Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. My name is Cindy and I will be your conference operator today. At this time, I would like to welcome everyone to the Cheesecake Factory 2023 Quarter Two Earnings Call. [Operator Instructions] Thank you.

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

Etienne Marcus

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

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

different be in our release, we fact in website could remind that in of the stated and forward-looking our meaning statements forward-looking from and within call, me Commission. press materially are those factors filings during are or not with of as quickly which discussed results the Securities today's of Actual on investors.thecheesecakefactory.com Act will considered implied is XXXX. be that the let Litigation available a the based begin, Securities this result at Before you items Exchange detailed on Reform and Private historical statements

speak made and update statements this the on undertakes forward-looking any no company date All as to duty call of today's statements. forward-looking only

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

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

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

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

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

David Overton

Etienne. Thank you,

levels. objective were back of generated in measurable increased made we margins towards share quarter deliver the Combined and one per returning pre-pandemic highest earnings able our net to with in profit our we adjusted income our adjusted quarter, stated any our history. scale, to company's second the dollars During progress

line. Despite unit leading of Cheesecake the continue value of environment, sales our a shareholder $XX.X bottom the is through generate averaging the million have slightly we Factory this annualized both industry believe top volumes continued growth for indicative softer and We opportunity restaurants to enhance quarter. to

the outperform demonstrating Comparable quarter XXXX. to our Dining sales for year, the segment X.X% continued Comparable second and strength versus Casual namesake versus sales and XXXX resilience them prior increased XX.X% the brand. of the from

Our focus contributing of a high degree consumer our relevancy. and innovation menu on remains key differentiation, point appeal to of broad

outstanding labor the our menu this restaurant within are Pecans Cookie commemorated delivering Cheesecake and walls country. flavor than performance with To solid driving improved the four end across Day introducing Cheesecake midst flow Dough past that by in profitability. results Sunday, and we our through Factory for was newest latest Lover's productivity, management, Cheesecake Execution indicators, rolling key out the several National including better with of cheesecake planned wage our across operators

combined favorable This exceeding input quarter adjusted our income expectations. resulted X% costs the net with in for margin of

On active. the the development quarter of opened second Factory the in FRC during restaurants Cheesecake sites our and we all pipeline two front, while remain the

our control, experience dates construction permit to various particularly opening delays. continue delays primarily beyond We to some and due in approval challenges

to factories, cheesecake the including as many nine Flower FRC five as North as XX and in company restaurants, open XXXX, locations. expects including restaurants a Child result, As new now six as Italias, fiscal many three

Factory We to under to restaurants open Cheesecake three continue internationally anticipate agreements. to two licensing

intently and long-term hospitality, food quality, drive focused hallmarks remained delivering growth. we our profitable of service ahead, look success on the we As to exceptional sales

brands, business, to our will scale the and gains. differentiated of to competitive value shareholder We market our leverage including continue share drive balance operators, best-in-class sheet our and strengths

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

David Gordon

Thank you, David.

well our to guests. positioned resource retain service to hospitality maintaining improvements on investing dining are our our our staff competitive uniquely edge and people and of excellent across enable And high and by and all experiences deliver focused in believe greatest best-in-class operators. delicious sharply remained ongoing our support memorable quality we train, and staffing. facets are members three attract, to for people we Our us We

our Restaurant Last in-person October, center. Management we Development our program resumed corporate held California Southern at support

Over the we quarter at our training hosted paying have over over and by both last nine the XX year-on-year. satisfaction XXX sequentially are off. improving our training With scores Factory conferences managers and Cheesecake months, second attended investments guests

second satisfaction metrics all fact, XXXX and In dine in the quarter levels. have key guest takeout surpassed

We another restaurant levels. to management industry retention, pre-pandemic back staff rates, and returning leading staff had quarter with also our effectively of hourly strong attrition

lastly the front. recruitment And staff on

We improvements position drive will believe restaurant as an of restaurant the guest's in relentless service these employer in Work recent focus to accolades choice recognition were named Fortune's XXXX. our XXX made Magazine's XXth our best for the overall And experience, for Fortune list and Following industry. For for ultimately consecutive our performance. Millennial's on staffing for also workplaces support just to having list We Best Companies year. to

Moving portfolio guests to sales of first stable totaled off-premise for quarter second remain behaviors. Factory positive, the predominantly sales with XX% trends, our concepts sales quarter sales of levels. comparable Cheesecake below across purchasing just

rates XXXX levels, with remained above no incident material daypart mix. on-premise change Additionally, to

XX% planned the sales, Italia annualized locations quarter Restaurant AUVs North with Four-wall million. North results the million. $X.X quarter, first adjusted for AUVs $X annualized quarter in continued actions X% for drive from matured from Other versus also Italia margin XX% Concepts to the XXXX XX.X% with strong second in of improvement. resulting comparable prior solid of the and increase further to year, in to Fox improved

