CAKE - Earnings call transcript Q4 2017 | The Cheesecake Factory Incorporated

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2017 Cheesecake Factory Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions].

As a reminder, this call is being recorded. to conference like Feit. to now would turn over the Stacy I you begin. Ma'am, may

Stacy Feit

Good to Thank fiscal and afternoon, you. welcome call. XXXX our earnings quarter fourth

On Clark, our Chairman Vice President Overton, David are Financial our Executive the Officer. Chief Executive Gordon, Matt Chief Officer; our and President; and call today and David

speak and and of first Gordon to Commission. our forward-looking the call this number a operational be will detail within Matt me with results our the and press statements take you discussed on implied outlook of through the new an of of and Securities begin, the that, release, Securities as not different impact our the are Before full-year are will in results begin could that Act for Actual initiatives. forward-looking David result filings call, forward-looking available you on is the opening XXXX, call this of website on of with let materially based duty and or no we fact the Exchange at review from the those as during quarter financial undertakes a today's some today's date which Litigation in on Reform All quickly remind investors.thecheesecakefactory.com stated and remarks. made then including factors update historical marketing provide update legislation. Private considered tax David company Overton statements And and only today's will statements. be meaning items in XXXX. forward-looking detailed our statements in any the will

turn questions. over to the call David. Following that, to we'll open call With that, the I'll

David Overton

Thank you, Stacy.

receiving continues opening demand. of We We times to level expectations. and exceeded stabilize. over appreciate for with Cheesecake unprecedented maintain table, had strong. and sales hours and again the are XX hour seeing bakery the Domestically, continue drove to to were where management the demand second quarter, openings a restaurants. we the Sugar International of Toronto lined people at our and the in day. an We our quarter, restaurant objective for Canada four Factory labor efficiency in front future. industry-leading in at retention trends with active the an the operational our milestone productivity restaurants eight significant saw opened look on in staff on be and serving of XXXX. XXX achieved up is for earnings started our open line opening now Chicago development restaurants slices in the also performance, in fourth to Factory We results increases level the the food warm guests which forward our Cheesecake over welcome a very year-over-year first This, both as guests within we company-owned coupled brand Factory in during area. Cheesecake Rock company-owned to during at comparable the meeting and to as with well sales six quarter we go solid take During can to our We Wait Cheesecake we

in and restaurants the opened Cheesecake in four licensing licensing of during XXXX, location location under internationally addition, expected. total including the a opened the fourth In quarter, as Qatar, first restaurants two agreement in Bahrain, under Factory agreements third

a location as to we company-owned XXXX, as Café as Lux expect to are to fast developing many Grand four first including restaurants, of to as forward our internally. concept, casual continue we open Looking well six one

and forward sharing details completion lease year you pending the have negotiations, with and Los We Intent more site a look the signed we this concept for in Letter launching then. area to of later of Angeles

in be one restaurants to for Work the barometer for in XXXX. five we've to of which employer good and environment. four were list, as tight the first consecutive a recognized in Best honored as choice many Fortune had again, year be position Mainland, strength a the Companies licensing the restaurant location as in XXX our as month company opening fifth agreements expect This should solid the and For Once our magazine. to solidifying open includes on last under potential also We of only China. the this values we culture labor to by an of Beijing the internationally Underscoring

intrigue I'll This initiatives and and now As been solid future. commitment anniversary the our update. call guides that, taking for turn way paves our of members, With operational our Gordon of this XXth over celebrate to steadfast David staff mindset guests success. the a for the long-term founding marketing year, we care our to has to strategic exceptional and our a

David Gordon

XXX daily half Thank you, Consumer an we we our in identified that XXXX of David. completed other from and the fresh that restaurants. in menu, raise research awareness scratch prepare with second our guests to our opportunity

preparation we is Our digital of engagement guest education. and quality media video the great fresh are and campaign in generating ingredients marketing team Utilizing high influencer social techniques. and our and marketing a highlighting midst meaningful other PR

to On We of X, our ever campaigns our longer-term that drove the more to Demand the holidays offering. legendary we planned even decided during This to expect slices across a increase to have with our the slices country. with offer deliver delivery delight sales week we day guests. delivery we strongest also fans supported brand strong and was creative delivery visibility our XX,XXX our XX,XXX of raise of business in so our awareness to we conjunction our off-premise partner. early, with December complimentary we cheesecake main which on of celebrated received

consumer via XX% operational with We provider provider business XX% which For sales XXXX. Go to for is our is now in our restaurants deliver third-party well of ordering ways integration And, of delivery the locations. experience. and increased nationwide in the to driving convenience, look underway. takeout meet efficiencies in demand Delivery enhancing to main orders continue to Our our approximately rollout we deployed point-of-sale for improvements is while available of guest as online

online live by growth of initiatives our Factory with forward. We We to expect of continued end all moving these ordering domestic support off-premise believe will sales Cheesecake be the restaurants March.

