Cheesecake Factory Q2 2026 Earnings Report

Cheesecake Factory EPS Results

• Actual EPS: $1.44
• Consensus EPS: $1.18
• Beat/Miss: Beat by +$0.26
• One Year Ago EPS: $1.16

Cheesecake Factory Revenue Results

• Actual Revenue: $1.03 billion
• Expected Revenue: $999.54 million
• Beat/Miss: Beat by +$30.10 million
• YoY Revenue Growth: +7.70%

Cheesecake Factory Announcement Details

• Quarter: Q2 2026
• Date: 7/28/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, July 28, 2026
• Conference Call Time: 5:00PM ET

Cheesecake Factory (NASDAQ:CAKE) (NASDAQ:CAKE) is an American restaurant company and distributor renowned for its full-service casual-dining concept and specialty cheesecakes. Headquartered in Calabasas Hills, California, the company operates more than 200 restaurants under The Cheesecake Factory® brand across the United States, Puerto Rico and select international markets. In addition to sit-down dining, Cheesecake Factory franchised locations offer catering and take-out services, while a separate manufacturing arm supplies branded cheesecakes and desserts to supermarkets, hotels and other foodservice operators.

The origins of the brand trace back to a small cheesecake bakery founded in Detroit in the 1940s. In 1978, founder David M. Overton transformed the bakery concept into a full-service restaurant, opening the first Cheesecake Factory in Beverly Hills, California. Under Overton’s leadership as chairman and chief executive officer, the chain grew steadily through the 1980s and 1990s, culminating in a public offering in 1992. Over the ensuing decades, Cheesecake Factory expanded its footprint beyond California, entering new U.S. markets and venturing overseas with restaurants in Canada, the Middle East and Mexico.

Cheesecake Factory restaurants are known for extensive, made-to-order menus featuring more than 250 dishes, including appetizers, entrée salads, pizzas, pastas, steaks and seafood. Signature desserts span over 30 cheesecake flavors, ranging from classic New York style to creative seasonal varieties. The company’s manufacturing division, based near its corporate campus, produces and distributes cheesecakes, oversized slices and specialty desserts under The Cheesecake Factory brand for retail and wholesale customers.

Led by David M. Overton, The Cheesecake Factory emphasizes chef-driven recipe development, high-quality ingredients and an experiential dining atmosphere. As the company continues to evolve, it explores new service channels, culinary innovation and selective international growth while maintaining its core focus on generous portions, diverse menu offerings and the trademark display case of dessert creations that has defined the brand for more than four decades.

Cheesecake Factory Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record second quarter performance: Revenue exceeded $1 billion for the first time, adjusted EPS rose 24% year over year to $1.44, and adjusted EBITDA increased 18% to $118 million. The company also raised full-year expectations to approximately $4 billion in revenue and a 5.4% net income margin.
• Positive Sentiment: Cheesecake Factory momentum strengthened: Comparable sales increased 5.8%, including 2.7% traffic growth that outpaced the casual-dining index by 350 basis points. Restaurant-level margins reached 20%, the highest in roughly a decade, aided by sales leverage, labor productivity, and food efficiency.
• Positive Sentiment: Menu innovation, social-media engagement, and the Cheesecake Rewards app are contributing to higher awareness and guest frequency. Management said app adoption exceeded expectations, while viral menu items and targeted marketing helped sustain momentum beyond the initial free-cheesecake promotion.
• Neutral Sentiment: Portfolio performance was mixed: Flower Child continued to outperform, with comparable sales up 13% and restaurant-level margins of 20.1%, while North Italia comparable sales declined 3% and margins fell to 15.6%. North Italia will test lower-priced menu items, targeted marketing, and local promotions to improve traffic over time.
• Positive Sentiment: The company remains on track to open as many as 26 restaurants in fiscal 2026, including six in the third quarter, supported by $210 million of planned capital expenditures. Strong liquidity of $561.7 million and continued dividends and share repurchases provide financial flexibility for growth and shareholder returns.

Presentation

[Operator]

Now I'll hand the conference over to Etienne Marcus, VP of Finance and Investor Relations. Etienne, please go ahead.

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

Good afternoon, welcome to our second quarter fiscal 2026 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 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. All forward-looking statements made on this call speak only as of today's date, the company undertakes no duty to update any forward-looking statements.

