Revenue Growth - Revenues increased by 4.8% to $907.2 million for the fiscal quarter ended September 30, 2025, compared to $865.5 million for the same period last year, driven by new restaurant openings and increased comparable restaurant sales [106]. - Revenues increased 4.9% to $2,790.2 million for the first nine months of fiscal 2025 compared to $2,660.7 million for the same period in fiscal 2024 [121]. - North Italia sales increased 16.1% to $83.5 million for Q3 fiscal 2025, compared to $71.9 million in Q3 fiscal 2024 [108]. - Flower Child sales increased 31.4% to $48.1 million for Q3 fiscal 2025, compared to $36.6 million in Q3 fiscal 2024 [111]. - Other FRC sales increased 16.5% to $78.0 million for Q3 fiscal 2025, compared to $67.0 million in Q3 fiscal 2024 [112]. - North Italia sales increased 18.1% to $257.7 million for the first nine months of fiscal 2025, compared to $218.3 million in the same period of fiscal 2024 [123]. - Flower Child sales increased 30.9% to $139.8 million for the first nine months of fiscal 2025, compared to $106.8 million in the same period of fiscal 2024 [124]. Comparable Sales and Customer Traffic - The Cheesecake Factory Restaurants sales rose by 0.6% to $651.4 million in Q3 fiscal 2025, with average sales per restaurant operating week increasing by 0.4% to $231,971 [107]. - Comparable sales for The Cheesecake Factory increased by 0.3%, or $2.1 million, primarily due to a 2.8% increase in average check, despite a 2.5% decrease in customer traffic [107]. Cost Management - Total costs and expenses represented 95.9% of revenues for the thirteen weeks ended September 30, 2025, with food and beverage costs at 21.8% and labor expenses at 35.6% [105]. - Food and beverage costs as a percentage of revenues decreased to 21.8% in Q3 fiscal 2025 from 22.6% in Q3 fiscal 2024 [114]. - Labor expenses as a percentage of revenues decreased to 35.6% in Q3 fiscal 2025 from 35.9% in Q3 fiscal 2024 [115]. - Other operating costs and expenses increased to 28.2% of revenues in Q3 fiscal 2025 from 27.7% in Q3 fiscal 2024 [116]. Profitability - Net income for the thirteen weeks ended September 30, 2025, was $31.9 million, an increase from $30.0 million for the same period in 2024, representing a growth of 6.3% [135]. - Adjusted net income for the thirty-nine weeks ended September 30, 2025, was $134.7 million, compared to $116.9 million for the same period in 2024, reflecting a year-over-year increase of 15.2% [135]. - EBITDA for the thirteen weeks ended September 30, 2025, was $65.1 million, up from $59.6 million in the prior year, indicating an increase of 9.1% [139]. Capital Expenditures and Investments - The company opened 18 new restaurants in the first nine months of fiscal 2025, compared to 14 in the same period of fiscal 2024, with plans to open up to 25 new restaurants in fiscal 2025 [146]. - Capital expenditures for new restaurants were $62.7 million for the first nine months of fiscal 2025, down from $76.1 million in the same period of fiscal 2024 [145]. - Future capital allocation will focus on new restaurant investments, managing debt levels, and returning capital to shareholders through dividends and share repurchases [102]. Shareholder Returns - Common stock dividends paid in the first nine months of fiscal 2025 totaled $39.4 million, slightly down from $39.8 million in the same period of fiscal 2024 [151]. - Cumulatively, the company has repurchased 59.7 million shares of common stock at a total cost of $1,972.4 million through September 30, 2025 [152]. - The company aims to offset share dilution from equity compensation and enhance earnings per share through its share repurchase program, which has no expiration date and is subject to Board discretion based on various financial factors [153]. Financial Position and Liquidity - Cash provided by operating activities increased by $52.1 million to $226.4 million for the thirty-nine weeks ended September 30, 2025, compared to $174.3 million in 2024 [143][144]. - The company repaid $110.0 million on its revolving credit facility in the first quarter of fiscal 2025, leaving a net availability for borrowings of $366.5 million as of September 30, 2025 [147]. - The company issued $575.0 million in convertible senior notes on February 28, 2025, with net proceeds of approximately $558.5 million after deducting issuance costs [149]. - The company expects adequate liquidity for the next 12 months from cash, cash equivalents, and operational cash flows, along with available borrowings under the Revolving Facility [154]. Operational Challenges - The company’s operating results have been impacted by geopolitical and macroeconomic events, leading to supply chain challenges and increased commodity and wage inflation, which began returning to historical levels