Earnings call transcript Q4 2022

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Operator

Good afternoon. My name is Devon, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory Incorporated Q4 2022 Earnings Conference Call. [Operator Instructions] Thank you for your patience.

I now turn the call over to Vice President of Investor Relations, Etienne Marcus.

conference. the begin may You

Etienne Marcus

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

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

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

conference our we financial and In terminations our this GAAP comparable assets our reconciliations release acquisition-related as the in lease press on explanation excludes impairment call, basis, on non-GAAP website during will of and results be described. and An most directly expenses. an use addition, of adjusted of presenting which to measures measures appear previously

David opening update. will and financial results some David provide then quarter with fourth Gordon provide Overton our and an will today's begin update. review remarks, will operational Matt call a

questions. open Following the that, we'll to call

Overton. call the turn With that, I'll David to over

David Overton

Thank you, Etienne.

restaurants. $X our for in our over with across unit company's the million volumes Cheesecake annual sales first quarter sales of portfolio solid Factory in domestic another concepts, for delivered $XX average of history time resulting billion exceeding We

quarter versus a sales increased Additionally, XXXX basis. fourth North XX-week exceptional XX% XX-week over Italia's an comparable on

memorable operational hospitality menu differentiation their Our by driven effectively excellence. focused our best-in-class our strong guest of delicious, service continues performance line end, innovation, strategy To operators managing intently and experiences top through that delivering and remain to be restaurants. on

performance compression last been been inflationary margin has operational restaurant fiscal in in XXXX reflected level high our our resulted in has environment, as While we as quarter, which I an have results. solid, exceptionally discussed

the to mandate Over to have year, protecting we while recovering the the margins traffic endeavored in dual long past for medium of meet term. also near the guest run

additional rapidly an While margins margins the menu objective. December results, price our seasonally our increase at objective top Factory exiting the momentum the we the reflect have sales with at results restaurant Cheesecake this that inflation. we with achieved escalating rolled shortfall, out level the Based levels. on the start XXXX kept address of we adjusted December, our have positive I have sustained profit our of recognize we To not believe year given out pace line, of

inflation further XXXX. we menu as better improve labor the We that between and move through believe commodity will pricing keep to stabilize and as alignment increases in seems cost year will

short sales in and term. recent is are to guest traffic value margins maintain shareholder to sales as both Our goal and and critical our the also driving trends long

the Turning Factories, to Cheesecake two two two North X successfully quarter, fourth new Childs including Flower unit restaurants during growth. the We and Italias, restaurants. opened FRC

Factories, our acceleration subsequent to On Nashville. time, including Gilda’s under XX beyond to in City to fifth demonstrates X last our believe X the a opening X ability our licensing some the new and new And while restaurants and as locations. plan. XX challenges X in end, in North including a growth at control, year to a due opening experience restaurants, international expect to XXXX, we X restaurants XX fiscal Flower execute of in Cheesecake Child permit front, FRC as Mexico opened we delays we quarter chain open delays location this to to Factory I we Cheesecake Italias many supply continue unit opened eight X quarter And to approval agreement. to

X internationally pillars way remain under open guests X excellent bright of expect of to success maintaining agreements. future. on continue ensuring X.X Factory foundation Cheesecake and restaurants menu will for temporary focused the of service. a we designed deeply decades to and and Additionally, restaurants pave the to We our into driving core innovation, our receive licensing These our form

now With to Gordon provide that, marketing. our some and details call David turn to I'll operations over additional the on

David Gordon

David. you, Thank

XX% start at of Our the than remain the Staffing levels same the prior more XXXX, to year. down solid. compared staffing needs in period

hourly the once in improvements staff quarter, retention. both drove we fourth and manager year-over-year again During sequential

Our they were a applicant year available In January, hire X And strong. we million of over applicants XX one to what than XXXX, every had as to more flow be applications. continues with X need. were applicants times for approximately ago,

hand-in-hand XXXX. quarter-to-date promising operating with restaurants a sales guest great experiences dine-in comparable store trends and go basis up are and and To end, levels comp week ultimately, staffing start for up The XXst, improved that an to promoter net metrics in and Through on performance. and retention sales our delivering believe versus X.X% XX% off February sequentially We XXXX. Factory year-over-year, sales versus are XXXX Cheesecake

to Factory profile for of our The Cheesecake marketing I previously, primarily Factory our The to the awareness messaging performance, concept. and shared back sales restaurants, strength of raise we brand-based As shifted Cheesecake given the

to with on However, some we activity. the channel support promotional continue brand off-premise

