Documents and Entity Informatio
Documents and Entity Information - USD ($) | 12 Months Ended | ||
Jan. 02, 2024 | Feb. 20, 2024 | Jul. 04, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Period End Date | Jan. 02, 2024 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 0-20574 | ||
Entity Registrant Name | THE CHEESECAKE FACTORY INCORPORATED | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 51-0340466 | ||
Entity Address, Address Line One | 26901 Malibu Hills Road | ||
Entity Address, City or Town | Calabasas Hills | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 91301 | ||
City Area Code | 818 | ||
Local Phone Number | 871-3000 | ||
Title of 12(b) Security | Common Stock, par value $.01 per share | ||
Trading Symbol | CAKE | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 1,654,084,907 | ||
Entity Common Stock, Shares Outstanding | 51,115,061 | ||
Entity Central Index Key | 0000887596 | ||
Current Fiscal Year End Date | --01-02 | ||
Document Fiscal Year Focus | 2024 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 56,290 | $ 114,777 |
Accounts and other receivables | 103,094 | 105,511 |
Income taxes receivable | 20,670 | 21,522 |
Inventories | 57,654 | 55,559 |
Prepaid expenses | 63,090 | 48,399 |
Total current assets | 300,798 | 345,768 |
Property and equipment, net | 791,093 | 746,051 |
Other assets: | ||
Intangible assets, net | 251,727 | 251,524 |
Operating lease assets | 1,302,150 | 1,268,986 |
Other | 194,615 | 162,891 |
Total other assets | 1,748,492 | 1,683,401 |
Total assets | 2,840,383 | 2,775,220 |
Current liabilities: | ||
Accounts payable | 63,152 | 66,638 |
Gift card liabilities | 222,915 | 219,808 |
Operating lease liabilities | 134,905 | 139,099 |
Other accrued expenses | 239,699 | 231,133 |
Total current liabilities | 660,671 | 656,678 |
Long-term debt | 470,047 | 468,032 |
Operating lease liabilities | 1,254,955 | 1,233,497 |
Other noncurrent liabilities | 136,648 | 125,010 |
Total liabilities | 2,522,321 | 2,483,217 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued and outstanding | ||
Common stock, $.01 par value, 250,000,000 shares authorized; 107,195,287 shares issued and 50,652,129 shares outstanding at January 2, 2024 and 106,323,117 shares issued and 51,173,597 shares outstanding at January 3, 2023 | 1,072 | 1,063 |
Additional paid-in capital | 913,442 | 887,485 |
Retained earnings | 1,216,239 | 1,170,078 |
Treasury stock inclusive of excise tax, 56,543,158 and 55,149,520 shares at cost at January 2, 2024 and January 3, 2023, respectively | (1,811,997) | (1,765,641) |
Accumulated other comprehensive loss | (694) | (982) |
Total stockholders' equity | 318,062 | 292,003 |
Total liabilities, Series A convertible preferred stock and stockholders' equity | $ 2,840,383 | $ 2,775,220 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jan. 02, 2024 | Jan. 03, 2023 |
CONSOLIDATED BALANCE SHEETS | ||
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized (in shares) | 200,000 | 200,000 |
Series A convertible preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 107,195,287 | 106,323,117 |
Common stock, shares outstanding | 50,652,129 | 51,173,597 |
Treasury stock, shares | 56,543,158 | 55,149,520 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
Revenues | $ 3,439,503 | $ 3,303,156 | $ 2,927,540 |
Costs and expenses: | |||
Food and beverage costs | 803,500 | 810,926 | 653,133 |
Labor expenses | 1,227,895 | 1,211,951 | 1,072,628 |
Other operating costs and expenses | 922,428 | 881,627 | 792,311 |
General and administrative expenses | 217,449 | 205,753 | 186,136 |
Depreciation and amortization expenses | 93,136 | 92,380 | 89,654 |
Impairment of assets and lease termination expenses | 29,464 | 31,387 | 18,139 |
Acquisition-related contingent consideration, compensation and amortization expenses | 11,686 | 13,368 | 19,510 |
Preopening costs | 25,379 | 16,829 | 13,711 |
Total costs and expenses | 3,330,937 | 3,264,221 | 2,845,222 |
Income from operations | 108,566 | 38,935 | 82,318 |
Interest and other expense, net | (8,552) | (6,043) | (10,698) |
Income before income taxes | 100,014 | 32,892 | 71,620 |
Income tax benefit | (1,337) | (10,231) | (753) |
Net income | 101,351 | 43,123 | 72,373 |
Dividends on Series A preferred stock | (18,661) | ||
Undistributed earnings allocated to Series A preferred stock | (4,581) | ||
Net income available to common stockholders | $ 101,351 | $ 43,123 | $ 49,131 |
Net income per common share: | |||
Basic | $ 2.10 | $ 0.87 | $ 1.03 |
Diluted (Note 1) | $ 2.07 | $ 0.86 | $ 1.01 |
Weighted-average common shares outstanding: | |||
Basic | 48,324 | 49,815 | 47,529 |
Diluted | 49,050 | 50,414 | 48,510 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net Income (Loss) | $ 101,351 | $ 43,123 | $ 72,373 |
Other comprehensive gain/(loss): | |||
Foreign currency translation adjustment | 288 | (695) | 34 |
Unrealized gain on derivative, net of tax | 3,464 | ||
Other comprehensive gain/(loss) | 288 | (695) | 3,498 |
Total comprehensive income | 101,639 | 42,428 | 75,871 |
Comprehensive income attributable to Series A preferred stockholders | (23,540) | ||
Total comprehensive income available to common stockholders | $ 101,639 | $ 42,428 | $ 52,331 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK - USD ($) shares in Thousands, $ in Thousands | Preferred stock Cumulative Effect, Period of Adoption, Adjustment [Member] Convertible Preferred Stock [Member] | Preferred stock Cumulative effect of adopting ASU 2020-06, adjusted balance Convertible Preferred Stock [Member] | Preferred stock Convertible Preferred Stock [Member] | Common Stock Cumulative effect of adopting ASU 2020-06, adjusted balance | Common Stock | Additional Paid-in Capital Cumulative effect of adopting ASU 2020-06, adjusted balance | Additional Paid-in Capital | Retained Earnings Cumulative Effect, Period of Adoption, Adjustment [Member] | Retained Earnings Cumulative effect of adopting ASU 2020-06, adjusted balance | Retained Earnings | Treasury Stock Cumulative effect of adopting ASU 2020-06, adjusted balance | Treasury Stock | Accumulated Other Comprehensive Loss Cumulative effect of adopting ASU 2020-06, adjusted balance | Accumulated Other Comprehensive Loss | Cumulative Effect, Period of Adoption, Adjustment [Member] | Cumulative effect of adopting ASU 2020-06, adjusted balance | Total |
Beginning balance at Dec. 29, 2020 | $ (4,763) | $ 213,485 | $ 218,248 | $ 986 | $ 986 | $ 878,148 | $ 878,148 | $ 4,763 | $ 1,114,850 | $ 1,110,087 | $ (1,696,743) | $ (1,696,743) | $ (3,785) | $ (3,785) | $ 4,763 | $ 293,456 | $ 288,693 |
Beginning balance (in shares) at Dec. 29, 2020 | 200 | 200 | 98,645 | 98,645 | |||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Net income | 72,373 | 72,373 | |||||||||||||||
Foreign currency translation adjustment | 34 | 34 | |||||||||||||||
Change in derivative, net of tax | 3,464 | 3,464 | |||||||||||||||
Cash dividends declared common stock, net of forfeitures, $1.08 per share | 588 | 588 | |||||||||||||||
Stock-based compensation | $ 8 | 24,778 | 24,786 | ||||||||||||||
Stock-based compensation (in shares) | 759 | ||||||||||||||||
Common stock issued under stock-based compensation plans | $ 5 | 23,177 | 23,182 | ||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 436 | ||||||||||||||||
Common stock issuance | $ 31 | 167,019 | 167,050 | ||||||||||||||
Common stock issuance (in shares) | 3,125 | ||||||||||||||||
Treasury stock purchases | (5,766) | (5,766) | |||||||||||||||
Series A preferred stock cash-settled conversion | $ (160,114) | (283,637) | (283,637) | ||||||||||||||
Series A preferred stock cash-settled conversion (in shares) | 150 | ||||||||||||||||
Series A preferred stock conversion to common stock | $ (53,371) | $ 24 | 53,273 | 53,297 | |||||||||||||
Series A preferred stock conversion to common stock (in shares) | (50) | 2,401 | |||||||||||||||
Deemed dividends on Series A preferred stock | (13,591) | (13,591) | |||||||||||||||
Cash dividends declared Series A preferred stock, $25.35 per share | (5,070) | (5,070) | |||||||||||||||
Ending balance at Dec. 28, 2021 | $ 1,054 | 862,758 | 1,169,150 | (1,702,509) | (287) | 330,166 | |||||||||||
Ending balance (in shares) at Dec. 28, 2021 | 105,366 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Net income | 43,123 | 43,123 | |||||||||||||||
Foreign currency translation adjustment | (695) | (695) | |||||||||||||||
Cash dividends declared common stock, net of forfeitures, $1.08 per share | (42,195) | (42,195) | |||||||||||||||
Stock-based compensation | $ 8 | 24,644 | 24,652 | ||||||||||||||
Stock-based compensation (in shares) | 788 | ||||||||||||||||
Common stock issued under stock-based compensation plans | $ 1 | 83 | 84 | ||||||||||||||
Common stock issued under stock-based compensation plans (in shares) | 169 | ||||||||||||||||
Treasury stock purchases | (63,132) | (63,132) | |||||||||||||||
Ending balance at Jan. 03, 2023 | $ 1,063 | 887,485 | 1,170,078 | (1,765,641) | (982) | 292,003 | |||||||||||
Ending balance (in shares) at Jan. 03, 2023 | 106,323 | ||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||
Net income | 101,351 | 101,351 | |||||||||||||||
Foreign currency translation adjustment | 288 | 288 | |||||||||||||||
Cash dividends declared common stock, net of forfeitures, $1.08 per share | (55,190) | (55,190) | |||||||||||||||
Stock-based compensation | $ 9 | 25,957 | 25,966 | ||||||||||||||
Stock-based compensation (in shares) | 872 | ||||||||||||||||
Treasury stock purchases | (46,356) | (46,356) | |||||||||||||||
Ending balance at Jan. 02, 2024 | $ 1,072 | $ 913,442 | $ 1,216,239 | $ (1,811,997) | $ (694) | $ 318,062 | |||||||||||
Ending balance (in shares) at Jan. 02, 2024 | 107,195 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND SERIES A CONVERTIBLE PREFERRED STOCK (Parenthetical) - $ / shares | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||
Cash dividends declared Series A preferred stock | $ 25.35 | ||
Cash dividends declared common stock, net of forfeitures | $ 1.08 | $ 0.81 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Cash flows from operating activities: | |||
Net income | $ 101,351 | $ 43,123 | $ 72,373 |
Adjustments to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization expenses | 93,136 | 92,380 | 89,654 |
Impairment of assets and lease termination expenses | 26,998 | 31,327 | 17,937 |
Deferred income taxes | (15,715) | (18,646) | (20,849) |
Stock-based compensation | 25,781 | 24,426 | 22,988 |
Changes in assets and liabilities: | |||
Accounts and other receivables | (98) | (12,266) | (24,816) |
Income taxes receivable/payable | 852 | 14,651 | 715 |
Inventories | (2,092) | (12,725) | (3,478) |
Prepaid expenses | (14,694) | (11,960) | (1,137) |
Operating lease assets/liabilities | (27,113) | (18,404) | (4,106) |
Other assets | (14,504) | 13,739 | (9,227) |
Accounts payable | 3,971 | 17,586 | (3,678) |
Gift card liabilities | 3,104 | 8,634 | 26,527 |
Other accrued expenses | 37,424 | (9,939) | 50,103 |
Cash provided by operating activities | 218,401 | 161,926 | 213,006 |
Cash flows from investing activities: | |||
Additions to property and equipment | (151,565) | (112,464) | (66,943) |
Additions to intangible assets | (1,658) | (680) | (606) |
Other | (274) | 329 | (1,061) |
Cash used in investing activities | (153,497) | (112,815) | (68,610) |
Cash flows from financing activities: | |||
Acquisition-related deferred consideration and compensation | (24,243) | (18,316) | (17,000) |
Borrowings on credit facility | 15,000 | 130,000 | |
Repayments on credit facility | (15,000) | (130,000) | (150,000) |
Convertible debt issuance | 345,000 | ||
Convertible debt direct and incremental costs | (10,074) | ||
Series A preferred stock cash-settled conversion | (443,751) | ||
Series A preferred stock conversion direct and incremental costs | (74) | ||
Series A preferred stock dividend paid | (18,661) | ||
Common stock issuance | 175,000 | ||
Common stock issuance direct and incremental costs | (7,950) | ||
Proceeds from exercise of stock options | 84 | 24,786 | |
Common stock dividends paid | (53,207) | (42,272) | (337) |
Treasury stock purchases | (46,085) | (63,132) | (5,766) |
Cash used in financing activities | (123,535) | (123,636) | (108,827) |
Foreign currency translation adjustment | 144 | (325) | (27) |
Net change in cash and cash equivalents | (58,487) | (74,850) | 35,542 |
Cash and cash equivalents at beginning of period | 114,777 | 189,627 | 154,085 |
Cash and cash equivalents at end of period | 56,290 | 114,777 | 189,627 |
Supplemental disclosures: | |||
Interest paid | 9,764 | 7,233 | 9,586 |
Income taxes paid | 14,473 | 14,688 | 13,031 |
Construction payable | $ 16,815 | $ 9,346 | $ 4,343 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Jan. 02, 2024 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies Description of Business The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate 334 restaurants throughout the United States and Canada under brands including The Cheesecake Factory ® ® ® ® Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2023 and 2021 each consisted of 52 weeks. Fiscal year 2022 consisted of 53 weeks. Fiscal year 2024 will consist of 52 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Geopolitical and Other Macroeconomic Impacts to our Operating Environment During fiscal 2021 and 2022, the COVID - 19 pandemic continued to affect our business during periods of accelerated case counts in which we experienced increased restaurant staff absenteeism and temporary shifts in consumer behavior, such as changes in customer traffic or the mix between on-premise and off-premise channels. Along with the COVID-19 pandemic, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation. Some of these factors continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs. We also encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges. The ongoing impact of geopolitical and macroeconomic events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in the supply chain and delay in new restaurant openings. Any of these factors may have an adverse impact on our business and materially adversely affect our financial performance. Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $21.0 million and $19.1 million at January 2, 2024 and January 3, 2023, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to these balances, and we believe credit risk to be minimal. We consider the concentration of credit risk for accounts receivable from our bakery customers to be minimal due to the payment histories and general financial condition of our larger bakery accounts. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors, insurance providers and delivery partner. Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. Property and Equipment We record property and equipment at cost less accumulated depreciation. Improvements are capitalized, while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the reasonably certain lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation periods are as follows: Buildings and land improvements 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. Impairment of Long-Lived Assets and Lease Termination Expenses We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Impairment testing is performed at the individual restaurant asset group level, which is inclusive of property and equipment and lease right-of-use assets. Recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by those assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2023, we recorded $29.5 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory (one previously impaired), one North Italia (previously impaired), one Other FRC and two Other restaurant lease terminations. In fiscal 2022, we recorded $31.4 million of expense primarily related to the impairment of long - lived assets for three The Cheesecake Factory, one Other FRC and three Other restaurants. In fiscal 2021, we recorded $16.3 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory and two Other restaurants. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. Intangible Assets The following table presents components of intangible assets, net (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Indefinite-lived intangible assets: Goodwill $ 1,451 $ 1,451 Trade names and trademarks 234,341 234,077 Transferable alcoholic beverage licenses 7,923 7,683 Total indefinite-lived intangible assets 243,715 243,211 Definite-lived intangible assets, net: Licensing agreements 4,602 5,092 Non-transferable alcoholic beverage licenses 3,410 3,221 Total definite-lived intangible assets 8,012 8,313 Total intangible assets, net $ 251,727 $ 251,524 Goodwill and other indefinite-lived intangible assets are not amortized and are tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to, historical financial performance, wage, product and services inflation, competitive environment, macroeconomic and industry conditions, results of prior impairment tests and share price performance. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessments require the use of estimates and assumptions regarding future cash flows and asset fair values. Key assumptions include projected revenue growth and operating expenses, discount rates, royalty rates, valuation multiples and other factors that could affect fair value or otherwise indicate potential impairment. Such assessments could change materially if different estimates and assumptions were used. We performed our annual impairment assessment of indefinite-lived intangible assets as of the first day of the fourth quarters of fiscal 2023, 2022 and 2021 and concluded there was no impairment. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. We performed our annual impairment assessment of definite-lived intangible assets as of the first day of the fourth quarters of fiscal 2023, 2022 and 2021. We concluded there was no impairment for fiscal 2023 and 2022 and recorded $1.3 million of impairment one We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from five eight We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $7.3 million, $7.0 million and $6.8 million of gift card breakage in fiscal years 2023, 2022 and 2021, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2023, we deferred and recognized previously deferred revenue of $27.5 million and $23.3 million, respectively, related to promotional programs. During fiscal 2022, we deferred and recognized previously deferred revenue of $27.3 million and $23.6 million, respectively, related to promotional programs. During fiscal 2021, we deferred and recognized previously deferred revenue of $27.5 million and $15.2 million, respectively, related to promotional programs. Leases We currently lease all of our restaurant locations, generally with initial terms of 10 to 20 years plus two five-year renewal options. Our leases typically require contingent rent above the minimum base rent payments based on a percentage of revenues ranging from 2% to 10%, have escalating minimum rent requirements over the term of the lease and require payment for various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation if specified co-tenancy requirements are not satisfied. We expend cash for leasehold improvements and furniture, fixtures, and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. We do not meet any of the accounting criteria under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases, for being the owner of the asset under construction. Many of our leases provide early termination rights permitting us to terminate the lease prior to expiration in the event our revenues are below a stated level for a period of time, generally conditioned upon repayment of the unamortized landlord contributions. In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The leases for our restaurant locations, automobiles and certain restaurant equipment are included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each material lease and those that don’t qualify for the short-term exclusion to determine its appropriate classification as an operating or finance lease. All of the leases evaluated meet the criteria for classification as operating leases. For restaurant leases that existed as of the adoption of ASC 842, we continued to apply our historical practice of excluding executory costs, and only minimum base rent was factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. Rent expense is included in other operating costs and expenses in the consolidated statements of income. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, the value of the operating lease asset and liability and the term over which leasehold improvements for each restaurant are depreciated. These judgments may produce materially different amounts of operating lease assets and liabilities, rent expense and interest expense than would be reported if different assumptions were used. Self-Insurance Liabilities We retain financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Significant judgment is required to estimate IBNR amounts, as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members, consultants and non-employee directors. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 15 for further discussion of our stock-based compensation.) Advertising Costs We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $34.7 million, $24.0 million and $19.9 million in fiscal 2023, 2022 and 2021, respectively. The increase in fiscal 2023 is primarily due to the launch of our Cheesecake Rewards TM Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies (when applicable) and results of recent operations. If we later determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we adjust the deferred tax asset valuation allowance and reduce income tax expense. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authorities based solely on its technical merits, taking into account available administrative remedies and litigation. If this threshold is met, we recognize only the portion of the tax benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We record a liability for any portion of the tax benefit that does not meet these recognition and measurement criteria and we adjust this liability through income tax expense in the period in which the uncertain tax position is effectively settled, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available. We recognize interest and penalties related to uncertain tax positions in income tax expense. Net Income per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At January 2, 2024, January 3, 2023 and December 28, 2021, 2.9 million shares, 2.5 million shares and 2.1 million shares, respectively, of restricted stock and restricted stock units issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for our convertible senior notes due 2026 (“Notes”) are determined by application of the if-converted method, and common stock equivalents for outstanding stock options, restricted stock and restricted stock units are determined by the application of the treasury stock method. Holders of our Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which required us to apply the two-class method to compute both basic and diluted net income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we were required to calculate diluted net income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. Fiscal Year 2023 2022 2021 (In thousands, except per share data) Basic net income per common share: Net income $ 101,351 $ 43,123 $ 72,373 Dividends on Series A preferred stock — — (18,661) Undistributed earnings allocated to Series A preferred stock — — (4,581) Net income available to common stockholders 101,351 43,123 49,131 Basic weighted-average shares outstanding 48,324 49,815 47,529 Basic net income per common share $ 2.10 $ 0.87 $ 1.03 Diluted net income per common share: Net income available to common stockholders 101,351 43,123 49,131 Reallocation of undistributed earnings to Series A preferred stock — — 85 Net income available to common stockholders for diluted EPS 101,351 43,123 49,216 Basic weighted-average shares outstanding 48,324 49,815 47,529 Dilutive effect of equity awards (1) 726 599 981 Diluted weighted-average shares outstanding 49,050 50,414 48,510 Diluted net income per common share $ 2.07 $ 0.86 $ 1.01 (1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 2.9 million, 3.3 million and 1.9 million for fiscal 2023, 2022 and 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income, unrealized gains on our interest rate swap and translation gains/(losses) related to our Canadian restaurant operations. Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendment also provides further disclosure comparability. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively. However, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Jan. 02, 2024 | |
Fair Value Measurements | |
Fair Value Measurements | 2. Fair Value Measurements Fair value measurements are estimated based on valuation techniques and inputs categorized as follows: ● Level 1: Quoted prices in active markets for identical assets or liabilities ● Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities ● Level 3: Unobservable inputs in which little or no market activity exists, therefore requiring the Company to develop its own assumptions The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): January 2, 2024 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 94,136 $ — $ — Non-qualified deferred compensation liabilities (93,979) — — Acquisition-related contingent consideration and compensation liability — — (25,495) January 3, 2023 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 78,542 $ — $ — Non-qualified deferred compensation liabilities (78,286) — — Acquisition-related deferred consideration (1) — (10,751) — Acquisition-related contingent consideration and compensation liability — — (28,565) (1) The final $11.3 million payment related to the Acquisition - related deferred consideration was made in fiscal year 2023. Changes in the fair value of non-qualified deferred compensation assets and liabilities are recognized in interest and other expense, net in our consolidated statements of income. Changes in the fair value of the acquisition-related deferred and contingent consideration and compensation liability are recognized in acquisition-related contingent consideration, compensation and amortization expenses in our consolidated statements of income. The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liability categorized as Level 3 (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Beginning balance $ 28,565 $ 23,894 Payment (12,994) (7,187) Change in fair value 9,924 11,858 Ending balance $ 25,495 $ 28,565 The fair value of the Acquisition-related contingent consideration and compensation liability was determined utilizing a Monte Carlo model based on estimated future revenues, margins and volatility factors, among other variables and estimates and has no minimum or maximum payment. The undiscounted range of outcomes per the Monte Carlo model utilized to determine the fair value of the acquisition-related contingent consideration and compensation liability was $2.6 million to $235.4 million at January 2, 2024 and $0 to $276.0 million at January 3, 2023. Results could change materially if different estimates and assumptions were used. During fiscal 2023, the fair value of the contingent consideration and compensation liability decreased by $3.1 million due to a payment of $13.0 million per the FRC acquisition agreement, partially offset by $9.9 million increase in the fair value primarily stemming from a change in the volatility factors, as well as an increase in fiscal 2023 revenues and estimated future revenues utilized in the calculation and amortization. During fiscal 2022, the fair value of the contingent consideration and compensation liability increased by $4.7 million due to an $11.9 million increase in the fair value primarily stemming from a change in the volatility factors, as well as an increase in fiscal 2022 revenues and estimated future revenues utilized in the calculation and amortization, partially offset by a payment of $7.2 million per the FRC acquisition agreement. The fair values of our cash and cash equivalents, accounts receivable, income taxes receivable, other receivables, prepaid expenses, accounts payable, income taxes payable and other accrued expenses approximate their carrying amounts due to their short duration. At both January 2, 2024 and January 3, 2023, we had $345.0 million aggregate principal amount of Notes outstanding. The estimated fair value of the Notes based on a market approach as of January 2, 2024 and January 3, 2023 was approximately $298.8 million and $282.9 million, respectively, and determined based on the estimated or actual bids and offers of the Notes in an over-the-counter market on the last business day of the reporting period. The increase in the fair value of the Notes was primarily due to an increase in our stock price. See Note 10 for further discussion of the Notes. |
Accounts and Other Receivables
Accounts and Other Receivables | 12 Months Ended |
Jan. 02, 2024 | |
Accounts and Other Receivables | |
Accounts and Other Receivables | 3. Accounts and Other Receivables Accounts and other receivables consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card distributors $ 35,777 $ 37,586 Bakery customers 13,863 16,561 Landlord construction contributions 12,650 9,862 Insurance providers 9,984 10,529 Delivery partner 7,154 7,757 Other 23,666 23,216 Total $ 103,094 $ 105,511 |
Inventories
Inventories | 12 Months Ended |
Jan. 02, 2024 | |
Inventories | |
Inventories | 4. Inventories Inventories consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Restaurant food and supplies $ 32,283 $ 30,783 Bakery finished goods and work in progress 16,230 17,250 Bakery raw materials and supplies 9,141 7,526 Total $ 57,654 $ 55,559 |
Prepaid Expenses
Prepaid Expenses | 12 Months Ended |
Jan. 02, 2024 | |
Prepaid Expenses | |
Prepaid Expenses | 5. Prepaid Expenses Prepaid expenses consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card contract assets $ 19,111 $ 19,886 Prepaid rent (1) 24,438 12,165 Other 19,541 16,348 Total $ 63,090 $ 48,399 (1) The primary cause for the increase in prepaid rent expenses is a higher number of restaurants under construction at January 2, 2024 where the lease has not yet commenced compared to the prior year. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Jan. 02, 2024 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Land and related improvements $ 15,852 $ 15,852 Buildings 44,179 44,138 Leasehold improvements 1,291,153 1,225,860 Furnishings, fixtures and equipment 625,931 584,924 Computer software and equipment 57,952 60,861 Restaurant smallwares 38,234 36,494 Construction in progress 58,067 36,675 Property and equipment, total 2,131,368 2,004,804 Less: Accumulated depreciation (1,340,275) (1,258,753) Property and equipment, net $ 791,093 $ 746,051 Depreciation expenses related to property and equipment for fiscal 2023, 2022 and 2021 were $92.9 million, $92.1 million and $89.4 million, respectively. Repair and maintenance expenses for fiscal 2023, 2022 and 2021 were $99.5 million, $89.1 million and $77.4 million, respectively and are recorded in other operating costs and expenses. Net (income)/expense for property and equipment disposals was ($0.4) million, $1.6 million and $1.1 million, in fiscal 2023, 2022 and 2021, respectively. |
Other Assets
Other Assets | 12 Months Ended |
Jan. 02, 2024 | |
Other Assets | |
Other Assets | 7. Other Assets Other assets consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Non-qualified deferred compensation assets (1) $ 94,136 $ 78,542 Deferred income taxes (2) 91,944 76,245 Other 8,535 8,104 Total $ 194,615 $ 162,891 (1) See Note 16 for further discussion of our non-qualified deferred compensation assets. (2) See Note 17 for further discussion of our income taxes. |
Gift Cards
Gift Cards | 12 Months Ended |
Jan. 02, 2024 | |
Gift Cards | |
Gift Cards | 8. Gift Cards The following tables present information related to gift cards (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card liabilities: Beginning balance $ 219,808 $ 211,182 Activations 140,647 152,368 Redemptions and breakage (137,540) (143,743) Ending balance $ 222,915 $ 219,808 Fiscal year ended January 2, 2024 January 3, 2023 Gift card contract assets: (1) Beginning balance $ 19,886 $ 18,468 Deferrals 14,957 16,440 Amortization (15,732) (15,022) Ending balance $ 19,111 $ 19,886 (1) Included in prepaid expenses on the consolidated balance sheets. |
Other Accrued Expenses
Other Accrued Expenses | 12 Months Ended |
Jan. 02, 2024 | |
Other Accrued Expenses | |
Other Accrued Expenses | 9. Other Accrued Expenses Other accrued expenses consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Self-insurance $ 71,546 $ 71,872 Salaries and wages (1) 51,040 43,402 Staff member benefits 28,951 27,332 Payroll and sales taxes 20,365 24,861 Rent 18,973 12,713 Deferred consideration (2) — 10,751 Other 48,824 40,202 Total $ 239,699 $ 231,133 (1) The increase in accrued salaries and wages was primarily due to the timing of payroll disbursements in relation to the fiscal 2023 versus 2022 year-end dates. (2) The final $11.3 million payment related to the Acquisition-related deferred consideration was made in fiscal year 2023. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Jan. 02, 2024 | |
Long-Term Debt | |
