Cheesecake Factory Q4 2025 Earnings Report

Cheesecake Factory EPS Results

• Actual EPS: $1.00
• Consensus EPS: $0.98
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: $1.04

Cheesecake Factory Revenue Results

• Actual Revenue: $961.56 million
• Expected Revenue: $949.03 million
• Beat/Miss: Beat by +$12.52 million
• YoY Revenue Growth: +4.40%

Cheesecake Factory Announcement Details

• Quarter: Q4 2025
• Date: 2/18/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, February 18, 2026
• Conference Call Time: 5:00PM ET

Cheesecake Factory (NASDAQ:CAKE) (NASDAQ: CAKE) operates full-service casual dining restaurants in the United States. Its flagship Cheesecake Factory restaurants offer an extensive menu of made-to-order dishes spanning American and international cuisines, along with a broad selection of cheesecakes and other desserts.

The company also operates North Italia, an Italian restaurant concept, and restaurants developed through Fox Restaurant Concepts. In addition, its bakery division produces cheesecakes and other baked goods for the company’s restaurants, retailers, and other foodservice customers.

Founded in 1978 by David Overton, The Cheesecake Factory began as a bakery business before opening its first restaurant in Beverly Hills, California, in 1978. The company primarily serves customers through restaurant locations across the United States and has expanded its brand presence internationally through licensing and other arrangements.

Cheesecake Factory Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Delivered a strong year — record annual revenue and adjusted diluted EPS of $3.77 for fiscal 2025, with Q4 adjusted diluted EPS of $1 and over $206 million returned to shareholders through buybacks and dividends.
• Positive Sentiment: Accelerating unit growth: the company opened 25 restaurants in 2025 (~7% unit growth), opened 7 in Q4, and expects to open as many as 26 restaurants in 2026 (including 1–2 international licensed Cheesecake Factory locations).
• Positive Sentiment: Margin improvement across concepts: The Cheesecake Factory’s adjusted restaurant-level profit margin rose 60 bps to 17.6%, with North Italia and Flower Child also reporting solid mid-to-high teens mature margins.
• Neutral Sentiment: 2026 outlook: management forecasts ~$3.9 billion in revenue at the midpoint and a ~5% net income margin, assuming low- to mid-single-digit inflation, roughly $210 million in cash CapEx, and ~26 net openings.
• Negative Sentiment: Near-term headwinds and accounting items: Q1 includes an estimated ~1% weather-related sales drag, Q4 recorded a $24.6 million pre-tax charge (impairments, lease terminations and other items), a $17.3 million gift-card breakage revenue benefit affected comparisons, and the company has $69 million of convertible notes due June 2026.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to The Cheesecake Factory Incorporated Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, simply press star one again. Thank you. I would now like to turn the conference over to Etienne Marcus, Vice President, Investor Relations and Finance. Etienne, please go ahead.

[Etienne Marcus, VP of Investor Relations and Finance at The Cheesecake Factory]

Good afternoon, and welcome to our Fourth Quarter Fiscal 2025 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 may be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com, and in our filings with the Securities and Exchange Commission.

[Etienne Marcus, VP of Investor Relations and Finance at The Cheesecake Factory]

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 acquisition-related items, impairment of assets and lease termination expenses, and other items. Explanations 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 fourth quarter financial results and provide commentary on our financial outlook before opening the call up to questions. With that, I'll turn the call over to David Overton.

[David Overton, Chairman and CEO at The Cheesecake Factory]

Thank you, Etienne. We closed out the year with a solid fourth quarter, delivering stable top-line performance and profitability. While the restaurant industry continued to face a more challenging operating environment, including weather-related impacts, our business remained steady, with revenue for the quarter finishing within our expected range. I'm very proud of how our teams navigated through the environment and continued to deliver delicious, memorable experiences for our guests. Our operators managed the factors within their control exceptionally well, driving year-over-year improvements in labor productivity, wage management, retention, and guest satisfaction. This strong operational execution supported margins and adjusted diluted net income per share, finishing toward the higher end of our expectations. This performance reflects the resilience of our high-quality concepts and the strength of our operators. Reflecting on 2025, it was a year of meaningful progress for our company.

[David Overton, Chairman and CEO at The Cheesecake Factory]

Despite a dynamic macro backdrop and a highly competitive restaurant landscape, we delivered strong results. Sales growth across our core concepts and the most new restaurant openings in a single year supported record annual revenue and adjusted diluted earnings per share, and our operators' consistent execution throughout the year drove meaningful profitability growth. Adjusted restaurant-level profit margins at The Cheesecake Factory increased 60 basis points year over year to 17.6%, with margin expansion also realized at North Italia and Flower Child. Culinary innovation remains a core strength and an important differentiator for our business. The new menu items we introduced across a wide range of categories and price points continue to resonate well with guests and support our broad appeal. These offerings reinforce the breadth and the value of our menu while keeping it relevant and competitively positioned without relying on discounting.