$XX drive when capacity. more promotion sales will of is days during Xrd, of celebration guests to designed week ordering they starting through complementary which and in example, in Monday, the spend For online of next will Monday Friday, DoorDash March have This run XXth anniversary, more. through slice or a or we our cheesecake receive available

The of fourth to the second XX% for We Factory totaled Cheesecake continue behaviors. stable the sales consecutive see purchasing off-premise quarter guest sales for quarter.

with incident past remaining rates XXXX quarters material seen levels. not three incident any over on-premise we've rates Additionally, changes in above the

solid increased XX% comparable the versus and Through have XXst, XXXX X% grew on North February XXXX, on Italia. Now a an turning sales trends comparable Year. both positive These basis. versus to quarter-to-date New XX-week Fourth basis week Overall versus quarter XX-week continued same sales implemented a for locations sales XX% into year-over-year XXXX. adjusted XX.X% fourth quarter. for margin supported approximately by mid-fourth North compared improved and the operating to quarter, the period menu increase the Italia in fiscal mature as to price a XX%

our FRC concepts meaningful also results reinforcing continues emerging growth drove with of million, and drive some forward. that differentiated AUVs the annualized develop strong to will FRC going $X.X belief

their and our absolute operating navigate wrap up, I our to while for Before continued managers guest continuing across to dynamic to thank our concepts staff and members maintaining environment. the dedication I culture want satisfaction

And over now for our to that, financial turn will with I the review. call Matt

Matt Clark

Thank you, David.

the objectives primary XXXX. I Let by outlined for fiscal begin progress quarter reviewing last me against financial our

revenue $X.X Total year. billion for The was Factory the million. $XX Cheesecake exceeded AUVs

margins. increase, for December December latest XXXX Cheesecake the Factory price menu exceeded four-wall margins Following

the For G&A, depreciation were expenses year. XX than year, lower combined and basis points prior preopening the

million Finally, in we stock returned and to $XXX dividends form repurchases. our of shareholders the over

per comparable included Now, increased $XX.X XX-week Flower operating and Italia million. The a XXXX, Cheesecake And contribution Cheesecake a week Sales Revenue prior around versus at the Total quarter from which the The more specific Factory additional were FRC million fiscal XX-week details restaurants turning XXXX. million $XX.X of of XXXX, the $XXX.X North the The basis. to some at sales contributed and approximately during additional external were X% reminder, on $XXX.X versus million. FRC, as year totaled $XXX,XXX. bakery Child, versus quarter quarter. operating both sales Factory approximately quarter for revenues week XX.X% sales. an fourth Fourth week, of Incorporated at fourth including were

a Now by menu decreased insurance fourth medical by higher $X.X points were leverage. in compared G&A the pricing. the in sales $X.X and of fourth opened operating year million lower million in sales prior Labor in quarter we the over higher leverage. quarter moving expenses inflation and Other points, to than charge prior pretax and $X.XX. XXXX. basis mostly Fourth asset restaurant primarily net by XXX income Adjusted Cost diluted versus a quarter, incentive share sales GAAP openings FRC period. points Preopening fees. QX during basis the pricing points net as to of quarter XX of decreased quarter of payout $XX.X XXX increased expenses. legal of principally XX driven year, XXXX, commodity driven recorded We by increased impairments acquisition-related driven loss level driven expenses X million per lower share significantly $X.XX. basis versus was related to basis percentage was And restaurants largely items. fourth costs the X the common per

million of available the million our approximately share and at unchanged about liquidity quarter shareholders And balance dividend million and via approximately capital Now approximately The facility. sheet $XXX $XX $XX and returned for outstanding a new in during the with cash million including completed credit balance was turning $XXX our available our quarter maintenance. during Total totaled unit under approximately million, development total of Company quarter. in to debt just we and $XXX million repurchases on revolving $XXX to the million principal. $XX CapEx fourth ended allocation.