in fiscal 2024 [159]. - The company is negotiating contracts for key food and non-food supplies for fiscal 2026, but these efforts may not yield intended benefits [160]. - The company is evaluating hedging vehicles to manage risks associated with commodity price fluctuations, but as of September 30, 2025, had no hedging contracts in place [160]. Accounting and Financial Estimates - The company’s critical accounting estimates have not materially changed from those reported in the Annual Report for the fiscal year ended December 31, 2024 [156]. - A hypothetical 1% increase in food costs would have negatively impacted cost of sales by $2.0 million for both the third quarter of fiscal 2025 and 2024 [161]. - A hypothetical 1% rise in interest rates would have increased interest expense by $1.1 million annually based on outstanding borrowings at December 31, 2024 [162]. - A 10% decline in the market value of the deferred compensation asset would have resulted in a net income decline of $3.2 million and $2.9 million at September 30, 2025, and December 31, 2024, respectively [163].

Core Viewpoint - The investment thesis for The Cheesecake Factory (CAKE) is centered on the growth potential from the restaurants acquired from the Fox Group, particularly North Italia and Flower Child, which is not currently reflected in the stock price [1]. Group 1 - The Cheesecake Factory's main concept focuses on long-term investment opportunities within the restaurant sector [1].

Group 1 - The Q3 earnings season is characterized by high stakes as investors are nervous about all-time market highs [1] - Consumer-facing businesses continue to provide insights into market trends, reflecting ongoing challenges and opportunities [1] - Gary Alexander has extensive experience in technology and startup sectors, contributing to the understanding of current industry themes [1]

Core Insights - The Cheesecake Factory reported a net income of $31.89 million for Q3 2025, reflecting a 6.3% increase from $29.99 million in the same quarter last year [1] - Total revenues for the quarter reached $907.22 million, marking a 4.8% year-on-year growth [1] - The company operates 365 restaurants across the US and Canada under various brands, including The Cheesecake Factory, North Italia, and Flower Child [1] Revenue Composition - Revenue sources for the quarter included $651.37 million from The Cheesecake Factory, $83.48 million from North Italia, and $78.01 million from other FRC and related operations [2] - An $800,000 pre-tax charge was incurred, primarily related to costs from acquiring FRC [2] - Adjusted net income for Q3, after accounting for the pre-tax charge, was $33.2 million, or $0.68 per diluted share [2] Operational Performance - Comparable restaurant sales at The Cheesecake Factory increased by 0.3% year-on-year during the quarter [2] - The company's chairman and CEO highlighted the positive sales results amid a competitive environment, showcasing the strength of the brand [3] - Improvements in labor productivity, wage management, and staff retention contributed to healthy margin performance [4] Expansion Plans - The company opened two new FRC outlets and two licensed Cheesecake Factory locations in Mexico during Q3 [4] - Following the quarter, one additional FRC location was opened, with plans to open up to 25 restaurants in fiscal 2025, including multiple brands [5] - A quarterly dividend of $0.27 per share was announced [5]

Core Insights - The Cheesecake Factory reported mixed results for Q3, with earnings per share of 68 cents exceeding the analyst consensus estimate of 60 cents, while sales of $907.226 million fell short of the expected $912.784 million [1][2]. Financial Performance - Quarterly earnings were 68 cents per share, beating the analyst consensus estimate of 60 cents per share [1]. - Quarterly sales amounted to $907.226 million, missing the analyst consensus estimate of $912.784 million [1]. Management Commentary - CEO David Overton highlighted solid results, with revenue within guidance and earnings exceeding expectations, driven by strong performance at The Cheesecake Factory restaurants [2]. - The company achieved year-over-year improvements in labor productivity, wage management, and staff retention, contributing to healthy margins [2]. - Two new restaurant openings in Q3 are on track to meet the unit growth objective for the year [2]. Market Reaction - Following the earnings announcement, Cheesecake Factory shares declined by 4.8%, trading at $51.73 [2]. Analyst Ratings and Price Targets - Stephens & Co. analyst Jim Salera maintained an Overweight rating but lowered the price target from $70 to $64 [5]. - B of A Securities analyst Katherine Griffin maintained a Neutral rating and reduced the price target from $61 to $56 [5].

