CAKE - Earnings call transcript Q1 2019 | The Cheesecake Factory Incorporated

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Operator

Good afternoon. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory First Quarter Fiscal 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like President the of now Stacy over Feit, Vice Investor to would call turn to I Relations. Please go ahead.

Stacy Feit

Thanks our first and welcome XXXX afternoon, call. Kelly. earnings quarter Good fiscal to

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

are at within Before let implied me based of in this filings this factors to meaning detailed be our today's will items update any result are Exchange Private which we Reform with undertakes today's the quickly a statements. not the Securities is during Securities statements be only stated statements, begin, duty Act All Actual discussed speak the historical different date, on on considered and of our the and made of or investors.thecheesecakefactory.com and fact forward-looking statements call, Company those and forward-looking from in the results remind release, as you forward-looking of materially website that Litigation as in Commission. call that press available could XXXX. forward-looking on no

throughout this I'll on call year adjusted quarter David some our use full David. we as described. appear in Gordon provide then operational measures and and release our detail to provide XXXX. the will conference be results press second on With an to the opening you and for our Matt measures David with presenting website of financial previously over directly take explanation remarks, results the of and outlook today's financial begin our GAAP call comparable will call, will turn basis, update. through that, an and non-GAAP Overton reconciliations addition most In the in will our

David Overton

across Strong results and positive growth first our within were geographies. key expectations across per overtime We of The posted all and these to end Stacy. Cheesecake contributed benchmarks productivity, the industry adjusted channel the productivity, results. you, sales outperformed Comparable at through. including quarter. our the the performance was for and X.X% key in measure restaurants share the sales and our initiatives topline Thank Factory higher marketing labor efficiency, at earnings walls flow food, solid four off-premise performance within metrics we sales the Operating of

During the new Monk Asian the find Social location casual quarter, first concept. we opened Kitchen, of our fast first

the the is model in a look to in end feet and we far, in to it So response to partners approximately build with export smaller about cuisine, sufficient this smaller locations which has as we capture determine model restaurants We Subsequent can if month, guest positive opted footprint. and productivity to Asia, successful, XXXX are square real international where would Oxnard, between and to our California, last support Los find. could efficiencies particularly halfway been the additional Factory we opportunities, to If Cheesecake are difficult The quarter ambience. Barbara. business and estate great Angeles feedback design opened Santa larger

including expect to open as continue restaurants, location. as we Oxnard For to many Cheesecake XXXX, Factory the six

quarter. We agreements turn and opened experiences XXXX, start, over we in David great also many new to as continue to five a the the Monterrey company markets, memorable forward open Factory Mexico the the Cheesecake restaurants domestic I'll to location expect internationally under including during guests, call now With growth long-term our abroad for to and to to as first look off continuing licensing and to potential. bringing that, both to year Gordon. that The positioning deliver is additional The

David Gordon

David. you, Thank

basis, Both as strong is continues turnover. quarter, our to and success further staff contrary our and the manager retention industry, strengthen consistent contributing of the first to overall also operational the trend scores quarter. performance. year-over-year the during continues we during satisfaction to and guest In face in even believe and increase of a both the the addition to the restaurants execution staffing saw guest which to the year-to-date research experience service confirm service to industry to guest We the importance on

store in As quarter. solid initiatives during channel David to the some mentioned, contributed continued the as momentum well our as off-premise effective marketing performance comp sales

believe Our this over our supported by positioning made brand during XX% on from fresh driven of sales by our XXXX. of off-premise quarter continues total to first differentiated high is value menu grow, creative comprising quality business the marketing. proposition, being scratch and We

channel in and to aided Factory the social an with status. in brand so their Consumers awareness of with Factory dining We additional American paid our Gold of is in opportunity to do very are receive, about the we Cheesecake have mind marketing The that findings Card. unaided influencer a own world strong. from confirmed love is frequently round publicity this advertising, our interest complement the attain noise has channels, direction, utilizing delivery our Express however today's number people experience Our remind of with us increase consumer and Cheesecake awareness. To partnership search high. In marketing research want to and very we year top The much including more enhanced

