CAKE - Earnings call transcript Q1 2022 | The Cheesecake Factory Incorporated

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Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory First Quarter Fiscal 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President conference. and Vice may Relations, begin your of Marcus, Investor Finance you Etienne

Etienne Marcus

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

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

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

and call operational that, financial call will a most described. With David David some I'll of briefly In impairment and financial measures update. Overton acquisition-related GAAP on a assets which this opening press basis, an lease comparable presenting to non-GAAP our today's reconciliations exclude uncertain an Overton. quarter tax as update. directly turn for our on the addition, fourth then reserve of will be as appear and in results with use adjusted Matt provide measures conference explanation the call, we results review terminations, amortization compensation our contingent during as Gordon consideration, and David expense, website, of over will provide release well to will begin An our positions. previously and remarks,

David Overton

XXXX increasing in total brands for capture quarter same our XX% strength We in of and first solid over the quarter, demand XXXX, to the Etienne. our quarter another delivered consumer with underscoring the demonstrating you, sales Thank the of share. market ability

Factory to Black comparable First the continue in at quarter increased KNAPP-TRACK outperform and first the XX.X% casual to both of quarter restaurants dining indices. XXXX and XXXX relative Box sales Cheesecake

we to Our that managing building Fortune operators one guests job did They great where delicious of our fostering earnings And by restaurants memorable a focused the of than Companies for members we ninth levels experiences employer continue Best year and pandemic. just an recognized Magazine since call, recently a on now improved the is For the sales. staff priority. reinforcing approximately we row, mid-February, our were X% as an their am last the Work of further a delivering more proud our have I for staffing that top remain environment did industry. prior restaurant To point, in that to XXX in have we to choice be

the Our laughing now the as our all XXth to same a positive mind dining reopening this comparison, with we time pretty Factory has is the Cheesecake first sales like the of versus quarter quarter in through for like April in second at rooms. X.X% of comparable momentum nearly are Keep at good XXXX. period continued a sales indoor

openings. of current supply effects pipeline, have while sites the the remain been environment development, the and approvals timing permitting chain, working jurisdictions we that on our of our of we are are the having and local governmental cognizant to Turning on all in

other five Factories, locations. Flower including Italias, Child As to including North such, as four open many as seven FRC XXXX, we expect Cheesecake four fiscal XX XX to new in three year now restaurants, restaurants to to four

Despite agreement. many X% restaurant annual to we of our up are -- of Factory towards are also our development control, growth expect which currently continue ramp We a one unit we licensing internationally to challenges, Cheesecake goal. these current under out open

of call, investing a the program. dividend our In we in ability in to are and recognize business, and I is given unit to addition reinstate our quarterly the growth, face our and the we'll sales paying environment dynamic stock generation we cash continue strike, purchase challenges time that substantial these competence take remain margins plan supply and a summer appropriate and pricing in the inflation, the high disruptions. the with as four-wall to market, to do commodity tight noted Despite our over chain committed we further protecting during labor headwinds, last so. to

will I'll I now resilient continue operators confident to call Gordon. turn am our operating to brands environment. best-in-class David manage volatile over the Our effectively and this that remain that, With to

David Gordon

our you, manage David. to commitment and We're the our sales and excellent hospitality, service quarter to pleased expenses. execute first ability to operating with operators at levels their capture sales showcasing very growth, Thank incremental highest and

quarter As staff to to both David compared first we once as the manager drove retention leading improvements mentioned, well the sequential industry both we levels. In staffing our as to levels Cheesecake Factory hourly where and again relative pre-pandemic rates. quarter, began improve our to continue

levels. now Cheesecake XXXX first first total of continued annualized channel, this sales hourly The weekly With from and And channel XXXX We Fact. sales. above for pre-pandemic hourly to are staffing for the of positions, prep cooks, sales the for pandemic solid ratios application quarter trend over And off-premise at the the continue and XX% end including quarter increased close levels twice highest see to servers. average several neat are and Factory X% began remains levels the to cooks, about try steady. by levels. the positive flow. applicants since momentum accounting and annual totally X% and to

versus in quarter XXXX Italia, sales grew an in day turning with XX% first impressive Now, comparable North geographies. to parts improvements all all

to realize with differentiated through have levels, of with true at we to our second comparison our our XX% approximately levels, sales XX% To pandemic FRC to of comprising earlier nearly the our now also as products team our our dining ensure to first April The vendor delivering contribute XXXX our are continue minimal they our David's during our strong including comments, this need similarly a strength be ability equally topline is our strong quarter-to-date partnerships quarter, XX in performance guests. menu offer and the operators enable on rooms. North. the to supply us approximately restaurants disruptions developing sales minimal has the of product as the comparable to distractions, in worked us indoor these each with confidence lapping and to quarter important, serve portfolio versus allowing reopening giving operational of hospitality drove started all chain off-premise up sales laser-focused Reiterating and large guests. service exceptional throughout supply the growth. of chain has tirelessly network, overall The long-term to brands our

update Before provide responsibility our I turn I corporate some wanted efforts. it an social on over of to to Matt,

of guests. the of have the increased. well-being We the established track our Throughout over local operating only we've to all to the leading and past two undertaken we our faced with resolve the share an efforts responsibility. our alignment and And years, we've record restaurants all given staff and sustainability, challenges of has safety environment of the social to and pandemic, environmental, our communities, protect contribute significant and staff,

benefits, access special by Some the receiving mental of providing vaccine booster themselves encouraging sick staff health providing pay enhancing COVID-XX efforts include shots, no vaccine at pay, and counseling these our keep safe cost. to and to

social We on other have and many progress also made substantial environmental areas.

