The Cheesecake Factory(US:CAKE)2025-10-28 22:02Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $907 million, finishing near the midpoint of the guidance range [14] - Adjusted net income margin was 3.7%, exceeding the high end of the guidance [15] - GAAP diluted net income per share was $0.66, while adjusted diluted net income per share was $0.68 [17] Business Line Data and Key Metrics Changes - Comparable sales at The Cheesecake Factory restaurants increased by 0.3%, with total sales of $651.4 million, up 1% from the prior year [15][6] - North Italia's total sales were $83.5 million, up 16% from the prior year, with comparable sales declining by 3% [15][12] - Flower Child's sales totaled $48.1 million, up 31% from the prior year, with comparable sales increasing by 7% [15][12] Market Data and Key Metrics Changes - Annualized unit volumes for The Cheesecake Factory averaged over $12 million [6] - North Italia's annualized AUVs reached $7.3 million [11] - Flower Child's annualized AUVs were $4.6 million [12] Company Strategy and Development Direction - The company plans to open as many as 25 new restaurants in 2025, including four Cheesecake Factory locations and six each of North Italia and Flower Child [20] - For 2026, the company expects to accelerate development with as many as 26 new restaurant openings [8][20] - The focus remains on delivering exceptional food, service, and hospitality while executing long-term growth strategies [8] Management's Comments on Operating Environment and Future Outlook - Management noted a softer macro and consumer environment but emphasized stable overall performance [6] - The company anticipates total revenues for Q4 2025 to be between $940 million and $955 million, representing a 1% step down from Q3 sales trends [18] - Management expressed confidence in navigating the dynamic macro environment and maintaining profitability [22] Other Important Information - The company recorded a pre-tax net expense of $0.8 million related to FRC acquisition-related expenses [16] - The Cheesecake Rewards program continues to show strong membership growth and positive member satisfaction [10] Q&A Session Summary Question: What is driving the caution in the current consumer environment? - Management indicated that the caution is primarily due to a decline in traffic, with stable day parts and good performance from new menu items [24] Question: Can you provide the breakdown of comps for The Cheesecake Factory and North Italia? - For The Cheesecake Factory, pricing was about 4%, traffic was -2.5%, and mix was the difference. For North Italia, price was 4%, mix was -1%, and traffic was -6% [27] Question: What is the outlook for commodity inflation in Q4? - Commodity inflation was about flat in Q3, but is expected to be around 2% in Q4, primarily driven by beef prices [29] Question: How is the company planning to promote lower price point items? - Management plans to continue promoting bites and bowls through social media and marketing campaigns, leveraging the Cheesecake Rewards program [36] Question: Are there any changes in labor demand or supply? - Management reported steady applicant flow and strong retention, indicating no significant changes in labor demand or supply [89] Question: What are the expectations for the app launch? - The company is working on launching a rewards app in the first half of next year, aimed at enhancing customer engagement and experience [91]