leveraging store sales further identify highly are increase the of to convenient time, guest learnings believe new this to both to products with comp other our famous brown dining and of and Cheesecake correlated channel. improve will in Southeast are currently to from satisfaction opportunity further platform growth. experience performance, Factory, We and provide wine, experiences. areas To scores launched to the This with with guests the of our and leverage ways awareness, anticipated food in engage over top-line to and a via our our in we We and significant media was takeout available contribute soon. brand distribution continuing Satisfaction just Hip-Hop CPG nationwide story we're the product. in BuzzFeed, power Sugar, all likes major promoting the the three retailers stores the formats bread in the new brand grocery platform

will current guests the the at-home the have also call parts of turn the our to experience of products addition of over Factory are country. to for home. thrilled out rounds Factory financial retailers available Our option at review. the Matt I at now one across to this Cheesecake in with portfolio And that, Cheesecake And their favorite our

Matt Clark

the million compared as the year XXXX were revenues to Total in period. David. $XXX.X quarter you, of fourth prior million for $XXX.X Thank

restaurants As Factory fourth it XXXX extra of at which of X.X% two-year to the a and $XX.X the reminder, that results diluted our per versus XXXX, on week broader basis. declined weakness evaluate more quarter about Recall meaningful operating that quarter contributed relative basis. we sales the fourth million Cheesecake last were believe we performance particularly period the solid in XX-week Accordingly, XX-week notable of an on Comparable earnings which sales year. approximately $X.XX is a seen is in had share. lapping stack during industry to a

outperformed revenues as basis quarter Our bakery measured of sales were XX.X% of XX.X% the in by by the quarter. by industry the XX Cost the Knapp-Track driven higher expense bonus up legal points revenues, costs XX from higher points. XXX an last quarter marketing sales of fourth of million amount basis XXXX, last of and a was the This was points accrual This basis External period primarily the fourth from primarily driven down basis $X was year. was the million wage of $XX.X of was prior the the A two-year majority repairs as to operating from revenues, from fourth attributable fourth increase well and year. quarter period rates some increase in about offset in versus were last expenses, same basis in was expense, as was in of This G&A an XX and quarter the increase points dairy. X.X% to partially same of prior attributable of was primarily hourly Pre-opening occupancy groceries expected by and of deleverage. maintenance. costs. Other by the Labor as fiscal costs, $X.X year. lower approximately comp revenues, of modest XXXX higher lower million inflation XX stock-based compensation same XX.X% year. points year.

and charge we also of of million tax XXXX, Lux to one Café. from revaluation our Tax the liabilities one to recorded impairment enacted related and the $XX.X a period pre-tax Cheesecake recorded Factory deferred Finally, a restaurant related quarter we assets Reform. tax non-cash $X.X fourth during In million a of our Grand benefit to recently provision

$XXX cash growth and approximately via earnings $XXX million $X.XX returned wraps expectations. dividend to million for capital XXXX from Excluding was programs. about for line of free the I just and we impairment XXXX. net nearly shareholders referenced, That $XXX million repurchase of the $XX $XXX up operations cash generated our capital investments, review with share financial roughly million the flow and quarter was of in Cash of used our fourth and share per year, we million, for flow in in tax expenditures, benefit, our for adjusted

thus assumptions our of outlook the estimated a the application our new Before tax we we These information first are rate. quarter change for of further on receive on of available on on interpretation of tax impact to could review corporate of clarity XXXX, move and but as full-year based components. our far, the analysis will various the provide and brief legislation I the

and corporate preserved, various quarter first new to and pulls, pushes XX% rate the XXXX XX% and well the rate XX%. as we credit be estimate statutory as other the now tax to for corporate FICA full-year our approximately With U.S. tip of

Now our of the outlook. rest for

weather. we for continue As we've the as ahead, happen have in at any past in ranges comparable and effect will assumptions what think share time. which associated based factor this assumptions we with most holidays weeks today, realistic everything or of of know our sales done the information best we the These we estimate trends, quarter-to-date current the includes cost to and impacts in provide per on earnings

we're the quarter to the For earnings of positive first of per a restaurants and X.X% comparable XXXX, Cheesecake between Factory return and to at $X.XX share diluted X.X% sales $X.XX. estimating range in a

and are sales comparable to assumed an Turning Factory we diluted XXXX, Cheesecake range of at up share now earnings $X.XX X% full-year the based on per restaurants. to between estimating $X.XX flat

the across of inflation reflects On our our X% food cost higher This notably for inflation see XXXX we continue costs. dairy, categories side, most and to produce of poultry, market basket.

