Earnings call transcript Q1 2023

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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, Inc.

First Quarter 2023 Earnings Conference Call. [Operator Instructions].

of Investor President begin you Vice conference. your Marcus, Finance Relations, and may Etienne

Etienne Marcus

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

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

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

In on specifically will operating comparable this to be basis, sales, sales addition, comparable we referring conference call, when unless stated during otherwise. week an discussing

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

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

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

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

David Overton

expectations. first positive with with Etienne. momentum you, performance and solid top trend that carried XXXX to in our and deliver line a line with forward bottom quarter entered Thank We

XX.X% market, XX% the our rainfall First X.X% to in $XXX comparable quarter and Despite year largest Italia over versus and The North restaurants versus versus X% increased XXXX, comparable increased increased XXXX. prior sales Cheesecake year million. and record X.X% consolidated versus and revenues year sales prior Factory California, the prior

and growth quarter of that The positioned Demonstrating the differentiated appeal belief all resilience to of broader well our positive sales extensive consumer for comparable demand dining. strength the concept portfolio, of supports first on across and delivered uniquely concepts. we we the growing our capitalize continued favorable our experiential are our

margin projections input outstanding support guidance. our Execution with consistent within flow-through our walls high end was costs solid driving the restaurants resulted operators at for combined This, adjusted with in net our X with to of the profitability. income quarter the X.X% of

front, we restaurants during Child. development the On X Flower first quarter, FRC the opened including

continue and including to this approval new fiscal restaurants to we X open to expect X experience at including Child X supply North many to as X X due XX we X still some delays, and in in While year permit Cheesecake chain challenges openings Italia XX to delays to factories, as FRC time, Flower restaurants, to locations. XX XXXX,

X to internationally open restaurants Cheesecake X anticipate licensing Factory agreements. we Additionally, to under

us of focused profitable long-term ahead, execution every to for to success center are of experiences sales our memorable force day. growth. food our quality, the hospitality, we delicious, company our on hallmarks our people, intently who of and deliver guests As our we look service remain drive driving the delivering At the exceptional capability enable

these employees. continue tenth commitment list for an choice. to have To to the attributes Work of as Fortune are consecutive that Best to testament been XXX will recognition training to honored Magazine's us is employer end, a believe We industry-leading This year. strong and For named our culture to to Companies differentiate our we

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

David Gordon

you, Thank David.

Our extensive hospitality concepts the of unwavering years. made most The deliver Factory over one casual commitment XX in differentiated to and the menu innovative service and has Cheesecake restaurant dining and excellent industry for

our has in competitive contributor advantage distinct key been our staffing. A to success

and our highly to ability our operators. best-in-class longer-term train members dedicated in staff achieving attract, position is believe We industry-leading growth to and retain Our foundational objectives. staffing maintaining

levels during attrition staffing Our remained was the further quarter. our flow Applicant and rates improved. healthy industry-leading robust,

to Cheesecake hourly believe nearly the by prior Factory our in and We attrition retention fact, service key In and first trends improvement year. Scores a and in year-over-year restaurants. food versus levels Net for quarter, contributor the The declined the XX% sequential were Promoter our quality

not are nearing attrition practices Italia's that recognition which the the despite of enjoys, and programs past effectiveness Factory national Importantly, presence over implemented Cheesecake levels, affirms the years. we few industry-leading levels having the we've North Cheesecake and brand believe

think facilitate well-trained North markets. about efforts we further the growth managers leverage staff the will our As Italia, scale to and accelerating of tenured into new existing ability and to

continue trends we totaled and see guest our Factory concepts behaviors. of Cheesecake sales for quarter sales this across The As first remain you the of the sales our for purchasing quarter. heard portfolio consecutive from to point, To off-premise XX% stable David, strong, third

not any do rates in remaining changing on-premise materially. incident see we rates incident material over XXXX and above year, with levels changes daypart Additionally, the not past mix

contribute our remain annualized strong ability in portfolio $X.X developing concepts Fox of confident our their drive results, also AUVs in Restaurant Concepts We million. to to and growth. continued to with the

to Turning marketing.

launched program rewards had followed a with We a effectively been and our goals, We've execution, our objective operational Factory. pilot result, have leverage on accomplished overarching As pilot I've analytics incremental and a to November. acquisitions expectations. exceeding previously one-on-one a shared, activity June data Cheesecake pilot with strong our last more second member Chicago and The rewards to and is we've of launch a in for guests as by basis our rates insights engage in program sales. Houston, The initially developing drive the last

financial profitable strategy sales ensure to with is objective designing marketing our of have Rewards purposefully this and deliberate time, consistent desired very driving We program. At a midyear for it Cheesecake our taken measured of our new growth. launch we're rewards targeting planning a in national approach while