and underlying While net comparable year first provide and very be for and our full specific assumptions providing to the thoughts the revenue on guidance, we we for margin. sales environment be dynamic, our earnings continues not updated given will income will quarter operating XXXX

most Cheesecake the trends quarter. we and million. of increase price price of menu disruptions, For no the the the deploying quarter million approximately revenues QX, Factory price between we $XXX middle This first X.X% menu the in quarter-to-date increase and on includes performance, operating $XXX assuming consumer recent total at or be are is took to a based The menu our material restaurants year. anticipate we last of replacing during increase This X.XX%

to expect this QX. of time, we XX% about effective at for XX% inflation commodity Next,

income of factoring commodities. on first We components labor channel year-over-year as outlined trends the wage labor. We net to when latest modeling fiscal well based previously X% other the approximately elevated in XXXX as rates, about revenue the X% mix X.X% are the inflation and margin total of of quarter range for anticipate net in of I

between range, our for other million. on moderating $X.X we most in performance, And to Now based across the mid-single-digit billion. be inflation and consumer our be to We to growth disruptions, throughout expenses year, year. total operating estimating are billion anticipate currently given be recent assuming preopening revenues year-to-date trends to and operating $X.X total expectations, approximately approximately unit the our material or full fiscal for no commodity we XXXX expenses total labor estimate $XX baskets, the

offset we our said margin have with pricing objectives. inflation to effectively menu earlier, goal As is to our support

no income margin net and year X% expect of Assuming when other do the full material exogenous consumer remain the of so, I we midpoint consistent there trends revenue factors, range approximately provided. we are at

David open Overton our the as development, in highlighted earlier, to And $XXX concepts our restaurants year to this on With development restaurants. some as new of XX we to many openings half approximately to of occurring XX% in of $XXX million and with regard required approximately as well XX plan as across the CapEx of we this would anticipate as year's second to maintenance year. year's unit support next million portfolio

top results closing, with In the portfolio remain across line we our pleased of concepts.

extremely our year undeniably clearly, be our our appear expected while will some going we volatility an correlation a cost of up standards, it said, tighter to and between be margin to respect and guarantees December, XXXX and challenging in the costs, However, experience quarter-to-quarter, actions relative That in goal inflation performance. XXXX. caught to heightened pricing And there abate still the environment forward. is to uncertainty with and have degree can it historical with our no remains should was pricing keep

recapture continued provided. the have forward. our for to level depreciation going value leverage further growth results to and and reaccelerated capital Combined a our platform would to and this restaurant meaningful sales work earnings our to and flow continue we strong potential and programs, with unit expenses, unlock our cash margins returns is creation G&A As objective provide that shareholder momentum

Operator? questions. With said, your we'll take that

Operator

[Operator comes from question with Our Long Instructions] Joshua Stephens. first

Joshua Long

about you trends geography, if channel share last were like continue been quarter then, can taking for curious by about the Thank daypart, of current pricing the questions. restaurant as curious mix? sort consumer we've that across can you're what for the decisions the from at been of maybe you have how I And Great. talking the read-through system, terms we think been my seeing just consumer they've It feedback, environment? those you well. or accepted seems we in the as level But how handling? two, was in

Matt Clark

Sure. question. Matt. Josh, for this is the Thanks

extremely I been lunch have literally, call, Cheesecake was been extremely the pre on-premise I summer always looking post pack think typical rates the for consistent. quarter, recent our that it's dining dinner consistent. pricing the the actions, daypart, most or and whether consistent incident performance, historical as the daypart, the The historical they've We've the both at almost geographies just to to same performance, seen been. before one. was the stat be

the have pricing margins, So, at everybody below of we've when the incremental away versus we're what of of has been that least I the our home points that brand we consistency think really look pricing, still up. been held recapture has rest pleased part since while to data the just that is from been. we menu market at food the X And XXXX, percentage remind taking the

are guests been. way proposition the using I still for that and the have always it the that value Cheesecake is So, they there, think

Joshua Long

guidance we into just Great. trends of informed the digging XQ? timing? talk total When the there Were there any full maybe in for third you to That's sort the with guidance terms visibility of talked million portfolio the of quarter terms pushes or the kind what you quarter, had helpful. pulls the when of pieces XQ can -- XQ in other into the it drove come and out of in that Was of about of some the revenues revenues? pricing some of about we kind think that $XXX of some

Matt Clark

Sure.

of one, of year strong. looking two extremely piece think there's the at I end parts. biggest the was it, Number the

in of weeks. couple the came So, last performance really best our

there So highlight as certainly, Gordon David the some start And seen say time talked year a about and we But have some of that the been I we've two has what that. weather in what saw. It's was different about to have comments, very downs probably other or well. the things marketplace. sales that. basis his holiday consumer ups in about resiliency just may strong one, there I in The would know terms at in fueled XX this XX to as to that mentioned impact. X.X%, been Number concepts points.

the And is only ups was The sort was other back up XXXX November say thing and below would just because and investors internal last our see one that it to fact would chalk strong, that exceptionally reminds slightly I personally November I that the estimates. analysts and just and -- really to the were going of looking where metric continues at downs. waves we year-over-year be the in to the of the year of

in there the think gap a of but just I on so was versus And little bit results based a XXXX just November, XXXX.