Long-Term Debt | 10. Long-Term Debt Revolving Credit Facility On October 6, 2022, we entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement” and the revolving credit facility provided thereunder, the “Revolver Facility”). The Loan Agreement amends and restates in its entirety our prior credit agreement. The Revolver Facility, which terminates on October 6, 2027, provides us with revolving loan commitments that total $400 million, of which $50 million may be used for issuances of letters of credit. The Revolver Facility contains a commitment increase feature that, subject to certain conditions precedent, could provide for an additional $200 million in revolving loan commitments. Our obligations under the Revolver Facility are unsecured. Certain of our material subsidiaries have guaranteed our obligations under the Revolver Facility. On October 6, 2022, we repaid the outstanding balance under the then-existing credit agreement and borrowed the same amount on the Revolver Facility. In November 2023, we borrowed $15.0 million on the Revolver Facility and repaid it in December 2023. As of January 2, 2024, we had net availability for borrowings of $236.5 million, based on a $130.0 million outstanding debt balance and $33.5 million in standby letters of credit under the Revolver Facility. Under the Revolver Facility, we are subject to the following financial covenants as of the last day of each fiscal quarter: (i) a maximum ratio of net adjusted debt to EBITDAR (the “Amended Net Adjusted Leverage Ratio”) of 4.25 and (ii) a minimum ratio of EBITDAR to interest and rent expense (“EBITDAR Ratio”) of 1.90. The Amended Net Adjusted Leverage Ratio includes a rental expense multiplier of six as compared to eight in the prior credit agreement. At January 2, 2024, we were in compliance with all covenants in effect at that date. Borrowings under the Loan Agreement bear interest, at our election, at a rate equal to either: (i) the sum of (A) adjusted term SOFR (as defined in the Loan Agreement, the “Term SOFR Rate”) plus (B) a rate variable based on the Amended Net Adjusted Leverage Ratio, ranging from 1.00% to 1.75%, or (ii) the sum of (A) the highest of (x) the rate of interest last quoted by The Wall Street Journal as the prime rate in effect in the United States, (y) the greater of the rate calculated by the Federal Reserve Bank of New York as the federal funds effective rate or the rate that is published by the Federal Reserve Bank of New York as the overnight bank funding rate, in either case, plus 0.50%, and (z) the one-month Term SOFR Rate plus 1.00%, plus (B) a rate variable based on the Net Adjusted Leverage Ratio, ranging from 0.00% to 0.75%. We will also pay a fee variable based on the Net Adjusted Leverage Ratio, ranging from 0.125% to 0.25%, on the daily amount of unused commitments under the Loan Agreement. Letters of credit bear fees that are equivalent to the interest rate margin that is applicable to revolving loans that bear interest at the adjusted SOFR plus other customary fees charged by the issuing bank. We paid certain customary loan origination fees in conjunction with the Loan Agreement. We are also subject to customary events of default that, if triggered, could result in acceleration of the maturity of the Revolver Facility. Subject to certain exceptions, the Revolver Facility also limits distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and also sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters. Convertible Senior Notes On June 15, 2021, we issued $345.0 million aggregate principal amount of convertible senior notes due 2026 (“Notes”). The net proceeds from the sale of the Notes were approximately $334.9 million after deducting issuance costs related to the Notes. The Notes are senior, unsecured obligations and are (i) equal in right of payment with our existing and future senior, unsecured indebtedness; (ii) senior in right of payment to our existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to our existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of our subsidiaries. The Notes were issued pursuant to, and are governed by, an indenture (the “Base Indenture”) between us and a trustee (“Trustee”), dated as of June 15, 2021, as supplemented by a first supplemental indenture (the “Supplemental Indenture,” and the Base Indenture, as supplemented by the Supplemental Indenture, the “Indenture”), dated as of June 15, 2021, between the Company and the Trustee. The Notes accrue interest at a rate of 0.375% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes will mature on June 15, 2026, unless earlier repurchased, redeemed or converted. Before February 17, 2026, noteholders will have the right to convert their Notes only upon the occurrence of certain events. From and after February 17, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. We will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of our common stock. However, upon conversion of any Notes, the conversion value, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 30 trading days, will be paid in cash up to at least the principal amount of the Notes being converted. The initial conversion rate is 12.7551 shares of common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $78.40 per share of common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. At January 2, 2024, the conversion rate for the Notes was 13.4936 shares of common stock per $1,000 principal amount of the Notes, which represents a conversion price of approximately $74.11 per share of common stock. In connection with the cash dividend that was declared by our Board on February 15, 2024, on March 5, 2024 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with the terms. The Notes are redeemable, in whole or in part (subject to certain limitations described below), at our option at any time, and from time to time, on or after June 20, 2024 and on or before the 30th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of our common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice; and (ii) the trading day immediately before the date we send such notice. However, we may not redeem less than all of the outstanding Notes unless at least $150.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time we send the related redemption notice. In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require us to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving us and certain de-listing events with respect to our common stock. The Notes will have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, will be subject to a 30-day If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to us (and not solely with respect to a significant subsidiary of ours) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to us, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to us and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, we may elect, at our option, that the sole remedy for an Event of Default relating to certain failures by us to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. As of January 2, 2024, the Notes had a gross principal balance of $345.0 million and a balance of $340.0 million, net of unamortized issuance costs of $5.0 million. The unamortized balance of issuance costs was recorded as a contra-liability and netted with long-term debt on our condensed consolidated balance sheets. Total amortization expense was $2.0 million, $2.0 million and $1.1 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively and was included in interest expense in the consolidated statements of income. The effective interest rate for the Notes was 0.96% as of January 2, 2024. |
Leases
Leases | 12 Months Ended |
Jan. 02, 2024 | |
Leases | |
Leases | 11. Leases Components of lease expense were as follows (in thousands): Fiscal Year 2023 2022 2021 Operating $ 145,774 $ 140,351 $ 131,834 Variable 87,047 81,585 73,909 Short-term 142 116 283 Total $ 232,963 $ 222,052 $ 206,026 Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 145,836 $ 149,624 Right-of-use assets obtained in exchange for new operating lease liabilities 114,373 86,187 Weighted-average remaining lease term — operating leases (in years) 14.9 15.2 Weighted-average discount rate — operating leases 5.3 % 5.0 % As of January 2, 2024, the maturities of our operating lease liabilities were as follows (in thousands): Fiscal year 2024 $ 138,459 Fiscal year 2025 146,828 Fiscal year 2026 144,453 Fiscal year 2027 142,444 Fiscal year 2028 149,919 Thereafter 1,357,092 Total future lease payments 2,079,195 Less: Interest (689,335) Present value of lease liabilities $ 1,389,860 Operating lease liabilities include $710.3 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $280.7 million of legally binding minimum lease payments for leases signed but not yet commenced. |
Other Noncurrent Liabilities
Other Noncurrent Liabilities | 12 Months Ended |
Jan. 02, 2024 | |
Other Noncurrent Liabilities | |
Other Noncurrent Liabilities | 12. Other Noncurrent Liabilities Other noncurrent liabilities consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Non-qualified deferred compensation liabilities (1) $ 93,979 $ 78,286 Contingent consideration and compensation liability 25,495 28,565 Other 17,174 18,159 Total $ 136,648 $ 125,010 (1) See Note 16 for further discussion of our non-qualified deferred compensation assets and liabilities. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 02, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. Commitments and Contingencies Purchase obligations, which include inventory purchases, equipment purchases, information technology and other miscellaneous commitments, were $101.4 million and $129.9 million at January 2, 2024 and January 3, 2023, respectively. These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services rendered. Real estate obligations, which include construction commitments, net of up-front landlord construction contributions, and legally binding minimum lease payments for leases signed but not yet commenced, were $414.8 million and $252.4 million at January 2, 2024 and January 3, 2023, respectively. The FRC acquisition agreement included a contingent consideration provision of which the remainder is payable annually from 2024 through 2027 and is based on achievement of revenue and profitability targets for the FRC brands other than North Italia and Flower Child with considerations made in the event we undergo a change in control or divest any FRC brand (other than North Italia and Flower Child) during the five years after closing. The liability for this contingent consideration provision was $25.5 million at January 2, 2024. See Note 2 for discussion of the fair value measurement of this liability. We are also required to provide financing to FRC in an amount sufficient to support achievement of these targets during the five years after closing. As credit guarantees to insurers, we had $33.5 million and $31.5 million at January 2, 2024 and January 3, 2023, respectively, in standby letters of credit related to our self-insurance liabilities. All standby letters of credit are renewable annually. We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. The total accrued liability for our self-insured plans was $71.5 million and $71.9 million at January 2, 2024 and January 3, 2023, respectively. On June 7, 2018, the California Department of Industrial Relations issued a $4.2 million wage citation jointly against the Company and our vendor that provides janitorial services to eight of our Southern California restaurants, alleging that the janitorial vendor or its subcontractor failed to comply with various provisions of the California Labor Code (Wage Citation Case No. 35-CM-188798-16). The wage citation seeks to recover penalties and other monetary payments on behalf of the employees that worked for this vendor or its subcontractor. On June 28, 2018, we filed an appeal of the wage citation. On November 10, 2022, the parties participated in voluntary mediation and reached a settlement of all claims. We reserved an immaterial amount for settlement purposes. Final payment under the settlement agreement was made in October 2023 following the final agency approval. On February 10, 2023, a class action complaint was filed against the Company in the United States District Court for the Southern District of California (Lightoller vs. TCF Co. LLC., Case No. 3:23-cv-00272-AJB-NLS), alleging violations of state privacy laws. The lawsuit alleges that the Company violated state wiretapping and privacy laws by improperly tracking and/or recording the keystrokes of visitors on the Company’s website without permission. A similar case was filed in the United States District Court for the District of Maryland on February 21, 2023 (Curd v. TCF CO. LLC; Civil Action No. 1:23-cv-00472-JMC). On May 10, 2023, the plaintiffs in Case Nos. 3:23-cv-00272 and 1:23-cv-00472 voluntarily dismissed their complaints against the Company without prejudice. Within the ordinary course of our business, we are subject to private lawsuits, government audits and investigations, administrative proceedings and other claims. These matters typically involve claims from customers, staff members and others related to operational and employment issues common to the foodservice industry. A number of these claims may exist at any given time, and some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to infringements of, or challenges to, our registered trademarks and other intellectual property, both domestically and abroad. We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they are valid or whether we are legally determined to be liable. At this time, we believe that the amount of reasonably possible losses resulting from final disposition of any pending lawsuits, audits, investigations, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims. Legal costs related to such claims are expensed as incurred. We have employment agreements with certain of our executive officers that provide for payments to those officers in the event of an actual or constructive termination of their employment, including in the event of a termination without cause, an acquirer failure to assume or continue equity awards following a change in control of the Company or, otherwise, in the event of death or disability as defined in those agreements. Aggregate payments totaling approximately $3.4 million, excluding accrued potential bonuses of $2.6 million, which are subject to approval by the Compensation Committee, would have been required by those agreements had all such officers terminated their employment for reasons requiring such payments as of January 2, 2024. In addition, the employment agreement with our Chief Executive Officer specifies an annual founder’s retirement benefit of $650,000 for ten years, commencing six months after termination of his full-time employment. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jan. 02, 2024 | |
Stockholders' Equity | |
Stockholders' Equity | 14. Stockholders’ Equity Common Stock Issuance On June 15, 2021, we issued 3.125 million shares of our common stock for $175.0 million. In connection with the issuance, we incurred direct and incremental costs of $8.0 million. Common Stock - Dividends and Share Repurchases Following the suspension that began in fiscal 2020 due to the impact of COVID-19 on our business and in conjunction with the terms of our Loan Agreement, our Board declared a quarterly dividend in the second quarter of fiscal 2022 and has declared quarterly dividends since then. Our Board declared dividends of $1.08 per common share in the aggregate during fiscal 2023. Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Loan Agreement and applicable law, and such other factors that the Board considers relevant. (See Note 10 for further discussion of our long-term debt.) On October 26, 2022, our Board increased the authorization to repurchase our common stock by 5.0 million shares to 61.0 million shares. Under this authorization, we have cumulatively repurchased 56.5 million shares at a total cost of $1,811.7 million, excluding excise tax, through January 2, 2024. During fiscal 2023, 2022 and 2021, we repurchased 1.4 million, 2.0 million and 0.1 million shares of our common stock at a cost of $46.1 million, $63.1 million and $5.8 million, excluding excise tax, respectively. The increase from fiscal 2021 to 2022 is primarily due to the resumption of our share repurchase program in the second quarter of fiscal 2022 after the suspension that began in fiscal 2020 due to the impact of COVID-19 on our business and in conjunction with the terms of our Loan Agreement. Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. Repurchased common stock is reflected as a reduction of stockholders’ equity in treasury stock. Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. Share repurchases may be made from time to time in open market purchases, privately-negotiated transactions, accelerated share repurchase programs, issuer self-tender offers or otherwise. Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the FRC acquisition, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and covenants under our Loan Agreement that limit share repurchases based on a defined ratio. (See Note 10 for further discussion of our long-term debt.) Series A Convertible Preferred Stock On April 20, 2020, we issued 200,000 shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) for an aggregate purchase price of $200 million, or $1,000 per share. In connection with the issuance, we incurred direct and incremental costs of $10.3 million, including financial advisory fees, closing costs, legal expenses, a commitment fee and other offering-related expenses. These direct and incremental costs reduced the Series A preferred stock balance at the issuance date and were recognized through retained earnings on June 30, 2020, the first measurement date. Upon adoption of ASU 2020-06 in the first quarter of fiscal 2021, we recorded a $4.8 million cumulative adjustment to retained earnings to reverse beneficial conversion features recorded during fiscal 2020. The Series A preferred stock ranked senior to our common stock with respect to dividends and distributions on liquidation, winding-up and dissolution upon which each share of Series A preferred stock would be entitled to receive an amount per share equal to the greater of (i) the purchase price (without giving effect to the commitment fee), plus all accrued and unpaid dividends (the “Liquidation Preference”) and (ii) the amount that the holder of the Series A preferred stock would have been entitled to receive at such time if the Series A preferred stock were converted into common stock. On June 15, 2021, we paid $443.8 million in connection with the cash-settled conversion of 150,000 shares of our outstanding Series A preferred stock (effected through a repurchase agreement), which was recognized through additional paid in capital. We also share-settled the conversion of the remaining 50,000 shares of our outstanding Series A convertible preferred stock into 2,400,864 shares of our common stock. These are both based on the then current Liquidation Preference per share of $1,067.42 and conversion price of $22.23. During the first quarter of fiscal 2021, we declared a cash dividend of $5.1 million, or $25.35 per share, on the Series A preferred stock. During the second quarter of fiscal 2021, $13.6 million in payments were made in connection with the conversion of the Series A preferred stock, consisting of $3.9 million, or $19.72 per share, of accrued dividends and $9.7 million of an inducement, which is also deemed to be a dividend. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Jan. 02, 2024 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation We maintain stock-based incentive plans under which incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units may be granted to staff members, consultants and non-employee directors. Our current practice is to issue new shares, rather than treasury shares, upon stock option exercises, for restricted share grants and upon vesting of restricted share units. To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock under these plans. On March 24, 2022, our Board approved an amendment to our The Cheesecake Factory Incorporated Stock Incentive Plan to increase the number of shares of common stock reserved for grant under the plan to 19.8 million shares from 17.5 million shares. This amendment was approved by our stockholders at our annual meeting held on May 23, 2022. Approximately 3.1 million of these shares were available for grant as of January 2, 2024. Stock options generally vest at 20% per year and expire eight three The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2023 2022 2021 Labor expenses $ 9,914 $ 9,590 $ 8,856 Other operating costs and expenses 318 321 311 General and administrative expenses 15,549 14,515 13,821 Total stock-based compensation 25,781 24,426 22,988 Income tax benefit 6,437 6,026 5,646 Total stock-based compensation, net of taxes $ 19,344 $ 18,399 $ 17,342 Capitalized stock-based compensation (1) $ 185 $ 226 $ 194 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. Stock Options The weighted-average fair value at the grant date for options issued during fiscal 2023 was $15.76 per share. The fair value of options issued was estimated utilizing the Black-Scholes valuation model with the following weighted-average assumptions: (a) an expected option term of 6.7 years, (b) expected stock price volatility of 45.2%, (c) a risk-free interest rate of 4.0% and (d) a dividend yield on our stock of 2.7%. We did not issue any stock options during fiscal 2022 or 2021. The expected option term represents the estimated period of time until exercise and is based on historical experience of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future staff member behavior. Expected stock price volatility is based on a combination of the historical volatility of our stock and the implied volatility of actively traded options on our common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with an equivalent remaining term. The dividend yield is based on anticipated cash dividend payouts. Stock option activity during fiscal 2023 was as follows: Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 1,685 $ 46.11 4.2 $ 0 Granted 40 $ 40.42 Exercised — $ — Forfeited or cancelled (175) $ 48.01 Outstanding at end of year 1,550 $ 45.75 3.8 $ 0 Exercisable at end of year 1,199 $ 47.11 3.1 $ 0 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year-end date. There were no options exercised during fiscal 2023. The total intrinsic value of options exercised during fiscal 2022 and 2021 was $4.9 million and $7.1 million, respectively. As of January 2, 2024, total unrecognized stock-based compensation expense related to unvested stock options was $1.5 million, which we expect to recognize over a weighted-average period of approximately 1.3 years. Restricted Shares and Restricted Share Units Restricted share and restricted share unit activity during fiscal 2023 was as follows: Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at beginning of year 2,512 $ 41.93 Granted 1,005 $ 37.73 Vested (501) $ 43.59 Forfeited (130) $ 39.77 Outstanding at end of year 2,886 $ 40.28 Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The weighted-average fair value for restricted shares and restricted share units issued during fiscal 2023, 2022 and 2021 was $37.73, $36.84 and $49.57, respectively. The fair value of shares that vested during fiscal 2023, 2022 and 2021 was $21.8 million, $18.5 million and $15.4 million, respectively. As of January 2, 2024, total unrecognized stock-based compensation expense related to unvested restricted shares and restricted share units was $57.1 million, which we expect to recognize over a weighted-average period of approximately 2.9 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Jan. 02, 2024 | |
Employee Benefit Plans | |
Employee Benefit Plans | 16. Employee Benefit Plans We have defined contribution benefit plans in accordance with section 401(k) of the Internal Revenue Code (“401(k) Plans”) that are open to our staff members who meet certain compensation and eligibility requirements. Participation in the 401(k) Plans is currently open to staff members from our restaurant concepts, bakery facilities, corporate office and FRC headquarters. The 401(k) Plans allow participating staff members to defer the receipt of a portion of their compensation and contribute such amount to one or more investment options. Our executive officers and a select group of management and/or highly compensated staff members are not eligible to participate in the 401(k) Plans. We currently match in cash a certain percentage of the staff member contributions to the 401(k) Plans and also pay a portion of the administrative costs. Expense recognized in fiscal 2023, 2022 and 2021 was $2.3 million, $2.1 million and $2.1 million, respectively. We have also established non-qualified deferred compensation plans (“Non-Qualified Plans”) for our executive officers and a select group of management and/or highly compensated staff members. The Non-Qualified Plans allow participating staff members to defer the receipt of a portion of their base compensation and bonuses. Non-employee directors may also participate in the Non-Qualified Plans and defer the receipt of their earned director fees. We currently match in cash a certain percentage of the staff member contributions to the Non-Qualified Plans and also pay for the administrative costs. We do not match any contributions made by non-employee directors. Expense recognized in fiscal 2023, 2022 and 2021 was $1.3 million, $1.4 million and $1.2 million, respectively. While we are under no obligation to fund Non-Qualified Plan liabilities (in whole or in part), our current practice is to maintain company-owned life insurance contracts and other investments that are specifically designed to informally fund savings plans of this nature. These contracts are recorded at their cash surrender value as determined by the insurance carrier. Our consolidated balance sheets reflect investments in other assets and our obligation to participants in the Non-Qualified Plans in other noncurrent liabilities. Gains and losses related to our non-qualified deferred compensation assets and liabilities are reflected in interest and other expense, net in our consolidated statements of income. We maintain self-insured medical and dental benefit plans for our staff members. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us as of the balance sheet date. The accrued liability for our self-insured benefit plans, which is included in other accrued expenses, was $11.3 million and $14.0 million as of January 2, 2024 and January 3, 2023, respectively. (See Note 1 for further discussion of accounting for our self-insurance liabilities.) |
Income Taxes
Income Taxes | 12 Months Ended |
Jan. 02, 2024 | |
Income Taxes | |
Income Taxes | 17. Income Taxes The provision for income taxes consisted of the following (in thousands): Fiscal Year 2023 2022 2021 Income before income taxes $ 100,014 $ 32,892 $ 71,620 Income tax provision/(benefit): Current: Federal $ 7,183 $ 3,520 $ 15,746 State 7,195 4,895 4,350 Total current 14,378 8,415 20,096 Deferred: Federal (15,329) (17,733) (20,434) State (386) (913) (415) Total deferred (15,715) (18,646) (20,849) Total benefit $ (1,337) $ (10,231) $ (753) The following reconciles the U.S. federal statutory rate to the effective tax rate: Fiscal Year 2023 2022 2021 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % State and district income taxes, net of federal benefit 5.4 8.9 4.2 Credit for FICA taxes paid on tips (24.9) (66.4) (24.2) Other credits and incentives (2.2) (10.7) (4.2) Impact of net operating loss carryback 0.0 0.0 (6.3) Deferred compensation (2.4) 9.7 (2.9) Equity compensation 1.5 5.5 0.0 Uncertain tax positions (0.7) (2.3) 10.3 Non-deductible executive compensation 0.8 2.8 0.3 Other 0.2 0.4 0.7 Effective tax rate (1.3) % (31.1) % (1.1) % On March 27, 2020, the CARES Act was signed into law. It included provisions allowing for the carryback of net operating losses generated in fiscal years 2018, 2019 and 2020. During fiscal 2021, we filed a refund claim in the amount of $18.4 million for our fiscal 2020 net operating loss carryback, which was received during fiscal 2022. In January 2022, we filed amended returns for tax years 2018 and 2019 requesting total refunds of $21.3 million for credits released by our fiscal 2020 loss carryback. These refunds have not yet been received. The effects of these claims were primarily included in our fiscal 2020 provision for income taxes, using estimates based on the best information available at the time we prepared our fiscal 2020 consolidated financial statements, and were adjusted to as-filed actual amounts in our fiscal 2021 provision for income taxes. These adjustments had a minor effect on our fiscal 2021 provision for income taxes. In our fiscal 2021 provision for income taxes, we also recorded the effects of accelerating the remittance of certain FICA taxes that had been deferred pursuant to the CARES Act. The accelerated remittance increased the value of our fiscal 2020 loss carryback by $4.3 million. We made no further adjustments in our fiscal 2023 provision for income taxes relating to these amounts. Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): January 2, 2024 January 3, 2023 Deferred tax assets: Staff member benefits $ 35,932 $ 31,325 Insurance reserves 14,931 14,374 Operating lease liability 324,587 323,094 Deferred income 38,074 35,928 Tax credit carryforwards 74,004 57,710 Goodwill 22,743 21,331 Stock-based compensation 10,789 10,769 State and foreign net operating loss carryforwards 1,640 2,435 Other 674 604 Subtotal 523,374 497,570 Less: Valuation allowance (1,444) (1,223) Total $ 521,930 $ 496,347 Deferred tax liabilities: Property and equipment $ (121,219) $ (113,565) Prepaid expenses (8,933) (8,151) Inventory (8,882) (8,399) Accrued rent (5,889) (5,285) Operating lease asset (284,244) (283,921) Other (819) (781) Total $ (429,986) $ (420,102) Net deferred tax asset $ 91,944 $ 76,245 At January 2, 2024 and January 3, 2023, we had $72.8 million and $56.5 million, respectively of U.S. federal credit carryforwards which begin to expire in 2038 and $1.6 million and $1.6 million, respectively, of state hiring and investment credits which begin to expire in 2024. At January 2, 2024 and January 3, 2023, we had $2.3 million and $2.5 million, respectively of foreign net operating loss carryforwards which begin to expire in 2038 and $27.4 million and $46.6 million, respectively, of state net operating loss carryforwards with statutory carryforward periods ranging from 5 years to no We assess the available evidence to estimate if these carryforwards and our other deferred tax assets will be realized. We concluded that a substantial portion of our deferred tax assets are more likely than not to be realized by reversals of existing taxable temporary differences and that forecasted future taxable income, exclusive of reversing temporary differences, will result in realization of a substantial portion of the remainder. We did not need to consider tax planning strategies in this analysis. Based on this evaluation, at January 2, 2024 and January 3, 2023 we carried a valuation allowance of $1.4 million and $1.2 million, respectively, to reflect the amount that we will likely not realize. This assessment could change if estimates of future taxable income during the carryforward period are revised. The earliest tax year still subject to examination by a significant taxing jurisdiction is 2015. At January 2, 2024, we had a reserve of $3.8 million for uncertain tax positions, all of which would favorably impact our effective income tax rate if resolved in our favor. A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands): Fiscal Year 2023 2022 2021 Balance at beginning of year $ 3,787 $ 4,799 $ 655 Additions related to prior year tax positions 181 227 4,157 Additions related to current period tax positions (121) (54) (13) Reductions related to settlements with taxing authorities — (1,185) — Balance at end of year $ 3,847 $ 3,787 $ 4,799 At January 2, 2024 and January 3, 2023, we had $1.4 million and $2.2 million, respectively, of accrued interest and penalties related to uncertain tax positions. $0.3 million of the balance of uncertain tax positions at January 2, 2024 related to tax positions for which it is reasonably possible that the total amount could decrease during the next twelve months based on the lapses of statutes of limitations. |
Segment Information
Segment Information | 12 Months Ended |
Jan. 02, 2024 | |
Segment Information | |
Segment Information | 18. Segment Information Our operating segments, the businesses for which our management reviews discrete financial information for decision-making purposes, are comprised of The Cheesecake Factory, North Italia, Flower Child, the other FRC brands and our bakery division. Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory, North Italia and the other FRC brands are the only businesses that meet the criteria of a reportable operating segment. The remaining operating segments (Flower Child and our bakery division) along with our businesses that do not qualify as operating segments are combined in Other. Unallocated corporate expenses, capital expenditures and assets are also combined in Other. Segment information is presented below (in thousands): Fiscal Year 2023 2022 2021 Revenues: The Cheesecake Factory restaurants $ 2,595,066 $ 2,528,043 $ 2,293,225 North Italia 258,878 228,622 171,901 Other FRC 263,923 237,552 182,175 Other 321,636 308,939 280,239 Total $ 3,439,503 $ 3,303,156 $ 2,927,540 Income from operations: The Cheesecake Factory restaurants $ 297,063 $ 220,765 $ 242,599 North Italia 18,515 13,934 8,624 Other FRC 19,422 23,577 16,323 Other (1) (226,434) (219,341) (185,228) Total $ 108,566 $ 38,935 $ 82,318 Depreciation and amortization expenses: The Cheesecake Factory restaurants $ 64,206 $ 66,539 $ 65,987 North Italia 6,407 5,713 4,078 Other FRC 7,916 6,231 4,802 Other 14,607 13,897 14,787 Total $ 93,136 $ 92,380 $ 89,654 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ 20,401 $ 19,701 $ 11,904 North Italia 1,015 — — Other FRC 2,582 3,909 1,305 Other 5,466 7,777 4,930 Total $ 29,464 $ 31,387 $ 18,139 Preopening costs: The Cheesecake Factory restaurants $ 12,857 $ 9,525 $ 4,868 North Italia 5,058 4,305 4,510 Other FRC 6,482 1,361 3,188 Other 982 1,638 1,145 Total $ 25,379 $ 16,829 $ 13,711 Capital expenditures: The Cheesecake Factory restaurants $ 80,752 $ 65,996 $ 31,832 North Italia 26,882 14,818 12,539 Other FRC 27,562 18,895 13,524 Other 16,369 12,755 9,048 Total $ 151,565 $ 112,464 $ 66,943 Total assets: The Cheesecake Factory restaurants $ 1,571,943 $ 1,625,073 $ 1,653,161 North Italia 346,810 306,642 270,029 Other FRC 399,038 301,618 276,369 Other 522,592 541,887 598,566 Total $ 2,840,383 $ 2,775,220 $ 2,798,125 (1) Fiscal 2023, 2022 and fiscal 2021 include $ 11.7 million, $13.4 million and $ 19.5 million, respectively, of acquisition-related expenses. These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expenses in the consolidated statements of income. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jan. 02, 2024 | |
Subsequent Events | |
Subsequent Events | 19. Subsequent Events On February 15, 2024, our Board declared a quarterly cash dividend of $0.27 per share to be paid on March 19, 2024 to the stockholders of record of each share of our common stock at the close of business on March 6, 2024. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 02, 2024 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and its wholly owned subsidiaries (referred to herein collectively as the “Company,” “we,” “us” and “our”) and are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consolidation. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal years 2023 and 2021 each consisted of 52 weeks. Fiscal year 2022 consisted of 53 weeks. Fiscal year 2024 will consist of 52 weeks. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. |
Geopolitical and Other Macroeconomic Impacts to our Operating Environment | Geopolitical and Other Macroeconomic Impacts to our Operating Environment During fiscal 2021 and 2022, the COVID - 19 pandemic continued to affect our business during periods of accelerated case counts in which we experienced increased restaurant staff absenteeism and temporary shifts in consumer behavior, such as changes in customer traffic or the mix between on-premise and off-premise channels. Along with the COVID-19 pandemic, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation. Some of these factors continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs. We also encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges. The ongoing impact of geopolitical and macroeconomic events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in the supply chain and delay in new restaurant openings. Any of these factors may have an adverse impact on our business and materially adversely affect our financial performance. |