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

Matthew Clark

you, Thank David.

of range. I midpoint me Let outlined expectations provide revenues $XXX.X a at the Total the of of high-level recap last quarter. results our QX were versus first million our

net Adjusted margin at end of X.X% was income the range. high the of

the to million and a depreciation, which $XX.X we We manage our were continued dividends form And sales diligently shareholders of of G&A combined flat prior and returned percent stock year. with repurchases. to in as

turning more some quarter. the Now around details to specific

shifted XXXX revenues of average was over in Christmas with an the first Comparable that is First quarter by sales fourth first XXXX sales high XX shift, sales comparison into week having the and at Day versus increase volume million The from that the the calendar X% sales XXXX. year of in negatively Year's It quarter an quarter weeks, noting year. restaurants a sales were the New result XX.X% first $XXX to week X.X% million versus first the Due and this of as replaced approximately worth quarter XXXX. prior $XX Cheesecake strong between prior quarter, to Factory week quarter XXXX. of fiscal our impacting fiscal the increased

increase year. XX% sales X% Sales million, XX%. growth North sales a prior supported versus for of Comparable were prior increased by over versus $XX.X Italia year, XXXX comparable

Child, operating million and Flower XX% weekly sales FRC, from up the $XX.X were were million prior XXXX. For week excluding first year, totaled sales per bakery the FRC, External $XX.X and Flower sales including average quarter of sales $XXX,XXX. Child, fiscal were during $XXX,XXX

insurance by shift. as higher increased slightly XX mostly basis percentage inflation commodity slightly Now of pricing. G&A Cost the remained points, leverage the pricing menu driven moving flat Other basis by XXX predominantly a sales medical of to lower driven year-over-year deleverage XX expense expenses Labor and sales. calendar operating to decreased variance expenses. points, increased commentary. than related driven fiscal from impact revenue points, by basis

prior of quarter the opened to openings reported XXXX. $X.X lease compared versus period. We were costs the FRC first during year and the first expense items. quarter Preopening and in the charge first $X.X million impairment quarter, the million no pretax And of of acquisition-related quarter related assets in million $X.X a restaurants new termination X to in we in

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

facility. revolving was during the sheet debt cash Total company $XXX unchanged principal. CapEx with new outstanding $XXX million of the our approximately maintenance. including and ended credit total in liquidity our $XX $XXX approximately quarter turning balance available and The of a about balance capital approximately at unit allocation. Now for development $XXX million million, available to first on million and totaled million quarter

share During approximately million completed our the $XX.X and shareholders just repurchases quarter, million dividend. via $XX.X we in to under returned

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

QX, disruptions, we and on revenues and most consumer recent assuming anticipate material quarter-to-date million. million or our between total based $XXX to $XXX For be performance, trends operating no

this at time, single of commodity QX. for digits expect inflation we Next, high effective

We well latest are other the trends mix in mid-single when channel in modeling labor as wage net labor. of total factoring of about digits inflation as rates, components

of fiscal we assumptions, at these midpoint approximately the year-over-year this and the of the X.XX% revenue I for on second quarter the includes range Based outlined, net previously elevated XXXX, of anticipate income commodities. margin

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

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

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

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

date, to on our trends was bottom closing, the In line. and first performance our with top operating the both aligned most pre-pandemic quarter

Specifically, our expectations. overall key and with line sales, profitability total drivers in were most all our business

solid and still trends noise Importantly, our and absolute pandemic the seasonality consistent the despite historical comparisons remain with volatility environment. year-over-year to impacting ongoing sales related

solid to positioned and return to And with to taken, more performance, line predictable environment costs we operational consistent we dynamic and are our steps our generating the levels input well results. top have remains strategic gradually we although normalizing believe financial historically

the despite for will through strength uncertainty momentum X.X We this has been concepts continue and differentiate beyond and to believe our macroeconomic XXXX operating the and over are of decades. case to balance the teams working hard build on of as us the

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

Operator

[Operator Instructions].