loaded then quarter We expected year. moderate the for in inflation each front-end the be quarter the with expect this of and estimated approximately first balance to X% to

we're some potential of our mitigate is team to to the procurement seeing. identify savings chain supply to Our areas continuing pressure help evaluate cost for

guidance also XXXX. inflation range rate to Our wage X% continues in approximately of assume

wage staff As this based most the current move concentrated is which with David pressure labor member rising in to pricing continuing costs. more retention is also forward best labor market defense our to the strong We're help environment. mitigate where discussed,

Looking support plan to further the the making our ahead, scale phase growth. the year, future, as this XXth we long-term anniversary strategic of we next for the Cheesecake investments Factory's celebrate to are and business

This growing facility Our and West as our this domestic customers. well Coast anticipated will more production to bakery third-party base modern us with efficient underway restaurant as international infrastructure provide a is completion upgrade serve and summer. with

of to million growth to a line as be between and is our company-owned In $XX range capital anticipated cash including with maintaining with new per substantial share and XXXX, six our Based our ongoing on four high of labor contributions net the million. as basis assumes range closing, in $XX million years. approximately anticipate average. between share questions. yourself industry basis We said, we G&A anticipate planned implementing capital aggregate, to our begin repurchase associated with XXXX to growth, this With many we this pressure, the baseline two-year In maintain ERP line amount to year. then spend tax to investing openings. partially rate of million benefit adjusted to currently new capital to in XXXX, first expect end management We system in a income $XXX we implementation $XX generate X.X% and and with in phase offset in restaurants prior any our earnings in range while will re-queue in the flat sales also margin our objective of We order In expect and dividend margin plan take XXXX. balance our of please maintaining the questions. questions many X.X% as CapEx that on our cash by continue question We and XXXX. possible, our your an now from additional guidance programs target a meet human but to recent in accommodate limit pressure points as XX to one for

Operator

[Operator Instructions].

question first Morgan of Stanley. John from Our Glass comes

Your line is open.

John Glass

in Matt to much. some of your seems I not business? then is solely either clarify the your you in tax due underlying benefits of does just labor aspects same, assumptions the but want just rate that others the other just tax maybe that be very And are in change presume could clarify, to as now other the reinvesting or that? the you're Thanks it change have guidance, to

Matt Clark

most to said the last are Yes, we what quarter. of assumptions so John, key similar the

look is piece returning initiatives we sort end part tax the and of continue obviously, it, top respect the sales it as such in able it corporate. move parts positive to which strategic at looking we're But for in that's I the that tax to main we think of and of to the to savings, to the various you’re we're the and off the ways, positive it the our table correct some three of that and including staff part with at were guidance earnings, evaluate With to end of on of of us. as part also the take will really able slightly driver. in a importantly ERP bottom forward invest to we raised is environment a these view members

So that it's balanced kind of if a sense? and little bit of a makes approach each,

John Glass

of I that or it's that, is wasn't what It distinct from does. is that and And addition and CapEx, growth you that and is term part CapEx, to CapEx in used meant CapEx the sure is so what of all specifically? part CapEx is that

Matt Clark

CapEx a is the is capital have cash the the we're CapEx, at of and then, No, that and Flower partners which Italia our to component North sort we Child. making secondary growth please, contributions

it. So two is to pieces there

Operator

Our Blair. from next of comes question William Sharon Zackfia

open. now is line Your

Sharon Zackfia

think Hi taxes of afternoon. the I the follow-up good so John's on a I math on is guess question, north $X.XX.

that business? roughly back are reinvesting the So you of half or in more

Matt Clark

a maybe say would bit I half, than little yes. more

Sharon Zackfia

Okay.

Matt Clark

coming of the at range of that. narrowing That's really it and about the right, bottom then, the guidance can see and piece you other Sharon, end

Sharon Zackfia

house staff tip in pretty that waiters you're back more members, you say are presume of I about raising wages, the that is investing stagnant. When the

Matt Clark

not actually Yes, doing the be wages, so management in all it going could the we're other is across a little benefits, across necessarily and our some be in to specifically and things of teams. also for bit staff, raising

Sharon Zackfia

strategically plan your to about not can to lot you about but on a kind this on a know a at it. Okay. us going thinking talk a want you trajectory to And fast I are concept, give of question the point, casual then want how that

look about watch a parameters opening open one, would are and do second third? you how what it, success, think quickly you for to long you or and the how So you sit

David Overton

need probably we've about a right we it make I balanced. so our once months another things the think and look we that profitability to sure would would say all I and make to maybe wait operationally. six that time, good really long don't feel have or then site we And sure just everything for we done right, is

what little and see So it We're excited. we'll that's bit We're on happening. is a where goes. working everyday

Operator

of comes from Bernstein Barclays. question Jeffrey Our next

now is line Your open.

