Investor Relations

The Cheesecake Factory Reports Results for Fourth Quarter of Fiscal 2023

February 21, 2024

The Cheesecake Factory Incorporated (NASDAQ: CAKE) today reported financial results for the fourth quarter of fiscal 2023, which ended on January 2, 2024.

Total revenues were $877.0 million in the fourth quarter of fiscal 2023 compared to $892.8 million in the fourth quarter of fiscal 2022. The fourth quarter of fiscal 2023 included 13 weeks compared to 14 weeks in the fourth quarter of fiscal 2022. Excluding the impact of the additional week in fiscal 2022, which contributed approximately $78.4 million in sales, total revenues for the fourth quarter of fiscal 2023 increased 7.7% over the prior year period. Net income and diluted net income per share were $12.7 million and $0.26, respectively, in the fourth quarter of fiscal 2023.

The Company recorded a pre-tax net expense of $35.6 million related to impairment of assets and lease termination expenses and Fox Restaurant Concepts (“FRC”) acquisition-related items. Excluding the after-tax impact of these items, adjusted net income and adjusted net income per share for the fourth quarter of fiscal 2023 were $39.0 million and $0.80, respectively. Please see the Company’s reconciliation of non-GAAP financial measures at the end of this press release.

Comparable restaurant sales at The Cheesecake Factory restaurants increased 2.5% year-over-year in the fourth quarter of fiscal 2023 and increased 14.0% relative to the fourth quarter of fiscal 2019, on an operating week basis.

“Our fourth quarter results marked a strong finish to the year, with positive comparable sales growth and margin expansion contributing to record annual revenue and solid earnings growth for the year,” said David Overton, Chairman and Chief Executive Officer. “Comparable sales and traffic at The Cheesecake Factory restaurants outperformed the broader casual dining industry in the fourth quarter, demonstrating the strength and resilience of our namesake brand and our ability to capture market share. Execution within our restaurants was outstanding with our operators delivering improvements in labor productivity, food efficiency, wage management, and hourly staff and manager retention, driving solid flow-through to support profitability.”

“During the quarter we opened nine new restaurants to strong consumer demand, and on the international front two Cheesecake Factory restaurants opened under licensing agreements, including the first location in Thailand. We believe we are well-positioned to build on this momentum and continue accelerating unit growth to achieve our longer-term development objectives. As we look ahead, we remain intently focused on leveraging our competitive strengths, including our scale, differentiated concepts and best-in-class operators to drive profitable growth and meaningful shareholder value.”

Development

During the fourth quarter of fiscal 2023, the Company opened nine new restaurants, including three Cheesecake Factory restaurants, three North Italia restaurants and three FRC restaurants. In addition, two Cheesecake Factory restaurants opened internationally under licensing agreements in China and Thailand. Subsequent to quarter-end, the Company opened one North Italia restaurant, one Flower Child and one Culinary Dropout, and one Cheesecake Factory restaurant opened internationally under a licensing agreement in Mexico.

Liquidity and Capital Allocation

As of January 2, 2024, the Company had total available liquidity of $292.8 million, including a cash balance of $56.3 million and availability on its revolving credit facility of $236.5 million. Total principal amount of debt outstanding was $475 million, including $345 million in principal amount of 0.375% convertible senior notes due 2026 and $130 million in principal amount drawn on the Company’s revolving credit facility.

The Company repurchased approximately 318,400 shares of its stock at a cost of $9.8 million in the fourth quarter of fiscal 2023. In addition, the Company’s Board of Directors has declared a quarterly dividend of $0.27 per share to be paid on March 19, 2024 to shareholders of record at the close of business on March 6, 2024.

Conference Call and Webcast

The Company will hold a conference call to review its results for the fourth quarter of fiscal 2023 today at 2:00 p.m. Pacific Time. The conference call will be webcast live on the Company’s website at investors.thecheesecakefactory.com and a replay of the webcast will be available through March 22, 2024.

