Company Overview - Cheesecake Factory shares have increased by approximately 15.5% over the past month, outperforming the S&P 500 [1] - The most recent earnings report is crucial for understanding the catalysts affecting the stock [1] Earnings Estimates - Estimates for Cheesecake Factory have trended downward in the past month, with a consensus estimate shift of -6.99% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [4] VGM Scores - Cheesecake Factory has a strong Growth Score of A, but a low Momentum Score of F, while maintaining a Value Score of A, placing it in the top quintile for value investment [3] - The aggregate VGM Score for the stock is A, which is significant for investors not focused on a single strategy [3] Industry Performance - Cheesecake Factory is part of the Zacks Retail - Restaurants industry, where Brinker International has seen a notable gain of 29.5% over the past month [5] - Brinker International reported revenues of $1.43 billion for the last quarter, reflecting a year-over-year increase of +27.2%, with EPS rising from $1.24 to $2.66 [5] - For the current quarter, Brinker International is expected to post earnings of $2.36 per share, marking a year-over-year change of +46.6% [6]

Core Viewpoint - The Cheesecake Factory Incorporated (CAKE) is expected to benefit from unit expansion, strong performance of Flower Child, and effective marketing strategies, although concerns exist regarding the uncertain macroeconomic environment and elevated expenses [1]. Factors Driving Growth - The company opened eight new restaurants in the fiscal first quarter, including three North Italia, three Flower Child, and two FRC units, with plans to open up to 25 new restaurants in 2025 [2] - Flower Child's sales increased by 26.1% year over year to $43.5 million, supported by a 19.2% rise in total operating weeks and a 5.8% increase in sales per restaurant operating week [3] - The company executed a successful marketing strategy, including a menu update with over 20 new items, generating significant media attention and nearly double the PR impressions compared to the same quarter last year [4] Loyalty Program and Market Performance - The Cheesecake Rewards loyalty program is gaining traction, with high member acquisition and satisfaction levels, shifting towards a personalized engagement strategy [5] - Shares of Cheesecake Factory have increased by 7.7% over the past six months, outperforming the industry's decline of 5.2% [5] Concerns for CAKE Stock - The company is facing an uncertain macroeconomic environment, with concerns over fluctuations in commodity costs, labor, and various expenses [7] - Anticipated cost pressures include low-single-digit commodity inflation and net total labor inflation in the low-to-mid-single-digit range, with general and administrative expenses expected to be around $60 million [8] - Total costs and expenses for the second quarter of fiscal 2025 are projected to rise by 4.6% year over year to $884.6 million [8]

Group 1 - The Cheesecake Factory (CAKE) is given a hold rating due to the near-term upside being already priced in [1] - Strong performance in 1Q25 margin, steady same-store sales growth (SSSG), and momentum in new store openings are encouraging [1] - The investment approach focuses on understanding core business economics, competitive moat, unit economics, reinvestment opportunities, and management quality [1] Group 2 - The analyst emphasizes the importance of long-term free cash flow generation and shareholder value creation [1] - The analysis aims to help readers focus on factors that drive long-term equity value [1] - The investment insights shared are intended to be both analytical and accessible for readers seeking high-quality, long-term investment opportunities [1]

Group 1 - The Cheesecake Factory Incorporated (CAKE) is experiencing significant activity in the options market, particularly with the Jun 18, 2025 $30 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to either a rally or a sell-off [2] - The Cheesecake Factory currently holds a Zacks Rank 3 (Hold) in the Retail - Restaurants industry, which is in the bottom 21% of the Zacks Industry Rank, with recent downward revisions in earnings estimates from analysts [3] Group 2 - The high implied volatility surrounding The Cheesecake Factory may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4]