USA underscoring to the Cheesecake will sustained just deliveries in that, brand I'll And moving turn review. and The Today. for People, with increase DoorDash including the XX We eight $XX Factory campaigns within the campaign call creative Day delivery. offer. the also campaign, Fools' sales Royalist marketing collaborative store this off-premise in over to Factory were we XX,XXX over including and recent and free for now forward. which including and got sales XX,XXX minutes broadcast of these believe comp our financial following local with in great publicity affinity saw We April contribute efforts our claimed to Cheesecake from people growth tremendous We to Matt like national online rewards coverage in All continued Eater, segments channel today execute sites received major continue

Matthew Clark

to David. first million the was points menu basis sales, you, XX.X% quarter. our the increased $XXX.X end wage from X.X%, same of is period Other leverage. of the management external of an about were This first of basis sales with same $XX.X bakery operating Cheesecake XX and last higher a The the associated higher labor. at Factory points Cost XX revenues, due period accounting of additional costs sales Thank non-cash expectations total was rent This year. about quarter last of million. the from reflecting rates year. revenues, adoption decrease lease were which increase XX.X% of the Including at attributable revenues, for points from Comparable new XX primarily hourly basis restaurants of pricing to revenues XX.X% last was in the the standard. year, of up Labor is

by comp down last million although of In as were same our points addition, insurance same first quarter in we quarter was in the Pre-opening offset XXXX, basis general XXXX marketing the favorability $X.X first also the in X.X% the workers expense expected period year. these the comparison. in of year. prior quarter versus approximately fiscal from of XX costs liability $X.X G&A was and had million higher of revenues

openings XXXX, X%. we first opened our quarter year. Our in approximately costs Oxnard same tax the was first of rate associated Social And incurred last Asian Monk during the plus Kitchen had quarter this the opening. with location period no We

Excluding X costs primarily the Concepts, minority driven Restaurant levels. loss Fox which by investments pre-opening our unit their on in growth the high is given

the capital million operations $XX approximately of cash As first X flow for expected, Concepts. quarter. repurchase for $XX in ramps million. investments we used And Restaurant our Cash to returned adjusted our Roughly for That financial up and from via earnings growth per and was share share the our nearly $XX capital Fox expenditures million were million shareholders $X.XX. review dividend was $XX program.

full-year outlook a Now I'll XXXX. our on second few spend the for and minutes quarter

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

quarter from The Cheesecake at XXXX, share are sales between we and comp adjusted XX into This comparable estimating the Easter year. sales to earnings restaurants. break based X.X% of year per $X.XX diluted the estimated of quarter X.X% first basis on of quarter the Factory $X.XX range second in assumes an For point impact a range shift last spring positive and this the of second associated from vacations the

in Turning range The of to continue our Cheesecake longer-term a comparable expect sales we XXXX, to at X% X% target. restaurants, to line with full-year Factory in

of and food inflation expect X% the we basket X%. about cost be X% XXXX side, to inflation approximately to to continue On for market wage

we modeling diluted For anticipate turn, tax a XXXX share we now In now purposes, estimate and X%. of $X.XX. $X.XX adjusted earnings between rate per approximately

a $XXX be to portion As and Fox our $XX the With of with and expect Italia. as Concepts million well full-year capital integration ongoing from North to our of EPS maintenance any in growth costs ranges and allocation, anticipated XXXX million any our needs. anticipated CapEx support unit our as the of exclude associated regard between anticipated QX cash reminder, to the to we continue operations loss acquisition one-time

Concepts, in expectation quarter to XXXX. our Italia. to the North for to first solid to the consistent support expect for remainder performance results anticipated of our In the growth prior million Fox to continue We million provide X Restaurant $XX approximately operating $XX capital of acquisition closing,

Cheesecake is in The sales underlying trend with Our brand. our target Factory longer-term for line

your said, re-queue plan net order With prudent our should questions with we time, grow as coupled on stabilize executing possible. take limit that margin questions. long-term Please yourself are any many which accommodate Operator? In growth. as allocation we'll drive profitability to We question then believe and with over to one to and capital additional questions. income