About The Cheesecake Factory Incorporated

The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. Delicious, memorable experiences created by passionate people – this defines who we are and where we are going. We currently own and operate 334 restaurants throughout the United States and Canada under brands including The Cheesecake Factory®, North Italia®, Flower Child® and a collection of other FRC brands. Internationally, 33 The Cheesecake Factory® restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers. In 2023, we were named to the FORTUNE Magazine “100 Best Companies to Work For®” list for the tenth consecutive year. To learn more, visit www.thecheesecakefactory.com, www.northitalia.com, www.iamaflowerchild.com and www.foxrc.com.

From Fortune ©2024 Fortune Media IP Limited. All rights reserved. Used under license. Fortune and Fortune 100 Best Companies to Work For are registered trademarks of Fortune Media IP Limited and are used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, The Cheesecake Factory Incorporated.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, without limitation, statements regarding strength and resilience of the Company’s brand, ability to capture market share, operational execution to support profitability, customer demand, accelerating unit growth, achievement of development objectives, profitable growth and shareholder value. Such forward-looking statements include all other statements that are not historical facts, as well as statements that are preceded by, followed by or that include words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should” and similar expressions. These statements are based on current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. These forward-looking statements may be affected by various factors including: economic, public health and political conditions that impact consumer confidence and spending, including increased interest rates, periods of heightened inflation and market instability, and armed conflicts; supply chain disruptions; demonstrations, political unrest, potential damage to or closure of the Company’s restaurants and potential reputational damage to the Company or any of its brands; pandemics and related containment measures, including the potential for quarantines or restriction on in-person dining; acceptance and success of The Cheesecake Factory in international markets; acceptance and success of North Italia, Flower Child and Other Fox Restaurant Concepts restaurants; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreign exchange rates, tariffs and cross border taxation; changes in unemployment rates; increases in minimum wages and benefit costs; the economic health of the Company’s landlords and other tenants in retail centers in which its restaurants are located, and the Company’s ability to successfully manage its lease arrangements with landlords; the economic health of suppliers, licensees, vendors and other third parties providing goods or services to the Company; the timing of new unit development and related permitting; compliance with debt covenants; strategic capital allocation decisions including with respect to share repurchases or dividends; the ability to achieve projected financial results; the resolution of uncertain tax positions with the Internal Revenue Service and the impact of tax reform legislation; changes in laws impacting the Company’s business; adverse weather conditions in regions in which the Company’s restaurants are located; factors that are under the control of government agencies, landlords and other third parties; the risks, costs and uncertainties associated with opening new restaurants; and other risks and uncertainties detailed from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”). Forward-looking statements speak only as of the dates on which they are made and the Company undertakes no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements and the discussion of risk factors contained in the Company’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K as filed with the SEC, which are available at www.sec.gov.

The Cheesecake Factory Incorporated
Condensed Consolidated Financial Statements
(unaudited; in thousands, except per share and statistical data)
 
Consolidated Statements of Income/(Loss)

13 Weeks Ended

January 2, 2024

14 Weeks Ended

January 3, 2023

52 Weeks Ended

January 2, 2024

53 Weeks Ended

January 3, 2023

Amount

 

Percent of

Revenues

Amount

 

Percent of

Revenues

Amount

 

Percent of

Revenues

 

Amount

 

Percent of

Revenues

Revenues

$

877,009

 

 

100.0

%

$

892,802

 

 

100.0

%

$

3,439,503

 

 

100.0

%

$

3,303,156

 

 

100.0

%

Costs and expenses:        
Food and beverage cost

 

201,449

 

 

23.0

%

 

220,469

 

 

24.7

%

 

803,500

 

 

23.4

%

 

810,926

 

 

24.6

%

Labor expenses

 

308,555

 

 

35.2

%

 

318,629

 

 

35.7

%

 

1,227,895

 

 

35.7

%

 

1,211,951

 

 

36.7

%

Other operating costs and expenses

 

234,969

 

 

26.8

%

 

237,783

 

 

26.6

%

 

922,428

 

 

26.8

%

 

881,627

 

 

26.7

%

General and administrative expenses

 

54,683

 

 

6.2

%

 

56,115

 

 

6.3

%

 

217,449

 

 

6.3

%

 

205,753

 

 

6.2

%

Depreciation and amortization expenses

 

24,012

 

 

2.7

%

 

