, that's clearly resonating across casual dining.
Okay. And then just real quick, just bringing it back to Cheesecake for a second. It does sound like the mobile app is attracting both new customers for you guys and probably driving some increased frequency from some of your existing customers. But was there anything about the mobile app launch that surprised you, either positively or negatively here through the first four months of the launch?
Jeff, I don't think we would have expected on the day we launched that we would have been one of the top three downloaded apps right next to some of those AI companies. So we're pleasantly surprised by that. Outside of that, I think the rewards program really being in year three has told us that there is an affinity for Cheesecake that we've always known is out there. And the more we talk about it and the more people hear about it, it continues to just grow and grow and grow. And I think the app has proved that out.
We've launched rewards with more members than we would have anticipated when we first started. The same thing has happened with the app. And I think after 45-plus years, Cheesecake Factory continues to be more relevant today as an experiential dining leader with made-from-scratch food that people really appreciate. It's just working very, very well. And people -- to Matt's point earlier, people really appreciate what Cheesecake is offering today as much as they ever have. And I think we're executing against that really, really well.
So -- the launch of the app was a pleasant surprise, but rewards told us that we were going to have a high level of engagement. So it was good to be a little surprised, but we were expecting it to continue -- we expect it to be strong, and we would continue to -- expect it to continue to be strong, excuse me.
And Joe, this is Matt. Just one more note on that, just a shout out to our IT and marketing and finance teams for working collaboratively on an app that's getting tremendous reviews. So the amount of focus on the details, the flow, the guest experience is very, very strong. And so we took a lot of time to make sure we got it right, and I think we did.
Your next question comes from the line of John Ivankoe with JPMorgan.
At least from our observation, some of the products that we've seen go viral, in some cases, they're 20 years old on The Cheesecake Factory menu, which is just fascinating to me. So obviously, you guys continue to talk about menu innovation and going to where the consumer is in terms of new products. But how does that kind of inform you in terms of where the menu should go? I mean could we potentially do more by, I guess, adding more to the menu, in other words, expanding the menu? Or might there be an opportunity to kind of get back to maybe an original core, whatever that is and get the same or even more with even less. So when we kind of think about a menu either expanding and contracting and various kind of opportunities on either side that you might get from that, how do you kind of envision the future of The Cheesecake Factory menu?
Thanks, John. That's a great question. First time anyone's ever asked us to put more items on the menu. So thank you for that.
I postulated both. So for that.
We know that. I think that the breadth of the menu is very, very strong. And you're right, the items -- a couple of the items are items that have recently become more popular that have been on the menu for 20-plus years. I think you never know what's going to just catch on. What we can do is continue to put compelling menu items on, compelling portion sizes, compelling value and a wide variety of different types of cuisine. And I think that, that just widens the pool of what potentially could become something that's more popular than we expected. We would never narrow that. That's something we've been saying for a long time, right? We would never make the menu smaller. We want to make it consistent to execute, but have as much variety that there's never a [indiscernible]. And I think there's always going to be something on that menu that could become viral.
There were some new things we heard about today that are also menu items that have been on the menu for a long time. So hopefully, that will continue. Our goal is just to put delicious menu items on the menu because if it goes viral and it's not delicious and it's not fantastic and not executed well, it will make no difference. So we're focused on putting delicious items on and executing against that really, really well.
And I think a direct follow-up on this. So a lot of the call has been about social and digital type of marketing, including obviously, your app, social media, what have you. Do you have an opportunity to go back and use traditional paid media for people that don't necessarily consume their media on the social media platforms? Is there an audience that might be receptive to kind of going back to the other side of top of the funnel type of marketing to perhaps drive even more awareness and usage of the brand?
Sure. I don't think it's an either/or. I think it's an and. I think we are still doing some traditional work, and we will always do that. There are different core audiences for all these different touch points. So although we may be a little louder in the social channel today, we haven't gone away from what we've traditionally done over time. And since we have such a broad base of consumer from those 15-year-olds to 80-year olds, we want to make sure we're touching all those funnels all the time, and we'll continue that approach.
Your next question comes from Jim Salera with Stephens.
I wanted to ask a follow-up on Brian's earlier question on Flower Child. Are you able to give us the comp breakdown for the same-restaurant sales at Flower Child with a particular eye on how much traffic is contributing? And as a second part to that, you mentioned the AUVs are up to like $5.3 million on an annualized basis. Can you contextualize what the upper band of the restaurants are doing just so we can help think about the additional upside from where we are today given the strength?
Sure. Jim, we'd be happy to share a couple of those details. This is Matt. The majority of the Flower Child sales are traffic. It's probably in the 8-ish percent range with the rest being 2.5% pricing and a little bit of other check average from some of the catering. So 2/3 of that number is coming from traffic.
And then the bands, we definitely have a few locations that are getting into the $6.5 million to $7 range with Flower Child. It's pretty tight. Performance is pretty tight, but those locations tend to be ones that have been around a little bit longer and just keep growing, right? So they continue to add guests over time to them. And we certainly have figured out ways to ensure we have enough capacity in our locations to get to that level.
Given the gap there and that most of the upside is coming from traffic, have you thought about what restaurant level margins could look like for more mature Flower Child locations given that they're already kind of above the core Cheesecake and how that might contribute to the portfolio as a whole as that brand continues to scale and grow as a piece of the portfolio?
Yes, Jim, this is an important point, and we've talked about this a little bit before, but we're at a 20% margin at $5.3 million. And we really look at that as the penny profit. Those two levers are driving a huge amount of [store wall] -- profitability. And honestly, because we do have more capacity, if we continue to grow traffic and it supports margins, we'll just take less pricing to an earlier point that someone made. And so we would just invest back into the business.
We don't think there's a need to push past the 20% if we can continue to grow AUVs at this level. And we think that perhaps some of the challenges in the more traditional fast casual assembly line has been aggressive pricing. So we'll probably try to balance that out.
Your next question is from the line of Sharon Zackfia with William Blair.
I guess I'm curious, and I know you don't want to share a lot about rewards. So I'm going to maybe phrase something a bit differently. When we think about the uptick you're having at the core Cheesecake concept, is there a way to dimensionalize what you're seeing with rewards versus lapsed users or new to brand?
It's tough, Shannon, this is Matt, to separate them because of the sort of the coalescence of the different events. I mean, I think that it's also the sales in the quarter, obviously being pretty differentiated in the first quarter, early to say for sure. But I would say we're getting relative contributions from rewards and then also delivery has been a strength for us. It shows the same percentage, but actually, it's just a little bit of rounding. It's been better. And then some of the menu has contributed and some of the marketing. And I would say kind of on equal footing, if that's how I would dimensionalize those four factors. And then obviously, the ability to execute against that.
And then that, when I think about the implied fourth quarter comp kind of coming off a little bit from the current trend, is that just inherent conservatism? Or is there something that you think is not durable with what you're seeing right now?
No. I think we're just early stage. There's no point in getting ahead of our skis at this point in time. And the only thing that I would note that we've talked about before that's outside of us, too, is there's always the geopolitical risk, and we do have midterm elections coming up and the government did shut down last year. And so those things are out there.
This concludes our Q&A and our call. Thank you for attending. You may now disconnect.
Cheesecake Factory Incorporated — Q2 2026 Earnings Call
Cheesecake Factory Incorporated — Q2 2026 Earnings Call
Record quarter: revenue topped $1B, EPS +24% YoY, traffic and margins surprised to the upside driven by menu, app and execution.
📊 Quarter at a Glance
- Revenue: >$1.0B (first time above $1B)
- EPS: $1.44 adjusted diluted (+24% YoY)
- Margins: Restaurant-level margin 20% (highest in a decade); adjusted net income margin 6.8% for Q2
- Sales & Traffic: Cheesecake Factory comp sales +5.8%; traffic +2.7%; company AUVs: Cheesecake Factory >$13.5M
- Cash & Returns: Liquidity $561.7M; returned $25M to shareholders; repaid $69M convertible notes
🎯 What Management Says
- Menu innovation: Twice-yearly updates and new "Bites" and "Bowls" are driving frequency and guest interest without resorting to discounting.
- Digital & loyalty: Cheesecake Rewards app launch accelerated downloads, guest acquisition and engagement; management sees it as a durable channel for personalized offers.
- Operations & rollout: Strong retention, labor productivity and consistent execution lifted margins; plan to open up to 26 restaurants in 2026 and apply Cheesecake learnings to other concepts.
🔭 Outlook & Guidance
- Q3: Total revenues $980–$990M; adjusted net income margin ~4.3% at midpoint; commodity inflation low single digits; labor inflation low–mid single digits.
- Full year: Revenues ~ $4.0B midpoint; full-year net income margin ~5.4%; CapEx ~ $210M; expect ~26 openings and shares diluted by convertibles/stock comp.
- Modeling notes: G&A, depreciation, preopening and tax assumptions provided; Q4 2025 had a one-time gift card breakage benefit to consider when modeling comparables.
❓ Analyst Q&A
- Durability: Management says the app was a catalyst but the lift reflects multiple factors (menu hits, social virality, marketing, operations); they declined to disclose specific rewards usage metrics.
- Pricing & reinvestment: Pricing ~3% Y/Y (just under 3% in Q3, 3% in Q4); management is willing to reinvest margin gains into marketing and value initiatives.
- Brand performance: Flower Child strong (Q2 comps +13%, AUV $5.3M; traffic-driven); North Italia weaker—plans for value-oriented menu and targeted marketing to improve trends.
⚡ Bottom Line
- Investment takeaway: This quarter validates a playbook of menu innovation, digital engagement and tight operations — driving share gains, margin expansion and cash generation — but investors should watch execution at North Italia, the sustainability of social-driven hits, and full‑year margin sensitivity to labor/commodity inflation.
Cheesecake Factory Incorporated — Q1 2026 Earnings Call
1. Management Discussion
Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions]
I will now turn the call over to Etienne Marcus, Vice President of Finance and Investor Relations. Please go ahead.
Good afternoon, and welcome to our first quarter fiscal 2026 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Matt Clark, our Executive Vice President and Chief Financial Officer.
Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission.
All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude acquisition-related items, impairment of assets and lease termination expense and other items. Explanations of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described.
David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our first quarter financial results and provide commentary on our financial outlook before opening the call up to questions.
With that, I'll turn the call over to David Overton.
Thank you, Etienne. We delivered strong results in the first quarter, exceeding expectations across revenue, margins and adjusted diluted earnings per share. This performance reflects disciplined execution across our restaurants and continued demand for our differentiated high-quality concepts.
First quarter comparable sales at The Cheesecake Factory restaurants increased 1.6%, outperforming the industry and reflecting the strong affinity for our namesake concept. Culinary innovation continues to be a core strength of our business. Our recent menu additions, including new bites and expanded bowl options have been well received by guests and highlight the broad appeal of our menu and the value we deliver to our guests. Importantly, these offerings keep the concept fresh and competitively positioned without relying on discounting.
To this point, Cheesecake Factory average weekly sales reached a new all-time high during the quarter, bringing our industry-leading annualized unit volumes to nearly $12.8 million. Strong sales and exceptional execution drove further improvement in The Cheesecake Factory's restaurant-level profit margins, and we delivered double-digit growth in adjusted diluted earnings per share year-over-year.
Turning to development. During the first quarter, we opened 3 restaurants, including a North Italia, a Henry and a Flower Child. In addition, 1 Cheesecake Factory restaurant opened in the first quarter in Mexico under a licensing agreement, the only international opening we expect this year. Subsequent to quarter end, we opened in North Italia, marking our 50th location for the concept. With these openings, we remain on track to meet our objective of opening as many as 26 new restaurants this year.
In summary, we delivered a strong quarter. And as we look ahead, we will remain focused on delivering exceptional food, service and hospitality, the hallmarks of our success while continuing to execute our long-term growth strategy. Before I turn the call over, I am pleased to share we were once again recognized by Fortune as one of the 100 Best Companies to work for, marking our 13th consecutive year on the list.
This recognition based on direct feedback from our staff reflects the strength of our culture and the engagement of our people. We believe this continues to be an important advantage in attracting and retaining talent in a highly competitive labor environment.
With that, I will now hand the call to David Gordon to provide an operational update.
Thank you, David. Our performance this quarter reflects the strength of our operations teams and their ability to execute at a high level in our restaurants while leveraging sales growth to drive flow-through and profitability. Operators delivered improvements in labor productivity, food cost management and other controllable expenses while maintaining strong retention across both hourly staff and management teams and delivering strong guest satisfaction scores.
As David mentioned, our recent menu additions at The Cheesecake Factory restaurants have been well received, which we believe has contributed to the sequential improvements in traffic and check mix. This has allowed us to moderate menu pricing without impacting restaurant level margins.
Moving on to Cheesecake Rewards. The recent launch of our new mobile app has exceeded expectations with top-tier download rankings, including #3 overall and #1 in food and drink during the rollout week. And early guest feedback has been overwhelmingly positive, particularly around the app's ease of use for making reservations and browsing the menu to place orders, reordering favorites and accessing rewards all within the app. We are also seeing solid early traction with increasing adoption of the app for digital ordering, reflecting strong early engagement with the platform.
At the same time, we continue to refine the program toward more targeted behavior-based personalized offers with an increased focus on life cycle management. So far this year, we've seen higher engagement, improved incrementality and greater offer efficiency. I'll now turn to additional concept performance details. The Cheesecake Factory's first quarter comparable sales outperformed the Black Box Casual Dining Index by 40 basis points and resulted in annualized AUVs of $12.8 million for the quarter. This performance was supported by an off-premise mix of 22%, in line with the prior quarter and prior year.