[Part I - Financial Information](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for The Cheesecake Factory, including balance sheets, income statements, and cash flows, with explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a summary of the company's assets, liabilities, and equity as of April 1, 2025, compared to December 31, 2024 | Account | April 1, 2025 (in thousands $) | December 31, 2024 (in thousands $) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $135,411 | $84,176 | | Total current assets | $361,053 | $333,313 | | Total assets | $3,110,864 | $3,041,760 | | **Liabilities & Equity** | | | | Total current liabilities | $683,943 | $711,420 | | Long-term debt | $627,306 | $452,062 | | Total liabilities | $2,771,459 | $2,598,305 | | Total stockholders' equity | $339,405 | $443,455 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section details the company's revenues, operating income, and net income for the thirteen weeks ended April 1, 2025, compared to the prior year | Metric | April 1, 2025 (in thousands $) | April 2, 2024 (in thousands $) | | :--- | :--- | :--- | | Revenues | $927,197 | $891,223 | | Income from operations | $51,959 | $39,293 | | Loss on extinguishment of debt | ($15,891) | $0 | | Net income | $32,941 | $33,191 | | Diluted EPS | $0.67 | $0.68 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash flows from operating, investing, and financing activities for the thirteen weeks ended April 1, 2025 | Activity | April 1, 2025 (in thousands $) | April 2, 2024 (in thousands $) | | :--- | :--- | :--- | | Cash provided by operating activities | $78,919 | $66,748 | | Cash used in investing activities | ($43,353) | ($37,356) | | Cash provided by / (used in) financing activities | $15,663 | ($25,319) | | Net change in cash and cash equivalents | $51,235 | $3,930 | - Significant financing activities in Q1 2025 included proceeds from new long-term convertible debt of **$575.0 million**, repayment of existing convertible debt of **$289.8 million**, and treasury stock purchases of **$141.4 million**[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes disclose accounting policies, debt instruments, segment performance, and shareholder equity, including new convertible notes, debt extinguishment, and share repurchases - In February 2025, the company issued **$575.0 million** of 2.00% Convertible Senior Notes due 2030, with net proceeds of approximately **$558.5 million**[39](index=39&type=chunk) - Proceeds from the 2030 Notes were used to repurchase approximately **$276.0 million** of the 2026 Notes for **$289.8 million**, resulting in a **$15.9 million** loss on debt extinguishment in Q1 2025[48](index=48&type=chunk)[106](index=106&type=chunk) - During Q1 2025, the company repurchased **2.6 million shares** of common stock for **$141.4 million**; cumulatively, **59.7 million shares** have been repurchased under the **61.0 million share** authorization[61](index=61&type=chunk) Segment Revenue (Thirteen Weeks Ended April 1, 2025 vs April 2, 2024) | Segment | Q1 2025 Revenue (in thousands $) | Q1 2024 Revenue (in thousands $) | % Change | | :--- | :--- | :--- | :--- | | The Cheesecake Factory Restaurants | $672,734 | $667,794 | +0.7% | | North Italia | $83,410 | $70,874 | +17.7% | | Other FRC | $87,424 | $74,229 | +17.8% | | Other | $83,629 | $78,326 | +6.8% | | **Total** | **$927,197** | **$891,223** | **+4.0%** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 financial results, focusing on revenue growth, comparable sales, cost fluctuations, and capital allocation, including debt refinancing and share repurchases [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Total revenues rose 4.0% to $927.2 million, driven by comparable sales growth at The Cheesecake Factory, while cost of sales and labor expenses improved as a percentage of revenue - The Cheesecake Factory comparable sales increased **1.0%**, driven by a **2.2%** average check increase (**4.4%** pricing, **-2.2%** mix), offset by a **1.2%** traffic decrease; off-premise sales were stable at **22%** of restaurant sales[94](index=94&type=chunk) - North Italia comparable sales decreased approximately **1%**, while Flower Child comparable sales increased approximately **5%**[95](index=95&type=chunk)[96](index=96&type=chunk) - Food and beverage costs decreased to **21.8%** of revenues from **22.8%** YoY, primarily due to favorable commodity inflation[99](index=99&type=chunk) - Labor expenses as a percentage of revenue decreased to **35.7%** from **36.0%** YoY, as menu price increases outpaced wage inflation[100](index=100&type=chunk) Non-GAAP Adjusted Net Income Reconciliation (Thirteen Weeks Ended) | Metric | April 1, 2025 (in thousands $) | April 2, 2024 (in thousands $) | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$32,941** | **$33,191** | | Loss on extinguishment of debt | $15,891 | — | | Other adjustments | $1,376 | $3,204 | | Tax effect of adjustments | ($4,489) | ($833) | | **Adjusted Net Income (Non-GAAP)** | **$45,719** | **$35,562** | | **Adjusted Diluted EPS (Non-GAAP)** | **$0.93** | **$0.73** | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Cash increased to $135.4 million, driven by operating cash flow and financing activities, including new convertible notes, debt repayment, capital expenditures for new restaurants, and shareholder returns - Cash provided by operating activities increased to **$78.9 million** in Q1 2025 from **$66.7 million** in Q1 2024[115](index=115&type=chunk)[116](index=116&type=chunk) - The company plans for **$190 to $210 million** in capital expenditures for fiscal 2025 to support the opening of as many as **25 new restaurants**[118](index=118&type=chunk) - In Q1 2025, the company repaid the entire **$110.0 million** outstanding balance on its Revolver Facility; as of April 1, 2025, net availability was **$366.5 million**[119](index=119&type=chunk) - In Q1 2025, the company paid **$12.5 million** in dividends and repurchased **2.6 million shares** for **$141.4 million**[115](index=115&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies market risks including commodity price volatility, interest rate changes, and investment value fluctuations, with a hypothetical 1% food cost increase impacting cost of sales by $2.0 million - A hypothetical **1%** increase in food costs would have negatively impacted cost of sales by **$2.0 million** in Q1 2025[134](index=134&type=chunk) - As of April 1, 2025, the company had no outstanding borrowings under its variable-rate Loan Agreement, thus having no immediate exposure to interest rate fluctuations on that facility[135](index=135&type=chunk) - The company is exposed to market risk from investments in variable life insurance contracts supporting its non-qualified plans; a hypothetical **10%** decline in the market value of these assets would reduce net income by **$2.8 million** due to the tax impact[135](index=135&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of April 1, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of **April 1, 2025**[136](index=136&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[137](index=137&type=chunk) [Part II - Other Information](index=45&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information, including updated risk factors related to increased indebtedness and details on share repurchase activities [Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section supplements existing risk factors, focusing on new risks from increased indebtedness, including lack of debt covenants, potential inability to fund note repurchases, and stock price depression from hedging or dilution - The indentures for the **2026** and **2030** Notes do not restrict the company from incurring additional debt, which could increase financial vulnerability and limit cash flow for operations[140](index=140&type=chunk)[141](index=141&type=chunk) - The company may not have sufficient funds to repurchase the notes for cash following a 'fundamental change' (e.g., a change of control), which could trigger a default[148](index=148&type=chunk) - Hedging activities by note investors (e.g., short selling the company's stock) and the potential for share issuance upon note conversion could depress the trading price of the common stock[144](index=144&type=chunk)[146](index=146&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q1 2025, the company repurchased 2.6 million shares for $141.4 million, with 1.3 million shares remaining available under authorization Share Repurchases in Q1 2025 | Metric | Value | | :--- | :--- | | Total Shares Purchased (in shares) | 2,606,000 | | Average Price Paid per Share ($) | ~$54.26 | | Total Cost (in thousands $) | $141,400 (excluding excise tax) | | Shares Remaining in Authorization (in shares) | 1,335,000 |