Day of and and the exciting placements, team features news, attention celebrated the totaling was to surrounding media Turning marketing by followed significant the msn.com PR social including media publicity matched X.X into new marketing, and flavor few. announcements. as National on amount more Today.com XX we than David which meal, daily generated a our mentioned, Cheesecake broke name parade.com notable a billion impressions, Sunday, on

Day. featured examples prime Overton to marketing and of campaigns Factory consumer marketing on sales. events brand and Founder creative increase The and awareness XXth Today on the and last brands David National PR publicity are was Friday, our momentum, tie Show our engagement drive our strategy to recognition Cheesecake Building on this generate These Cheesecake to raise to our anniversary

On reward a June off we're rewards is our X, start stages, promotion while of and with member celebration early promising July to as Day program X. slice nationally. price on the an cheesecake our surpassing and August our any guests And offer expectations. program National the in cheesecake Cheesecake we launched exclusive XX, for a And very half enrollments We dining our special offered for members.

to effectively with reminder, incremental overarching more while our leverage a margins. to as and and maintaining drive the guests is our objective And insights restaurant sales level data our analytics engage

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

Matthew Clark

you, David. Thank

recap low second the sequential quarter although level last I our under end a of quarter. the Let range me provide first just outlined results Total the revenues improvement of of expectations throughout were a the our versus basis year-on-year $XXX.X high on million quarter.

Adjusted returned and our shareholders expectations net sales. our were combined above depreciation of margin to $XX.X and of of stock income in expectations. sales percent as relative X% million in repurchases. dividends was a form G&A And we to the with our line

more details around Now specific the turning some to quarter.

the year restaurants for Second versus the $XXX.X versus XXXX. X.X% XX.X% million. increased and Cheesecake at Factory quarter prior Comparable from sales sales

XX%. quarter Flower year. supported North comparable by [$XXX.XXXX]. second average prior million including Comparable sales from X% for sales of million prior million, and a XXXX prior the operating weekly increased versus were sales Sales XX% versus XX% growth $XX.X during sales FRC sales fiscal $XXX.XXXX. totaled $XX.X And the FRC bakery sales were Italia week increase year Other $XX.X Child were year, XXXX. of up were per over external

moving year-on-year Now expense to variance commentary.

seen key items have cumulative year-on-year our the P&L. catch we We up measurable with As realized across improvement in pricing several line inflation.

basis of and decreased commodity XXX sales higher despite points of second inflation by favorable pricing the dairy cost XXXX. quarter contracts driven Specifically, lapping in menu

hire driven by by XXX labor offset costs leverage, rewards marketing decreased leverage, driven Labor Other pricing driven levels. related management the mostly by to decreased partially points, predominantly by pricing program. basis XX expenses partially staffing operating basis launching higher by offset points

quarter of compared Depreciation, to the We opening expected second remained costs preopening dates $X $X.X quarter as restaurants costs basis in XXXX. second a than the higher in period. the for restaurants staffing to percent to year Delays Preopening two XX increased related contributed year. points, were G&A in in million flat mostly opened quarter of levels. three million sales the prior higher during the prior the versus quarter.

related And expenses. and of in of the acquisition expense $X.X income a second net million quarter, impairment recorded we FRC lease and termination to related assets

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

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

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

guidance. will we While comparable earnings be sales and specific not providing

very operating be continues environment Given to the dynamic.

underlying We QX and for will income thoughts our for year revenue XXXX updated provide net revenue our assumptions on margin. full and

as or recent For a no of and a assuming material trends half basis $XXX $XXX be the we more to assumes trends comparisons. we sequentially performance, anticipate quarter-to-date QX, on second and million. on consumer continuation lapped QX, between our improved revenues This operating year-on-year total the essentially most from based million of which favorable disruptions,

this broad time, continues QX at of our effective low to inflation single-digits we market Next, for basket as expect stabilize. commodity

to continue net well labor. to trends in mix modelling and are total mid-single-digits channel similar when of normalize which latest the of commodities about components other labor inflation our as factoring in rates, as wage We

revenue anticipate manager approximately planned QX of our also the in midpoint annual which at $X mostly Based place about than of expense for preopening on assumptions, million September, average range related and higher G&A the which X.XX% margin to we I quarter. general we income of reflects of previously takes the approximately net in expect $X the these million, conference, outlined,

performance, on Now for no more year, operating year-to-date trends assuming or based material recent consumer and full the a disruptions.