Let me highlight a just few.

the three working our of the towards of and eggs XXXX, cage-free our we transition of eggs are cage-free ahead end to years for now sourcing committed schedule. restaurants by On front, to sourcing bakery operations XXX%, the

on to the committed agreement since the emission XX% line recently front, per On by all adopted foot and environment and negative field. by our environment training Paris out including its And several portfolio, the color carbon mentoring belonging of warming X.X programs, steering we degrees limiting committee, to emissions de-escalation with XXXX, of our Agreement, commitment almost lastly, increased gas and implementing in new change diversity and formation programs, diversity, reducing with equity global our climate square inclusive to international Celsius. managers and leaders rolling have we've our to an intensity an greenhouse impacts address inclusion our fostering for restaurant of the reduced front, inclusion program, the and in

towards working zero net communities. reduction of our than aligned staff, thing report. annual of by strategy, and are more This degree outlined emissions emissions efforts X.X achieving the social are legacy of greenhouse additional the for an We doing goal Many natural guests, responsibility of gas is with right our in corporate our our our XXXX. and XX sustainability our the year of evolution

We the expect coming in weeks. to publish newest our report

thank to delicious, and experiences our to review. their our navigating change, with results the I will staff these our Of will through operational would over course, Matt dedicated be for continuing none and memorable of teams. best-in-class And managers without like turn I deliver financial that, guests. to call possible now while members our for resiliency non-stop for of all

Matthew Clark

David. you, Thank

both and bottom. have more topline Our stability the results predictability reflected we the throughout quarter than on first seen pandemic, and

and costs. operating and line negatively inflation, to total our That from related hourly higher in million drivers income expected sales an Specifically, our natural by key compared was in impacted was wage total time expectations with $X business approximately slightly COVID-XX our expectations. sick mostly gas said, than were

to impacts However, we be generally these believe environment-driven.

specific details some quarter. the to Now, around

were the at increased Cheesecake of XXXX. million year-over-year. first total external North XX.X% FRC, contribution sales $XX.X Italia the Italia totaled XX% operating million week year-over-year. during increased sales Factory from Flower at in Child comparable $XXX.X quarter restaurants And quarter fiscal First were and per North million. comparable including bakery Revenue FRC revenues sales, including $XXX.X $XXX,XXX. approximately Sales

Now, moving expenses. to

than a due course, relative leverage. from sales that, detail XXX lower points, partially inflation two corresponding the in prior of and by Other points, continues Cost operating primarily by going primarily the years, year, expenses the associated recorded revenues, we quarter, restaurants and of an second three over opened leverage higher sales first there increased quarter fourth quarter lapping this primarily but charge due driven by first given $X.X primarily sales and pricing. zero basis the some commodity $X.X also percentage the some the lower after-tax impact million on COVID openings the to partially disparity basis offset versus outperformance opened provide first FRC offset costs note the Last basis quarter primarily with in first expenses, usual, compared general XXX and sales rates of to day margins. to $X.X In during period of by driven As wage acquisition-related points, insurance year. with to impact bonus of the items. related a claim I'm a basis activity. XX year that prior were higher Labor increased year and menu period. by quarter declined as accrual to quarter. leverage prior in in to the significantly the be declined in million sales year-over-year to Preopening points, past to G&A year XX million

per common income diluted GAAP share quarter $X.XX, share net First net was adjusted $X.XX. was income per

and revolving to totaled quarter liquidity of $XXX including approximately turning we and million first earnings The Now, be the million development sheet. of of from approximately credit flow will during the $XX balance was not ending million providing our cash Total quarter, $XXX million. unit and facility. a sales activities million, approximately Well, million outstanding cash CapEx first new generated available during guidance. on and company $XXX cash debt with maintenance. specific available $XXX a operating about balance flow for total comparable $XX

Given be to continues very that operating the environment dynamic.

year million have continue includes that could Factory operating impact over this similar balance last quarter. our XXXX, Based will the for revenues on $X.X $X.X with this performance, Cheesecake updated week to to $XX providing some more surges, underlying anticipate thoughts total our trends, we billion, would the further impacts nuances, of We Note year. including we timing the from and million. on no for AUVs reaching assuming approach approximately quarter material first of virus expectations to our be recent XXrd be the

Next, commodity in over which a basis, inflation as has an happened to on year result our we now expect annual mid double-digits of XXXX, of for geopolitical fiscal to a X.X% turmoil. prior low X% on marketplace the based outlook the represents increase what

driven the quarter. the net and as moving through for in to for ending with we to absolute X% year, continue lot fourth labor points cost and mid-teens known high trends to well of we with parts. quarters On as be to now pressure the basis, lessen unit modeling year-over-year and single-digit pressure market through the different dynamic inflation of of increases, model Inclusive continue by to the We with stable go wage comparison second components but the continues we're variability an quarter labor primarily other pressure latest model corresponding year, to commodities the the when fairly of as inflation commodities also mix, in channel price about minimum wage XXXX. labor. a The factoring total be per rates,

quarter the for a we the would While first going and some expect, forward. sales normalization about could quarter benefit the in we second third XX% expect we with time, the between sales with operating end still at we and of with over quarter volatility you anticipate anticipate expenses of dealt some XX.X% points. We year to be around of might other now pricing those roughly as

margins. to we noted remain four-wall As quarter, term protecting our longer last committed

short-term we towards To middle we of historical current quarter our another menu fluctuations end, would taking also as noted, anticipate previously to likely by driven increase as price continue that norm. the the However, is absorb cost will environment. third the

We extra to pricing are four our X% quarter, the now reminder and of reasonable and will to need the line currently year. to objective. increases seems labor it we to given Below the prior this back walls up an to a needed February, our assume expectations. which includes four-wall to margins the million the in be our above G&A ramp to And projections inflation XXXX anticipate half is in $XX week evaluating remains XXXX, of regain it in commodities as reference X.X% basically in the continue with fourth prior by which versus G&A level our

support half year. with approximately, development of are of to We $XX the our now about back preopening of for the year assuming three-fourths plans expense occurring million the the in

the for for a Finally, billion of depreciation using purposes, the in we to the of tax year. and modeling we rate XX% expect for XX% year about full are $XX balance

more detail with provide the quarter. me second let bit a Now, little to help

First, take of balance similar if million between current material we the extrapolate to the $XXX assuming would sales quarter, to revenue. QX approach a $XXX in anticipate our be for million we year and full further total trends no disruptions, and

difference are to year. the As restaurants. open expect margins move to restaurants pricing in your while well per stated by predictability. of I recover share take with the level our And of brands long-term appropriate earnings for these new And reasons. enable last In And quarter as as during and our timing our we pricing that into solid be in for many With inflation basis our shifted about to have that as industry we believe appear closing, and on points regard levels to XX we're the the as key XXXX, and consumer dividend historical be development, four-wall drivers we'll approximately strategic we program. in to plan second David of as locations development, a second and unprecedented, to our solid, can current importantly, expenses strength market year, inflation paying deliver trends we in to call, XXX improve most stock XXXX. reinstated Overton margins our quarterly our this underscoring continue CapEx expect profit questions. share commodities the anticipate as is remain actions, demand while brands with as the implementing our to support for relative We would said, our XXXX of well repurchase below and million CapEx them now the margins a $XXX business plan as remains our quarter, four-wall gains. of through to some of XXXX to would that help this required protecting year. this to in maintenance Note includes XX levels returning more half sales mentioned, unit we We