[David Overton, Chairman and CEO at The Cheesecake Factory]

Turning to development, during the fourth quarter, we opened Two Cheesecake Factory restaurants, Two North Italia locations, and Three FRC restaurants. Subsequent to quarter end, we opened One Flower Child and closed Four restaurants, including Two Cheesecake Factory restaurants, One Grand Lux Cafe, and 1 FRC restaurant. With seven new restaurants opened in the fourth quarter, we finished the year with 25 new openings, delivering approximately 7% unit growth for 2025. Looking ahead, we expect to open as many as 26 restaurants in 2026. With a strong development pipeline in place, we remain confident in our ability to achieve our development goals.

[David Overton, Chairman and CEO at The Cheesecake Factory]

We also anticipate one to two Cheesecake Factory restaurants to open internationally under licensing agreements. Finally, underscoring our confidence in the strength and consistency of the business, we announced an increase to our share repurchase authorization and raised our quarterly dividend for the first quarter. These decisions reflect our disciplined approach to capital allocation and our ongoing commitment to returning capital to shareholders while continuing to invest thoughtfully in the long-term growth of our company. With that, I will now turn the call over to David Gordon to provide an operational update.

[David Gordon, President at The Cheesecake Factory]

Thank you, David. Through strong operational leadership and disciplined execution, our teams drove meaningful performance improvements this quarter, including continued gains in overall guest satisfaction. This progress was underpinned by our strong staffing position and further advancements in our industry-leading retention across both hourly staff and management. This stability enables our operators to reinforce the core operational standards that define The Cheesecake Factory, so our guests consistently experience the exceptional hospitality that we're known for. As David noted earlier, our recent menu additions have been well received, and we are building on that momentum by refreshing our bites and expanding our bowl options as part of our current menu rollout. Results have been encouraging, with year-over-year growth in appetizer attachment rates and improved entree ordering patterns. Moving on to Cheesecake Rewards, we have made meaningful progress during the past 12 months, highlighted by strong membership growth and improved engagement.

[David Gordon, President at The Cheesecake Factory]

We've continued to enhance the guest experience while strengthening our technology and team capabilities, giving us better insight into member behavior. As we look ahead, we remain confident in the program's trajectory, and we will use our expanded capabilities to further refine offers and deepen member engagement. To support this evolution, we expect to launch a dedicated rewards app in the coming months, with the objective of creating a more seamless and connected experience for our guests. I'll now turn to sales trends. Industry sales decelerated in the fourth quarter, as reflected by the Black Box Casual Dining Index, declining sequentially by 410 basis points from the third quarter. The Cheesecake Factory's comparable sales were -2.2% in the fourth quarter, down from 0.3% in the third quarter, demonstrating relative stability in comparison to the industry's sequential declines.

[David Gordon, President at The Cheesecake Factory]

Adjusted annualized AUVs were $12.2 million for the quarter, supported by an off-premise sales mix of 22%, a slight improvement from recent quarters. North Italia fourth quarter annualized AUVs totaled $7.6 million. Comparable sales declined 4%, reflecting broader industry sales trends, continued pressure from sales transfer related to recently opened restaurants, as well as the lingering impact of the Los Angeles fires. We remain focused on disciplined operational execution and investing in our people. With manager and hourly staff retention remaining near historical highs, we are confident in our ability to compete effectively in a more challenging and competitive environment. In the fourth quarter, we opened two new North Italia restaurants to strong demand, with aggregate average weekly sales exceeding $182,000 for an annualized AUV of over $9 million.

[David Gordon, President at The Cheesecake Factory]

These results reinforce our confidence in the significant demand for an on-trend, contemporary Italian concept like North Italia. Restaurant-level profit margin for the adjusted mature North Italia locations was a solid 17.5% for the quarter, bringing the full-year average to 17%, right at the midpoint of our long-term objective of 16%-18%. Flower Child continued to perform exceptionally well and meaningfully outpaced the fast casual segment. Fourth quarter comparable sales increased 4% for a two-year comp sales increase of 15%. This strong sales performance translated into annualized AUVs of $4.3 million for the quarter and $4.6 million for the full year.

[David Gordon, President at The Cheesecake Factory]

Restaurant-level profit margin for the adjusted mature Flower Child locations was 17.5% for the fourth quarter, bringing the full year average to an impressive 18.5%. Lastly, we expanded our FRC portfolio with the opening of three new restaurants in existing markets, including a Culinary Dropout and a Henry. All three restaurants opened to strong demand, with average weekly sales equating to an annualized AUV of over $8.7 million. With that, let me turn the call over to Matt for our financial review.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Thank you, David. Let me first provide a high-level recap of our fourth quarter results versus our expectations I outlined last quarter. Total revenues were $961.6 million, inclusive of $17.3 million of gift card breakage revenue as a result of a change in historical redemption patterns. Excluding this benefit, fourth quarter revenues of $944.3 million finished within the range we provided. Adjusted net income margin was 5.1%, and adjusted diluted earnings per share was $1, both finishing toward the higher end of our expectations. We returned $24 million to our shareholders in the form of dividends and stock repurchases. For the fiscal year, we delivered total revenues of $3.75 billion, up 5% from the prior year.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Adjusted diluted earnings per share increased 10% year-over-year to $3.77, and adjusted EBITDA totaled $354 million. And we returned more than $206 million to shareholders in the form of dividends and stock repurchases in 2025. Now, turning to some more specific details around the quarter. Fourth quarter total sales at The Cheesecake Factory restaurants were $681.4 million, up 2% from the prior year. Excluding the gift card breakage benefit, total sales at The Cheesecake Factory restaurants were $664.2 million. Comparable sales, which is not impacted by the gift card breakage adjustment, declined 2.2% versus the prior year. Total sales for North Italia were $88.2 million, up 8% from the prior year period.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Other FRC sales totaled $99.4 million, up 17% from the prior year, and sales per operating week were $139,100. Flower Child sales totaled $45.5 million, up 19% from the prior year, and sales per operating week were $83,400, and external bakery sales were $17.2 million. Now moving to year-over-year expense variance commentary. Specifically, cost of sales decreased 70 basis points, with 40 basis points attributable to the gift card breakage benefit to revenue, with the remainder primarily driven by favorable commodity costs and mix shift, partially offset by higher beef costs. Labor, as a percent of sales, declined 40 basis points, with 60 basis points attributable to the gift card breakage benefit.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

