The Cheesecake Factory Incorporated (CAKE) on Q3 2022 Results - Earnings Call Transcript

Operator: Hello, my name is, Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2022 The Cheesecake Factory Earnings Conference Call. Thank you. I would now like to turn the call over to Etienne Marcus, Vice President of Finance and Investor Relations. Please go ahead. Etienne Marcus: Good afternoon and welcome to our Third Quarter fiscal 2022 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Matt Clark our Executive Vice President and Chief Financial Officer. Before we begin, let me quickly remind you that during this call items will be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed on today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission. All forward-looking statements made on this call speak only as of today's date and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude impairment of assets and lease terminations and acquisition-related expenses. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described. David Overton will begin today's call with some opening remarks and David Gordon will provide an operational update. Matt will then review our third quarter results and provide a financial update. Following that, we'll open the call to questions. With that, I'll turn the call over to David Overton. David Overton: Thank you, Etienne. We were pleased with our overall sales performance with the third quarter revenues finishing within our expected range. Despite consumer headwinds and an uncertain macroeconomic backdrop. We are navigating the challenging landscape by continuing our relentless focus on menu innovation, service, hospitality and operational excellence. These are hallmarks that have made The Cheesecake Factory brand, of the most differentiated Restaurant concepts in the casual dining industry for over four-and-a-half decades and through numerous economic cycles. Comparable sales at The Cheesecake Factory restaurants for the third quarter of 2022 increased 1.1% and 19.5% from the third quarters of 2021 and 2019, respectively. Sales trends strengthened throughout the quarter and into the fourth quarter. To this point through October 25, fourth quarter to-date comparable sales for The Cheesecake Factory restaurants increased approximately 2.8% year-over-year and 14% as compared to the same period in fiscal 2019. Average unit volumes at The Cheesecake Factory continue to track to $12 million for the year and our newest location in Katy, Texas opened to tremendous demand. Underscoring the strong affinity for The Cheesecake Factory brand and the unique dining experiences we provide for our guests. Our execution within the four walls was solid during the quarter, with the best-in-class operators focused on delivering delicious and memorable guest experiences and effectively managing what is in their control. In fact labor productivity and food efficiency results for the quarter exceeded our expectations and pre-pandemic levels. On the development front, we opened three new restaurants during the third quarter including The Cheesecake Factory in Katy, Texas, a suburb of Houston, North Italia, in Dunwoody Georgia, a suburb of Atlanta and the first brick-and-mortar location of Fly Bye in Phoenix. Fly Bye is FRC's newest fast casual dining concept offering Detroit enhanced stretch style pizza and crispy chicken. Subsequent to quarter end, The Cheesecake Factory Opry Mills in Nashville, Tennessee and the North Italia in The Woodlands, Texas, a suburb of Houston both open to impressive demand. And today, we opened our third Flower Child in Austin, Texas market. All of the sites, we have been working on remain active in our pipeline. However, consistent with the trends seen throughout the industry, opening dates continue to be impacted by supply chain challenges and permit approval delays. As such, we now expect to open as many as 13 new restaurants in fiscal year 2022, including three Cheesecake Factory restaurants, four North Italia and six other FRC restaurants, including three Flower Child locations. Additionally, we still expect one Cheesecake Factory restaurant to open internationally under a licensing agreement. We also recently announced the expansion of one of our international development agreements to include Thailand. And in continuation of our global growth strategy, we are exploring potential opportunities to expand in Europe. Looking ahead to next year, our pipeline continues to build in addition to the carryover sites from this year. Thus, we remain confident in our ability to achieve our unit growth goal of 7% annually. While our operational performance has been solid we continue to face a dynamic and challenging inflationary environment, which was reflected in our third quarter profit margins. We remain highly focused on returning restaurant margins to pre-pandemic levels in the near-term. To this point, we're rolling out an additional menu price increase at the start of December, which Matt will provide more details on shortly. In addition, the Board approved a quarterly dividend of $0.27 per share and expanded our share repurchase authorization by 5 million shares. We remain committed to our capital allocation priorities of investing in the growth of our business to achieve our targeted returns and returning value to our shareholders. With that I'll now turn the call over to David Gordon. David Gordon: Thank you, David. Building on what David said about our solid operational execution, not only do see improvement in labor productivity and food efficiency results, but we also delivered year-over-year improvements across our dine-in guest satisfaction metrics, including phase of experience, staff service and food quality. On the staffing front applicant flow remained strong. In fact, we had over 350,000 applicants during the quarter. We're also starting to see our best-in-class attrition rates fall below prior year levels. As we've said before, we believe our staffing success is a key contributor to the improvement of our dining guest satisfaction scores. After all, our people are our greatest resource and enable us to deliver delicious memorable experiences for our guests every day. Our ability to attract and retain dedicated and experienced employees in a competitive industry amidst the tight labor market is a testament to the strong culture, industry-leading training and tangible career advancement opportunities we provide for our staff members and our managers. Speaking of our greatest resource, our talent. In September, we held our first General Managers conference since the start of the pandemic, it wasn't inspiring and productive week of learning and development through formative programs, panels, speaker-led training and leadership seminars. Importantly, we were able to recognize our outstanding field leadership for their unwavering dedication and hard work amid unprecedented challenges, while continuing to uphold our deepest values along the way. The events and activities serve to reenergize and motivate our General Managers, who are crucial to our success and provide them with additional insights and tools to take back to their restaurants to improve operations, celebrate wins and develop their people. Now turning to North Italia, third quarter comparable sales grew a robust 10% versus 2021 and 18% versus 2019 with improvements across all dayparts and all geographies. These positive sales trends have continued into the fourth quarter. In fact, through October 25, fourth quarter to-date comparable sales increased approximately 9% year-over-year and 25% as compared to the same period in fiscal 2019. Additionally, our most recent North Italia opening in the Woodlands, Texas had one of our strongest North Italia opening week sales. For-wall margin for the adjusted mature locations declined from 16% in the second quarter to 12.9% for the third quarter, predominantly driven by inflation. During the process of implementing a 4.3% menu price increase in accordance with our overall margin strategy to offset inflation and recapture of pre-pandemic restaurant level margins, FRC drove similarly strong top line results. The continued sales performance we've seen across our concept, reinforces our belief that we are well positioned for the future. Given the strength of our brands, best-in-class operators and breadth of high quality growth vehicles. We believe, our long-term outlook continues to be bright. And with that, I will now turn the call over to Matt for our financial review. Matthew Clark: Thank you, David. Despite the many unprecedented challenges encountered this