Financial Data and Key Metrics Changes - The company reported total revenues of $927 million for Q1 2025, finishing towards the high end of guidance, with a 27% year-over-year increase in adjusted earnings per share [5][15] - Adjusted net income margin was 4.9%, exceeding the high end of the guidance range [15] - The Cheesecake Factory restaurants' total sales were $673 million, up 1% from the prior year, with comparable sales also increasing by 1% [16][17] - The four-wall restaurant margins increased to 17.4%, up 140 basis points from Q1 2024 [6] Business Line Data and Key Metrics Changes - North Italia's total sales were $83.4 million, up 18% from the prior year, with comparable sales declining by 1% [17][12] - Flower Child's sales totaled $43.5 million, up 26% from the prior year, with comparable sales increasing by 5% [17][13] - The company opened eight restaurants in Q1 2025, including three North Italia and three Flower Child locations [6][24] Market Data and Key Metrics Changes - The off-premise sales mix for The Cheesecake Factory was 22%, consistent with Q1 2024 [16][100] - North Italia's annualized average unit volumes (AUVs) increased to $7.75 million, while Flower Child's AUV was over $4.6 million, reflecting strong consumer demand [12][13] Company Strategy and Development Direction - The company aims to open as many as 25 new restaurants in 2025, with a focus on accelerating new unit growth [7][24] - The company has been recognized as one of Fortune Magazine's 100 Best Companies to Work For for the twelfth consecutive year, highlighting its commitment to employee satisfaction [7] - The company is focused on menu innovation, operational execution, and maintaining contemporary restaurant designs as key components of its strategy [8][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment feels less robust than three months ago, citing various external factors impacting performance [29] - The company anticipates total revenues for Q2 2025 to be between $935 million and $950 million, reflecting a cautious outlook due to economic conditions [21] - Management remains confident in the company's ability to absorb potential tariff impacts without changing adjusted net income margin expectations [21][39] Other Important Information - The company returned $153.8 million to shareholders during the quarter through dividends and share repurchases [15] - The company ended the quarter with total available liquidity of approximately $501.9 million [19] Q&A Session Summary Question: Is the uncertain macro environment already impacting the business? - Management indicated that while the business remains stable, the environment feels less robust than previously expected, suggesting a prudent outlook for the remainder of the year [28][29] Question: Can you quantify the expected impact of tariffs on the P&L? - Management noted that the biggest impact would likely be in other operating expenses, with potential pricing adjustments of 50 to 75 basis points if necessary [34][39] Question: What are the same-store sales components for The Cheesecake Factory? - The Cheesecake Factory experienced 4% effective pricing, with traffic down 1.2%, indicating a mix shift due to menu changes [47] Question: How is the loyalty program performing? - The loyalty program is seeing strong member acquisition and positive guest feedback, with plans to implement more personalized offers moving forward [42][44] Question: What is the outlook for commodity inflation? - Management reported that commodity inflation was close to breakeven in Q1, with expectations of low single-digit inflation in Q2 [64] Question: Are there any planned closures affecting guidance? - Management confirmed a closure in Seattle but indicated no other planned closures at this time [66] Question: What differentiates Flower Child's performance in a slowing environment? - Flower Child's strong performance is attributed to food quality, operational stability, and effective staffing, which resonate well with consumers [70]