Core Insights - Cheesecake Factory reported revenue of $907.23 million for the quarter ended September 2025, marking a year-over-year increase of 4.8% and an EPS of $0.68 compared to $0.58 a year ago, with an EPS surprise of +13.33% [1] - The revenue fell short of the Zacks Consensus Estimate of $912.96 million by -0.63% [1] Financial Performance Metrics - Comparable restaurant sales for The Cheesecake Factory were 0.3%, below the seven-analyst average estimate of 1.2% [4] - The number of company-owned restaurants for The Cheesecake Factory remained at 216, matching the seven-analyst average estimate [4] - Revenue for The Cheesecake Factory restaurants was $651.38 million, slightly below the $655.31 million estimated by six analysts, representing a year-over-year change of +0.6% [4] Other Business Segments - North Italia reported comparable restaurant sales of -3%, significantly lower than the average estimate of 0.3% [4] - Revenue for North Italia was $83.48 million, below the six-analyst average estimate of $84.85 million, but showed a year-over-year increase of +16.1% [4] - Revenue from Other segments was $94.35 million, exceeding the six-analyst average estimate of $91.61 million, with a year-over-year change of +19.7% [4]

Core Insights - Cheesecake Factory reported quarterly earnings of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.60 per share, and showing an increase from $0.58 per share a year ago, resulting in an earnings surprise of +13.33% [1] - The company generated revenues of $907.23 million for the quarter ended September 2025, which was slightly below the Zacks Consensus Estimate by 0.63%, but an increase from $865.47 million year-over-year [2] - Cheesecake Factory's stock has increased approximately 17.9% year-to-date, outperforming the S&P 500's gain of 16.9% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is $1.11 on revenues of $969.08 million, and for the current fiscal year, it is $3.77 on revenues of $3.76 billion [7] Industry Context - The Retail - Restaurants industry, to which Cheesecake Factory belongs, is currently ranked in the bottom 11% of over 250 Zacks industries, indicating potential challenges ahead [8] - The performance of Cheesecake Factory's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Estimate Revisions - Prior to the earnings release, the estimate revisions trend for Cheesecake Factory was mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $907 million, finishing near the midpoint of the guidance range [14] - Adjusted net income margin was 3.7%, exceeding the high end of the guidance [15] - GAAP diluted net income per share was $0.66, while adjusted diluted net income per share was $0.68 [17] Business Line Data and Key Metrics Changes - Comparable sales at The Cheesecake Factory restaurants increased by 0.3%, with total sales of $651.4 million, up 1% from the prior year [15][6] - North Italia's total sales were $83.5 million, up 16% from the prior year, with comparable sales declining by 3% [15][12] - Flower Child's sales totaled $48.1 million, up 31% from the prior year, with comparable sales increasing by 7% [15][12] Market Data and Key Metrics Changes - Annualized unit volumes for The Cheesecake Factory averaged over $12 million [6] - North Italia's annualized AUVs reached $7.3 million [11] - Flower Child's annualized AUVs were $4.6 million [12] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025, including four Cheesecake Factory locations and six each of North Italia and Flower Child [20] - For 2026, the company expects to accelerate development with as many as 26 new restaurant openings [8][20] - The focus remains on delivering exceptional food, service, and hospitality while executing long-term growth strategies [8] Management's Comments on Operating Environment and Future Outlook - Management noted a softer macro and consumer environment but emphasized stable overall performance [6] - The company anticipates total revenues for Q4 2025 to be between $940 million and $955 million, representing a 1% step down from Q3 sales trends [18] - Management expressed confidence in navigating the dynamic macro environment and maintaining profitability [22] Other Important Information - The company recorded a pre-tax net expense of $0.8 million related to FRC acquisition-related expenses [16] - The Cheesecake Rewards program continues to show strong membership growth and positive member satisfaction [10] Q&A Session Summary Question: What is driving the caution in the current consumer environment? - Management indicated that the caution is primarily due to a decline in traffic, with stable day parts and good performance from new menu items [24] Question: Can you provide the breakdown of comps for The Cheesecake Factory and North Italia? - For The Cheesecake Factory, pricing was about 4%, traffic was -2.5%, and mix was the difference. For North Italia, price was 4%, mix was -1%, and traffic was -6% [27] Question: What is the outlook for commodity inflation in Q4? - Commodity inflation was about flat in Q3, but is expected to be around 2% in Q4, primarily driven by beef prices [29] Question: How is the company planning to promote lower price point items? - Management plans to continue promoting bites and bowls through social media and marketing campaigns, leveraging the Cheesecake Rewards program [36] Question: Are there any changes in labor demand or supply? - Management reported steady applicant flow and strong retention, indicating no significant changes in labor demand or supply [89] Question: What are the expectations for the app launch? - The company is working on launching a rewards app in the first half of next year, aimed at enhancing customer engagement and experience [91]

Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $907 million, finishing near the midpoint of the guidance range [14] - Adjusted net income margin was 3.7%, exceeding the high end of the guidance [15] - GAAP diluted net income per share was $0.66, while adjusted diluted net income per share was $0.68 [17] Business Line Data and Key Metrics Changes - Comparable sales at The Cheesecake Factory restaurants increased by 0.3%, with total sales of $651.4 million, up 1% from the prior year [15][6] - North Italia's total sales were $83.5 million, up 16% from the prior year, with comparable sales declining by 3% [15][12] - Flower Child's sales totaled $48.1 million, up 31% from the prior year, with comparable sales increasing by 7% [15][12] Market Data and Key Metrics Changes - Annualized unit volumes for The Cheesecake Factory averaged over $12 million, while North Italia reached $7.3 million [6][11] - Flower Child's annualized AUVs were $4.6 million, significantly outperforming the fast casual segment [12] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025 and 26 in 2026, focusing on delivering exceptional food and service [8][20] - Menu innovation is a key strategic focus, with new offerings resonating well with customers and driving sales [6][10] - The company is developing a dedicated rewards app to enhance guest engagement and streamline the rewards program [11][90] Management's Comments on Operating Environment and Future Outlook - Management noted a softer macro and consumer environment but emphasized stable overall performance and healthy demand for their concepts [6][22] - The company anticipates total revenues for Q4 2025 to be between $940 million and $955 million, reflecting a cautious outlook due to current consumer trends [18] - Management expressed confidence in navigating the dynamic macro environment, citing strong execution and a resilient business model [22] Other Important Information - The Cheesecake Factory's restaurant-level profit margin increased by 60 basis points year-over-year to 16.3% [7] - Labor as a percentage of sales declined by 30 basis points, driven by improved retention and productivity [16] Q&A Session Summary Question: What is driving the caution in consumer behavior? - Management indicated that the caution is primarily due to a decline in traffic, with stable day parts but a slight drop in overall consumer visits [24] Question: Can you provide the breakdown of comps for The Cheesecake Factory and North Italia? - For The Cheesecake Factory, pricing was about 4%, traffic was negative 2.5%, and mix was the difference. For North Italia, price was 4%, mix was negative 1%, and traffic rounded to negative 6% [27] Question: What is the outlook for commodity inflation in Q4? - Commodity inflation was flat in Q3, but