Operator

first Sharon William line Your Instructions] from Zackfia question ahead. Blair. the go comes of Please from [Operator

is line open. Your

Sharon Zackfia

on good Hi, with any of seeing new geographic any on North been you're have Could thought that A the and Italia. afternoon. us give going actually play update concept? how out of how process openings couple on portability you kind questions

David Gordon

Hi, David Sharon, it's Gordon.

total that very XX So far, take and the opening North Italia to today were a strong. the up that The the been affinity restaurants in will is has number across as there's restaurant actually at opened Union the country and Dallas

I way here most one So been as to-date the Florida all they've about they've that has of the restaurants recent in had Arizona, expectations successful open. beat moved in outside said, the that weeks Texas actually opening to six most in in California they've is first the opening continue the out into of and the been

strong been the guest positive. portability certainly to the - the has far that's So feedback appears very in very, be very very,

Sharon Zackfia

is but long, two sit on Monk, anything and there share And Social process is is there you thought something already? the in Do watch hasn't or it number while separately been that the know what opening hopper wait on then and you and I can open there there?

David Overton

this don't to Hi, David. is Sharon, think wait too have long. I we

working very happy We been core on food. of are been be have with that. the - received and food sales We've seems quite of the some successful. to cost labor. to All was great. points that The How

costs simple, So food a the profitability one. and pretty going down as to don't think soon because as looking second for start prove bit, long the it it's we in a end. it's We all can take time little we'll to to just get it's labor our straightforward, out down

Sharon Zackfia

That's great. Thank you.

Operator

go Jeffrey of ahead. question next line Your the Bernstein Please from from Barclays. comes

Your open. line is

Jeffrey Bernstein

thank much. questions Great, well. as you very Two

mean you've pricing and within of significant with there, The where the now many seems low-single restaurant margin and first in we've settled you're digit on but dealing your you still a I peers some more it just it into range got broadly, compression. are margin, of kind comp one like stable seems like position

follow-up. where do cost handling maybe go you they buckets or wondering opportunity in challenging then whether one when there would I the to And mitigate if where pressure pressures the could terms degradation as you draw and about be that how line you or more it Just want of are? are price specific take to had see you was you anything on what

Matthew Clark

This Hey, Jeff. Clark. is Matt

accounting. that I - sand. think There we the optics first when obviously some look of are and drawing some P&L the lease well flat in keep so think a quarter as last at the restaurant year as that you with margins is line full-year we we believe I the can to for the guidance,

least think at be adjust And other at X% so I netting that out, some line to we OpEx from movement going it when you X% depreciation that, environment interest had item to manage the range in this OpEx in used so, obviously but into to we are other able X% flat for forward. and really comp into what pricing

our that's objective. been So

when you we're the think component accounting meeting away I it. that of take

Jeffrey Bernstein

or of still then And any of North But terms do I of just XQ. timing, it. perhaps you upon term, anticipate in I'm Got how the and transactions in XQ late the the of of really the terms see mean, on past Italia, have expect or you much assuming making changes playing specific it's the anything so, closing payment out change menu deal, brand full be have you sudden any or of whether have control a Thanks. for real it operations really year and therefore we ownership? shouldn't you that when all or or

Matthew Clark

is This Jeff. Hey, Matt again.

have options. we think still the I evaluating good we're financing,

capital relatively think is I accessible.

be the able don't will things see opportunity. to have for very us. balance this a we sheet. We I be purposely to it when like complicated think do strong We

bit ready. We getting have just a or ourselves left little of time

looks third us right be into at performance $XXX and the talked the we in a roughly that financials point would essentially then on due would basis. quarter of roll consolidated depending million of the like time it payment at on the it as about end would So be

David Gordon

why is then Gordon. North much. at And that's is Everything on some going David - Jeff love operationally this it today just guests

can or very and and we one restaurants a today our the supply some look sure however scale, the the we'll to to want can menu, IT may, time, of the with very, everything will. whatever delicious if that will run to but, we'll add sound that And leverage menus we And value happens there concept HR two and way. menu, but over new make it things add is chain to infrastructure, you operationally, We business more very what the our stays we to see practices, we it's do well. do our to

add good today value we can bigger of that company. So they're across the we do being a how about we still think handled to feel things some and there's lot

Jeffrey Bernstein

Thank you very much.