year, we are still progressing towards our primary financial objectives for 2022, including total revenue expectations of about $3.75 billion. The Cheesecake Factory AUVs continue to track towards $12 million, with the additional menu price increase, David Overton mentioned earlier, we continue to plan to exit the year at pre-pandemic four -wall margins. We continue to leverage G&A, depreciation and preopening to support total enterprise margins and we restarted returning capital to our shareholders through our dividend and stock repurchase programs. For the third quarter, along with the broader restaurant industry, we continue to face higher inflationary headwinds than we had anticipated. Specifically, higher utilities and building maintenance, which totaled approximately $5 million or $0.10 of EPS in the quarter and accounted for the majority of the variance to expectations in other operating costs. Turning to some more specific details around the quarter. Third quarter comparable sales versus prior year increased 1.1% at The Cheesecake Factory restaurants and increased 10% at North Italia. Revenue contribution from North Italia and FRC totaled $135,.4 million sales per operating week at FRC including Flower Child were approximately $103,000. And including $14.2 million in external bakery sales, total revenues were $784 million during the third quarter of fiscal 2022. Moving to expenses. Cost of sales increased 270 basis points versus Q3 of the prior year. Principally driven by significantly higher commodity inflation menu pricing, labor increased 30 basis points over 2021, primarily driven by higher wages and increased training costs, and partially offset by lower medical insurance expenses. Other operating expenses increased 100 basis points, largely driven by higher utilities and building costs noted, which are mostly inflation related. G&A as a percentage of sales increased 30 basis points reflecting travel returning to a more normalized level, including holding our first-in-person General Manager conference since the pandemic began. Preopening costs were $4.3 million in the quarter compared to $3.2 million in the prior year period. We opened three restaurants during the third quarter versus four openings in the third quarter last year. However, third quarter 2022 preopening costs are higher year-over-year, primarily due to costs related to two additional early fourth quarter openings. In the third quarter, we reported an after-tax $0.8 million charge, primarily associated with FRC acquisition-related items. Third quarter GAAP diluted net loss per common share was $0.05 adjusted net loss per share was $0.03. Now turning to our balance sheet and capital allocation, the Company ended the quarter with total available liquidity of approximately $372 million, including a cash balance of about $133 million and over $239 million available on our revolving credit facility. Total debt outstanding was unchanged at $475 million. Subsequent to the end of the third quarter, we renewed our credit facility agreement to extend the maturity to October 2027 at comparable pricing and favorable terms to provide financial flexibility and ample liquidity to support our long-term growth objectives. CapEx totaled approximately $32 million during the third quarter for new unit development and maintenance. We completed approximately $27 million in share repurchases and returned just over $14 million to shareholders via our dividend during the quarter. While we will not be providing specific comparable sales and earnings guidance given the operating environment continues to be very dynamic. We will provide our up-to-date thoughts on our underlying assumptions for the fourth quarter of 2022 and full year 2023. Based on our year-to-date performance and more recent trends, we anticipate total revenues for the year to be about $3.75 billion, which includes the impact of the 53rd operating week fiscal 2022. For the fourth quarter, we would anticipate total revenue to be between $900 million and $930 million. Next, we now expect commodity inflation of about 15% on an annual basis as well as for the fourth quarter, which represents about a 2% increase over our prior fourth quarter outlook, and which is directionally in line with headline CPI increases we observed during the quarter. It was about flat to Q3 levels. We continue to model net total labor inflation of about 5% when factoring latest trends in wage rates, channel mix as well as other components of labor. And given the inflationary outlook for energy and services and assuming they remain similar to Q3, we now expect other operating expenses to be approximately 25.5% of sales in the fourth quarter. As David mentioned, we remained committed to protecting our longer-term four-wall margins, while managing through the risks associated with cost fluctuations, driven by the current environment. Given the additional inflationary pressures we are experiencing, we are in the process of implementing about a 2.8% incremental menu price increase which as anticipated is above our current level and is supportive of our margin objectives. Turning to margins. Let me walk through some of the math to bridge our Q3 margin results to our stated goal of exiting the year at pre-pandemic level restaurant margins. The Cheesecake Factory restaurants four-wall margin was 10.1% in Q3. If we add one-half of the Q3 price increase of 4.25 % so adjusted for the timing of the pricing rollout, plus the 2.8% incremental Q4 price increase. This brings us to an approximately 15% four-wall margin. In Q3, our training and recruiting expenses were higher than anticipated by approximately 0.5% of sales due to the strong hiring results David Gordon mentioned, which we would expect to normalize if the labor market continues to stabilize. This would put us about 25 basis points away from the Q3 2019 Cheesecake Factory restaurant-level margin, which we are focused on recovering through operational efficiencies. Keep in mind, that the third quarter sales were about 2% below this year's year-to-date sales performance of 2019 sales plus menu pricing. Using the Q3 sales trend as our baseline positions us to achieve our margin targets, even with the volatility, we have seen this year or a slight pullback in consumer spending in the future. On a positive note, as David mentioned earlier, fourth quarter to-date sales trends have improved to be in line with 2019 sales plus menu pricing, and our best seasonally adjusted average weekly sales since April. I would also note that this margin bridge includes our higher expectations for cost of sales, utilities and building maintenance expenses, which we're carrying into our fourth quarter and beyond expectations. Importantly, based on our latest information, input costs appear to have stabilized at these levels. Given we are rolling out the incremental price increase at the start of December, the fourth quarter will only receive about one-third of the benefit. As such, we do not expect to fully close the margin gap for the entire fourth quarter. However, we do expect this pricing action to be sufficient to close the gap going into 2023 based on current levels of inflation. And going forward, our goal is to offset inflation with menu pricing, as has been our longstanding stated strategy. Of course there can always be timing differences depending on market movements and lapping of extreme variability as we have experienced this year. Lastly, it is noteworthy that in September food away from home spending increased to an all-time high of 55.1% as a percentage of total food spending. Exhibiting consumer staple like attributes. Additionally, food at home inflation outpaced restaurant inflation nationally by over 400 basis points affirming our belief that there continues to be sufficient demand even in the current environment to support pricing power as a means to offset inflation and recapture four-wall margins as is our strategy. Now, moving on, we still anticipate G&A to be approximately $55 million to $56 million for the fourth quarter, which as a reminder, includes an extra week this year. Our preopening assumption remains unchanged at $7 million in the fourth quarter. Finally, we expect about $25 million in depreciation for the fourth quarter and for modeling purposes, we're using a tax rate of about 8%. With regard to development, we plan to open as many as 13 new restaurants this year and we would now anticipate approximately $130 million in CapEx to support this level of unit development as well as required maintenance on our restaurants. Note that this includes some CapEx for locations