Joshua Long

That's me over outlined in goals then think When back I'll we of the margin maybe last the one hop of some about queue. helpful. quarters. and And last you've for that couple the

levels. pricing about your prepared once were in pre-COVID above so of we you kind how were also of in think place, December in back margin, back there the talked terms or XXXX of levels? of I XXXX, share all the comments, four-wall progression December color level Any commentary in was additional getting set can this of margins in to what can you terms sort just

Matt Clark

December. monthly actually that right, goal be don't on there differences things. that when I sure because helpful. mean, We above accomplished specific seasonality levels, are metric in not Sure. based to our would we think on and I XXXX be report was that I'm margin

explaining that We it best, that's four-wall think we set right? the appropriately. There to by So, side or overall we had the consistent been But better, all margins the G&A, and pressure, the the in ourselves margin I about, most so hit plan momentum of a think a costs, I of So, driven that think little came was core on I achieved. had quarter little the labor the that, right? bit on again, right? forward really was a combined that we've that year. positive. for our level, absent overall, up is sales little four-wall performance the that total noise move And has the commodities So pressure kind There four-wall, talked just in in below results.

of too, come we year some that into about and want and to make this, that companies have wage other talk whatever Xst heard quarter, time minimum the the January thing on you kind but is clear I've new You or some that of you've for from the do first contracts is sets and year, is The past in, your over. sure, rolling that right? commodities

right? more the of So, important right? half, to inflation got the little being XX% right? first the quarter, the normally first given we've a so in distinction the like in be really bit, about environment, the up would again case. And for outsized back that's commodity four-wall an quarter the the and of we So, just particularly the catch We XX% cadence see sustainability, level. talk That seasonality margin just margin at X% in moderating recovery terms to

Joshua Long

And understood extra any that that specifically, the the That's benefit comment sort about accretive. comment think think When week, on December we be exclude typically would would makes of sense. that would holistically we margin helpful. which from

Matt Clark

that That's intention the the did seasonally was -- of attempt that in. adjusted, and factor So to language, right? Correct. we

Operator

Brian Our comes next Raymond Vaccaro Instructions] [Operator with James. from question

Brian Vaccaro

a of margin the Yes, new going because imagine I unit kind the Cheesecake new North unit would that XX%, continue discussed -- of sort to burdening in definitely that's And to mid-teens to Italia given specific in of there's comment. previously getting there's growth I range. back just recovery but just margins. that XX% running inefficiencies still that that brand. that, that understand likely to previous confirm, back Just calls want is I'm targets is you've asking that

on any commentary that helpful. So would be

Matt Clark

trying that clarity. as Yes, this you Thank that's much for is to specific provide Matt. again, asking great. question, Brian,

waiting So is depending the we've goal be, I other on could Cheesecake that of another growth factors. of objective. the XX a overall to the is the that, brands, company but growth what seasonalities, about think all So goal on the talked terms around And Company the there the quarter, all Cheesecake is the specific stage, would XX put mid-XXs, based basis-point XX right? on then that and in

Brian Vaccaro

and if can the the traffic quarter? Factory Matt, Cheesecake missed on comps but -- then in provide price fourth it, And you sorry, I mix

Matt Clark

count preponderance a Sure. just X.X%. X.X%. not behaviors of the mix miss question, the in the was the The off-premise. in check the with negative virtually is way And the previous the a that and I the reminder, it. we the off-premise vast And purchasing was positive associated Pricing of channel just as did as Traffic it answered was and a incident on-premise, a capture you on with X.X%.And par was pricing. mix, of rate

Brian Vaccaro

Okay. Great. just it one, I could squeeze And if last then in.

guide On the it's XXXX. I been pieces right. to sort what and guided you know -- In a was that great. and the Any color lot you of fourth a specifically of that costs, are it I lot moved against on mid-XXs in think other my line. that manage quarter, line that operating through of It's a moving volatility difficult would if notes that had be you

