CAKE - Earnings call 3 2023 | The Cheesecake Factory Incorporated

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Operator

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Etienne Marcus, Vice President of Finance and Investor Relations, you may begin your conference.

Etienne Marcus

Good afternoon, and welcome to our third quarter fiscal 2023 earnings call.

and during me Officer; David and David meaning that will our items Securities Vice of with and Reform of our based Matt the call, call are considered forward-looking XXXX. we Executive be Executive and Act historical Officer.Before Chief Gordon, President the today me Overton, Private are Chairman facts this are that Clark, statements begin, not On let Financial quickly Chief you remind our discussed on President; within the Litigation the Actual stated which results factors statements result from our our could Securities detailed be materially with investors.thecheesecakefactory.com available the is or as and different those at Exchange of release, forward-looking implied in website in Commission. press on in today's and a filings made when this today's to be sales, to specifically update referring only as statements week basis, the undertakes during forward-looking stated addition, discussing on comparable call, statements.In unless otherwise. sales speak on this no of company call conference comparable any duty an and operating date, will All we forward-looking

basis, We adjusted results third the website of our operational and An an GAAP appear results financial of use provide be will excludes begin impairment then press update. opening update. terminations described.David quarter presenting previously David financial acquisition-related Matt on our release will in explanation our an our Gordon assets, today's review remarks, on Overton most as expenses. provide reconciliations call and with and directly will to will measures a some non-GAAP and of comparable also lease measures which

David turn that, the call the open Overton. to that, Following With questions. I'll call to over we'll

David Overton

XX.X% comparable indices periods. prior restaurants XXXX, over exceeding and Knapp-Track dining revenues increased prior Black led $XXX Thank versus and for the Cheesecake Factory of you, Etienne.Third both The growth casual million, X.X% year year the Box the versus sales to X.X% consolidated quarter by time

on and us best, over and to the long meaningfully our sequentially consistently increasing operators industry leader delicious, focus valued despite our our differentiate will we We contributed drive able position staffing strategy. to comparable at the exceptional profitable at this guests. front, environment always X memorable levels, traffic in third quarter The strategy the and best-in-class sales Factory and our outperformed third broader development continue executing softening delivering quarter the dining We dining what hospitality X for their increase term. Factory, during FRC locations. restaurants will the Cheesecake revolve the experiential and believe to industry.On around Factory with restaurant believe importantly, quarter the service subsequent Cheesecake we opened improved do strong have And Our end demand experiences an sales been casual to growth The sales as Cheesecake to

pipeline against We planned continue previously year. is construction had and we of ongoing our progress to this to on restaurants all make our open

development to permitting our order with However, experience of to seen to beyond the continue strategically year. next proven quarter and we positioned succeed, move restaurants to decided ensure open we pushing our industry, consistent trends some process have first of December. late dates our our control, with to of particularly new opening throughout the adhere the into some delays, challenges In openings to well

bakery we as growth. of produce China develop openings Indiana. and our the Charlestown, new Factory facility effectively to Cheesecake XX our Factories, quarter, new as week, restaurants restaurants our first products expectations open excited plans location bakery at addition now fifth and XXXX the quarter other retailers Flower our under we restaurants licensing in to and activity XXXX. many pipeline. such, week, we new between in Thus, for we Mainland in restaurants and to including Cheesecake As our At development this this Child open the and XXXX X year to towards are restaurant third earlier for to restaurants, challenges, anticipated internationally openings facility providing X this XXXX Italia I'm many XX FRC also unit the Factory's Cheesecake expect location.Last X share X% to had we take we location, X build North restaurant XX in this the to openings completion, previously XX X annual measurable agreements in new our The for are now expect X include distribution X as for will in to continue X announced last accelerate opened, that XXXX. achieving Upon year. including to ongoing and objective permitting X as next of cheesecakes step Despite our production time, Signature another anticipated efficiencies. for to

The Our vertically industry-leading competitive brands, share I sheet by turn our the ahead, now the will operations we our With value to call with dessert over gains. scale additional continue details leverage integrated as on bakery to best-in-class our operators and to marketing. brand shareholder affinity and some competitive David strong for Cheesecake driving that, business, our Factory balance including differentiated provide to the drive our a and Gordon market of will is distinct our advantage illustrated strength, sales.Looking desserts

David Gordon

people. further focus speaker-led and our performance. start the General and with and insights seminars that designed year, been cultivating We well The This great Cheesecake as executing delivering food, for standards ambience these foundational we principles Conference to have wins take as the believe on. leadership, theme was held their development team's improve performance panels, reinforcing the informative and built celebrate intent that service learnings develop back leadership successful the operating to hospitality, be in Managers on with to management Factory the content several their operational managers on year's these consistent execution, programs, has focused was and of running industry, general the our restaurants and of and restaurants David.Since excellence, fundamentals mind. of you, operational great training centered same great Thank firmly restaurant trainings been the on and