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

Sharon Zackfia

second that. you comps the I'm of kind of if I to if think a are curious, in trends the mention have guess if dynamic like in know quantify and what more just do Factory at might the that's healthier weather curious I'm quarter. been don't possible it I Cheesecake than you if because in quarter. weather-impacted seems math the saw the it's And did correctly, single-digit range low half I underlying you

Matthew Clark

you just just I the maybe a feet, is XX,XXX Matt. factually said taking it's true. would what Sharon, step say, year-over-year comp, back, more

However, last sales. we in significant variability saw year

in the in case levels we, increased received it pent-up sustainable where that some and a they And were there significant down given was at June buying there the restaurants. moved I saw that industry and time, not other really with demand the reopening think said been because times, capita in like had Sometimes to per trends, counts. that July

it think true, bit think, factually little is it's but of narrow a a, I So I lens.

levels, versus we pretty of seasonality, XXXX, When XXXX, at look performance the kind consistent. historical was pre-pandemic quarter

say California, would that is towards our We being of basis, midpoint of so predictability. been came our in little for us and slightly in call. in the about What that's expectations came bit second really we the the which not own half considered obviously lot good an felt from above the a maybe And high absolute quarter right? the it about us. at expectations, in kept of probably more what after Because of a weather point time all. the I came end had at that weather on

did I about that and we So feel think the good stability predictability see. we

Sharon Zackfia

mentioned behind post also any concerted And expectations exceeded sort the it was sign-ups? of launch marketing And were then going frequency you the sign-ups? increased launch is some of of on loyalty. or it loyalty, spend Or that, you there to wondering expectations. when be kind I'm

David Gordon

is this David Sharon, Gordon.

of half acquisitions and was it second the both. around expectations to sales So increased question, your our penetration,

importantly, thus with had happy use some use certainly the of we which program launch side, the of in doing engine we marketing as And acquisition feel So hopefully, we'll the or national the goes optimization, well that time awareness we're the with that here expectations, marketing, the far, was far is both -- search published the pilot during a reservation whether the but actual national some as up, and coming for as marketing goes, of the as as some far launch. about our out rolled good along as why marketing exceeded component the in-restaurant June. offers be marketing

Operator

of Stephens. the with Joshua next Long comes Your line from question

Joshua Long

model. Encouraged to consistency the in hear the

many You mentioned take challenging started as about year. all prepared back into trends, and outlook consideration utilization traffic, daypart, about you the inflation, the comments course your outlook over for year? consistent think your consumer curious, the backdrop. real But very taking of times had no given across last the in that in your inform to You encouraging just inflation, up changes of labor pricing does prices how half for that macro commodity

running you for quarter. were think about I this XX%

your you've XXXX? just philosophy or has changed curious as more little so visibility if bit got outlook And into a

Matthew Clark

and be the Josh, so It's basis, things need all a was and very and be. that actually an big from pertinent you data, speak, obviously tea that continues reading last think of focus to little the I leaves, area this is the year a happen. a to think, Matt. learnings on real-time of We'll question, bit more I be is and one to agile nimble of

the right, depends, same stays if my guess, I it if is it it changes. So or point,

more a not, one. I think, dynamic it's answer. It's So a of static

is the perspective maybe sort favorable has we we if got which far environment, the where Certainly, this be cost December, strive X% I is close the the inflation or pricing incremental think our us cycle, left been of X% think, behind to a industry, pandemic still with outcome will, to year. that competitive in reasons. the took we over so I for you

And in could of the continue to some back support underlying performance of the improved year. the trends half

take rather pricing. less we'd always, as And

it be continues that So inform that if would us to way.

pricing. inflation is year's year this goal this Our to offset with this year's

we that so be go the continue the guiding And to a half will throughout of factor back as math year.

Joshua Long

one appreciate Very helpful. I that. And follow-up, if I can.

do Can from them the the bringing the plan forward? timing, talked for of that. into about the to default talk infrastructure, Flower for a relationship the can outlook get and in calls, kind the into the fold? development think we've In going And that of terms of that the I kind development work year, probably logistics in just progression and bringing within prior encouraged towards what the is opened still of environment? perspective up brand and in current brand just see to that, the Child stores cadence about you ability to

David Gordon

little supply the were the chain prepared for pertinent a over very typical This is openings We about of of of the is The we some then in Josh. good, year part. will The time. amount feel the more Thanks, confident And open XX that easier have be last throughout those will a subsided few for permitting for QX, cadence challenges we'll sort year. the But Gordon. bulk and the in bit XX in that openings. of quarter feel be them industry. a fourth probably that few getting QX more David to most

So confident pretty in number. we're that

integration down year. the continue path this we Child, Flower at And

through all We has constructed Factory Our be those lot the by office, operating we're goal which along at the all was the and of integrated also components, really onset be throughout of year, FRC already utilizing would that plan pandemic. a on working and the IT teams all power along on been. year, with did here the teams the supply all the chain the components, that the HR, are work fully the we the early end with opening of our of the we most in integrated and and which restaurants at to target Cheesecake fully