XXXX results. approximately $X.X our This total billion. We reflects revenues for second are now quarter fiscal anticipating be to

on perspective rewards in the impact post launch program. as related the well seasonality to of pandemic, timing opening delays impact the Our from restaurant and dates, as any new

and range. to low back labor range now year, For estimate in year-on-year be in commodities mid-single the the single-digit the of inflation digit the half for we

Given our be we million. preopening growth expenses unit approximately are $XX expectations, to estimating

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

consumer no exogenous and are so, remain do there we consistent, factors. Assuming and trends other material

openings We income at of new in XX the as approximately we restaurants margin as five development provided. the remainder fourth X% revenue plan in portfolio our highlighted quarter. to and continue as year, Overton expect quarter this David of level many with the regard third the year earlier, I to With open full net four to concepts, to across

And $XXX of now we on and maintenance in approximately CapEx next this as well unit anticipate $XXX as million year's some to required million restaurants. development our year's support to

In in closing, profit we our margins. took earlier, step four-wall as an the second enterprise recovering wide operating David towards quarter, stated another

continued to to consumer be of sentiment environment various pandemic due in remains shifts the comparisons due somewhat potential While and inconclusive the and of lapping to stages uncertain behavior.

of stability overall predictability year. performance so We and are pleased with this far the financial our

levers As key profitability previously year the growth. ensure sales our appropriate and are place to noted, future to in have drive we we rebuild this objectives our have to

operational again As generate stabilize, we normalizing are we cost the financial and environment macro starting to once consistent positioned we well ahead, believe with results. or historically input, to and look

And take with questions. said, we'll that your

Operator

of first Mullan Your comes Instructions] from Piper line Sandler. from Brian the [Operator question

Brian Mullan

Hi, thank you.

some rest the Just know, the recapture just price do the through the quarter? us then please the industry how you you're brand. continue on to results mix margin menu you traffic sales And to the to of pause menu any traffic, the you trends more on conversely, at for you solve Could cheesecake expect core taking of same-store strategically year about going for progress a maybe price. the and take give the question or price piece, the

any would thoughts great? be Just

Matthew Clark

negative for the roughly mind for investors, actual The Brian. most about negative good XX.X%, and mix Matt, Probably the traffic the data, a it's a the then X.X% was Sure, just question. of quarter. This was pricing a was is X.X%. on top

stable, about being off-premise QX we has last the of to As bit the year. very in do little before a change in the some mix talk while heightened year-on-year still with

other revenge But of call how heightened we so that mix And pre-pandemic are the what part buying we QX, or way year, saw of levels. dessert causes was higher XXXX. in that called buying. purchasing levels some the count guests negative into the And was we of the in was the still guests behavior appetizers impact. running obviously We're and much race last above, really alcohol, place

lapping menu of level versus pricing we're For with we our had. contemplating year, the the X% the remainder a summer X.XX%

it'll weighted December. in because we'll diminish remember, know, XX.Xish know it XX.X%, you from in the the then And So, at quarter. don't or the I so third go up the see the of I did catch think we beginning fourth quarter, X.X% at to

of we'll of X%, more exit. that because quarter balance will year in over we had with like the that fourth So, pricing some into go catch and lap up that the next

and at lap I most was that thinking think of surge, look pertinent it, our in quarter this kind came maybe about though second the of cheesecake. difficult second the had post of for And it. a by last Brian, part Certainly, how out year versus we and COVID there the quarter in importantly, expectations. how sales we to driven your some volumes the is question, as very exceptional optical just we of we're quarter

was bit couple little May June new then couple Really a openings, normal. had that softer, delayed percent really it. figure of of a timing obviously in and to seasonality contributed of to And trying terms that the of out the a we good. looks But maybe

we As in of comps the digit how exited performed, the mid-single quarter we being closer about there most traffic. difference we to think

in going So, we pretty good our actually traffic think shape is forward.

we're what as through go the see expecting and that's third fourth quarter. to And we

But we the that business with than strong. underlying we're I very taking the third it. to I going trends keep support doing. think doing what will into think, And that are we And So, quarter are been. we're pricing less pleased going have we're

Brian Mullan

the And versus all one the the but that's helpful. expect? just one Would for to, Okay. some of know some I dynamics, approval you is a outlook permit two challenges, your wondering, release other follow-up very on then unique or Thank I'm factor it. construction expect And not you those just delays. mentions, X% to them development bigger might this or X% of year, I'm impacted? net context a you these of one bit kind improve potentially want that quickly other? longer? that thinking to seeing you to have with XXXX investors growth get will the you next than could more understanding has been issues of be Do year and

David Gordon

David the think, XX, growth Overton is year up unit Great question. David year. puts Gordon. to this This And Hi, Brian. as for X.X% this X.X% I about to mentioned, at for us

the So, our really we city, year, in in permit the a that's more more little sites confident for permitting, still number us, next bit feel that construction next Most on for broad. in pipeline X% when are not we a of whether something local at the year. or delays for look

for as terrific think we ensuring And stayed as openings on equipment I that have far the a what for again as the path, we done job next we've the year. we've of pipeline need

than able jobs to over new we So, what nothing that's to going little in to quick hitting people being targets. that be keep less And cities to bit from being better. but need, about do And little continue a it's previous. time, internally those that just would will more a us slower, only more hope there's get then

Brian Mullan

you. Thank

Operator

Your next John from question comes Fargo. from Wells Park

John Park

good Hi, afternoon guys.

of kind in growth about growth? of at by what's seeing? by margins of like guess, down recovery the FRC this that kind being look driving Italia cheesecake how other us kind banner they're much - outperform quarter, I help you restaurant the And of dragged are North nearly terms think the and can Just looks outsize