Operator

go Your David Please next the from line ahead. of question Baird. comes from Tarantino

Your line is open.

David Tarantino

then question Easter after the afternoon. Hi, between then helpful. the give on first us Matt, if that in have was pricing mix quarter, be similar to question that the and And one expect or also would second the good first mechanical quarter you breakdown and confirmed I traffic the a drag comps, in could benefit clarification you that real that.

Matthew Clark

and question. X%, real attributable Couple the directly mix way at us Sure. and it's a was of That's the for data. talked traffic as delivery a X.X%, negative growth things, the we X.X%. was the to positive Pricing mix in positive we've was in the remember, X.X% the capture about off-prem the

that's first XX to think than XX lower it's more quarter multiple impact to So maybe flip the against I little the traffic point and in are we're estimating We and effectively but would second today quarter. basis to points, bit back be net people. basis the we XX checks, large going that what are which exactly in XX getting about about had then a a was more we that, affect it thought - we

below when like So traffic at which look tracking. where negative, that, of we looks X% we've sort David, been is it's

David Tarantino

Great, thanks and growth. I a then picture the for And big question that. guess check about check

need you $XX of over as you the beyond. average if you push next is dining average year But in I think do years that. up the guess resistance The you'll about think the world towards I know in check check, how and of absolute be justifies and at the think pretty Cheesecake increases several crossing $XX level quality over which wondering casual you're any you'll I and this Factory, just high that

Matthew Clark

track Again, we've is and watching we compared I of and as our this and nationally. talked has before, it's they're Matt. competition the competitors XX about the think company and where art relative almost at changed that all, the not constantly with science to at position we're been years David, and all

moving make in protect they I we see we've think, come asked seen pricing think And the moving earlier that so, sort companies question sure and lockstep Jeff about are their I margins. I to protect of think up, everybody that margins, to

is be our menu $X get spend I want can different, meal options, think to places. it guest to don't many think have whatever many $XX or and relatively they the appetizers I so thing So will much we can really about as you for equivalent full of choose in

obviously to think I I power, how the across the good positive. is that's off-premise I And that different mix, it areas. are in thing look business, check, then when it's of higher. continue our those distorted elasticity pricing navigating. the driving of bit and and thing everybody the we differentiated growth spectrum, it's little They the as is at is across so knows mean other more would last what's bit average very which pricing higher a part the we feel becoming the by a geographies little say significant And in about order about cost guests very

that think the And it, everywhere. it's into plays so also same I not

David Tarantino

Thank helpful. that's Great, you.

Operator

Your next America. of go Bank ahead. line Francfort Gregory from of question from comes the Please

line is open. Your

Gregory Francfort

that guys, think or thanks. shift? And the that and timing guess ago, place else have know start what did Hey happen that. you you're retention training better, initiatives three inflection is talked when that quarters that's with causing do what I you to key do on guess I around quarters I you putting getting it the something ago, about in two that driving is

David Gordon

their something is is last a practices really list of XX This to in first days a concerted really being probably Gordon. staff work effort, places David staff The retention the Fortune very, and were on of we've on just retention been. We are very did the year our and that's that Greg. been middle people and XX hired, in churning to and giving we're put and put teams I with really going really too part have we actually early always right trained give we making employment the that our hiring culture that our those obviously hours place engaging they that the of told question, who them had is to around great think at months we in schedule for management time all were sure during thoroughly appropriately about look at we the ago some the time been did over to by right practices for focus beneficial. proud even Thanks them meeting their the and stabilized members in that them flexibilities in that were around our people

I year, job very low. be first retention on continues strong think far same. we've year I a we're this in this had always front, think to general it's the so days. those an at management that level, And And doing better XX the management manager the all-time

I think it's X% or X%.

of Fortune work an us very, the attraction strong list places and Cheesecake from standpoint. of has the great benefit remains Factory and being brand So think I on very and helped us culture the the the awareness

are HR us. specifically of built a for So a the bit Practices into made that just those XX our has days DNA, but around benefit

Gregory Francfort

up of that's And how you XX-day maybe, changed in can terms frame much retention?