Restaurant-level profit margins increased 10 basis points year-over-year to 17.5%. North Italia's first quarter annualized AUVs totaled $7.4 million with comparable sales declining 2%. Our focus remains on returning to positive sales growth, and we remain confident in the concept's competitive positioning and long-term opportunity. At the same time, we're seeing encouraging trends, including improved retention across both managers and hourly staff as well as strong early results at new restaurant openings with average weekly sales at recent openings meaningfully above the system average.
In addition, we recently implemented at North Italia, the guest feedback platform used at The Cheesecake Factory, which we believe will provide valuable insights into execution and support ongoing improvement. Our new menu currently being rolled out introduces a dedicated lunch section featuring lighter options, including refreshed salads and additional protein offerings aligned with current guest preferences and thoughtfully priced. We believe this will increase awareness of our lunch offering and strengthen our value proposition in the lunch daypart.
Restaurant level profit margin for the adjusted mature North Italia locations was 14.8% for the quarter versus 16.6% for the prior year. The decline primarily reflects sales deleverage along with higher building expenses, including repairs and maintenance and utilities.
Flower Child delivered another standout quarter, meaningfully outpacing the fast casual segment, underscoring the strong affinity for the concept as it continues to take market share. First quarter comparable sales increased 10% for a 2-year comparable sales increase of 15%. This strong performance translated into annualized AUVs of $4.9 million, a new quarterly high for the concept. Restaurant-level profit margin for the adjusted mature.
Flower Child locations was 19.6% in the first quarter, up 100 basis points from the prior year. This performance reflects the concept's highly differentiated positioning with a made-from-scratch menu that is both health-focused and craveable, delivering compelling value across a broad range of offerings, all within thoughtfully designed restaurants to provide a more elevated experiential dining experience.
Combined with consistent strong execution by our restaurant teams, these strengths continue to drive momentum and strong sales trends. We remain focused on building strong teams to support the concept's continued growth, and we're increasingly confident in the opportunity ahead.
And lastly, we expanded our FRC portfolio with the opening of a Henry in Phoenix, which opened to strong demand. Average weekly sales have exceeded $280,000 in the first 4 weeks for an annualized AUV of over $14 million.
And with that, let me turn the call over to Matt for our financial review.
Thank you, David. Let me first provide a high-level recap of our first quarter results versus our expectations I outlined last quarter. Total revenues were $978.8 million, meaningfully above the high end of the range we provided. Adjusted net income margin was 5.2% and adjusted diluted earnings per share was $1.05, both finishing above our expectations. And we returned $32.6 million to our shareholders in the form of dividends and stock repurchases.
Now turning to some more specific details around the quarter. First quarter total sales at The Cheesecake Factory restaurants were $690.5 million, up 3% from the prior year. Total sales for North Italia were $89.5 million, up 7% from the prior year period. Other FRC sales totaled $104.5 million, up 20% from the prior year, and sales per operating week were $145,200. Flower Child sales totaled $52.6 million, up 21% from the prior year, and sales per operating week were $94,500. And external bakery sales were $13.9 million.
Now moving to year-over-year expense variance commentary. Specifically, cost of sales decreased 10 basis points, primarily driven by favorable dairy costs, partially offset by higher beef and seafood costs. Labor as a percent of sales declined 20 basis points, primarily driven by labor productivity gains, partially offset by higher group medical.
Other operating expenses increased 40 basis points, primarily driven by higher utility and bakery overhead costs. G&A remained relatively flat as a percent of sales and depreciation increased 10 basis points from the prior year. Preopening costs for the quarter, including some expenses related to early second quarter openings totaled $5.5 million compared to $8.1 million in the prior year period.
We opened 3 restaurants during the first quarter versus 8 restaurants in the first quarter of 2025. And in the first quarter, we recorded a pretax net expense of $2 million, primarily related to impairment of assets and lease termination expenses and FRC acquisition-related items. First quarter GAAP diluted net income per share was $1.02. Adjusted diluted net income per share was $1.05.
Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of $601.6 million, including a cash balance of $235.1 million and $366.5 million available on our revolving credit facility. Total principal amount of debt outstanding was $644 million, including $69 million in principal amount of 0.375% convertible senior notes due 2026 and $575 million in principal amount of 2% convertible senior notes due 2030.
CapEx totaled approximately $43 million during the first quarter for new unit development and maintenance. During the quarter, we completed approximately $18.4 million in share repurchases and returned $14.2 million to shareholders via our dividend.
Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q2 and full year 2026. Our assumptions factor in everything we know as of today, including net restaurant counts, quarter-to-date trends, our expectations for the weeks ahead, anticipated impacts associated with holiday shifts and the recent softness in industry sales trends and the current consumer environment.
Specifically for Q2, we anticipate total revenues to be between $990 million and $1 billion. Next, at this time, we expect effective commodity inflation of low to mid-single digits for Q2 as our broad market basket remains stable. We are modeling net total labor inflation of low to mid-single digits when factoring in the latest trends in wage rates and minimum wage increases as well as other components of labor.
Other operating expenses are estimated to be approximately 20 basis points higher than prior year, reflecting higher marketing spend to support the launch of our rewards app. G&A is estimated to be approximately $63 million to $64 million. Depreciation is estimated to be approximately $28 million to $29. We are estimating preopening expenses to be approximately $7 million. Based on these assumptions, we would anticipate adjusted net income margin to be about 5.5% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 13% and weighted average shares outstanding of approximately 48.5 million.
Turning to fiscal 2026. Based on similar assumptions and no material operating or consumer disruptions, we anticipate total revenues for fiscal 2026 to be approximately $3.91 billion at the midpoint of our sensitivity modeling. For sensitivity purposes, we are using a range of plus or minus 1%. We currently estimate total inflation across our commodity basket, labor and other operating expenses to be in the low to mid-single-digit range and fairly consistent across the quarters.
We are estimating G&A to be about 6.5% of sales, partially driven by our sales growth outlook impacted by the timing of restaurant openings and closures as well as periodic true-ups related to stock-based compensation. Depreciation is expected to be about $115 million for the year. And given our unit growth expectations, we are estimating preopening expenses to be approximately $35 million to $36 million. Based on these assumptions, we would expect full year net income margin to be approximately 5% of the sales estimate provided.
For modeling purposes, we are assuming a tax rate of approximately 11% and weighted average shares outstanding relatively flat to 2025. With regard to development, we plan to continue accelerating unit growth this year. At this time, we expect to open as many as 26 new restaurants in 2026, with roughly 3/4 of those openings planned for the second half of the year. This includes as many as 6 Cheesecake Factories, 6 to 7 North Italias, 6 to 7 Flower Childs and 7 FRC restaurants.
And we would anticipate approximately $210 million in cash CapEx to support unit development as well as required maintenance on our restaurants. Note, this CapEx range includes some new restaurant construction expenses, which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows.
In closing, our first quarter results reflect a healthy business, solid top line momentum, disciplined cost management and strong operational execution. Our financial position continues to provide the flexibility to support new unit growth while investing in the business and returning capital to shareholders. With a diversified portfolio of high-quality concepts, experienced operators and a strong balance sheet, we believe we are well positioned as we move through the year.
Looking ahead, we remain focused on consistent execution, comparable sales growth, margin expansion and long-term shareholder value creation. With that said, we'll take your questions.
[Operator Instructions] Your first question comes from the line of Andy Barish with Jefferies.
2. Question Answer
Can you just kind of go through -- I know the Cheesecake business has been very consistent on the top line. Just anything quarter-to-date? I know it's been noisy with Easter and spring break shifts. But just anything you're seeing in your guests, any check management that you'd be willing to comment on would be helpful.
Sure, Andrew. This is Matt. I mean, as you know, we're not going to give a specific number. But I think if you interpolate the revenue guidance for the second quarter, we're expecting to have consistent trends continue for the Cheesecake Factory. And I think we feel cautiously optimistic about the rollout of the app and the incrementality that we have potential to drive there. We rolled out incremental more new menu items in the first quarter, and we saw progressively improving incident rate trends on those. So generally, I would say we have a bullish outlook on our business at this time.
Your next question comes from the line of Jeff Farmer with Gordon Haskett.
Matt, you mentioned that the Q1 revenue performance exceeded obviously, the guidance. But what was the primary driver of that outperformance relative to your guidance?
Yes, Jeff, this is Matt. It was a couple of factors. I mean, obviously, Cheesecake Factory comps came in above the range that we had provided there. And I think they were very stable throughout the quarter. So I think that was a positive. And then certainly, Flower Child, that 10% was above our expectations that we had thought more in the mid-single digits. And each of those probably contributed about 50% of the beat.
Okay. And then one more. As it relates to intra-quarter same-store sales trends, when the conflict in Iran really kicked off in early March and gas prices jumped, did you see any impact on same-store sales for any of the businesses?
We were pretty steady throughout the quarter. Honestly, we were looking at that as well and parsing it. And throughout the portfolio, we continue to be, I think, steady. There's a little bit of spring break movement, but even that was probably more muted than we thought. And so it was very balanced throughout the quarter, and we didn't see any trade down either. So I would say both the guest traffic and the mix were both steady throughout.
Your next question comes from the line of Jim Salera with Stephens.
Maybe a 2-part question. One, just some housekeeping. Are you able to provide the breakout of Cheesecake Factory comps, the traffic, the pricing and then the mix components? And then as we look at the strong results in the quarter, I know historically, you've talked about kind of GDP and jobs numbers as having a big influence on guest traffic and engagement with the brand.
I don't think we've had necessarily very good jobs numbers this year that haven't been horrible, but I think kind of continuing to slow growth in 2025. But then we see your results accelerating. And so I was hoping maybe you could just kind of bridge what's happening at your restaurants that's maybe leading you to outperform relative to kind of the macro backdrop as a whole.
Sure, Jim, this is Matt. I'll start here on the specifics of the Cheesecake Factory. Pricing was at 3.3%. As we have noted previously, that's coming down. It will be 3% in the subsequent quarters, just given the timing of what was rolling off in the quarter, it was at 3.3%. And then the mix was a negative 0.3%. So we saw a pretty material stabilization there, really benefiting particularly from the bites being add-ons and not substitutions. And so we feel really positive about that. And the traffic was a negative 1.4%, which was a material improvement over the Q4 results.
And just also note for everybody for the record, the total weather impact for the company was about 1.7% of sales. Of course, there was weather in the prior year. So the net really was about 70, 75 basis points, if you think about that. So pretty close to getting back to that flat traffic for Cheesecake Factory really on a like-for-like basis. So really positive movement there.
And I think, Jim, there's a lot of factors at play regarding sort of the economy. Certainly, if you believe in or subscribe to the K economy component of it, many of our concepts in our portfolio benefit from higher income cohorts. And so I think that there's a piece of that. I think the flexibility of the menu, particularly at Cheesecake Factory and Flower Child will benefit us with a tail here and the whole GLP-1 thing. right? Like you can get anything you want to eat.
And at Cheesecake Factory, you can get steamed salmon with broccoli, if that's what you want and heavy up on the proteins and certainly have Flower child as well. So I think the menu, ultimately, we believe in sort of the 3 primary tentpoles of restaurant touring, and that's the menu and the hospitality and the service. And so I think we're excelling in those. So probably taking some share for those reasons.
I do think even though the jobs haven't been great, to your point, sort of breaking into the economist here, the news cycle around the layoffs is not also as bad as it sounds. I mean the big news, but it's been steady. The job market has been steady. discretionary income is up slightly, and it's up a bit more than we're taking price. So from a wallet perspective, I think there's that. I think also lastly, what we've ascribed to here, and I just read about this today in the journal where people's wallets are going is for experiences, not for just goods and we're experiential dining. And so it's not so much transactional. So I think for all of those reasons.
Jim, this is David Gordon. I'll just add one more piece, and that would be the continued retention we see in the restaurants at the hourly staff and management level quarter after quarter after quarter, has allowed the operations teams to execute as well as they ever have. And we continue to see that type of execution. We see it in the results of our Net Promoter Scores continuing to be positive. And that just has a flywheel effect of guests wanting to come back and having those type of experiences that Matt just mentioned. So that can never be overlooked.
Your next question comes from the line of Jeff Bernstein with Barclays.
This is Pratik on for Jeff. Just a quick housekeeping question. Can we also have the components of the comp for North Italia, please? And then I have a real question.
Yes. This is Matt. I'm happy to provide that for the components. So mix was positive 1% for the quarter. Price was about 3% that came down a little bit, and then traffic was negative 6%.
I appreciate it. And then my bigger picture question was, I appreciate that your brands skewed to relatively higher income consumers. But with elevated gas prices, inflation north of 3%, the ongoing stock market volatility, it just seems like everyone is frustrated these days to some degree. So I was just wondering if you're seeing any trade down from fine dining and other higher-end casual dining customers into your brands. Do you currently think you're capitalizing on that? Or is there an opportunity to capitalize that on that frustration? And secondly, in terms of whatever read you have on your own customers, do you see any check management in terms of alcohol appetizers or add-ons?
Sure. This is David Gordon. A couple of things. I think that the incident rates and the add-ons have remained incredibly consistent. As Matt touched on earlier, some of the early check management that maybe people were anticipating with the bites, really, we didn't see. We saw people attaching bites along with the rest of their meal at Cheesecake Factory. As far as the high-end consumer and white table cloth, I would say actually, if you look at Flower Child, I think maybe Flower Child is taking market share from QSR or maybe from some of the folks in fast casual that have had to take much more price to protect margins over time.