25,616

 

 

2.9

%

 

93,136

 

 

2.7

%

 

92,380

 

 

2.8

%

Impairment of assets and lease termination expenses

 

27,827

 

 

3.2

%

 

31,074

 

 

3.5

%

 

29,464

 

 

0.9

%

 

31,387

 

 

1.0

%

Acquisition-related contingent consideration, compensation and amortization expenses

 

7,796

 

 

0.9

%

 

10,448

 

 

1.2

%

 

11,686

 

 

0.3

%

 

13,368

 

 

0.4

%

Preopening costs

 

9,579

 

 

1.1

%

 

7,791

 

 

0.8

%

 

25,379

 

 

0.7

%

 

16,829

 

 

0.4

%

Total costs and expenses

 

868,870

 

 

99.1

%

 

907,925

 

 

101.7

%

 

3,330,937

 

 

96.8

%

 

3,264,221

 

 

98.8

%

Income/(loss) from operations

 

8,139

 

 

0.9

%

 

(15,123

)

 

(1.7

)%

 

108,566

 

 

3.2

%

 

38,935

 

 

1.2

%

Interest and other expense, net

 

(2,483

)

 

(0.3

)%

 

(2,137

)

 

(0.2

)%

 

(8,552

)

 

(0.3

)%

 

(6,043

)

 

(0.2

)%

Income/(loss) before income taxes

 

5,656

 

 

0.6

%

 

(17,260

)

 

(1.9

)%

 

100,014

 

 

2.9

%

 

32,892

 

 

1.0

%

Income tax benefit

 

(7,025

)

 

(0.8

)%

 

(13,962

)

 

(1.5

)%

 

(1,337

)

 

(0.0

)%

 

(10,231

)

 

(0.3

)%

Net income/(loss)

$

12,681

 

 

1.4

%

$

(3,298

)

 

(0.4

)%

$

101,351

 

 

2.9

%

$

43,123

 

 

1.3

%

         
Basic net income/(loss) per share

$

0.27

 

 

$

(0.07

)

 

$

2.10

 

 

$

0.87

 

 
Basic weighted average shares outstanding

 

47,828

 

 

 

48,951

 

 

 

48,324

 

 

 

49,815

 

 
         
Diluted net income/(loss) per share

$

0.26

 

 

$

(0.07

)

 

$

2.07

 

 

$

0.86

 

 
Diluted weighted average shares outstanding

 

48,609

 

 

 

48,951

 

 

 

49,050

 

 

 

50,414

 

 
Selected Segment Information   13 Weeks Ended

January 2, 2024
  14 Weeks Ended

January 3, 2023
  52 Weeks Ended

January 2, 2024
  53 Weeks Ended

January 3, 2023
Revenues:        
The Cheesecake Factory restaurants  

$

658,445

 

 

$

674,467

 

 

$

2,595,066

 

 

$

2,528,043

 

North Italia  

 

67,224

 

 

 

65,514

 

 

 

258,878

 

 

 

228,622

 

Other FRC  

 

70,913

 

 

 

66,507

 

 

 

263,923

 

 

 

237,552

 

Other  

 

80,427

 

 

 

86,314

 

 

 

321,636

 

 

 

308,939

 

Total  

$

877,009

 

 

$

892,802

 

 

$

3,439,503

 

 

$

3,303,156

 

       
Income/(loss) from operations:        
The Cheesecake Factory restaurants  

$

65,363

 

 

$

50,872

 

 

$

297,063

 

 

$

220,765

 

North Italia  

 

3,201

 

 

 

3,553

 

 

 

18,515

 

 

 

13,934

 

Other FRC  

 

3,596

 

 

 

5,346

 

 

 

19,422

 

 

 

23,577

 

Other  

 

(64,021

)

 

 

(74,894

)

 

 

(226,434

)

 

 

(219,341

)

Total  

$

8,139

 

 

$

(15,123

)

 

$

108,566

 

 

$

38,935

 

       
Depreciation and amortization expenses:        
The Cheesecake Factory restaurants  

$

16,251

 

 

$

18,803

 

 

$

64,206

 

 

$

66,539

 

North Italia  

 