that have shifted into 2023. In addition, keep in mind, that we have reinstated our stock buyback program and have now declared three dividends this year. Looking ahead to fiscal 2023, as previously mentioned, the macroeconomic backdrop continues to be uncertain. However, we want to provide some initial perspective for next year. Based on our year-to-date performance, more recent trends and assuming no material operating or consumer disruptions, we anticipate total revenues for fiscal 2023 to be between approximately $3.5 billion to $3.6 billion, total inflation across our commodity baskets and total labor is currently estimated to be in the mid-single digit range. And as I said earlier, our goal is to offset inflation with menu pricing. With regard to development, we plan to open as many as 21 to 24 new restaurants next year, spread across our portfolio of concepts. For modeling purposes, at this point, we would expect four to five Cheesecake Factory restaurants, seven to eight, North Italia, three to four Flower Child locations and seven other FRC restaurants and we would anticipate approximately $150 million to $170 million in CapEx to support this level of unit development. As well as required maintenance on our restaurants. In closing, as I noted in the beginning of my prepared remarks, despite the persistence of unprecedented headwinds in our industry, our company is still on track, to accomplish the majority of our key financial objectives for 2022. We attribute this primarily to the strength of our brands, our belief that we have the best operators in the business and our strategic approach to effectively balancing the short-term with the long-term. Taking all these considerations together, we believe we are well positioned going into 2023 to take advantage of our increased scale to deliver meaningful earnings growth, generate robust cash flows and drive significant shareholder value going forward. And with that said, we'll take your questions. Operator, over to you. Operator: Your first question comes from the line of Nicole Miller with Piper Sandler. Nicole Miller: Thank you for the update and good afternoon. Just one question, can you talk about average check in terms of value proposition and affordability. So the question being at Cheesecake Factory and also the North Italia brands, what is average check average transaction today? And then what opportunities does the, guests have to come in and spend - I mean, really the least amount available so they can still access you in terms of affordability? Matthew Clark: Sure, Nicole, this is Matt. Thank you for that question. I think it's pretty relevant in today's environment. I think the hallmark of the Cheesecake Factory is the breadth of the menu, and we still have items that are $8 and $9 going up to the low 30s if you want to get a fillet, which I would note, probably compares to about $50 even at the most value-focused steakhouses today. So guests can certainly come in. And don't forget, the portion sizes. You can still get a full-size Cheesecake Factory portion on the chicken or pasta dish for the high teens dollars. You can split that and still get out an average check in the low teens with a drink per person if you want to. So I don't think we're - we’re one, not focused on that. We're always focused on the value, but also believing that we are maintaining, if not expanding our value proposition relative to the rest of the dining industry. If you look at the compounded pricing that the industry has now taken because it's starting to get a little interesting as we lap around early summer and fall pricing from last year, which we didn't take and others did, it's probably about 14% based on the latest census, and that's probably going to go higher going into the fourth quarter. So we remain 3% to 4% below that level. So I think overall, we have a great value proposition. I think the average I would have to look at the specifics for the Cheesecake Factory is probably in the high-20s. But remember, there's a split between off-premise and on-premise. It's probably around $27 or $28 for the on-premise guests, which is most likely what we would be benchmarking against, yes. In general, I think that North Italia follows a very similar approach, although the menu, obviously not being as broad, but having somewhat of a barbell strategy, you can get a pizza or a pasta, still a very affordable price in North Italia. Or you want to go in for a high-end dinner you can also get fillet or Branzino that might be in the mid-$30s to close to $40. So it's really looking for that experience that you might want. And I think that if you can deliver on that experience which operators can, yes that the value proposition remains extremely strong. Nicole Miller: Thank you. Matthew Clark: Just one additional note to that, as we - as everybody asks and this may come up in terms of incident rates, we continue to see very strong attachment across desert, across alcohol between entrees and appetizers. So that would also tell me that when guests are coming in, they're not managing their check or they don't have any sticker shock, because they're actually continuing to order a little bit more than they used to. Operator: Your next question comes from the line of Sharon Zackfia with William Blair. Sharon Zackfia: Hi, how are you? Sorry, I didn't recognize my name, there first. I guess it would be helpful as we talk about price to hear about kind of what you're seeing in terms of the mid-summer price increase. Did you see any resistance there or management of check? How comfortable are you with that the additional 2.8% will be passed along usually, I guess. And if you could give us kind of where transactions versus ticket kind of fell out in the quarter and how much price you'll be carrying for the full fourth quarter, that would be helpful? Matthew Clark: Sure, Sharon, this is Matt. I think - so the first thing is when we look at our sales trends today in October, which obviously is about six weeks to eight weeks into having taken the summer menu pricing. They are the best that we've seen pretty much all year equal to April. So I would say we've been successful capturing our price. Obviously there's, been ups and downs in sales trends this year. But we don't really think that has anything to do with the different pricing as much as it has to do with external factors such as COVID or gas prices. But certainly, the consumer has accepted the pricing. And as I just mentioned, the attachment rates actually continue to run above last year and about 2019 actually. So they are coming in for the full experience. Just as a technical response for the quarter, pricing was 6%. Traffic was essentially flat at 0.1% and the mix was a negative 4.8%. But just for everyone to remember, that's really driven by how we count the on-premise, off-premise, right? So the off-premise is one guest, but obviously, the check average is about two times that. So it's a little bit funky. For the weighted average for Q4, we would anticipate the menu pricing to be around 8% to 8.5% on a weighted basis, obviously, depending on the sales trends throughout the quarter and when we think about capturing all of that, it would be not until December as noted so it's about one-third of the incremental 2.8% pricing that would be in the fourth quarter. Sharon Zackfia: Okay. And then I just wanted to clarify, you were giving a lot of kind of triangulation around Cheesecake Factory margins. So I just want to, I guess, quantify, are you basically saying that given the price you're taking this quarter and assuming no further kind of kick up in inflation, you think you'll be in the 15% plus kind of unit level margin in 2024. Is that - I'm sorry, 2023 I just skip the year. Is that kind of the takeaway that you're leaving us with? David Overton: 100%, right. So I think if - just to be crystal clear, the expectation of the commodities is essentially flat from Q3 to Q4. We're also carrying in what I consider to be pretty heightened other operating expenses, considering what we've seen and what many others have seen in the utilities and building maintenance. And frankly, at a slightly lower sales level than what we're running today also, right, to accommodate for any of the ups and downs. So then that would mean we would exit the year at our targeted level and then we would have to assess what the pricing would need to be to offset next years' inflation, right? So - and one of the things that we'll continue to try to be transparent about is on a quarter-to-quarter basis, you've gotten a lot of interesting noise this year in the