David alluded focus key excellence multiple increased As and is consistent across on earlier, yielding we operational execution believe areas. positive our results to

share me Let a couple. just

First, guest we seen satisfaction. in have measurable improvements

dine-in Net measured metrics both are levels. internally across Score and consistently Promoter Our off-premise the exceeding pre-pandemic

trend In meaningfully to addition, our our has third-party increased has not more volume only enviable and start year, sites since the these staffing continued rating of position of the reviews positive.Second, improve. of on aggregate reviews the to continues incrementally improved but

improvements continued moderation inflation, year already levels. levels. Our now which industry-leading retention trending in supported pre-pandemic above high below engagement significantly ago. scores have running is the wage These are our rates improved Furthermore, staff from now pre-pandemic a

levels, consistent historical traffic seasonal these mentioned second we the remained third quarter lower outperforming totaled David off-premise quarter a with both mix As months, below above sales, to believe summer incident just XXXX more quarter.Now trends. the to with earlier, improvements patterns. of levels rates normal industry latest during to comparable the the in indicating On-premise no seasonality mix. of daypart The Cheesecake sales change sales return sales XX% potentially contributed and material turning to Factory for operational off-premise

culinary higher in a which Italia the from North down the seasonally XX% adjusted versus continue the where this remain rates the trajectory $XXX,XXX year to XX.X%, and locations by excited higher margins on experiential of the high increased dropout averaging have FRC's as FRC's now October about of promising cash-on-cash unit Italia solid Carolina objectives sales level to from strong margin heightened dropout. $XXX,XXX of The the North concepts Southwest We in North so utility given concentration. for within couple just demand normalize quarter. third dropout a X% North out as were a lower However, economics. XXXX. average was far X-wall quarter one of prior per We Charlotte, lap for over year. portfolio, just this week more in over year. first X.X% positions including support concept.We the this costs, and various mature growth exacerbated locations menu to the concepts has by spending Italia price previous our we X returns comparable attractive basis our the Culinary with We from concept Italia the strong impacted North weeks. incident year-over-year portfolio rolled in record increase open, XX.X% a opened culinary sales sales within in margins were part temperatures of potential prior newest

as We as well to I a years the location and Southeast, next to update across let currently Atlanta call X year program. are over to brief another testing provide have Matt, rewards and year the the geographic on turn X California.Before Southern over locations open in this a our X Texas plans me portability the another

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

of launch the of following program While seeing. we encouraged are the continue on member Rewards just by now entering fifth month the and of be activity national X, we level are to June we engagement Cheesecake our

or right elements early and we're a to me expectations program anticipate in sales path.During that, review. so. for said, over previously scores various have our to our of let year better and strategies are seeing and being demand resonate the additional do the effective activation the we and we taking driving reinforcing And for deliberate call members tactics very are with and increasing internal first enrollment Matt over-indexing, that frequency. fourth well satisfaction quarter, testing are That stated, we membership rewards the understand belief will therefore, a most the As to our key be our turn engagement financial and as on the approach exceed we the continues expand to acquisition with measurable not campaigns that member impact

Matthew Clark

was you, slightly the shareholders our million high-level of stock of lower X.X% a returned $XXX.X driven over in $XX.X X.X% last of recap guidance just the of short I end we quarter income Thank repurchases. as range. versus of just outlined and the net the expectations dividends of despite finishing first our G&A low form of third better quarter. results expectations. last Total David.Let were than percent depreciation Adjusted increased predominantly to combined margin a provided, we under year revenues And and me the sales. our million by also provide sales

we some believe build a we have period, adjusted details $X.XX of turning Over the to and financial our of revenues that stabilized, months, past forming around X.X% net Over quarter. $X.XX.Now XX total income from. adjusted specific billion, can with results EPS more our margin foundation were substantially the

versus million. $XX.X quarter prior X% year, were XXXX and the were prior increased expense over at totaled were supported per to year year, sales sales were sales up and XX% X.X% and XX% Comparable quarter prior were $XX.X of growth North from $XXX.X million, FRC versus XX% XXXX.Now comparable for during operating increased prior Other by sales totaled $XX.X XXXX. sales XX.X% commentary. $XX,XXX year-over-year the increase fiscal Child prior Factory XX%. million sales operating Third Italia Sales restaurants versus a Cheesecake the million, year. million, year, week per sales versus the third of Comparable Flower from week external $XX.X moving the variance and bakery sales $XXX,XXX. sales up

pricing the the have items P&L. menu key cumulative XX year-over-year improvement in to past realize continue the we to With offset months across over help implemented several measurable inflation, we line

levels some by Specifically, staffing points, to-go G&A and cost predominantly the than increased commodity Labor points XX expenses decreased primarily offset million driven net a sales. preopening million and of versus lower points, costs restaurants basis year utilities by opened by basis of the insurance driven the medical mostly XXX million decreased restaurants driven in XX inflation. mostly third prior Cheesecake basis rewards pricing expenses. acquisition-related X and menu X $X.X XXX marketing XX the basis as quarter Factory slightly percent decreased the by costs of And we of leverage, pricing compared lapping primarily in during Preopening pricing opening elevated decreased costs the period. driven third delays Other sales basis a points We in dates operating mix improved partially including $X.X program the leverage, by costs, for points, to depreciation launch. quarter and were third and concepts. of in expenses. Higher were the expense quarter, quarter FRC $X.X related to XXXX. recorded in quarter higher