1,694

 

 

 

1,638

 

 

 

6,407

 

 

 

5,714

 

Other FRC  

 

2,289

 

 

 

1,519

 

 

 

7,916

 

 

 

6,231

 

Other  

 

3,778

 

 

 

3,656

 

 

 

14,607

 

 

 

13,896

 

Total  

$

24,012

 

 

$

25,616

 

 

$

93,136

 

 

$

92,380

 

       
Impairment of assets and lease termination expenses:        
The Cheesecake Factory restaurants  

$

20,241

 

 

$

19,760

 

 

$

20,401

 

 

$

19,701

 

North Italia  

 

1,015

 

 

 

-

 

 

 

1,015

 

 

 

-

 

Other FRC  

 

2,527

 

 

 

3,909

 

 

 

2,582

 

 

 

3,909

 

Other  

 

4,044

 

 

 

7,405

 

 

 

5,466

 

 

 

7,777

 

Total  

$

27,827

 

 

$

31,074

 

 

$

29,464

 

 

$

31,387

 

       
Preopening costs:        
The Cheesecake Factory restaurants  

$

4,457

 

 

$

4,362

 

 

$

12,857

 

 

$

9,525

 

North Italia  

 

2,926

 

 

 

1,550

 

 

 

5,058

 

 

 

4,305

 

Other FRC  

 

1,998

 

 

 

1,004

 

 

 

6,482

 

 

 

1,361

 

Other  

 

198

 

 

 

875

 

 

 

982

 

 

 

1,638

 

Total  

$

9,579

 

 

$

7,791

 

 

$

25,379

 

 

$

16,829

 

       
The Cheesecake Factory restaurants operating information:   13 Weeks Ended

January 2, 2024
  14 Weeks Ended

January 3, 2023
  52 Weeks Ended

January 2, 2024
  53 Weeks Ended

January 3, 2023
Comparable restaurant sales vs. prior year  

 

2.5

%

 

 

4.0

%

 

 

3.0

%

 

 

7.0

%

Comparable restaurant sales vs. 2019  

 

14.0

%

 

 

11.4

%

 

 

13.9

%

 

 

10.5

%

Restaurants opened during period  

 

3

 

 

 

2

 

 

 

6

 

 

 

3

 

Restaurants open at period-end  

 

216

 

 

 

211

 

 

 

216

 

 

 

211

 

Restaurant operating weeks  

 

2,783

 

 

 

2,939

 

 

 

11,010

 

 

 

11,052

 

       
North Italia operating information:        
Comparable restaurant sales vs. prior year  

 

7

%

 

 

9

%

 

 

8

%

 

 

15

%

Comparable restaurant sales vs. 2019  

 

34

%

 

 

26

%

 

 

31

%

 

 

22

%

Restaurants opened during period  

 

3

 

 

 

2

 

 

 

3

 

 

 

4

 

Restaurants open at period-end  

 

36

 

 

 

33

 

 

 

36

 

 

 

33

 

Restaurant operating weeks  

 

442

 

 

 

454

 

 

 

1,729

 

 

 

1,604

 

       
Other Fox Restaurant Concepts (FRC) operating information:(1)        
Restaurants opened during period  

 

3

 

 

 

2

 

 

 

6

 

 

 

3

 

Restaurants open at period-end  

 

40

 

 

 

34

 

 

 

40

 

 

 

34

 

Restaurant operating weeks  

 

512

 

 

 

462

 

 

 

1,906

 

 

 

1,681

 

       
Other operating information:(2)        
Restaurants opened during period  

 

-

 

 

 

2

 

 

 

1

 

 

 

3

 

Restaurants open at period-end  

 

39

 

 

 

40

 

 

 

39

 

 

 

40

 

Restaurant operating weeks  

 

519

 

 

 

558

 

 

 

2,074

 

 

 

2,072

 

       
Number of company-owned restaurants:        
The Cheesecake Factory  

 

216

 

     
North Italia  

 

36

 

     
Other FRC  

 

40

 

     
Other  

 

39

 

     
Total  

 

331

 

     
       
Number of international-licensed restaurants:        
The Cheesecake Factory  

 

32

 

     
 
(1) The Other FRC segment includes all FRC brands except Flower Child.
(2) The Other segment includes the Flower Child, Grand Lux Cafe and Social Monk Asian Kitchen concepts, as well as the Company's third-party bakery, international and consumer packaged goods businesses, unallocated corporate expenses and gift card costs.
 