Matthew Clark

were the Sure, Factory recovery. yes, we with pleased Cheesecake pleased, really margin

timing last through, end flowed inflation, we're was basis cake of And extra that that up year-on-year, the X% think of think we seeing the took about pricing, year. at you the XXX points. I versus If

So pretty much XXX% pricing. flow through on the

concepts that's see. Part think the the great I to growth. of So, between difference is

thumb. As a you so how about noted, many of but of good X% depending openings, a rule that's sort on that's usually delta, or

for the that North other pricing up the some that component quarter. did in the we second actually think I of catch was of

that didn't get the even benefit we So, yet. full of

So the lag, there's think X% I front. even another pricing on just probably

are of increase progress. like positioned lot we've the we're the well and all concepts really right we're of think not our we We're to that, because continue on it. we made But, building recovery we declaring front. to it's making that think on victory, still want decisions, a So,

John Park

just you us Italia Can was remind Okay. what at pricing North this quarter?

Matthew Clark

I X%. think what do about we'll

John Park

you. Thank

Operator

Your next from question comes from UBS. Dennis Geiger

Dennis Geiger

Great. Thank you.

First of mix from how sort question, about seen opportunities demand, channel? you've there, if to a change wanted within bit any that and I ask delivery that a perspective, you've changed that's with and at other any identified little could, what

David Gordon

Dennis. It's David Gordon. Thanks,

very see stable We continue activity. to

the just then QX. we of about below that were Now X% ordering. off-premise and up still made phone walk where of percent X% is or mix. it in up, of up makes in remainder Deliveries XX% the QX, XX% is at a to online

So as last strong preferential we as need said very said, position exclusive with DoorDash, a well give really our may commission extend have marketing as we I us continues quarter, think to we which agreement to rate. a

That means are sales in any way that the dilutive. our off-premise margin of DoorDash sales all including not

we remain, that to about would be So, those sales feel the summer overall. sales good the to hold will slowest to continue see tends on delivery for time that this they fact

have go X% same seen where quarter the we were integration with the use also, down rewards the And allowed type to guests incentives reward of we ongoing also ahead last is is partnership. year. about the from have DoorDash. really which last we side, feel on that behavior So the the on DoorDash and But would good

Dennis Geiger

does that may. if more one I Appreciate David

like a you're definitely thinking wanted forward. run solid you maybe exit the to going on and follow-up to about number just June good that seems it a Now that that's spoke rate mid-single

earlier in some Just as you about talked months. seasonality

if multiyear Thank guess year to still forward that anymore, over we one months, think you. guys on coming maybe of on basis think you way as think and is just those, a think Just a curious. about, about that basis trends? just how June exit, to it's good about kind go that a about those the the I

Matthew Clark

data Yes. it any Matt. This mean, bit right I is Yes little in remarks, as inconclusive, said, a I one is with still - prepared the point.

always, to is caution, to we And year prior think continue absolute of but we variability, try I and rates, there again, run triangulate XXXX right. against that so, some

and have you now, holidays, in you're operating changes been there's weeks. five day differential So comparing

And tricky. little - it so a bit little that is it's a -

the the that, did, think that be And of job to managing need to I through reinforces sales that be our flows and forecasting agile, operators driving was exceptional. and with great their

I the stability August, the of in of think kind remember September that the I last timeframe, if correctly. started beginning year,

feel digit are And that appropriate kind so, we've been And will. mid-single of we outlook, is rate if I like, seeing. run you that's what think know, what that's encompasses, you

Dennis Geiger

appreciate It's Thanks great. that. I Matt.

Operator

Stephens from Your question Inc. from Long comes next Joshua

Joshua Long

understanding even expectations. you it of in your in question. kind predictability one-time had actual terms or for you're we about though And falling the that items right, the comments it then, relatively from about Thank taking the level with really of talked maybe predictability in am Xth just sounds Is the like feels store I financial of on of in performance falling your have some the if model? the the quarter, Great. that back might maybe sounds there periods, of revenue, is my maybe line. line point thinking get away absolute you some Matt lowered as have some peers Curious, point, that like how that, be whether to you in traffic your to was kind of choppier July, go as to performance, the your of

Matthew Clark

and I be abnormalities numbers, right. mean, to there continues that's right. lapping some potential think again, I

they are labor inflation, and not think been, exists. cake the the that I the input the moderation line. predictable the that I as So, bottom I that COGS for thinking and we've volatile last both, business we've and and a seen have as that think in in quarter absolute three most top The think particularly And the But costs was the years. about terms, half the the seen. goes in

And fact is stability improvement very the continued that that some in us confidence the that the costs, with gives top line of achievable. core

course So, I last has think that teams, from months. the And again, narrowed six over benefiting a our hopeful dramatically And continues. think variability that the that's testament environment. the that we're that's real to of the just I

Joshua Long

Anything helpful. the the yes mix of or you've to geography, kind When surprising a those there the overall out basis, within that think either results? or maybe noticed, also sounds it context of by you. That's maybe trends are consistent about pretty Thank we like well. daypart, that - call from as