Operator

with line Nicole Piper [Operator of from Instructions] the comes question Your Miller Sandler. today first

Your now line open. is

Nicole Miller

all talked the you wondering bit for about a was about the if a you I environment. good could talk little you and lot current evening. Thank -- information

conditions, or know like I not beyond? seeing wanted gate about process. to just little about underlying can, As go-forward I mark you're you But it'll the a bit a And what really understand kind anything today. as look question of summer there's consumer stage come

have things go essentially, capital? that a And if would So, would just of be slow relates blow pipeline development? you ahead you soften as little, preserving it I objectives do were to a you is -- through the just today? store with you about in Or there kind development to up, with mean some particular? think like position it, Or even reason how a just you in to especially could would

Matthew Clark

Nicole, Matt. its Hi

I party, we is the environment. is The mean, would that I which demand think, happen has to our far exit Omicron right tough consumer thought start with one today, to even the thing surge predict stronger. the that brands it out in first occurred, for what too would is

that again, we've good in shape. really that trends, I to-date occur. indicate a lower And I so would you seen our know, QX Certainly than at once slightly level be even think are and good would that, very still we think sales

quarterly little certainly and confident such our matter our capital business bit in healthy that stock from So, cushion very level outstanding while flow, no planning repurchase plans of will for think a we growth we we our continue absorb perspective, happens. and expectations that And a a with the of plan, of uncertainty, are liquidity cash dividend maintaining can what. I strength what in in a regardless reinstating QX a are

And the expectation. consumer because to I right seeing new demand of that will is we're what that think the our continue there. be units action our course that outperform is

we good. think I feel So,

that buffer of given have our strength confidence that trends. think I we the we against can

to it know comes whatever so we'll And be happen, we prepared.

Nicole Miller

I terminology follow-up make didn't an I are be I I But what recently even a just some using down approach, this on now practices, think really was And you about don't think as best But you know like right, scale see like of for I'm portfolio now feel or level Because And when the in about even I margin that just margin? does margins got normal them that was Bronco realize, a an everything's to idea restaurant that thinking and of store or unlock anymore. Like or there's me understand six culture? around it one, whole -- level efficiencies [ph] like, the about game the acquisition I what something and behind -- has mean, should believe level store unlock? that the triggers I trying road? we what end do you something. higher how

Matthew Clark

Sure.

we I think to of to performance business. two where the we years, sort that return can hard think it's, past of is the environment back even strategy the Cheesecake around the last right. go brands levels, over margin the FRC Factory, any related or as to North quarter to whether or it's pre-pandemic portfolio, again, correlate The underlying a to it's

And a than North the and pre-pandemic may the on Factory. very slightly FRC And Cheesecake vary sales and higher seeing, thought brands consistent Italia it inflation it's the to they're So, and pricing is pre-pandemic the of pattern. those levels by some return levels. slightly margins overarching had that to strategy the brand, on but depending depending

back is being for to That get still would that are. So, near-term what XXXX to second levels. our shooting on half of the be focus we said, margins those

longer think to that, the a that'll if margin getting target. to step be I achieve good first term we

David Gordon

Gordon. David And Nicole, this is

and Factory at they we chain Cheesecake example well strategy ability the our Flower factor as the leverage to channel really recently, think leveraging company concepts, Child and when to think about about supply supply at growth the the to differentiating chain them restaurant are. for allow recently, an through as has more that, a even to has those of good as that industry gone we Just a I North everything bigger add and think operate to largest the of been

the as brands So, Factory under and functional the organization we and will bring being continue bigger other leverage part the to of learnings over the more some umbrella. Cheesecake time of cross learning the of

Nicole Miller

Thank you. Appreciate it.

Operator

next line the Your Blair. comes William from Sharon question of with Zackfia

Your is now open. line

Sharon Zackfia

look year? guess be pre-pandemic? now I about two of Kind and Hi, or more And good at, March afternoon. box. monitor you I'd about for kind you Where the program, secondarily, either guess questions on-premises I've that versus Cheesecake if don't you I Matt, April. I heard is Factory of curious you the talk is this untapped still inside utilization think however, loyalty then for

Matthew Clark

to You for want go it?

David Overton

I'll it to Sharon Matt. David, over this and is turn

as our launch we're the in coming months far As still looking pilot. program, loyalty the to

over as around the launched, we'll So, soon some that. we to on share the as news I'll turn get it new happy on that And Matt capacity. be to

Matthew Clark

side and between Sharon, of XX% traffic we're roughly the were on the we that XX% the on-premise pre-pandemic. of

So, meaningfully. would guess a on-premise. have where to perspective, run up pick from rough were. on mean, certainly to the to us like million get rate capacity I it'd And -- back continue this that be Right so another that $X.X we probably -- just increase could we I we annualized

Sharon Zackfia

That's any versus areas meaningful week the where days that or very are lagging do there Are helpful. day parts there pre-pandemic? of more you see the gap any a of country or particular

Matthew Clark

of is tourist urban and universally I area one the Well, would you locations. more the in sort tell that

We but over little in Otherwise, time. lagged say have those, it's -- are starting strong. they to of see I a still a improvement been consistently pretty little would bit bit

restaurant-specific it's members, not few pocket thing. we perfect. The in have a locations only mentioned, more As opportunities staffing both where would where geographic-specific could thing might is that's staff a David our right, that's and of but good, other not Overton more of we But be a Gordon David a those have

Sharon Zackfia

from some that I'm that as if have question a seeing more than comp and the in traffic? far last grows extent the cake positive negative a quickly that of -- have kind curious the second to on also you off-prem? one is shift you're on-premises does ticket so eighth then And quarter, average

Matthew Clark

are the Matt, X.X%. So, this little funky, an terms, and X.X% have we're is they? at -- simplistic aren't we metrics a most in pricing, those all Yes, bit

So, off-prem, year-over-year, which just order. I X.X% so, picking measure you're we is up obviously, the per guest 'traffic'. mean, or one

all just, the that little it's funky. is mix of a bit So,

Our experiential average think, that's and a dining saw bump-up, I We many move with concepts pricing. holding to been continues now as during steady. on-premise pandemic pretty ticket with did roughly see particularly the

a you of the as a expect, would course, -- little the year-over-year but there's we're little of average. on basically dessert, little around alcohol, bit Of movement maybe more price settling of bit increase check a net-net, bit getting

Sharon Zackfia

you. Thank

Operator

comes next Your from question Brian Bittner with Oppenheimer.