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

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

material sales While our operating for no trends assumptions results. updated QX comparable will performance, versus be recent total or trends and QX, providing be thoughts sales assumes quarter-to-date QX million as since notably of consumer September, and the to XXXX specific XXXX $XXX disruptions, million. This we and and end meaningful improvement margin.For a will most revenues provide and between based our the reflect we our XXXX $XXX anticipate which to compared a continuation we essentially not full levels of year guidance, underlying income our assuming earnings net on on revenue

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

planned at net modeling regard to this development inflation fourth XXXX.Looking the this as wage as XX will mix many are David This range. X unit uncertain. of XXXX, digits these to commodities development, our in approximately when about year's labor our we many year approximately the total sales new other anticipate the the And the facility in quarter.With Based components production net concepts fiscal restaurant as previously third continues be initial to $XXX to and ahead million reflects $XXX backdrop our higher to labor. well next across trends $XX about assumptions, negligible of in mentioned, to Overton well million mid-single portfolio our for expense which, on restaurants of the as as rates, as expect support in as to income in open cash we earlier, year's with of to the latest quarter. plan anticipate of the margin required similar continues we preopening highlighted be openings, X.XX% We million as restaurants. now some outlay as openings channel on as and which to we midpoint maintenance factoring bakery be normalize support be macroeconomic to to Note in CapEx

assumptions, However, be to is unit step these expectations $X.X for assuming as be fiscal consumer billion. we towards low across XXXX to want on total recent Based no $X.X regard material initial our operating With year. earlier, to development, objective to or trends and approximately perspective baskets we in currently for year-to-date Based estimated Total the our stated disruptions, income to take some mid-single-digit to range. margin are anticipate for net approximately next between provide our X.X%. to anticipate inflation revenues growth. and performance, David we more billion XXXX of commodity total be annual our to to on X% measurable another X% labor

on mix restaurants. $XXX details our including to million Flower Given $XXX the and And additional anticipate would across provide facility. third in approximately This assumes we concepts.Additionally, next we million we of continue CapEx, an in evenly restaurant for environment, Italia, preliminary to Child Cheesecake face, on to the our range required the call maintenance initial of the planning estimate February. are dynamic earnings FRC distributed production Factory, phase our development includes for bakery the openings North

thoughts, as plans past of operational in XXXX in chain unprecedented the we this significant X To and reiterate additional the project I level and At early the financial moving and a we not years. incur we supply XX project the to still come XXXX in this and we outlays coming over inflation challenges the with David's of have our anticipate bakery of are in the forward profitability.In coming provide the will to XXXX. in earlier and we of in labor we XXXX As will opening of expect to of or this remarks, and but long-term materialize. are enhance out this we pandemic which CapEx differentiated be pleased early development, investment, facility future support progress preparation discuss the as the significant closing, made initial stages only capital growth believe time, not XXXX quarters our most in detail will for quarters do highest

position Our can efforts we have and resulted continue growth in a which our from forward. solid of trajectory sales expansion moving margin

towards returning macro years, Specifically, the past XXXX core patterns inclusive of meaningful to of growing accretive additional some stabilizing the key return the consumers the predictability XXXX guest degree headwinds restaurant operating creation, longer-term And growth. restaurant value of take of of of operating our to ability our accelerating comparable make questions. of lofty gives couple sales, the your the margins in said, even in model expanding traffic behaviors us and with we'll steps areas to unit in confidence and that goals and spending

Operator

[Operator the Barish Instructions] question first line from with Your Jefferies. of comes Andry

Andrew Barish

wanted the estimate? to same-store that October, versus monthly the on Or I XQ you XQ was kind referring at quarter, with during a quarter-to-date sequentially. confused the looked sales the progress? of Was there. continuing as improving driving then clarify your assumptions the And commentary XQ, you some just Just to of the into mentioned, full little as

Matthew Clark

those period, slightly, but sort then current what end measurable darn to from the of to referring terms terms to people a track, we're hopefully right, the in Andy. followed the the Matt. every have September traffic quarter clear, third August seen was And better down improvement This through industry is that The trends is was September. the roughly both time of indices relatively. in think be really I period comp and traffic. of trends, it stable, Sure, sequentially to pretty than of from albeit in most meaningfully July

may with you heard as outpacing. relatively So in industry what that's well. again, But think I think also I the have consistent

