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]

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].