And Flower Child has not had to do that and has an elevated experience. And so along with that elevated experience and the quality of the food and the menu innovation and the ongoing LTOs, I think we are taking market share maybe from that consumer that feels pinched, whether that's your typical fast casual or QSR. I think that's benefited Flower Child.
Your next question comes from the line of [ Samantha Cheng ] with Goldman Sachs.
This is Samantha on for Christine Cho. Congrats on the strong results. With the new Cheesecake mobile app launched earlier this month, I know you mentioned that really guest feedback has been positive so far. Could you touch on any additional early observations that you have from the app rollout regarding member engagement and frequency? And how do you expect personalized marketing to evolve following this launch?
Sure, Samantha. This is David again. We still haven't discussed any actual numbers around the rewards program. And I would anticipate -- you should anticipate we won't be doing that either when it comes to the amount of downloads or members that have joined since they've downloaded the app. What I will say is that we are very pleased with the amount of downloads that we've seen thus far. We're also very pleased with the amount of sign-ins that we've seen after downloading because downloading is one thing, but then engaging with the app is something else.
And we're happy with the amount of folks that have enabled locations and allowed notifications because those are ways that we can engage with them on a one-on-one personalized relationship, get the best ROI out of them, try and drive the incrementality that we've talked about historically and continue to gather data to make sure that the marketing spend is getting us the best ROI in the long run. So we're super happy with the launch early on.
I think as I stated in the opening prepared remarks around the amount of engagement in the App Store and the Google Play Store right in the beginning was very, very high, and that's very promising to see and continues week after week to be significant.
Samantha, this is Matt. Just one thing qualitatively. I've been really pleased with the number of new guests that we're getting for the sign-up. So clearly, we're opening the funnel to attract incremental traffic, and it's not just about engaging with our current rewards members, but making sure we're actually growing the total base.
Your next question comes from the line of John Ivankoe with JPMorgan.
This is [ Chris ] on for John. My first question is on Flower Child. So the 10% comp is really strong against the category that came in roughly at flat in the same quarter. And most of the discussion around unit growth, you said has been dependent on your management pipeline, whether let's say general manager and your executive chef. I was wondering where are you on that, especially as the category is growing really fast compared to other segments in the restaurant?
Chris, this is David. Great question. And we have said that in the past that we still believe that being able to grow at the pace we want is going to require the right type of general manager and executive chef. We still believe that. We're pleased to see continued retention benefits at Flower Child because that's a key component of career growth and enabling people to be able to grow their careers within the concept to reach that general manager and executive chef level.
And we feel confident in our current growth trajectory that we have the pipeline in place to meet those expectations. And that team is very, very focused. If we decided we wanted to ramp up just a little bit from where we are today, they remain focused in the most important areas to enable the growth in that talent level to have the general managers and executive chefs in place in time for that growth.
And second one is on North Italia. Looking at numbers, it looks like new unit volumes came down a little bit in the first quarter. I was just wondering how new units are opening up and if you could give a little bit more detail.
Sure. We've opened up 2 new restaurants here recently. Actually, we just finished our first full week at our new Brea location in Southern California, the busiest opening week in the history of North Italia for any individual location. So very, very well received in an existing market. And then in the new market in Northern California, roughly about a month ago, that would have been our busiest opening if we hadn't just opened Embrea. So new markets have been very, very well received. We'll continue down the path this year of about 50% new to existing markets, and we're pleased with the early results.
Your next question comes from the line of Jim Sanderson with Northcoast Research.
Congratulations on a great quarter. I wondered if you could talk a little bit more about store margin at North Italia. That was a bit lower than expected and what the unlocks or remedies are to get that back up to the double-digit teens.
Sure, Jim. This is Matt. I think a couple of things. There's certainly a little bit of pressure there from the comp and some deleverage on more of the fixed cost piece. I think it's also about making sure that we're investing the right amounts in labor as well as having, as David talked about on the prepared remarks, the right menu offerings at thoughtful prices. There's also a little bit of the mix of mature. So right, every year, the different sort of group comes into the mature margin set, and this happened to have a couple of higher margin or higher cost market in that. So more on a comp basis, it didn't move quite as much. So that's a little bit of it's optics.
I think the most important thing, though, is to continue to focus, as David said, on positive comp store sales, right? That's really the primary attribute to recapturing the margin piece. Overall, we feel very confident that the mature margins should be in that 16% to 18% range on an ongoing basis that we've talked about. And we're obviously very close to striking distance on that. So it's not a big movement from our range, and some of it is just the moving pieces that happened to be in Q1, but certainly a lot of focus on recovering that.
And just a follow-up to that. How would leaning into lunch impact the store margin just in general?
It's really about aggregate traffic. I think from a lunch perspective, the incrementality and recapturing that traffic there. The flow-through, obviously, we have the teams there, right? There's a staffing level that's already set. And so you're able to recapture margins at a higher rate than what the average is. And I think that's the key, right? That's why, ultimately, we believe that's the biggest lever on the margin side of things is to bring in more people when we have capacity.
All right. And just last question for me. Just stepping back, how should we look at the ability for you to consistently expand consolidated store margin over time? I think it's pretty much flattish with prior years the trend that we're seeing right now on an annualized basis. So the formula to get back to modest expansion.
Sure. Our full year guidance still calls for about 25 basis points of 4-wall margin expansion in totality. Certainly, every quarter is going to have a little bit of ups and downs depending on, as we noted, group medical or one of the things that we saw in the first quarter was that produce prices were higher just because of weather conditions, right? But our outlook for the year remains unchanged because a lot of that just is timing that was already anticipated by us and built into our expectations for the quarter.
So we feel very confident that 25 basis points a year is still attainable across the portfolio, and that's our plan for this year. That would put us north of the 16% kind of range, and that is inclusive of the growth of adding 26 new restaurants. So I would say that's still our target and still very viable, and that's our plan so far.
Speaker 0
Your next question comes from the line of Jon Tower with Citi.
This is Karen Holthouse on for Jon Tower this evening. Yes, Anecdotally, it seems that there's more social content coming out. It's, I think, showing up in at least within our team, we've talked about it our feeds more often than I think just content that's more engaging. Could you maybe comment on anything you're doing differently on your end, how you're measuring engagement in that channel and how meaningful that you think that could be as a part of a go-forward marketing strategy?
Sure, Karen. This is David. We have a pretty strong social presence across Instagram. We just -- I'd say in the past 6 months, dipped our toe in the water on TikTok here and there, using influencers, paid and nonpaid. I'd say for Cheesecake Factory, one of the most beneficial aspects of the concept is all the PR that we get on a regular basis, whether that's through -- not through paid media, right, but just through culture and showing up on late-night TV, et cetera. But we have many different tactics across all social media platforms that we're using on a regular basis and try and take a real multichannel approach, and we'll continue to do that.
And then a quick second one. I think Cheesecake Factory is probably one of the really like primarily U.S.-based brands that has a pretty big brand recognition. As you move around the world, kind of this is the concept there is theory, just the Big Bang theory is a reason it's popular. Are you building anything explicit in your second quarter or annual outlook for a potential benefit around the World Cup and the associated tourism?
Karen, this is Matt. No, I think that would be a nice upside. I do think you're right. We do have great worldwide recognition, and we do hear that. And you're also right about the big bang theory, which is kind of funny but true. But I think that the World Cup could be a benefit. I think we'll -- if that happens, then we'll all be pleasantly surprised to the upside.
Your next question comes from [ Kelly Merrill ] with Morgan Stanley.
This is Kelly on for Brian. Just wanted to ask, do you have any plans to iterate on bowls and bites just as smaller portions become more popular among consumers? And can you remind us, is that menu going to be refreshed a few times a year like the core menu?
Certainly, menu innovation is going to remain core to everything that we do. I think you can expect in our next menu change that we'll be refreshing some new bowls and bites, and there'll be some new opportunities for guests to enjoy some new flavor profiles and some new interesting innovative menu items, whether that's on the bowls and bites menu or on the main menu and in bowls and bites.
So our plan is to continue to make sure we have as much variety on the menu as possible. That's across every type of cuisine and every type of price point that we can offer for guests to give them the most value in any way they choose to use Cheesecake Factory.
Your last question comes from Sara Senatore with Bank of America.
I just -- I guess I wanted -- one last question on North Italia, I apologize if you touched on this earlier. But I guess, AUVs are down a little bit year-over-year, perhaps more than the same-store sales. I think one of the things that you -- or maybe 2 things you've talked about in the past are cannibalization on the one hand and on the other hand, awareness. So maybe a longer ramp and awareness is low, but also last year, you had perhaps more of a cannibalation impact because of where you were building those restaurants. I guess, as I look out this year, is cannibalization still a factor for North Italia? And also, I guess, conversely, are you opening in more new markets? And is that part of why the AUV might come down? So just some insights into the development strategy.
Sure. That's a great question. Thanks, Sara. I think the mix for this year is about 50-50 new and existing markets. We did call out cannibalization last year, and we still have some of that lingering in some of those markets as well. As far as the new markets, as I said earlier, we opened in Northern California, very strong opening there. But we would expect what traditionally does happen in North is that there's a much longer not expecting that we're going to open up at the volumes of the last 2, but that we will open up a little shy of what our targets are and grow into those over time.
And that's our own internal expectation. If we exceed that expectation, we're pleasantly surprised and that creates a little bit of cannibalization in the short term, we're okay with that as well.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Cheesecake Factory Incorporated — Q1 2026 Earnings Call
Cheesecake Factory Incorporated — Q1 2026 Earnings Call
Solid start to the year with strong top-line momentum, margins and unit growth across concepts.
📊 Quarter at a Glance
- Revenue: $978.8M, above the high end of guidance
- EPS (adjusted): $1.05
- Margin (adjusted): 5.2% adjusted net income margin
- Comparable sales: Cheesecake Factory comps +1.6% YoY; restaurant AUVs near $12.8M
- Openings & growth: Opened 3 restaurants in Q1; 50th North Italia opened post-quarter; up to 26 openings planned in 2026
🎯 What Management Says
- Strategy: Disciplined execution across high-quality concepts with ongoing menu innovation to stay fresh without relying on discounting
- Operations: Focus on guest experience, labor productivity and expanding digital engagement through the new rewards app
- Growth: Accelerating unit development (up to 26 openings in 2026) across Cheesecake Factory, North Italia, Flower Child and FRC, including international licensing
🔭 Outlook & Guidance
- Q2 revenue: $990M–$1.0B; commodity inflation in low-to-mid single digits; labor inflation in same range
- Margin & costs: Other operating expenses ~+20 bps; G&A $63–$64M; depreciation $28–$29M; preopening about $7M; adjusted net income margin ~5.5% at midpoint
- Full year 2026: Revenue ~$3.91B (±1%); G&A ~6.5% of sales; depreciation ~$115M; preopening $35–$36M; net income margin ~5%; development to open up to 26 restaurants; CapEx ~$210M
❓ Analyst Q&A
- Key questions: Drivers of Q1 beat (Cheesecake Factory and Flower Child), app rollout engagement and ROI, North Italia margin dynamics and cannibalization concerns, and the cadence of new markets vs cannibalization
⚡ Bottom Line
The results underscore a diversified, growing portfolio with disciplined cost control, improving margins and a clear path to more openings in 2026. Management maintained a constructive growth trajectory, aided by menu innovation, a digital rewards push and steady guest demand, with near-term guidance pointing to roughly $1B in Q2 revenue and about $3.9B for 2026.
Cheesecake Factory Incorporated — Q4 2025 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to The Cheesecake Factory Incorporated Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Etienne Marcus, Vice President, Investor Relations and Finance. Etienne, please go ahead.
Good afternoon, and welcome to our fourth quarter fiscal 2025 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Matt Clark, our Executive Vice President and Chief Financial Officer.
Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission.
All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude acquisition-related items, impairment of assets and lease termination expenses and other items.
Explanations of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described.
David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our fourth quarter financial results and provide commentary on our financial outlook before opening the call up to questions.
With that, I'll turn the call over to David Overton.
Thank you, Etienne. We closed out the year with a solid fourth quarter, delivering stable top line performance and profitability. While the restaurant industry continued to face a more challenging operating environment, including weather-related impacts, our business remained steady with revenue for the quarter finishing within our expected range. I'm very proud of how our teams navigated through the environment and continue to deliver delicious, memorable experiences for our guests.
Our operators managed the factors within their control exceptionally well, driving year-over-year improvements in labor productivity, wage management, retention and guest satisfaction. This strong operational execution supported margins and adjusted diluted net income per share, finishing toward the higher end of our expectations. This performance reflects the resilience of our high-quality concepts and the strength of our operators.
Reflecting on 2025, it was a year of meaningful progress for our company. Despite a dynamic macro backdrop and a highly competitive restaurant landscape, we delivered strong results. Sales growth across our core concepts and the most new restaurant openings in a single year supported record annual revenue and adjusted diluted earnings per share, and our operators' consistent execution throughout the year drove meaningful profitability growth.
Adjusted restaurant level profit margins at The Cheesecake Factory increased 60 basis points year-over-year to 17.6%, with margin expansion also realized at North Italia and Flower Child. Culinary innovation remains a core strength and an important differentiator for our business. The new menu items we introduced across a wide range of categories and price points continue to resonate well with guests and support our broad appeal. These offerings reinforce the breadth and the value of our menu while keeping it relevant and competitively positioned without relying on discounting.