Andrew Barish

Got on one you. inflation. Helpful. then just wage other And

noting below guide, and that I low the to levels, then $XX I next your it's think, again, levels think, number pre-pandemic thinking? spring in the California on guess? into is mid-single just kind that some XXXX, clarification kind move of digits. factor How I of that XXXX below And of to moving kind incorporates is right does

Matthew Clark

to driven a locations is average are X we'll is inflation out. ripple more the the even Yes, QSR of California fewer sort inclusive evaluate many that again. actual urban to included increases, as Today, see that Certainly, there there's pandemic. already the for I pressures That period, based but at expectations market we paying that, restaurants this But leading probably And And Obviously, the and our that. in play Matt below of to be making time X, we that correct. also effect. that whole say relatively have in to going people that some the coming or by wages be will choices remains running of you of be on could there. tend was up pandemic. dynamics is and Like wage none Andy, below lot obviously, that restaurants some of in think legislation. mandate. Obviously, the areas, wages in in years allude range. government-mandated probably suburbs, would the are deep stable the I

that we inflation overall as So have decisions. we'll of And address to we'll part pricing what have holistically makes respect at with to to I look if that basket, then it sense. think see consider our and certainly

Operator

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

Sharon Zackfia

questions. X guess I

you talk I kind execute to that you many what be and given of than it in it's quickly, can And that much that so price know helpful. us about 'XX, like mix initial kind to better but outlook to to I what other for development, this give achieve on kind were embedded what's to range, I mean, development and internally kind be of difficult a on seem Just want of where XXXX. traffic the secondarily, of to environment things in number more at wide permitting challenging you versus guess, buffer you quarter, then look kind you're doing defer give would sounds of, if of us going the is could

Matthew Clark

then Good both take can the on Gordon questions, touch first, side. This Sharon. Sure, Matt. of the I'll and David them. development is

and at specifically, traffic then So a was X.X% was X.X%. mix was pricing X.X%, negative a negative

piece the points And than last a quarter. traffic XXX stable. I industry the improvement saw think basis So the represented in good what about we pretty better and over pretty

throughout Andy, As I my noted response it stable in very the to quarter. was very,

Gordon development. us that good gives base touch David And a So the on baseline. will

David Gordon

Sharon, this is David.

development the cetera. about and a of on earlier more issues I supply heavy That restaurants, around the chain we into were of lot local and has getting said, was, think talked permitting And most large as are et really and municipalities as pieces previously, equipment of once today pace positions. lot what people it is you issues dealing around a abated. of not new the new their more and with COVID

are So able what the that we set around be try increase hit targets for to and our to have pipeline and we do year. in sites to more that to next funnel the planning is maneuver

to we little what we'll funnel bit will path bit point, growth, that's I that's only permitting better, increase next this to said continue the get that faster year. have pace and thing really the we little see And start for good we think at a X% towards hopefully, municipalities a at slowing a down. good to because us about and unit feel

best ensure a negative at the hit the we of I good on for cadence, much to put decision us business that that pressure this to line, a time business push to good at think but we're too these cadence a for able operationally, and really also operators. some they're QX open to was that's the that opening don't to decide

Operator

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

Joshua Long

Matt, it and labor stabilization XQ in construct forward the the equation. food we you on in from perspective think as XQ? and cost then forward and talk to that be of what some could follow-up price you on quarter pricing maybe a side the comment, how kind and curious the X.X% comp cost a appears as into your go Curious of about about plans if pricing pricing was

Matthew Clark

Sure, Josh.

I stabilizing, And year, return take, objective as is certainly, which sort Xx cadence of and we X.X% to normal our relevant. think is pricing a that to more is of time. level to typically X% it the see inflation a we each

the Factory, for X%, was Cheesecake lapping but a believe, that in we quarter notably, took over X.XX%. I third So

And then so X.XX a dropped for fourth lap points. on mind, run quarter, we that And at rate the going basis, in we catch-up the keep off incremental did we're the to beginning of December.

So Etienne for quarter, the the is... average weighted fourth [ ], what

Etienne Marcus

X.X%. X% to

Matthew Clark

Okay. come X% at next that's offset more then really our the X.X%. more pieces feels of going point. And into be a that the together, see in And like pricing And like year, then but to range it's take enough range right? only to normal going it to how in is all be to again, going objective X%, we'll to inflation.