David Gordon

front those have of with don't can we follow-up certainly in me, numbers you. but I

Gregory Francfort

Thank you.

Operator

comes of go next Long Your Please the question Piper Joshua from ahead. Jaffray. line from

open. line Your is

Joshua Long

location. back to up smaller for made so comments new the to you Wanted much my at Great, circle these Oxnard question. thank taking the footprint

short some becoming gone versus Would gets with us might there there previous excited maybe efficient learnings able new evolution that repurposed. you there to just has of in share square more Just you footage be footprint. iterations a where in bit maybe terms been of or some your curious

David Gordon

it's Gordon. Well, David

smaller. us the real see is our to tend sites X,XXX where could to help if foot intent operate As most the square Asia estate David originally for to was specifically to X,XXX partners, restaurant a be to international our mentioned, fluidly little restaurant but bit in sites

the this a out, it's probably we that prove to design. and our We seen different much one, there. kitchen the when weeks currently out because be experiences guest has the sales able of foot Cheesecake menu, little year that couple at knew wait Factory really, or So been a actually still an field of of smaller the and throughout wait Tennessee to in exceeding there have there's times still of be to bit expectations busiest our end the to square than X,XXX Chattanooga, able per that would the be opened, feet, of in not we that restaurant number more that menu In you first we prove been are day, with is Lubbock, walk and square could everything of excessive, popularity, the too want wouldn't the want the we we've I'd guests a execute some execute Texas whether last we've even say flow of really had in well. we times openings the

been far, seen thus about of first couple feel that's good we've again only we promising weeks. but what a So weeks, in two it's early, it's the

Joshua Long

been of more higher guest read Great, or of time if as you've how your learnings engaging in spent of seen And thank guests channel? then do using your menu. those channel, relatively you trends that any off-premise how people are new sort branded of that sort of whether curious talked terms past with just ticket, but have about you any in I the in is terms usually terms steady, you've in how frequency average multiple the brand, we've the have know that. with there for

David Gordon

even I channel. is as changed delivery last or the Matt higher, little call. checks through online orient said think digital since check bit that's really through whether that nothing's our Obviously, the the through

to XX% XX% delivery is quarter. the first in closer I check for Dessert are We also on XX.X% see about the restaurant sales there. think higher versus probably

to that we the see are are been, in whether to markets we The be those have markets more guests of continue in in of the trends popularity for we launched they just been continues the that newer mature the pressed past. they markets those the that So end what in and delivery some time similar but and to of have year. towards grow last

have our with along when mind at successful the goes of some Factory somebody awareness and campaigns app brand through the DoorDash The been top to of just with the And of DoorDash meaningful in the the DoorDash has app that marketing TV we've in they being the to has that us with with pretty marketing featured have done most grow strong to a channel meaningful continue be begin having Cheesecake and with. of the top done of recently marketing way. Along being brand that able one

Joshua Long

you so much. Thank Great.

Operator

Your from next comes Please line the question from JPMorgan. ahead. John go of Ivankoe

line Your open. is

John Ivankoe

that even Yes, I thank it unaided awareness. you. of last on not you're interesting into digital awareness, And was Maybe into but aided tying non-traditional channel. obviously question, to conversation thought some just deeper driving going the

to going a and shifting of is terms as digital, now actually I seeing to marketing how makes basis traditional that the that points between sales in in spending sales, So sense percentage wanted are ROI marketing you forward? and increase for of see marketing specific

Matthew Clark

way Hey, I is say a early John. learning know don't stage the we're This and we're that. other. question one Matt. committed I would about that It's or good and

track always go see the with in is behavior you a directly, things we're for quicker name and I have good the how know can sense and has doing owning do yet like online you you think so see surge you guests, can the approach for - ordering are know areas, that doing have see you us that what we your we for can But the we with and does just what taken rates go. new is. to can business can that engagement certainly proven, make that marketing think to that I these good digital going the don't far we ROI, does

are money things drive be determined, good some least said, tangible. those I unaided to awareness, will spend goes, the like I the about at to near-term. continuing very, think we in Where incremental So very that feel but