Matthew Clark

look of each Yes, we things like them for mix, I XXXX, mean, within when it's right. example, X.X%, at daypart versus like

don't to it's been consistent it's close, trends. we Obviously, the that of continue usage And in has now. unique of no right really negative the areas. some heat of and that's other that So around to about and movement a I've value know, see challenging. that of some half commentary there's sort heard possible back I some country historical kind

results, and even our I factors, feel think So better. given we those

Joshua Long

you. Thank

Operator

comes Brian from Your next Raymond from James. question Vaccaro

Brian Vaccaro

good Hi, that wanted you'd a looks comment improvement circle little the what I Is said basis. on comps. that I the XX% in Cheesecake comp exiting versus on what curious digit in the 'XX thanks. first versus of evening. I'm quarter. comp And And the I half like up, think appreciate Factory the to. to that what softness you May, mid-single year? saw saw then attribute And curious you versus an back a you the just

Matthew Clark

is so Brian. This Yes, think I Matt.

certain cadence May, and all model The different. been year, expectations. trying it cadence we first like saying, in of were around year a was I sort was there they've there year-on-year, before last our a was point to certain mean, really,

second mostly pattern. was expectations how around this quarter think do, new our out figure I about internal that So, you

XXXX we to And sort roughly or don't terms, that's the just the it of I year. improved versus mean, sort think is through I still, XX% compared as that is we of I But I that of line. prior absolute And, our it better to went and expectations, digits I kind hard it's represents mid-single quarter. because to stability thinking on the was in of just know think think, worse, our I right. versus say. back think as XX%

Brian Vaccaro

down And points is, pre margins And this, here That's you. thank fully but Cheesecake that recapturing segment good you it your right, like are see margins. and 'XX. But, on COVID basis of Cheesecake would what looks versus on front, Italia. of may view? margins COVID quick the recapture the All about is XX then, be and from improvement segment North helpful. some math certainly still recovering key confidence I expressed to question drivers hope in guess margin your some I my right the the sort to levels allow of in pre in

Matthew Clark

first think math is your correct, all, Well, right. I of Brian,

is we're that have seeing than rates as pre-pandemic think we've are a bit or not - been incremental carry, there I half, summer fast gap, also quarter, close continue are But us second pricing. maybe that help have inflation probably the where the that a I little in to that, a to So X% wage think in one will taking we and more true quarter that the as I couple that last mean, might of two as historically, we in there seen is continue areas we levels. with below believe the of level might

to we be items able COGS to line little the as leverage So labor move forward. a the bit again, opportunity I the in and really think see we

we is here associated And third fourth. the we quarter. case comparison piece expense also in marketing rewards. other incurred will both of in that anticipate is there little bit the the a incurred, launch There with second that the be and the in and The it

David term I XX, but point acquisition XX the obviously, basis the neutral, believe back as Gordon mentioned, we year. it second of initiation on costs, and quarter margin the and the probably be range half that's in the will think for longer that customer the

Brian Vaccaro

worth were quite Are and labor But first it then the below of a wanted looks there line provide sort right. more seeing cetera? sales you like fundamentally That's improvements line there one-time very that great about Thanks All Are could are just non-recurring to that and I the you're came would any be improvements highlighting? guessing and color. adjustments specifically what overtime seeing color or much. bit hiring life. et on great? costs quarter. Matt, kind any, you a in ask favorability? items know, little and versus And And color training But and was Labor drove of just hiring you costs,

Matthew Clark

really predictability improving productivity really forecasting of one this first the selling the could, a have better in Ryan, on Well exceptional upon you environment. that did of did wise year-on-year, on upgrading of we've of all been labor. better all, that. possibly and job than is team templating those it's the that things focused And noted. the has done because we of an improvements job component it stability We you But the of sales the

efficiencies, one-time seen have And a can in of lot there we've are you there. benefits that no I we so, tell

much on was plan. medical basically group pretty Our normal. were All items

that better in I and Gordon opportunity execution about. think that we of David advantage to talked take the an staffing were just

David Gordon

David This Brian, Hi, Gordon. Yes. is

part that's Our is in that, continued certainly improvement of retention off. paying

XXXX last year, only pre-pandemic at And look versus our importantly, level. we time, to we're leads I over to That operations really best-in-class QX management to better And at we productivity. So are improved continue which a have think it's staff. of sort leads improvements. most back of to

flow get applicant better quarter-after-quarter. continues our to And

year been need. every have had probably previously That's last we still the when to versus who didn't reporting the XX about people applicants for hiring up to need today. time for in about period, XX people have last think industry, And be this that at quality every hiring I we of hiring were experience. continues applicant

the more those and gives you them ability longer productivity labor out, and you take with the environment us to to with productive combined as us And maximize reduce make staff that our cross really stay operators in predictive more overtime. train the restaurants. maximize pointed them, to the allows So, sales continue and

Matthew Clark

Thank you very much.