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

In addition, during this conference call, we will be presenting results on an adjusted basis, which excludes acquisition-related items, impairment of assets and lease termination expenses, and other items. Explanations of the use of our 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, David Gordon will provide an operational update. Matt will review our second quarter financial results and provide commentary on our financial outlook. We're 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 delivered an outstanding second quarter with revenue, margins, and earnings all exceeding our expectations. Quarterly revenue surpassed $1 billion for the first time, adjusted diluted earnings per share increased 24% year-over-year. The Cheesecake Factory restaurants led our performance, delivering comparable sales growth of 5.8% and positive traffic. Our strong top-line sales this quarter reflect disciplined execution across our restaurants. As a result, traffic trends improved, we captured market share. The increase in sales, along with gains in labor productivity and food efficiency, drove solid flow through, increasing The Cheesecake Factory's restaurant level margin to 20%, its highest level in a decade. One of the key drivers of this momentum has been the positive response to our recent menu additions, demonstrating the strength of our culinary innovation.

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

Our new offerings highlight the breadth and relevance of our menu, helping to drive frequency, attract new guests, reinforce value through innovation rather than discounting. Later this week, we will celebrate National Cheesecake Day with the debut of our Brownie Crunch Choc-a-Lot Cheesecake. We're especially excited about this year's flavor and believe it will resonate well with our guests. Turning to development, we opened four restaurants during the second quarter, including two North Italia locations, a Flower Child, and a The Henry. Subsequent to quarter end, we opened one Cheesecake Factory location. We remain on track to open as many as 26 restaurants this year, consistent with our longer-term objective of 7% annual unit growth. In summary, we delivered a record-setting quarter and entered the second half of the year from a position of strength.

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

Our success remains rooted in the fundamentals that have defined us for decades: exceptional hospitality, high-quality food, and memorable dining experiences. We are building on that foundation with menu innovation, deeper guest engagement through our rewards program, and operational excellence across our restaurants. Our results demonstrate that our strategy is working and reinforce our confidence in our ability to drive growth and create shareholder value. With that, I will now hand the call over to David Gordon to provide an operational update.

[David Gordon, President at The Cheesecake Factory]

Thank you, David. As David highlighted, The Cheesecake Factory delivered positive traffic in the second quarter, increasing 2.7% from the prior year and meaningfully outperforming the Black Box Casual Dining Index by 350 basis points. This performance contributed to average weekly sales reaching a new all-time high, elevating our already industry-leading annualized unit volumes above $13.5 million. We believe these results reflect our strategic focus on three key areas. First, best-in-class operational execution and industry-leading retention. Second, ongoing menu innovation. Third, the continued growth and evolution of our Cheesecake Rewards program. Since launching three years ago, the program has become an increasingly effective driver of guest loyalty and frequency, supported by a growing member base, enhanced digital capabilities, and more personalized engagement. Starting with operations.

[David Gordon, President at The Cheesecake Factory]

Our teams remain intensely focused on executing at a high level every day, from food quality and pace of service to hospitality and overall guest experience. Industry-leading retention among both our management and hourly teams creates greater consistency in our restaurants and helps us deliver a high-quality experience for our guests. We believe our experienced teams, stable staffing, and commitment to operational excellence are key contributors to our strong guest satisfaction and loyalty as well as our continued sales outperformance. Culinary innovation remains a core pillar of our strategy. Our twice-yearly menu updates keep our offerings fresh, relevant, and aligned with evolving guest preferences. Combined with consistent execution, these innovations help drive sales and traffic. Our recently introduced bowls are a great example, as guests who have ordered from this new category are visiting more frequently, reinforcing the importance of continued menu innovation.

[David Gordon, President at The Cheesecake Factory]

Cheesecake Rewards, we're extremely pleased with the successful launch and early performance of the app. Guest adoption exceeded our expectations, driving strong member acquisition and engagement and creating a powerful new channel for direct communication. The app is already providing valuable insights into guest behavior and enabling us to deliver increasingly personalized, targeted offers to drive incremental visits and improve marketing efficiency. Strong member growth, positive guest feedback, and rising engagement reinforce our confidence in the platform as a meaningful long-term growth driver. During the quarter, we also increased our marketing activity, leveraging social media, influencer partnerships, targeted digital campaigns, and key promotional moments to amplify awareness of our menu innovation and rewards offerings.