The remaining difference was primarily driven by higher group medical expenses, partially offset by the continued improvement in retention, supporting labor productivity gains and wage leverage, as well as lower payroll taxes. Other operating expenses declined 20 basis points, with 50 basis points attributable to the gift card breakage benefit, partially offset by timing of marketing spend. G&A, as a percent of sales, increased 70 basis points, primarily driven by the write-down of gift card inventory. Depreciation increased 10 basis points from the prior year. Pre-opening costs were $9.4 million in the quarter, compared to $7.6 million in the prior year period. We opened seven restaurants during the fourth quarter, versus nine restaurants in the fourth quarter of 2024. The year-over-year variance reflects differences in the mix of concepts opened during the respective quarters.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

In the fourth quarter, we recorded a pre-tax net expense of $24.6 million related to impairment of assets and lease termination expenses, FRC acquisition-related items, gift card breakage, and gift card inventory adjustments. Fourth quarter GAAP diluted net income per share was $0.60. Adjusted diluted net income per share was $1. Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $582.2 million, including a cash balance of $215.7 million, and approximately $366.5 million available on a revolving credit facility.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Total principal amount of debt outstanding was $644 million, including $69 million in principal amount of convertible notes due June 2026, and $575 million in principal amount of convertible notes due 2030. CapEx totaled approximately $25 million during the fourth quarter for new unit development and maintenance. During the quarter, we completed approximately $11.2 million in share repurchases and returned $12.8 million to shareholders via our dividend. Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q1 and full year 2026.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Our assumptions factor in everything we know as of today, including net restaurant counts, quarter to date trends, our expectations for the weeks ahead, anticipated impacts associated with holiday shifts, and the recent softness in industry sales trends and the current consumer environment. Specifically, for Q1, we anticipate total revenues to be between $955 million and $970 million. This includes the estimated impact of inclement weather experienced so far in the quarter and four restaurant closures that occurred toward the end of January. These closures included two Cheesecake Factories, one Grand Lux Cafe, and one Blanco. Next, at this time, we expect effective commodity inflation of low single digits for Q1, as our broad market basket remains very stable.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

We are modeling net total labor inflation of low to mid-single digits when factoring in the latest trends in wage rates and minimum wage increases, as well as other components of labor. G&A is estimated to be approximately $63 million to $64 million. Depreciation is estimated to be approximately $28 million. We are estimating pre-opening expenses to be approximately $4 million to $5 million. Based on these assumptions, we would anticipate adjusted net income margin to be about 5% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 5%-6% due to the timing of certain discrete items in the quarter, and weighted average shares outstanding of approximately 48.5 million.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Turning to fiscal 2026, based on similar assumptions and no material operating or consumer disruptions, we anticipate total revenues for fiscal 2026 to be approximately $3.9 billion at the midpoint of our sensitivity modeling. For sensitivity purposes, we're using a range of ±1%. We currently estimate total inflation across our commodity basket, labor, and other operating expenses to be in the low- to mid-single-digit range and fairly consistent across the quarters. We are estimating G&A to be about 6.5% of sales, partially driven by our sales growth outlook, impacted by the timing of restaurant openings and closures, as well as periodic true-ups related to stock-based compensation. Depreciation is expected to be about $115 million for the year.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

And given our unit growth expectations, we're estimating pre-opening expenses to be approximately $35 million to $36 million. Based on these assumptions, we would expect full year net income margin to be approximately 5% at the sales estimate provided. For modeling purposes, we are assuming a tax rate of approximately 10% and weighted average shares outstanding relatively flat to 2025. With regard to development, as David stated earlier, we plan to continue accelerating unit growth this year. At this time, we expect to open as many as 26 new restaurants in 2026, with roughly three-quarters of those openings planned for the second half of the year. This includes as many as 6 Cheesecake Factories, six to seven North Italia, six to seven Flower Childs, and seven FRC restaurants.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

We would anticipate approximately $210 million in cash CapEx to support unit development, as well as required maintenance on our restaurants. Note, this CapEx range includes some new restaurant construction expenses, which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows. In closing, we delivered solid financial and operational performance for both the fourth quarter and full year, reflecting stable top-line performance and strong execution. We also generated a record adjusted EBITDA of $354 million, reinforcing the consistency of the business and supporting disciplined growth and increased capital returns to our shareholders. Our portfolio of high-quality concepts, seasoned operators, and financial position provide a solid foundation as we look ahead. As we move forward into 2026, we remain focused on comparable sales growth, margin expansion, and long-term shareholder value creation. With that said, we'll take your questions.