David Gordon

just would John. I add,

are little As really marketing you traditional. more and bit and you traditional a things becoming know, all see and never we've today the done influencing social

us talk I our do hear think our want you and food and them in want it with good very could kitchen and say. what's our to so brand for and photogenic, about I that is people visit managers about our to influencers kitchens guess post tours Instagramable and about

really our helps level us to presence that social then comes So in awareness. of it helping that when and

John Ivankoe

component you as Could you spend, what what remind look it think you wasn't whole it, as be total of a marketing that XXXX sales time? might and of me the percentage XXXX at in we had this

David Overton

Yes.

I in about G&A like like mean about under the out I historically will that. think in somewhere, probably spend, or X.X% we're carving marketing been than XXXX and just I just since things gift think that talk cards, and it's less

So we're it creeping forward. just of sort

John Ivankoe

Helpful. Thank you.

Operator

Slabaugh comes question next go from Please Will Your the line Stephens. of from ahead.

open. line Your is

William Slabaugh

be a pressured that eventually guest? traditional evolved backdrop to value. whenever or this sort address type that may menu is and a like had whether communicate value another in through negative traffic question way to you Thanks that guys. the that's menu value thinking launch role and if your and to at be on I all that played as of The SkinnyLicious are How modestly on continues you industry about value at Cheesecake Factory brand everyday

David Overton

Will, guests. right remind source time, think views, with I to over and help you're menu

you're that guests they quality a again, know our awareness the not really think and in it's two, similar a there combination. can I buying marketing, Cheesecake of meal and component when The even our the only to that value understand, people you that when at in $XX value for but or share $XX some there, of $X kind always or that confident are we're the $X Factory unaided the is dishes portion size, I is appetizer think the of very will, or if because

can or So couponing bit to obvious, to been impactful remind them in and get when or bring has really more think, and that, when obviously, three that's special or that recognize everyday just sometimes, to little of do have we're going they that, for different we a we not the partnered get to reiterate occasions slice we so guest, again that Cheesecake. LTOs guest to something like like way I for thought with to the to anything DoorDash do a slightly use just work

been always that value So think used on we've vehicle put I just it. we've But has to a reintroduce there.

we We We'll with we being between will or and items continue maybe to $X the same as that we'll and do continue in $XX guests, continue come necessary, view maybe up as are add that. will to way remind that ways. new the to have

William Slabaugh

Thank you.

Operator

from line question comes next Securities. go DiFrisco ahead. Guggenheim from Your Please the Matt of

open. is line Your

Matthew DiFrisco

you. Thank

mean, or Just in wanted expense they de-minimus you some the basis. in But to lease there major you you basis I have, factor as other fees didn't as the quantify fees delivery has restaurants line to a I comment go not you did back in you've there, the out other are Can far embedded how pressure. obviously, in I year-over-year know characterize you would commented the think accounting got points? operating call margins, delivery a

David Overton

Yes.

on the regarding there's think our year-over-year it's quantify basis. sales questions relationship around We some couple we lead I then tense that be confidential DoorDash. there's of and a have to with given that with to a much may around want the how we careful and information questions

other de don't minimis if the I P&L, think but tends honest. moving one know it's the don't a you I to be or couple or So of way be material, consider to

Matthew DiFrisco

there than are the in increase in you or at quarter the makeup, the are in And do you guidance to you'd summer implied looking usually then And EBIT. I the add guess as Is the - first there if then took margin you to I were quarters. full-year remaining that do? some the for what of middle greater an have price that to is is look flat, than

David Overton

Matt, part of is how that about the EBIT, just that makeup that on the margin out interest is in below the think we piece, but in not it right. When moved from

So I on we I think in that we netting to up it. ground sort of of piece more track. make because are out we're any right think account have don't

was So below to went there basis XX points down that above the XX is basis the points line that line. EBIT EBIT

which up we kind the believe net of the you is business will really totality, then that better. if line, flat flat be we're saying, So to it core shows in and income on take margin

Matthew DiFrisco

thank Okay, you.

Operator

ahead. comes from Your next go Gordon Haskett. Farmer from Jeff of line question Please the

Your line is open.

Jeffrey Farmer

last earnings levered Matt, dollar thanks. growth. per has week Cheesecake Great, operating been that on hold call, you to noted the able

you wage think below rate I growth. said

do So you I'm that. been have able just guys curious, how to

Matthew Clark

foremost. of the it's thanks think question. and for first couple This I Matt. And is things, Jeff a

As a David keeping the retention in attracting and if mentioned, are only are is Gordon people, right. efficiencies in achievable, really big training we driver, restaurant

improving and very so long-term, that, at I we get core better differentiator that's just I with good over we can so were bit said, to think our be And and little a of in think as sort is tenant an that continuously as that a example. time

bit which driven drives little I were that a better QX, retention better staffing, by we scheduling partly think a our in little is well bit in as year-over-year. overtime as

that we're those piece think it's driving make to think making we I the people of next them. So right can initiatives staffed, just so And if and core it utilize we of I it the foundations. off retain like sure it's fully component begins first and a with then really that we that's that, have sure

Jeffrey Farmer

to on And overall contribution estimate you you share follow-up guys - the off-premise, what then are an same-store rate willing your one growth right sales think more off-premise just is now? to you of

Matthew Clark

it's of you think driving mean, rate would it it I that I the a as at pool. that's I say look But that look positive delivering is, the it's total if increasing fungible off-prem think piece that's I Yes, we comps at at increasing sales. little you math, obviously that think the when year-over-year our bit

Jeffrey Farmer

you. Thank Right.

Operator

question from James. Raymond next comes Brian Vaccaro go ahead. from line Your Please of the

Your open. line is

Brian Vaccaro

Thank good you afternoon. and

a couple labor could. questions cost I if of Just on

in health that of you the a in on year was this outsize that normal costs and pressure QX, how think benefit quarter you line? benefit would in last year's year in and insurance - I that last quantify a So if a could claims it as first of so year-on-year saw be and level saw if you much heightened terms

Matthew Clark

medical Brian looking a QX, think in grew back impact the when it in we're was but really last I year, little QX. really, bit at bigger higher was

So year pretty this is QX comparable.

bigger saw in increase I have was but was. what back impact I sure we double relatively normal that I and And consider think check provided. is to to would the that know what the the where QX, guidance be into for was that we activity. go I factored

bigger of quarter. growth and the what the look you guidance first we year-over-year much EPS the at sort If obviously in QX achieved in

Brian Vaccaro

given of when you Okay. total And inflation year? to hourly of percent specific X%. a your Matt, wage talk hourly what and in would - you confirm when labor dollars mentioned labor Can you labor be that

Matthew Clark

correct. Brian, that is

is the when So, total from the say at wage look of perspective out an the XX%. I and would hourly P&L, that in it low hourly we inflation

roughly of to, labor you same rate. have item. the Obviously, not do line the two-thirds of but it's So labor that's management probably increases

Brian Vaccaro

Right, okay.

guess try so seeing two-thirds - X% the help other the inflation, managerial XX% might the you I and we in of inflation I to be insurance. XX%, mean, that? inflation other on that X%, terms are any will if in what So bucket,

Matthew Clark

range X% think today. I X% to fair as a

Brian Vaccaro

you line, and Great, in low just us were of high and unusually year liability you remind Can that you workers' a then that? favorability out OpEx other there? cost quick this QX. maybe was can called you comp quantify last And year, the or lapping general one,

Matthew Clark

basis netted - it delivery, year kind this it it and basically that was in was going to offset improvement about the the kind earlier I'm in the an XX out. range say trends the XX point of of to in so Mostly question

Brian Vaccaro

you. Okay, great. Thank

Operator

of Oppenheimer. the Brian from ahead. question from next comes line Please Your go Bittner

is open. line Your

Brian Bittner

Thanks. Hey, guys.

just that? is the the some much of half to full-year implies main relates lapping half. EBIT the it it Is lower that growth guidance, in As half is first the second driver the What's year, Group main in the last first profit like seeing in the that is second overtime issues, second Medical issues or quarter half? growth half the of difference, the driver these the year-over-year and first you're

Matthew Clark

Hey, Brian, and there this other takes. puts of it is that's Matt. part are Certainly -

is G&A as I timing - think well. of there

pre-opening. Group legal little of just piece think as we second sort the about with talked and particularly half of of second the a the piece, the comparison biggest I think first the there's and But in quarter I of half. bit biggest the driver timing Medical is the was all

Brian Bittner

a its the how able much different you own…? business grew in Okay. probably debt the just way, And the it's year-over-year to asking are just off-premise much on how first question say been on quarter, growing just

David Gordon

the X% quarter Yes. about year. Off in permits total of first over was last

Brian Bittner

Okay.

Matthew Clark

from Grew to XX% XX%.

Brian Bittner

Yes.

that about - obviously? you're right as of far the as talking business As far as the mix

Matthew Clark

exactly. yes, Exactly,

Brian Bittner

it. you. Got Thank

Operator

Your go Jon next from comes line Tower question Wells Fargo. ahead. from of the Please

Your line open. is

Jon Tower

thanks. Great,

see like California. production Just could a that international works to you smaller sort on this that stores in and clarification not markets or some with that? for the Is markets, be domestic Oxnard, Thank geared towards only reaching off-premise company test moving why market, the mix opened applicable is if the XX% dark of only this then first this the or into footprint the stores kitchen of how a only - kitchens? out as to separately And international sales your of now explored either you. in glister

David Overton

we been want think Thanks as we well further really, closer smaller for can we're a idea wasn't for If around that possibly sites for question, intent, it's get what Jon. we'll returns footprint happens the at the get it we that original we The the understanding also international little other looking some restaurants over could but see but bit and time. to really us knows, how time, into and limit lead operating the do well do. we to who was opening the over store

returns scratch the to would because and be. important anything menu, execute to to add continue do most to can any to or today from that size then premise do and off-premise or not of not kitchen any additional to looking need is what and the we're we that's the of sales have think really cost other the And that designs we due I We that the have could understand their even complexity. look made kitchens. we those what goes we grow our and kitchen additional size, so do

Jon Tower

you. Thank

Operator

Your from ahead. comes Saleh from line next BTIG. question go Please Peter the of

Your line is open.

Peter Saleh

back Can of the that to I want labor much coming is thanks. front any in to of and us your of idea taking remove around now orders? off-premise. of allowing Great, you how guys the digitally you some those to give are house off-premise an come orders of for if conversation the

Matthew Clark

grow ordering talked ordering and today for service off-premise that to to is I a to up Sure. online is XX% call earlier. today. at set currently XX% that's drive XX% great great I offset hospitality XX% when the potential know as about sales up and total, was we of don't and number to mentioned I from open the Online the about seen and in certainly we've that it's We're that XX% that XX%, roughly about to any labor delivery continue restaurant QX - going

Peter Saleh

you pool? partnership you Great. partnering aggregators with on And other then just with guys DoorDash, or remain the the do with DoorDash to are exclusive considering expand

David Overton

We now. do contract with our for in current remain exclusive DoorDash

Peter Saleh

you thank Okay, very much.

Operator

go line Your Anderson next question ahead. Please from Group. of the Maxim comes from Stephen

is open. Your line

Stephen Anderson

Yes.

you some your seeing you're your where commodity those seeing the your peers benefit pressures? so of for forecast year, a see some they've their among but up up and left basket, As ticked I look in maybe of that lot you at unchanged and

David Overton

Sure.

most have market and peers. basket We probably broader much of a our

think less. it moves maybe I So up down and

and couple just other because swine been pork pressure little in big, we're - able So spot of so and got are the just produce up we've moving that think because But X%. balance, of of a they to in flu. some they of pressure staying categories, to I maybe that short-term bit offset down, nothing in X% a it sweet right across but of

Stephen Anderson

you. thank Right,

Operator

at there And further time. you for this joining. no are questions Thank

disconnect. now may You

The Cheesecake Factory Incorporated (CAKE) 1 May 192019 Q1 Earnings call transcript