Turning to development. During the fourth quarter, we opened 2 Cheesecake Factory restaurants, 2 North Italia locations and 3 FRC restaurants. Subsequent to quarter end, we opened 1 Flower Child and closed 4 restaurants, including 2 Cheesecake Factory restaurants, 1 Grand Lux Cafe and 1 FRC restaurant. With 7 new restaurants opened in the fourth quarter, we finished the year with 25 new openings, delivering approximately 7% unit growth for 2025.
Looking ahead, we expect to open as many as 26 restaurants in 2026. With a strong development pipeline in place, we remain confident in our ability to achieve our development goals. We also anticipate 1 to 2 Cheesecake Factory restaurants to open internationally under licensing agreements.
Finally, underscoring our confidence in the strength and consistency of the business, we announced an increase to our share repurchase authorization and raised our quarterly dividend for the first quarter. These decisions reflect our disciplined approach to capital allocation and our ongoing commitment to returning capital to shareholders while continuing to invest thoughtfully in the long-term growth of our company.
With that, I will now turn the call over to David Gordon to provide an operational update.
Thank you, David. Through strong operational leadership and disciplined execution, our teams drove meaningful performance improvements this quarter, including continued gains in overall guest satisfaction. This progress was underpinned by our strong staffing position and further advancements in our industry-leading retention across both hourly staff and management. This stability enables our operators to reinforce the core operational standards that define The Cheesecake Factory, so our guests consistently experience the exceptional hospitality that we're known for.
As David noted earlier, our recent menu additions have been well received, and we are building on that momentum by refreshing our bites and expanding our bowl options as part of our current menu rollout. Results have been encouraging with year-over-year growth in appetizer attachment rates and improved entree ordering patterns.
Moving on to Cheesecake Rewards. We have made meaningful progress during the past 12 months, highlighted by strong membership growth and improved engagement. We've continued to enhance the guest experience while strengthening our technology and team capabilities, giving us better insight into member behavior. As we look ahead, we remain confident in the program's trajectory and we will use our expanded capabilities to further refine offers and deepen member engagement.
To support this evolution, we expect to launch a dedicated rewards app in the coming months with the objective of creating a more seamless and connected experience for our guests.
I'll now turn to sales trends. Industry sales decelerated in the fourth quarter as reflected by the Black Box casual dining index declining sequentially by 410 basis points from the third quarter. The Cheesecake Factory's comparable sales were negative 2.2% in the fourth quarter, down from 0.3% in the third quarter, demonstrating relative stability in comparison to the industry sequential decline. Adjusted annualized AUVs were $12.2 million for the quarter, supported by an off-premise sales mix of 22%, a slight improvement from recent quarters.
North Italia fourth quarter annualized AUVs totaled $7.6 million. Comparable sales declined 4%, reflecting broader industry sales trends, continued pressure from sales transfer related to recently opened restaurants as well as the lingering impact of the Los Angeles fires. We remain focused on disciplined operational execution and investing in our people. With manager and hourly staff retention remaining near historical highs, we are confident in our ability to compete effectively in a more challenging and competitive environment.
In the fourth quarter, we opened 2 new North Italia restaurants to strong demand with aggregate average weekly sales exceeding $182,000 for an annualized AUV of over $9 million. These results reinforce our confidence in the significant demand for an on-trend contemporary Italian concept like North Italia. Restaurant-level profit margin for the adjusted mature North Italia locations was a solid 17.5% for the quarter, bringing the full year average to 17%, right at the midpoint of our long-term objective of 16% to 18%.
Flower Child continued to perform exceptionally well and meaningfully outpaced the fast casual segment. Fourth quarter comparable sales increased 4% for a 2-year comp sales increase of 15%. This strong sales performance translated into annualized AUVs of $4.3 million for the quarter and $4.6 million for the full year. Restaurant level profit margin for the adjusted mature Flower Child locations was 17.5% for the fourth quarter, bringing the full year average to an impressive 18.5%.
And lastly, we expanded our FRC portfolio with the opening of 3 new restaurants in existing markets, including a Culinary Dropout and a Henry. All 3 restaurants opened a strong demand with average weekly sales equating to an annualized AUV of over $8.7 million.
And with that, let me turn the call over to Matt for our financial review.
Thank you, David. Let me first provide a high-level recap of our fourth quarter results versus our expectations I outlined last quarter. Total revenues were $961.6 million, inclusive of $17.3 million of gift card breakage revenue as a result of a change in historical redemption patterns. Excluding this benefit, fourth quarter revenues of $944.3 million finished within the range we provided. Adjusted net income margin was 5.1% and adjusted diluted earnings per share was $1, both finishing toward the higher end of our expectations. And we returned $24 million to our shareholders in the form of dividends and stock repurchases.
For the fiscal year, we delivered total revenues of $3.75 billion, up 5% from the prior year. Adjusted diluted earnings per share increased 10% year-over-year to $3.77, and adjusted EBITDA totaled $354 million and we returned more than $206 million to shareholders in the form of dividends and stock repurchases in 2025.
Now turning to some more specific details around the quarter. Fourth quarter total sales at The Cheesecake Factory restaurants were $681.4 million, up 2% from the prior year. Excluding the gift card breakage benefit, total sales at The Cheesecake Factory restaurants were $664.2 million. Comparable sales, which is not impacted by the gift card breakage adjustment, declined 2.2% versus the prior year. Total sales for North Italia were $88.2 million, up 8% from the prior year period. Other FRC sales totaled $99.4 million, up 17% from the prior year and sales per operating week were $139,100.
Flower Child sales totaled $45.5 million, up 19% from the prior year and sales per operating week were $83,400 and external bakery sales were $17.2 million.
Now moving to year-over-year expense variance commentary. Specifically, cost of sales decreased 70 basis points with 40 basis points attributable to the gift card breakage benefit to revenue, with the remainder primarily driven by favorable commodity costs and mix shift, partially offset by higher beef costs. Labor as a percent of sales declined 40 basis points, with 60 basis points attributable to the gift card breakage benefit.
The remaining difference was primarily driven by higher group medical expenses, partially offset by the continued improvement in retention, supporting labor productivity gains and wage leverage as well as lower payroll taxes. Other operating expenses declined 20 basis points, with 50 basis points attributable to the gift card breakage benefit, partially offset by timing of marketing spend. G&A as a percent of sales increased 70 basis points, primarily driven by the write-down of gift card inventory.
Depreciation increased 10 basis points from the prior year. Preopening costs were $9.4 million in the quarter compared to $7.6 million in the prior year period. We opened seven restaurants during the fourth quarter versus nine restaurants in the fourth quarter of 2024. The year-over-year variance reflects differences in the mix of concepts opened during the respective quarters. And in the fourth quarter, we recorded a pretax net expense of $24.6 million related to impairment of assets and lease termination expenses, FRC acquisition-related items, gift card breakage and gift card inventory adjustments. Fourth quarter GAAP diluted net income per share was $0.60. Adjusted diluted net income per share was $1.
Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $582.2 million, including a cash balance of $215.7 million and approximately $366.5 million available on our revolving credit facility. Total principal amount of debt outstanding was $644 million, including $69 million in principal amount of convertible notes due June 2026 and $575 million in principal amount of convertible notes due 2030.
CapEx totaled approximately $25 million during the fourth quarter for new unit development and maintenance. During the quarter, we completed approximately $11.2 million in share repurchases and returned $12.8 million to shareholders via our dividend.
Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q1 and full year 2026.
Our assumptions factor in everything we know as of today, including net restaurant counts, quarter-to-date trends, our expectations for the weeks ahead, anticipated impacts associated with holiday shifts and the recent softness in industry sales trends and the current consumer environment.
Specifically, for Q1, we anticipate total revenues to be between $955 million and $970 million. This includes the estimated impact of inclement weather experienced so far in the quarter and 4 restaurant closures that occurred toward the end of January. These closures included 2 Cheesecake Factories, 1 Grand Lux Cafe and Blanco.
Next, at this time, we expect effective commodity inflation of low single digits for Q1 as our broad market basket remains very stable. We are modeling net total labor inflation of low to mid-single digits when factoring in the latest trends in wage rates and minimum wage increases as well as other components of labor. G&A is estimated to be approximately $63 million to $64 million. Depreciation is estimated to be approximately $28 million. We are estimating preopening expenses to be approximately $4 million to $5 million. Based on these assumptions, we would anticipate adjusted net income margin to be about 5% at the midpoint of the sales range provided.
For modeling purposes, we are assuming a tax rate of approximately 5% to 6% due to the timing of certain discrete items in the quarter and weighted average shares outstanding of approximately 48.5 million.
Turning to fiscal 2026. Based on similar assumptions and no material operating or consumer disruptions, we anticipate total revenues for fiscal 2026 to be approximately $3.9 billion at the midpoint of our sensitivity modeling. For sensitivity purposes, we are using a range of plus or minus 1%. We currently estimate total inflation across our commodity basket, labor and other operating expenses to be in the low to mid-single-digit range and fairly consistent across the quarters.
We are estimating G&A to be about 6.5% of sales, partially driven by our sales growth outlook impacted by the timing of restaurant openings and closures as well as periodic true-ups related to stock-based compensation. Depreciation is expected to be about $115 million for the year. And given our unit growth expectations, we are estimating preopening expenses to be approximately $35 million to $36 million. Based on these assumptions, we would expect full year net income margin to be approximately 5% at the sales estimate provided.
For modeling purposes, we are assuming a tax rate of approximately 10% and weighted average shares outstanding relatively flat to 2025.
With regard to development, as David stated earlier, we plan to continue accelerating unit growth this year. At this time, we expect to open as many as 26 new restaurants in 2026, with roughly 3/4 of those openings planned for the second half of the year. This includes as many as 6 Cheesecake Factories, 6 to 7 North Italias, 6 to 7 Flower Childs and 7 FRC restaurants. And we would anticipate approximately $210 million in cash CapEx to support unit development as well as required maintenance on our restaurants.
Note, this CapEx range includes some new restaurant construction expenses, which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows.
In closing, we delivered solid financial and operational performance for both the fourth quarter and full year, reflecting stable top line performance and strong execution. We also generated a record adjusted EBITDA of $354 million, reinforcing the consistency of the business and supporting disciplined growth and increased capital returns to our shareholders.
Our portfolio of high-quality concepts, seasoned operators and financial position provide a solid foundation as we look ahead. As we move forward into 2026, we remain focused on comparable sales growth, margin expansion and long-term shareholder value creation.
With that said, we'll take your questions.
[Operator Instructions]
And your first question comes from the line of Andy Barish with Jefferies.
2. Question Answer
Just wondering if you can kind of update us on sort of the go-forward structure with FRC and kind of changes you've made there and what's going on with management team and such?
Sure, Andy, it's Matt. Thanks for the question. Appreciate it. Well, we're, first of all, really pleased with the overall performance of the business unit out of Phoenix. All of the lines of business are meeting or exceeding our expectations. And I think we'll all look back on this being one of the most successful restaurant acquisitions. It's right now, it's steady as it goes. I think as you know, we put someone in place from Cheesecake to work with the team there in a senior operations role, and that continues to go excellently. And we'll continue to look at opportunities to add benefits via scale or expertise in operations. And at the same time, we'll continue to look at that team to innovate and incubate the way that they have.
So I think we're really pleased with where things are at, and we'll continue to try to create value through all of those concepts.
Your next question comes from the line of Sara Senatore with Bank of America.
The first question is, you mentioned strong execution that supported margins. I guess given the restaurant level margin was quite healthy and also that you've seen, I think, a positive response to some of your maybe more accessible price point additions to menus. Is there an opportunity to invest in value or at least to sort of market value more centrally as you communicate with your consumers? Just something we've seen is other casual diners kind of emphasizing abundant value or quality value, just given it looks like you have a little bit of room on the margin. And then I do have a quick follow-up.
Sure. Sara, this is David Gordon. Thank you for the question. Certainly, we're very pleased with the reception the bites and bowls have gotten across all of the restaurants. And when we rolled those out, we did roll them out with a little heightened sense of awareness. We put them on a separate menu card, so guests could see them right away. We marketed them a little more clearly in all of our social channels. And I think that's one of the reasons we had such great awareness. And we're seeing strong attachment rates because they do provide great Cheesecake Factory value. And that value comes certainly in the price point on the bowls, but also on the portion size on the bites and bowls that are great for sharing. We're seeing people attach the bites to their check.
As we look to continue to roll out the menu, which we're doing right now, we have some new bites and bowls that are happening. So we're going to lead into that value wherever we can and maybe move some of those items into the main menu and create another menu card so that we have that heightened sense of awareness for guests that are dining in or through our social channels.
Great. And then just to confirm the North Italia same-store sales, I guess, it is more of a housekeeping. I think last quarter, you said sales transfer was maybe 2 percentage points and the fires were 1. Are those roughly the same magnitude? And similarly, the daypart mix, more weakness in the lunch, are all those factors kind of consistent in the fourth quarter as well?
Yes. Sara, this is Matt. I would say, yes, that's very true. And I think the positive news there, though, is that as we're midway through the first quarter, we're seeing evidence that there was truly the cannibalization in the fire as the comp is recovering. So positive there. Just to double down on what David Gordon said, I think the strategy is working on menu innovation. We said we would see some negative mix. We did. But in both December and now again in January, we're seeing incident rates year-over-year growing. And that means the guests are coming in and seeing tremendous value, right, because they're ordering those items at a higher rate. So I think we're doing everything we thought we would do, and it's working.
Your next question comes from the line of Brian Harbour with Morgan Stanley.
Matt, just a quick one. Give a rough estimate for kind of how much the weather impact was in this current quarter?