Operator

from Zackfia Sharon William question comes Blair. next from Your

Sharon Zackfia

good Hi, circle can the program. to year? on become the early. mean, to you goal I others back expect do frequency start clearly, of is us you this how And wanted of that know But your programs, over it's afternoon, kind would game that evolve think to manifest? incent I experience when plan to I'm And given give other rewards assuming kinds to with you

David Gordon

Sharon. it's David Sure, Hi, Gordon.

recall to leverage sales to drive and is while offers, longer that offers. As that, to goal we're that the and with analyze design - be since insights, we the And incremental in unpublished probably program data. really you program's then now level say is maintaining margins. around June, data would able taking our time published really those engage the marketable the And offers and guests really launched full to I only restaurant term

that's to drive have be we'll a it's incremental in then look the we time throughout part meaningful it visits able that completely, channels the pinpointed at would we we to the QX. incrementality some next into we'll it And might start to right all type start whether at want be enough some really of where fourth right to think that or drive doing right incident occasions. be very and data likely, quarter. some more that leveraging But marketing drive than And to would occasion, offers the year,

we're forward to to looking fully year. that do So, be able next

Sharon Zackfia

come recognized go and just order is or an in if mortar? is kind of get they DoorDash somebody channel if omni And or they can brick and through where model there the it get to

David Gordon

and together one with DoorDash. also the of it's through things somebody be drive that DoorDash. to with put was ability able early DoorDash for to the That through No, participate value we

to omni its So use want anyway, channel it. guests

Sharon Zackfia

my be patio how weather been summer. then there is has of I spring Cheesecake Factory provide of looked And over you has broadly, year? how to given mean, the can one and versus questions, wacky metric was the going utilization on actually year more patio Okay. last utilization this kind for any

David Gordon

don't front raining, of that sort we're - patio measuring ready the number trickier. don't because in measure on perspective have at mean, right I drive in me, heat little and locations a know, better about right, think, how I that been I of the it's been closure. when impacted. that absolute clear quote it that's to sales those have side that. I because a on of we a that of we've it's talking sort that in greater things, have specific to I typically mean,

Sharon Zackfia

you. Thank Okay.

Operator

comes question Stanley. Harbour from Morgan from next Your Brian

Brian Harbour

you. even thank earlier, out Good that mix afternoon. year? the start continuing? you see second those Do some of of Matt in do to drivers are Yes, think those you of kind the will half you explained the

Matthew Clark

because obviously, I a and for we a component Yes, be thing of the that funny we talking I stable. will bit think extremely good off-premise the to that because that counted. there make whatever us, team planning historically that's perspective, to were about Yes, is, a is, revenue continue way sure have quite variability, an of

we components at it, of look sequentially other together year as of move the The last continue sort to historical to levels.

first So, I on in around second based was was X% trend X% quarter. piece quarter, that in the about the current that think the

and perspective two sort normal fourth year. one probably back next more So, of and it'll a to kind of we historical quarters, in versus be the third think then be variants patterns, and

Brian Harbour

how from Italia of Maybe that doing part perspective. there newer you you is kind on maybe Italia good. or address sounds you sounds margins, of other of doing? then anything you're to was like - it which margin North of North price, but to a just to alluded just had that else And there could actions from ramp same-store they're a just revenue perspective just some kind the sales, units, also, Okay, strong comment

David Gordon

Hi, Brian. Gordon This is again. David

the that we gradual up. what probably at we think see cheesecake market. at new a really ramp where full in versus and It's North its what a to Whereas at rest it by third more we the more sales open then look of a potential industry would be highest the be time of volumes our settles it when Cheesecake we of year in long-term. Factory see opens up over some of generally And up in the into typical is Italia. I North

And the of Factory scale to to thus work the progress through North But importantly, we at On far Italia. chain. in another made there have and mentioned, October increase in for as North more of Italia. think the continue margin supply side, have I do bit through supply leverage the to October price come we've more chain Matt end Cheesecake we distribution has right margin

at more And lot balanced help increase going think versus incorporating cheesecake, for Factory lot and time. - operational to them that started but they're walking dashboards, that's Italia that also to capacity trends North sure a that in use North of productivity, the guests. a make to analytics We've they're percentage over reservations, their we allow than I to continue and to to take they the Cheesecake reservations ensure also leveraging seating that in

Matthew Clark

Right.

in things a three it to to add open our doing was it some years one that, have too we there thing the need all the three we market, we go when do area. recently, sales, about kind work. Boy, starts one And of two at on of COVID really helps of into restaurants two years and of were Just Virginia is, looking pre coalesce maybe business the three, to in saying, those to we David or were we ago, openings see what just with some review Washington, were when DC that later, we talking

look practically used at Factory, as we're are the same rest that they're the now. North Cheesecake the to at their because And volumes we And system. unit margins great. of And

talked growth seen that's those I And we've to I stabilized gives post pandemic. to, what opportunities opening out think guess right. that started as to confidence really really pattern so, of And we kind keep it David as to is, us tracking market-to-market, that pan

Brian Harbour

Okay. you. Thank

Operator

comes Jefferies. Andy from from question Barish Your next

Andy Barish

Hi guys.