Matt Clark

with the The lot utilities the but point provided through hits versus to it the forward gas, natural government Energy, Sure. their above by pressure to the Sure. of of ended way use and think, again, Department the well only and where of a anticipated. One, be do energy, I still expectations. so guess a curve forecasts. piece had continued the is, can I biggest We we that up rolls the timing our significant attempt

bit. us a hit little that So

a R&M. the little October, I think higher November, bit still particularly we in on runoff of saw,

price that thing a for when to And like needed looks of I had what insurance to commentary -- this those costs did And pressure so the year, we far -- that really -- we one getting not at we higher all December. of continued, just challenge. worse. but looked ultimately, early do they're little for was it bit we that the have think that, a then on

Brian Vaccaro

in pressures, of the been light end shoots Okay. of green pressuring you utilities, kind have might tunnel OpEx be what 'XX whether other in inflationary that XXXX? R&M it other Understood. line and abating relates in ballpark that is And you that way to line at things it there or inflation these to level of as see any any the some or in

Matt Clark

January, Yes. definitely, we mean think I it higher. seen I said, look haven't it we I December like at escalate in even

stabilized. definitely So has it

Some that it's the mean, to of in X% of more have gas in are the normal contractual I in you the market, X% would components eventually, today. And Xs range low seen. capitulation trading the that the natural

summer, it X. During hit the

by and then ripple that will be So through. timing. different It geography will

somewhat we inflation be And we pricing so when I in but were that P&L, probably remains less think to But our for be speaking, going the forward relief goals, some think, think OpEx than other because there XXXX the I below will period. the should about relative in our year. generally where high

Operator

Dennis from UBS. comes question Geiger next with Our

Dennis Geiger

the your to you're wanted the focus. clear. the event balance event becomes a in margin and how to the that, think that for starts focus bit industry that a promotional, event of that's the can little Turning on pricing that in I margin about kind I Clearly, focus scenario -- you maybe the and But you'll margin recovery, play speak a think Matt to the how tougher bit to macro out? a the team, versus just year, or of for in sense, thinking more more kind price to major the get get competitors

Matt Clark

Dennis. Sure,

typically the in -- some see slow as brings like on labor, an right? roll So think we've like and never I we in prices points end menu keep been commodity that would doing. stabilizes that the down, ever So typically pricing, what's discount demand think have. it well, times, that to of lower you're We to is we seen what if down one guests. are and I economies mind of And traditionally. requires attractive prior it's look think other and at the typically, people associated in I things that's talking pieces side up don't the don't back don't about, we that, those right? some that and is pricing. out price environment when also We restaurants significant, cost innovation less rolling

I like points And I that want guests the positioned couple over below past the industry to think I we're the just So given X of value. years. make well we're see that said, sure still the

So I we've a defensive. think already stay tried to is bit in little a position that

Dennis Geiger

Great. you And you relates I be, to want given follow-up. that. a there you are staffing you quick demand can but where just now, to the know quickly If on the it and have on I out touched missed just you as right where be? comment, want staffing you guys that's that exact touch might levels, staffing relative versus could to to where highlight

David Gordon

Sure, is David Gordon. Dennis. This

Our they XXXX. staffing in are were levels basically where

recovered the they happy that they've So that to extent we're have.

for We roughly out there XX every we applicants need have today. higher that have

The we XX other able experience more applicant We're positive to is that than ago. people the continues were hire quality months get of with better. to

have only So challenge any operations not staffing on all style where sales. in at or front, issues the with limiting positives continue we and to be might staffing

where really good are. So we feel we about

employer continue level which to be staff us continue year. at and industry-leading an also help to as continue on will We have choice throughout the manager of the and we retention

Operator

next Jon Our Tower question from Citi. with comes

Jon Tower

Great.

implied rate year. tax both guidance the quarter quarter of be interest quarter can for you would the what -- interest excuse the net margin offered first for you net the the and me, the the offer in the On year,

Matt Clark

that low Yes. ballpark. in Jon, teens, It's

Jon Tower

it you guess, to the I think slightly unit just, then And XXXX. number side, anticipated relative on down Great. the took for originally Okay. where you today, growth I

Now it's XX to versus XX XX. XX to

it's could add just securing you on with what's still color issues some So you Are can you explain just if I'm or there. equipment permitting? seeing whether curious going there.