Matthew Clark

this Josh, is Matt. And

point. Flower follow-up one Just to the Child

the our think the Child Flower I team been the improve conjunction restaurants. job performance. an well look along, it scale to the the at the amazing had prepare about the marries for that the well dovetails and And of financial on it done And of with growth. All chain, to has brand initiative that improving the in basis. hurdles talking growth a really objective with consistent investments the supply benefits to some that with in some of hitting enable have utilizing efficiencies was at some making enhanced costs we David we return

Operator

Your with next Harbour of Brian question comes from the Morgan line Stanley.

Brian Harbour

you on one still lately. few Would at just Maybe one sense delivery comment of business consider point partners? partner. Yes. the that, And other to has you're the delivery of first, just course, adding any it make delivery could

David Gordon

is Brian, David Gordon. for the Thanks question. this

Our data total now. maintained in that as XX% very execute we off-premise strong consistent. They and us remained could those of with delivery all quarters incredibly XX%, still the incredibly X well continue to earlier remains want. quarters stated that row at for that DoorDash. has throughout a analytics We all sales believe give we And and stable we possibly

where it a metrics. feel deal commission our quarterly we're And and support. of when relationship just strong and we meeting ongoing marketing structure performance course, to over an very comes we have going We have

of of of the X, incoming market consistency I and operators have one again consistent ease somewhere X because to execute partners just do that high is not which job take execution, and would complexities that So that the very others to which still a we some orders, to us X, we level, sales moved XX% execution the need good sales. managing share I and allows can of also know reason because the allows a maintaining go the having we're us off-premise part at to prefer overall have think to in for of such partner,

Brian Harbour

that's called shift just it's a And kind of still on least maintenance? that, out a greater will cost of do side. anything Matt, Or a the then that else of think whether repairs -- you the of the something we year? you OpEx kind of impacting a you calendar maybe it know as kind Okay. think source that's on and the source been there leverage of rest at kind go through higher, I basis, is be year-over-year impact. Is question of be could

Matthew Clark

pressure Brian, this comes good have stand us. Etienne start a is I having And really, areas and talking seeing that been as line Matt. I on question. bit And it moderate. more specifically That's to the we're little trends because that dollar about think absolute a do X out does down to it based

first one The utilities. is

saw it that cetera, does but here know rolls take through it of capitulate couple the the that way I electric the So the market and months. et nat gas we all bills system, a of

remain relative are tailwind on for to be a a basis. quarter in I move, year of last that will and starting the sort we to us compared on and did do So quarter-to-quarter, that our even see elevated, that, think although first

a is piece year start year, until said, categories dynamic comparisons second unprecedented the I be that one. doing of of really, the you last all didn't sort a it the inflation as was quarter. and It other in said rate as of R&M so And the of earlier, of different because in the changes will

on first compared definitely highest a those the basis, So moderation comparable see trailing some the inflationary rest year expenses. year. to the of I us to again, of component the will be quarter into of we're going But think, for the

Operator

from the Bittner with Brian Oppenheimer. question next comes Your line of

Brian Bittner

targets, you growth guidance. your 'XX because as year slightly tweaked appears outlook the they question within And still like I X% roughly year AUV Matt, building for a block it full were ask full $XX the same-store revenue million. the the sales kind on a of guidance? Is that

million to $XX.X million. $XX they're Now

So I'm outlook to if not minor as same-store a implies sales that tweak well. sure the

Matthew Clark

we Brian, it's words same. $XX the million I nearly I mean, Matt. the No, think it's used really before.

I million $XX.X mean it's think I vernacular. $XX So to more million,

outlook, basis. the are think I comps in the at a so perspective, and on year-over-year because funny Just the speak least this, on our facts to

looking I to perspective taking way a in our little applying about more at top think the that up different bottom and obviously a basis, to a variety by the restaurants their aggregate, at saying, looking normalized do of the down. going model individual think right? seasonal providing. current forward, a restaurant, on that ways. We is on a so the things that in conditions. at bit where guide better really do a it's local expectations we of we're looking and if we're But historical And We out gets continue long-term us and conditions

Brian Bittner

be Okay. margins. kind still you're And there? you you thinking a you to to X% in also X% commodity I Last call, that restaurant margin. get same that range. second the about consistent the profit seen is you roughly to margins net movements that to in on if that way just any Is you stays anticipated curious inflation anticipated of the be that pointed XX% think that And the low range Have today? I'm margins? somewhere said follow-up you out half my

