The Cheesecake Factory(CAKE) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter consolidated revenues increased by 9.1% year-over-year to $866 million [6] - Adjusted net income margin for the quarter was 3.5%, at the high end of guidance [7][14] - First quarter GAAP diluted net income per share was $0.56, while adjusted net income per share was $0.61 [16] Business Line Data and Key Metrics Changes - Sales at The Cheesecake Factory restaurants were $656 million, an 8% increase over the prior year, with comparable sales up 5.7% year-over-year [14] - North Italia reported sales of $63.3 million, a 20% increase over the prior year, with comparable sales growth of 9% [15] - Fox Restaurant Concepts (FRC), excluding Flower Child, had sales of $68.6 million, up 17% from the prior year [15] Market Data and Key Metrics Changes - The Cheesecake Factory's comparable sales increased by 14.9% compared to 2019 [6] - North Italia's comparable sales increased by 30% compared to 2019 [6] - Off-premise sales for The Cheesecake Factory remained stable at 23% of total sales for three consecutive quarters [11] Company Strategy and Development Direction - The company plans to open 20 to 22 new restaurants in fiscal year 2023, including 5 to 6 Cheesecake Factory locations and 10 FRC restaurants [7][19] - The company aims to deliver exceptional food quality and service to drive long-term profitable sales growth [8] - A new rewards program is set to launch mid-year, designed to leverage data analytics for guest engagement and incremental sales [12][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong sales trends despite macroeconomic uncertainties [21] - The company anticipates total revenues for fiscal 2023 to be approximately $3.55 billion, with a net income margin of around 4% [19] - Management noted that input costs are gradually normalizing, which should support operational and financial results [21] Other Important Information - The company returned $25.6 million to shareholders through dividends and stock repurchases [13] - The company ended the quarter with total available liquidity of approximately $355 million [16] Q&A Session Summary Question: Impact of Weather on Sales - Management acknowledged that weather impacted sales, particularly in California, but felt overall sales trends remained stable [23][25] Question: Loyalty Program Marketing - The loyalty program exceeded expectations in terms of sign-ups and usage, with plans for national marketing during the launch [26][27] Question: Pricing Outlook - Management indicated that pricing strategies would be adjusted based on commodity inflation and consumer trends, aiming to offset inflation with menu pricing [28][30] Question: Development Outlook - Management expressed confidence in achieving the planned openings for the year, with a typical cadence of openings expected in the second half [31][32] Question: Delivery Business - The company remains satisfied with its partnership with DoorDash, maintaining stable off-premise sales [35][37] Question: Cost Side and OpEx - Management noted that operating expenses were under pressure but expected moderation in costs moving forward [38][40] Question: Same-Store Sales Growth - Management confirmed that same-store sales growth expectations remain consistent, with a focus on long-term seasonal trends [42][43] Question: Margin Recovery - Management indicated that they are working towards recovering margins, with expectations for mid-14% restaurant margins in 2023 [46][71]