Cheesecake Factory (CAKE) Earnings Transcript

Core Insights - The restaurant industry is facing challenges, but the company has shown resilience with steady revenue and improved operational metrics [1][4][25] - The company achieved record annual revenue and adjusted diluted earnings per share, supported by strong operational execution and culinary innovation [4][14][25] - The company plans to open up to 26 new restaurants in 2026, reflecting confidence in its development pipeline and commitment to long-term growth [6][24] Financial Performance - Total revenues for the fourth quarter were $961.6 million, with adjusted diluted earnings per share at $1, finishing toward the higher end of expectations [14][19] - Comparable sales for The Cheesecake Factory declined by 2.2% in the fourth quarter, while North Italia saw an 8% increase in sales [10][15] - Adjusted restaurant-level profit margins for The Cheesecake Factory increased to 17.6%, with North Italia at 17.5% and Flower Child at 18.5% [12][14] Operational Highlights - The company opened seven new restaurants in the fourth quarter, contributing to a total of 25 new openings for the year, achieving approximately 7% unit growth [5][24] - Labor productivity and guest satisfaction improved, supported by high retention rates among staff [7][11] - The introduction of new menu items has resonated well with guests, enhancing the overall dining experience [8][33] Market Trends - Industry sales decelerated in the fourth quarter, with the Black Box Casual Dining Index declining by 40 basis points [10] - The company’s off-premise sales mix was 22%, indicating a stable demand for delivery and takeout options [10][76] - The company anticipates total revenues for fiscal 2026 to be approximately $3.9 billion, with inflation across commodities and labor expected to be in the low to mid-single digits [21][22] Strategic Initiatives - The company plans to launch a dedicated rewards app to enhance guest experience and engagement, expected in the second quarter [61][66] - There is a focus on menu innovation, particularly with the introduction of bites and bowls, which have shown strong attachment rates [9][33] - The company is committed to disciplined capital allocation, increasing share repurchase authorization and raising quarterly dividends [6][25]