[Operator]

Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. We ask that you limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from the line of Andy Barish with Jefferies. Please go ahead.

[Andy Barish, Managing Director at Jefferies]

Hey, guys. Just wondering if you can kind of update us on sort of the go-forward structure with FRC and, you know, kind of changes you've made there and what's going on with management team and such?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure. It is Matt. Thanks for the question. Appreciate it. Well, we're, we're first of all, really pleased with the overall performance of the business unit out of Phoenix. All of the lines of business are meeting or exceeding our expectations, and I think we'll all look back on this being, you know, one of the most successful restaurant acquisitions. As right now, it's, it's, you know, steady as it goes.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

I think, as you know, we, we put someone in place from Cheesecake to work with the team there in a senior operations role, and that continues to go excellently. And we're, we'll continue to look at opportunities to add benefits via scale or expertise in, in operations. And at the same time, we'll continue to look at that team to, to innovate and incubate the way that they, that they have. So I think we're really pleased with where things are at, and we'll continue to try to create value through all of those concepts.

[Andy Barish, Managing Director at Jefferies]

Great. Thank you very much.

[Operator]

Your next question comes from the line of Sara Senatore with Bank of America. Please go ahead.

[Sara Senatore, Senior Research Analyst at Bank of America]

Thank you. I guess the first question is, you know, you mentioned strong execution that supported margins. You know, I guess given the restaurant level margin was quite healthy, and also that you've seen, I think, a positive response to some of your maybe more accessible price point additions to menus, is there an opportunity to invest in value or, at least to sort of market value as more centrally as you communicate with your consumers? Just something we've seen is, you know, other casual diners kinda emphasizing abundant value or, you know, quality value, you know, just given it looks like you have a little bit of room on the margin, and then I do have a quick follow-up.

[David Gordon, President at The Cheesecake Factory]

Sure. Hi, Sara, this is David Gordon. Thank you for the question. Certainly, we're very pleased with the reception the bites and bowls have gotten, across all of the restaurants, and when we rolled those out, we did roll them out with a little heightened sense of awareness. We put them on a separate menu card, so guests could see them right away. We marketed them a little more clearly in all of our social channels, and I think that's one of the reasons we had such great awareness. We're seeing strong attachment rates because they do provide great Cheesecake Factory value, and that value comes certainly in the price point on the bowls, but also on the portion size on the bites and bowls.

[David Gordon, President at The Cheesecake Factory]

They're great for sharing. We're seeing people attach the bites to their check. As we look to continue to roll out the menu, which we're doing right now, we have some new bites and bowls that are happening. So we're gonna lead into that value wherever we can, and maybe move some of those items into the main menu and create another menu card so that we have that heightened sense of awareness for guests that are dining in or through our social channels.

[Sara Senatore, Senior Research Analyst at Bank of America]

Great. Thank you. And then, just to confirm the North Italia same store sales, I guess it's more of a housekeeping. I think last quarter you said sales transfer was maybe two percentage points, and the fires were one. Are those roughly the same magnitude? And similarly, you know, the day part mix, more weakness in the lunch, or are all those factors kind of consistent in this fourth quarter as well?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yeah, so this is Matt. I would say yes. That, that, that's very true, and I think the, the positive news there, though, is that as we're, you know, midway through the first quarter, we're seeing evidence that there was truly the cannibalization in the fire as, as the comp is recovering. So comp positive there. Just to double down on what David Gordon said, I think the strategy is working on menu innovation. We said we would see some negative mix. We did, but in both, December and now again in January, we're seeing incident rates year over year growing, and that means the guests are coming in and, and seeing tremendous value, right? Because they're, they're ordering those, those items at a, at a higher rate. So I think we're, we're doing everything we thought we, we would do, and it's working.

[Sara Senatore, Senior Research Analyst at Bank of America]

Thank you.

[Operator]

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

[Brian Harbour, Equity Research Analyst at Morgan Stanley]

Yeah. Hey, good afternoon, guys. Matt, just a quick one. Do you have a rough estimate for kinda how much the weather impact was in this current quarter?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

You're talking about Q1, Brian, just to confirm?

[Brian Harbour, Equity Research Analyst at Morgan Stanley]

Yes. Like, how much

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure

[Brian Harbour, Equity Research Analyst at Morgan Stanley]

Is factored into your guide?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yeah, for sure. So what we did is to really look at it on a net basis, 'cause clearly there, you know, every year there's inclement weather and right now, the weather to date through Q1, we believe, is about a 1% net impact, negative net impact on the entire quarter. So that assumes, you know, no more, no more weather impact. We did see, you know, some record closures. I think we probably had 120 restaurants closed on a peak day, so it was pretty profound. And so, yeah, so that's built into it, though.

[Brian Harbour, Equity Research Analyst at Morgan Stanley]

Okay, understood. What, you know, you talked about kind of evolving the bites and bowls. What's done best on that menu? How are you sort of, you know, shifting that or, you know, what are you seeing customers gravitate to?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

I think everything has been very, very popular, to be honest. So, it's not one particular item, but a couple of the bowls have done very, very well. All the bites have done well. So, you know, that large menu variety is what people love about Cheesecake Factory, and they seem to be enjoying the bites and the bowls the exact same way.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

I personally think the truffle fries are the best, Brian.