Your line is now open.

Brian Bittner

Good question. afternoon. Thanks the for

up fully inside in out Following short that, box reason business of as we is expect? kind the get new a will recovery the mix there's we on pre-pandemic still the of there to and the believe traffic normal, can order? do is to current a traffic should you like back there normalize? relatively levels Or Basically, believe

Matthew Clark

consumer past Brian, will Matt, pretty seen again, a predict various what Certainly, to little XX bit of that it's standpoint. the I'll reiterate have from it's the steady just be we've a reopening. stages over XX so performance, it's I hard what with to said, increasing just months

or opportunities we're had those in uptick that today. we're I So, the that's like to could us. might a think to But spring I to for good and that consumers that's I we spot, I mentioned, the think think that us of some seeing support summer happening in the during continue travel going trends. an good trends those sales areas position casual be really there's see business, a strength are don't going quick, have are puts anything the just that in that do where

in I think be it's better jump. to it's don't where going were a we But fall. think the even than anything I quick happens,

Brian Bittner

for margins. were Margins there line in Delta line the except believe is follow-up expecting, just XX.X%. the and was all I what pretty that expected operating in in versus come line. expense part, item with we're it around you to that first Got in most quarter, on expectations a

item moving specifically So, kind you that that was of potentially items the incrementality what that pressuring line forward? were was really line nat that in gas surprised in

Matthew Clark

was spiked Yes, right us And for And the with worse for news, to be up January. natural in then seemed sure, even problem. than was gas it the obviously, fall. part levels of the certainly geopolitical it on to trajectory the in we saw back

mean, The originally you're supply than some we chain that goes would other maintenance. was more and right? labor seeing, repairs the saw some anticipated, and that little that say the we hand-in-hand building with a of make a plumber piece a areas, constraints I of little equipment fix I pressure in And something the or based expensive come electrician is obviously, get to you can demand. on we an just I sure expected or and of of today, some to think then out more

the So, but after the those are was. would Hopefully, to quarter. normalize begin continue into pressure that the two that's second areas. I expect of some to where that,

Brian Bittner

Thank it. Matt. Got you,

Operator

next the Your question from Farmer comes line of Jeff with Gordon Haskett.

Your line is open. now

Jeff Farmer

Great, thank you.

macro in or is contending gas your recent insight the we've guests behavior terms some the been with in factors jump of guests a change that war how even Ukraine, of in with inflation, customers into frequency prices, seen impacted? all of some you your spend looking behavior for in core Just have meaning your

Matthew Clark

and But the like it's -- was have not site interesting, noise what a I this say we're specific first yet don't our in tracking those obviously basis. had data it, Matt. on would guests just But kind starting as opinion very I some kind late the of of to the quarter because to little April here, then the war March is inflation bit mid Jeff, start-up consistent cheesecake predictable at look the very spiked I and and in Omicron, late certainly been would up we say. like more. of the with a visit-by-visit

what that's all factors baked so those And it. into

that's good sign. pretty so And a guess I

Jeff Farmer

topic. Similar follow-up. quick one just then and Okay,

impacted of just distribution that's So, costs. fees, gas movement And third-party And price embedded is terms delivery of you supply there importantly, chain seen some any the up, I'm moving guidance. curious your sounds in those the that's the or it in how like as fees have then higher?

David Gordon

impacted Jeff, historically, of all. in just Gordon. weeks a our since core those from stable, things saw been seem maybe couple haven't war, then. much of -- have people we the really Matt have we And change of shielded delivery of what fees, there a haven't to we really a to could said, we're the very happening, No, seen that And pressure gas this on pretty also is as and bit glued first normalized little They're that at haven't guests. the television, well. watching David was prices their

Matthew Clark

diesel bump-up whatever being or -- And don't on the that the of for Jeff, side -- But in is every with probably embedded little flu. per me, respect restaurant front that, delivered. avian the and penny at of in obviously, some the the slight prices. math are for one right, to know, in thing of I with like there's respect a impacting this to bit that at that's also impact, but Matt, is cost that, thrown dollar commodities business, other things more it mean, I at is the box windows distribution,

have can today chain is of, level. about the close Gordon kind an would deliver David a these job. to parts. this, next it, noted, And in there's our wins quarters, done product team those for pretty totality, I call done three impact sure we're In and so execution as a job. prepared global What and our and making at moving remarks, booked experiences And they've historical that the two-thirds great of our you has supply amazing all

about, supply generally of it. speaking, So, the we chain side feel good

Jeff Farmer

you. Thank

Operator

with of the Morgan Your Stanley. next line Glass question John comes from

line is open. now Your

John Glass

continue? quarters. by gap Thanks we're Or and you uptick better? on drive I material in look first sales industry happened you April, what the the have what go guess quarters? a Do several a in at pretty think prior example, for very better, quarter has back mandates, a mass least you but do three-year that driven the about and pretty getting even explained you if Cheesecake, a in it's you talked of basis further in did first with industry And no and the just correspond improvement you as versus you a at know big or I that it's material, But looked to in holiday even think I widening this business gap? longer So, shifts idiosyncratically the more versus that, doing industry? did April, reduction three gotten it much. last by them the is the sort Can