Financial Data and Key Metrics Changes - The company reported total revenues of $927 million for the first quarter, finishing towards the high end of guidance, with a 27% year-over-year increase in adjusted earnings per share [7][16] - Adjusted net income margin was 4.9%, exceeding the high end of the guidance range [16] - GAAP diluted net income per share was $0.67, while adjusted diluted net income per share was $0.93 [20] Business Line Data and Key Metrics Changes - Comparable sales at The Cheesecake Factory restaurants increased by 1%, with total sales reaching $673 million, up 1% from the prior year [7][17] - North Italia's total sales were $83.4 million, an 18% increase from the prior year, with comparable sales declining by 1% [17][14] - Flower Child sales totaled $43.5 million, up 26% from the prior year, with comparable sales increasing by 5% [17][14] Market Data and Key Metrics Changes - The Cheesecake Factory's off-premise sales mix was 22%, consistent with the previous year [18][102] - North Italia's annualized average unit volumes (AUVs) increased to $7.75 million, while Flower Child's AUV was over $4.6 million, reflecting strong consumer demand [13][14] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025, with eight openings expected in the second quarter [9][26] - The company has been recognized on Fortune Magazine's 100 Best Companies to Work For list for the twelfth consecutive year, highlighting its commitment to employee satisfaction [9] - The focus remains on menu innovation, operational execution, and maintaining restaurant design and ambiance [9][27] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment feels less robust than three months ago, citing unprecedented weather and economic factors [30][31] - The company anticipates total revenues for fiscal 2025 to be approximately $3.76 billion at the midpoint of estimates, with adjusted net income margin expectations around 4.75% [24][25] - Management expressed confidence in navigating near-term uncertainties while delivering sustainable long-term value [27] Other Important Information - The company returned $153.8 million to shareholders during the quarter through dividends and share repurchases [17] - The company ended the quarter with total available liquidity of approximately $501.9 million [20] Q&A Session Summary Question: Has the uncertain macro environment already impacted the business? - Management acknowledged that there has been a lot of noise in the first four months of the year, but the business remains stable and predictable [30][31] Question: Can you quantify the expected impact of tariffs on the P&L? - Management indicated that the biggest impact would be in other operating expenses, with potential pricing adjustments of 50 to 75 basis points if necessary [35][40] Question: What are the same-store sales components for The Cheesecake Factory? - The Cheesecake Factory experienced 4% effective pricing, with traffic down 1.2% [50] Question: How is the performance of Flower Child differentiating in a slowing environment? - Management highlighted the strong food quality and operational stability as key factors driving Flower Child's performance [70] Question: What is the expected pricing for the year? - Management confirmed that the pricing expectation remains at 4% for the year [75]

Financial Performance - Total revenues for Q1 fiscal 2025 were $927.2 million, up 4.0% from $891.2 million in Q1 fiscal 2024[2] - Net income for Q1 fiscal 2025 was $32.9 million, with diluted net income per share at $0.67[2] - Adjusted net income for Q1 fiscal 2025 was $45.7 million, with adjusted diluted net income per share at $0.93[3] - Total revenues for the 13 weeks ended April 1, 2025, were $927.2 million, a 4.0% increase from $891.2 million for the same period in 2024[20] - The company reported a net income (GAAP) of $32.9 million for the 13 weeks ended April 1, 2025, compared to $33.2 million in the prior year[28] - Adjusted net income (non-GAAP) for the 13 weeks ended April 1, 2025, was $45.7 million, up from $35.6 million in the same period last year[28] - The adjusted diluted net income per share (non-GAAP) was $0.93 for the 13 weeks ended April 1, 2025, compared to $0.73 in the prior year[28] Comparable Restaurant Sales - Comparable restaurant sales increased by 1.0% year-over-year in Q1 fiscal 2025[4] - Comparable restaurant sales for The Cheesecake Factory increased by 1.0% compared to a decline of 0.6% in the prior year[22] - North Italia's comparable restaurant sales decreased by 1% compared to an increase of 3% in the prior year[22] Restaurant Openings - The company opened eight new restaurants in Q1 fiscal 2025 and plans to open up to 25 new restaurants throughout the fiscal year[6][7] - The company opened 3 new North Italia restaurants during the period, increasing the total to 45[22] - The Cheesecake Factory operated 215 restaurants at the end of the period, down from 216 a year earlier[22] Liquidity and Debt - Total available liquidity as of April 1, 2025, was $501.9 million, including a cash balance of $135.4 million[9] - Cash and cash equivalents increased to $135.4 million as of April 1, 2025, from $84.2 million a year earlier[24] - Long-term debt rose to $627.3 million as of April 1, 2025, compared to $452.1 million at the end of 2024[24] Shareholder Returns - The Board of Directors declared a quarterly dividend of $0.27 per share to be paid on May 27, 2025[10] - The company repurchased approximately 2.6 million shares of common stock at a cost of $141.4 million in Q1 fiscal 2025[10] Other Financial Items - The company reported a pre-tax net expense of $17.3 million related to debt extinguishment and acquisition-related items[3] - The company issued $575 million of 2.00% convertible senior notes due 2030 on February 28, 2025[8]