way that commodities have moved. So we're really positioning ourselves to make the whole year 2023 margins at the restaurant level. Sharon Zackfia: Okay. Thank you. Operator: Your next question comes from the line of Andy Barish with Jefferies. Andy Barish: Hi, guys, good afternoon. Just a couple of things on what the variances were to the downside on the food cost, Ari, you said you had been about 75% lock kind of going into 3Q. So what kind of went off there? And then secondly, on the - sort of on the productivity and food efficiency measures that you follow, can you give us a little bit of kind of background on what that looks like given it's not exactly tied to near-term restaurant level margins? Is there something maybe that you're looking at to adjust on the productivity or efficiency side, as we look out to kind of 2023 and get through this, obviously, volatile sort of environment? Matthew Clark: Yes, Andy, so this is Matt. Just on the commodities, the primary variance was in the dairy category. So if you go back and look at the third quarter butter chart, it ballooned from, I'm thinking $2.40 to north of $3 over a span of like two weeks. And so that was one area that we did have exposure and did experience some incremental inflation in the quarter beyond where we were sitting when we had the call. I think as noted on the other OpEx, it was predominantly around the utilities and maintenance. And then just a slight bit on the labor was really from the hiring and training. As you noted, from a productivity standpoint, we measure predominantly sales per labor hour. I think it's sort of the truest financial measure in terms of productivity. And then on the cost of sales, it's really actual to theoretical. Historically, on that, it's run a 95% range for us. We're probably closer to 96% today. I think the main component for us is that we're executing at a high level. And that's important for financial discipline. It's important for us to ensure that we're going to get 100% of the pricing flow through. And at the same time, as David Gordon mentioned, maintain extremely high and improving guest satisfaction, right? So you've got to make sure that you're not over productive but that you are producing at a level that is commensurate with providing excellent guest service too. Andy Barish: Okay very helpful color. And then, I'm just following up on Sharon's question on the margin targets for next year. Should we assume that comment on menu pricing, offsetting the mid-single-digit inflation means that that's kind of where things will shape up in sort of that mid-single digit range as we look at menu price rolling off and not fully replaced and all those kind of things as we move through 2023? Matthew Clark: Yes I mean, right now, one of the things that's happen certainly in the last two years of COVID is that they contracting cycle for commodities has moved a little bit later. I mean 10 years ago, we might have had some significant clarity by now, I think, but similar to most, it's moved into really December quite a bit. But if we're looking at sort of the current spot in conjunction with the forward curves, based on our cost this year that looks like mid-single digits in the labor side, we're running about a net 5%. So I mean, just if we carry that forward for the year, those add up to be mid-single-digits. And again, our objective would be to take enough pricing that would be equal to that inflation on the annualized basis. Andy Barish: Thanks guys. Operator: Your next question comes from the line of Jared Garber with Goldman Sachs. Jared Garber: Hi, great. Thank you for taking my question. You talked about trends improving throughout the quarter and here into the fourth quarter, if you think about October, can you help frame for us what those trends might look like on a three-year basis if we think about sort of removing some of the - rather the delta variant last year? And then just wanted to get a sense of if you're seeing any differential in trends in your higher penetrated California market versus some of the rest of your state exposures given some of the studios benefits that have hit consumers' pockets out there? Thank you. Matthew Clark: Sure, Jared. It's Matt. I think that 2019 baseline has proven to be the most consistent. Obviously, you kind of nailed it there. There's, been some significant waves of both COVID as well as reopening. And both of those have proved to be relatively transitory in both too high and too low for kind of when the averaging sets out. So, if we think about the - versus 2019, it was mid-single digits in July then moved to be almost double-digits in August. And then basically, the September run rate was pretty similar to the October run rate. So kind of for the past two months, we've been right back on that 2019 pricing track. In terms of geography, has been pretty balanced. I think we're all trying to figure out seasonality a little bit on whether it's going to be exactly like 2019 or prior - but I think when we look at the sort of bigger picture, the Southeast, the Southwest and the Northeast. They are all starting to migrate to a tighter, narrower band as we progress through the year. As we noted on our last call, in July, we did see some separation. We attributed that to being some of the COVID movement and potentially some of the gas prices - or other options. But I think as we kind of take that average and we see it progress particularly in September and October, in order to get to the sales levels that we're at, you've really got to - all geographies contributing. So I think we feel good about the balance today. Jared Garber: Great, thanks for all the color. Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Brian Harbour: Yes hi, thank you. Maybe just first, when you think about kind of the same-store sales performance of North Italia and you benchmarked that against kind of Cheesecake. I recognize that one brand is much newer, and there's younger stores in the base, but what else do you think might explain some of the differences in kind of current performance of those two brands? David Overton: Hi Brian, that's interesting. I mean, they are different, right? And so I think it's - I'm not sure that we would make a direct comparison. Certainly, the newness of the brand would particularly signify that it's still accelerating. I mean prior to COVID, we were comping up positive traffic in North. I think part of that is due to the capacity constraints that Cheesecake Factory typically finds itself in. We opened up that capacity to Cheesecake, we kind of never leave that, as we've talked about in the past, North begins at a much lower level and ramps up over time and still have some capacity. So I think you put that opportunity on the plate with excellent execution and we're driving incremental results. And there are fewer also so - you're not looking at the degree of penetration that Cheesecake has is probably part of it. It's a little bit more unique in those marketplaces. So it's probably a combination of those predominantly. Brian Harbour: Okay great. Thanks. And then when you think about just kind of cost inflation next year, and you'll look to offset that with pricing. But is there anything else that you think can offset some of that? Is there anything on the labor side that you think can help bite some of that inflation or more that you can do on kind of productivity on the food side? David Overton: I think we're always looking to offset as many costs as we can without passing it along to the gas. I mean, historically that - the opportunity to offset component of inflation by improving the performance of your bottom quartile restaurants, for example, was pretty meaningful. I think in a 2% inflationary environment or a 3% inflationary environment where you're taking 2% or 2.5% pricing and you're offsetting 1.5% to 1% is meaningful. I think in an environment like today, if we're talking 5% or 6%, of course, we're going to try to do that, but you've got to get menu print pretty close, right? That's the lesson learned from this year, for sure. There's just only so much you're going to do at that point in time. So we will always look to do that to pass the lease amount come on. But I think in this environment, you're still talking about 90% of it being menu pricing. Brian Harbour: That's great. Thank you. Operator: Your next question comes from the line of Jeff Farmer with Gordon Haskett. Jeff Farmer: Great, thanks. Good afternoon. You guys indicated a couple of times that October saw the strongest, I think you said seasonally adjusted average book of sales performance since