Joshua Long

execution was talk you or have, adjust at I margins. which point from upon in restaurant-level a Got That's that's terms point industry just as make execute the through the what the can quarter overarching But you appreciate in of volatility been like follow-up, your we're you against more the that encouraging. despite goal yours see. the an you about little to curious played peers, of improving appreciate gets it. mean, a and number some maybe at as I we environment But you there. capabilities volatile think and looking muscles the seems mentioned It and helpful. that's color And that. steady. volatility is captured underlying That I that in trends. relatively consolidated just just additional operating operational for mean helps how what your the out could as out Just team from traffic about all? then just a bit can it. curious, normalize hearing you

Matthew Clark

Cheesecake looks may of Yes. the before, we concepts of it's I elements the I at flow-through That's to it's of of really week-to-week, would revenue the predictable, business. all mean up helpful forma concept down, is right? think much of an kind and be. our to, actually have level alluded the expected are are understand than I the but supposed the of this I P&L from consistency like interesting the to pro question, have better the Factory from and the All that whether lines or or it to more think

secure run the planned. wage The slightly to to been with our slightly planned. supply to continues inflation chain noted, As better continue than that run than commodities we've able better

week So week. all the those ability all So that point manage trends volatility to business significantly that of to we monitor has right? of the And decreased, better. to

We are levels overtime training better. to slightly return or back pre-pandemic seeing and

slightly I profitability a be the progress of for to anticipated profitability that And We've So it line about is standpoint. financial with probably piece, flow-through QX that. not math, thought than underpinnings would the material. the of from of was and a was really more where revenue yet you if And and you the sort are we on appropriately. if we're in those And just adjusted mix quarter was difference anticipated, X% that our outlook right in but improvements. think the gap. third We notably, X% think return It the probably had a to normalization. do we

So the speaks ability and relative we're we're execute to that on to levers would sales of that profit we're the expand We our to expand. I going margin really expecting. top are to that think pulling to levels year-over-year expect expecting targets at to margins the profit that. QX get and that these QX, still

consistency underlying reflects execution quarter-to-quarter. in that operational trajectory the So

Operator

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

Jon Tower

the believe up shifting there. to might Great. bit little the I just got maybe follow-up can it following if little But have well. as elaborate more if delivery conversation. the I've a what's to around and with elaborate And going you mix Curious on on a you bit. then on could business business a relative do little a on-premise bit

Matthew Clark

a very mean, Sure, Compared compared attachment, take, or at. Matt. above just mix with consistent be check, on consistent, maybe And to year. I the performance X%, attributes works compared at still we attachment which those sort and right? categories thing less Jon, industry. slightly is year, last we're are last a And is it's but give like of seeing, lot percentage the associated to-go or that the I business, bit it's to slightly little XXXX look us. mix I About other and think less feels every the appetizer a to to others in with one a to the down it's perspective very So think, alcohol guest but the continues from stable, daypart of a of XXXX, also

Jon Tower

Got it.

going plans the just strategies in have to customer discussion you for, there's back quarter and acquisition I the then increase the fourth to And believe, plans earlier loyalty here. Okay. some regarding

Just a perhaps how that. little program. of hear could the a just into people Cheesecake giving incent about program. you're going into or to anticipating I'm getting the Are bit deeper away promotional into sizes jump little to you curious more curious thinking getting about folks if more bit delve you to

David Gordon

very high Jon. to really activity is Sure, begin and This a we to have This is when of is with. it to Well, join seen David. encouraged David guests level good the comes are Gordon. program news acquisition, the

promotion. if basket a week would complementary And and birthday. a size offers, reservations, about certain drive with published a all you everybody in order Day. little join look that what their and and dayparts, the ensure quarter those and up. that's Cheesecake the a days their a there's that in signing for are we certain on we're Just or there could it's certain complementary fourth be Those you're going up and QX that year of the talking ended that segmentation then guest offers, potential a mentioned, more which of ROI test targeted promotions. of to slice, as best originally, can dollars gets understand things each to part next And be that might at of on about spending potential it as bit at a reminder, work we're promotion marketing very we one measure our they towards in trying slice way when as getting upon effectiveness made of some a and to was a doing behaviors lunch slice small of And the we be slice discount offering. as access to a unpublished the to Labor a We

Jon Tower

on I for have changes program, sort frequency customers into so know far? any the can the the you it's of that program in but jumped early in comment

David Gordon

talked haven't We yet. about those numbers any of

think I that expand program. feel to we on good continuing the

something. very members. to members. overall higher see for also And we're non-reward happy. able versus on And in XX% rewards I to measure we rewards between XX% sentiment that's We NPS were members a NPS score think

and promising So come of to good feeling guests well. hopefully service they're there incrementality that rewards lead as about wanting the the to to drive would as hospitality a member back, results getting

Operator

the with comes line Lauren question next from of Silberman Bank. Your Deutsche

Lauren Silberman

exiting I wanted relative and improvement? September commentary What think regarding to the trend driving improvement follow into up October you do in on the to 'XX. the is

Matthew Clark

Matt. this is Lauren,

think some of off-prem, that. that on slightly, script. that it shifted do has little think in the I bit in has So you lower summer seasonally back on-premise of with sort fall. a the the do on commented in mix I comes seasonality. Others touched is have right? see off-premise to of the We that

I So think get bit little of there. pickup a you a

we everybody I right? Day. to age saw I calendars mean Labor country school mean school pre-pandemic. August have think think going the to this And back trend shifted, X. sounds after develop cliche, I the back today, on day I this half goes my starting actually but remembers

schools of it of think frankly, to our a too some and mean all you're their is on-premise, back I level. just I schedules at So factors, performance. those whatever are with lot executing I high think think normal, I the is really we're what now off-premise with a seeing of