Core Insights - The Cheesecake Factory has introduced 22 new menu items while discontinuing 13, aiming to enhance customer demand and sales performance [1][5] - The company's shares increased by 5.1% following the menu update, reflecting positive investor sentiment [1] - The focus on menu innovation and strategic adjustments is expected to support the company's competitive position in the casual dining sector [4][5] Menu Changes - New menu items include Chicken Shawarma, Mortadella Panino, grilled seafood, steak dishes, and lighter options, while some pizzas, burgers, pasta, and seafood dishes have been removed [2][3] - The "SkinnyLicious" menu has been updated with a new seafood dish, and a new dessert for kids has been added [3] Business Strategy - The Cheesecake Factory operates 352 restaurants in the U.S. and Canada, with 34 international locations through licensing agreements [4] - The company updates its menu biannually and adjusts prices to manage rising operating costs, which helps maintain margins and customer traffic [4] Financial Performance - Shares of The Cheesecake Factory have increased by 24.5% over the past six months, contrasting with a 0.8% decline in the Zacks Retail – Restaurants industry [8] - Earnings estimates for 2025 have risen to $3.72 per share, indicating an 8.1% growth from 2024 [9]

The Cheesecake Factory Incorporated (CAKE) has shown strong stock performance in recent months. Over the past six months, the stock has jumped 22.1%, significantly outperforming the Zacks Retail – Restaurants industry’s decline of 0.5%. It has also fared better than the broader Zacks Retail-Wholesale sector’s 2.1% growth and the S&P 500 index’s 1.6% decline during the same period.Cheesecake Factory continues to benefit from strong consumer demand, improving comparable sales and restaurant openings. The soli ...

Core Viewpoint - Earnings growth is essential for company survival and significantly influences share prices, with market expectations playing a critical role in stock performance [1][2]. Earnings Estimates & Share Price Movements - Stock prices may decline despite earnings growth if they fail to meet market expectations, while prices can rally following an earnings decline [2]. Importance of Earnings Estimates - Earnings estimates reflect analysts' views on sales growth, product demand, competitive environment, profit margins, and cost control, serving as a valuable tool for investment decisions and assessing cash flow [3]. Investment Strategy - Investors should focus on stocks with historical earnings growth and increasing quarterly and annual earnings estimates [4]. Screening Measures - A screening process using specific parameters has been established to identify stocks with significant earnings growth and positive estimate revisions, including: - Zacks Rank of 2 or lower, indicating 'Buys' or 'Strong Buys' [5]. - 5-Year Historical EPS Growth greater than the industry average [5]. - Year-over-year earnings growth of 5% or more in the last reported fiscal year [6]. - Positive revisions in current quarter and annual earnings estimates over the last four weeks [6][7]. Top Stocks Identified - The Cheesecake Factory (CAKE) has an expected earnings growth rate of 7.9% and a Zacks Rank of 2 [7]. - LeMaitre Vascular (LMAT) has an expected earnings growth rate of 16.6% and a Zacks Rank of 1 [8]. - Huron Consulting Group (HURN) has an expected earnings growth rate of 10.5% and a Zacks Rank of 2 [10].