You're talking about Q1, Brian, just to confirm.
Yes. Like how much is factored into your guide?
Yes, for sure. So what we did is to really look at it on a net basis because clearly, every year, there's increment weather. And right now, the weather to date through Q1, we believe, is about a 1% net impact -- negative net impact on the entire quarter. So that assumes no more weather impact. We did see some record closures. I think we probably had 120 restaurants closed on the peak day. So it was pretty profound. And so yes, so that's built into it, though.
Okay. Understood. What you talked about kind of evolving the bites and bowls. What's done best on that menu? How are you sort of shifting that? Or what are you seeing customers gravitate to?
I think everything has been very, very popular, to be honest. So it's not one particular item, but a couple of the bowls have done very, very well. All the bites have done well. So that large menu variety is what people love about Cheesecake Factory, and they seem to be enjoying the bites and the bowls the exact same way.
I personally think the trouble fries are the best, Brian.
Your next question comes from the line of Drew North with Baird.
I wanted to circle back to your comments on the broader consumer environment. You highlighted the slowdown in industry trends from Q3 and volatility in Q1 to date, particularly due to weather. So at this point, when you look at the business from an underlying perspective, do you believe you've seen any fundamental change in the consumer spending backdrop at this point? And maybe what do you believe has caused some of the softer industry trends in recent months?
And then maybe just what does your current outlook for the balance of the year contemplate as it relates to the external environment, given all the puts and takes out there?
Sure, Drew, great question. This is Matt. I think if I dial back to our last call, I think we gave some color on why we think the consumer sentiment would be soft for the fourth quarter. And if you kind of think about where the comp came in for Cheesecake, we said we thought it would be about a 1% delta in terms of real performance from Q3. We had about 1% of weather impact in Q4 and about 50 basis points of a holiday shift impact. So pretty much right where we would have anticipated it to be.
Again, many factors in terms of whether you want to believe it's the K economy or the government shutdown. And we have a lot of historical data to understand those trends. I do think coming out into the first quarter here that our performance is notably better. And I think the environment, I don't know. I can't really speak to other companies. But I think our performance, if you interpolate the guidance, is more like what we saw in Q2 of last year. And so it feels like while we felt maybe it was a 2-quarter event, it's more like a 1 quarter at this point in time where we sit today.
And so that's what our full year guidance also expects is that where we kind of are seeing it in Q1, which is pretty steady and pretty good across all of our concepts will continue through the balance of the year.
Your next question comes from the line of Jim Salera with Stephens.
I wanted to circle back on the bowls and bites. You mentioned that you're seeing attachment with those. And I was hoping maybe you could help us break out on Cheesecake, the traffic and transaction in the quarter but particularly with an eye to the mix component. Should we expect to see mix as kind of a continued headwind as we roll into FY '26 as we kind of balance maybe some greater attachment but the lower check size from the bowls and bites and maybe that drives some transactions as well?
Sure, Jim, this is Matt. So Q4 pricing was about 3.5% to 4% and mix was a negative 1.8% and then traffic was the delta from that. So as anticipated, we still did see some negative mix. I would say, though, that's a full quarter number, and we had just rolled out the new menu items really ending in early September. So we didn't have a lot of traction if we think about our average guest comes once a quarter.
So as I noted, I think just importantly, what we saw in December and now again in January is an actual improvement year-over-year in incident rates. So some of the pricing investment will be offset by increased ordering. So we do think that the negative mix will continue, but at a lesser rate as we progress through the year. Importantly, too, as we look at January, when you look at alcohol plus nonalcoholic beverages, it was almost a breakeven on incident rate.
So I think it's really guests are coming in and getting that full Cheesecake experience. So I don't know, we're kind of saying, if you think about the guide, probably a negative 1% for the year on a mix perspective based on continuing to roll out the bowls and the bites, but getting some positive on the order rate.
Okay. Great. That's very helpful. And then just a follow-up as we think about some demand drivers in '26. I know there's been a lot of conversations around incremental demand from people getting tax refunds, larger-than-expected tax refunds. Do you have any kind of historical data that you can look at when there were big refund seasons in the past. Is that something that actually tends to show up in the restaurants? Or is that maybe just more of the talking point than a reality from what you guys see on the ground?
Yes. I mean I think great companies control their destiny, Jim. And so we don't really ever count on getting any benefits from the tax refund. I think what we're seeing in our performance, given also that it started way before that, is that the improvements are based on our execution and our menu innovation and the things that we're doing. And just normally, given the income cohort associated with most of our portfolio, I just don't think it's as pronounced and we haven't seen nor do we see correlations to gas prices, things like that either.
Your next question comes from the line of Jeffrey Bernstein with Barclays.
Great. My first question is just on the restaurant margin, specifically around what your assumptions are for the quarter and the year. It does seem like now all the 3 brands that you're reporting are comfortably sitting in that 17% to 18% range. Just wondering how we should think about that as the portfolio and by brand? Any puts and takes in terms of how that should play out as we look through '26? And then I had one follow-up.
Sure, Jeff. This is Matt. Thanks for the question. Let's just start with the full year. I think as we set out our guidance last October, we're happy to say that we're right on plan, 25 basis points of 4-wall margin is our expectation for the restaurant levels. A little bit of pressure in G&A. As we know, we gave some specific guide there, really just accounting. We've had tremendous retention in the restaurants. We've also had tremendous retention at corporate. And so there's a thing called a forfeiture rate with the equity comp that will true up a little bit, but it's really sort of nonoperating, but it hits the P&L. And then all the other pieces kind of net out.
So a very, very clean outlook for us. The caveat comes on a quarter-to-quarter basis. Obviously, other OpEx can be a little bit bumpier in the first quarter, again, the 25 basis points coming in cost of sales, a little bit of pressure on labor and lapping group medical. But really, the difference there is about 50 basis points in other OpEx, which is timing of marketing spend and some utilities. And then you can do the math on the preopening and other pieces. So pretty much a flattish year-over-year net income guide and that slight improvement for the full year. So...
Got it. And my follow-up was just on the menu pricing. Obviously, the flip side to the greater emphasis on value. But I think you mentioned that The Cheesecake was running price in the 3.5% to 4% range. Maybe just quantitatively, what are you expecting as we run through this year and qualitatively, your confidence in being able to take whatever particular lever you're targeting or maybe that's a gross amount and you expect that on a net basis, you won't necessarily pass all that through. But just conceptually, how are you thinking about that pricing and actually what will that pricing be?
Yes, Jeff, it's Matt. So this year, Cheesecake will be about 3%. So we're bringing that down, which I think, number one, we saw the inflation numbers where food away from home is still at 4%. And to your point, we're investing in lower price points on an average basis. As I said, maybe that's 100 basis points of negative mix.
So we look at that as probably an effective 2% if you combine the mix and the price together, which is going to be well below where the industry is. And we're aided there by -- while beef is higher, it's not as big of a piece for us and dairy is measurably lower. So our market basket, I think, is aiding us in that endeavor. And I think we feel like that's definitely an achievable level, and we have that pricing power based on where we're seeing the sales trends today, the attachment rates today, the guests are perceiving value there.
Your next question comes from the line of Lauren Silberman with Deutsche Bank.
You called out the 4 closures to date. Were these all anticipated and any other closures that are anticipated for the balance of '26?
This is David Gordon. Yes, they were all anticipated, and we don't anticipate any future in 2026.
Great. Just on the comp side, are there any callouts in terms of differences across regions or dayparts? And I guess in the markets that haven't been impacted by weather, are you seeing trends hold up pretty stable?
Well, this is Matt. It's a little complicated because weather has been everywhere. I feel like -- and so you have to really slice it. I mean, California has had the rains at different points in time, and we had much more southern weather impact than we normally do. I would say, generally, the overall business has been predictable. I mean I think we were in the range we expected to be in despite a little bit more weather.
Right now, we feel good about the guidance that we're giving. And all of our regions, I think, are doing well. So you're going to have those sort of hits and misses based on whether it's school holidays or whatever those schedules are, but nothing that I would call out specifically.
Okay. Great. And then just final one, going back to North, how are you thinking about comps for that business into '26? I know there's the cannibalization dynamics. Do those continue? Any differences in where new units are expected to open?
So the new units specifically are about 50-50 in new and existing markets. So we continually evaluate where any potential cannibalization might be as we look at any new sites and would anticipate for this year, probably a little bit less than we had with the openings that were a little more impactful for the past 12 months that we've seen. And our goal is to get North a little bit more stabilized than it has been, probably a little more impacted versus Cheesecake and more in line with the rest of the industry.
So in North, we continue to be working also on menu innovation, working a little bit on that lunch daypart because that was where we felt a little bit of the pressure over the past few quarters and continued bar innovation as well. We've seen a nice little comeback in bar incident rates at North, which is good. It's an important part of the concept. And our bar mix is about 23% have been very, very stable. So we're working on innovation in that area as well as we believe they continue to be very relevant to the concept.
Just for modeling, I think, like I said, we've seen the impacts of the fire and the cannibalization rolling off. And it kind of assumes sort of like more like first half of last year's performance in our model.
Your next question comes from the line of Christine Cho with Goldman Sachs.
So David, you mentioned your plans to launch the dedicated Rewards app in a few months. Could you elaborate a little bit more on the time line and if you have any planned marketing investments around the launch?
Sure, Christine. Our goal would be to get it launched in the second quarter. I think that we're feeling pretty confident that, that's going to be the case. And we will launch it with a strong social media presence, what we think will be a nice strong offer for people to download the app onto their phone and probably a little bit of in-restaurant marketing as well.
Okay. Great. And then in the last quarter, I think you've called out some regional trends coming from the government shutdowns. Has that normalized as you exited the quarter?
Yes. I think we've seen pretty stable performance across the portfolio, again, ex the weather, which everybody is seeing in different times at different places.
Your next question comes from the line of Jeff Farmer from Gordon Haskett.
Matt, just as a follow-up, I think you referenced that Q2 '25 same-store sales were roughly plus 1%. Were you saying that plus 1% is the implied 2026 same-store sales number? Did I get that right or wrong?
That's right. If you do the math, that's about where you're going to come into. That's right.
Okay. And then just following up on the Rewards app launch. Tougher question, but in terms of setting an expectation level for us, how impactful could this be to visit frequency, average check, whatever metric you want to point to, just how meaningful could this be from what you guys have understood?
Sure, Jeff. This is David. I think that our goal is to continue to make members' experience as seamless as possible and give them as much value as they can as members. So I wouldn't anticipate we're going to share any of those finer details in the near future, just like we haven't in the recent past, but we're going to be very focused on the app, making the guest experience easier. So easier access to reservations for them, being able to see things like their order history, repeat their order history for off-premise, and we're excited to get it going in Q2. And if and when we start sharing any of those numbers, we'll be sure to share them on one of these calls.
Your next question comes from the line of Brian Mullan with Piper Sandler.
Question on Flower Child. Wondering if you could just talk about the vision here over the next several years. What have you learned about the formats and locations that work best for this brand? How much can you standardize that versus kind of needing to customize based on the location? And just as a part of all that, what would you need to see to really start to ramp that development pace above the 6 or 7 for this year?
Sure, Brian. That's a great question. Certainly, we are enthusiastic and very pleased with the performance of Flower Child. It continues to exceed expectations in new and existing markets, which I think is very promising as we moved into new markets, even when there has been no Flower Child within miles or states, the reception has been very, very strong.
So it's resonating with consumers, I think, for a few reasons. One, it's very healthy on trend and delicious. And it's an experiential fast casual dining experience. It's not transactional. And today, we continually say that we believe all of our guests are looking for experiences versus transactions. And then the operations team really has put in place a lot of systems over the past 24 months to enable consistent execution. There's probably a little bit more of that to go.
But up to this point, the guest experience when we look at the type of reviews we're getting in social media or even just through our own channels are very, very positive, and that's because of the consistent execution. So we feel good that -- the concept is certainly in a place where we can accelerate. The only thing that's holding us back from going a little bit faster than maybe a 20% growth rate would be we want to make sure we have the right people power in place. And we need the right leadership at the GM and executive chef level to open up those very busy fast casual units and do it really, really well for consistent brand execution that's most important to us.
If we're able to ramp that up over time, could it be a little faster than 20% eventually? Perhaps. But for now, in the near term, we feel confident in that 20% number, and that's what we're most focused on.
Your next question comes from the line of Dennis Geiger with UBS.
I appreciate the commentary on mix. Matt, I just wanted to confirm, did you say how much of the mix pressure was folds and bites versus group order versus maybe alcohol and dessert in the quarter? I know you spoke to alcohol for January. But just in the fourth quarter, is there a breakdown by bucket as far as the mix impacts go?
Dennis, I didn't provide specifically, but my qualitative commentary would be we saw alcohol stabilize. Dessert was very steady. So we know where most of it is coming from. But I don't have the exact number in front of me, but we know those macro trends would indicate that a lot of it is coming from the pricing differential of the new product.
Got it. Very helpful. And then I guess just -- I assume it's a similar answer. But just on the '26, as you think about maybe a best guess of that down 1 mix, is that the same largely from the new products on the bites and bowls, more so than like a group order dynamic, et cetera, as you think about that estimate for '26?
Yes, that's right. Exactly. So I mean there's an offset from the pricing, but as you start to see the order rate pick up, it kind of neutralizes some of it. So that's what we're anticipating.
Your next question comes from the line of Rahul Kro with JPMorgan.