[Operator]

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

[Drew North, Senior Research Associate at Baird]

Great. Thanks for taking the question. I wanted to circle back to your comments on the broader consumer environment. You highlighted the slowdown in industry trends from Q3 and volatility in Q1 to date, particularly due to weather. So at this point, when you look at the business from an underlying perspective, do you believe you've seen any fundamental change in the consumer spending backdrop at this point? And maybe what do you believe has caused some of the softer industry trends in recent months? And then maybe just what does your current outlook for the balance of the year contemplate as it relates to the external environment, given all the puts and takes out there? Thank you.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure, Drew. Great, great question. This is, this is Matt. I think it's a dial back to our last call. I think we gave some color on why we think the consumer sentiment would be soft for the fourth quarter. You know, and if, if you kind of think about where the comp came in for Cheesecake, you know, we said we thought it would be about a 1% delta in terms of real performance from Q3. We had about 1% of weather impact in Q4 and about 50 basis points of a holiday shift impact. So. Pretty much right where we would have anticipated it to be. Again, many factors in terms of whether you want to believe it's the K economy or the government shutdown, and we have a lot of historical data to understand those trends.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

I do think coming out into the first quarter here, that our performance is, you know, notably better. And I think the environment, I don't know, I can't really speak to other companies, but I think our performance, if you interpolate the guidance, is more like what we saw in Q2 of last year. And so it feels like what we felt maybe it was a two-quarter event. It's more like a one quarter at this point in time where we sit today. And so that's what our full year guidance also expects, is that where we kind of are seeing it in Q1, which is, you know, pretty steady and pretty good across all of our concepts will continue through the balance of the year.

[Operator]

Your next question comes from the line of Jim Salera with Stephens. Please go ahead.

[Jim Salera, Equity Research Analyst at Stephens]

Guys, good afternoon. Thanks for taking our question. I wanted to circle back on the bowls and bites. You'd mentioned that you're seeing, you know, attachment with those. And I was hoping maybe you could help us break out on cheesecake, the traffic and transaction in the quarter, but particularly with an eye to the mixed component. Should we expect to see mix as kind of a continued headwind as we roll into FY 2026, as we kinda balance, you know, maybe some greater attachment, but the lower check size from the bowls and bites, and maybe that drives some transactions as well?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure, Jim, this is Matt. Q4 pricing was about 3.5%-4%, and mix was a negative 1.8%, and then traffic was the delta from that. As anticipated, we still did see some negative mix. I would say, though, that, you know, that's a full quarter number, and we had just rolled out the new menu items, really ending in early September. You know, we didn't have a lot of traction if we think about our average guest comes once a quarter. As I noted, I think just importantly, what we saw in December and now again in January, is an actual improvement year-over-year in incident rates. Some of the pricing investment will be offset by increased ordering.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

So we do think that the negative mix will continue, but at a lesser rate as we progress through the year. Importantly, too, as we look at January, when you look at alcohol plus non-alcohol beverages, it was almost a break even on incident rates. So I think it's, you know, really, guests are coming in and getting that full cheesecake experience. So I don't know, we're kind of saying, if you think about the guide, probably a negative one for the year on a mix perspective, based on continuing to roll out the bowls and the bites, but getting some positive on the order rates.

[Jim Salera, Equity Research Analyst at Stephens]

Okay, good. That's very helpful. And then, just to follow up, as we think about some demand drivers in 2026, I know there's been a lot of conversations around incremental demand from people getting tax refunds, you know, larger than expected tax refunds. Do you have any kind of historical, you know, data that you can look at from when there were big refund seasons in the past? Is that something that actually tends to show up in the restaurants, or is that maybe just more the talking point than a reality from what you guys see on the ground?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yeah, I mean, I think, you know, great companies control their destiny, Jim, and so we don't really ever count on getting any benefits from the tax refunds. I think what we're seeing in our performance, given also that it started way before that, is that the improvements are based on our execution and our menu innovation and the things that we're doing. And just normally, given the income cohort associated with most of our portfolio, I just don't think it's as pronounced, and we haven't seen, nor do we see correlations to gas prices, things like that, either.

[Jim Salera, Equity Research Analyst at Stephens]

Okay, good. I appreciate the thoughts. I'll hop back into you.