Company Operations - The Cheesecake Factory operates 334 restaurants across the U.S. and Canada, including 216 locations of The Cheesecake Factory, 37 North Italia, and 32 Flower Child[9]. - The company operates two bakery facilities producing cheesecakes and other baked goods for its restaurants and third-party customers[9]. - The company operates a total of 33 restaurants across various international locations, including 6 in the United Arab Emirates and 8 in Mexico[39]. - The company employs approximately 47,900 people, with about 46,250 in restaurants and the remainder in corporate support and bakery operations[57]. - The company has dedicated corporate personnel to support international development and operations, emphasizing the importance of training for licensees[148]. Financial Performance - The Cheesecake Factory's average sales per restaurant for fiscal 2023 were approximately $12.2 million, with average sales per productive square foot at about $1,132[27]. - The average check per customer, including beverages and desserts, was approximately $30.54 during fiscal 2023[20]. - North Italia restaurants achieved average sales of approximately $7.8 million per location for fiscal 2023, with an average check of $33.60 for lunch and $43.25 for dinner[45]. - Flower Child restaurants reported average sales of approximately $4.1 million per location for fiscal 2023, targeting 15% to 20% average annual unit growth[46]. - The company recorded impairment of assets and lease terminations expense of $29.5 million during fiscal 2023, primarily related to three The Cheesecake Factory locations and one North Italia location[150]. Sales and Marketing - During fiscal 2023, alcoholic beverage sales accounted for 11% of total restaurant sales, while off-premise sales represented approximately 22%[15]. - Dessert sales accounted for approximately 17% of total sales during fiscal 2023, highlighting the importance of the company's dessert offerings[16]. - The Cheesecake RewardsTM program was launched nationally in 2023 to enhance customer engagement and drive incremental sales[71]. - The company generated approximately 15.1 billion media impressions in fiscal 2023 at minimal cost, leveraging public relations and social media strategies[72]. Expansion Plans - The company aims to expand its brand internationally and grow its other concepts, including North Italia and Flower Child[5]. - The company plans to open as many locations as possible that meet its site selection criteria, targeting approximately 300 company-owned restaurants domestically over time[23]. - The company plans to expand its North Italia concept to approximately 200 domestic locations over time, supporting a 20% average annual unit growth[45]. - The company operates 32 Flower Child locations and targets approximately 15% to 20% average annual unit growth for this concept[46]. Cost and Inflation - The company faced significant commodity and wage inflation, impacting operating results and contributing to increased costs[12]. - The company has experienced inflationary cost pressures, leading to price increases above historical levels to maintain restaurant-level margins[125]. - The company implemented price increases above historical levels in fiscal years 2022 and 2023 to offset significant inflationary cost pressures[19]. - Significant labor cost inflation has been experienced, driven by low unemployment and increased minimum wages, which may continue to impact financial performance[98]. Risks and Challenges - The company has identified risks related to economic conditions, labor costs, and public health emergencies that could adversely affect financial performance[8]. - The company experienced significant cost inflation due to supply shortages and transportation delays, largely attributed to the COVID-19 pandemic and exacerbated by geopolitical unrest[65]. - The ongoing geopolitical and macroeconomic events may lead to shifts in consumer behavior and further operational challenges, adversely affecting financial performance[103]. - The company faces risks related to food safety, including potential contamination and food-borne illnesses, which could lead to litigation and damage reputation[104]. Technology and Operations - The company has implemented technology solutions for inventory management, labor management, and guest payment security to improve operational efficiency[69]. - The company utilizes a data warehouse architecture to provide insights into key operational metrics and performance indicators[67]. - The company maintains a focus on food safety and quality assurance, with its bakery facilities certified under the Safe Quality Food program[77]. Employee Relations - The company has been recognized on Fortune magazine's list of "100 Best Companies to Work For®" in 2023 for the tenth consecutive year, reflecting its commitment to employee satisfaction[21]. - The company has a fiscal 2023 internal management promotion rate of 41%, reflecting its commitment to staff development[53]. Legal and Compliance - The company is subject to various federal, state, and local laws and regulations, impacting operations including health, sanitation, and labor[79]. - The company is subject to various legal proceedings, including class action lawsuits, which could result in significant legal fees and adversely impact financial performance[154]. - The company faces potential legal liabilities and penalties related to data protection and privacy laws, which could adversely affect financial performance[166]. Financial Structure - The company completed the offering of $345.0 million in convertible senior notes and issued $175.0 million in common stock, using net proceeds to fund approximately $457.3 million for the conversion of Series A convertible preferred stock[178]. - As of January 2, 2024, the company had approximately $475 million in consolidated indebtedness, which may limit its ability to obtain additional financing and increase vulnerability to adverse economic conditions[179]. - The company is subject to financial covenants under its Revolver Facility, including a maximum net adjusted debt to EBITDAR ratio of 4.25 and a minimum EBITDAR to interest and rent expense ratio of 1.90[175].

I am an Equity Analyst and Accountant specializing in restaurant stocks, with a solid foundation in Business Administration and Accounting, complemented by an MBA in Forensic Accounting and Controllership. As the founder of Goulart's Restaurant Stocks, I lead a company focused on analyzing restaurant stocks in the U.S. market. Our coverage spans multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining. We employ advanced analytical models and specialized valuation techniq ...

The Retail-Wholesale group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Cheesecake Factory (CAKE) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Retail-Wholesale peers, we might be able to answer that question.Cheesecake Factory is one of 212 companies in the Retail-Wholesale group. The Retail-Wholesale group currently sits at #2 within the Zacks Sector Rank. The Zacks Sec ...

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