The Cheesecake Factory(US:CAKE)2025-11-03 22:01Revenue 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].