Cheesecake Factory (CAKE) Q2 Sales Up 6%

Core Insights - Cheesecake Factory reported Q2 FY2025 earnings with GAAP revenue of $955.8 million, exceeding analyst estimates of $947.3 million, and adjusted EPS of $1.16, surpassing the consensus of $1.06, indicating strong performance despite slowing comparable sales growth [1][5][12] Financial Performance - GAAP revenue increased by 5.7% year-over-year from $904.0 million in Q2 FY2024 to $955.8 million in Q2 FY2025 [2][5] - Adjusted EPS grew by 6.4% from $1.09 in Q2 FY2024 to $1.16 in Q2 FY2025 [2][5] - Net income rose by 4.6% from $52.4 million in Q2 FY2024 to $54.8 million in Q2 FY2025 [2][5] - Comparable restaurant sales for The Cheesecake Factory increased by 1.2%, a slowdown from 1.4% in Q2 FY2024 [2][6] Business Overview - Cheesecake Factory operates a diverse portfolio of full-service restaurants, including its flagship brand, North Italia, and Flower Child, with dessert sales accounting for approximately 17% of total sales [3] - The company emphasizes menu innovation, high-traffic locations, international expansion through licensing, employee retention, and a resilient supply chain [4] Operational Highlights - Off-premise sales constituted 22% of total sales in Q1 FY2025, with delivery and digital orders being significant contributors [8] - The company opened four new FRC restaurants and six new Flower Child locations during Q1 and Q2 FY2025 [7] - Employee retention remains a priority, with attrition rates for salaried managers in the mid-teens and hourly staff turnover between 60% and 70% [10] Capital Allocation and Guidance - The company maintained its quarterly dividend at $0.27 per share and executed minimal share repurchases of $0.1 million in Q2 FY2025 [11] - Management provided cautious guidance for Q2 FY2025 revenue, projecting between $935 million and $950 million, and updated annual comparable sales growth expectations to flat to 1% for FY2025 [12][13]