April. I'm just curious, if there's anything concept specific that you guys were doing to drive that improved performance at the Cheesecake Factory. Matthew Clark: Jeff, I think consistent execution overtime just returns that trend to the norm. I mean, I attributed a little bit more to the abnormal summer seasonality. Certainly, we're keeping a good percentage of the to-go sales. From a seasonal perspective, September and October absolute to-go sales are higher than they used to be seasonally and maybe that creates a little bit more of a stabilizer compared to the summertime. But nothing more or less than what we always do. I think it's really reverting to the mean that we've seen for the year. David Overton: Jeff, it's David I guess I would just add, perhaps a little bit more of an ease in the staffing market has helped a bit, which has helped improve attrition overall, which has helped improve operations overall. So as that continues - we continue to follow that trend. We would anticipate just - we already have great operators and consistent generations, but the more stable the staff level environment is in the restaurant, the easier it is for us to be able to execute consistently and drive sales, which is the hallmark of the Cheesecake Factory. Jeff Farmer: That's helpful. And just one more follow-up on elasticity of demand, so all of your peers have said something largely similar, which is that you haven't seen too much demand pushback on the menu price increases. But the question I have is that given the casual dining segments relatively low frequency, do management teams, including yourself truly sort of have a fully informed read on elasticity and with all the pricing that's been taken? Matthew Clark: Yes that's a really interesting angle, Jeff. And it is Matt. I do think that we get enough frequency from our high visitation guess that we're going to see that by now. I mean they're coming in at least once a month, right? And so I think we're - and it's a pretty good percentage of the total visit. So I think statistically, I would say, yes, we have enough population to measure that elasticity against. The other thing that I mean I just find interesting. And I think it's kind of an indicator of where our value proposition sits relative to where other places that people are going because even if those guests aren't coming in, to us, maybe the moderate to come in once a quarter, they're going other places. But when they do come in, they're ordering more than they used to. So to me, that says that our large portion pastas and our great desserts relatively must look like they're well priced compared to where everybody else is going because they're ordering more than they used to. Jeff Farmer: All right, thank you appreciate it. Operator: Your next question comes from the line of Jeffrey Bernstein with Barclays. Jeffrey Bernstein: Great, thank you very much. Two questions the first one just on unit growth, Matt, I think you said you want to get to the prior 7% growth target in 2023. I know in 2022, you started - you had planned for 2020, which I guess would have been that 7%, but ultimately it was only the, I guess, the 13-year targeting now. So I'm just wondering if you can size up maybe what the greatest challenges were in 2022? Just trying to get a read on the confidence in reaccelerating it back to now, you're talking about upwards of 25% next year. I think you mentioned the seven of them that are rolling into 2023 are part of that, but just trying to get a sense of what you think are the greatest challenges in 2022 that you think maybe have abated to allow you to assume there's going to be such a big reacceleration next year and then one follow-up? David Gordon: Hi Jeff, this is David. A lot of the challenges were and continue at a much slighter extent around permitting getting through permits in local jurisdictions and earlier in the year around some major pieces of equipment. And so we're trying to be a little more proactive there and doing some more proactive purchasing on the CapEx side to be able to ensure we have those big pieces of equipment that are very unique to Cheesecake Factory and to be prepared for that 7% next year. So we feel confident in the 2021 to 2024 four or five of those being Cheesecake, some of them being North Italia and then the rest being FRC concepts, including probably three to four flower channels. So I think our teams are certainly capable of opening 21 to 25 restaurants. We've done it historically in the past, just - the Cheesecake Factory. And so I think we're poised to meet the supply chain challenges and some of the permitting and approval delays that we had in 2023 head on to be able to meet the target for next year. Jeffrey Bernstein: Understood and just following up on the restaurant margin commentary. I think you said you are going to exit the fourth quarter at a certain level just wondering if you can more specific in terms of quantifying what do you think that exit rate going to be I am assuming you're talking about like 15% plus, but maybe you talk about what that rate because I think that's the rate you're kind of anchoring around 2023? And again because you said it’s the exit rate of the fourth quarter any color in terms of what you think the fourth quarter restaurant model would be being that you already have the first month complete and you already think the exit rate is going to be in that whatever that defined range is just trying to get sense in terms of specifics on the numbers for the margin for this quarter and into 2023? Matthew Clark: Sure, Jeff it's Matt. So the math would give us in December back to the fourth quarter of 2019 Cheesecake Factory which was 15.7. So that's kind of where we're anchoring on going into next year. And then obviously one thing that would caveat is that that does mean each quarter for 2023 would mirror the 2019 quarter because there is a lot of moving in the inflation and pricing timing, but 15.7 is kind of our aggregate anchor that we're looking to trend into 2023. The fourth quarter is only going to get third of the benefit of the 2.8% pricing. So two-thirds of that will not happen right so roughly speaking there is 2% below that level that we are sort of talking for the fourth quarter. Jeffrey Bernstein: Because that's the margin you are saying for the full fourth quarter would be two points below 15.7? Matthew Clark: For the Cheesecake Factory four-wall correct. Jeffrey Bernstein: Got you, thank you very much. Operator: Your next question comes from the line of David Tarantino with Baird. David Tarantino: Hi good afternoon, Matt. I just wanted to clarify how you're thinking about your pricing, so sorry to ask this for the third or fourth time here. But on your December price increase, is that a pull forward amount from what you maybe normally would have taken in February or would you contemplate taking more in February when your normal cycle to address the inflation that you're seeing next year? I just want to make sure I understand how you're thinking about it? Matthew Clark: David, that's an excellent question. I appreciate that you brought that up for clarification. This is incremental. We will be doing in the first quarter, what we always do. And we don't know what that level of pricing is because we're still assessing the commodities market and what we can contract for. But it will be a normal level of pricing to offset next year's inflation. This is really this 2.8% is to catch up for this year. I think one of the things that we saw happen is that we probably had a little better protection last year in the commodities market and our labor was a little more insulated because we were better staffed. So a lot of our competitors took pricing last year in the fourth quarter incrementally in about the 3% range. And so that gap, we didn't feel as much in the fourth quarter and first quarter, but then it built in the second and third quarters of this year. So that really is to make up for what happened this year, and then we'll move forward as normal in February. David Tarantino: Got it. So, the way to think about maybe year-over-year pricing is you'll exit the year with about a 10% increase in the menu and you might do something in February that maintains it and that's a similar ballpark or maybe up and then that will carry forward to your August price increase. Is that the right way to think about it? Matthew Clark: That's correct, that's correct. David Tarantino: Great. And I guess, relatedly, I know this has been asked, but because you're kind of lagging what others have done, you could end up in a situation next