Matthew Clark

Brian. Yes,

higher. It in you a move same math, second So down, bit mid-XXs half, margin, the QX year. of and if the did it and higher it's I is So QX to a will restaurant a little QX think up the for that's lower right. always going is, again, bit little be kind right? that

our early if a does make like think commodities about were call. So the income net look the outlook definitive to changed, we and I But I better. mean feel getting bit really at too hasn't little you the level. just things a it it's kept right? front, On same think

chicken remains have I in get you be just decent, bit eggs, us, keep still right? some ground we'll that like out it right? So against And other. risk, progress and there. it to seeing take I nets too, So maybe kind some but would in obviously, So each if things categories pricing will categories beef, good like think, do less better, little of a you're

executed think the quarter, our X The X to I we after picture predictability. bit can in a big where plan little is first to has right? black So the in you environment message years events here returned have really swan more

best and We in we that think the well. back have the the the in will environment business, operators half enable year us execute as to the of

Operator

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

Brian Vaccaro

on could comps, traffic, Matt, through XQ? in mix and just you Factory The us Cheesecake run the reflected price

Matthew Clark

Brians first I X all, But of It anyway, in row. said that seems sure. like statistical will. anomaly. note Vaccaro, a a Brian But we

the the was positive little piece, X%. XX%. Cheesecake Mix as Factory, is that Of half pricing we So mind, way business. just everybody account, over of was negative a just about knows, X.X%. a was bit for a that in Traffic keep to-go for right, the mix

And was -- in so basis. it traffic basically flattish aggregate year-over-year an was

Brian Vaccaro

about mix? That's Okay. to and And like any specifically the mix the isolate possible And dynamics you channel mix between help to specifically. out seeing dine-in to if going set it I dine-in try parse you're that great. aside Is mix? ask within changes was

Matthew Clark

Sure.

it of half the that, So of about whole deal. channel is

consumer we attributable saw some behaviors, I and and behavior. dine-in just other say, purchasing February The outsized to piece, in predominantly the last March, would is because year's

of was David noted in on this purchasing expectations. the but earlier, sort all what measurably as think of rates expect trend. XXXX bumpiness line and year, in to do So our COVID Gordon per And depending some our I behaviors we see with happening levels, during right person remain the incident above the is

about in quarter the X XX-XX it's first components. respect those to So with

Brian Vaccaro

then And All medical I benefits. to And think you back lower right. we I said wanted labor, could. shift to if

year, much ballpark that's of in know also, I attrition. quantify out and lower overtime about your lower maybe first lot you Could importantly, improved costs were and a you last QX. the pressure costs. us? that think here way from those training more what Any quarter? comments outside And I called to I staffing there's heard in hiring, how for

Matthew Clark

Yes.

wasn't you, the driver I piece. labor So would may better. it million. tell I Group huge mean a be it $X Medical of was the

the measurably attrition general biggest teams it. the over help and entire factors just the labor levels to to I to a that or lower net really think would did was have from of the getting specific Medical. significant I around attribute efficiency of but I of don't million mean productivity. back I move close that training time Group just number, difference are a that it sort of to pre-pandemic $X

Brian Vaccaro

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

bps, to back And towards Just on The maybe just it 'XX? has pricing ran XX more versus recent not, down Cheesecake -- Cheesecake I the in remind Factory you what's segment us quick quarter maybe pre-COVID levels margins margins segment in allowed recovering more And get took 'XX. QX. on the math still more fully know in those if that months? February, bridge about to the was margins, Matt, maybe first but like looks of And I the

Matthew Clark

correct. That's in a not took quite it expect higher-than-average keep OpEx, digits, noted, And not And with bit be We in to again correct. the but in the there quarter. the pricing that low is So math quarter. just first we as the we commodity Yes. double other first the little right? inflation your ran mind in

to There of to think -- are change to ballpark a can the that will enable that, want us for we commodities quarters levels, sales the But right, in least be all past the pieces lot be. we're be X think at at these where where during within cetera. now year. to I of variables striking I enabled of can of with change, et distance the we're

Operator

question Baird. North of Drew comes the Your from next line with

Andrew North

development. already, I'll been a unit on A my permitting and asked It to follow Great. continues as seems lot though construction have questions but of up be challenge.

guidance, So be may I guess if speak wondering give XX development recognizing of year? level about this differently of shaping would just those from my XX at And specific year? or And seeing the to just your getting your pipeline next looking availability not you're than longer-term while confidence you real could you how anything look directionally question build openings there's make you is year up a for the perspective that cost if is algorithm? to estate

David Gordon

Drew, target about same as a number bit chain be look a that said by, feel And to growth supply overall be great be would X% that this that little month in we to little that very and we side. growth Things year. towards this continuing We XX is year. for every pressures confidence type in we that, we'll have the a on unit earlier, have to something David as that Gordon. confidence next easier not is we towards. confident unit previously, is as is still which why number confident stated bit XX still permitting this attainable X% as the the We, of seen working goes have and seem year. a I remain

Matthew Clark

this And is Drew, Matt.

