Why Is Cheesecake Factory (CAKE) Down 5.3% Since Last Earnings Report?

Core Viewpoint - Cheesecake Factory's recent earnings report shows mixed results, with earnings exceeding estimates while revenues fell short, leading to concerns about future performance [3][4]. Financial Performance - For Q3 fiscal 2025, Cheesecake Factory reported adjusted earnings per share (EPS) of 68 cents, surpassing the Zacks Consensus Estimate of 60 cents, and up from 58 cents in the prior year [4]. - Quarterly revenues reached $907.2 million, missing the consensus estimate of $913 million by 0.6%, but reflecting a year-over-year increase of 4.8% [4]. Comparable Sales - Comparable sales at Cheesecake Factory restaurants rose by 0.3% year-over-year, a decline from the 1.6% increase reported in the previous year [5]. - North Italia's comparable sales decreased by 3% year-over-year, contrasting with a 2% growth in the prior year [5]. Cost Structure - The cost of food and beverage as a percentage of revenues decreased by 80 basis points to 21.8% [6]. - Labor expenses as a percentage of total revenues fell by 30 basis points to 35.6% [6]. - Other operating costs increased by 50 basis points to 28.2% of total revenues, while general and administrative expenses remained flat at 6.5% [6]. Balance Sheet - As of September 30, 2025, cash and cash equivalents totaled $190 million, up from $84.2 million at the end of 2024 [7]. - Long-term debt stood at $629.2 million, an increase from $452.1 million as of December 31, 2024 [7]. - Total available liquidity was reported at $556.5 million, including an undrawn revolving credit facility [7]. Shareholder Returns - A quarterly cash dividend of 27 cents per share was declared, payable on November 25, 2025, to shareholders of record as of November 11 [8]. - During the quarter, approximately 18,900 shares were repurchased for $1.2 million [8]. Expansion Plans - In Q3 fiscal 2025, the company opened two new FRC restaurants and two Cheesecake Factory locations in Mexico under licensing agreements [10]. - For fiscal 2025, Cheesecake Factory plans to open up to 25 new restaurants, including four Cheesecake Factory units, six North Italia locations, six Flower Child restaurants, and nine FRC concepts [10]. Market Sentiment - Recent estimates for Cheesecake Factory have trended downward, with a consensus estimate shift of -11.35% [11]. - The company currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [13]. Industry Comparison - Within the Zacks Retail - Restaurants industry, Domino's Pizza has seen a 2.4% gain over the past month, reporting revenues of $1.15 billion for the quarter ended September 2025, reflecting a year-over-year change of +6.2% [14].