Gordon on, very strong we David a NPS. touched have As

Our are staffed. fully operators

to I So turn we're tables. able think

think the difference. X I of those we're would I a things percent are think need things And couple out. able a to do to But incrementally it's that that we call I the do. makes

Lauren Silberman

restaurant we any That's embedding margins I XXXX, we takes what as should helpful. think to about puts you're recapturing always just for then pre-COVID to relative visit And margins, shifting margin and and to restaurant are consider? you as thinking how

Matthew Clark

Yes.

right? I As obviously some of X said, Cheesecake And outside in to to good to X-wall rather feel objective us over is than walls. there, we've I our time very the expand headwinds pragmatic journey with. on long-term recapture we're all it will once. to our that Factory that back think get we've continue objective decisions have We begin And journey is at our made get to the had to XXXX like margins.

As I QX is said, going to I think better. QX over be

over is better. QX think QX I

Obviously, hard of a we that to on frame will a continuing time so there. put And us range gave net it. It's specific progression income. get

range for near-term margin implies that a I But think, achievable a X-wall remains, goal very it was there Factory. of Cheesecake So potentially performance.

Operator

Your from with Sandler. Brian the Mullan Piper of comes question next line

Brian Mullan

Just another margins, North restaurant at just one on Italia. but

some opportunity know price, anything well? consider you On seeing those the are where operations there. Can talked the I you are drive you prepared just remind think last in remarks, that an what in referenced just improvements on of side I and call, initiatives to as about us taking to process? but the you

Matthew Clark

This Brian. Sure, is Matt.

this things you for I mean part from And on. price that's plan. focused cycle Cheesecake, we X totality. areas would did close we're focused about behind key we think think being But going certainly, really on the operationally. that, And notable note we right? a be to in us at probably that remain price aside that of increase. couple a gap last of look that the of I So couple is actually

one to the restaurant for to new doing implementing is second Factory mature Factory and Italia, those and Cheesecake stages the best standards is the focused little North well. term good a up over to on up efficiencies, time deployed in comparisons. more really so practices opportunity early one is we third restaurants time we time, we're the have bit bringing faster, there.The success Cheesecake you restaurants over that So as to it the over really a One been if a of where the area right? sets of faster, longer one really by up an and those that's And bring that have food up that can bringing food the lower but thing, speed systems systems is side-by-side costs being see margin lot of

field I'd margin actually comparing which I leadership is that and and is geographies operating an those fleet, or team is really looking appropriate our and to think the mention have in at for fourth metrics indirect idea North, do not a that you Now the and XXs it's we sales. direct, laser-focused if low portfolio driver, of on that.And will, be a but can much understanding the the sales ability what is the better one volumes

If they you growing growing We're the at exceptionally sales, look North We're strong. store our comp business. remain off-premise traffic.

may add grow than there's improve So and really it wanted saying, sales to no that but go to I just to better without way margins on.

David Gordon

expertise are them. our use part things sales has I sales. been that basket are keeping in gains scale over still done a think continue purchase fast, chain while the can And we're terrific there. ensure most for perhaps good some just Italia, unique that much And David. as maximizing out we've has that but X this broader is there. tables is to understanding of in add on point, leverage tables and to restaurants productivity to terrific get we the North I we and that job the just team Brian, and the in to Cheesecake ability had the can to our and the One past turning also that North not it that X and that answer the for we're back would years Matt's maximizing we of special, brought supply of opportunities just products has reservations look to our to as

Matthew Clark

concept I going high we're expectations and Brian, have we guess, So a is forward. the answer lot, doing for the

Brian Mullan

Child. Factory the end brand growth And segue, some to the about you yes, still And plan umbrella to benefits see do the And start year? that period Flower expect maybe bring under the Cheesecake we talk time can impact what Is you by the accelerate? this would of could that? to just trajectory? the that of maybe of And if doing over

David Gordon

Sure, Brian.

But We that We on We're strong to under year. of that other growth. openings our chain, It's supply year-over-year. whether concept. very to that's Flower the looking and enable et Landlords with would for markets, next over in some have far, the portability grower of doing the are of good the teams very we've to I think be we seen new continues availability with too concept the of thus focused And Child, that's there very Flower a bringing forward Child, we on XX% umbrella year. HR that anticipate promising. advantages our that anticipate management developing infrastructure time scale The are be sites. with about concepts of cetera. some fully infrastructure, would track well it accelerating same the pace excited this

its in demand We the fantastic. continue to been feel And differentiated it's certainly, guest and the space. traffic has

Matthew Clark

Brian, just is that. one on Matt. piece This

the is margin make although that us for don't which get target carve Child, a mid-teens to in track Flower key to the on level. it this out are initiative to In be growth for segment that a addition we at vehicle, need for we yet year, to to we

about really trajectory good overall the Child. So of we Flower feel

Operator

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

Jeffrey Farmer

to margin any you contemplating, what when XXXX, comes on increases menu are You at could you potential between with or but are the guys did that traffic that and how either touch it looking trade-off in it, price growing headwinds guys come pricing? protecting

Matthew Clark

looking It's middle inflation. perspective. only Typically, right? historical to with pricing. protect the it's of science, the industry always doing. the be to I mean in we Jeff, been pack against That's our and tend Matt. price we're art to at think is the what We I want

their ours, path way. be the average of in same mean inflation right? kind take off industry, we're going to is answer, either so the way you So to that's to going similar If not the

year. relatively normal than better seen we've feels a It think I like industry traffic.