Core Viewpoint - The Cheesecake Factory Incorporated reported strong first-quarter revenues but revised its outlook due to economic concerns and tariff-related uncertainties [1][2]. Financial Performance - First-quarter revenues reached $927.2 million, an increase from $891.2 million year-over-year [1]. - Adjusted EBITDA forecast for 2025 was lowered from $323.5 million to $317.6 million, and adjusted EPS was revised from $3.72 to $3.68 [4]. - For 2026, EBITDA estimate was reduced from $348.8 million to $343.3 million, and adjusted EPS was trimmed from $4.14 to $4.09 [5]. Market Position and Trends - The company maintains a strong foundation of steady consumer demand, supported by a broad menu appealing to a wide range of guests [4]. - Positive trends include gradually improving same-store sales, year-over-year margin expansion, and increased unit growth, positioning shares for continued momentum through fiscal 2025 [3]. - The company plans a summer menu update to reinforce a value-focused trend as customers favor lower-priced items and non-alcoholic beverages [5]. Stock Performance - CAKE shares are currently trading lower by 3.82% at $48.45 [5].

Core Insights - The Cheesecake Factory reported first-quarter earnings of 93 cents per share, exceeding the analyst consensus estimate of 81 cents per share, while quarterly sales of $927.20 million fell short of the estimate of $927.44 million [1][2] Financial Performance - The company demonstrated strong topline revenue, margins, and earnings, indicating positive momentum across its business [2] - Sales were at the higher end of expectations, driven by The Cheesecake Factory restaurants, reflecting consistent consumer demand for its dining experiences [2] Operational Efficiency - The company achieved year-over-year improvements in labor productivity, food efficiency, wage management, and retention among staff and managers, contributing to strong profit flow-through and margin expansion [2] Stock Performance - Following the earnings announcement, Cheesecake Factory shares declined by 4.9%, trading at $47.88 [2] Analyst Ratings and Price Targets - Baird analyst David Tarantino maintained a Neutral rating and raised the price target from $46 to $49 [7] - Wells Fargo analyst Zachary Fadem maintained an Equal-Weight rating and increased the price target from $45 to $50 [7] - Morgan Stanley analyst John Glass maintained an Underweight rating and raised the price target from $39 to $40 [7]