Jeffrey Bernstein

you guess like X.X, the very in were just Great, spoke just to it came I the that you comp, fourth stabilized. when was One low-end, you're sales the at to Two thank you to looks much. that in flat I I'm comp questions. compare quarter, that down last X know your the have expecting trying commentary that early to specific but to seem

more maybe little of sales through have I fourth if just the very or stabilization that sure color implying improved quarter more the again wasn't that kind to a the So and quarter how into trends being trends range, or on low-end that remarks. the was quantify came get the the wanted of you first comp recently the at

Matt Clark

Sure.

the versus right from I maybe obviously we saw into as also the benefit reading going QX our was we not cadence quarter think quarter When was, sort but positive momentum of we direction. some much in the think that of of rebound direction. continued sure the hurricane activity did, two-fold. sort right that moment at it I continue that momentum a and a to QX I'm we is was on look our it then performance the it's think as of others the where saw in improve. throughout the a guidance obviously And

Jeffrey Bernstein

margins cost pressure it. broadly significant then, Got in mean under the side, And XXXX. restaurant just I on were the

are know to with you X, X, we up the up, again and is XXXX, we maybe that plus just I comp As X labor but now up you is flat projecting again. can food maybe look size mean to probably of

do margins pressures those to would some again mitigate other restaurant initiatives there's restaurant somewhat think the of saving maybe or a you of some you significant cost pricing your and So or help allow should that to protect anticipate we margin. under be you component thinking pressure

Matt Clark

the what were going flat, think X% margins would comp pretty I with dial in expect for just year. back is need math XXXX, Yes, and to negative if we we the a of that hold you is full-year X% to a consistent where the roughly we saying the

And in the so think realistic flow at that to some the sales probably that expectations. was week speed happened, movement doing for the which adjusting that through XXXX I of and XXrd and

really short-term. Going view The on kind and offset driver so into the looking income operating the the net point on in push end margins we in kind the as minimum XXXX, government on this the and sort in at trade-off really a slightly big that time tax margins government that the lower bottom-line. a that at piece of we're and labor back looking is by the line at from line of wage some we of get that of

at where margins of look sales those at we're environment, percentage X% some We that to too process we're of business the looking flat the net sort So those our so holding we income normal I back right. savings speaking into And prudently would of XXXX. going and given in that's thought flat. into reinvesting of margins can think roughly net some hold the rebuild a think investments restaurant we that's that

we of is the we sales, thing and first protect build year the long-term to think good the of as to a get concept margins up. make the is sure continue do intact that back view can I want we and The guests

Jeffrey Bernstein

that ultimately you be X.X% a running less that will assume pricing that fair least XXXX, in the XXXX? still be think is should at pricing, X.X% we said for no price still so assessment I you'll But market-based blended than

Matt Clark

its pieces as more today bit pricing you there markets again around have somewhere going X.XX%. look is more markets a it's on get a the pricing that that, industry have think aren't the think we But I themes a our to about of an that than doing higher north in in those are and out. at much we're that's of sort minimum I really though wage average that's great as think to balance to those one Yes, X.X% of as taking those point and main little

correct So that assumption. is pricing on the

Operator

Baird. comes Our Tarantino David from question of next

open. is line Your

David Tarantino

Hi, good afternoon.

of couple sales trends. a the questions on Just

the of First, Matt, and could for quarter the mix. terms in pricing, of you comp provide composition a breakdown traffic,

Matt Clark

we had mix and QX negative X.X%, traffic pricing, Sure. at was a the X.X% down X.X%. was difference

David Tarantino

it. Got

the that much. comparisons environment, the internally if a what can you it And think you as you're Okay, that function think specific first or thank there's encouraging the expecting? you into you seen spending seems improvement, just look then, better improvement about something maybe is you've it's of do very improvement maybe driving some you talk quarter, driving that's

Matt Clark

yes, and yes, David. Yes,

seeing initial we're more, we think, environment lapping of year is some as well. would softness more last and that I consider what normal over a spending

see think more move to I that delivery. quarter when out traffic that's how been normalization well quarter very that's great we guidance some on we're the and So where that as a have working last pieces patterns for to and had forward. a I We it's piece little guest it special I the we last I card really started year getting the and of go we gave think we that and the more and bit as in we've we think business the from put fourth adoption think

So I of say of little bit it's pieces. those a would each

David Tarantino

question sort and in your anything pointed -- David And going of that sounds marketing specific the to trends drive that like traffic better driver is consumer there highlighting opportunity I coming in forward. do sort was what I that. specific last value expertise culinary question than that did I can there or of other around traffic perception that guess research there insights anything a of related getting that the to be or guess you and some I'm that second of would But then anything out value forward. traffic you I to proposition opportunity traffic going at interesting And think study was half you mentioned a bigger a on a guess sort picture have Great.

