The Cheesecake Factory(US:CAKE)2024-02-22 03:55Financial Data and Key Metrics Changes - The company reported fourth quarter revenues of $877 million, with comparable sales at Cheesecake Factory restaurants up 2.5% year-over-year and 14% compared to 2019, outperforming the casual dining industry [7][10] - Adjusted net income margin for the fourth quarter was 4.5%, exceeding the guidance of 4.25% [10] - Total revenues for the fiscal year reached $3.44 billion, a 6.7% increase over 2022 after excluding the impact of an additional week in fiscal 2022 [10][11] - Fourth quarter GAAP diluted net income per share was $0.26, while adjusted diluted net income per share was $0.80 [14] Business Line Data and Key Metrics Changes - Total sales at Cheesecake Factory restaurants were $658 million, with comparable sales increasing 2.5% year-over-year and 14% compared to 2019 [11] - North Italia reported total sales of $67.2 million, with fourth quarter comparable sales increasing 7% from the prior year and 34% versus 2019 [12] - Other FRC sales totaled $70.9 million, while Flower Child sales were $30.4 million [12] Market Data and Key Metrics Changes - Off-premise sales accounted for 22% of total sales in the fourth quarter, consistent with the full year percentage [12] - The company experienced stability in on-premise incident rates, remaining above 2019 levels [11] Company Strategy and Development Direction - The company plans to open as many as 22 new restaurants in 2024, including 3 to 4 Cheesecake Factory locations and 6 to 7 each of North Italia, Flower Child, and FRC restaurants [9][19] - The focus remains on leveraging competitive strengths, differentiated brands, and best-in-class operators to drive shareholder value and market share gains [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's health, citing stabilizing top-line trends, improving profit margins, and normalizing input costs [20] - For Q1 2024, total revenues are anticipated to be between $875 million and $895 million, assuming no material operating or consumer disruptions [16] - The company expects full year revenues for fiscal 2024 to be approximately $3.6 billion, with a net income margin of about 4.25% [19] Other Important Information - The company ended the quarter with total available liquidity of approximately $293 million, including a cash balance of about $56 million [14] - The Cheesecake rewards program is seeing early demand exceeding internal expectations, with a focus on member engagement and acquisition tactics [15] Q&A Session Summary Question: Can you comment on the updated annual guidance compared to last quarter? - Management indicated that nothing has changed fundamentally, and the guidance reflects a prudent approach considering recent weather trends [22][23] Question: Can you elaborate on labor productivity and potential improvements for 2024? - Management noted improvements in labor productivity due to better retention and stability in the labor environment, which is expected to continue into 2024 [25][26] Question: How is the Cheesecake Factory business performing in terms of check and traffic components? - Traffic was flat in Q4, representing a 1% improvement over Q3, with pricing coming down as the company exited one-time pricing from the previous year [30] Question: What are the expectations for restaurant margins in 2024? - Management expects to expand restaurant level margins by 50 to 75 basis points in 2024, driven by productivity and efficiency gains [39] Question: How is the company addressing the impact of the California FAST Act legislation? - Management stated that the impact is still uncertain, but they believe they have sufficient pricing power to defend margins in California [44][45] Question: Can you provide insights on the unit growth plan for 2024? - The company plans to open 22 new restaurants, with some relocations factored into the growth plan [58][59]