NPS why a drive have And going. great rewards, right? of visitation. where right, operational our leading is to a industry that's we're think as we means execution, typically I launched We incremental in indicator

So respect though, it's pricing act, be always a feels next before. going to balancing could certainly, year like normal as it commented we to be with more

Jeffrey Farmer

bookkeeping. just quick a And right. All

it, but you levels provide commodity mentioned out or could and it I you qualitatively just inflation the QX? wage called in think saw you

Matthew Clark

X%. then on X% What commodities. wages specific to were the we And around saw I to X% commodity? was the think X%

Operator

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

James Sanderson

could growth. against net if new look on new for unit mentioned And rate feedback the you openings X% to and unit to talk the provide for units store closures you some for I more wanted the then growth XX about to how at XXXX. XXXX

Matthew Clark

Jim, this is Matt.

an the on flow for basis we've typically, about their X of all year. closure attributes. evaluate annual normal of So cash lease, life And restaurants averaged the where a the think we is, I probably

going to don't just where And a be. unit closing us aggregate it's location, driver net a we I event. of will are So be accretive in growth we to think think if significant that's any

a think And I net, kind unit kind and of be going so gross roughly I would same, or take of thing. the year a to X% just say is give

James Sanderson

right. All

going pricing out Just sales provide traffic you a trend follow-up. more on quarter. the quick it same-store by a North fourth Could and little bit Italia breaking mix detail for and into

Matthew Clark

versus versus the done traffic we the haven't We anything, provide but mix Jim. prices do

X% about and It's X% Okay. comp.

Operator

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

Brian Vaccaro

I the it, off-premise what was if Cheesecake in quarter? Factory X me. but just sales I'm for the missed ones quick at mix So sorry

David Gordon

is XX% Brian, It Gordon. David it same as was was... this

Brian Vaccaro

plan to Just early Okay. basically ] Great. you February, take correctly, the in into 'XX? part moving the you'd be on settling menu so into comments Factory, did then, [ And Matt, clarify. of around range wanted pricing hear Cheesecake the at X% X I to

Matthew Clark

X.X impact carve look that we Act that X I guardrails it those out, feel exactly think geography, heading feel of regular going right? do done We like others not depends haven't not FAST only is, have basis finalized to where add the thing to what it's number, and I this. on up like it say way, So on be the but noted, use back California are at the we some may right? just to. but today. And is everywhere, We're for it same kind and some may would we and a to As is

Operator

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

David Tarantino

margin comments margin for pricing next expansion think match. you maybe and explain think gave I how expansion? assumes deliver I should suggested your And could year you inflation be maybe but and going it Matt, guidance I to roughly you're this, that your as missed

guess, key driver in is the expansion the scenario? that So of I what margin

Matthew Clark

Yes.

that I One, imply a that and things. think in could couple we'll it for we does opportunity. territory be comps, be think of think there leverage positive we So some

certainly, scenario, heightened too, the I inflation there, think QX we're lapping commodity in well. really specific as

I pure on operational XX points. sequential to XX a natural progression. profitability range So just basis, a now, from just think of in that some there's basis Right we're some standpoint, driving the incremental

G&A So the a of of little off leverage of there's bit as some wall. that's X We well. target getting

today. So at piece we relatively I which the end, to sales going of X-wall at the range, of bit the David, from range, are it more the is where think particularly low within get high little close is that end you're than to a

it's those So of combination factors. a

David Tarantino

year Great. And the revenue of what when margin you making target? next either you or sort for set are the assumption traffic

Matthew Clark

for been I of think accommodate we're combination that. a of mix, looking important right? at think in they of little traffic to of, and kind Because of Well, hand both it's going sort they've I and hand, a bit

single-digit in prudent some are the think the combined some as at other from gotten it range. to today Looking advisers the of expect some X feels that probably our outlooks of guidance, well we've I those industry of as negative, that low

Operator

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

Brian Bittner

about ask guidance, for the margin net quarter. fourth to wanted specifically I income

you of basis think at implied would XXX be and revenue improvement, like against that range. X%-ish get assume because rate, margin normalized net if think I you income would a range. the to tax margin like midpoint is to suggest that a is path there be think it just a wondering X.XX% operating the I And in points said your of I I'm comp

that in that the Or be is modeling? thinking is there tax So coming a we right about should big benefit XQ XQ? way you're