David Gordon

the pricing of the the -- breadth middle press did pricing the menu card items. that menu I guests breadth sure to an of points those that think on and that think in that's of menu Matt rolled make highlight special opportunity is mentioned, in we and with realize of we saw the the menu be to the last special see the some the I lower the and menu the why year And always the outside that out effective. we of

maybe value, bit importantly -- really around here they it them. it was they once guest all was although they really those the understand meaningful little be but a tasted So from seemed food eat for more day. were time, really wanting items It that about did to making was there every and scratch every single to

it's the obviously that So done that we billion media rolled we whether within the made restaurant some XXXX. marketing is about and out is impressions have messaging, key. think year on X walls going that have be to the getting then there in this our videos four we'd slowly fresh messaging of executing out, We we've

Operator

Our Miller next question comes of from Nicole Jaffray. Piper

line open. now Your is

Nicole Miller

the where those of afternoon. for region? XXXX Thank openings up the look existing you a are you opening at regions Good international you. world to When opening

David Overton

the so in they're Middle They're territories. new not they're in in East, existing markets,

Nicole Miller

performance question those? of is a a those you. look of it back have Thank at you And in and of been you those? openings the good you to total then how when just comp a contrast that would second that for ask versus opened have for while, international stores you the think few latest you compare how measure do And stores the the stores about opened or how when to performance a years would part been the

David Gordon

a the really in very that partner Hong the well, the very, second we feel opened to in in continued whether think mall probably brand that's just that Factory in still confident after up restaurant we restaurant our opened newest Cheesecake relatively is it's has Beijing doing continues which be our is busiest performance I new Kong.

So said, new in third to year, we and in last the well opened David we territories, as restaurant be Qatar. our received continue even

are So system XX miles Qatar there's over our doing domestically. three all that within average restaurants of other each in regular

regional Dubai our restaurant still entire to very mall, demand busiest our first continue in continues we in be restaurant company. strong to see in So second the

growth a these So the comp continues of if for about affinity from and is some brand parts think the the demand very you of be strong the the that very and strong. perspective in world really to

Operator

next Gregory Bank Our of of comes Francfort America. question from

is open. Your line

Gregory Francfort

a one I and Hey, just question. had clarification

Just whole that flat the conservatism high-end or if there? quarter question I did your and specifically. I say in or and the why restaurant look there's level talk you think the is three and quarters seen is the quarter, then that margins for basically my comp or year-on-year. is the you about know to your somewhat of industry the has the guidance the think can is just both back you a from and fourth the lot a assumes will slowdown some slowdown the at you year And guys as I there in be margins you flat the improvement think widened look net the baked guessing driving there. guidance have in I outperformance And versus first industry, then, the at what quarter then at income both year a I'm it of of

Matt Clark

tackle let's problem. a Okay, time, Greg, one at no them

for that at saying net margin the just range percentage on income piece on offsetting high-end restaurant the clarity So the we some pressure equivalent of an are would would the margins. but be adjusted there be in basis

in labor okay? points XX but So to to benefited tax net income, equal out the XX on on line line, maybe basis the

Gregory Francfort

Understood.

Matt Clark

Okay.

ahead. not quarter think this we'll there's but do so lot the in basis of the And just I way, benefit rest we that that one enough shift the range I think On then that XX perspective I consistent relative quarter piece, points have think point couple just we break shorter the of things. that's go from quarter so mind. it's see a the year with a plus the the any in goes different it's very spring there's anticipate and in the and perspective next the longer-term One a then that I -- matter way first a at and different the holiday how I pretty and to second of round shift don't think yes, into math. think it's both comes

Gregory Francfort

Thank Good job. you. was just the to ask last piece I No. going sorry.

Matt Clark

holiday it's gap Was at industry a six I it But tell and think those more rolling it performance quarter shifts X.X% I conceptualize lot lapping and give around way quarter one perspective. and quarters would noise on much not would to six at defined next we just and maybe the of the a I that may weather it range quarter somewhere rolling to look that look basis. maybe the we're you is we and a I basis. on better the There's we best the a always the guess on rolling best on track sequentially X% versus it's pretty gap our shifts

So what said. to this guess I month easier rather are about from so think than an trying many that's changed way factors you and last to involved there think to as month

Gregory Francfort

understand. I Thank you for completely the perspective.

Operator

comes Our question next of from Andy Barish Jefferies.

open. line Your is

Andy Barish

of to capital in amounts you Yes. of sort this the cash Are you allocation back plans, similar shareholders buyback are year's on anticipating Matt.