adding that, come, you or by sounds it's through actually, expect to big as kind to - as going on you on Flower but end well. of in-house it noticeable work that like your as of 'XX? to Child way not North, circling year some I know, Just as have is kind benefits

David Gordon

year the of we've made umbrella Flower is well. integration next Child Cheesecake this chain Hi under been designing will as this two We're David. really next do year. more the building Andy. and actually Factory the and We aspects open some This two on supply incorporating Child working that Flower strong improvements on there

we leading feel of new the would Child as umbrella our our by uniquely and be positioned under fully to out as that the be we Flower in opening we has end a development potential teams the we great restaurant there continue high very to end So, charge positive think that's continue and and marketplace. grow teams it fast year, concept the will very casual

Andy Barish

testing And on. just then Thanks. I'm

of, on again, couple there's But labor there added in that some or that increases know be terms of netting all is more side factors bit a the improvements just the against guide On questions it. helpful? on is there a are XQ, still color That's kind of of wage been some hours productivity? digit in any labor little I for those mid-single the or would out being

Matthew Clark

Andy, is budgets. I saying about inflation our it's preponderance We're talking that opportunities I always but Matt. some pure makes of missing We're And up inflationary impact. wages, wage a just really productivity, offset with that mean, from there's think, environment. a to inflationary of

Andy Barish

know on have September, there coming the you your those kinds a Matt that and up of July, of Is you mandates things? component head state off of that top do

Matthew Clark

California. in and incorporates it Yes,

have I think here some jurisdictions LA that maybe some that County. of there's that

the things obviously, has mean, wage sort year, of on of the ticked we've think I down, of right. promising mid-single, this one beginning the though, from I said inflation it because, is

it we're based mid-single would the realized to actual went from seeing. I higher say that that on wage lower more, way mid-single, So, inflation now

Andy is kind to sits think note, within So, is it's but improving. that of important that it that still I mid-range.

Andy Barish

you. Thank helpful. Very

Operator

Your Tarantino comes next Baird. David from question from

David Tarantino

Hi, good afternoon.

clarify this trend guess corresponds that that with to exiting, the I and the, you the First, I seeing exiting in of the quarter second quarter closer traffic digit wanted you're you Matt? guess, what I I just or saw traffic that frame the up early to I made, how half recently, still what last you're you guess, over comment a or more is and the seeing guess, would negative so? mid-single month part

Matthew Clark

but Well, the but were theories. comment as the on quarter. at based just And But kind extrapolate June, these don't we're of of comp. to inter predominantly for driven really, a June, on We going difference in mid-single the was digit you that between talk by our guide, about quarter rest we is traffic. can

So comp. was seven, three, on negative the a X.X traffic quarter for

And so, getting pretty it's close.

even. or where or get close mean, Day be on run there to, based like can But, promotions break we I getting see we're things going differences that. National week-to-week, but Cheesecake to holidays, it's pretty we'll to

David Tarantino

and question why even And what's pretty do and of think do levels, your so mean, than kind I among late my you And know the pricing, catch is more your, you, currently doing in to traffic's Is take recover in decision the you've and a more historically. that August the I you margins? to traffic But I on industry, guess, understandable. that? the what's in market seems the risks I year-over-year, decision up are done mainly are how there? to just guess, I the it of guess about the that pricing I great. fragile, guess I like objective industry guess highest I then, your guess Okay, on to

David Overton

Yes, mean, in In I and very of stable. with just traffic, purchase than business, it's I better stable, when what pretty said. behavior the underlying line David, at goes, it I parcel is rates. think look sort and the underlying part we historical are our

our really base, And the We're X%, accomplish of our off probably below program this our and grow and so, levers to the math, is of of rewards objective cumulative year I the since rebuild things. profitability, this those execution, about pricing sales the we're operational to feel in like XXXX. the sort industry to going develop to still think and

has we've when what done. because of I noted, you funny little inflationary of impacts did as years over bit like year-over-year, a still feel the course it's four the so, those we outpaced And pricing. But, of timing the

leg very that And and last in where like feel a so, back. just helps I And we think time this situation get stable. period, is business us the a during

David Tarantino

Great. Thank you.

Operator

question next JPMorgan. from comes from The Ivankoe John

John Ivankoe

thank you. Hi,

it of current more what like is best something sites? you next location even of get sheet TI for your coveted and terms? to words, lease take other you I'm sites it to I think get you to end, And getting point? I And are best time competitive terms felt XX some Thanks. money, units better new than more the mean, the sense quality? curious, access I you of and ago? how landlords a calculated this less that from types that actually at you of other -- were some balance pipeline you're challenging have? the back I in some seeing wanted about actually Are overall of year. Is the if getting In betting the