Matthew Clark

bit talking we're the hung always Brian, I the think the little is components sequential this with right? year-over-year think, up in the Because pricing, about where Matt. modeling, a is gets This modeling about.

for the effective As the a single digits, last wages for mid-single significant be X.X%. to in year. over on Etienne And to our the are were inflation going inflation pricing and remember categories pretty be are noted, key we to low low the So really is to creates pricing effective X% yet, going quarter commodities right? because inflation for digits, that pickup X-wall, pricing and behind margin for

on that So we ended up X% taking X. December roughly

the think And of year. in And lapping last get big difference. we that fourth didn't that's so the quarter we're benefit I that

Brian Bittner

it to shed next range as about, net margin tax income think we we about... the assumption rate X% light you the when in some can And year, on expansion, to said so guidance, what but Tarantino implies can X.X% think how David that is think about

Matthew Clark

our model low would be to expect. It right digits. XX% in will now. XX% we be double would That's what what's

Operator

question the Katherine Bank of Griffin next from Your America. of line with comes

Katherine Griffin

I you and to and just Are income mix the maybe we've a heard commentary alcohol of little management wanted players way. about of up that a couple follow cohorts on kind discernible from bit since you're seeing of some normalizing among spending on normalizing think seasonality. higher anything check that more pattern, higher income just expressing seeing I sensitive

can income patterns? of how as sort anything cohorts curious normalizing relates you on comments just to it on contextualize your So

Matthew Clark

research have are and do industry. We to relative that that an and our same thought segments I we narrow more demographic approach pattern I such of appeal that distribution cohort that sort the pretty of terms a in some welcome see, broad we call. Matt, think maybe are week-to-week patterns like month-to-month this spending on mean, on We I think basis, track other or have is the as we're stable. don't that Katherine, don't or our annualized a in doing.

others look don't way that do in quite regard. same the we So as the at it

Katherine Griffin

wanted some the Okay. And just then to a of concepts. other I about little bit ask

comments on geographic culinary customer to add you if of to unique of more portability. brand? can anything I'm a enough the bit profile, attractive dropout, And on if Given move that see where just components you are on with give curious your the economics growing forward confidence unit little sort I comments guess color there's given your that you about

Matthew Clark

I'll And is the that's you teens to this of the Matt. bit of margin the can touch the performance But profile and the sort historical mid been then today X:X numbers roughly today. on I has on David a think mean to CapEx. to what Gordon been give concept. continues we in can achieving close the sales coming Katherine, to attributes and little upper it be out we're Sure. deliver the of pandemic.

and better returns. So putting above to XX% than that be those together, a much sort definitely you're X-wall hopefully, going on of margin

so So far. we feel also the it's about good consistent pretty economics, across the overall and been portfolio

noted, we sales test we'll very what look But as very margins, and exactly right, you portability. strong what's solid for. So that

David Gordon

Yes. add. know I don't to much

broad And sales a we consistent it's levels I we as those bar see younger not Factory, as as we think bit demographic, year. than little we to concept. some sales. again, have It scratch moved of terrific And a made really most think moves far, a thus a And appeal have next as great to the geographies, has would continue into it mix bit promising. make closely into markets concept. but a same new from the has Cheesecake traditionally Cheesecake Factory, high higher new of of and skews a maybe those we'll monitor it is it

Operator

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

Brian Harbour

labor it that within fact, more for the combined prospects comments your single you digit, range? handicap on favorable Just of end bit higher that, would low maybe lower? were, to commodities year, do inflation your a in of like inflation sort is think be How inflation you if about next to be

Matthew Clark

is this Brian, Matt.

little I pressured know, commodity headwind I challenging, definitely going done think next to recently, on year. but you as some remains work the there's be downs still into some ups a and beef front. mean, a bit

But And want to So things. today. hours before too Certainly, where we before and specific and are together there to parts them because all ability still quite of time brand I and moving the retain They're purpose and we that bit and getting on environment we think get reputation there's with promising attract with that of tips see kinds I labor can our their get some there. I helps think a put we being is their think those our employees.

it and So out next we or about range, see that good to we'll mid feel the in low months. X X where plays

Brian Harbour

saying you that Okay. behind to a And and essentially, will we you get comment just that, just were that put comparable And that's North pricing were on Italia, pricing as XQ took, so the level was there? into you beyond? your somewhat at margins Cheesecake

Matthew Clark

one they're basically, mean, behind cycle Factory. I Brian. right, That's Cheesecake

X.X of And so look versus catch X, sort we inflation, do were cumulative up. pricing points what to when cumulative just That's we we needed to behind correct. just at

Operator

This and concludes Q&A our conference today's you attending. for Thank call.

may You disconnect. now

The Cheesecake Factory Incorporated (CAKE) 1 Nov 232023 Q3 Earnings call transcript