Matthew Clark

talking a kind people to We've versus keep and is very masks also higher. is it strong of bit comes dollars while so rising it much of talking three Matt the also moving that it a Cheesecake in And that's were the metric. And right? five are net it's I the but month also of our the thoughts been minutes And here. hard a something [indiscernible] the so of highlighting it's you're a we've their I call more might I some other? stable, some and three a some on little years happy shown that we're be than to time -- off-premise one ability XXXX. sick was years that taking I'm that topic why the although, year-over-year tide, bit that you're a pent-up was the other little about is is Maybe there I lot that sort and before back number it, the and this what about think better some keeping that of moving one towards And Factory. of talk every think seen it’s stronger. literally they dollars and And the are say, it discussion to little I delta, growing, things that happened And -- and of is just on-premise on John, off caused right, think of why it the because, are throughout sometimes bit that that think about. ago weird, demand, surge or of we there's

staff of and So, to some to time. I believe I are going those great to -- think there product they're open, great that factors industry us restaurants and also continue all that stay challenges the over have think is all in grow not the able able we continue to business help aren't the that that see having product to we

John Glass

question earlier not an seeing about on up of macro understanding, the following just environment, this And sort you're weakness.

you you're mind in that a your internally that leading as see right the brand, In you've a around signal the what probably you fact, long But to that you indicators externally either opposite are are or you you consumer see, dictate are whether now. been time seeing look the look correlations internally that the what at, that down? at or at stock is there you Are look consumer there or employment, it's slowing market, on metrics view things your forward? the going

Matthew Clark

how things managing our going The of about go And just that our to they're of right, the factors is tighter of sales the that's moved go from the of better that is stability, through their predictability earlier would -- and their feel say, look and March performance, indicator April, to just business leading at of about I around and means late the perspective. really day-to-day these really think the a consumer, back basis my comments, a about some we forward it. this way on I a the by to one isn't so behavior one that interesting going life. Yes, bands being late they're of that things because anymore, deciding other we about couple

that positive of the in metrics that, in that So, look industry sort for more we have and big mean, of and is certainly, at a I probably of the think we anybody of piece. day but days restaurant that's week, all us. parts indicator a terms that than I consistency

are things sort a the lot of the other of think health I side right. consumers, we watch of financial that external

of is Not is inflation. consumers, of So, up with keeping end but sheets lower wages doing actually everybody and ahead and of they're frankly, balance inflation, income well. the most

on. fine. probably least and today you're probably than higher is is estate, in your think end if And was, data just pre-pandemic. savings real of the more I XXX(k) then doing that there's So, saw a that group I accounts And bank latest at then your worker, trillion holding $X.X

those I good, forward. of going indicators all think, are So,

John Glass

you. Thank

Operator

with line of Your next David comes Tarantino question the Baird. from

open. Your line is now

David Tarantino

just up just do need you question it is you benchmark Hi, posture? you decision? respect to I with at, protect need brand's wanted to a to see environment power? you balance have good aggressive coming looking might the to this or decision and relation you I take about pricing the is the guess, how And to to with what order you're what competitive potential merely My just to take you from on in pricing that Or the that decision afternoon. guess, impact consumer that ask want in thinking it I how however pricing margins? a more you're

Matthew Clark

is Matt. this David, Sure,

X%, from our a specific bit strategy in might even I over all you well, get we past executing than question to they've this that David have Overton have but stable six some X%, of of dovetail competitors little cheesecake think only where don't X% want step we what it not I think can be. a over the behind, of take And a we John's time, are is think, strategy I right. pricing implemented one up once, jumped months, at function to want sudden. all to don't more

is think our trends. so helping sales also that to be continues and maybe that I And that our focus

worse, mean, at quite consumer seems the the where today and environment viable, very We on pricing. balance are not don't same right. that and looking back get we're I are to at if hold X% they get time, things margins

saw day that companies about here it some think that And and you're there see or happens. X.X% make before I upticks. that. every percent full was was for service I these to take what other data latest We'll pricing. latest couple mean, up reading the another industry of was at I

X.X we're behind And still that. so points

on a strength of So, from position of growing comp basis, well as a think certainly I relative in objectives our sales good mean, protecting and basis, sales we're both to accomplish as I a margins.

David Overton

part and the us breadth to add, pricing help helps the as business continues menu just in would every it I And David, well. of the of us in

be across breadth continue as a traffic which of a able may us compared to to pricing From as take of We without helps much an with standpoint, be items the more of to some consumer a not a XXX pricing competitors drive menu to much having our of menu menu. have noticeable, to impact. limited our

David Tarantino

above, lot I that, one sense. on check some casual average the see of a I I in quick is guess guess Right. likely That guess, certainly that dining. makes of typically the magnitude of would we averages your follow-up

carve too peers your what do of check it, So, average absolute however make on for to define that, sure they're sub-segment out the get, to core guess high of look the you value of your check you I guess, or a doing certain doesn't consumers? at your I kind that

Matthew Clark

our dining, that and double-digits. are relative think the the And set steak per groups today. the have the monitor of I $XX two least X.XX% proposition $XX, are mentioning because casual a we range being And That lot competitive we're come fast of menu, Sure, those to taking casual as presence David check to David, fast about that over of don't in said, to kind our at that this still from national dozen we competitors, taking consumer breadth Gordon $XX Even are se, because, markets. is steak Matt. the the XX was average We in. of most with this within, houses competitors have different is have sort a at restaurants. taking house a of consumer $XX a average value casuals improving, objective is double-digits overall core is a remain

So, wherever that or a versus two year they were ago, today. on we're out improving our positioning

David Tarantino

Thank you for Makes the perspective. sense.

Operator

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

is now line Your open.