[Operator]

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

[Jeffrey Bernstein, Equity Research Analyst at Barclays]

Great. Thank you. My first question is just on the restaurant margin, specifically around what your assumptions are for the quarter and the year. It does seem like now all the three brands that you're reporting are comfortably sitting in that 17%-18% range. Just wondering how we should think about that as the portfolio and by brand, any puts and takes in terms of how that should play out as we look through 2026, and then I had one follow-up.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure, Jeff, this is Matt. Thanks for the question. Let's just start with the full year. I think, you know, as we set out our guidance last October, you know, we're happy to say that we're right on plan. 25 basis points of four-wall margin is our expectation for the restaurant levels. A little bit of pressure in G&A, as we know, we gave some specific guide there. Really just accounting. You know, we've had tremendous retention in the restaurants. We've also had tremendous retention at corporate, and so there's this thing called a forfeiture rate with the equity comp that will true up a little bit, but it's really sort of non-operating, but it's the P&L, and then all the other pieces kind of net out. So very, very clean outlook for us.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

You know, the caveat comes on quarter-to-quarter basis. Obviously, other OpEx can be a little bit bumpier. In the first quarter, again, the 25 basis points coming in cost of sales, a little bit of pressure on labor and lapping group medical, but really the difference there is about 50 basis points and other OpEx, which is timing of marketing spend and some utilities. And then, you know, you can do the math on the pre-opening and other pieces. So pretty much a flattish year-over-year net income guide and then that slight improvement for the full year. So

[Jeffrey Bernstein, Equity Research Analyst at Barclays]

Got it. And my follow-up is just on the menu pricing, obviously the flip side to the greater emphasis on value. But I think you mentioned that the Cheesecake was running price in the 3.5%-4% range. Maybe just quantitatively, what are you expecting as we run through this year and qualitatively, your confidence in being able to take whatever particular lever you're targeting, or maybe that's a gross amount you expect that on a net basis, you won't necessarily pencil that through. But just conceptually, how are you thinking about that pricing, and actually, what will that pricing be?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yeah, Jeff, so it's Matt. So with this year, Cheesecake will be about 3%. So we're, we're bringing that down, which I think, you know, number one, we saw the inflation numbers where food away from home is still at 4%. And to, to your point, we're investing in, in, lower price points on an average basis. As I said, maybe that's 100 basis points of negative mix. So, so we look at that as probably an effective 2% if, you know, if you combine the mix and the price together, which is going to be well below where the industry is.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

And, you know, we're aided there by, while beef is higher, it's not as big of a piece for us, and dairy is measurably lower. So our market basket, I think, is aiding us in, in that endeavor. I think we feel like that's a, you know, definitely an achievable level, and we have that pricing power based on where we're seeing the sales trends today, the attachment rates today. You know, the guests are perceiving value there.

[Jeffrey Bernstein, Equity Research Analyst at Barclays]

Thank you.

[Operator]

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

[Lauren Silberman, Equity Research Analyst at Deutsche Bank]

Thanks a lot. You called out the four closures to date. Were these all anticipated, and any other closures that are anticipated for the balance of 2026?

[David Gordon, President at The Cheesecake Factory]

Lauren, yeah, this is David Gordon. Yeah, they were all anticipated, and we don't anticipate any future in 2026.

[Lauren Silberman, Equity Research Analyst at Deutsche Bank]

Great. Just on the comp side, are there any call-outs in terms of differences across regions or day parts? And I guess in the markets that haven't been impacted by weather, are you seeing trends hold up with, you know, pretty stable?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Well, and this is Matt. It's a little complicated because weather's been everywhere, I feel like, you know, and so you have to really splice it. I mean, California's had the rains at different points in time, and, you know, we had much more southern weather impact than we normally do. I would say, you know, generally, the overall business has been predictable. I mean, I think we were in the range we expected to be in, despite a little bit more weather. You know, right now, we feel good about the guidance that we're giving, and all of our regions, I think, are doing well. You know, you're going to have those sort of hits and misses based on, you know, whether it's school holidays or whatever those schedules are, but nothing that I would call out specifically.

[Lauren Silberman, Equity Research Analyst at Deutsche Bank]

Okay, great. And then just final one, going back to North, how are you thinking about comps for that business into 2026? I know there's a cannibalization dynamics. Do those continue? Any differences in where new units are expected to open? Thanks.

[David Gordon, President at The Cheesecake Factory]

The new units specifically are about 50/50 in new and existing markets. We continually evaluate where any potential cannibalization might be as we look at any new sites, and would anticipate for this year, probably a little bit less than we had with the openings that were a little more impactful for the past 12 months that we've seen. You know, our goal is to get North a little, little bit more stabilized than it has been, probably a little more impacted versus Cheesecake and more in line with the rest of the industry.

[David Gordon, President at The Cheesecake Factory]

So at North, we continue to be working also on menu innovation, working a little bit on that lunch day part, because that was where we felt a little bit of the pressure over the past few quarters, and continued bar innovation as well. We've seen a nice little comeback in bar incident rates at North, which is good. It's an important part of the concept, and our bar mix is about 23%, have been very, very stable. So we're working on innovation in that area as well, as we believe that it continued to be very relevant to the concept.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Just for modeling, I think, like I said, you know, we, we've seen the impacts of the fire and the cannibalization rolling off and, you know, it kinda assumes sort of like, more like first half of last year's performance in our model.

[Lauren Silberman, Equity Research Analyst at Deutsche Bank]

Thank you very much. Appreciate it.

[Operator]

Your next question comes from the line of Christine Cho with Goldman Sachs. Please go ahead.

[Christine Cho, Managing Director at Goldman Sachs]

Yes, thank you for the question. So, David, you mentioned your plans to launch the dedicated rewards app in a few months. Could you elaborate a little bit more on the timeline and if you have any planned marketing event, investments around the launch?