Cash and Cash Equivalents | Cash and Cash Equivalents Amounts receivable from credit card processors, totaling $21.0 million and $19.1 million at January 2, 2024 and January 3, 2023, respectively, are considered cash equivalents because they are both short-term and highly liquid in nature and are typically converted to cash within three days of the sales transaction. Our cash management system provides for the funding of all major bank disbursement accounts on a daily basis as checks are presented for payment. Under this system, outstanding checks are in excess of the cash balances at certain banks, which creates book overdrafts. Book overdrafts are presented as a current liability in other accrued expenses on our consolidated balance sheet. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receivables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. We invest our excess cash in a money market deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally insured limit, we have not experienced any losses related to these balances, and we believe credit risk to be minimal. We consider the concentration of credit risk for accounts receivable from our bakery customers to be minimal due to the payment histories and general financial condition of our larger bakery accounts. Concentration of credit risk related to other receivables is limited as this balance is comprised primarily of amounts due from our gift card distributors, insurance providers and delivery partner. |
Inventories | Inventories Inventories consist of restaurant food and other supplies, bakery raw materials and bakery finished goods and are stated at the lower of cost or net realizable value on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries. |
Property and Equipment | Property and Equipment We record property and equipment at cost less accumulated depreciation. Improvements are capitalized, while repairs and maintenance costs are expensed as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the reasonably certain lease term, whichever is shorter. Leasehold improvements include the cost of our internal development and construction department. Depreciation periods are as follows: Buildings and land improvements 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. Gains and losses related to property and equipment disposals are recorded in depreciation and amortization expenses. |
Impairment of Long-Lived Assets and Lease Termination Expenses | Impairment of Long-Lived Assets and Lease Termination Expenses We assess the potential impairment of our long-lived assets on an annual basis or whenever events or changes in circumstances indicate the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to, negative cash flow, significant underperformance relative to historical or projected future operating results, significant changes in the manner in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously estimated useful life and significant negative industry or economic trends. At any given time, we may be monitoring a number of locations, and future impairment charges could be required if individual restaurant performance does not improve or we make the decision to close or relocate a restaurant. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Impairment testing is performed at the individual restaurant asset group level, which is inclusive of property and equipment and lease right-of-use assets. Recoverability is assessed by comparing the carrying value of the assets to the undiscounted cash flows expected to be generated by those assets. Impairment losses are measured as the amount by which the carrying values of the assets exceed their fair value, which is determined based on discounted future net cash flows expected to be generated by the assets. In fiscal 2023, we recorded $29.5 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory (one previously impaired), one North Italia (previously impaired), one Other FRC and two Other restaurant lease terminations. In fiscal 2022, we recorded $31.4 million of expense primarily related to the impairment of long - lived assets for three The Cheesecake Factory, one Other FRC and three Other restaurants. In fiscal 2021, we recorded $16.3 million of expense primarily related to the impairment of long-lived assets for three The Cheesecake Factory and two Other restaurants. These amounts are recorded in impairment of assets and lease terminations on the consolidated statements of income. |
Intangible Assets | Intangible Assets The following table presents components of intangible assets, net (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Indefinite-lived intangible assets: Goodwill $ 1,451 $ 1,451 Trade names and trademarks 234,341 234,077 Transferable alcoholic beverage licenses 7,923 7,683 Total indefinite-lived intangible assets 243,715 243,211 Definite-lived intangible assets, net: Licensing agreements 4,602 5,092 Non-transferable alcoholic beverage licenses 3,410 3,221 Total definite-lived intangible assets 8,012 8,313 Total intangible assets, net $ 251,727 $ 251,524 Goodwill and other indefinite-lived intangible assets are not amortized and are tested for impairment annually as of the first day of our fiscal fourth quarter or on an interim basis if events or changes in circumstances between annual tests indicate a potential impairment. First, we determine if, based on qualitative factors, it is more likely than not that an impairment exists. Factors considered include, but are not limited to, historical financial performance, wage, product and services inflation, competitive environment, macroeconomic and industry conditions, results of prior impairment tests and share price performance. Any adverse change in these factors could have a significant impact on the recoverability of these assets and could have a material impact on our consolidated financial statements. If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is performed. The quantitative assessments require the use of estimates and assumptions regarding future cash flows and asset fair values. Key assumptions include projected revenue growth and operating expenses, discount rates, royalty rates, valuation multiples and other factors that could affect fair value or otherwise indicate potential impairment. Such assessments could change materially if different estimates and assumptions were used. We performed our annual impairment assessment of indefinite-lived intangible assets as of the first day of the fourth quarters of fiscal 2023, 2022 and 2021 and concluded there was no impairment. Definite-lived intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable based on estimated undiscounted future cash flows. If impaired, the asset or asset group is written down to fair value based on discounted future cash flows. We performed our annual impairment assessment of definite-lived intangible assets as of the first day of the fourth quarters of fiscal 2023, 2022 and 2021. We concluded there was no impairment for fiscal 2023 and 2022 and recorded $1.3 million of impairment one We evaluate the useful lives of our intangible assets, other than goodwill, at each reporting period to determine if they are definite or indefinite-lived. A determination on useful life requires judgments and assumptions regarding the future effects of obsolescence, demand, competition, other economic factors (such as the stability of the industry, legislative action that results in an uncertain or changing regulatory environment and expected changes in distribution channels), the level of required maintenance expenditures and the expected lives of other related groups of assets. |
Revenue Recognition | Revenue Recognition Our revenues consist of sales at our Company-owned restaurants, sales from our bakery operations to our licensees and other third-party customers, royalties from our licensees’ restaurant sales and from consumer packaged goods sales, and licensee development and site fees. Revenues are presented net of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate taxing authorities. Revenues from restaurant sales are recognized when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk to customers. Royalty revenues are recognized in the period the related sales occur, utilizing the sale-based royalty exception available under current accounting guidance. Our consumer packaged goods minimum guarantees do not require distinct performance obligations. Therefore, related revenue is recognized on a straight-line basis over the life of the applicable agreements, ranging from five eight We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $7.3 million, $7.0 million and $6.8 million of gift card breakage in fiscal years 2023, 2022 and 2021, respectively. Incremental direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings in the same pattern as the related gift card revenue. Certain of our promotional programs include multiple element arrangements that incorporate various performance obligations. We allocate revenue using the relative selling price of each performance obligation considering the likelihood of redemption and recognize revenue upon satisfaction of each performance obligation. During fiscal 2023, we deferred and recognized previously deferred revenue of $27.5 million and $23.3 million, respectively, related to promotional programs. During fiscal 2022, we deferred and recognized previously deferred revenue of $27.3 million and $23.6 million, respectively, related to promotional programs. During fiscal 2021, we deferred and recognized previously deferred revenue of $27.5 million and $15.2 million, respectively, related to promotional programs. |
Leases | Leases We currently lease all of our restaurant locations, generally with initial terms of 10 to 20 years plus two five-year renewal options. Our leases typically require contingent rent above the minimum base rent payments based on a percentage of revenues ranging from 2% to 10%, have escalating minimum rent requirements over the term of the lease and require payment for various expenses incidental to the use of the property. A majority of our leases provide for a reduced level of overall rent obligation if specified co-tenancy requirements are not satisfied. We expend cash for leasehold improvements and furniture, fixtures, and equipment to build out and equip our leased premises. We may also expend cash for structural additions that we make to leased premises. Generally, a portion of the leasehold improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents, or a combination thereof. We do not meet any of the accounting criteria under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 842, Leases, for being the owner of the asset under construction. Many of our leases provide early termination rights permitting us to terminate the lease prior to expiration in the event our revenues are below a stated level for a period of time, generally conditioned upon repayment of the unamortized landlord contributions. In addition to leases for our restaurant locations, we also lease automobiles and certain equipment that is used in the restaurants, bakeries and corporate office. The leases for our restaurant locations, automobiles and certain restaurant equipment are included in our operating lease assets and liabilities. All other leases are immaterial or qualify for the short-term lease exclusion. The assessment of whether a contract is or contains a lease is performed at contract inception. A lease is defined as a contract that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control is defined as having both the right to obtain substantially all the economic benefits from the use of the asset and to direct how and for what purpose the asset is used. At lease commencement, we evaluate each material lease and those that don’t qualify for the short-term exclusion to determine its appropriate classification as an operating or finance lease. All of the leases evaluated meet the criteria for classification as operating leases. For restaurant leases that existed as of the adoption of ASC 842, we continued to apply our historical practice of excluding executory costs, and only minimum base rent was factored into the initial operating lease liability and corresponding lease asset. For restaurant leases beginning after adoption of ASC 842, we have elected the single lease component practical expedient. Operating lease assets and liabilities are recorded on the balance sheet at lease commencement based on the present value of minimum base rent and other fixed payments over the reasonably certain lease term. The difference between the amounts we expend for structural costs and the construction contributions received from our landlords is recorded as an adjustment to the operating lease asset. Lease terms include the build-out period for our leases where no rent payments are typically due under the terms of the lease, as well as options to renew when we deem we have significant economic incentive to exercise the extension. When determining if we have a significant economic incentive, we consider relevant factors, such as contractual, asset, entity and market-based considerations. Option periods are included in the lease term for the majority of our leases. Termination rights have not been factored into the lease terms since based on our probability assessment we are reasonably certain we will not terminate our leases. We cannot determine the interest rate implicit in our leases because we do not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, we use our incremental borrowing rate as the discount rate for our leases. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because we do not generally borrow on a collateralized basis, we derive an appropriate incremental borrowing rate using the interest rate we pay on our non-collateralized borrowings, adjusted for the amount of the lease payments, the lease term and the effect of designating specific collateral with a value equal to the unpaid lease payments for that lease. We monitor for events or changes in circumstances that require reassessment of our leases. When a reassessment results in the re-measurement of a lease liability, a corresponding adjustment is made to the carrying amount of the operating lease asset. We also assess the potential impairment of our operating lease assets under long-lived asset impairment guidance in ASC 360, Property, Plant, and Equipment: Impairment or disposal on long-lived assets. Rent expense included in our operating lease assets is recognized on a straight-line basis. Contingent rent expense is recorded as incurred to the extent it exceeds minimum base rent per the lease agreement. Variable lease payments, which primarily consist of real estate taxes, common area maintenance charges, insurance cost and other operating expenses, are not included in the operating lease right-of-use asset or operating lease liability balances and are recognized as incurred. Rent expense is included in other operating costs and expenses in the consolidated statements of income. The reasonably certain lease term and the incremental borrowing rate for each restaurant location require judgment by management and can impact the classification and accounting for a lease as operating or finance, the value of the operating lease asset and liability and the term over which leasehold improvements for each restaurant are depreciated. These judgments may produce materially different amounts of operating lease assets and liabilities, rent expense and interest expense than would be reported if different assumptions were used. |
Self-Insurance Liabilities | Self-Insurance Liabilities We retain financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’ compensation, general liability, staff member health benefits, employment practices and other insurable risks. The accrued liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims, as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued expenses. Our estimated liabilities, which are not discounted, are based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. Significant judgment is required to estimate IBNR amounts, as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. |
Stock-Based Compensation | Stock-Based Compensation We maintain stock-based incentive plans under which equity awards may be granted to staff members, consultants and non-employee directors. We account for the awards based on fair value measurement guidance and amortize to expense over the vesting period using a straight-line or graded-vesting schedule, as applicable. (See Note 15 for further discussion of our stock-based compensation.) |
Advertising Costs | Advertising Costs We expense advertising production costs at the time the advertising first takes place. All other advertising costs are expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $34.7 million, $24.0 million and $19.9 million in fiscal 2023, 2022 and 2021, respectively. The increase in fiscal 2023 is primarily due to the launch of our Cheesecake Rewards TM |
Preopening Costs | Preopening Costs Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense preopening costs as incurred. |
Income Taxes | Income Taxes We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are recorded as a reduction of tax expense. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and record a valuation allowance if, based on all available evidence, we determine that some portion of the tax benefit will not be realized. In evaluating our ability to recover our deferred tax assets within the jurisdictions from which they arise, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies (when applicable) and results of recent operations. If we later determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, we adjust the deferred tax asset valuation allowance and reduce income tax expense. We evaluate our exposures associated with our various tax filing positions and recognize a tax benefit from an uncertain tax position only if it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authorities based solely on its technical merits, taking into account available administrative remedies and litigation. If this threshold is met, we recognize only the portion of the tax benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. We record a liability for any portion of the tax benefit that does not meet these recognition and measurement criteria and we adjust this liability through income tax expense in the period in which the uncertain tax position is effectively settled, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when new information becomes available. We recognize interest and penalties related to uncertain tax positions in income tax expense. |