CapEx everybody have definitely We, on the seen as with one financial inflation. else, Just along piece.

our the hitting that aggregate, levels growth. think aggregate, unit we it's the really kind the unit part, to, of with geography, keep expansion volume it long-term paralleled that the we to depends are For expectations with in pace of the in return need on most been but by pricing X% I

Operator

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

John Ivankoe

kind comp accurate quarter normal be quarter hoping year-over-year. a lot would it around know I positive. comp And versus of wanted us, that 'XX? low or looks 'XX, of But inferring exactly obviously I this, something I were reading there's to just -- comments difficulty if To and of I relatively the second single-digit the really flat been of and comps What guidance it you quarter like second in I for 'XX. of some -- see second the what of the guidance apologize. maybe was missed

are If customer? the on you is be is And could meaningfully in And the it it to is quarter 'XX -- geography versus it year-over-year just year-over-year? you store less it basis that. would pockets traffic that customer dayparts? on like where of that type elaborate Who customer weakness? And still basis, that, looks that type if case, is of down And to on of second certain 'XX. helpful. Is you coming a clarify seeing in that pretty

Matthew Clark

John. Sure, This Matt. is

not first looking to kind just was where were quarter and revenue, that's framework we're comps. year-over-year historical giving clarify the the but that the to when seasonality applying specific second providing reason that's the essentially an in first quarter, XX% is year, the aggregate comps July, more and about in We're we thing mean, pretty is, the delta were of the I just around specifically, at at So particularly full So last they say, actually I April, look year. distorted. there right? a QX for a to, compared mean comp, And in difference. we the And is huge

if Black to So tend think but you're think going see really we that Box was I continue to KNAPP-TRACK. reflected to we you the and I to curve. look I mean follow -- at and outperform, tend

of some normal to our So that basis. to I continue based and year-over-year on bumpiness our mean, we're going not opinion that see performance, a is it's specific on

kind at first to was I of the really pretty flat. our And quarter, traffic close looking noted, as

that in feels aggregate, good. So

right mathematically, of that negative you're the little what second we're a modeling think out I probably is quarter. traffic in bit

that of general. pretty heard. the it's really specific reports I with consistent not that's And all think in I've

think than absolute just really I more issue a that's so an comparison sales pattern.

-- true. dayparts performance consistent the still. continue pretty probably does it one But thing we've and that very see The be and the this think said to the areas geographies. our before, opportunity across generally, are our I locations with most urban across And we

John Ivankoe

when of historical would 'XX talk unusual? late through at afternoon, comp, Wednesday, night, be We Are to the on those of would middle that's weakness ago thing. used type type in still and up that shoulders a the of kind 'XX Monday of back patterns ever look it show making versus about of what's years maybe coming

Matthew Clark

the percentage of of No, I all mean pretty and March, at the I the total just look a think was up of for stat movements between February big variability. by April to I so. X.X% very go pack mean we looking last movement. very July, there really line a through mix we consistently, was pack our it I if don't today think within of then and just I March category. and to each stat year, big the a back was to It at month lot changes is

Operator

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

Jeffrey Bernstein

Great. Two questions.

hold where macro. confidence one, to trends through onto leverage gains as a we move you the positioned The the you where potentially had better the be you've like or margin your you'd year? be have then the just think feel first slowing perhaps say I'm outlook wondering were just we maintaining if I slow potentially to one wondering whether it momentum on you'd just about that follow-up. I'm is greater, with the as And sales recaptured?

Matthew Clark

Yes, Jeff, good a that's really question.