Matt Clark

XXbX-X also bit we bit we up lower, buy it's we in be with plan a more, the in just that when the can the you and goes a stock keep general to goes way free little all might XXXX. that the the structure math think little when than less. little it I on return it bit a less do it is was our mind and based and cash grids But flow stock buy

little bit the but bit So on contemplates well. be will a less, it little I a as the vehicle math think predicated

Operator

comes Our Will from Slabaugh next of Stephens. question

Your line is open.

Will Slabaugh

had assessment profitability as quantifiable you then that the incrementality you if also it’s I at us for a as any lift delivery. early seeing question have Can been that's Yes, well give your If you're this and launched. point? thanks feel guys. on on implications any

David Gordon

most of I think importantly believe sales. we at a we I for look as and to is delivery go the sales off-premise us total total think driver

XXXX go moved XXXX year. even the you look back and it about and of north fourth there last If up of were quarter at XX%, in XX%, that to

above need the the profitability business. feel is into Not there a get being believe may we profitability do we the covering cost the portion by be. that incrementality So any that of we and to that additional getting are details driven that is we like the delivery

our the very the POS And very, so, integration done partners XX% been is we've Cheesecake with delivery and very successful Factory now. so where we're happy as far well of the into and it's

it's where beginning execute the delivery this the to of it's the is. going know and at guest what, we're journey So highest level continue we because to demand

Will Slabaugh

Great. increased the marketing And then follow-up on and could I spend. awareness just if comment a

or that toward pulling building that report awareness in marketing far; putting around know your and company past anything sort that that we be so so there for customers more not as big in say is been recognized terms to has of anything rewarded that or far they've a able to through they've quarters. and shown is that you've dollars to So your the supposed something to see of preparation; and this been ingredients you're some Cheesecake the in we're either coming

David Gordon

X marketing got doing to just the the but we're spend we additional early have not done impressions get videos, no I think clarify last we've our billion influencers, social media was increased and the really at everything year everything to expense. it's marketing we

been are been is think pretty yet doing months we've about still to still results be early, and six so that, the So and I seen. now, it's

Operator

question Matthew next DiFrisco from Guggenheim. Our comes of

now is line open. Your

Matthew DiFrisco

delivery XX% you just is that; of couple or questions is as a think I and takeout things the was Thank follow-up including have sales said about that couple specific of a I you said or well that you. -- was

Matt Clark

Yes.

Matthew DiFrisco

What percent within delivery there? is

Matt Clark

to for total sales go That's XXXX.

Matthew DiFrisco

So have delivery? the higher stores than obviously, ended as and more that year trending you’re

Matt Clark

as takeout was higher of trending fourth quarter. the Overall

Matthew DiFrisco

disclose us is? that Would Okay. that you what on for

Matt Clark

be XX% take we'd in XXXX. to the XX% range that would that we Matt in to believe trajectory think I

we believe to know base, but hard rate. So can X% XX to it grow we exactly a X% so continue the to off

Matthew DiFrisco

you primarily a of that is base just or a context? And what delivery year give ago for was us can that

Matt Clark

up I piece think delivery making biggest area. is the the of growth

go a general us. opportunity I for think in to is growth

will ensuring at David we currently online look by our quarter. platform in as great of execution our this out to continue all have restaurants of the ordering rolling said be we're and will we so that end available And own

for but side. year think of at I category a bigger growth was the in that's just the growing last piece least delivery the So

Matthew DiFrisco

be Would you this what XXXX? to able for was disclose

Matt Clark

me to front but that. back in of have we don't get I XXXX can you on

Matthew DiFrisco

it, a think be if you for is one did give to curious number those I have was planned because And missed openings might pre-opening then, XXXX just Okay. I I York? of New

Matt Clark

Our we six. And and that how four it. up pre-opening on that depends $X many it direct that of call -- where is million is piece in the and the to includes end above openings within of to $X.X million obvious indirect sort

higher So exact even the on openings, end areas with. vary will up if depending have we of we that also number it cost

Matthew DiFrisco

in it you Okay. I'm a if if you Hawaii would City opening would store store New would larger curious because be just did be presumably? out pre-opening XXXX like call York the the

Matt Clark

that farther would us think so down, hear that's and will we make sure exciting you figure sense if out for site I'm would about be that we it. I and get as a

Operator

Wells from comes of Jeff question next Fargo. Our Farmer

is line Your open.