You guys are very early on DoorDash, and I believe with the exclusivity, there has been a lot of discussion in the industry around some -- and also across some of your peers on how you want to rethink fees, menu pricing and whatnot. Can you give some detail on how you guys are thinking about this? And also remind us on where the delivery mix is today?
Sure, Rahul. This is David Gordon. Great question. You're right. We certainly have been in a long-standing relationship with DoorDash. It's been a terrific relationship. And that relationship has allowed us to leverage, I think, what's great about the value of Cheesecake Factory's menu and pricing and not take extra price, which many of our competitors have had to do in the delivery channel.
So that would be our intent moving forward. We'd like to not have to take any more price than we take today, which is only about 2% to 3% versus the in-restaurant menu. When we look at total off-premise for Q4, it was 22% of sales, up about 1% from Q3. And that mix of that 22%, 10% is delivery and the rest is split relatively evenly through online ordering and phone pickup. So that's been very consistent. Those numbers have been very consistent, and that mix has been consistent over time.
Is there any possibility that you can extend this partnership across all your other brands down the line? I believe only Cake and Grand Lux were on the initial agreement. Just any updated thoughts there?
Sure. Well, actually, all the concepts are covered in the agreement today. So everything we own is part of the DoorDash agreement today.
Your next question comes from the line of Brian Vaccaro with Raymond James.
I wanted to ask about the '26 unit growth. And I thought it was interesting to see Cheesecake Factory's unit growth stepping up a bit. Maybe you just could give a little bit more on the opportunity you see there and maybe level set the size of units that you're opening and kind of the AUV or unit economic targets on these units. I know there's been some successful unit openings over the years in pockets that open up, but maybe just kind of what you're seeing in terms of that outlook for '26.
Sure, Brian. So we're excited to be opening up to 6 Cheesecakes this year. And as great sites become available for Cheesecake Factory, because of the flexibility and size, everything from 6,500 up to 10,000 square feet, we can build the Cheesecake Factory at any great site. For this coming year, most of these are in that 7,000 to 7,500 square foot range for all 6 of them on average.
And Brian, from a returns perspective, this is Matt. We've been super happy with the sales level. They've been able to generate effectively the average AUVs and average margins. And so we're sitting right between the 20% and 25% cash-on-cash we've been targeting and feel great about the ability to continue to open at that level.
All right. That's helpful. Appreciate that. And then on the margin outlook, Matt, could you comment specifically on just your expectation for commodity inflation specifically? And any quarterly variability to keep in mind on the commodity front year-on-year?
Sure. Commodities would be about 2.5% or so overall and pretty steady throughout the year, God willing.
Knock on wood, knock on wood. All right. And then last one for me. I'm sorry if I missed it, but could you also provide the comp components for North Italia in the fourth quarter?
Brian, this is Etienne. Yes, I'll give you the components here. So traffic was negative 6%, price is about 4% and the mix was negative 2% for the quarter.
And ladies and gentlemen, that concludes our question-and-answer session, and that concludes today's call. Thank you for your participation, and you may now disconnect.
Cheesecake Factory Incorporated — Q4 2025 Earnings Call
Cheesecake Factory Incorporated — Q3 2025 Earnings Call
1. Management Discussion
Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cheesecake Factory, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions]
It is now my pleasure to turn today's conference over to Etienne Marcus, Vice President of Finance and Investor Relations. Please go ahead.
Good afternoon, and welcome to our third quarter fiscal 2025 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Matt Clark, our Executive Vice President and Chief Financial Officer.
Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com, and in our filings with the Securities and Exchange Commission.
All forward-looking statements made on this call speak only as of today's date. The company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude acquisition-related items and impairment of assets and lease termination expenses. Explanations of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described.
David Overton will begin today's call with some opening remarks. David Gordon will provide an operational update. Matt will then review our third quarter financial results and provide commentary on our financial outlook before opening up the call to questions.
With that, I'll turn the call over to David Overton.
Thank you, Etienne. Our third quarter results were solid with consolidated revenues within our guidance range and earnings and profitability finishing above the high end of our expectations. Our performance was led by the Cheesecake Factory restaurants delivering positive comparable sales results amid a more challenging and competitive environment, underscoring the strength and resilience of our brands.
While we, along with the broader restaurant industry, are navigating a softer macro and consumer environment, our overall performance remained stable, in line with expectations. These results highlight the healthy demand for our high-quality concepts, the strength of our operators and the durability of our business model. Specifically, comparable sales at the Cheesecake Factory restaurants increased 0.3% for the third quarter with annualized unit volumes averaging over $12 million.
We believe our strategic focus on menu innovation remains a key point of differentiation, supporting our broad consumer appeal and strong relevance with guests. Our new menu offerings are resonating well, reflecting the success of our culinary innovation. We will continue to lean into this core strength to keep our menu highly relevant while providing exceptional value without relying on discounting. Supported by improved retention, our operators once again executed at a high level, driving year-over-year improvements in labor productivity and wage management, resulting in meaningful profitability growth.
The Cheesecake Factory's restaurant-level profit margin increased 60 basis points year-over-year to 16.3%, with margin improvement also realized at North Italia and Flower Child.
Turning to development. In the third quarter, we opened 2 FRC restaurants and 2 Cheesecake restaurants opened in Mexico under a licensing agreement. Subsequent to quarter end, we opened 1 additional FRC restaurant. With 19 restaurant openings so far this year, we're well positioned to meet our objective of opening as many as 25 new restaurants in 2025. Looking ahead to 2026, we plan to further accelerate development with as many as 26 new restaurant openings across our portfolio of concepts.
As we move forward, we will remain focused on delivering exceptional food, service and hospitality, the hallmarks of our success while continuing to execute against our long-term growth strategy.
With that, I will now turn the call over to David Gordon to provide an operational update.
Thank you, David. Our teams once again demonstrated strong leadership and operational discipline this quarter, delivering improvements across multiple areas of the business while maintaining consistently high levels of guest satisfaction. Their efforts were instrumental in driving profitability and ensuring our guests continue to receive the exceptional service and hospitality that sets us apart.
These results are a direct outcome of our sustained investment in our people. We remain committed to developing and supporting our managers and staff members, and that focus has yielded meaningful results. Over the past several quarters, we have achieved notable year-over-year improvements in both manager and hourly staff retention. In addition, our already strong team engagement scores have remained at historically high levels, underscoring the strength of our culture and the effectiveness of our people-first approach.
As part of this ongoing commitment, we hosted our General Manager conference last month, where we emphasized culinary excellence, focusing on elevating the quality of the food we serve every day and further optimizing our kitchen systems to ensure consistent execution of our broad and complex menu.
Speaking of our menu, as David noted earlier, our recent additions are resonating strongly with guests. The new bites have driven higher appetizer attachment rates, while the new bowls are among some of the most frequently ordered new items we've introduced in recent years. Together, these new offerings have contributed to an improvement in check mix and demonstrated the success of our menu innovation efforts.
Turning to Cheesecake Rewards. We remain highly encouraged by the program's positive momentum. Membership growth remains strong and member satisfaction continues to over-index. In a recent internal survey, members shared positive feedback, noting that the program is easy to use, delivers clear value and encourages them to dine with us more often. This validation reinforces our confidence that we are on the right path in delivering meaningful value to our most loyal guests. Earlier this year, we shifted to a more personalized strategy and the results have been promising with a notable uptick in member engagement.
Looking ahead, we will continue refining offers to improve their effectiveness and look for ways to enhance the overall guest experience, including how we engage with our members. To that end, we're currently developing a dedicated rewards app, which we believe will provide a more seamless and impactful way to engage with our guests.
Turning to North Italia. Third quarter annualized AUVs reached $7.3 million. Comparable sales declined 3%, reflecting sales trends in the broader industry, which softened in the quarter and continued pressure from some sales transfer from recently opened restaurants as well as the lingering impact of the Los Angeles fires. That said, our strong manager and staff retention enables us to execute at a high level, and we remain confident in our ability to compete effectively in a more challenging and competitive environment. Restaurant level profit margin for the adjusted mature North Italia locations improved 70 basis points from the prior year to 15.7%.
The margin expansion was driven by operational improvements as well as more favorable commodity inflation. Flower Child continues to perform exceptionally well with third quarter comparable sales increasing 7%, significantly outpacing the fast casual segment. This strong sales performance translated into annualized AUVs of $4.6 million.
The combination of robust top line growth and disciplined operational execution drove restaurant-level profit margins for adjusted mature Flower Child locations to 17.4% in the third quarter, an improvement of 140 basis points year-over-year. And lastly, we expanded our FRC portfolio with the openings of Culinary Dropout in Franklin, Tennessee, and The Henry in Carlsbad, California. Both restaurants opened to strong demand and early sales momentum with average weekly sales surpassing $200,000.
And with that, let me turn the call over to Matt for our financial review.
Thank you, David. Let me first provide a high-level recap of our third quarter results versus our expectations I outlined last quarter. Total revenues of $907 million finished near the midpoint of the range we provided. Adjusted net income margin of 3.7% exceeded the high end of the guidance we provided, and we returned $13.8 million to our shareholders in the form of dividends and stock repurchases.
Now turning to some more specific details around the quarter. Third quarter total sales at The Cheesecake Factory restaurants were $651.4 million, up 1% from the prior year. Comparable sales increased 0.3% versus the prior year. Total sales for North Italia were $83.5 million, up 16% from the prior year period. Other FRC sales totaled $78 million, up 16% from the prior year, and sales per operating week were $115,600. Flower Child sales totaled $48.1 million, up 31% from the prior year, and sales per operating week were $88,200. And external bakery sales were $18 million, up 20% from the prior year period.
Now moving to year-over-year expense variance commentary. In the third quarter, we continued to realize some year-over-year improvement across several key line items in the P&L. Specifically, cost of sales decreased 80 basis points, primarily driven by favorable commodity costs. Labor as a percent of sales declined 30 basis points, primarily driven by the continued improvement in retention, supporting labor productivity gains and wage leverage.
Other operating expenses increased 50 basis points, primarily driven by higher facility-related costs. G&A remained relatively flat as a percent of sales. Depreciation increased 10 basis points from the prior year. Preopening costs were $6.6 million in the quarter compared to $7 million in the prior year period. We opened 2 restaurants during the third quarter versus 4 restaurants in the third quarter of 2024. And in the third quarter, we recorded a pretax net expense of $0.8 million, primarily related to FRC acquisition-related expenses.
Third quarter GAAP diluted net income per share was $0.66. Adjusted diluted net income per share was $0.68. Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $556.5 million, including a cash balance of $190 million and approximately $366.5 million available on our revolving credit facility. Total principal amount of debt outstanding was $644 million, including $69 million in principal amount of convertible notes due 2026 and $575 million in principal amount of convertible notes due 2030.
CapEx totaled approximately $37 million during the third quarter for new unit development and maintenance. During the quarter, we completed approximately $1.2 million in share repurchases and returned $12.6 million to shareholders via our dividend. Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q4 2025 and full year 2026.
Our assumptions factor in everything we know as of today, including net restaurant counts, quarter-to-date trends, our expectations for the weeks ahead, anticipated impacts associated with holiday shifts and the recent softness in industry sales trends and a more cautious consumer environment. Specifically, for Q4, we anticipate total revenues to be between $940 million and $955 million, representing an approximate 1% step down from the Q3 sales trend. Next, at this time, we expect effective commodity inflation of low single digits for Q4.
We are modeling net total labor inflation of low to mid-single digits when factoring in the latest trends in wage rates and minimum wage increases as well as other components of labor. G&A is estimated to be about $60 million. Depreciation is estimated to be approximately $28 million. We are estimating preopening expenses to be approximately $8 million to $9 million to support the 7 planned openings in the quarter and early Q1 openings.
Based on these assumptions, we would anticipate adjusted net income margin to be about 5.1% at the midpoint of the sales range provided. And importantly, even with the current top line headwinds, our full year outlook for 4.9% net income margin remains intact, underpinned by prudent financial management and operational efficiency. For modeling purposes, we are assuming a tax rate of approximately 12% and weighted average shares outstanding of 49 million.
With regard to development, as David stated earlier, we expect to open as many as 25 new restaurants in 2025. This includes as many as 4 Cheesecake Factories, 6 North Italias, 6 Flower Childs and 9 FRC restaurants. And we continue to anticipate approximately $190 million to $200 million in cash CapEx to support this year's and some of next year's unit development as well as required maintenance on our restaurants.
Turning to fiscal 2026. This reflects our initial outlook based on what we know today. And given the dynamic macro backdrop, we'll continue to update our assumptions as conditions evolve. First, with regard to development, as David stated earlier, we plan to continue accelerating unit growth next year. At this time, we expect to open as many as 26 new restaurants in 2026, with roughly 3/4 of those openings planned for the second half of the year.
Next, based on our estimates for net operating week growth and depending on the length of the current softer consumer environment, we are targeting total revenue growth of approximately 4% to 5% for 2026 over full year 2025, with sales trends expected to improve as the year progresses. We currently estimate total inflation across our commodity basket, labor and other operating expenses to be in the low to mid-single-digit range and fairly consistent across the quarters.
And we expect G&A, depreciation and preopening expenses to remain essentially flat as a percent of sales compared to 2025. Based on these assumptions, we would expect full year net income margin to be approximately 5% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 12% and weighted average shares outstanding relatively flat to 2025. And we would anticipate approximately $200 million to $210 million in cash CapEx to support unit development as well as required maintenance on our restaurants.