[David Gordon, President at The Cheesecake Factory]

Sure, Christine. Our goal would be to get it launched in the second quarter. I think that we're feeling pretty confident that that's going to be the case. And we will launch it with a strong social media presence, what we think will be a nice, strong offer for people to download the app onto their phone, and probably a little bit of in-restaurant marketing as well.

[Christine Cho, Managing Director at Goldman Sachs]

Okay, great. And then in the last quarter, I think you've called out some regional trends, coming from the government shutdowns. Has that normalized as you exited the quarter? Thank you.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yeah, I think we've seen pretty stable performance across the portfolio. Again, ex the weather, which, you know, everybody is seeing at different times at different places.

[Operator]

Your next question comes from the line of Jeff Farmer from Gordon Haskett. Please go ahead.

[Jeff Farmer, Managing Director at Gordon Haskett]

Thank you. Matt, just as a follow-up, I think you referenced that Q2 2025 same-store sales were roughly +1%.

[Jeff Farmer, Managing Director at Gordon Haskett]

Were you saying that +1% is the implied 2026 same-store sales number? Did I get that right or wrong?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

That's right. If you do the math, that's about where you're going to come into. That's right.

[Jeff Farmer, Managing Director at Gordon Haskett]

Okay. And then just following up on the rewards app launch, tougher question, but in terms of setting the expectation level for us, how impactful could this be to visit frequency, average check, whatever metric you want to point to, just how meaningful could this be from what you guys have understood?

[David Gordon, President at The Cheesecake Factory]

Sure, Jeff, this is David. I think that our goal is to continue to make members' experience as seamless as possible and give them as much value as they can as members. So I wouldn't anticipate we're going to share any of those finer details in the near future, just like we haven't in the recent past, but we're going to be very focused on the app, making the guest experience easier. So easier access to reservations for them, being able to see things like their order history, repeat their order history for off-premise, and we're excited to get it going in Q2. And if and when we start sharing any of those numbers, we'll be sure to share them on one of these calls.

[Jeff Farmer, Managing Director at Gordon Haskett]

All right. Thank you.

[Operator]

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

[Brian Mullan, Equity Research Analyst at Piper Sandler]

Hey, thank you. Question on Flower Child. Wondering if you could just talk about the vision here over the next several years. You know, what have you learned about the formats and locations that work best for this brand? You know, how much can you standardize that versus kind of needing to customize based on location? And just as a part of all that, you know, what would you need to see to really start to ramp that development pace above the six or seven for this year?

[David Gordon, President at The Cheesecake Factory]

Sure, Brian, that, that's a great question. Certainly, we are enthusiastic and very pleased with the performance of Flower Child. It continues to exceed expectations in new and existing markets, which I think is very promising. As we moved into new markets, even when there has been no Flower Child within miles or states, the reception's been very, very strong. So it's resonating with consumers, I think, for a few reasons. One, it's very healthy, on trend, and delicious, and it's an experiential fast casual dining experience. It's not transactional. And today we continually say that we believe all of our guests are looking for experiences versus transactions. And then the operations team really has put in place a lot of systems over the past 24 months to enable consistent execution.

[David Gordon, President at The Cheesecake Factory]

There's probably a little bit more of that to go, but up to this point, the guest experience, when we look at the type of reviews we're getting in social media or even just through our own channels, are very, very positive, and that's because of the consistent execution. So we feel good that the concept is certainly in a place where it can accelerate. The only thing that's holding us back from going a little bit faster than maybe a 20% growth rate would be, we want to make sure we have the right people power in place.

[David Gordon, President at The Cheesecake Factory]

And we need the right leadership at the GM and executive chef level to open up those very busy fast casual units and do it really, really well for a consistent brand execution. That's most important to us. If we're able to ramp that up over time, could it be a little faster than 20% eventually? Perhaps, but for now, in the near term, we feel confident in that 20% number, and that's what we're most focused on.

[Brian Mullan, Equity Research Analyst at Piper Sandler]

Thank you.

[Operator]

Your next question comes from the line of Dennis Geiger with UBS. Please go ahead.

[Dennis Geiger, Executive Director at UBS]

Great. Thanks, guys. Appreciate the commentary on mix. Matt, I just wanted to confirm, did you say how much of the mix pressure was bowls and bites versus group order versus maybe alcohol and dessert in the quarter? I know you spoke to alcohol for January, but just in the fourth quarter, is there a breakdown by bucket as far as the mix impacts go?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Hey, Dennis. No, I didn't provide specifically, but, you know, my qualitative commentary would be we saw alcohol stabilize, dessert was very steady, you know, so we know where most of it is coming from. But I don't have the exact number in front of me, but we know those macro trends would indicate that, you know, a lot of it is coming from the pricing differential of the new product.

[Dennis Geiger, Executive Director at UBS]

Got it. Very helpful. And then I guess just assume it's a similar answer, but just on the 2026, as you think about maybe, you know, a best guess of that down 1 mix, is that the same largely from the new product on the bites and bowls, more so than like a group order dynamic, et cetera, as you think about that estimate for 2026?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Yes, that's right. Exactly. So, I mean, it's a you know, there's an offset, you know, from the pricing, but as you start to see the order rate pick up, it kind of neutralizes some of it. So that's what we're anticipating.

[Dennis Geiger, Executive Director at UBS]

Very helpful. Thanks, Matt.