Jeff Farmer

Great, thanks.

there or did Just satisfaction metrics light one quick any you have that follow-up, some research declines guys you traffic are any on seen discuss speed larger recent shed of consumer customer the guys that but quarters? in service

David Gordon

to we be early, of use just sample launched for year, just to the it’s good guest new we quarter we’re to types those directionally data, decisions. of inform all platform so fourth in data a satisfaction of the still survey, gathering need that have last really information So our to able

too early. still little it's So

Jeff Farmer

saw the of sounds Okay. you year And XXXX, the then potentially similar that rate to I points you to could in labor another guidance XXXX basis XXX heard menu in assume so very it guidance, of versus approach cost XXXX? is what pricing inflation fair pressure wage

Matt Clark

of that much One it. will week that of a that's I don't lapping and for is part be it a we're think XXrd so couple reasons.

line I think there XXXX a the we within other bit was pressure piece is certainly in it the deleverage of little comps item. will sales the depend on were labor and

high-end, some and includes points to we that XX at XX basis said well. what as we're the more making think like it’s so is And we of the that investments

Jeff Farmer

this any shift then or number? And believe that tailwinds I missed discussed one same-store I XQ but just headwinds calendar Okay. for sales more you

Matt Clark

could points in QX. the plus Yes. In from be XX basis a maybe there spring think break benefit we that first quarter, shift

Operator

Our Sachs. comes question from next Holthouse Goldman Karen of

open. line Your is

Karen Holthouse

for taking thanks Hi question. the

negative Just there. bit, mix menu I kind digging nice accelerating into be of a focusing still and that growth little that would of on in think tailwind sort your off-premise would actually a

So you that drivers just the that, it’s color what correctable is it thing, a bad are have a reason necessarily there? is not any of

Matt Clark

the special of had that card just we sort the And as so because of a that we question, and it a I it if take view of -- look be don't would as around the also although good we short-term. a bit in as then attributable we will a is as to we back through it's view the it's most to think that When the normalize sort longer-term we points good full-year, positive it's and benefit. we that expect the that accelerated such the value Karen. little think put I problem went XX menu adoption lap obviously you we at on to Yes, XX again, basis of a year. through

Karen Holthouse

having of seeing about redevelopment had mall? where pace one that be things in of we've of the the sort space? to a conversations of suggest, you that the mix end areas is sort challenges you more coming Is higher there mall might of Are anything incremental competition

Matt Clark

that we're developments, a don't and malls or a a and I we in No, those competitive chef-driven are years We areas some that been so just have there's concept, think competitive differently been for much it really perspective. us. that has I and revitalization as situation think mean in instances as anchor that I more from viewed think into mini not really more six like smaller but those very restaurants it's for been more five I moving discussed

Operator

Our next of question comes Morgan. J. Ivankoe P. from John

is line open. now Your

John Ivankoe

at Thank first think include you. Matt, spend a baseline mentioned X.X% And ERP I human and fiscal the you G&A the that incremental around in capital? clarification, XXXX. X.X% to Does

Matt Clark

capital answer basis question, to ERP to so XX management. your X.X% human the XX it's points X.X% for No, and the plus to

John Ivankoe

the know you do that's you here XXXX? get And mean but it's XXXX, I so a splitting in I in event leverage discrete think

Matt Clark

more a we great come year, That's year, and the give that it there clarity as some that more you into we as we will spillover get will think I don't enough, we we'll could ultimately through be question. know John, have color. possibly but back I do next provide progress,

John Ivankoe

at even months thinking generation flow what been, good obviously your free XX like And where XXXX cash in you your more pipeline, but all has Okay, right. terms this maybe you. Thank sometimes obviously guys you think are of point always our as give CapEx and at not site possible models remodels? if that, company-operated openings guardrails are stores certainly it's at to if in heading, the those of us number both as might least in too planned of any it's terms come around a that of early function it's some

Matt Clark

CapEx some being to the real year but Yes, only side I last we the environment. also construction headwinds of the four this in in think not talked environment, about operating for prudent six the of year because and things

to evaluate our in what point get give unit more as anything closer that and a specifics growth at core this would is what we else. to goal for Italia the business example longer-term that's have absent we also commitment time and X% for X% Our North from with and expect could we partnerships We'll mean.

know we closer. an but for get as certainly don't exact you number And provide have today, that so I that will we

John Ivankoe

expect no no I certainly reason And XXXX the early at for isn't but this to guess X% it's to point? X% number

Matt Clark

That's a long-term objective for us.

that before us. evaluate environments, look will I we construction -- we'll and will think the size overall at restaurant come We we'll the environment, the evaluate

delivering So I think be return. we in shareholder to it's total nimble continue

Operator

from of Peter comes Our question next BTIG. Saleh

open. now Your line is

Peter Saleh

Great, thank you.

you'll nationwide. think you've mentioned I launch online in ordering that March

to Just nationwide can you build think you awareness do to platform. curious customers folks how this and forward how quickly it's plan around that you capability or going once transition