is expected to be around 2% in Q4, primarily driven by beef prices [29] Question: How is the company addressing value at North Italia? - North Italia is promoting a small plate and pasta lunch for $25 to enhance value perception among guests [55] Question: Are there any changes in labor demand? - Management reported no significant changes in labor demand or applicant flow, maintaining a steady environment for hiring [88] Question: What are the expectations for the new app? - The app is expected to enhance the rewards program, allowing for easier reservations and order placements, with a launch planned for the first half of next year [90]

Financial Data and Key Metrics Changes - The Cheesecake Factory reported total revenues of $907 million for Q3 2025, finishing near the midpoint of the guidance range [11] - Adjusted net income margin was 3.7%, exceeding the high end of the guidance [12] - GAAP diluted net income per share was $0.66, while adjusted diluted net income per share was $0.68 [14] Business Line Data and Key Metrics Changes - Comparable sales at The Cheesecake Factory restaurants increased by 0.3%, with total sales reaching $651.4 million, up 1% from the prior year [4][12] - North Italia's total sales were $83.5 million, up 16% from the prior year, with comparable sales declining by 3% [10][12] - Flower Child experienced a 7% increase in comparable sales, translating into annualized AUVs of $4.6 million [10][12] Market Data and Key Metrics Changes - The Cheesecake Factory's annualized unit volumes averaged over $12 million [4] - North Italia's annualized AUVs reached $7.3 million [9] - Flower Child's restaurant-level profit margins improved by 140 basis points year over year to 17.4% [11] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025 and 26 new restaurants in 2026, focusing on delivering exceptional food and service [6][17] - The strategic focus on menu innovation is seen as a key differentiator, with new menu offerings resonating well with consumers [5][8] - The company aims to enhance the guest experience through a dedicated rewards app, expected to launch in the first half of 2026 [78] Management's Comments on Operating Environment and Future Outlook - Management noted a softer macro and consumer environment but emphasized stable overall performance and healthy demand for their concepts [4][20] - The company anticipates total revenues for Q4 2025 to be between $940 million and $955 million, reflecting a cautious outlook due to recent industry trends [15] - Management expressed confidence in navigating the dynamic macro environment, citing strong execution and a resilient business model [20] Other Important Information - The Cheesecake Factory's restaurant-level profit margin increased by 60 basis points year over year to 16.3% [5] - The company returned $13.8 million to shareholders through dividends and stock repurchases [12] - Total available liquidity at the end of the quarter was approximately $556.5 million [14] Q&A Session Summary Question: What is driving the caution in consumer behavior? - Management indicated that the caution is primarily related to traffic trends, with stable day parts but a slight decline in overall traffic [22] Question: Can you provide the breakdown of comps for The Cheesecake Factory and North Italia? - For The Cheesecake Factory, pricing was about 4%, traffic was negative 2.5%, and mix was positive [24] - For North Italia, pricing was 4%, mix was negative 1%, and traffic was negative 6% [25] Question: What is the outlook for commodity inflation in Q4? - Commodity inflation was flat in Q3, but is expected to rise to about 2% in Q4, primarily driven by beef prices [27] Question: How is the company addressing the lower price points in the menu? - Management plans to continue promoting lower price point items and menu innovation to attract customers [32] Question: Are there any changes in labor demand and retention? - The company has not seen changes in labor demand and continues to experience strong applicant flow and low turnover [75] Question: What are the expectations for the loyalty program and app? - The loyalty program is expected to contribute positively in 2026, with the app aimed at enhancing guest experience and engagement [82]