The Cheesecake Factory(CAKE) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported fourth quarter total revenues of $921 million, exceeding guidance, with adjusted net income margin at 5.6$3.58 billion, with adjusted earnings per share of $3.44, marking a 28$0.83, while adjusted diluted net income per share was $1.04 [28] Business Line Data and Key Metrics Changes - Cheesecake Factory comparable sales increased by 1.7$669.4 million, up 2% from the prior year [16][23] - North Italia sales were $81.3 million, up 21$38.2 million, up 25% from the prior year, with comparable sales increasing by 11% [19][23] Market Data and Key Metrics Changes - The Cheesecake Factory restaurant level margins for the fourth quarter were 18.4%, the highest level in over 7 years [14][15] - North Italia's restaurant-level profit margin for adjusted mature locations improved to 18.8% [17] - Flower Child's restaurant level profit margin for adjusted mature locations was 16.4% [19] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025, including 3 to 4 Cheesecake Factories and 6 to 7 North Italias [12][37] - The ongoing menu innovation is aimed at maintaining relevance without discounting, with over 20 new items introduced [10][11] - The company is focused on enhancing guest experiences and operational efficiencies to drive sustainable growth [13][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the portfolio, supported by strong consumer demand for high-quality dining experiences [13] - The company anticipates total revenues for fiscal 2025 to be approximately $3.8 billion, with a focus on maintaining operational improvements and margin expansion [34][36] - Management noted that the labor market remains stable, contributing positively to operational efficiency [120] Other Important Information - The company ended the quarter with total available liquidity of approximately$341 million, including a cash balance of about $84 million [29] - The company recorded a pretax net expense of$14.4 million related to impairment of assets and lease termination expenses [27] Q&A Session Summary Question: Clarification on revenue guidance for 2025 - Management indicated that the increase in revenue guidance to $3.8 billion is driven by unit growth and additional operating weeks from new openings [43] Question: Outlook for margin expansion in 2025 - Management acknowledged that while margin expansion is expected, the guidance is conservative due to increased preopening expenses and new unit openings [44][46] Question: Drivers of fourth quarter margin performance - Management highlighted strong sales and improved labor productivity as key drivers of margin performance across all concepts [52][54] Question: Trends in consumer behavior - Management noted that consumer behavior remains resilient, with no significant signs of anxiety impacting sales [140] Question: Impact of the rewards program - Management reported positive member acquisition and high guest satisfaction scores from the Cheesecake Rewards program, focusing on enhancing guest engagement [67][68] Question: Pricing expectations for 2025 - Management indicated that pricing will remain consistent, with no significant increases anticipated beyond current levels [73] Question: Performance of Flower Child - Management attributed the strong performance of Flower Child to increased brand awareness, catering introduction, and operational improvements [81] Question: Long-term margin potential for North Italia and Flower Child - Management expects North Italia to achieve mature margins similar to Cheesecake Factory, while Flower Child operates between 16% and 18% margins [152]