Lauren Silberman

Thank question. for the you

sales great thinking rest trends the of quarter-to-date saw sign. had you and when think you which expand is of I average in predictability So, average XQ? step levels, weekly week, trends, trends had follow-up then sales the extrapolating a is about select? taking up meaningful these per How through you on into you what from you XQ on about And talked as at we a $XXX,XXX just about a of into weekly And XQ. running which thought the sustainability Can account are about XXXX? seasonality, sales

Matthew Clark

Lauren, Sure, Matt. is this

actually, QX I some say, when started. probably in some them a March, as came noted QX, was period. of turmoil from impacted the surge think there total there's way of And our then early embedded but the the on to in well seasonality the expectations January in the was the Omicron little, through topline, also Certainly out that with that improvement ahead component as in well. Europe I QX we first would bumpiness, within widely all and

are out months QX January higher average two them down. of QX. QX QX and of weighed and think the quarters to QX the which and that's lowest compared so historically usually are two QX I and September, weekly year, the sales

right, other AUV right of there prepared is we we noted So, that's been higher, still as $XX potentially, have in necessarily, because million, running a that now, months. in at at we're those some level million targeting $XX.X then a the we're marks, would where seasonality,

ahead I probably little where that April, we a in thought the a bit originally of would think running said, being anticipated. than are little we we're that stronger trends we

Lauren Silberman

real talk estate, And and at from perspective Great, thank insights competitiveness you're can just about this a estate? estate you just [ph] you. of what real on real point, the seeing cost

David Overton

Cheesecake it's for in Lauren. our changed brands. David nothing's cost now sought for North Really, We're estate or is real Italia. after a This from whether Factory

to rest talked into So, year, and to able see won't don't next we've this And any we're in year have moving it. still are pipeline. through we as fantastic strategy. target of be continue going why achieve to site-based that towards I maintain it march sites unit that reason X% the about our We and a still growth

Lauren Silberman

Thank guys. you,

Operator

comes question of next from Dennis the UBS. Geiger with line Your

open. now is line Your

Dennis Geiger

on and And you benefit thoughts from how Matt, forward the tailwind what suggesting you might sort impacted the that? -- from it's how might forward, might just competitive competitive impacting competitive curious right now. traffic of malls you a environment to spoke your with folks Thanks. general going how dynamic respect going within going in likely Great. or you current set your mall I'm dynamic are the be the briefly, thoughts you -- to forward?

Matthew Clark

This Matt. is Dennis. Sure,

about and were basically our things when of destination. it thesis think for a to I malls one the our were down got and again, old of that to the story volumes, us reiterated shut back XX% of things, sort the just bring we

will that many seeing benefit the of of the actually a the in pandemic had in natural those anything the a pullback a cycle. time. you're mall It during higher I have at malls are right? properties little that take was of that in us. are in think interior as the the and seen restaurants and time, bit back same malls, place I only is yet mean, coming reinvestment terms the And hard

that this us think there's I And to for competitively, But point improvement so generally, of we think further properties. from and us that, as see a any X% within fewer that's that sort be benefit provides to restaurants, anywhere XX% I the mall benefit is global true at perspective in the a time. only also going

Dennis Geiger

technology biggest update That's on kind from helpful. in either provide what's could here margins of or where of Thank it at can you. enhance digital curious opportunities sort enhance you the sales And relates that Thank then just some just front, last, you. subway? are if to sort the latest of and you're as working, the of where

David Gordon

Dennis, is Hi, this David.

on use we to that the find put guests dining and to experience. continue of minutes the pagers QR pay off be enhancements. speed versus energy at and code look in going to few to in our take the bill want to kitchens. to that use technology to that's in allow do We'll positions We're their a meal, it our text curbside, we paging allowing walk the to make of where those they to we their continuing want. from kitchen facing guest technology their complexity to the experience service the place some as That for the easy means continue made possible possible, them their continue focus use into be of choice hospitality to look frictionless we'll and that. continuing still want We middle that majority their people in handing they to in to the when continue that and give continue process and to to from that, as we remove dining have make change up we uses type where car, an and to as And technology restaurant into of experience to increase on comes of to guests to means not use can made texting pandemic them off-premise the of experiential technology end scratch to productivity of really also So and faster. ways

look team is each continuing those avenues. our So at to of

think them I that said traditional to looking likely our quite putting may isn't right we're us. work that to those feel our kitchen. be some tables said ways tablets in leverage, and we're technology may we've on that competitors continuing to doesn't before, But things mean be doing the as of I evolve we not some more for that and for especially not that, own of

Matthew Clark

FRC able taking portfolio, examples just drive Yes. can associated in benefits the that, systems Factory have that I at scale food to management that the Factory. had we also Cheesecake and are of mean, our them with good there's inventory of we've across costs and deploying to and technology that right? efficiencies we So North that not use Cheesecake the

Dennis Geiger

Great. Thanks guys.

Operator

question Sachs. the next of Garber Goldman comes Jared from Your line with

now is line open. Your

Jared Garber

taking the question. for Thanks Hi.

like that was somewhat still that the on level overall average two us that drag comp, It North. if I but Cheesecake, line. margin for would quarter margins average weekly of be then did you you the frame the like XXXX could a sales Matt, helpful. North. the know the to-date. One, figure Just sales for on seems maybe brand I a And weekly restaurant on if hoping question you second at is can gave give you

the good units it really deck. those units. older different color something the the about in from some You new Is that there is in -- gave

was disconnect fact, those for it of Thanks. some productivity? does full if or those the to units think up to different about in I to there's in a new just I'm margins to curious point years it ramp if XXX something units. four three basis take older

Matthew Clark

Matt. part. Yes, answer second is the this I'll

dealing to I to while think national all unit It's the the about been the casual et with for still newer have and And Etienne a to runway heard impact happy we have it's staffing rebuilding we're pricing some it larger actually really between have North. we're get close to X%. close in to working cetera. to the starting now we've to to that to teams. you're has the took is than like that of think What train I'm see about that that closer We efficiencies food that right and the that some the staff additional part. of back other, two diners gap. And up the I attrition, first and the X% had gap some on has where data good on that buckets. those to be from continuing We'd X%

not we're far that So off.

optimistic I'm be is that of the essentially speed. really as new those we're year teams ability were And ago guess that making to as to productive around brand and So just a that possible I up progress. getting most

Etienne Marcus

XXX,XXX. were XXX,XXX. quarter-to-date at sales the That's at we to The quarter, compared are first

Jared Garber

Thanks color, Appreciate Matt, Great. for the there. data it. thanks for the and Etienne,