Note that the total CapEx estimated range assumes a similar mix of new restaurant openings by concept as 2025. In closing, we delivered another quarter of stable performance and strong profitability despite a more cautious consumer backdrop. Our operators executed at a high level. Our portfolio of high-quality concepts remains well positioned and our balance sheet and cash flow provide a solid foundation for growth. We remain confident in our ability to navigate a dynamic macro environment as we have successfully done so in the past. And we believe our strong execution and resilient business model will enable us to emerge even stronger. With our scale and financial strength, we are well positioned to continue creating meaningful long-term shareholder value.
With that said, we'll take your questions.
[Operator Instructions] Our first question comes from the line of Andy Barish with Jefferies.
2. Question Answer
Just kind of wondering what you're seeing in terms of consumer behavior that's driving a little bit more caution in the current environment? Is it regional? Is it check management? Or is it just kind of been a little bit of a drop-off in the traffic trends?
Andy, it's Matt. Thanks for the question. Really, it's the last piece. It's mostly in the traffic. I think we've seen pretty stable As David Gordon noted too, the bites and bowls are going well, and we're getting good attachment there. And I would say, really, the more cautionary tone is associated with the fourth quarter. And I think, frankly, there's probably been an impact from the government shutdown and we're looking forward to having that resolved. And overall, things remain pretty predictable, just slightly below where we have been.
Our next question comes from the line of Brian Vaccaro with Raymond James.
Just a bookkeeping question to start, if I could. Could you just provide the breakdown of comps for both Cheesecake Factory and North Italia traffic price mix?
Sure. This is Matt, Brian. So for Cheesecake, pricing was about 4% as it has been. Traffic was a negative 2.5% and then obviously, mix was the difference there. Etienne, do you have North?
Yes, Brian. For North, price was 4%, mix was negative 1% and traffic rounded to negative 6%.
Okay. Great. And as you think about the margin outlook just here in the near term in the fourth quarter, and sorry if I missed it, Matt, but what was the commodity inflation in the third quarter? And how do you see the fourth quarter playing out from a commodity inflation perspective?
And then if you could just kind of round out some of the store margin dynamics, obviously, a little bit of sales deleverage. But beyond sales deleverage, is there anything worth calling out in the fourth quarter margin outlook?
Yes, Brian, that's a really important question. So thank you for asking that. This is Matt. So when we think about commodities, obviously, beef has moved up another step. So we wouldn't expect to see the same degree of year-over-year favorability that we did certainly in the third quarter. It was about flattish in the third quarter, and I would think it would be more like a full 2%, really all of that delta coming from beef and so thinking about those margin line items, you can do the math there that the favorability will be cut in half or something like that on the cost of sales.
On the labor piece, the really important thing to note here is about group medical in the fourth quarter comparison. So we still believe, based on the best-in-class retention and improving year-over-year in the third quarter that we will continue to garner some productivity improvements, some great wage management from our operations. But there's about a 50 basis point impact on just the comparison of group Medical.
A lot of that is just timing, as you know, it depends on when some of the big claims hit last year, we had a credit. So if you think about that piece alone, on the true operational labor side, we still think it will be 10 to 20 basis points favorable. On the last major piece there of the 4-wall, really on the other OpEx, some of that was also timing, but we do continue to see a little bit of negativity related to facility, maybe 20 basis points negative in other OpEx for the fourth quarter. So really pretty stable outside of group medical and the beef. Really operationally, we have a really firm hold on the business.
Our next question comes from the line of Jon Tower with Citigroup.
Maybe just two. You're speaking to a softer consumer right now showing up in the business and Lord knows the factors that are causing it. But -- and you're speaking to guests with bowls and bites, lower price points than what you traditionally have in your menu. How are you thinking about, one, promoting that next year more or are you considering promoting that more so into next year than you have been currently? And then two, how are you thinking about pricing at the core Cheesecake Factory into 2026?
Jon, this is David Gordon. Maybe I'll take the first half, and then I'll turn it over to Matt. I think we're executing on the bites and bowls really well. I think the increased awareness through our social media channels and all of our marketing campaigns, along with our strategy to have the bites and bowls on the separate menu card has paid off really well. We're seeing strong attachment rates, and we're not really seeing the check impact.
So that's a very positive sign. It's what we were expecting to have happened, and it has played out that way. As we move into our winter menu change beginning of next year, we would anticipate using the card again and using the same methodology to make guests aware along with the Cheesecake Rewards program, which is a great way to make guests aware of those new items and those new price points.
And I think you can anticipate a few new items in maybe both of those sections, along with other new items as well. We're going to continue to lean into menu innovation wherever we can come up with delicious new menu items that are craveable. And we think that's how we'll continue to win in the long run.
And Jon, this is Matt. Just speaking to the pricing. So in Q4, it's already going to be down to about 3.5%. We would continue to expect that to moderate into next year. And keep in mind, because of the lower price points and the adoption rate, the effectiveness is about 100 basis points less than that. So if we're at 2.5% effectively to the consumer, and we're going to maybe a 2% in the first half of next year, that's really well below the food-away-from-home inflation that's been reported in the mid-3s. So we feel very competitive about that while still keeping the brand where it should be.
Okay. And then just looking to North Italia, I appreciate the headwinds for the industry and the hit on traffic. But can you speak to the cannibalization impact or the sales transfer you spoke to hitting their comps in the period? And when thinking about development for 2026, are you building out a schedule such that you're not going to see the same level of sales transfer next year as perhaps we've seen this year?
Yes, Jon, this is Matt. I think as we've said, it could be a little bit bumpy because as we think about sites, it's always about getting the best site. And whether there could be some near-term pressure on existing regional performance is not really what's going to define the investment returns that we're looking for. That being said, really is kind of what we had said previously is about 1 point from the L.A. fires and maybe about 2 points from the cannibalization.
Really, the difference that we've seen is more in North quarter-to-quarter is a little bit more in the macro environment. I think you saw more in the higher end, slightly higher price point and a little bit in the midweek lunch is where we can attribute. And we know from 5 decades of history of managing in this space, that's the first place that when you see consumers pull back, you get a little bit of pressure there. So I think from an execution standpoint, we're doing a great job.
And we'll keep everybody informed. If we think there's going to be a material shift in those patterns around the transfer, we'll try to let you know in advance to build that into your models.
Our next question comes from the line of Sharon Zackfia with William Blair.
I guess I wanted to build on the commentary around the government shutdown. Did you just start to see the softness in October? Or did you start to see some waning in the latter part of the third quarter?
We saw, I would say, a little bit of choppiness, Sharon, sorry, this is Matt. We saw a little bit of choppiness in September, but there was a little bit of movement relative to some of the rewards programs that we had done the year before. So it wasn't really meaningful. I would honestly say that the bigger shift has come in October. I think we saw this in the industry in the start of 2019 during the last shutdown.
I went back and looked at some of the old data there. There appeared to be a 1% to 2% shift down for a month there. So it sort of correlates to what I think some of the data is and the indices that are out there seems to corroborate that.
And then the thought process on sales getting better as '26 progresses, is that related to any specific initiatives or marketing plans or is that just a function of expecting to have easier comparisons in the back half?
Sharon, I think it's a little bit of both. I mean, certainly, by the time we get to, say, the middle of the second quarter, will have gone through 3 pretty significant menu changes, right, all enhancing the value proposition. We'll have a materially lower effective price point. So those things certainly will benefit us, we believe, in terms of traffic as well as the mix side of things.
So I think those will help. And then frankly, that will lap around kind of the beginning of some of the consumer noise this year that started in early April. And assuming the shutdown ends and we get some trade deals, at least the reports that I've been reading have been much more constructive on the consumer outlook for next year. So I think it's a combination of both.
Our next question comes from the line of David Tarantino with Baird.
My question is on some of the labor productivity benefits you've been getting. I think you mentioned maybe lower turnover is part of that. But I just wanted to ask, I mean, it's a little unusual to see such improvement in the margins when you have slightly negative traffic.
So I guess, could you just maybe talk about the sustainability of that? And how much more room you think you have as you move into next year to achieve productivity savings even in the face of maybe a soft industry environment?
Sure, David. This is Matt. I would say we definitely take credit for the benefits that we've seen related to the retention, and those do ripple through in productivity. And some of that is also in more stable wage environment. I think that's probably a balance between the internal efforts and the external job hugging, if you will, in this situation where you're just seeing some lower turnover there.
And the fewer people turn over, the fewer -- the less pressure there is to sort of adjust wages for the existing base. So I think that's part of it as well. But whether that's sustainable or not, I mean I think at this point in time, our goal every quarter is really just to hold the line, but we've gotten better year-over-year each quarter.
So there's still a tailwind going into next year, given that even through the third quarter, we were better year-over-year on retention. And we continue to invest in cross-training during these times as well. So I feel pretty good about being able to manage the margins even in a slightly softer environment. I think it's kind of an overall important point for the investors, right?
You can -- traders will trade on 100 basis points of sales, and that's what they do. But I think for the long-term investors, the P&L has the potential to be much more resilient in this environment because of the stable labor environment and the relatively stable and lower commodities. And so I think we're well positioned to manage into next year, and that's the guidance that we gave.
Our next question comes from the line of Christine Cho with Goldman Sachs.
So very impressed by the resilient comp trends at Flower Child. And with many of the fast casual brands experiencing a broad-based deceleration, could you provide some insights into what might be driving Flower Child's relative strength and how the trends are tracking so far in fourth quarter?
Sure, Christine. This is David Gordon. I think we continue to believe that Flower Child is very differentiated from those other fast casuals and guests are appreciating everything from the menu variety to the very strong price points. Our ability to not have to take the type of price that many in the fast casual space have had to take, which perhaps has impacted them a bit over the past 12 months and the higher level of hospitality and food quality.
And as we move Flower Child into new markets or existing markets, we continue to see an affinity for the brand being very, very strong and we would anticipate that continuing into the future. So we're really, really pleased. We're looking forward to continuing the growth of Flower Child, getting more restaurants open next year and bringing it across the country.
Great. Just a follow-up. So I think you mentioned earlier that bowls and bites are doing its job at Cheesecake Factory. But how do you think about the value proposition at North Italia? Any additional plans to communicate value differently amid the current backdrop and the increasing focus on kind of that lower fixed dollar prices and entry-level price points?
Yes, that's a great question, Christine. I think Matt mentioned that North plays a little bit more in that polished casual sort of space with the higher check average. But that doesn't mean we can't find ways to continue to leverage the menu. As an example, currently, we have a promotion in North that is a small plate and a pasta at lunch for $25.
So that's a great price point for somebody to get those two menu items with some great variety, made fresh from scratch. And we're using all of our internal marketing avenues to be able to share that with guests and make them aware. And so those are the type of things we will continue to do along with menu innovation like we've done at Cheesecake Factory.
We actually have our new seasonal menu for North rolling out tomorrow across the country with a couple of new menu items and a lot of the seasonal changes that we make on a regular basis. And we know that, that's very effective, and it gives us some good marketing to talk about with our current guests and to attract new guests.
Our next question comes from the line of Sara Senatore with Bank of America.
I guess I wanted to ask maybe a little broader macro. You mentioned North, which, as you said, plays kind of more polish. I guess the higher income customer has been more insulated. So to the extent that your business is a read on that, are you seeing some of this weakness kind of percolating higher up on income? Because up until now, it's primarily been lower and maybe middle. So that was one question on the macro.
And then the other piece is, I think you talked about more competition. Is that coming from other polished casual chains? Is it more from independents? We seem to be getting kind of a mixed read on kind of how some of the smaller operators are doing.
Sure, Sara. This is Matt. I think it's -- every environment is going to be a little bit different, but some of the things we can carry from our past experiences. Obviously, North, like I said, has a little bit of an idiosyncratic situation, but there may be a little bit more pressure at that midweek lunch. And whether that's an insight on to the higher-end consumer, I mean, sometimes what we've seen in these environments is you do get trade down even from those that are being insulated based on sentiment.
They may still have the job and a good income. But for whatever the reasons are that things are going down. They're still going out to eat and still spending, which would give you a positive read on their overall spend profile, but they may be taking it down a notch to a slightly lower price point experience, right? So that might be one of those opportunities. I think in terms of competition, really, the competitive environment today is twofold.
Number one, that's surrounding the deals, right? So you think about the competitive environment isn't just a number of competitors, but the extent to which every restaurant is offering some sort of BOGO or discount or whatnot. And I think I've seen some research that says this is -- it's at an all-time high. So that, I think, one defines a competitive environment. And I think the second part is that it's a little bit of a harder read today. I think probably the independents are having a harder time. But for the chains, whether it's casual dining or fast casual or any of the different layers, the capacity is very different to measure today because of the off-premise, right?
And so much has moved from on-premise to off-premise that has actually expanded capacity. So it's not necessarily a number of competitors, but it's the way that the consumers use them that has made the environment also, I would just as we discussed it, more competitive in general. So hopefully, that helps.
Our next question comes from the line of Brian Bittner with Oppenheimer.
Just as it relates to the new menu, I know you anticipated some pressure on mix a little bit from the bites and bowls, just given those are more affordable options and you talked about how the customer is navigating those nicely. So is that playing out exactly how you thought from a mix perspective? And if so, how should we anticipate mix to impact the comp moving forward in 2026?
Yes, Brian, this is Matt. I think so, to be honest, it's pretty -- been pretty much in line with our forecast and actually in the initial read has been a benefit to mix, which has come into the low 1 percentages so far. But we would anticipate kind of holding that line. There is still economic pressure out there for the consumer.
You still might see some trade down. So we're really pleased with the first round. And as David Gordon mentioned, we'll probably lean in more to it next year as well. So I would just think about around a negative 1% for next year, just as an ease of modeling.