Matt. to right? objective want I recapture our mean and margins want it's to or twofold, you to try case, is our This I very is in protect You pertinent. protect ultimately, think always traffic.

objective a we we situation $X.X we $X.X and that will normalized billion it we're a big flow position. in mean year, earnings can be think, have the we cash picture, a to good or grow if base, then I be I of really and if this billion margin more strong going spot, whether right? accomplish off

feels that to equation. companies piece, to we're execute like And on than the that up the labor margin of ourselves little of so certainly like the ability environment side like the compared set has for of sales it and a what feels bit we commodities to right? up a today crisis. the lines based operating better the the kind underlying seeing that the bit with to coming for the little piece, in targeting And what we're line saw better end, profile out market, on bottom produce financial that strong

Jeffrey Bernstein

that up margin Understood. And then comment. on following just

said of restaurant are I a back you keen to think earlier you margin. kind guys get certain to

for the price portfolio do I be think to mid-XXs it the said you to so. strategy in And your like seems 'XX. would

to you'd Or you're line slowing get with that concern really the margin. traffic? a there any But home and whatever incremental price take get just hopefully bottom are to maybe would to food keen preserve you to be from away certain falling therefore, new hit home let that I Like the pricing at you that below some be a to guess, be keen is hesitant to back margin food is said, now below there. necessary So limitation the being the and that price that margin? a macro certain to

Matthew Clark

Well, I think again, this Matt. -- is

one we both, prioritize much always try not And it's to right? other. over the So too

any point, right? absolute about period-to-period making because and of that tricky think providing think we the think that, I versus and or worth is of it's about at to time a we level satisfaction saw, gets that unprecedented taken inflation at sure bit It looking of point to the pricing I do guest it's it in So the year-over-year it. that curves quarter-to-quarter. kind needed this now we've -- little

we're this lapping, right? prices inflationary. rapid So the they're stores now we So So you think, the may I good less time, down, day, less to just those have think priced of I have But stack in some And grocery than position. grocery store over be haven't if still come inflation. right? it a we

less, that pricing. we're bit allow to a think it now. it balancing us poised and will I we're margin little less think well hit bit take strive commodities pretty if I are to a little But to target continue to right

Jeffrey Bernstein

Understood.

easing half, we Is X% you've and in the recently fourth third most I the you allows be what think to that first the the projected, of what previously and to Cheesecake modeling? in should respectively. you So quarter, which would taken an pricing hit be X% and XX%

Matthew Clark

think that's close. I

might and X%. X it like And yes, something you're that. taken we've be think X that, or I but within already

Operator

line the from Jon comes Tower question with next of Citi. Your

Jon Tower

about program? dig program, What how it could driving loyalty on to way from we -- the consumers into this? frequency-based it's a if a and And could program be Is you from shed rewards can else structured? sort going if little looking light incremental some frequency it the are Curious Curious expect? from what of you bit. you should spend, what spend-based gain a aside to think

David Gordon

the Jon, for Thanks this is Gordon. question. David

to I think there's really X the program. components

ongoing will which acquisition cheesecake and just engagement. slice we first the access birthday, those those be right, a on published drive, mentioned, offers throughout as visits. are be complementary those be incremental would given of support offers, you of designed have things year, would reservations will to and The that type Then to unpublished really to like activities member's

And marketable key moments. then some

be designed Promotion -- So we what to something used around Treat around National Day. the to will unique. Treat or that be Cheesecake Halloween be be And may our or our traditional program

at reservations component a spend-based of waits our and that's be historically We've been So is more people a program, be important a know It it acquisition. think benefit that delight. Cheesecake to surprise program. access do and an We certainly that for Factory. drive won't a points-based long for will known we won't

of we've doesn't something to anything cost good And the very side to seen so far usage us folks. reservations be that offering margin on

along, far, what this our all not margins. And program that's So goal we're thus that's have seeing. impact is to restaurant-level

gathering in and to guests to we'll enough be different way the periods. in Factory Cheesecake be market it to unique doing perhaps we'll time And hopefully, things. most specifically do we So fashion drive the able data be to

for can sure to coming make et those lunch, offer you marketable that around something cetera. we only moments we and you're talk if So you and dinner, of one

a started able in in to had data June haven't So get never since to that we use we're and traditional been we before a CRM that excited way program.

Jon Tower

Got it.

high about but set? think doesn't would level be have, costly, peer the be sound which it from spend additive the it low of to it So fairly in current you will to to marketing relative terms a this that spend, like is super

David Gordon

goal be the spend to Our and to it set, continue the low peer relatively within marketing would able keep be yes. to

Jon Tower

Got it.

just Okay. development. And then shifting to

seems it half year, this weighted. pretty back about thinking Just

more are to second the openings going shed get XX% coming of beyond this normalized you and of said not cadence can of a some numbers, half you for per When think on I'm to looking I extent asking 'XX, but se XXXX to the we guys light in on that? year. in the growth back guidance and year,

David Gordon

the of that's we think typical the going the be always for can that I Well, XX hope half pretty cadence the back case. the year. past to years, has But been

different. much be -- that expect Who expect be to wouldn't I knows. So it it to I wouldn't

pipeline, certainly be shift have love some we'll I around you. is as to that think, share We'd with able color But more Our to strong. forward. we that,

Operator

from question Sanderson comes Research. of with next line the Northcoast Your Jim

James Sanderson

goals. and to review wanted unit growth Just store briefly count

how that quarter, lot make by compared I flow didn't sure see I to into fourth I a I wanted to actual growth understood unit stores think will net net the real growth. of quarter.