Operator

JPMorgan. Your Ivankoe next question comes from John line the of with

line Your open. is now

John Ivankoe

on I'll follow-up just North the guess, subject. I Italia's

what a maybe assume perspective, based doing to guys line you you expectations. the excess doing are sales, in you of that about volume, think it's it's have customer your extremely pretty at concept to of different sites in are some really well? same-store was Looking least I guess, different experiences the of of beginning well, where mean, terms quite maybe mean, top unit at hands. of average your would achieve, is kind of what that and on potentially new numbers a amazing. where I you of I on and types volumes, concept I results achieving are are seeing, the What designed unit cohorts actually in from but types your terms

David Gordon

those North great John. every very with is I think that as about we've This David. you question. very has And a every to we're families a today Cheesecake been the what and geography, cohorts. see markets consumer where seen Factory what in talk stable similar Thanks, Yes. different works in for younger, a across North, that it And well be a geographies is reason different one in the very skews cohorts as who well. as gives That's the market, reason each there's happy bit well. no but many why Cheesecake us there's is results North believe of which also those couldn't little all Maybe at in to you

be as is a here Florida, sales I in you Atlanta haven't are about or as We in which into and we've disparity where summer, that we seen we'll think and in -- grown towards well. moving performance excited opened restaurants we're

to consumer execute there the bar is it base bar So, -- as has out bit along really a generally. brand that ambience well, everywhere design. food program, chain continue we is popular And traditional think that in what's it a offers a to of that people. with field wide great little a they restaurants also strong a those different different than the know in the strong with strength with it's We variety and works very teams of program appeals Italian a Italian how

and to grow be we've reason that hopefully we past. we XX% able don't growth, the to to continue talked So, that sales we're and of in growth won't north why about sustain rate those be any see levels able excited the

John Ivankoe

X:XX there's one. and probably sure in And weight I'm right, right you're I'm is Brickell now near something in at an the unit Florida And exceptional at night.

very that you've -- that's and something execution. location unit and done well definitely that with So

So congratulations.

current Let assume your the that steady me change made would from commodities that commodity this you stay basically level. subject. Matt, guidance comment the

XXXX, cost contracts? protein, that look to anything grain cause the there on worry later going contracted spot at to some industry? that's I And XXXX relative the as the I'm you, being or may give for as any relative you possibly deeply spot? and push suppliers that influence to question the guess, your else do of costs their to to example, the in basket pushed ask, that does of guess, well we we contracted on get have in is the up extremely they chicken markets I into have you money well and extremely that have your into own and potential you Like, for rest So, are is the as higher concern any

Matthew Clark

any sure, pretty of see past in I the not outsized months Yes, outsized, a would feel for say, but either. like I over them, don't John, time it's we're we're anything in six like would balanced, it's never really contracting positive negative terms dynamic it. of

can on our week. our what built outlook strategy is We've give has the I Cheesecake our that, We what If increased We just I can the and think strategy mean, can met know we on. take what booking, the predictability. do when we frequency right and this this that's been and the is. we've looked Wall pricing. we stability Street. perspective -- of again we're right reviews meetings to and can

But win-win to that working well. direct to ladder more. been in with we're it tied you take so costs trying to things We've things, right side a the variables. of for right, we're now, as mean it And that, of And year the like lot other stand trying think input We're I chicken could like suppliers. looked longer so risk higher we some inflation develop think certainly next than grain, relationships already. away at more that having anticipated at been think strategy the to a doing this some be. we it could I I corn, into the particularly be on perspective that Certainly, term has built ever year. wheat has of that I

that at So into been built point. this that I most expectations of think has

John Ivankoe

you. Thank

Operator

Jeffrey of comes question from Bernstein the next Your Barclays. line with

now Your open. line is

Jeffrey Bernstein

Great. Shifting to commodity labor much. very a you front. the Thank from

you mentioned I that inflation. expecting X% now was closer previously XXXX, know to for think I you're X%. maybe

retain and your choice. an benefits focus are I'm you you labor clearly, to staffing maybe of from want And of the shortages a mentioned inflation about mean, employer think back you're longer driver you're thoughts where perspective. wondering, the standpoint conscious pay from no the to you I thinking wondering, how just in just there terms increasing are to your in be and I retention on that a best, that's a is uptick So of just perspective. from really

David Gordon

David. Sure, Jeff, this is

we levels Obviously, want continue. that they the with are than are better think levels roughly we where our sales staffing are, happy pre-pandemic. to that I X%

industry said certainly across continue earlier, competently or our we still but are competitive. as not whether up to pressure. where there there's And industry, little going As others, they retail wages some where and particular that's of bit gone stay the restaurants Matt have are markets importantly, want just a some -- Most pay or to to well.

provide people So are and we're way that information what of have a what taking looks the behind. we fall We not around going with see and to they We market our like. of the so sure make operators basis competitive the want them all monthly can know proactively geographies rates care the to and pay them, on that historically.

so from. that's pressure that some probably where of coming is And

have, growth seems attract here. the retain members out, and it it's new we we we though today, to competitive, stay to can't future, but more going As how flattened and Matt sales grow. continue but predict need wouldn't feels staff said, not just from as I those and to we That's it are anticipate continue to

Jeffrey Bernstein

through give it's I Understood. downward assuming second we the low quarter for first digits sounds kind for sense the what pushing can And you're for XXXX, I'm easing so maybe front, the the a some in it the us the commodity wondering now mentioned just prior get basket double. if commodity mid-double on of maybe following know year? what year, but trend was like quarter? just can you versus up you then context. through the the basket just And the

Matthew Clark

Yes, I think is -- Jeff, Matt this again.

in, get may the was think sales cost little off, like a Etienne of get I this total I to the in I but if think quarter XX%, jump I this of XX% for bit first single X% than double digits think quarter digits third to high fourth in the and the and similar off I before. and And the X% in then in here. so about low second now, more that's

Jeffrey Bernstein

on making to points for you below make the was Matt, right that call you just basis I I that comment reference restaurant And for wanted point list. think you sure quarter, XX.X%. just to said XXXX? think you. I XXX Got margins your looking said clarify, I which mean your second was below back I the got XQ XXXX, were the

Matthew Clark

XQ lap three I XXXX quarter to quarter, guess, three comparing -- now. year, basis We're to year

Jeffrey Bernstein

Got it.

a assuming high second you're So margin quarter XXXX. the XX% of restaurant for

Matthew Clark

pricing. driven XX% simple, and It's Yes. just want or And So times, X% pretty where really on X% in that timing by an you're just there, we said commodities XX% right? that almost when P&L is think environment to will math commodities, recapture pricing gap to of if and the the right? the I go. we It's XX%

Jeffrey Bernstein

Understood. Thank much. you very

Operator

from of Raymond with Your the comes question next James. Vaccaro line Brian

open. now is line Your

Brian Vaccaro

that's would? strength snapbacks I'm to lagging Thanks Texas on in to what new back also, seeing reopening with degree sales also Or capacity seeing few evening. -- circle sales higher the of the previously being was driven you're I is and two in what or in be you constrained the Maybe hoping regional recent that just effective degree driven touch are by on might to being quarter-to-date, the curious you good also dynamics, the the improvement likes that by regions? highs those staffing may quarters. hitting and last Florida improved if have

Matthew Clark

Yes, Brian, this is Matt.