Net Income per Share | Net Income per Share Basic net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period, reduced by unvested restricted stock awards. At January 2, 2024, January 3, 2023 and December 28, 2021, 2.9 million shares, 2.5 million shares and 2.1 million shares, respectively, of restricted stock and restricted stock units issued were unvested and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates. Diluted net income per share is computed by dividing net income available to common stockholders by the weighted-average number of common stock equivalents outstanding for the period. Common stock equivalents for our convertible senior notes due 2026 (“Notes”) are determined by application of the if-converted method, and common stock equivalents for outstanding stock options, restricted stock and restricted stock units are determined by the application of the treasury stock method. Holders of our Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A preferred stock”) participated in dividends on an as-converted basis when declared on common stock. As a result, our Series A preferred stock met the definition of a participating security which required us to apply the two-class method to compute both basic and diluted net income per share. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. In addition, as our Series A preferred stock was a participating security, we were required to calculate diluted net income per share under the if-converted method in addition to the two-class method and utilize the most dilutive result. Fiscal Year 2023 2022 2021 (In thousands, except per share data) Basic net income per common share: Net income $ 101,351 $ 43,123 $ 72,373 Dividends on Series A preferred stock — — (18,661) Undistributed earnings allocated to Series A preferred stock — — (4,581) Net income available to common stockholders 101,351 43,123 49,131 Basic weighted-average shares outstanding 48,324 49,815 47,529 Basic net income per common share $ 2.10 $ 0.87 $ 1.03 Diluted net income per common share: Net income available to common stockholders 101,351 43,123 49,131 Reallocation of undistributed earnings to Series A preferred stock — — 85 Net income available to common stockholders for diluted EPS 101,351 43,123 49,216 Basic weighted-average shares outstanding 48,324 49,815 47,529 Dilutive effect of equity awards (1) 726 599 981 Diluted weighted-average shares outstanding 49,050 50,414 48,510 Diluted net income per common share $ 2.07 $ 0.86 $ 1.01 (1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 2.9 million, 3.3 million and 1.9 million for fiscal 2023, 2022 and 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. |
Comprehensive Income | Comprehensive Income Comprehensive income includes all changes in equity during a period except those resulting from investment by and distribution to owners. Our comprehensive income consists of net income, unrealized gains on our interest rate swap and translation gains/(losses) related to our Canadian restaurant operations. |
Foreign Currency | Foreign Currency The Canadian dollar is the functional currency for our Canadian restaurant operations. Revenue and expense accounts are translated into U.S. dollars using the average exchange rates during the reporting period. Assets and liabilities are translated using the exchange rates in effect at the reporting period end date. Equity accounts are translated at historical rates, except for the change in retained earnings which is the result of the income statement translation process. Translation gains and losses are reported as a separate component in our consolidated statements of comprehensive income and would only be realized upon the sale or upon complete or substantially complete liquidation of the business. Gains and losses from foreign currency transactions are recognized in our consolidated statements of income in interest and other expense, net. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which updates income tax disclosures related to the rate reconciliation and requires disclosure of income taxes paid by jurisdiction. The amendment also provides further disclosure comparability. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied prospectively. However, retrospective application is permitted. Management is currently evaluating this ASU to determine its impact on the Company’s disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Summary of Significant Accounting Policies | |
Schedule of depreciation and amortization periods | Buildings and land improvements 30 years Leasehold improvements 10 to 30 years Furnishings, fixtures and equipment 3 to 15 years (1) Computer software and equipment 5 years (1) Other than certain types of restaurant equipment with estimated useful lives that equal or exceed the reasonably certain lease term, in which case the reasonably certain lease term is utilized. |
Schedule of components of intangible assets, net | The following table presents components of intangible assets, net (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Indefinite-lived intangible assets: Goodwill $ 1,451 $ 1,451 Trade names and trademarks 234,341 234,077 Transferable alcoholic beverage licenses 7,923 7,683 Total indefinite-lived intangible assets 243,715 243,211 Definite-lived intangible assets, net: Licensing agreements 4,602 5,092 Non-transferable alcoholic beverage licenses 3,410 3,221 Total definite-lived intangible assets 8,012 8,313 Total intangible assets, net $ 251,727 $ 251,524 |
Schedule of basic and diluted net income (loss) per share | Fiscal Year 2023 2022 2021 (In thousands, except per share data) Basic net income per common share: Net income $ 101,351 $ 43,123 $ 72,373 Dividends on Series A preferred stock — — (18,661) Undistributed earnings allocated to Series A preferred stock — — (4,581) Net income available to common stockholders 101,351 43,123 49,131 Basic weighted-average shares outstanding 48,324 49,815 47,529 Basic net income per common share $ 2.10 $ 0.87 $ 1.03 Diluted net income per common share: Net income available to common stockholders 101,351 43,123 49,131 Reallocation of undistributed earnings to Series A preferred stock — — 85 Net income available to common stockholders for diluted EPS 101,351 43,123 49,216 Basic weighted-average shares outstanding 48,324 49,815 47,529 Dilutive effect of equity awards (1) 726 599 981 Diluted weighted-average shares outstanding 49,050 50,414 48,510 Diluted net income per common share $ 2.07 $ 0.86 $ 1.01 (1) Shares of common stock equivalents related to outstanding stock options, restricted stock and restricted stock units of 2.9 million, 3.3 million and 1.9 million for fiscal 2023, 2022 and 2021, respectively, were excluded from the diluted calculation due to their anti-dilutive effect. No shares of common stock equivalents related to the Notes were included in the diluted calculation due to their anti-dilutive effect. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Fair Value Measurements | |
Schedule of components and classification of assets and liabilities measured at fair value on a recurring basis | The following tables present the components and classification of our assets and liabilities that are measured at fair value on a recurring basis (in thousands): January 2, 2024 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 94,136 $ — $ — Non-qualified deferred compensation liabilities (93,979) — — Acquisition-related contingent consideration and compensation liability — — (25,495) January 3, 2023 Level 1 Level 2 Level 3 Assets/(Liabilities) Non-qualified deferred compensation assets $ 78,542 $ — $ — Non-qualified deferred compensation liabilities (78,286) — — Acquisition-related deferred consideration (1) — (10,751) — Acquisition-related contingent consideration and compensation liability — — (28,565) |
Schedule of reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liabilities categorized as Level 3 | The following table presents a reconciliation of the beginning and ending amounts of the fair value of the acquisition-related contingent consideration and compensation liability categorized as Level 3 (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Beginning balance $ 28,565 $ 23,894 Payment (12,994) (7,187) Change in fair value 9,924 11,858 Ending balance $ 25,495 $ 28,565 |
Accounts and Other Receivables
Accounts and Other Receivables (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Accounts and Other Receivables | |
Schedule of accounts and other receivables | Accounts and other receivables consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card distributors $ 35,777 $ 37,586 Bakery customers 13,863 16,561 Landlord construction contributions 12,650 9,862 Insurance providers 9,984 10,529 Delivery partner 7,154 7,757 Other 23,666 23,216 Total $ 103,094 $ 105,511 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Inventories | |
Schedule of inventories | Inventories consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Restaurant food and supplies $ 32,283 $ 30,783 Bakery finished goods and work in progress 16,230 17,250 Bakery raw materials and supplies 9,141 7,526 Total $ 57,654 $ 55,559 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Prepaid Expenses | |
Schedule of prepaid expenses | Prepaid expenses consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card contract assets $ 19,111 $ 19,886 Prepaid rent (1) 24,438 12,165 Other 19,541 16,348 Total $ 63,090 $ 48,399 (1) The primary cause for the increase in prepaid rent expenses is a higher number of restaurants under construction at January 2, 2024 where the lease has not yet commenced compared to the prior year. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Land and related improvements $ 15,852 $ 15,852 Buildings 44,179 44,138 Leasehold improvements 1,291,153 1,225,860 Furnishings, fixtures and equipment 625,931 584,924 Computer software and equipment 57,952 60,861 Restaurant smallwares 38,234 36,494 Construction in progress 58,067 36,675 Property and equipment, total 2,131,368 2,004,804 Less: Accumulated depreciation (1,340,275) (1,258,753) Property and equipment, net $ 791,093 $ 746,051 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Other Assets | |
Schedule of other assets | Other assets consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Non-qualified deferred compensation assets (1) $ 94,136 $ 78,542 Deferred income taxes (2) 91,944 76,245 Other 8,535 8,104 Total $ 194,615 $ 162,891 (1) See Note 16 for further discussion of our non-qualified deferred compensation assets. (2) See Note 17 for further discussion of our income taxes. |
Gift Cards (Tables)
Gift Cards (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Gift Cards | |
Schedule of gift card liabilities | The following tables present information related to gift cards (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Gift card liabilities: Beginning balance $ 219,808 $ 211,182 Activations 140,647 152,368 Redemptions and breakage (137,540) (143,743) Ending balance $ 222,915 $ 219,808 |
Schedule of gift card contract assets | Fiscal year ended January 2, 2024 January 3, 2023 Gift card contract assets: (1) Beginning balance $ 19,886 $ 18,468 Deferrals 14,957 16,440 Amortization (15,732) (15,022) Ending balance $ 19,111 $ 19,886 (1) Included in prepaid expenses on the consolidated balance sheets. |
Other Accrued Expenses (Tables)
Other Accrued Expenses (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Other Accrued Expenses | |
Schedule of other accrued expenses | Other accrued expenses consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Self-insurance $ 71,546 $ 71,872 Salaries and wages (1) 51,040 43,402 Staff member benefits 28,951 27,332 Payroll and sales taxes 20,365 24,861 Rent 18,973 12,713 Deferred consideration (2) — 10,751 Other 48,824 40,202 Total $ 239,699 $ 231,133 (1) The increase in accrued salaries and wages was primarily due to the timing of payroll disbursements in relation to the fiscal 2023 versus 2022 year-end dates. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Leases | |
Schedule of components for lease expense | Components of lease expense were as follows (in thousands): Fiscal Year 2023 2022 2021 Operating $ 145,774 $ 140,351 $ 131,834 Variable 87,047 81,585 73,909 Short-term 142 116 283 Total $ 232,963 $ 222,052 $ 206,026 |
Schedule of supplemental information related to leases | Supplemental information related to leases (in thousands, except percentages): Fiscal Year 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 145,836 $ 149,624 Right-of-use assets obtained in exchange for new operating lease liabilities 114,373 86,187 Weighted-average remaining lease term — operating leases (in years) 14.9 15.2 Weighted-average discount rate — operating leases 5.3 % 5.0 % |
Schedule of operating lease liabilities maturity | As of January 2, 2024, the maturities of our operating lease liabilities were as follows (in thousands): Fiscal year 2024 $ 138,459 Fiscal year 2025 146,828 Fiscal year 2026 144,453 Fiscal year 2027 142,444 Fiscal year 2028 149,919 Thereafter 1,357,092 Total future lease payments 2,079,195 Less: Interest (689,335) Present value of lease liabilities $ 1,389,860 |
Other Noncurrent Liabilities (T
Other Noncurrent Liabilities (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Other Noncurrent Liabilities | |
Schedule of other noncurrent liabilities | Other noncurrent liabilities consisted of (in thousands): Fiscal year ended January 2, 2024 January 3, 2023 Non-qualified deferred compensation liabilities (1) $ 93,979 $ 78,286 Contingent consideration and compensation liability 25,495 28,565 Other 17,174 18,159 Total $ 136,648 $ 125,010 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Stock-Based Compensation | |
Schedule of information related to stock-based compensation, net of forfeitures | The following table presents information related to stock-based compensation, net of forfeitures (in thousands): Fiscal Year 2023 2022 2021 Labor expenses $ 9,914 $ 9,590 $ 8,856 Other operating costs and expenses 318 321 311 General and administrative expenses 15,549 14,515 13,821 Total stock-based compensation 25,781 24,426 22,988 Income tax benefit 6,437 6,026 5,646 Total stock-based compensation, net of taxes $ 19,344 $ 18,399 $ 17,342 Capitalized stock-based compensation (1) $ 185 $ 226 $ 194 (1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development department that relates to capitalizable activities such as the design and construction of new restaurants, remodeling existing locations and equipment installation. Capitalized stock-based compensation is included in property and equipment, net on the consolidated balance sheets. |
Schedule of stock option activity | Weighted- Average Weighted- Remaining Average Contractual Aggregate Shares Exercise Price Term Intrinsic Value (1) (In thousands) (Per share) (In years) (In thousands) Outstanding at beginning of year 1,685 $ 46.11 4.2 $ 0 Granted 40 $ 40.42 Exercised — $ — Forfeited or cancelled (175) $ 48.01 Outstanding at end of year 1,550 $ 45.75 3.8 $ 0 Exercisable at end of year 1,199 $ 47.11 3.1 $ 0 (1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised their options on the fiscal year-end date. |
Schedule of restricted share and restricted share unit activity | Weighted- Average Shares Fair Value (In thousands) (Per share) Outstanding at beginning of year 2,512 $ 41.93 Granted 1,005 $ 37.73 Vested (501) $ 43.59 Forfeited (130) $ 39.77 Outstanding at end of year 2,886 $ 40.28 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Income Taxes | |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands): Fiscal Year 2023 2022 2021 Income before income taxes $ 100,014 $ 32,892 $ 71,620 Income tax provision/(benefit): Current: Federal $ 7,183 $ 3,520 $ 15,746 State 7,195 4,895 4,350 Total current 14,378 8,415 20,096 Deferred: Federal (15,329) (17,733) (20,434) State (386) (913) (415) Total deferred (15,715) (18,646) (20,849) Total benefit $ (1,337) $ (10,231) $ (753) |
Schedule of reconciles the U.S. federal statutory rate to the effective tax rate | Fiscal Year 2023 2022 2021 U.S. federal statutory rate 21.0 % 21.0 % 21.0 % State and district income taxes, net of federal benefit 5.4 8.9 4.2 Credit for FICA taxes paid on tips (24.9) (66.4) (24.2) Other credits and incentives (2.2) (10.7) (4.2) Impact of net operating loss carryback 0.0 0.0 (6.3) Deferred compensation (2.4) 9.7 (2.9) Equity compensation 1.5 5.5 0.0 Uncertain tax positions (0.7) (2.3) 10.3 Non-deductible executive compensation 0.8 2.8 0.3 Other 0.2 0.4 0.7 Effective tax rate (1.3) % (31.1) % (1.1) % |
Schedule of deferred tax assets and liabilities | Following are the temporary differences that created our deferred tax assets and liabilities (in thousands): January 2, 2024 January 3, 2023 Deferred tax assets: Staff member benefits $ 35,932 $ 31,325 Insurance reserves 14,931 14,374 Operating lease liability 324,587 323,094 Deferred income 38,074 35,928 Tax credit carryforwards 74,004 57,710 Goodwill 22,743 21,331 Stock-based compensation 10,789 10,769 State and foreign net operating loss carryforwards 1,640 2,435 Other 674 604 Subtotal 523,374 497,570 Less: Valuation allowance (1,444) (1,223) Total $ 521,930 $ 496,347 Deferred tax liabilities: Property and equipment $ (121,219) $ (113,565) Prepaid expenses (8,933) (8,151) Inventory (8,882) (8,399) Accrued rent (5,889) (5,285) Operating lease asset (284,244) (283,921) Other (819) (781) Total $ (429,986) $ (420,102) Net deferred tax asset $ 91,944 $ 76,245 |