Matthew Clark

Yes, Jim, X a this question. had Matt. closures in is actually We quarter. good first the It's

decisions and like would flow cash annual it of base look didn't it the portfolio that leases of on net. basis obviously, that's outlook. review timing like So We and why an on

was happens time of so it And that usually just a and of year. sort at trimming it normal

new the a X targeting on have would, that against the closures total openings, basis net did that. we're we but So

in as be what Gordon something is David that, then think noted, quarter. the balance second fourth I in it's a the the would to thinking. we're couple in like X% third, quarter, the X% And

James Sanderson

Okay.

So will that be the bulk of to fiscal still year? incremental the

Matthew Clark

Yes.

James Sanderson

good. Very

for sales that the sales dip expectation I commentary just second on Second G&A I a make quarter? going year. in that was a in as flattish to sure percentage of think last Is Meaning, place guidance? baked down the could. I second the understood Is if I typical? take Is into percentage that to question, your there wanted of quarter G&A.

Matthew Clark

be a Yes. tend And peak little about the average weekly really sales. -- of that's the the tends to leverage bit more of sales. quarter We of second

so changes, that of the a get but not So just little much leverage. it's bit to spend dollar

based similarly that. So it of kind should flow on

Operator

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

Lauren Silberman

across can And running to is might color any days I which in relative are presumably about traffic, pre-COVID? back pre-COVID understand noise on-premise looking that to traffic where be was below so there's fully or terms of running on-premise talk you're dayparts at back not channels to you XXXX?

Matthew Clark

consistent. this Lauren, been Sure, Matt. really is It's

almost that first is fourth where to or were to of differentiated on where identical in day we week again, for that that XX% of true. the pack. in It's sort been were It's much quarter We've on-premise of traffic a level the quarter. based we while. not in So stat is really XX%

a just of term. buttered lack across to of seems peanut that So for it more kind be technical

Lauren Silberman

to loyalty. another Is one targeted have Okay. at I loyalty just drive Is on both and on-premise then is off-premise? reward occasions. there dining that fair? and It And any seems component potentially like the

David Gordon

some Sure, We'd DoorDash test working Gordon. to into Lauren, ordering, is well. specifically and But traffic. rewards able will members DoorDash this around with which platform members available to throughout the online allow to to DoorDash It's we both. promotions, to pilot dine-in been continue marketing as to did love offers drive and period, the we've be actually David integrate make us

Lauren Silberman

one, a sense about final of about. normalize? Is to have a how follow-up about Just just we you can sense to peak. of think started the the then And that -- guys when the Great. thinking I on rates any trends when mix starts spoke there you to lapping a better expect guess, attachment of

Matthew Clark

off-premise. this row, X had is in Lauren, we've quarters XX% of Matt, and a Well,

And that same seems as it average So it's be kind the as consistently seem range. pricing. a in at been of pace growing to like weekly the sales percentage,

less percentage. plus So I that of on a minus to based see percent middle year seasonality. little the months the are do as tend or bit We a think

in for ballpark be to I think been that stride in industry a and that that of sort seems based behavior the But consumer that's now. the we've whole just something on almost sees. year

Operator

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

Dennis Geiger

XXXX period. compared it? ago to the months if speak on more out way if in of But a fair I one versus noise, some all trends. some that recent year XQ presumably, wanted sort choppiness think to-date it you 'XX, I underlying that's sales of sales ask could to to take know about you as the mentioned you at the could

Matthew Clark

I Sure. of the we that quarter. a built perspective very year. seen the steady of has on way the enabled of that up the sales to that We've good of think on XXXX quarter year outlook. the for our first sort that feel at second business And give balance Again, us QX we us, seasonality the the perspective XXXX applying good predictability looking is and and and based to forecast the in

Operator

you very call. This Thank concludes conference today's much for attending.

now disconnect. You may

The Cheesecake Factory Incorporated (CAKE) 10 May 232023 Q1 Earnings call transcript