David Gordon

and Jon. to Certainly, number. again. year. where country is show parts Sure, or location still are that moving really example, company good still is things the may up we all a feel David an than they There be XX the XX we're power permitting for waiting about Gordon of the were power bit that to where give This We have much little us we slower last as need. better a

growth. that why our have us to off the sure continued the plan about unit overall but of bit, in tiny the happening XX. year, we fully Most pulled XX just we one-off that make will we the So take confident very of to it down we be but that want this of some we understand second situations of X% openings number year that doesn't a half feel

Jon Tower

Got it. And certainly, And then you all? that the how delivery. during piece at business just talk XXXX, seen lastly, in about that mixed You've Can in quarter? just softness the any of on it starting shift quite lift on Curious there's a like lift seems seeing your a of away from you're similar of industry. channel business bit across if off-premise or towards the in demand the in on-premise type on-premise?

David Gordon

Thanks, is again. David Jon. This

the about who platform. very, XX% our finished in It that online XX%, and is we is very up quarter. remains XX% guests or guests And it using are delivery. then being which XX% was at about of phone mix where off-premise still total ordering QX walking line were Our with is stable. are

we that work the in well variety been to menu our to feel channel, So said with of off-premise the and that we've variety the team continues continue able offering price points, that whether along really deliver. to has I from the our think beginning, ops the that's quality

as it business. be the and great to year. the off-premise think that change new move We've feel is in stable into don't year we about that, the very seen going we So new

Operator

with comes Our Morgan Harbour Stanley. Brian next from question

Brian Harbour

Yes.

can ones over you brands also comment pieces. -- you be just will which those smaller the from have on of and sales and of do a time. other perspective some think Just kind how be FRC Can a been bigger performing, perhaps just

David Gordon

from stated see well. to Well, And before, by be demand accepted guests plans be our Italia sales strong. to geographies. into for It Sure. can very, very North as reported XX% to continues, continues great as you about very, North Consumer a the I we unit growth. moved very that we think those continue be new we is as

North. as and at success some Child to that growth XX we same the the and was new into moving So country continued geographies feel Flower across having restaurants the sales side. well great now up about on

FRC three there the number excited to four we next concepts be bring this and total culinary some past then of year. that Child nationally. Child the help anticipate that little to more we'd launch So continue opening. going to concept very are make excited be that North that under that other closely this we to we be XX like is sure try the Flower them Mexican make them will that, And dropouts and and umbrella sure can Flower and year before There'll presence profile going concept a restaurants will the concepts we get We're have like our that a national that need other about. continue Flower to they like very, we Blanco that We'll and to would we're feel the we a margin grow way up and a evaluate scale for we the are FRC they're that Child. lot. hitting decided for is

Brian Harbour

that was was from? of other impairments asset was I the Or to? much that much related guess, lease impairment, types how how were What Okay. of impairment? it What of

Matt Clark

real exercise you operate hit lease go this And to is that years urban which Brian, recovered, to is recovering fully were And an ago. while impairment. we right? accounting locations pandemic is driver there this to and Yes, It's are that five today, just the have And just compared through. weird continue several Matt. essentially, we so the predominantly COVID and haven't

assets. so can balance the actually lease you back right? sheet with And have when accounting remember up the to If gross right-of-use we the changed,

that of that investments just it number, even XX% were over of made. it, side not So is the lease I the mean,

Operator

comes question next Wedbush from Setyan Our Securities. Nick with

Unidentified Analyst

This Nick. actually for Michael on is

Just sales of have percent back OpEx and would as you wondering other were out a what to been extra expense labor that if guys week?

Matt Clark

Well, by Michael, would darn we it's because hours and those much Matt, accrued, the the are contract week. pretty fully be same worked

hand-in-hand the that And so operate in. with those weeks go we actually

the little just different been was a So too but to week rest it meaningful. shouldn't better of is relative bit bigger have because much the a quarter, it wasn't slightly probably

Operator

Credit with Our next Suisse. comes from question Lauren Silberman

Lauren Silberman

week sense to relative what's 'XX, you your underlying of really consistency driving strong over comps, seeing acceleration are obviously, the the And Just to week What's quarter-to-date. broadly? on period. looking trends quarter versus