Selected Consolidated Balance Sheet Information   January 2, 2024   January 3, 2023
Cash and cash equivalents   $

 

56,290

 

  $

 

114,777

 

Long-term debt, net of issuance costs (1)  

 

470,047

 

 

 

468,032

 

 
(1) Includes $340.0 million net balance of 0.375% convertible senior notes due 2026 (principal amount of $345 million less $5.0 million in unamortized issuance costs) and $130 million drawn on the Company's revolving credit facility. The unamortized issuance costs were recorded as a contra-liability and netted with long-term debt on the Condensed Consolidated Balance Sheet and are being amortized as interest expense.

Reconciliation of Non-GAAP Results to GAAP Results

In addition to the results provided in accordance with accounting principles generally accepted in the United States of America (“GAAP”) in this press release, the Company is providing non-GAAP measurements which present net income/(loss) and net income/(loss) per share excluding the impact of certain items. The non-GAAP measurements are intended to supplement the presentation of the Company’s financial results in accordance with GAAP. These non-GAAP measures are calculated by eliminating from net income/(loss) and diluted net income/(loss) per share the impact of items the Company does not consider indicative of its ongoing operations. The Company uses these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons.

The Cheesecake Factory Incorporated
Reconciliation of Non-GAAP Financial Measures
(unaudited; in thousands, except per share data)
       
  13 Weeks Ended

January 2, 2024
  14 Weeks Ended

January 3, 2023
  52 Weeks Ended

January 2, 2024
  53 Weeks Ended

January 3, 2023
   
Net income/(loss) (GAAP)  

$

12,681

 

 

$

(3,298

)

 

$

101,351

 

 

$

43,123

 

Impairment of assets and lease termination expenses(1)  

 

27,827

 

 

 

31,074

 

 

 

29,464

 

 

 

31,387

 

Acquisition-related contingent consideration, compensation and amortization expenses(2)  

 

7,796

 

 

 

10,448

 

 

 

11,686

 

 

 

13,368

 

Tax effect of adjustments(3)  

 

(9,262

)

 

 

(10,795

)

 

 

(10,699

)

 

 

(11,637

)

Adjusted net income (non-GAAP)  

$

39,042

 

 

$

27,429

 

 

$

131,802

 

 

$

76,241

 

         
Diluted net income/(loss) per share (GAAP)  

$

0.26

 

 

$

(0.07

)

 

$

2.07

 

 

$

0.86

 

Impairment of assets and lease termination expenses  

 

0.57

 

 

 

0.63

 

 

 

0.61

 

 

 

0.62

 

Acquisition-related contingent consideration, compensation and amortization expenses  

 

0.16

 

 

 

0.21

 

 

 

0.24

 

 

 

0.27

 

Tax effect of adjustments  

 

(0.19

)

 

 

(0.22

)

 

 

(0.22

)

 

 

(0.23

)

Adjusted net income per share (non-GAAP)(4)  

$

0.80

 

 

$

0.56

 

 

$

2.69

 

 

$

1.51

 

 
(1) A detailed breakdown of impairment of assets and lease termination expenses recorded in the thirteen and fifty-two weeks ended January 2, 2024 and the fourteen and fifty-three weeks ended January 3, 2023 can be found in the Selected Segment Information table.
(2) Represents changes in the fair value of the deferred consideration and contingent consideration and compensation liabilities related to the North Italia and FRC acquisition, as well as amortization of acquired definite-lived licensing agreements.
(3) Based on the federal statutory rate and an estimated blended state tax rate, the tax effect on all adjustments assumes a 26% tax rate for the fiscal 2023 and 2022 periods.
(4) Adjusted net income per share may not add due to rounding.

 

Etienne Marcus

(818) 871-3000

investorrelations@thecheesecakefactory.com

Source: The Cheesecake Factory Incorporated