David Gordon

currently the already launched are that restaurants marketing have in materials up. We in-restaurant we've we have

our will search go the some on have persuade as enable also ability not country, across them to optimization rollout use We we that sit online be hold engine we to and and ordering. to to online on people and using

easier, it's it's more it's as convenient, to it's for we seamless, fast the it's can, we the better better We think and more do as for will restaurant. guest, try

financially So prudent, what we that's being can, so to available. we're let going guests know do while

Peter Saleh

inflation first then said I through stay not will year side And inflation on moderate it year? my the quarter level you you in more the you is question second this we'd throughout about then the thanks. the what just it or thinking comparisons the and that and is we at moderation locked, Great, X% should how gives go confidence it food What is think moderating. be as have

Matt Clark

You some some really we're mean those contracted of the in seasonal are at nailed both pieces. visibility have in into on certain typically year-over-year are It's this the time good two-thirds and about we so that I fact those categories just we there year-over-year locked trends. that comparisons shift

Operator

Our next question James. comes Raymond Brian of from Vaccaro

open. line is now Your

Brian Vaccaro

Good Thanks. afternoon.

initiatives also of the labor you savings on touch of beginning those pursue some call, realized you and productivity efficiency towards potential David, in in XXXX? magnitude cost food Would that to So then savings the the savings mentioned and be XXXX? you quantify willing you'll

Matt Clark

can Brian. opportunities and was de-leverage lighter the more We're when and as when or that per environment a hour, average year-over-year of you the them making bring savings we to wide we all look hour, to up continuous sales this and per through system look really I environment despite a as to, that categories of think as our sales food of what actually a performers I our theoretical at go when process, be sure a when labor a ongoing measure the basically looking a So efficiencies labor. when or and well whatever bottom and objective things lot so looked of we compare seasoned guest very improvement rigorous think have in at the labor in to it, just planning of at quarterly sales actual. up such improved limit quartile the restaurants those that from Really we the we're productivity is at we referenced impact referring We and is evaluating bottom We forecast. each improvements rolling we that initiatives environment. typically from and kind

Brian Vaccaro

then, in was Grand that's sorry comps And Okay, quarter? if helpful. I what the fourth it, but Lux missed

Matt Clark

Positive X.X%.

the that have base many do but have and good the the them move in locations we because performance So category. up into Vegas in not volatility there's particularly comp positive Las we

Operator

Wedbush from Our Securities. of question comes Setyan Nick next

Your open. now lie is

Nick Setyan

the Thanks taking question. for

the of or terms was quarter-to-date worth there calling comp In any geographical an are acceleration across that are out board. that differences the

Matt Clark

Coast to what and we solid the also softer, bit California, East interim don't we give positive. be we of improvement color very geographies continued Florida, in Texas, saw that sort this, you the the say little the markets, continues of quarter. as in our upper half the I I can be we will have in broad-based fourth saw think Nick, to and fourth quarter I And think so quarter in did fourth that's extrapolate a the and that the quarter.

Nick Setyan

basis the the we I And pieces just from moving how of aside specifically pieces the that as about on the in piece in move terms the those comp; versus delivery XXXX? drove other and mean from we comp XX the think de-leverage some is should of into operating other QX pieces coming there any other it. or lower de-leverage costs, the points lower Got

Matt Clark

certainly Yes, very two commission item on know delivery the large, couple a things into don't I of and but OpEx. go other so that line One, it's the does that tenths.

bumpiness RNM. some in with in The just saw other to things we XXXX was that general respect

estimate think XXXX, reasonable that factored those for I those into our Regarding for the have guidance, essentially each so a and for bottom-line. of pieces we provided we trends

Operator

And question Guggenheim. DiFrisco from comes of next our Matthew

now open. is Your line

Matthew DiFrisco

I'll in to people you. and but perhaps taking view guys different of years of maybe revisited looking retail traffic, traffic about tenants curious real some respect much, of as someone to revisit negative otherwise just with draw asking it before driving in now? the so the that stores have a tax estate now savings the that the you persistent quick. to was around aren’t make marketing changing mall and would the Hey have a context traffic done and the have past marketing traffic and much to the negative maybe you Thank in

Matt Clark

the as Avenues. our Media and for and effective margin most I as still XX% XXX Social are think think Gordon we us coming before think to destination quantified the that malls is mentioned in David to XX% the I it’s to Matt, of basis a points. when the definitely we guests headwind XX there is us

so to not really guests want to And it just rather believe ordering, Social more we drive marketing experience than way through of other or ways a drive to delivery marketing. come traditional go platforms those looking that the to for trying at the might we sort Media with convenience online making than effective that's through just conjunction mall in their think to through

Operator

and questions at And gentlemen, great Ladies does for I'm you This may and participating conference. a you in have all showing disconnect. no day. conclude time. program this Everyone thank the further today's

The Cheesecake Factory Incorporated (CAKE) 21 Feb 182017 Q4 Earnings call transcript