Core Insights - The Cheesecake Factory Incorporated (CAKE) reported strong first-quarter fiscal 2025 results, with earnings and revenues exceeding the Zacks Consensus Estimate, showing growth compared to the prior-year quarter [1][4]. Financial Performance - Adjusted earnings per share (EPS) for the quarter were 93 cents, surpassing the Zacks Consensus Estimate of 81 cents by 14.8%, and up from 73 cents in the same quarter last year [4]. - Quarterly revenues reached $927.2 million, beating the consensus estimate of $926 million by 0.2%, and reflecting a 4% increase year-over-year [4]. Operational Highlights - The company's strong performance was attributed to effective operational execution and a focus on staffing and retention, which improved guest satisfaction scores and contributed to sales growth [2]. - Enhanced execution led to margin expansion while maintaining quality and value in a competitive market [3]. Marketing and Brand Engagement - A recent menu update featuring over 20 new items generated significant media attention, resulting in over 700 placements and more than 8 billion potential PR impressions, nearly double the exposure from the same quarter last year [3]. Comparable Sales - Comparable sales at Cheesecake Factory restaurants increased by 1% year-over-year, compared to a 0.6% decline in the prior-year quarter [5]. - North Italia's comparable sales declined by 1% year-over-year, contrasting with a 3% growth reported in the year-ago quarter [5]. Cost Structure - The cost of food and beverage as a percentage of revenues decreased by 100 basis points year-over-year to 21.8% [6]. - Labor expenses as a percentage of total revenues were 35.7%, down 30 basis points year-over-year [6]. - Other operating costs increased to 26.7% of total revenues, up 40 basis points year-over-year [7]. Balance Sheet and Liquidity - As of April 1, 2025, cash and cash equivalents totaled $135.4 million, up from $84.2 million at the end of 2024 [8]. - Long-term debt increased to $627.3 million from $452.1 million as of December 31, 2024 [8]. - Total available liquidity was reported at $501.9 million [8]. Shareholder Returns - The company declared a quarterly cash dividend of 27 cents per share, payable on May 27, 2025 [9]. - Approximately 2.6 million shares were repurchased for $141.4 million during the fiscal first quarter [9]. Expansion Plans - In the first quarter of fiscal 2025, the company opened eight new restaurants and plans to add up to 25 restaurants across its portfolio in 2025 [10].

Core Insights - Cheesecake Factory reported revenue of $927.2 million for the quarter ended March 2025, reflecting a 4% increase year-over-year [1] - The company's EPS was $0.93, up from $0.73 in the same quarter last year, exceeding the consensus estimate of $0.81 by 14.81% [1] - The revenue surpassed the Zacks Consensus Estimate of $925.55 million by 0.18% [1] Financial Performance Metrics - Comparable restaurant sales for The Cheesecake Factory were reported at 1%, slightly below the nine-analyst average estimate of 1.2% [4] - North Italia's comparable restaurant sales were down 1%, compared to the eight-analyst average estimate of 1.4% [4] - Total number of company-owned restaurants was 355, below the average estimate of 359 by eight analysts [4] Revenue Breakdown - Revenues from The Cheesecake Factory restaurants were $672.73 million, slightly below the estimated $673.38 million, representing a year-over-year increase of 0.7% [4] - Revenues from Other segments were $83.63 million, compared to the average estimate of $84.31 million, showing a year-over-year increase of 6.8% [4] - Revenues from Other FRC were $87.42 million, exceeding the average estimate of $86.99 million, with a year-over-year change of 17.8% [4] - Revenues from North Italia were $83.41 million, surpassing the estimated $81.63 million, reflecting a 17.7% increase year-over-year [4] Stock Performance - Cheesecake Factory shares have returned -2.4% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market [3]

Company Overview - The company owns and operates 358 restaurants across the US and Canada, including 215 The Cheesecake Factory locations[8] - The company's fiscal year 2024 revenue was $3.6 billion[8] - The company's market capitalization was $2.5 billion as of April 1, 2025[8] Expansion and Growth - There are 33 international The Cheesecake Factory locations[12, 21] - The company is targeting approximately 20% average annual unit growth for North Italia and Flower Child[82, 91] - The company plans to open as many as 25 new units in 2025[105, 118] Financial Performance - Total revenue for Q1 2025 was $927 million, up 4% from the previous year[113] - Adjusted net income margin for Q1 2025 was 4.9%, up 90 bps from the previous year[113] - The company issued $575 million of 2.00% Convertible Senior Notes due 2030[113, 117] Sales and Unit Volume - The Cheesecake Factory's FY 2024 average weekly sales equate to $12.5 million annualized AUV[111] - North Italia's FY 2024 average weekly sales equate to $7.7 million annualized AUV[111] - Flower Child's FY 2024 average weekly sales equate to $7.2 million annualized AUV[111] Off-Premise Performance - Off-premise sales accounted for 17% of total revenue in FY 2024[26] - The Cheesecake Factory's off-premise average weekly sales for FY 2024 were $2.8 million per restaurant[39]