Schedule of reconciliation of our uncertain tax positions | A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands): Fiscal Year 2023 2022 2021 Balance at beginning of year $ 3,787 $ 4,799 $ 655 Additions related to prior year tax positions 181 227 4,157 Additions related to current period tax positions (121) (54) (13) Reductions related to settlements with taxing authorities — (1,185) — Balance at end of year $ 3,847 $ 3,787 $ 4,799 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Jan. 02, 2024 | |
Segment Information | |
Schedule of segment information | Segment information is presented below (in thousands): Fiscal Year 2023 2022 2021 Revenues: The Cheesecake Factory restaurants $ 2,595,066 $ 2,528,043 $ 2,293,225 North Italia 258,878 228,622 171,901 Other FRC 263,923 237,552 182,175 Other 321,636 308,939 280,239 Total $ 3,439,503 $ 3,303,156 $ 2,927,540 Income from operations: The Cheesecake Factory restaurants $ 297,063 $ 220,765 $ 242,599 North Italia 18,515 13,934 8,624 Other FRC 19,422 23,577 16,323 Other (1) (226,434) (219,341) (185,228) Total $ 108,566 $ 38,935 $ 82,318 Depreciation and amortization expenses: The Cheesecake Factory restaurants $ 64,206 $ 66,539 $ 65,987 North Italia 6,407 5,713 4,078 Other FRC 7,916 6,231 4,802 Other 14,607 13,897 14,787 Total $ 93,136 $ 92,380 $ 89,654 Impairment of assets and lease termination expenses: The Cheesecake Factory restaurants $ 20,401 $ 19,701 $ 11,904 North Italia 1,015 — — Other FRC 2,582 3,909 1,305 Other 5,466 7,777 4,930 Total $ 29,464 $ 31,387 $ 18,139 Preopening costs: The Cheesecake Factory restaurants $ 12,857 $ 9,525 $ 4,868 North Italia 5,058 4,305 4,510 Other FRC 6,482 1,361 3,188 Other 982 1,638 1,145 Total $ 25,379 $ 16,829 $ 13,711 Capital expenditures: The Cheesecake Factory restaurants $ 80,752 $ 65,996 $ 31,832 North Italia 26,882 14,818 12,539 Other FRC 27,562 18,895 13,524 Other 16,369 12,755 9,048 Total $ 151,565 $ 112,464 $ 66,943 Total assets: The Cheesecake Factory restaurants $ 1,571,943 $ 1,625,073 $ 1,653,161 North Italia 346,810 306,642 270,029 Other FRC 399,038 301,618 276,369 Other 522,592 541,887 598,566 Total $ 2,840,383 $ 2,775,220 $ 2,798,125 (1) Fiscal 2023, 2022 and fiscal 2021 include $ 11.7 million, $13.4 million and $ 19.5 million, respectively, of acquisition-related expenses. These amounts were recorded in acquisition-related costs and acquisition-related contingent consideration, compensation and amortization expenses in the consolidated statements of income. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 USD ($) restaurant | Jan. 03, 2023 USD ($) | Dec. 28, 2021 | |
Description of Business | |||
Number of company-owned upscale, casual, full-service dining restaurants | 334 | ||
Number of International locations operating under licensing agreements | 33 | ||
Number of bakery production facilities | 2 | ||
Basis of Presentation | |||
Length of fiscal year | 364 days | 371 days | 364 days |
Cash and Cash Equivalents | |||
Amounts receivable from credit card processors | $ | $ 21 | $ 19.1 | |
Conversion period, credit card sales | 3 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property and Equipment (Details) | Jan. 02, 2024 |
Buildings and land improvements | |
Summary of Significant Accounting Policies | |
Useful life | 30 years |
Leasehold improvements | Minimum | |
Summary of Significant Accounting Policies | |
Useful life | 10 years |
Leasehold improvements | Maximum | |
Summary of Significant Accounting Policies | |
Useful life | 30 years |
Furnishings, fixtures and equipment | Minimum | |
Summary of Significant Accounting Policies | |
Useful life | 3 years |
Furnishings, fixtures and equipment | Maximum | |
Summary of Significant Accounting Policies | |
Useful life | 15 years |
Computer software and equipment | |
Summary of Significant Accounting Policies | |
Useful life | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Impairment of Long-Lived Assets and Lease Termination Expenses (Details) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 USD ($) restaurant | Jan. 03, 2023 USD ($) restaurant | Dec. 28, 2021 USD ($) restaurant | |
The Cheesecake Factory restaurants | |||
Summary of Significant Accounting Policies | |||
Number of restaurants for which impairment and lease termination expenses were recorded | 1 | 3 | |
Three, The Cheesecake Factory restaurants | |||
Summary of Significant Accounting Policies | |||
Impairment of long-lived assets | $ | $ 29.5 | $ 31.4 | $ 16.3 |
Number of restaurants for which impairment and lease termination expenses were recorded | 3 | 3 | |
North Italia | |||
Summary of Significant Accounting Policies | |||
Number of restaurants for which impairment and lease termination expenses were recorded | 1 | ||
Other FRC | |||
Summary of Significant Accounting Policies | |||
Number of restaurants for which impairment and lease termination expenses were recorded | 1 | 1 | |
Other | |||
Summary of Significant Accounting Policies | |||
Number of restaurants for which impairment and lease termination expenses were recorded | 2 | 3 | 2 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | 24 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | Jan. 02, 2024 | |
Goodwill and Other Intangible Assets | ||||
Goodwill | $ 1,451 | $ 1,451 | $ 1,451 | |
Other intangible assets | ||||
Total indefinite-lived intangible assets | 243,715 | 243,211 | 243,715 | |
Total definite-lived intangible assets | 8,012 | 8,313 | 8,012 | |
Total intangible assets, net | $ 251,727 | 251,524 | $ 251,727 | |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | General and Administrative Expense | |||
Amortization expenses related to our definite-lived intangible assets | $ 800 | 700 | $ 700 | |
Minimum | ||||
Other intangible assets | ||||
Definite-lived intangible assets, amortization period | 1 year | 1 year | ||
Maximum | ||||
Other intangible assets | ||||
Definite-lived intangible assets, amortization period | 52 years | 52 years | ||
Licensing agreements | ||||
Other intangible assets | ||||
Total definite-lived intangible assets | $ 4,602 | 5,092 | $ 4,602 | |
Impairment expense of Intangible assets | $ 1,300 | 0 | ||
Non-transferable alcoholic beverage licenses | ||||
Other intangible assets | ||||
Total definite-lived intangible assets | 3,410 | 3,221 | 3,410 | |
Trade names and trademarks | ||||
Other intangible assets | ||||
Total indefinite-lived intangible assets | 234,341 | 234,077 | 234,341 | |
Transferable alcoholic beverage licenses | ||||
Other intangible assets | ||||
Total indefinite-lived intangible assets | $ 7,923 | $ 7,683 | $ 7,923 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Revenue Recognition | |||
Gift card breakage period | 3 years | ||
Revenue recognized | $ 7.3 | $ 7 | $ 6.8 |
Promotional programs | |||
Revenue Recognition | |||
Deferred revenue | 27.5 | 27.3 | 27.5 |
Deferred revenue recognized | $ 23.3 | $ 23.6 | $ 15.2 |
Minimum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 5 years | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 8 years | ||
Maximum | |||
Revenue Recognition | |||
Revenue recognition agreement term | 7 years | ||
Revenue recognition for development and site fees over the life of the applicable licensee agreements (in years) | 30 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Leases (Details) | 12 Months Ended |
Jan. 02, 2024 lease | |
Summary of Significant Accounting Policies | |
Number of leases that have been executed but have not yet commenced | 2 |
Renewal term of leases, Restaurant locations | 5 years |
Minimum | |
Summary of Significant Accounting Policies | |
Initial term of leases, Restaurant locations | 10 years |
Percentage of revenue | 2% |
Maximum | |
Summary of Significant Accounting Policies | |
Initial term of leases, Restaurant locations | 20 years |
Percentage of revenue | 10% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Advertising Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Advertising Costs | |||
Advertising costs | $ 34.7 | $ 24 | $ 19.9 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Net income per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Jun. 15, 2021 | Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Basic net income per common share: | ||||
Net Income (Loss) | $ 101,351 | $ 43,123 | $ 72,373 | |
Dividends on Series A preferred stock | (18,661) | |||
Direct and incremental Series A preferred stock issuance costs | $ (8,000) | |||
Undistributed earnings allocated to Series A preferred stock | (4,581) | |||
Net income available to common stockholders | $ 101,351 | $ 43,123 | $ 49,131 | |
Basic weighted-average shares outstanding | 48,324 | 49,815 | 47,529 | |
Basic net income per common share | $ 2.10 | $ 0.87 | $ 1.03 | |
Diluted net income per common share: | ||||
Net income available to common stockholders | $ 101,351 | $ 43,123 | $ 49,131 | |
Reallocation of undistributed earnings to Series A preferred stock | 85 | |||
Net income available to common stockholders for diluted EPS | $ 101,351 | $ 43,123 | $ 49,216 | |
Basic weighted-average shares outstanding | 48,324 | 49,815 | 47,529 | |
Dilutive effect of equity awards | 726 | 599 | 981 | |
Diluted weighted average shares outstanding (in shares) | 49,050 | 50,414 | 48,510 | |
Diluted net income per common share | $ 2.07 | $ 0.86 | $ 1.01 | |
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Restricted stock | ||||
Diluted net income per common share: | ||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,900 | 2,500 | 2,100 | |
Restricted Shares and Restricted Share Units | ||||
Diluted net income per common share: | ||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 2,900 | 3,300 | 1,900 | |
Common Stock | ||||
Diluted net income per common share: | ||||
Antidilutive securities excluded from calculation of basic earnings per share (in shares) | 0 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Summary of Significant Accounting Policies | ||
Retained earnings | $ 1,216,239 | $ 1,170,078 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Assets/(Liabilities) | ||
Acquisition-related deferred consideration | $ 11,300 | |
Level 1 | ||
Assets/(Liabilities) | ||
Non-qualified deferred compensation assets | 94,136 | $ 78,542 |
Non-qualified deferred compensation liabilities | (93,979) | (78,286) |
Level 2 | ||
Assets/(Liabilities) | ||
Acquisition-related deferred consideration | (10,751) | |
Level 3 | ||
Assets/(Liabilities) | ||
Acquisition-related contingent consideration and compensation liability | $ (25,495) | $ (28,565) |
Fair Value Measurements - Begin
Fair Value Measurements - Beginning and ending amounts of the fair value (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2024 | Jan. 03, 2023 | |
Fair Value Measurements | ||
Payment | $ 9,900 | $ 7,200 |
Level 3 | ||
Fair Value Measurements | ||
Beginning balance | 28,565 | 23,894 |
Payment | (12,994) | (7,187) |
Change in fair value | 9,924 | 11,858 |
Ending balance | $ 25,495 | $ 28,565 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Jun. 15, 2021 | |
Fair Value Measurements | |||
Payments | $ 9.9 | $ 7.2 | |
Increase (Decrease) in the fair value of the contingent consideration and compensation liability | (3.1) | 4.7 | |
Increase in fair value due to volatility factors | 13 | 11.9 | |
Minimum | |||
Fair Value Measurements | |||
Undiscounted range of outcomes per the Monte Carlo model | 2.6 | 0 | |
Maximum | |||
Fair Value Measurements | |||
Undiscounted range of outcomes per the Monte Carlo model | 235.4 | 276 | |
Convertible Senior Notes | |||
Fair Value Measurements | |||
Aggregate principal amount | 345 | 345 | $ 345 |
Estimated fair value of the Notes | $ 298.8 | $ 282.9 |
Accounts and Other Receivable_2
Accounts and Other Receivables (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Accounts and Other Receivables | ||
Gift card distributors | $ 35,777 | $ 37,586 |
Bakery customers | 13,863 | 16,561 |
Landlord construction contributions | 12,650 | 9,862 |
Insurance providers | 9,984 | 10,529 |
Delivery partner | 7,154 | 7,757 |
Other | 23,666 | 23,216 |
Total | $ 103,094 | $ 105,511 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Inventories | ||
Restaurant food and supplies | $ 32,283 | $ 30,783 |
Bakery finished goods and work in progress | 16,230 | 17,250 |
Bakery raw materials and supplies | 9,141 | 7,526 |
Total | $ 57,654 | $ 55,559 |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Prepaid Expenses | ||
Gift card contract assets | $ 19,111 | $ 19,886 |
Prepaid rent | 24,438 | 12,165 |
Other | 19,541 | 16,348 |
Total | $ 63,090 | $ 48,399 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Property and Equipment | |||
Property and equipment, total | $ 2,131,368 | $ 2,004,804 | |
Less: Accumulated depreciation | (1,340,275) | (1,258,753) | |
Property and equipment, net | 791,093 | 746,051 | |
Depreciation expenses | 92,900 | 92,100 | $ 89,400 |
Repair and maintenance expenses | 99,500 | 89,100 | 77,400 |
Net (income)/expense on property and equipment disposals | (400) | 1,600 | $ 1,100 |
Land and related improvements | |||
Property and Equipment | |||
Property and equipment, total | 15,852 | 15,852 | |
Buildings | |||
Property and Equipment | |||
Property and equipment, total | 44,179 | 44,138 | |
Leasehold improvements | |||
Property and Equipment | |||
Property and equipment, total | 1,291,153 | 1,225,860 | |
Furnishings, fixtures and equipment | |||
Property and Equipment | |||
Property and equipment, total | 625,931 | 584,924 | |
Computer software and equipment | |||
Property and Equipment | |||
Property and equipment, total | 57,952 | 60,861 | |
Restaurant smallwares | |||
Property and Equipment | |||
Property and equipment, total | 38,234 | 36,494 | |
Construction in progress | |||
Property and Equipment | |||
Property and equipment, total | $ 58,067 | $ 36,675 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Other Assets | ||
Non-qualified deferred compensation assets | $ 94,136 | $ 78,542 |
Deferred income taxes | 91,944 | 76,245 |
Other | 8,535 | 8,104 |
Total | $ 194,615 | $ 162,891 |
Gift Cards (Details)
Gift Cards (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2024 | Jan. 03, 2023 | |
Gift card liabilities: | ||
Beginning balance | $ 219,808 | $ 211,182 |
Activations | 140,647 | 152,368 |
Redemptions and breakage | (137,540) | (143,743) |
Ending balance | 222,915 | 219,808 |
Gift card contract assets: | ||
Beginning balance | 19,886 | 18,468 |
Deferrals | 14,957 | 16,440 |
Amortization | (15,732) | (15,022) |
Ending balance | $ 19,111 | $ 19,886 |
Other Accrued Expenses (Details
Other Accrued Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 02, 2024 | Jan. 03, 2023 | |
Other Accrued Expenses | ||
Self-insurance | $ 71,546 | $ 71,872 |
Salaries and wages | 51,040 | 43,402 |
Staff member benefits | 28,951 | 27,332 |
Payroll and sales taxes | 20,365 | 24,861 |
Rent | 18,973 | 12,713 |
Deferred consideration | 10,751 | |
Other | 48,824 | 40,202 |
Total | 239,699 | $ 231,133 |
Payment related to deferred consideration | $ 11,300 |
Long-Term Debt - Credit Facilit
Long-Term Debt - Credit Facility (Details) $ in Millions | 12 Months Ended | |||
Jan. 02, 2024 USD ($) item | Nov. 23, 2023 USD ($) | Jan. 03, 2023 USD ($) | Oct. 06, 2022 USD ($) | |
Long-Term Debt | ||||
Outstanding letters of credit | $ 33.5 | $ 31.5 | ||
Revolving facility | $ 15 | |||
Revolving Credit Facility | ||||
Long-Term Debt | ||||
Net availability for borrowings | 236.5 | |||
Outstanding debt balance | 130 | |||
Outstanding letters of credit | $ 33.5 | |||
Base Rate | Maximum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.75% | |||
Base Rate | Minimum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0% | |||
Fourth amendment | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Maximum commitments | $ 400 | |||
Maximum commitments, letter of credit sub-facility | 50 | |||
Additional commitments available | $ 200 | |||
Fourth amendment | Maximum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Net adjusted leverage ratio | 4.25 | |||
Credit facility, basis spread on variable rate, (as a percent) | 1.75% | |||
Commitment fee (as a percent) | 0.25% | |||
Fourth amendment | Minimum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
EBITDAR ratio | 1.90 | |||
Credit facility, basis spread on variable rate, (as a percent) | 1% | |||
Commitment fee (as a percent) | 0.125% | |||
Fourth amendment | One-month Term SOFR Rate | Maximum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 1% | |||
Fourth amendment | Overnight bank funding rate | Maximum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Credit facility, basis spread on variable rate, (as a percent) | 0.50% | |||
Amended Credit Agreement | Maximum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Multiplier of rent used to compute adjusted debt | item | 8 | |||
Amended Credit Agreement | Minimum | Revolving Credit Facility | ||||
Long-Term Debt | ||||
Multiplier of rent used to compute adjusted debt | item | 6 |
Long-Term Debt - Convertible Se
Long-Term Debt - Convertible Senior Notes (Details) | 12 Months Ended | |||
Jun. 15, 2021 USD ($) $ / shares | Jan. 02, 2024 USD ($) D $ / shares | Jan. 03, 2023 USD ($) | Dec. 28, 2021 USD ($) | |
Long-Term Debt | ||||
Net proceeds from the sale of the notes | $ 345,000,000 | |||
Convertible Senior Notes | ||||
Long-Term Debt | ||||
Aggregate principal amount of debt issued | $ 345,000,000 | $ 345,000,000 | $ 345,000,000 | |
Net proceeds from the sale of the notes | 334,900,000 | |||
Interest rate | 0.375% | |||
Observation period | 30 days | |||
Threshold percentage of stock price trigger | 130% | |||
Number of threshold trading days | D | 20 | |||
Number of consecutive threshold trading days | D | 30 | |||
Minimum threshold aggregate principal amount of notes outstanding and not called for redemption | $ 150,000,000 | |||
Cure period in case of a default in the payment of interest | 30 days | |||
Threshold cured period in case of default in other obligations | 60 days | |||
Threshold limit of default with respect to indebtedness for borrowed money | $ 20,000,000 | |||