Matt Clark

Yes, it's like We against said, metric. the XXXX. it's I that's been like XXXX and year-over-year. to very think it, a balance between -- stable it's Lauren, And Matt. I good

why return I positive think seeing of I think if little seasonality weather. a you we January in little on that's first I two of to at. for talk patterns, a lapping the bit the year-over-year, look important strength to some but data, know. of account Certainly, right, normalcy terms about will, in a maybe or wouldn't think was in that more XXXX we're the week was which don't it there the bit omicron

and brands I we're of in trends resonate. general, just seeing consumer the a our normalization think,

is so the expected utilization we have And similar pre-pandemic. what to might

Lauren Silberman

behavior. on another just then And Great. consumer follow-up

if Just there's there's anniversary mentioned sort trying You to this shift or of discernible. that that in Is to understand type any XXth the promotion. what doing, real no also sign it's tech any is attachment seeing? weekday I you're rates management of think, response in

Matt Clark

this And occasion. that No, offer do is off-premise-driven. we type we do of and marketing Lauren, on -- that is the no, really Matt.

don't it a the frankly, we to maybe are really have the But which I we're cadence, offers." like would think keep you been what think opposite, do guests. "Oh, need would the because I just regular right, say, to strong trends, remind seeing

-- a staying so channels particularly top in bit the much activity. promotional there's more channels off off-premise mind because little of think I

or that's whether not. do important regardless we have we now, trends I think that, right strong of which

David Gordon

PR. garners another additional and us. people PR for with to with strong anniversary celebrating way there's always the very us certainly We've just celebrate And anniversary concept, had

Operator

comes Jeffrey Our Barclays. with from question Bernstein next

Jeffrey Bernstein

Great. very much. Two Thank you things.

corporate. restaurant that the the the margin, the for level First, should be XX% I had you operating I XXXX about think in think margin said at we overall you margins. just But about past talked as know

had them you back said you think operating that the were I range 'XX being wanted and back margins. restaurant to to the X.X% driver G&A between and to looking seemingly get the you big

relative we should about margin you dollar think that one or that follow-up. how operating how And it then at wondering think should about just we in spend look whether to whether G&A, I'm So growth 'XX? revenues, on on

Matt Clark

this Jeff, Matt. Sure. is

surrounds it to at is of Until general sales out right? there move of all continue approach. much that the I generally, mean look with to sort G&A every to our as we or mean, pretty expectations, in that get still of think equal when X% what's it and a I I I level. right? year, terms better estimates percentage goal holds, that

think little other similar level. the year-over-year. pretty will Depreciation I probably below bit Preopening will piece year-over-year. a be is up kind four-wall of be the

shake would of those kind think things I where are out. So

Jeffrey Bernstein

your And data. there presumably know be I and And that survey wondering just Got up basis the being insulated more and trying not the scores, the away Is you just value work? your event your the consumer, of slowing you on hold above target value macro. core it. that to for are at determine in know some is measure or play least here. pricing you think at often XXX below the vulnerable that because maybe confidence that factors points income food based slightly are do your that home. current on from a how higher income scores your I beyond at might government Just a price higher of testament scores get brands. concerned value I'm measure better you kind mentioned I a you then there

Matt Clark

It's of couple science. just A Yes. bit pricing, on art the things albeit right? a little

slightly at I've this we competitors, our I I We data, national mean, think below true. not track different to set, we're X it's either peer there. the midpoint at government the said or or right? and markets, in times, whether dozen to look addition many but try assess we

to these the if for be hand because alternative are with than the pricing no right, from at, data, less I more, competitors, So approach looking which biggest we're in government an not guess goes consumers hand change. taking the

basket I well. we're I so own very and we seeing said trade-off think our elasticity, internal evaluate look evaluation, And consistent price attachment. and far, think check analytical whether we're not we and we or as at we market as seeing so do patterns there

research, do we And research. qualitative

monitoring that value our is are saying consistent. So and about sure we're constantly what score our making that, guests

if Cheesecake really I independents, does The steakhouses they some of think we're is consumers Factory I from to last would thing that because the our because typically accessible. the brands likely we're benefit pressure, end down say into the expensive and feel off move in the and very one-offs of top the actually that still very,

for type don't would material think of economic that I slowdown that, us. So be

Operator

Our final from question Baird. with Drew comes North

Drew North

I have outlook basket get follow-up then you for at Just on of XXXX development. Great. on the percent have your the point? to X sense currently visibility do a you had this locked of on guidance What a commodity and there? quick trying mid-single-digit the