Our next question comes from the line of Brian Harbour with Morgan Stanley.
Maybe just a couple of clarification questions. In North, I thought in the past, we had sort of talked about some honeymoon effects in these restaurants. I think your comment was more about sales transfer. Is it both? Is it more one or the other?
Brian, this is Matt. We're definitely talking about sales transfer in this environment. Now that's driven in some instances by both phenomenon. If the newer restaurants in the market has a substantially higher opening rate than we thought, then that can drive the sales transfer in that market, right, if that makes sense.
Okay. Understood. Your comment, I think, about point step down in growth. Was that just overall top line growth? Or was that also roughly what you'd expect from same-store sales? I know sometimes there's also just revenue dynamics from how many stores you're opening and what brands you're opening, but could you comment on that?
For sure. I would say it's total revenue, but it's predicated on traffic, right? So we would just anticipate in the fourth quarter based on sort of the impact, as we've noted more recently and likely relative to the shutdown amongst other economic factors that we would be about 1% less in traffic than third quarter.
Our next question comes from the line of Jeffrey Bernstein with Barclays.
Matt, just curious, the sequential trends through the third quarter and thus far into October from a comp perspective, I mean, I think we're all assuming maybe a deceleration that maybe ramped up through the third quarter and maybe continued in the fourth quarter. Just curious at your core casual dining brands of late, how you're thinking about that sequential trend and maybe what your assumption is for closing out 2025.
I know you mentioned maybe one less point of traffic in the fourth quarter, but are you assuming trends stabilize from here? Or are you assuming the trend continues to ease? Just curious because we're sitting at what appears to be an inflection point of slowing trends?
Yes. Like I said, Jeff, this is Matt, I mean, I think the first 2 periods were pretty consistent in Q3. We did see a little bit of choppiness. I mean, in hindsight, maybe 0.5 point of that was already some easing of the consumer, but we're also lapping a bigger rewards program. And it's always in the moment, hard to tell.
I definitely said and would reiterate that in the fourth quarter, we would anticipate a 1% lower traffic run rate. Generally, we are continuing to be predictable and steady and have the ability to manage the P&L. So we feel good about the guidance we're giving. And again, historically, looking at some of the trends these types of events tend to be based more on a macro component and not that long-lived. So I think we're confident in our ability to manage the business in this near-term environment.
Got it. And just following up, I appreciate the color you gave on 2026. I'm guessing most of your peers probably wouldn't give that level of granularity, so it's encouraging. I think you mentioned for commodities or for commodities and labor, you kind of talked about low single digit to mid-single digit, which is somewhat of a broad range.
But I know you talked about beef being on the rise. How should we think about commodities as we think about 2026 more broadly? I mean, do you have any insights into where that could fall out relative to that range you suggested or where maybe beef is headed?
Sure. And don't think that we're not giving a little bit of a broader range on purpose, Jeff, just to be clear. But the reality is that we are booking more commodities and feel better about it than some years, right? So we've seen the dairy complex really look positive on a year-over-year basis based on the capitulation of butter in late summer. And we have a much broader market basket than most. So beef will likely continue to be a pressure point.
It's just not as big of a component for us. I think some of the crop yields came in very, very strong. And so that supports some of the other proteins like chicken, right, which is really driven off the feeder corn piece of it. It supports some of the grocery and oil complexes with soybeans where they're at and bread. So overall, it feels pretty good. I don't know that I would go back to the teen years where it was negative or 0, but certainly a 1% to 2% feels achievable at this point in time and labor being maybe a little bit above that.
Our next question comes from the line of Lauren Silberman with Deutsche Bank.
I want to start with following up on the comp side. Are you seeing the deceleration broad-based across geographies or certain markets weaker, which is kind of informing your view on the impact from government shutdowns? And I guess are you assuming these similar trends continue at least into the first half of '26?
Yes. I mean, generally, Lauren, this is Matt. Geographically, Cheesecake is usually pretty stable. There are certainly outliers. I mean, the closer you get to D.C., the more prone, I think anyone is to pressure in this, but that's kind of like an anomaly. Generally speaking, we think this will potentially continue into the first quarter.
I think a lot of it depends on the ability for government to get back to work and trade deals to get done to give businesses and consumers more certainty, right? Everybody wants to be able to plan their lives and add jobs to the economy and all of those attributes that help drive restaurant sales. But I think that we're going to be cautious until we see that turn. I would say maybe the closest analogy to go back and track, I referenced the last shutdown.
But really, if you look at 2017, we saw a very, very similar trend in the industry. And it was about a 6-month -- 6- to 8-month period of time. So we're sort of planning on that without any better information, and we'll manage the business appropriately.
Got it. Helpful. And then on the restaurant margin side, you guys have obviously seen really strong 4-wall performance in the last couple of years. A 2-part question. One, as you think to '26, what are you embedding in 4-wall restaurant margin? And then two, Cheesecake Factory 4-wall is now exceeding 2019 levels. As we think ahead, is the future RLM expansion more driven by improvements in margin from North and other concepts or do you still see room for Cheesecake?
Sure. Yes. I mean I think what we've been talking about all along for like the last 6 to 9 months for next year is that we'd like to get 25 basis points of 4-wall margin. And based on the tax rate and the G&A and all the other pieces, you can pretty much back into that in the guidance. And I do think that Cheesecake really will focus on margin stability and that we have opportunities to improve margins across some of the more early-stage concepts for sure, and longer term, that would absolutely be the case.
Our next question comes from the line of John Ivankoe with JPMorgan.
Two questions, if I may. First, on the labor side. Obviously, I know you guys use E-Verify, and I understand that your turnover remains low, but it's kind of an industry or maybe a market-specific question in terms of just maybe demand for labor and kitchen labor specifically that you're seeing going up. Obviously, the industry has -- the broad industry has a decent amount of undocumented workers that are in it, not a Cheesecake Factory, but are in it broadly. And I was just curious if there was any tightening of this important labor segment that you're seeing in any various markets?
Yes. Thanks for the question, John. This is David Gordon. We really haven't seen any change by geography. We have continued terrific applicant flow across the country. We have a couple of openings coming up for Cheesecake Factory, where we've had over 1,000 applicants for those restaurants. So the marketplace really has not changed for us in the kitchen nor in the front. And our continued best-in-class retention has helped us to not need as many staff members as others may have had now or historically.
So the marketplace seems very steady and very stable. It's allowed us to keep our wage inflation in line with expectations. And as Matt said, we'll continue to build on this momentum moving into next year. And the stable environment, we think will sustain itself because of the employer of choice that we are.
And secondly, I think I heard in your prepared remarks an app at Cheesecake Factory, which at least for what I can find, just still doesn't exist. So remind us why you haven't had an app in the past? I mean, what kind of functionality that you might be able to do with it, how the loyalty program might change and if you think it's a potentially big idea for you or more evolutionary in nature?
Thanks, John. I think it's evolutionary. You're right. We don't have one. And I know you're a Cheesecake fan, and so you would know before anyone else when that app launches. But we are currently today in scope of trying to get an app launched in the first half of next year, and I think we're going to meet that goal. And it's sort of an evolutionary part of the rewards program, which will allow guests to make reservations and see their history in an easier way.
It will certainly allow guests to order off-premise in an easier way, repeat their orders from previous orders in a more seamless way and track their history of rewards and redemption. So we think there's good benefits to it. We want to create a program that really works for casual dining and guests will find a lot of value in. And we think we're on the right path to do that, and we'll hopefully get it launched here next year.
And can I ask what was the sticking point in the past several years of having one? Why are we waiting until '26 for this?
I think without a rewards program, it became a little more challenging to find the value proposition for the consumer, right? So we really wanted to make sure that it made sense for somebody to take up that real estate on their phone when your average guest is coming 4 to 6 times a year. And we think with the reward -- amount of rewards members we have today and their high frequency that we will really find the benefit in downloading the app and using it on a regular basis.
Our next question comes from the line of Dennis Geiger with UBS.
One more on loyalty there following up. As it relates to the app and just kind of the momentum that you talked about with the membership growth and the customer satisfaction with the program. As we think about -- or you think about benefits to '26, is it -- does it look similar to maybe what we saw in '25? Or again, based on your response to the last question, do we build on that? I think you guys have talked maybe about 100 basis points from a contribution perspective. Is that still the right level to be thinking about from loyalty?
Dennis, this is Matt. I think we're continuing to evolve the program. We definitely know that we're getting incremental contribution from it. But certainly, in the very near term, when you've got a little bit more of a bumpy consumer, just making sure that we're not overstating where we're at with that. I think as David Gordon mentioned with the app, we want to really reduce friction and improve kind of if you think about it, the holistic guest experience, not just within the 4 walls, and we think that there is a lot of opportunity. We're only now about 6 months into the more refined, more specific analyses that will help us develop the cohorts that we believe will drive even more incrementality. So again, we think it's a long-term proposition. And yes, there is some benefit today. We would expect to continue to build on that next year, but I don't think we're specifying that yet.
Great. And then just a quick one. Just anything on delivery, where that shook out in the quarter? Was that stable similar to off-prem? Or any changes sequentially on the delivery performance side of things?
Yes, Dennis, off-premise continues to stay very, very stable. Total off-premise was 21% of sales, right in line with Q2 and last year. Of that, delivery was about 10% and the rest of it was made up of 5% of online ordering and a little over 5% of phone and walk-up still. So very, very stable business. We continue to think Cheesecake is a great value in the off-premise channel, and we'll continue that way.
Our next question comes from the line of Jeff Farmer with Gordon Haskett.
You guys largely answered the question with a 1-point step down in traffic. But what is the implied Q4 Cheesecake same-store sales range with that $940 million to $955 million revenue guidance?
It's about a negative 1 to 0, right? I mean that's kind of in the range if you look at where the comp was in the third quarter, roughly.
Okay. And then just more macro -- one more macro question. So a lot of discussion, obviously, about lower income cohorts for the last really 18 months or so. But over the last couple of quarters, a little bit more discussion about that sort of younger demo or that 35 and under consumer cohort. Have you seen that consumer behavior or that consumer see a change in behavior across your portfolio of concepts?
I don't know if we would parse it down to that. I mean I read an analyst report recently that said the challenged groups were the lower income, the Hispanic, the liberal, the younger, the tourists. So I don't know who was left.
Our final question comes from the line of Tyler Prause with Stephens Inc.
Two questions from my end. Regarding media and advertising, what are you seeing in terms of consumer engagement per ad spend? I appreciate the color around flat G&A as a percent of sales in '26. But given the more competitive environment, could there be a need for more marketing dollars in '26?
Tyler, that's a super interesting question. This is Matt. I mean I think we have continued to spend more, but really just in the rewards program, right? So we're not going to try to do national TV advertising, but we are increasing the amount that we are doing with rewards. So I think that's the on-brand way. And I think it's a fair point goes back to the question about how do you let guests know about the value proposition. And so I think social media also is where we would probably dedicate more funding rather than really ad placement.
Great. That's super helpful. And you kind of touched on this just now, but although you're a different occasion, some fast casual concepts have called out a headwind from the Hispanic consumer, just given the tighter immigration policies in recent months. Just curious if you've seen any noticeable step change within that particular cohort?
I don't know that we -- again, we would parse it out. I think it's just -- what it says to us is that it's more broad-based, right? It's what you've seen in the back half of the year, and if I can claim this, back in April, we said that we thought the environment would soften in the back half of the year based on just macroeconomic factors, right?
Tariffs cause lower discretionary income. There's been fewer jobs created and consumer sentiment is at a low point. And so I don't know that I would say we're pointing out one cohort or another. I think it's an accumulation of those factors. But we also don't think it's permanent, right? I mean this is -- we operate in what's called the consumer discretionary category, which tends to be cyclical. And while it has stabilized much more over the past 10 to 15 years to become a little bit more stable, there tends to be a little bit of movement, like I said, 100 basis points here or there, but we're confident that with our execution and best-in-class operators and concepts that it will normalize in the next 3, 4, 5 months.
Thank you. And with no further questions in queue, this does conclude today's conference call. You may now disconnect.
Cheesecake Factory Incorporated — Q3 2025 Earnings Call
Financial data from Cheesecake Factory Incorporated
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 3,877 3,877 |
6%
6%
100%
|
|
| - Direct Costs | 841 841 |
4%
4%
22%
|
|
| Gross Profit | 3,036 3,036 |
6%
6%
78%
|
|
| - Selling and Administrative Expenses | 1,632 1,632 |
5%
5%
42%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 356 356 |
12%
12%
9%
|
|
| - Depreciation and Amortization | 113 113 |
8%
8%
3%
|
|
| EBIT (Operating Income) EBIT | 242 242 |
15%
15%
6%
|
|
| Net Profit | 179 179 |
12%
12%
5%
|
|
In millions USD.
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Cheesecake Factory Incorporated Stock News
Company Profile
Cheesecake Factory, Inc. engages in the operation of restaurant chains. It operates through The Cheesecake Factory, North Italia, Other FRC, and Other segments. The Cheesecake Factory segment offers appetizers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches and omelettes, and a selection of gluten-free items. The North Italia segment specializes in Italian cuisine. The Other FRC segment includes brands acquired from Fox Restaurant Concepts. The Other segment comprises of the Flower Child brand, along with other businesses. The company was founded by David M. Overton, Oscar Overton, and Evelyn Overton in 1972 and is headquartered in Calabasas Hills, CA.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Overton |
| Employees | 48,400 |
| Founded | 1972 |
| Website | www.thecheesecakefactory.com |