Threshold limit for occurrence of default in case of rendering of certain judgments against to company or on its subsidiaries | $ 25,000,000 | |||
Minimum percentage of notice holders can give notice in case of default | 25 | |||
Maximum period of which noteholders to receive special interest as a remedy in case of default | 180 days | |||
Special interest rate as a default remedy | 0.50 | |||
Gross principal balance outstanding | $ 345,000,000 | |||
Outstanding debt balance | 340,000,000 | |||
Unamortized debt issuance costs | 5,000,000 | |||
Amortized debt issuance costs | $ 2,000,000 | $ 2,000,000 | $ 1,100,000 | |
Effective interest rate | 0.96% | |||
Convertible Senior Notes | Convertible Debt Securities | Common Stock | ||||
Long-Term Debt | ||||
Aggregate principal amount of debt issued | $ 1,000 | $ 1,000 | ||
Conversion ratio | 12.7551 | 13.4936 | ||
Conversion price | $ / shares | $ 78.40 | $ 74.11 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Leases | |||
Operating | $ 145,774 | $ 140,351 | $ 131,834 |
Variable | 87,047 | 81,585 | 73,909 |
Short-term | 142 | 116 | 283 |
Total | 232,963 | 222,052 | $ 206,026 |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | 145,836 | 149,624 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 114,373 | $ 86,187 | |
Weighted-average remaining lease term - operating leases (in years) | 14 years 10 months 24 days | 15 years 2 months 12 days | |
Weighted-average discount rate - operating leases | 5.30% | 5% |
Leases - Maturity of operating
Leases - Maturity of operating lease liabilities (Details) $ in Thousands | 12 Months Ended |
Jan. 02, 2024 USD ($) | |
Operating Leases | |
Fiscal year 2024 | $ 138,459 |
Fiscal year 2025 | 146,828 |
Fiscal year 2026 | 144,453 |
Fiscal year 2027 | 142,444 |
Fiscal year 2028 | 149,919 |
Thereafter | 1,357,092 |
Total future lease payments | 2,079,195 |
Less: Interest | (689,335) |
Present value of lease liabilities | 1,389,860 |
Operating lease liabilities related to options extend | $ 710,300 |
Options to extend lease terms | options to extend lease terms |
Minimum lease payment for leases | $ 280,700 |
Other Noncurrent Liabilities (D
Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands | Jan. 02, 2024 | Jan. 03, 2023 |
Other Noncurrent Liabilities | ||
Non-qualified deferred compensation liabilities | $ 93,979 | $ 78,286 |
Contingent consideration and compensation liability | 25,495 | 28,565 |
Other | 17,174 | 18,159 |
Total | $ 136,648 | $ 125,010 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended | |||
Oct. 02, 2019 | Jun. 07, 2018 USD ($) item | Jan. 02, 2024 USD ($) | Jan. 03, 2023 USD ($) | |
Commitments and Contingencies | ||||
Purchase obligations | $ 101,400,000 | $ 129,900,000 | ||
Purchase obligations due within terms recorded | 3 years | |||
Minimum payments for real estate and leases | $ 414,800,000 | 252,400,000 | ||
Outstanding standby letters of credit | 33,500,000 | 31,500,000 | ||
Total accrued liability for self-insured plans | 71,500,000 | $ 71,900,000 | ||
Wage citation | $ 4,200,000 | |||
Number of restaurants receiving janitorial services | item | 8 | |||
Liability for contingent consideration provision | 25,500,000 | |||
Payments required under event of an actual or constructive termination of employment | 3,400,000 | |||
Accrued potential bonuses | 2,600,000 | |||
Annual founder's retirement benefit for ten years after termination of full time employment | $ 650,000 | |||
Number of years annual founder's retirement benefit after termination of full time employment | 10 years | |||
Number of months annual founder's retirement benefit after termination of full time employment | 6 months | |||
FRC Acquisition | ||||
Commitments and Contingencies | ||||
Number of years for providing finance to achieve the targets | 5 years |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Jun. 15, 2021 | Apr. 20, 2020 | Mar. 30, 2021 | Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | Oct. 26, 2022 | |
Stockholders' Equity | |||||||
Common stock issuance (in shares) | 3,125,000 | ||||||
Common stock issuance | $ 175,000 | $ 167,050 | |||||
Issuance costs | 8,000 | ||||||
Cash dividends declared common stock, net of forfeitures | $ 1.08 | $ 0.81 | |||||
Number of shares authorized to be repurchased | 61,000,000 | ||||||
Repurchased shares since program inception | 56,543,158 | 55,149,520 | |||||
Value of treasury stock | $ 1,811,997 | $ 1,765,641 | |||||
Treasury stock repurchased during period | $ 46,356 | $ 63,132 | $ 5,766 | ||||
Common stock issuance direct and incremental costs | 7,950 | ||||||
Common stock issuance | 175,000 | ||||||
Cash dividend | $ 5,070 | ||||||
Cash dividends declared Series A preferred stock | $ 25.35 | ||||||
Cumulative adjustment to retained earnings | $ 1,216,239 | $ 1,170,078 | |||||
Treasury Stock | |||||||
Stockholders' Equity | |||||||
Repurchased shares since program inception | 56,500,000 | ||||||
Value of treasury stock | $ 1,811,700 | ||||||
Shares repurchased during period | 1,400,000 | 2,000,000 | 100,000 | ||||
Treasury stock repurchased during period | $ 46,100 | $ 63,100 | $ 5,800 | ||||
Stock Repurchase Program, Additional Number of Shares Authorized to be Repurchased | 5,000,000 | ||||||
Series A Redeemable Convertible Preferred Stock | |||||||
Stockholders' Equity | |||||||
Series A preferred stock cash-settled conversion | $ 443,800 | ||||||
Number of preferred stock shares repurchased | 150,000 | ||||||
Number of preferred stock shares converted | 50,000 | ||||||
Number of common shares issued upon conversion | 2,400,864 | ||||||
Liquidation preference value per shares | $ 1,067.42 | ||||||
Deemed dividend in connection with conversion and repurchase of the preferred stock | 13,600 | ||||||
Accrued dividend | 3,900 | ||||||
Dividend inducement | $ 9,700 | ||||||
Cash dividend | $ 5,100 | ||||||
Cash dividends declared Series A preferred stock | $ 25.35 | $ 19.72 | |||||
Number of shares issued (in shares) | 200,000 | ||||||
Value of shares issued | $ 200,000 | ||||||
Price per share (in dollars per share) | $ 1,000 | ||||||
Preferred stock direct costs | $ 10,300 | ||||||
Cumulative adjustment to retained earnings | $ 4,800 | ||||||
Conversion price (in dollars per share) | $ 22.23 | $ 0.01 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares shares in Millions | 12 Months Ended | ||
Jan. 02, 2024 | Apr. 05, 2017 | Apr. 04, 2017 | |
Stock-Based Compensation | |||
Shares authorized for issuance under share-based compensation plan | 19.8 | 17.5 | |
Shares available for grant | 3.1 | ||
Employee Stock Option | |||
Stock-Based Compensation | |||
Annual vesting rights (as a percent) | 20% | ||
Employee Stock Option | Minimum | |||
Stock-Based Compensation | |||
Option expiration period (in years) | 8 years | ||
Employee Stock Option | Maximum | |||
Stock-Based Compensation | |||
Option expiration period (in years) | 10 years | ||
Restricted Shares and Restricted Share Units | Minimum | |||
Stock-Based Compensation | |||
Annual vesting rights (as a percent) | 0% | ||
Vesting period (in years) | 3 years | ||
Restricted Shares and Restricted Share Units | Maximum | |||
Stock-Based Compensation | |||
Annual vesting rights (as a percent) | 150% | ||
Vesting period (in years) | 5 years |
Stock-Based Compensation - Net
Stock-Based Compensation - Net of forfeitures (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Stock-Based Compensation | |||
Total stock-based compensation | $ 25,781 | $ 24,426 | $ 22,988 |
Income tax benefit | 6,437 | 6,026 | 5,646 |
Total stock-based compensation, net of taxes | 19,344 | 18,399 | 17,342 |
Capitalized stock-based compensation | 185 | 226 | 194 |
Labor expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 9,914 | 9,590 | 8,856 |
Other operating costs and expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | 318 | 321 | 311 |
General and administrative expenses | |||
Stock-Based Compensation | |||
Total stock-based compensation | $ 15,549 | $ 14,515 | $ 13,821 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Stock options | |||
Stock-Based Compensation | |||
Weighted-average fair value at the grant date for options issued (in dollars per share) | $ 15.76 | ||
Weighted average assumptions under Black-Scholes valuation model | |||
Expected option term | 6 years 8 months 12 days | ||
Expected stock price volatility (as a percent) | 45.20% | ||
Risk-free interest rate (as a percent) | 4% | ||
Dividend yield (as a percent) | 2.70% | ||
Stock option activity, Shares | |||
Outstanding at beginning of year (in shares) | 1,685 | ||
Granted (in shares) | 40 | ||
Exercised (in shares) | 0 | ||
Forfeited or cancelled (in shares) | (175) | ||
Outstanding at end of the period (in shares) | 1,550 | 1,685 | |
Exercisable at end of the period (in shares) | 1,199 | ||
Weighted Average Exercise Price | |||
Outstanding at beginning of year (in dollars per share) | $ 46.11 | ||
Granted (in dollars per share) | 40.42 | ||
Forfeited or cancelled (in dollars per share) | 48.01 | ||
Outstanding at end of the period (in dollars per share) | 45.75 | $ 46.11 | |
Exercisable at end of the period (in dollars per share) | $ 47.11 | ||
Weighted Average Remaining Contractual Term (In years) | |||
Weighted Average Remaining Contractual Term (In years) | 3 years 9 months 18 days | 4 years 2 months 12 days | |
Exercisable at end of the period (In years) | 3 years 1 month 6 days | ||
Aggregate Intrinsic Value | |||
Outstanding at beginning of year | $ 0 | ||
Outstanding at end of the period | 0 | $ 0 | |
Exercisable at end of the period | 0 | ||
Total intrinsic value of options exercised | $ 4,900 | $ 7,100 | |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 1,500 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 1 year 3 months 18 days | ||
Restricted Shares and Restricted Share Units | |||
Restricted Shares and Restricted Share Units, Shares | |||
Outstanding at beginning of year (in shares) | 2,512 | ||
Granted (in shares) | 1,005 | ||
Vested (in shares) | (501) | ||
Forfeited (in shares) | (130) | ||
Outstanding at end of the period (in shares) | 2,886 | 2,512 | |
Fair value of shares vested | $ 21,800 | $ 18,500 | $ 15,400 |
Weighted Average Fair Value | |||
Outstanding at beginning of year (in dollars per share) | $ 41.93 | ||
Granted (in dollars per share) | 37.73 | $ 36.84 | $ 49.57 |
Vested (in dollars per share) | 43.59 | ||
Forfeited (in dollars per share) | 39.77 | ||
Outstanding at end of the period (in dollars per share) | $ 40.28 | $ 41.93 | |
Unrecognized Stock-based Compensation Expense | |||
Total unrecognized stock-based compensation expenses related to unvested stock options, restricted shares and restricted share units | $ 57,100 | ||
Expected weighted average period for recognition of compensation expense related to unvested stock option | 2 years 10 months 24 days |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 12 Months Ended | ||
Jan. 02, 2024 USD ($) item | Jan. 03, 2023 USD ($) | Dec. 28, 2021 USD ($) | |
Employee Benefit Plans | |||
Minimum number of investment options available to participating plan members | item | 1 | ||
Accrued liability for self-insured benefit plans | $ 11.3 | $ 14 | |
401(k) Plan | |||
Employee Benefit Plans | |||
Expense recognized | 2.3 | 2.1 | $ 2.1 |
ESP | |||
Employee Benefit Plans | |||
Expense recognized | $ 1.3 | $ 1.4 | $ 1.2 |
Income Taxes - Provision & Reco
Income Taxes - Provision & Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | Jan. 31, 2022 | Dec. 29, 2020 | |
Income tax provision/(benefit): | |||||
Income before income taxes | $ 100,014 | $ 32,892 | $ 71,620 | ||
Current: | |||||
Federal | 7,183 | 3,520 | 15,746 | ||
State | 7,195 | 4,895 | 4,350 | ||
Total current | 14,378 | 8,415 | 20,096 | ||
Deferred: | |||||
Federal | (15,329) | (17,733) | (20,434) | ||
State | (386) | (913) | (415) | ||
Total deferred | (15,715) | (18,646) | (20,849) | ||
Total benefit | $ (1,337) | $ (10,231) | $ (753) | ||
Income Taxes | |||||
U.S. federal statutory rate | 21% | 21% | 21% | ||
State and district income taxes, net of federal benefit | 5.40% | 8.90% | 4.20% | ||
Credit for FICA taxes paid on tips | (24.90%) | (66.40%) | (24.20%) | ||
Other credits and incentives | (2.20%) | (10.70%) | (4.20%) | ||
Impact of net operating loss carryback | (0.00%) | (0.00%) | (6.30%) | ||
Deferred compensation | (2.40%) | 9.70% | (2.90%) | ||
Equity compensation | 1.50% | 5.50% | 0% | ||
Uncertain tax positions | (0.70%) | (2.30%) | 10.30% | ||
Non-deductible executive compensation | 0.80% | 2.80% | 0.30% | ||
Other (as a percent) | 0.20% | 0.40% | 0.70% | ||
Effective tax rate | (1.30%) | (31.10%) | (1.10%) | ||
Cash refunds of carryback claims | $ 18,400 | $ 21,300 | |||
Deferred FICA tax remittance | $ 4,300 |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Deferred tax assets: | |||
Staff member benefits | $ 35,932 | $ 31,325 | |
Insurance reserves | 14,931 | 14,374 | |
Operating lease liability | 324,587 | 323,094 | |
Deferred income | 38,074 | 35,928 | |
Tax credit carryforwards | 74,004 | 57,710 | |
Goodwill | 22,743 | 21,331 | |
Stock-based compensation | 10,789 | 10,769 | |
State and foreign net operating loss carryforwards | 1,640 | 2,435 | |
Other | 674 | 604 | |
Subtotal | 523,374 | 497,570 | |
Less: Valuation allowance | (1,444) | (1,223) | |
Total | 521,930 | 496,347 | |
Deferred tax liabilities: | |||
Property and equipment | (121,219) | (113,565) | |
Prepaid expenses | (8,933) | (8,151) | |
Inventory | (8,882) | (8,399) | |
Accrued rent | (5,889) | (5,285) | |
Operating lease asset | (284,244) | (283,921) | |
Other | (819) | (781) | |
Total | (429,986) | (420,102) | |
Net deferred tax asset | 91,944 | 76,245 | |
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Balance at beginning of year | 3,787 | 4,799 | $ 655 |
Additions related to prior year tax positions | 181 | 227 | 4,157 |
Additions related to current period tax positions | (121) | (54) | (13) |
Reductions related to settlements with taxing authorities | (1,185) | ||
Balance at end of year | 3,847 | 3,787 | $ 4,799 |
Accrued interest and penalties related with uncertain tax positions | 1,400 | 2,200 | |
Decrease in uncertain tax positions during the next twelve months based on the lapses of statutes of limitations for certain jurisdictions | 300 | ||
Tax credit carryforward valuation allowance | $ 1,400 | $ 1,200 | |
Minimum | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Expiration period | 0 years | ||
Maximum | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Expiration period | 5 years | ||
State | |||
Deferred tax assets: | |||
Tax credit carryforwards | $ 27,400 | $ 46,600 | |
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | 1,600 | 1,600 | |
Foreign | |||
Deferred tax assets: | |||
Tax credit carryforwards | 2,300 | 2,500 | |
Federal | |||
Reconciliation of beginning and ending amount of our uncertain tax positions | |||
Tax credit carryforwards | $ 72,800 | $ 56,500 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Segment Information | |||
Revenues: | $ 3,439,503 | $ 3,303,156 | $ 2,927,540 |
Income from operations | 108,566 | 38,935 | 82,318 |
Depreciation and amortization expenses | 93,136 | 92,380 | 89,654 |
Impairment of assets and lease termination expenses | 29,464 | 31,387 | 18,139 |
Preopening costs | 25,379 | 16,829 | 13,711 |
Capital expenditures | 151,565 | 112,464 | 66,943 |
Total assets | 2,840,383 | 2,775,220 | 2,798,125 |
Acquisition-related expenses | 11,700 | 13,400 | 19,500 |
The Cheesecake Factory restaurants [Member] | |||
Segment Information | |||
Revenues: | 2,595,066 | 2,528,043 | 2,293,225 |
Income from operations | 297,063 | 220,765 | 242,599 |
Depreciation and amortization expenses | 64,206 | 66,539 | 65,987 |
Impairment of assets and lease termination expenses | 20,401 | 19,701 | 11,904 |
Preopening costs | 12,857 | 9,525 | 4,868 |
Capital expenditures | 80,752 | 65,996 | 31,832 |
Total assets | 1,571,943 | 1,625,073 | 1,653,161 |
North Italia [Member] | |||
Segment Information | |||
Revenues: | 258,878 | 228,622 | 171,901 |
Income from operations | 18,515 | 13,934 | 8,624 |
Depreciation and amortization expenses | 6,407 | 5,713 | 4,078 |
Impairment of assets and lease termination expenses | 1,015 | ||
Preopening costs | 5,058 | 4,305 | 4,510 |
Capital expenditures | 26,882 | 14,818 | 12,539 |
Total assets | 346,810 | 306,642 | 270,029 |
Other FRC [Member] | |||
Segment Information | |||
Revenues: | 263,923 | 237,552 | 182,175 |
Income from operations | 19,422 | 23,577 | 16,323 |
Depreciation and amortization expenses | 7,916 | 6,231 | 4,802 |
Impairment of assets and lease termination expenses | 2,582 | 3,909 | 1,305 |
Preopening costs | 6,482 | 1,361 | 3,188 |
Capital expenditures | 27,562 | 18,895 | 13,524 |
Total assets | 399,038 | 301,618 | 276,369 |
Other Segments [Member] | |||
Segment Information | |||
Revenues: | 321,636 | 308,939 | 280,239 |
Income from operations | (226,434) | (219,341) | (185,228) |
Depreciation and amortization expenses | 14,607 | 13,897 | 14,787 |
Impairment of assets and lease termination expenses | 5,466 | 7,777 | 4,930 |
Preopening costs | 982 | 1,638 | 1,145 |
Capital expenditures | 16,369 | 12,755 | 9,048 |
Total assets | $ 522,592 | $ 541,887 | $ 598,566 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | 12 Months Ended | |||
Feb. 15, 2024 | Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Subsequent Events | ||||
Quarterly cash dividend declared (in dollars per share) | $ 1.08 | $ 0.81 | ||
Subsequent Events | ||||
Subsequent Events | ||||
Quarterly cash dividend declared (in dollars per share) | $ 0.27 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 02, 2024 | Jan. 03, 2023 | Dec. 28, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 101,351 | $ 43,123 | $ 72,373 |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Jan. 02, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |