CAKE - Earnings call transcript Q2 2021 | The Cheesecake Factory Incorporated

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Operator

Good day, and thank you for standing by. Welcome to The Cheesecake Factory Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I would now turn the call over to your first speaker, Ms. of President Vice Feit, Investor Relations. Stacy

begin may your conference. You

Stacy Feit

welcome second quarter Thanks Moriah. XXXX our and afternoon Good fiscal to earnings calls.

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

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

call In the adjusted which the and noncash addition, be related quarter we call, release David expense measures and acquisition amortization consideration the will and company's described. operational the and will use that, results terminate period repurchase to the basis, review potential interest contingent appear financial remarks provide second our the and rate update. cost David was begin excludes Matt site, conversion on opening I'll the as Overton results reflects that the most an into for financial turn to prior impact during of the to a and will GAAP it previously over this With Overton. then briefly update. some provide the of June with presenting comparable Gordon reconciliations conference on an will today's our and stock outstanding then Web non-GAAP on to stock of company's explanation convertible XXth. call common of preferred quarter our conversion during An in our press swaps David directly measures

David Overton

restaurants Comparable helped XXXX. at record X.X% second and Toronto, indoor achieve flow generated Notably, our increased dining at of country. restaurants XXXX to generates Father's revenues significant the performance cash our and fiscal This the quarter the restaurants at demand of of level capacity million stronger that this continue Thank to the we except operations Cheesecake we Day year sales spite Day see on some us across locations, of relative Mother's capacity from quarter. in second Cheesecake Factory you, versus sales Stacy. Factory pent-up the in dine had restrictions. Al to indoor $XXX in

Day dining In sales Mother's fact, location in with one capacity, on for XXX,XXX did tremendous just the had XX% indoor Cheesecake brand Factory. affinity underscoring that we the

the channel sales again premise strong during in strength the second Continued off performance quarter. supported our

July toward as third restrictions the XXXX, versus With metric in quarter increased we restaurants consistency week in and July saw we restrictions. seen and Cheesecake of into further the are no this sales second locations the number markets comparable to month. XXXX at with Factory through this operating sales comparable XX% Fiscal have XXth date each quarter, end nearly of indoor other of of dining lifting a strengthen the all our California

the Factory and food sales for delicious the restaurants expectations performance experiences performance results across a leveraging quarter. second the strong memorable our did exceeding This restaurant delivering including managing productivity. job efficiency levels, guests indicators, drove at our margin our and also operators strong labor Our key great and Cheesecake during level

and opened restaurants quarter. in opened Atlanta Child second Italia North San two front Antonio during the Flower development the in On Miami and

We locations Franklin. second as a opened area expect year. XX in to open now on new we remain restaurants Just Italia last this our many week, Internationally, across North in concepts track location to as turn David as Nashville the open call agreements restaurant that, Cheesecake licensing XXXX. Middle Gordon. two I'll as open as in many to under the East Factory With over now is now one in anticipated to the

David Gordon

Off Thank When quarter a the tremendous average deliver to depths quarter July $XXX,XXX we we date enabled to we of date strength on period. the off-premise restaurants, in at an to the unit on has our year $XX,XXX, to with results weekly Factory Cheesecake of $X.X Based the on XX% annualized date comprised sales per weekly so of at ago sales on basis. you, during David. where promise us COVID-XX, of approximately reflect to on are nearly annualized of who basis per quarter approximately for grateful average Cheesecake average equating sales sustain the an sales Factory approximately the this were million unit equates million to to teams nearly second restaurants. $XX sales

a softer third-party the for restaurant and seasonally industry providers. generally channel off-premise As delivery a is period reminder, summer

XXXX. average context, So for level same additional weekly during that off-premise period level is the double about in saw sales we the this

performance, strategy. forward value platform, with The and technology With our reinforced next a We and as through of new we the rewards better restaurants, to goal brand next to to launch CRM of of end raise messaging for database to experience for the the marketing shifted year. to more significant completed frequency move are develop with the order driving for The amount guests, Cheesecake also drive initiatives. of to website plan expected that guest generation In to with a revamping right time marketing rates conversion our email view orders. and our the [We] Pre-COVID, to program program our is a had our we Factory based research brand. profile the now is Cheesecake a the sales sales during success marketing brand were consumer in our these evaluating to on platform campaigns targeted the to COVID including targeting launch enhancements Factory back that deliver the more we've our primarily and potential strength are migrate of to we we of upgrades driving Factory a the work and hand robust our Cheesecake rewards to by online in forward well. lifts year. the launch program interim, site transition and average to hand is this commerce a a system

Turning to staffing.

XXX Fortune for also We the recognition following Xth list just are pleased Magazine's recent for were share as Companies work our to to year. for that consecutive We the millennials. recognized on workplace best Best

our of employer these believe demonstrate as choice. an to position continue accolades We

removed the made labor market restrictions as not has Cheesecake for competitive, While and we remains restaurants. into dining have fully encountered towards very meaningfully some performance cycled challenges progress fully being the And sales pockets of sales good have staffed the staffing current levels. Factory we at markets this our

guest we Cheesecake Notably, Italia, relative we in satisfaction contributing We've performance the period at to the the are the quarter believe second Factory lower staff In to and to of needs is our fact, manager experience. North during same at both seen in and which restaurants XXXX. we satisfaction sales which increase believe versus we same At pre-COVID time are retention of to the positive first guest have hiring also levels, time, leading quarter hourly positive saw that guest the in a brand. staffing the we strong contributor rates continue call. now an a above maintain industry key

trend, messages seen sales performance quarter sales. through sales of celebratory have approximately comp We levels off our we date back XX% XX% and to to a the July brand traditional with approximately in focus. tone consistency store based this With XXXX local our shifted marketing sales third comprising with but primarily XX versus with premise have

Italia's FRC the stronger and and second reinforces long-term third quarter as performance to sales during further the margin We for strengthened. continue to the believe North brand. quarter date sales performance have drove potential well,

second We performance of are we and continued seen by concept’s to strength quarter sales the third date. all have our in the quarter, very encouraged during

turn believe over continue high strength We for well call growth our to review. for operators financial Matt the I and will now brands, of with best-in-class the positioned breadth are And the given the future vehicles. of that, quality we our the

Matt Clark

Thank you, David.

year-over-year. premise XXX% contribution sales including up quarter external were Factory record total million. XXXX. second period, sales of FRC, North sales revenues Cheesecake increased the second $XXX,XXX. including total comparable restaurants Sales Relative period. XX% a Italia and Factory Flower Child, the quarter totaled were Italia and Second at Off XX% from sales, during the increased year-over-year North million fiscal versus $XX.X quarter. XXXX Revenue were comparable XXX% approximately to sales approximately comp at during in the of bakery operating the million represented $XXX.X $XXX restaurant X.X%. XXXX weeks Cheesecake up And were per FRC

note Cost course sales going I'm the year second expenses. COVID detail impact quarter disparity usual, that revenues basis significant the level sales Other Labor year-over-year of XXX of points, to given in from abnormal drove provide compensation. the due points, But X,XXX sales leverage, year-over-year variances. to in on last primarily by declined sales mix expenses driven and pricing offset points, incentive leverage. partially higher by XXX operating basis declined primarily reflecting primarily basis declined by leverage. restaurant As

year-to-date we through margins drive had We at in mature remind to at impacted opened yet at North following the the leverage have second saw level steady Factory quarter, the in costs of a restaurants would Italia quarter of restaurants leverage, by the reported and strength locations restaurants three period. primarily XXX points, sales with the and million new new didn't to percentage and reached number unit with the margin Child department trajectory second Our corporate accrual. similar locations prior levels, we and $X.X G&A we sales but Flower to other development restaurant levels. restaurant bonus the open do the Italia higher basis that operational have operators opened North state were aggregate second whereas Cheesecake the performance that Two margin. year strength million expected quarter haven't the want period, any North performance our newer which restaurants costs quarter prior in year sales Italia during also offset management compared bench. associated had due Pre-opening as locations one in a declined $X.X partially to sales everyone

share income Second income net was quarter $X.XX. GAAP $X.XX. diluted share net was Adjusted per per

the CapEx from cash the approximately ended $XXX a approximately million during to liquidity $XXX the second a generated approximately unit $XXX on sheet. the development. balance previously during second and announced issued maintenance million Now million, credit $XX second flow X.XXX% $XXX Total following quarter. was during and with turning million required amount the available quarter company convertible quarter second million drawn of million The million of repayment $XXX flow the and due totaled available activities $XXX million our million, balance quarter, including debt facility. total XXXX revolving quarter. approximately outstanding during $XXX of new cash of revolving including on operating of notes and for principal credit senior We our approximately facility, cash $XXX

offering of We also the X.XXX million completed common shares the quarter. stock of second during

we fund preferred stock dividend. structure the As the convertible the convertible and approximately into used senior X.X remaining million simplified preferred notes repurchase disclosed, stock previously stock. shares of of proceeds common to of previously convertible common of XX,XXX future preferred capital the our shares from outstanding and offerings the the shares eliminated net and convertible stock conversion This the XXX,XXX of

For GAAP was quarter of be XXXX. dividend of consideration fiscal an million to the assumed second during paid the total accounting $XX.X purposes, deemed

you dynamic, for very keep given underlying environment be ahead, to the Looking we want on expectations to that operating XXXX. updated continues our

first commodity of for cost Following the we back X% benign of expect inflation the year, half the we total experienced the of currently approximately half of year. in the inflation sales

of points second on the other believe basis the regard we Factory spend take that sales fund to we costs opportunity the for in to average, with up strength level. to factors expenses, at year. quarter the coupled to a X% the half the slightly from and business in second With the We remain half the FRC, of commentary, Given contemplated. of higher and the half have sufficient back trends in of the operating with believe rewards labor the could than as for year, second normal Cheesecake associated to the the anticipated deleverage the be year line inflation XX menu to we on sales line restaurants prior is currently wage seasonal by the reinvest currently the second given pricing sales with quarter Cheesecake in program Factory building. inflationary plan percent cover the and We this basis our level

our third million as of to be and development, $X half With we $XX we CapEx maintenance now approximately this new We to many expected restaurants, as continue about new as of the to the XX tax year expect $XX We remaining continue half million to to we unit estimate support fourth G&A full expect back rate to $XX anticipate expense for now and for open restaurants quarters. be of development, to our full respect anticipate million. X%. And year, preopening each CapEx approximately of openings. with in unit million our well second approximately budget on approximately in the required as year for year the the the

to key further sheet. on we comparable share have margin With we'll take this We and believe performance our take to accelerate sales, our focus to your level restaurant us development, bottom our questions. ahead, line will further said, driving recapture including the as continue targeted we sales financial X% new Looking growth continue unit also drivers, that and momentum to balance drive leveraging results. solid in that enable XXXX to momentum in and unit market

Operator

[Operator first the your Instructions] Nicole from Miller question And Piper comes line Sandler. of from

Nicole Miller

first in-dining room off-premise in, kicking Just maybe see you're to or channel. on it's with in-person above up question, made quite component XXXX net-net whole great the some things not the

equilibrium So seeing that room reaching the you how that the you're back today? do given capacity think behaviors dining to get about how and you in

Matt Clark

the It's when mentioned. that a XXXX really that we current at run sales off-premise the had back we We're from piece basis. almost coming the to in QX that interesting from you on-premise with sales in look rate orders

we I the average check driven go bit as by So in everybody capacity to still actually else industry, on-premise little those similar because sales think have are to a than more historical.

still to have components, think frankly. I both room we grow So

an And forward. both we there's at will, as channels equilibrium, still so if go opportunity you to drive

Nicole Miller

on cover going look the basis COGS for the last that just to that step up net-net so level just point get you back level you half. the delever store with Are that little right? I margin. we XX level need wages the to -- will piece XQ? margin so then sufficient the -- like comment, is modest. X% does might are margin price, to I'm that's like mean then store be is can And get might Operating just modeling might up down ask, clarifying one bit I X% we inflation, modify store menu be But percentage-wise. in points, guess a we cake a still for made

Matt Clark

wouldn't I think I say it's a step down.

wasn't trying been we're year that since good sure make that it's seasonality I business. think ups to everybody modest remembers is the some many to and last downs there so guidepost a and

has QX So margins. QX looked like never

has at the looking for brand margin Cheesecake Factory QX so year. historically And a been every peak

movements So there's off just be of to QX. going

trying we’re but hone be to at and look could so less commentary for also You basis, more that year applicable over just different, last on so inflation was the year it a might year because applicable in.

at year, totality because at but still the solid the margin a we’re of it you not just over I company a look may improvement smooth looking back XXXX, seasonality. half think for of it as of when some be pace the

Operator

And your comes from of line Fargo. next the Jon Wells from question Tower

Jon Tower

referring Just company for last you that, margin that clarify, just better you Are following Matt? margins XXXX. mentioned up EBIT versus on to point, the specifically have you to

Matt Clark

Yes, correct.

Jon Tower

little comments. here the into bit a investment taking And just some of for the so some of

to investments in also in or rewards that's that ongoing us the it then mentioned and kind forward? which something you'd can as not up half there that is the going quarter a so of That's other is into some quantify that going only? in maturity. the drag to it way to tied we be that program our to those that can onetime had mentioned purely they're idea back level stores relative spend the that point store that are OpEx 'XX half mostly second, this You expectations year, investment you new because aggregate of line, potentially for blend Will will some on margins, Is acting one. bit the investment a back of a And the move of up technology. second see

Matt Clark

Italia, So The mature Italia in did line North the right that and on the referencing of there much first is provide timing the Cheesecake one, margins Factory specifically with buildup and just context the are restaurants. pretty North the referencing newer in some margins, So right? we difference of the

what There's respect With specific back equivalent this And really has see expect brand up the that half much to that's investment, time. over totality would in as stores the it's to margin. of So seen all to the the we of year. ramp pretty revenues it we basis, we then be expect get it. to the costs on happen the to It's that an going doesn't have to provide incur program until But that some going. but we upfront accretive. would ongoing to launch

the specific really this for year. it's half So back of

Jon Tower

kind And it's the similar going of program on where following other think across to utilize should that's it Is we the plan How Cheesecake spend brand, itself? that then focusing be going or something this solely portfolio? guys on is on you this like to just about to it and point. up based Factory programs

David Gordon

have it in Cheesecake won't be at definitely As Cheesecake The the point for on it you share brand only next Factory be certainly, as year, we will might our we time, across industry, it And towards for similar what's more And Factory. current will get details happening as that's necessarily we will. to this to anticipate, strategy. be

Operator

question Jeff Haskett. Gordon from next your Farmer from And comes

Jeff Farmer

several dining almost the basis. months a national of what's on like indoor we're looks return It into

of terms incrementality the is So of and those your seeing I'm the numbers right on just updated sales? sustainability in what you're off-premise now curious thinking

David Gordon

the is off-premise they we we as QX, states we very quarter-to-date XXX% at had that they high think, too sales, those as capacity, at mature percent. And have so seating continue solid. remain At Georgia, to XX% in are of were said, have look of have at open longer to looking that more et mid the end I very, XXs cetera, far they maintained XX%. restaurants where Well, been Florida,

that So we to execute with we the the the of value portion good growth. continue still feel of a along ability our the of menu menu well that hold pretty and will off-premise very offerings to off-premise the bullish

Matt Clark

we're we it's where The about other it, double in up to that XXXX. think almost way just Jeff, were

And will bit as the always is talked to so now which continue AUV little we things the mean, percentages still move we've at I at one about million tracking off-premise. $X.X million $XX and we're a great. the is right of regrow on-premise, on we're level

think also. talked we're even about $X rooms that's important of reopened always for So keeping still and an I yet fully We've we dining piece $X.X it. million of past it could if the million month, keep with

Jeff Farmer

And one question. unrelated

of terms not? little pretty seen how here, Cheesecake Oklahoma a COVID So early or in sort has Any like jumps but case behavior it counts, restaurants. consumer bit changed that have of in read markets have where it premature looks has some just Missouri, on material dose Florida,

David Gordon

to certainly out want long will tell. happen really country, of much right an I term, here who mandates impact your point, I to went think think effect didn't too mask get in Lake effect into to it's across Certainly, Jeff, County, it's People it where to say. seem no to It's soon still there. the a have appear early the LA to in back too little or now what early. knows

Operator

from And the Brian your Vaccaro James. line from next question of comes Raymond

Brian Vaccaro

Factory on September, July like can a XXXX the $XXX,XXX the at through seasonality just a appreciate third kind the maybe August or week looks the good what Matt, you of there towards and quarter-to-date us have base comments the seasonality? remind to and quarter comparing in moving Cheesecake brand. I

Matt Clark

that it's years very not would XXXX, one was it say, And every I've here to just been I prior is of the seasonality the COVID, predictable.

pretty month a the drop range. XX% meaningful a to looks say September, August July. It's I'm pretty back-to-school then you January. similar to hit when of going there And XX% weekly like is it's in in lot So sales. average to the

on what each equivalent pretty the across an average lower four end weekly September is you QX quarters. movement. are with quarter slightly that of up is just basis because So sales QX the of than

Brian Vaccaro

think is on quarter-to-date North Italia, up in said running you I period And XX%. North the

the of are the at sort 'XX. Just page sure all provide quarter we period? AWS same to on to date make context in have the you since North Can to don't where we're historical back

Matt Clark

We are AUV. running approximately $X.X in million

that's we're restaurants to weekly So But I'm was that seasonality change. it's looking million math. historically, on $X.X it's sales which little the it in some bit the in virtually have for that to I do the was my And AUV, a of referencing those quarter, been the Arizona. so of $XXX,XXX third level as because about same have of the focus here.

if by So that. take you'll you divide XX, get the XX

Brian Vaccaro

second. lastly, the then ask cash wanted sheet the to just about on balance And I a flow for

I get in to the spot under XXXX. if from were serves? reflected performance ops $XXX a that some think in I in think expecting balance Act Was point CARES memory or A said from you cash tax you ops QX? refund that at cash

Matt Clark

has the not decisions. business yet. reflected the tax to and our timing changes some of the We've the adjusted filing some of of in returns reflect of some been It

also, that needing at a are some will time and approach it that way out little little then point of obviously, of tax best from cash not the we've come to deferrals that. payroll bit, reflecting in the so And this up a And the of repayment also. bit pushed the benefits there's on

none is balances. yet our that So of current in cash reflected

Brian Vaccaro

debt. the on the think, What's sheet, of Matt, million, total million of of has Historically, in cash sort the company much the the debt. way not just And $XXX balance had and the I any posture Is $XXX prioritizing and in beyond capital term core how COVID? leverage about growth targeted just thinking or cetera? unit et technology, a new investing and ratio you view obviously internally exiting the allocation longer you're there of are on

Matt Clark

which we generating, obviously reason we revolver obviously do see as any be new anything would the convert, pay I would cash flow down to, say, go. with I that that effective intention we're the would with is don't our unbelievably capital. the great

So sure would will very year. capital would amendment Board through restarting the still the and will year, revolver, once which foresee form We're repurchase, because dividend That through be we programs, quarter. the the we capital. I be that clear some and excess including we return of some have of I'm that the in the the share interested an have next I in through in for probably will revolver assuming the parts all think that of hurdles, clear early go already this we second

So that won't be a problem.

would early imagine be that we next I again. year So would allocation there balanced part towards of

Operator

your North the of Baird. question And line next comes from Drew from

Drew North

I up to development follow wanted unit on the pipeline.

about You've the and period. now that XXXX, months from X% out discussed unit growth target XX of in you're

to thinking the follow-up, any So has of as unit is pipeline process Cheesecake pipeline, any the there or been in as color around a that shaping I up. pipeline going company's estate just guess And in this next the is provide and target you real the the rebuild development wanted strategy a other forward? hitting the for how you year? growth sense I of to terms then there visibility could for or get brands, change X% the

David Overton

there brands when good Flower FRC that center looks strong of for pipeline continues I feel availability be lifestyle for looking in news think the to Cheesecake Child, is X% other our a The to other location good strategy brands. a out traditional Factory growth, as example. real that comes well it great the in and estate North is as even the unit development we some see across or and smaller whether some as good some an mall centers A or the of sites, we and about just

that appears X% XXXX looking be far. we really bullish to and So thus pretty on are number

Matt Clark

from pre-COVID of opportunities think terms than to the Just much there's unit build distributed FRC North. coming because and that is pipeline I and ahead growth tracking it that between obviously, were may we've to Cheesecake X% come the Factory we're to out, we described probably of total X% in we in think said are in able the I have it. and where from being a up. further diversification pretty that split sort equally more how we've then we're meet And pretty

Operator

next Goldman your of comes from from question Sachs. line And Michael Rothstein the

Michael Rothstein

like bit on had in cadence something guys your you a pretty labor back June average of California June reopened you well look the like through update in little obviously Just of terms from have stores Did June? quick then progression -- labor. And coming a the to one the does weekly and what about sales the running adding talk at and going could quarter-to-date? end May when

Matt Clark

played mentioned. mean, I perspective, associated predicted cadence the particularly exactly California, would almost I scenario For with we it the think you reopening out describing like have in as

at X% So we XXXX XX%. were at did our we running we're the we comp quarter business update when refinancing, versus and ended the at and X.X%

and XX% XX% in talked And XX% our being delta no restrictions between about the California to they're so of about to we XX% business. had

it that you anticipated. if do played math, the with so the exactly we would consistency actually have And out

it perspective, is reopening. our approach to from think add labor I commensurate a with to the try

to Certainly, with continue the are to be at sales fewer to needs As Gordon than our were call. now they time the that, staffing able pre-COVID. we want we strength, now support slightly have where mentioned, of we above did David our levels last but

So dang popular keep It's we've job. to just that done we're good up. a have we so

Michael Rothstein

XXX% those more look capacity running still mix. do seeing high AWS on-premise On like Georgias, XX% one. What that those is the a high? quick line other with there, Floridas, that off-premise where the states history in like one are you're also and And mid or bit to Missouris, little

Matt Clark

using in running to to work the $XX tend million you on average, you the out down we're our break average. pretty So geographies if just close And total averages.

big versus California, Florida you that enough them If not different. it's group

so into we're below $X.X back an if maybe bit a would be. we're said, much doing off-premise and we kind like that. million on-premise just can doing And with I on-premise, now, the of running it's think on the little you pre-COVID where line And pretty basis in

Operator

line Rutherford question next the comes your And from of James from Stephen.

James Rutherford

if I scaling about Child, could. of It XXX% your I curious potential about nationally. priorities nicely your have year-over-year. like very that the just over with start rebounded term with business, sales at Flower I'm wanted to and up latest brand thoughts that long that looks

David Overton

think I in XX we about in every state, into. every to XX geography different of restaurants well sitting just great we're type in It Flower still feel Child, perform going about that really and continues states. it's today

So good about through has performed we well did it. It and COVID. perform feel well

speed they think a execution. quality very high with do great with do They food. job I and job a great throughput, off-premise it's just and

bullish more this than Sam we and here into as take point. it aspects. Child, just in over And next might operational in and maybe our continue what we're we'll continue short move involved year we'll team as team when his evaluate have we So we grow Flower the completely all members to to pre-COVID were term,

James Rutherford

ask XXXX, it look higher about levels the I And basis then in sales in another XXXX on here, XQ. but I If XX level quarter yet one you're in at several from down to talked that I than total wanted you've margins about at different angle. just times restaurant restaurants here running from margins, a know total, are your points

takes talk on about operating and other and other in think you if forward should the is variance how about the operating of costs. there puts I'm of can on most think curious we just I go kind that? the

Matt Clark

was course, pre-acquisition. I think of because there's some -- there's the right, movements, also XXXX

reorganization some there. bit in So little maybe there's just a

also marketing increased around operating I and/or commissions obviously expense think piece, delivery. the includes other

that there's of things. up significant in been side a So move

we the higher of go-forward I to that the And half if the third channel. look that of like And in when sort expect and piece. XX we across sales the said leveraging points in of just fourth a for think and labor, rewards you line as as mean be and both percentage quarter at on basis cost of invest it delivery sales XX we program. the we general, slightly basis, just that, the And the in obviously, of acquisition it's year, for to sales dynamic But line. in look I think items, other on would a a by the back so the we investment

Operator

Lauren from of Silberman Credit line Your next Suisse. question comes from the

Lauren Silberman

with sales times able there through So $XXX,XXX as of What's has the reason you down guess, with recovered aren't come pointed above expect average maintain the to being Is just come these opportunity your weekly confidence any the nearly we move off-premise year, in $XXX,XXX on then going context X see seasonality? $XXX,XXX? out I pre-COVID. should volumes down the of that On to even premise the is average weekly just at sales we bit transactions in there the the fully volumes forward? off seasonality on-premise of exception on-premise recovered and rest a fully perhaps

Matt Clark

I I still think It's stability one. wildcard very I comp the about of feel mean question. the a the think we trend. it's good that good

as taken will which the play on different sales. weekly has on I that can average of out, predictability typically, little I and March middle and know, average plenty Factory, September still of And might you across And bit have really high then hallmarks it's But the really a that sales. so really we December, now like And you capacity. we October as earlier, are feel of be weekly noted have from and the as dependability. in characteristics think until are the Cheesecake business the progressed really,

to there opportunities channels that sales think still I continue So in those drive to of going both forward. are

stands goes see happy we'll as with So trajectory it today. it we're where but the

Lauren Silberman

on picture brand. a Factory you And believe historically, potential. then Cheesecake just about XXX-unit I talked question bigger

brand? XX last the the anything months so, and you're for the thinking unit changed how has Over about or that potential

David Overton

has not it say I’d changed.

more flexibility to our number. can Cheesecake we Factories have that XXX a and ability that us think that little I sizes gives hit even of confidence probably different

square with great large the well have up way that's in some to performing very margins, to all that's very, Factory the size Oxnard feet the here X,XXX Cheesecake We built close new cheesecake.

So that for target very we XXX think is still us over time. realistic

Operator

[Operator Instructions] Jon line the from Tower question Wells comes Fargo. Your next from of

Jon Tower

thing Just but circle am the on back to hate to wanted margin I be again, dead I horse, the curious.

incremental like think up, so either. volumes quarter in the the to margins program doesn't I idea levels. be with sound case XXXX didn't talked -- that around obviously, fourth roughly mean, above the I nor potentially XX% on quarter the wasn't third think I the previously, about the we’ve that's of level case. rewards It necessarily going this investment and tie Clearly, or seeing

incremental again hold that beyond if level XXXX through other to labor [Technical that can Difficulty]… So going flow I'm into impede or inflation curious and like inputs

Matt Clark

them. …a lot of movement between

quarter think of quarters, of I EBIT three the level third combined second, X% that and in to everything fourth this at rate for back run we're the look for XX% we at when that exceeding year. the Certainly, going is at sort company the of XXXX. half right doing be now

I make So does sense. totality think that in still it

more look versus period within the tough always bit it's over and of pieces a one time. maybe at think an that it some I little quarter at you looking when of of extended

Operator

[Rahul] Your JPMorgan. Instructions] comes from next from question [Operator

Unidentified Analyst

mean strategy on if John upon here. initial around This bit expand you more is have on time? of part, on the a and Two strategy, this G&A you the a be next target for and to what for term the comments? a given G&A year there about is the term? would change X.X% second in talked over Ivankoe. want this this next-generation And strategy in marketing touched marketing spend? this would you long could guys know question year. just how Can part sticky any Is the specifically, Rahul off-premise the X.X% I you the and context this marketing, expectations you for new layer the And long

David Overton

Matt David. on it front. is G&A I'll turn to the This over

to strategy a into can while learn channel we flexibility that's whether reason rewards the off-premise done we a to be into that today, ordering spend as guests, time spend want we driving be to as target to a traffic through by our decision could term did we be able no their longer our we'll that overall or will those of continue little off-premise will restaurants. we back is the over have that and generally, again key more won't on how preferences habits go opportunities that about component think bit the and rewards, use we way. we make why which grow any to done throughout a guests understand be and do hopefully, COVID, the also, I details more if there's about And won't in targeted

Matt Clark

our all, at expectations no so impact G&A change those. doesn’t It with

Operator

last you our do any remarks? question. Speakers, that's And have closing

Stacy Feit

with for the next joining to you quarter. We connecting look you No, call. forward thank

Operator

you And today's for conference Thank this concludes participating. call.

You now disconnect. may

The Cheesecake Factory Incorporated (CAKE) 28 Jul 212021 Q2 Earnings call transcript