I think sales pretty it's strength. a balanced

a at high better seen have in so it's different pinpoint, have hard not points to March, have pretty on, We comps kind equaling in to all sales, in there's those March to in have comp level because factoring were year so X% expected a I it's strength. probably we as tell because order we lapping bit gone pricing different average you and what, X%, markets that's little than out. But surged that that of broad-based to actually we ago might as weekly variables we're time X%. have that have But where you, year the got seen their a got been -- get many strong so and might to

good. pretty we're So

I it's better. a from bit getting we've little a to fair assume staffing help because probably think gotten little we're

bit I But probably that's think us. that, So benefit. can little that a of sustain can And only everything. we if it's help a

Brian Vaccaro

Okay.

just margins, Okay. XXXX. second the wanted on the go And of quarter to I back to

costs. to I degree had QX just think I'm bonuses costs in And back or called what have your you have guide? embedded costs out annual and training to those those several you then, curious, started and overtime like normalize?

Matthew Clark

better I as And low but So of I it's outlook our Training low better we're it know embedded as right? mean, than doing not what pre-pandemic. but than seen of improvement. a over time we've what's kind is are don't was, continuation as is normal, in pre-pandemic. not costs now. were, as they

Brian Vaccaro

All right.

need if I I would that second margin to in quarter the target. in third expect half. the everything achieve But earlier recover know, pricing you And you call, today, a missed sorry XXXX I take margins And it, that level of think your to to dynamic said what that it's know you but you in environment.

Matthew Clark

still and objective. So of we have We're that's pricing, our still specifics evaluating a little the bit time. the on

of is to So higher will we're than was inflation to in wait want see. last it certainly, a we and kind we I What is talking the X.X February call, X. say And were percent that. thinking about

what moment. exact on gives that we're But that number contemplating the yet. we range at settled is that haven't a So

Brian Vaccaro

Understood.

Okay. Thanks. I'll it pass along.

Operator

with Your from question next Citi. Jon comes Tower

Your line is now open.

Jon Tower

Great. taking Thanks question. for the

brand frequency I'm and off-premise using between to particularly in are two Are back the and you're are you seeing just business seeing -- similar customers and at a higher customers Just terms you are or at both using fully reopened curious channels Factory use that to a the Cheesecake the come are stores seeing seeing -- are customers channel? the you of off-premise overlaps what actually there. in real brands, and seeing in frequency? use the you from in-store? hear customers come see channels you Are in-store? unique the quick, each how Or to how customers

Matthew Clark

Jon, this is Matt.

to are the it's be little noted tell, dollars steady. that we a I think honest. staying probably to early Well, off-premise

not channel weekly that still we we're do We guests and Again, stopped yet are coming that those are those meaning average sales, So tracking people research. into growing using transactions. the haven't annual more we're restaurant.

the you new tell you point to increased kind on-prem. I it specific can I than again right? the those utilization year. kind off-prem Steady that in data they're of two into of couldn't those though some of other or of that's don't that I But time. feels point But of point in And the guests so at attributes, the as yet. have key would I a anticipate look middle think normally, we I questions mixed

Jon Tower

mean, itself, impressive then off-prem mix. the kind of I obviously, strength very And absolute Okay. of numbers just and the in of on percent in terms the and

for are you're is that placing the the doing to say, search I'm ensure digital targeted how throwing some specifically that how top meaning, curious dollars curious persist? off-premise you money you towards you doing spending sales delivery that -- marketing the on, DoorDash, provider that Are you're Just into to sustained expect like ensure to channel of know engine at a do right company what as of occasion? the more future level app? behind the your to just the things

David Gordon

started never offer until a Jon. what off-premise the was first pandemic. Thanks, wasn't we and In out that ran The to increase dollars DoorDash just off March search that promotion, XX% some to and people a and achieve really whether we paid it David. we some This QX, guests. We with is trying DoorDash comparatively to of that. really during overspend on doing that brand wasn't or much hold small it's and reach our we is had need and that did it -- timeframe intent to we're that we during that, social awareness as far marketing to through having continue because pull can if that But use offer. news know marketing to marketing it can social. ordering online online that's we paid awareness to through when and got worked to majority we works we without trying a we off-premise acquire or ordering $X we've that pandemic before sales seen dollars awareness forward up drive thus channels, whether specific good lever increased and that, know done think the our and to we've no can the moving of do of new We the

to in about we the strategic. will be have good when that we do that Hopefully, we And continue. So spend didn't feel very spend, it quarter. the will money

Jon Tower

lastly, then like on of sales. spend better the percent marketing, in XX absolute And just it. dollar or the Got it spend think I basis points of XXXX, was

therefore, time? the about be this range going do future. of dollars just high? keep that you terms Is spend the more Or and, business thinking awareness you percent to over expect marketing that more right into expect of In where to forward

Matthew Clark

can like percentage. Child those brands I Matt. little But it higher think a in that we Flower mind a keep other the this bit do a North actually keep there, Jon, have maybe a of or is

think So creep a as get company we're over the side. time they little on bit. bigger I up might comfortable a percentage But that pretty Cheesecake

Jon Tower

Got you it. Thank for the time.

Operator

you today's conference. for concludes That attending. as question-and-answer as well Thank today's

You may now disconnect.

The Cheesecake Factory Incorporated (CAKE) 28 Apr 222022 Q1 Earnings call transcript