David Overton

I'll project, about type as John. mall, site for projects, going be the And of Child, Factory I if I culinary best we earlier, landlords dropout just as of portfolio being have opportunities, our a hey, said to Cheesecake But the projects, XX,XXX allows far us even high-end and XXXX sites sheet. a we're really lot drive north pipeline, let options. potential, best sites, and fit to would as this Hey, decisions. the between square the with The come of our types foot we a concepts sites, what of XXXX. would or particular good our square say, balance the the and to say let feel to Matt a on touched these Flower a still, in foot mall, it's for

able be think to to growth that forward. next So we place we're sitting look I rate and year in as really comfortable a X% hit

Matthew Clark

I this think, John, is Matt.

even I sheet. think mean, important. Right? Cheesecake is name more that Factory I the helps. certainly, it balance the On

the terms And sort to similar of we the those so, attributes of may and asked quality want. to the the question. activities, centers, in I generally think landlords Everybody entertainment what say environment bringing that historically, the I though, expected it's would all is leasing of terms. types that we're have of

properties. still top before. that's property around We're was class. like basically got it's the than it it's not For as in for we a the better But uniquely best same ever

John Ivankoe

Thank you.

Operator

from Jeffrey Bernstein Your comes Barclays. from question next

Jeffrey Bernstein

XX% traffic flattish I encouraging you. consumer like Definitely because measure demonstrate price. wondering is scores or just you you your hasn't learnings consumer? a price been have I'm -- Thank I value north guest Great. the same regular is intimidated follow if running, running just about most was make And brand up. that hear whether approaching you are recent on still then are the scores of measure or that frequency. to basis. we're you the how And he value satisfaction, What the had the about that how to the sounds the driving you one them? wondering talked sure think just trends which that that wondering to

David Overton

just Thanks, and doing scores awareness pretty are actually say I'd our usage attitude should annual with I Jeff. study. Its value completed we And stable. David. be And our that that guests.

we've next saw that that months. coming that portion still yet, the an in know know the I post COVID. stated have guests about guests also And interest have We talked they there's a back that of within come about that before. in XX% our study, six we haven't of last

would still love to that about and some said, be we So us feel that. he sales haven't at anything or of that when rates incident good don't guests yet. We to continued give really we those to And a hoping back Matt dine when in behavior, and of as maybe build scores or our looked come weren't see as us we're pause. really But desserts XX%. seen, upon comfortable percentage

strong that menu them But makes and item. as also, guests a that from consumer And it so well. the really points pricing standpoint, sense I to remind so menu choice use strong menu they just of menu to that want continues that the just the was in now you the and the from would just allows to breadth a of navigate price for be breadth use it way

Jeffrey Bernstein

demonstrate question it your such if -- I'm demographic, any the you sign of portfolio? just sounds to broad are not noticed that And slowdown that's up like my the portfolio to just wondering, because anything have you to servicing demonstrate of strengthened signs broad now really course, portfolio any leading follow of with And close a you've Understood. wondering Are broad and been have you just such second believe portfolio indicators of seeing there quarter. the yet? such any trends in actually brands, actually involved But have the change actually operate portfolio, you a you're just across across seen a just behavior?

David Overton

No, of occasions. locations I trade, think end, higher of broad and but of kind a generally slightly the concepts array all

think has mentioned, continue And across you really improve Child, the to what all at Gordon we've what David so so like, seen for Flower know, consistent been it, quarter-over-quarter. as sales of Jeff, Cake I all of looking

same to seeing casual, and but a that's business, right, so reception. And go positive and the we're guest of resiliency fast sort primarily

in just look from the and past shape. the up I good over think of as enough, off couple to months. that I at doomsday sort the the the switched you'll Interestingly in consumer well talk month generally significantly So mean, of news pretty away right, Michigan survey, landing, and the is it's have past it's maybe in

it's so, and up. And do consumers showing I think generally feeling are better,

Jeffrey Bernstein

Great. Thank you.

Operator

comes from question Jim Research. Final Sanderson from North Coast

Jim Sanderson

Wondering walk check? thanks through half Hi, expect to type back between do price if the what the carry for and traffic could the breakout you Italian for of question. into you to through XXXX? of North And

David Overton

the rest the negative The traffic mix of pricing carry throughout we X%. positive the and X% I X%. was expect year. about X%, think was would probably And to Price was

Jim Sanderson

indication out be Right. might on the down? Any trading to want feedback call mix, change in alcohol any consumer you'd that that

David Gordon

North that or seen a begin Cheesecake David. is No, concept, FRC that this the really the with. concepts haven't Jim, heavier mix or have of any bar to we other

down trade We really haven't law. any seen

Jim Sanderson

average, alcohol your on is across? mix just What

David Overton

Well, that's it can question a very very be broad because different.

culinary run Cheesecake be can but so. might way think, historically the up. XX-ish in low it the all range, I dropout around that is or So A XXs

would in single you know, the it's and runs like lowest, it low is Flower say the the gamut. something I things Child that's that. So digits, because really just probably

all concept, it it's depends Jim. So on the

Jim Sanderson

Thank you. right. All

Operator

further today's may and this at now no concludes are This time. There you disconnect. questions conference call

The Cheesecake Factory Incorporated (CAKE) 2 Aug 232023 Q2 Earnings call transcript