The Cheesecake Factory Incorporated Q4 FY2025 earnings call

David Overton noted the company closed out the year with solid fourth quarter, stable top line and profitability despite challenging industry environment. Teams navigated well, driving improvements in labor productivity, wage management, retention and guest satisfaction. 2025 was a year of progress with strong results, record revenue and adjusted diluted earnings per share. Culinary innovation was a core strength with new menu items resonating. Development saw 2 Cheesecake Factory, 2 North Italia, 3 FRC restaurants opened in fourth quarter; finished 2025 with 25 new openings, 7% unit growth and expected to open up to 26 restaurants in 2026 with 1-2 Cheesecake Factory internationally. David Gordon provided operational update including strong leadership and execution driving performance, menu additions well received, Cheesecake Rewards progress, sales trends discussed with The Cheesecake Factory, North Italia and Flower Child performance highlighted

The Cheesecake Factory: Fourth quarter total sales were $681.4 million, up 2% from prior year; excluding gift card breakage benefit, total sales at The Cheesecake Factory restaurants were $664.2 million; comparable sales declined 2.2% versus prior year. North Italia: Fourth quarter total sales were $88.2 million, up 8% from prior year period. Other FRC: Sales totaled $99.4 million, up 17% from prior year and sales per operating week were $139,100. Flower Child: Sales totaled $45.5 million, up 19% from prior year and sales per operating week were $83,400 and external bakery sales were $17.2 million. Adjusted restaurant level profit margin at The Cheesecake Factory increased 60 basis points year-over-year to 17.6%, margin expansion also realized at North Italia and Flower Child

For Q1, total revenues are anticipated between $955 million and $970 million, factoring in inclement weather and 4 restaurant closures. Effective commodity inflation of low single digits for Q1, net total labor inflation of low to mid-single digits. G&A is estimated to be approximately $63 million to $64 million, depreciation approximately $28 million, preopening expenses approximately $4 million to $5 million, with adjusted net income margin at the midpoint of the sales range about 5%. For fiscal 2026, total revenues are anticipated to be approximately $3.9 billion at the midpoint of sensitivity modeling, total inflation in low to mid-single-digit range, G&A estimated to be about 6.5% of sales, depreciation about $115 million, preopening expenses $35 million to $36 million, full year net income margin approximately 5% at the sales estimate. Plan to open up to 26 new restaurants in 2026 with ~$210 million cash CapEx

Q: Update on go-forward structure with FRC and management team.

A: Pleased with FRC business unit performance, put someone from Cheesecake in senior operations role and continue to create value.

Q: Opportunity to invest in value and market value.

A: Bites and bowls well received, will continue to roll out menu and lead into value.

Q: North Italia same-store sales factors.

A: Sales transfer and fires impact, comp recovering.

Q: Weather impact in current quarter.

A: About 1% net negative impact on Q1.

Q: Best on bites and bowls menu.

A: Everything popular, some bowls and bites done well.

Q: Broader consumer environment.

A: Consumer sentiment soft in Q4, Q1 performance better, full year guidance expects steady performance.

Q: Weather impact on Cheesecake mix.

A: Negative mix, but incident rates growing, negative mix will continue at lesser rate.

Q: Tax refund impact on restaurants.

A: Don't count on tax refund benefits, improvements based on execution and menu innovation.

Q: Restaurant margin assumptions.

A: Full year net income guide flattish, slight improvement, Cheesecake pricing about 3%.

Q: Closures and future closures.

A: 4 closures anticipated, no other closures anticipated in 2026.

Q: North Italia comps and new units.

A: New units 50-50 in new and existing markets, working on menu innovation, bar incident rates recovering.

Q: Rewards app launch.

A: Goal to launch in second quarter, with social media and in-restaurant marketing.

Q: Regional trends and closures.

A: Weather impacted everywhere, overall business predictable.

Q: Flower Child vision and development.

A: Enthusiastic about Flower Child, resonating with consumers, need right people power for development.

Q: Mix impacts breakdown.

A: Qualitative on mix impacts, 2026 mix estimate based on new products.

Q: Delivery partnership and mix.

A: Long-standing relationship with DoorDash, off-premise mix 22%, 10% delivery.

Q: 2026 unit growth and Cheesecake Factory.

A: Excited to open up to 6 Cheesecakes, average size 7000-7500 sq ft, good returns.

Q: Commodity inflation.

A: About 2.5% overall, steady.

Q: North Italia comp components.

A: Traffic negative 6%, price about 4%, mix negative 2% in fourth quarter