year where that year-over-year increase is quite a bit higher than what others are running? Are you going to be taking a close look at that when you get to the February price increase or the February increase is going to be less about your relative position in the market and more about what you need to do to invest kind of cover the inflation? Matthew Clark: Well, I think it's been such a kind of wild ride. David I think our perspective is you've got to look a little bit on the compounded level and also the speed at which all of this has happened. I think we feel pretty good, as I've mentioned about our value proposition even with the incremental pricing, we are going to be below the national average and probably pretty much in line with our peers. And don't forget, the quoted pricing number for a lot of our peers excludes the lack of discounting that they're doing. And they all talk about that, right? We don't discount anyway. It also excludes the reduction in marketing that they may have to pick back up, and we don't do that either. So I think competitively, we're actually way below the market. And so I think we have some room to run. And we know that our volumes are tracking to the $12 million this year. So if we can protect the four-wall margins even if there is a little bit of a consumer pullback, like I said, we're going to be good. We're going to be in good shape and we'll grow all off that base with that level of profitability. David Tarantino: Great, thank you very much. Operator: Your next question comes from the line of Joshua Long with Stephens Inc. Joshua Long: Great, thank you for taking the question. Was curious if you could provide an update on rewards program pilot that you started out in Houston I think back in June. And any sort of early learnings there and if that's the point where you start to build that out into other pilot studies? David Overton: Sure Josh, this is David great question. So we did launch the pilot in Houston in June and our acquisition rate continues to be significantly ahead where we had originally forecasted and about I think two days on Thursday we will be launching a beta in the Chicago market. And we have some new things that we want to test out not just from the acquisition standpoint, but also from a redemption standpoint and some more operational training opportunities that we want to learn from. So we feel good about where we are today and our hopefully that we'll be launching something nationally at some point next year. Joshua Long: Great, thank you and on that point, I feel like and correct me if I'm wrong, but I feel like the kind of scaling up and the training piece, as you just mentioned, was kind of something that was initially a focus point for the Houston pilot. As you think about that going forward, can you talk a little bit more about maybe the consumer-facing pieces or some of those items that you'd expect to see or how the guests might experience that a little differently? David Overton: I think we want to learn a little bit more about the redemption rates. We'd like to see the redemption rates to be a little bit higher than they are today. And what are the ways that we can remind people once they're in the building that they are members of the program and they may have something sitting in their account that they've forgotten about. So we'll test a few different ways to remind them and see if we can make an impact on redemption. Joshua Long: Got it, that's helpful. And then one follow-up, it's a smaller piece, but just curious if you could provide some context around what's happening with the bakery sales, the third-party or external bakery sales and kind of where we're at with that as we start to lap over the kind of moderation in growth from the second half of last year? David Overton: Sure, Josh as I think similar to some other components of COVID, we saw the bakery sales be a little bit spiked and maybe a little bit lumpy in 2021. I think we're generally tracking back to our historical levels. I think our focus also has been to ensure that we had enough for the restaurants. Our restaurant sales and bakery sales have been much higher than pre-pandemic. So we've been covering some of that. I think there is a lot of opportunity. We're looking at going forward, again, off of a base that I would say is kind of normalized at this point in time. Joshua Long: Got it, thank you. Operator: Your next question comes from the line of Brian Mullan with Deutsche Bank. Brian Mullan: Hi, thank you. Just a question on the delivery sales channel, just looking for a sense of consumer demand for that delivery occasion right now, have you seen any degradation on a year-over-year basis? I know delivery sales per week are probably much higher than 2019, but just trying to get a sense of consumer sensitivity to pricing right now or demand as we've moved further away from COVID? David Overton: Thanks, Brian. This is David. The total off-premise was roughly 23% for the quarter, only down a couple of percent from Q2 and delivery remains pretty stable. Even if I go back and look a full year ago Q3 delivery of that was around roughly 12%, and it's 10% today. So continues to be strong demand. We continue to not take as much pricing in the delivery channel as many of our competitors so the value proposition from a menu perspective continues to remain really strong. So we're happy with continued total off-premise, performance and the delivery as well. Brian Mullan: Okay. Matthew Clark: As noted - we are actually running Brian, about 24% in October off-prem, so you know we don't feel like there's been any real movement, either up or down. It's just kind of sideways. Brian Mullan: Thank you. And then just follow-up, just on G&A when you look out to 2023 assuming just to normalize, your normalized environment is leveraging it at 10 bps a year still kind of the goal. You're talking about that pre-COVID work. Is there enough in there or maybe there's an opportunity to go a little faster than that? Even if it's just for a period of time just - any early thoughts on G&A for next year? Matthew Clark: Yes I mean, I feel good with tendency a year off of this year at this point in time. We haven't gone through our budgeting process yet. So I think I'll stick with that until further notice. Brian Mullan: Thank you. Operator: Your next question comes from the line of Lauren Silberman with Credit Suisse. Lauren Silberman: Thank you very much. I actually wanted to ask on on-premise. What you're seeing there, what you saw throughout the quarter and then where on-premise traffic is running relative to historical levels? Thank you. Matthew Clark: Hi Lauren, it's Matt. Yes, we're right around 90% of the historical on-premise. So that's pretty darn consistent today as it was sort of in April, as noted. So that's been pretty stable, too. I mean, obviously, in July when we did see a little bit of a dipped up deal correlated to both on and off in total, but we continue to track for the year to about 90% of the historical levels which I think gives us an opportunity. As we've noted before, when we did our research in the middle of the year, there was a good percentage. I think it was 25% to 30% of our guests who said that they had not yet become comfortable enough to dine into our restaurant. So I mean I would attribute most of that to that 10% delta from pre-pandemic offset by some new guests that we've picked up, right? So we know we've picked up a good number of cohorts, but that's been a pretty steady number in addition to the off-premise being steady as well. Lauren Silberman: Great thanks. And then just a follow-up on the margins, I understand the focus on returning to the Cake Factory four-walls. If we include North Italia and FRC, where does that translate to, I guess, on a consolidated basis or how do we think about that, whether it's 2023 and just going forward? Thank you. Matthew Clark: I think on a weighted average basis on the P&L, like if you took our entire P&L, we could get that optical four-wall granted that includes all the brands in the bakery, but just think about it holistically above G&A, depreciation, preopening. If we could get that number to be the same as what the Cheesecake Factory target is, I think we'd all be happy. That may not happen all at once, but that would be an aggregate goal. Lauren Silberman: Thank you very much. Operator: We have reached the allotted time for questions. This concludes our conference for today. You may now disconnect.
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Cheesecake Factory Beats Q4 Estimates, Plans Aggressive Expansion in 2025