Matt Clark

or closer is Matt. might this then beef, We're which I this think where at would And XX%, there. a kind to be want year, Drew, contract is mean categories of is this XX% of pretty still the in where time. but obviously, but little The a long-term opportunity we're is we normally ground an that category that half, we we about first Sure, of time to the half, close. to still a be watching couple to second that there's close booked we pretty bit harder get so. tricky, there's

Drew North

just provide costs look the are your Elevated cost and there Great. major an as That's of was brands you the relative I openings returns has for from your investment anticipating performance could of recent expectations? you standpoint. you hoping update to the on theme achieved And a are your unit ahead? you shoots in been construction clearly update XXXX. across internal then green maybe an each on you a for development the helpful. any level new seeing openings But And industry

Matt Clark

in, a of would relative the you're say, there's the on So moderate seeing marketplace right either tough variability all. on inflation think I today, much to lot marketplace I outsized a at right, Florida, a hurricane or basis, right? There's is didn't depending and demand so inflation, in last thing Sure. place because the South year one would that certainly, build everybody that know now help you're

mature the because while increases I front, news of not think Italia say CapEx a seeing volumes you there we're are $X.X in the significantly $X Well, have really about taking, that think the CapEx on our million to we're if that achieving North sales pricing and that up million. they're good million. we So outpacing location about we $X moved the right? partly may would the are from

sales to CapEx. still we're doing so And X:X

I think materially. our So margin don't profiles changed have

in that's back back to right? overall margins think can -- that locations as profile we the as as for help opened will the thing out we're execution. better the terms the really important perspective, better new seen get that returns. get that great important, our long long can staffing sales of most We've and the a to sorry, So and which we've returns we I is of targeting, performance which on

didn't the So with we we'd XX we to returns. forward hitting moving the wouldn't XX be be locations if feel

confident about same been we're has and so back CapEx will historically. the And that we'll as be the margins it sales those get to

Operator

comes Our JPMorgan. with Rahul question from final Krotthapalli

Rahul Krotthapalli

the business like the fullest further that not have focus from within, things like anything. margins to potential improve we or or like the for Is back margins beyond thought very a increasing ourselves to level. the Is of process macro any core of Step the any intensity there are business opportunity here are boxing like, high on comparing currently Cheesecake there dealing been like like done. say, with already XXXX to the

other from be your seat, something from understand independently the like little can maybe more I smaller but Just like away pivoting focus done, more a again, has concepts, what Fox operated. curious or like things like less like

thoughts So on going this just year? here curious, your into

Matt Clark

for say, not caused was Matt. we've inflation. the not volatility going to only the recovery with then Certainly, war going it's or to, Look, I to and a seen right? pandemic we're Sure. The that look two to much between years think events benchmark. multistep the XXXX, that three that pretty a Europe a in that thought, is just swan be we're obviously done in black This

see need to Then just right? more to stability mean, think be we I some see steps, market, a reasonable staffing. we it I I about starting think when to in say point. trying and will we're a what's really stability little benchmarks bit timely talk next in the provide

make stability about chain, talking about anyway. up We need opportunities to additional really and supply margin you're costs before material core see restaurants unlocking in XX%

a that, environment some you, mind. bit you of and think reaction, let's for starting think if point, I top levers us, knee-jerk then the sort not little let's But pull get stabilize hear is that see let's I I having a So to of and a will.

Operator

Our with next from Vaccaro question Brian Raymond James. comes

Brian Vaccaro

the more but I through ask, wasn't was to this guess, you year? XXXX, that X.X% apologize here, in I going February? Or in clear you you're that I taking, the take just and around does this, comments guidance, no moving of that. high-level on said assume from assume if margin your does I additional Matt, made pricing terms you

Matt Clark

between is return hopeful I this are Matt. Brian, pricing in summertime. the then. of be do and at the No, to We'll think cadence now kind we're that what looking trends a to normal

but much, something. we on don't really. think key you, Hopefully, have but for there's the would we definitive to we're is number us with inflation. a point will depend and the to At don't inflation I to environment up it to this give going try have anticipate at in down, take keep see as we time, we

Operator

this further questions said, at you Thank today's today's conference. for With presentation. attending no that concludes are There time.

You may disconnect. now

The Cheesecake Factory Incorporated (CAKE) 22 Feb 232022 Q4 Earnings call transcript