[Operator]

Your next question comes from the line of Rahul Krotthapalli with JP Morgan. Please go ahead.

[Rahul Krotthapalli, Equity Research Analyst at JPMorgan]

Good afternoon, guys. You guys are very early on DoorDash, and I believe with the exclusivity, there has been a lot of discussion in the industry around, and also across some of your peers on how you want to rethink fees, menu pricing, and whatnot. Can you give some detail on how you guys are thinking about this, and also remind us on where the delivery mix is today?

[David Gordon, President at The Cheesecake Factory]

Sure, Rahul. This is, this is David Gordon. Great question. You're right, we certainly have been in a long-standing relationship with DoorDash. It's been a terrific relationship, and that relationship has allowed us to leverage, I think, what's great about the value of Cheesecake Factory's menu and pricing and not take extra price, which many of our competitors have had to do in the delivery channel. So, that would be our intent moving forward.

[David Gordon, President at The Cheesecake Factory]

We'd like to not have to take any more price than we take today, which is only about 2%-3% versus the in-restaurant menu. When we look at total off-premise for Q4, it was 22% of sales, up about 1% from Q3. And that mix of that 22%, 10% is delivery, and the rest is split relatively evenly through online ordering and phone pickup. So that's been very consistent. Those numbers have been very consistent, and that mix has been consistent over time.

[Rahul Krotthapalli, Equity Research Analyst at JPMorgan]

Is there any possibility that you can extend this partnership across all your other brands down the line? I believe only Cake and Grand Lux were on the initial agreement. Just any updated thoughts there?

[David Gordon, President at The Cheesecake Factory]

Sure. Well, actually, all the concepts are covered in the agreement today. So everything we own is part of the DoorDash agreement today.

[Rahul Krotthapalli, Equity Research Analyst at JPMorgan]

Thank you.

[Operator]

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

[Brian Vaccaro, Equity Research Analyst at Raymond James]

Hi, thanks, and good evening. I wanted to ask about the 26 unit growth, and I thought it was interesting to see Cheesecake Factory's unit growth stepping up a bit. Maybe you just could give a little bit more on the opportunity you see there, and maybe level set the size of units that you're opening and kind of the AUV or unit economic targets on these units. I know there's been some successful unit openings over the years in pockets that open up, but maybe just kind of what you're seeing in terms of that outlook for 26.

[David Gordon, President at The Cheesecake Factory]

Sure, Brian. We're excited to be opening up to six Cheesecakes this year, and as great sites become available for The Cheesecake Factory, because of the flexibility and size, everything from 6,500 up to 10,000 sq ft, we can build a Cheesecake Factory at any great site. For this coming year, most of these are in that 7,000-7,500 sq ft range, for all 6 of them, on average.

[Matt Clark, EVP and CFO at The Cheesecake Factory]

And Brian, from a returns perspective, this is Matt. We've been super happy with the sales levels. They've been able to generate effectively the average AUVs and average margins. And so we're sitting right between 20% and 25% cash on cash we've been targeting and feel great about the ability to continue to open at that level.

[Brian Vaccaro, Equity Research Analyst at Raymond James]

All right. That's helpful. Appreciate that. On the margin outlook, Matt, could you comment specifically on just your expectation for commodity inflation, specifically, and any quarterly variability to keep in mind on the commodity front year on year?

[Matt Clark, EVP and CFO at The Cheesecake Factory]

Sure. Commodities would be about 2.5% or so overall, and pretty steady throughout the year, God willing.

[Brian Vaccaro, Equity Research Analyst at Raymond James]

Knock on wood. Knock on wood. All right, and then, last one for me, I'm sorry if I missed it, but could you also provide the, top components, for North Italia in the fourth quarter? Thanks again.

[Etienne Marcus, VP of Investor Relations and Finance at The Cheesecake Factory]

Hey, Brian, this is Etienne. Yeah, I'll give you the components here. So traffic was negative 6%, prices about 4%, and the mix was -2% for the quarter.

[Brian Vaccaro, Equity Research Analyst at Raymond James]

Thank you.

[Etienne Marcus, VP of Investor Relations and Finance at The Cheesecake Factory]

Sure.

[Operator]

Ladies and gentlemen, that concludes our question and answer session, and that concludes today's call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• David Gordon, President
• David Overton, Chairman and CEO
• Etienne Marcus, VP of Investor Relations and Finance
• Matt Clark, EVP and CFO

Analysts

• Andy Barish, Managing Director at Jefferies
• Brian Harbour, Equity Research Analyst at Morgan Stanley
• Brian Mullan, Equity Research Analyst at Piper Sandler
• Brian Vaccaro, Equity Research Analyst at Raymond James
• Christine Cho, Managing Director at Goldman Sachs
• Dennis Geiger, Executive Director at UBS
• Drew North, Senior Research Associate at Baird
• Jeff Farmer, Managing Director at Gordon Haskett
• Jeffrey Bernstein, Equity Research Analyst at Barclays
• Jim Salera, Equity Research Analyst at Stephens
• Lauren Silberman, Equity Research Analyst at Deutsche Bank
• Rahul Krotthapalli, Equity Research Analyst at JPMorgan
• Sara Senatore, Senior Research Analyst at Bank of America