The Cheesecake Factory (NASDAQ:CAKE) delivered strong fourth-quarter results, with earnings and revenue exceeding analyst expectations, reinforcing the company’s continued momentum and expansion plans.

For Q4, the restaurant chain posted adjusted earnings per share of $1.04, surpassing analyst estimates of $0.91. Revenue climbed to $921 million, exceeding projections of $912.04 million and marking a 5% year-over-year increase from $877 million in the same quarter last year.

Comparable restaurant sales at The Cheesecake Factory rose 1.7% year-over-year, reflecting steady consumer demand for the brand’s dining experience despite macroeconomic uncertainties.

The company accelerated its expansion efforts in Q4, opening nine new restaurants, including three North Italia locations, two Flower Child sites, two Fox Restaurant Concepts (FRC) outlets, and the relocation of two Cheesecake Factory locations. Looking ahead, Cheesecake Factory plans to open up to 25 new restaurants in 2025, as it leverages its diverse brand portfolio to fuel long-term growth.

Management expressed confidence in sustaining financial and operational progress in 2025, emphasizing scalability, operational efficiencies, and brand differentiation as key drivers for shareholder value.

The Cheesecake Factory Incorporated (NASDAQ:CAKE) Anticipates Quarterly Earnings Release

  • Wall Street analysts expect earnings per share (EPS) of $0.91 and revenue of approximately $912.7 million for the quarter ending December 2024.
  • Analysts predict a 15% increase in EPS from the previous year and a 4% rise in revenues, supported by strategic pricing and strong off-premise sales.
  • CAKE has exceeded earnings estimates in the last four quarters, with an average surprise of 14.1%.

The Cheesecake Factory Incorporated, listed on NASDAQ:CAKE, is a renowned restaurant company known for its extensive menu and signature cheesecakes. As it gears up to release its quarterly earnings on February 19, 2025, Wall Street analysts have set the bar with expectations for an earnings per share (EPS) of $0.91 and revenue of approximately $912.7 million.

Analysts are optimistic about CAKE's performance for the quarter ending December 2024. They anticipate an EPS of $0.92, a 15% increase from the previous year, and revenues of $912 million, a 4% rise. This positive outlook is supported by strategic pricing actions and strong off-premise sales, as highlighted by Zacks Investment Research.

In the previous quarter, CAKE reported an adjusted EPS of $0.58, surpassing the Zacks Consensus Estimate by 23.4% and marking a 48.7% year-over-year increase. The company has consistently exceeded estimates in the last four quarters, with an average surprise of 14.1%. This track record has led to an upward revision of the EPS estimate for the upcoming quarter.

CAKE's financial metrics reveal a price-to-earnings (P/E) ratio of 19.85 and a price-to-sales ratio of 0.77, indicating how the market values its sales. However, the company faces challenges with a high debt-to-equity ratio of 4.76, suggesting significant reliance on debt. Additionally, a current ratio of 0.44 points to potential liquidity issues in meeting short-term obligations.

The Cheesecake Factory (NASDAQ:CAKE) Earnings Preview and Financial Analysis

  • Earnings Expectations: Analysts predict an EPS of $0.47 and revenue of approximately $866 million for the upcoming quarterly release.
  • Zacks Upgrade: Zacks Investment Research upgraded CAKE to a Zacks Rank #2 (Buy), indicating potential for stock price growth.
  • Financial Health Concerns: Despite positive indicators, a debt-to-equity ratio of 1.66 and a current ratio of 0.43 raise concerns about leverage and liquidity.

The Cheesecake Factory (NASDAQ:CAKE) is a well-known restaurant chain famous for its extensive menu and signature cheesecakes. As it prepares to release its quarterly earnings on October 29, 2024, analysts predict an earnings per share (EPS) of $0.47 and revenue of approximately $866 million. This release is highly anticipated by investors and analysts alike.

Recently, Zacks Investment Research upgraded CAKE to a Zacks Rank #2 (Buy), indicating increased optimism about its earnings prospects. This upgrade suggests potential upward movement in the stock price, as highlighted by Zacks. The Zacks rating system focuses on changes in earnings estimates, which can significantly influence stock prices.

The Cheesecake Factory's valuation metrics provide further insight into its financial standing. With a price-to-earnings (P/E) ratio of 17.25, the market values its earnings moderately. The price-to-sales ratio of 0.61 indicates that investors pay 61 cents for every dollar of sales, suggesting a reasonable valuation. The enterprise value to sales ratio of 1.14 reflects the company's total valuation relative to its sales.

Despite these positive indicators, some concerns remain. The company's debt-to-equity ratio of 1.66 suggests a relatively high level of leverage. Additionally, the current ratio of 0.43 may indicate potential liquidity issues in meeting short-term obligations. These factors are crucial for investors to consider when evaluating the company's financial health.

Zacks Investment Research is also examining whether investors are undervaluing CAKE. The analysis considers value, growth, and momentum trends to identify strong investment opportunities. The Style Scores system developed by Zacks highlights stocks with high grades in the "Value" category, suggesting that CAKE may be a strong value stock when combined with its high Zacks Rank.

The Cheesecake Factory Incorporated (NASDAQ: CAKE): A Sweet Investment Opportunity

  • Recent Performance: CAKE has gained approximately 6.72% over the past 30 days, showcasing strong upward momentum despite a minor setback of about 2.78% in the last 10 days.
  • Growth Potential: With a growth potential of approximately 6.94%, CAKE is positioned for further appreciation, making it an attractive option for growth-oriented investors.
  • Strong Fundamentals: Highlighted by a robust Piotroski Score of 8, indicating strong fundamentals and operational efficiency.

The Cheesecake Factory Incorporated (NASDAQ: CAKE) is a well-known restaurant company that operates a chain of upscale casual dining restaurants. It is famous for its extensive menu and signature cheesecakes. The company competes with other restaurant chains like Olive Garden and Red Lobster. Despite the competitive landscape, CAKE has managed to carve out a niche with its unique offerings and strong brand presence.

In recent performance, CAKE has shown a promising trend. Over the past 30 days, the stock has gained approximately 6.72%, indicating strong upward momentum. This gain reflects investor confidence and the company's ability to perform well in the current market environment. However, in the last 10 days, CAKE experienced a minor setback, losing about 2.78%. This dip could be seen as a temporary fluctuation, offering a potential buying opportunity for investors.

Looking at growth potential, CAKE is positioned for further appreciation with a growth potential of approximately 6.94%. This suggests that the stock could continue its upward trajectory, making it an attractive option for growth-oriented investors. The company's ability to maintain this growth potential is supported by its strong fundamentals and operational efficiency.

CAKE's fundamental strength is highlighted by its robust Piotroski Score of 8. The Piotroski Score is a measure of a company's financial health and operational efficiency. A high score like 8 indicates that CAKE has strong fundamentals and is capable of generating positive returns. This score reflects the company's solid financial position and its ability to navigate challenges effectively.

In terms of valuation, the target price for CAKE is set at $41.38. This target price suggests a potential upside from its current levels, reflecting analysts' confidence in the stock's ability to reach new heights. The combination of recent gains, strong growth potential, and solid fundamentals makes CAKE a compelling investment opportunity for those looking to add a resilient and promising stock to their portfolio.

Piper Sandler Raises Cheesecake Factory Price Target to $39 on Strong Q2 Performance

Piper Sandler analysts raised the price target for Cheesecake Factory (NASDAQ:CAKE) to $39.00, up from $37.00, while maintaining a Neutral rating.

Cheesecake Factory announced its second-quarter 2024 results yesterday, showcasing solid performance. The restaurant chain's results were highlighted by a year-over-year increase of 91 basis points in restaurant-level margins, with a flow-through rate of approximately 37% for the quarter.

Cheesecake Factory is experiencing same-store sales (SSS) and traffic trends that are outperforming the industry at its core brands, according to management. However, trends at its non-core brands are more in line with recent industry data.

Management's guidance for third-quarter 2024 revenue came in about 2% below pre-print consensus at the midpoint, which aligns with current industry data. Despite this, the quarter was strong overall, with the company benefiting from continued stability and normalcy in the operating environment at the restaurant level.

Cheesecake Factory (NASDAQ:CAKE) Exceeds Quarterly Earnings Expectations

Cheesecake Factory (NASDAQ:CAKE) has recently reported its quarterly earnings, showcasing a notable performance that exceeded analysts' expectations. With earnings of $0.73 per share, the company surpassed the Zacks Consensus Estimate of $0.63 per share, marking a significant improvement from the $0.61 per share earned a year ago. This achievement represents an earnings surprise of 15.87%, continuing the trend from the previous quarter where earnings of $0.80 per share beat the anticipated $0.74, resulting in a surprise of 8.11%. Over the last four quarters, Cheesecake Factory has managed to beat consensus EPS estimates three times, demonstrating a consistent ability to outperform expectations.

In terms of revenue, Cheesecake Factory posted $891.22 million for the quarter ended March 2024, slightly above the Zacks Consensus Estimate by 0.33% and an increase from the $866.11 million reported in the same period last year. This growth in revenue, however, contrasts with the company's stock performance. Despite the positive earnings and revenue results, Cheesecake Factory shares have declined about 2.8% since the beginning of the year, underperforming compared to the S&P 500's gain of 8.8%. This discrepancy highlights the complex dynamics affecting stock prices, including market sentiment and broader economic factors.

The company's financial health and investment appeal are further illuminated by its valuation metrics. With a Price to Earnings (PE) ratio of approximately 16.03, Cheesecake Factory's earnings relative to its share price appear attractive, especially when compared to the industry average. The Price to Sales ratio of about 0.50 and an Enterprise Value (EV) to Sales ratio of approximately 1.03 further underscore the company's valuation in relation to its sales, suggesting that the market values each dollar of Cheesecake Factory's sales favorably. Additionally, the EV to Operating Cash Flow ratio of around 16.19 highlights the company's valuation based on its operating cash flow, offering insights into its financial efficiency.

However, the company's financial leverage and liquidity pose areas of concern. The Debt to Equity ratio, at roughly 1.90, signals a high reliance on debt for financing compared to equity, which could pose risks in times of financial instability. Moreover, the Current Ratio of approximately 0.46 suggests potential liquidity challenges, indicating the company's ability to cover its short-term obligations is limited. These factors, combined with the company's earnings outlook and the performance of the Retail - Restaurants industry, will likely influence Cheesecake Factory's stock movement in the near term.

Despite these challenges, Cheesecake Factory's solid Zacks Rank and top-tier Value and VGM Style Scores indicate its potential for long-term success in the stock market. The company's forward Price-to-Earnings (P/E) ratio of 10.93 makes it an attractive option for value investors, and the upward revision of CAKE's earnings estimates by two analysts for fiscal 2024 reflects optimism about its financial prospects. With an average earnings surprise of 3.3%, Cheesecake Factory remains a noteworthy contender for investors' portfolios, balancing its financial strengths against the backdrop of market and operational risks.