[David Gordon, President at The Cheesecake Factory]

This coordinated approach across marketing, operations, and technology helps strengthen guest engagement and brand visibility. Looking ahead, we believe the combination of operational excellence, continued menu innovation, growing rewards engagement, and increasingly sophisticated marketing capabilities position us well to sustain momentum and deliver long-term profitable growth. I'll now turn to performance of our other concepts. North Italia's second quarter annualized AUVs totaled $7.9 million, and comparable sales declined 3%. We continue to see healthy demand at new restaurants, with both locations open during the quarter, generating average weekly sales well above $200,000. Through the first half of the year, retention has improved among both management and hourly teams.

[David Gordon, President at The Cheesecake Factory]

Against the competitive industry backdrop, we're building on strategies and learnings that have proven effective at The Cheesecake Factory and Flower Child to develop targeted initiatives to drive improvement at North Italia. These include more value-oriented menu offerings and accessible price points, such as lower-priced pasta options and lunch specials to enhance affordability and strengthen guest perception of value. We are also increasing targeted marketing to build brand awareness and drive conversion. At the local level, we are expanding our marketing efforts through in-mall digital advertising, restaurant weeks, and community events. We plan to test these initiatives during the second half of the year. We believe they can support more sustainable traffic, improvement will take time, and we expect some variability in traffic trends over the next several quarters as we begin to see the impact of these efforts. Our focus is on strengthening the brand for durable long-term growth.

[David Gordon, President at The Cheesecake Factory]

Restaurant level profit margin for the adjusted mature North Italia locations was 15.6% for the quarter versus 18.2% for the prior year. The change reflects sales deleverage and higher commodity inflation. Flower Child continued to perform exceptionally well and once again meaningfully outpaced the fast casual segment. Second quarter comparable sales increased 13% for a two-year comp sales increase of 17%. This sales performance translated to annualized AUVs of $5.3 million. Restaurant level profit margin for the adjusted mature Flower Child locations was 20.1% in the quarter. Flower Child's performance reflects the strength of its unique positioning within fast casual. Its made-from-scratch menu is both health-forward and craveable, with a broad range of offerings at accessible price points, complemented by thoughtfully designed restaurants that provide a more elevated experience than traditional fast casual.

[David Gordon, President at The Cheesecake Factory]

Combined with disciplined execution in our restaurants, these attributes are driving repeat visits, traffic growth, and impressive sales results. We're continuing to build on the concept's talent pipeline and operating capabilities while leveraging The Cheesecake Factory's scale, systems, and expertise to support its expansion. We remain very excited about the opportunity ahead and Flower Child's potential for meaningful long-term growth. Lastly, we opened another location of The Henry in Wilmette, a suburb of Chicago, to solve a demand with average weekly sales trending at $200,000 for the first six weeks, for an annualized AUV of over $10 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 second quarter results versus our expectations I outlined last quarter. Total revenues were over $1 billion, meaningfully above the high end of the range we provided. Adjusted net income margin was 6.8%, and adjusted diluted earnings per share was $1.44, both finishing well above our expectations. We returned $25 million to our shareholders in the form of dividends and stock repurchases. We also generated record quarterly net income of $68 million, up 25% year-over-year, and record adjusted EBITDA of $118 million, up 18%, underscoring the strength of our earnings performance. Turning to some more specific details around the quarter. Second quarter total sales at The Cheesecake Factory restaurants were $729.5 million, up 7% from the prior year. Total sales for North Italia were $98.4 million, up 8% from the prior year period.

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

Other FRC sales totaled $104 million, up 15% from the prior year, and sales per operating week were $142,100. Flower Child sales totaled $56.6 million, up 18% from the prior year, and sales per operating week were $101,300. External bakery sales were $15.4 million. Moving to year-over-year expense variance commentary. Specifically, cost of sales increased 20 basis points, primarily driven by higher beef, produce, and seafood costs, partially offset by lower dairy costs. Labor as a percent of sales declined 80 basis points, primarily driven by sales leverage and associated productivity gains. Other operating expenses decreased 30 basis points, driven by sales leverage and insurance, partially offset by higher marketing spend. G&A increased 30 basis points from the prior year, primarily due to higher legal costs and stock-based compensation expense. Depreciation remained relatively flat as a percent of sales.

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

Pre-opening costs were $7 million in the quarter, compared to $9 million in the prior year period. We opened four restaurants during the second quarter versus eight restaurants in the second quarter of 2025. In the second quarter, we recorded a pre-tax net expense of $1.4 million, primarily related to FRC acquisition-related expenses. Second quarter GAAP diluted net income per share was $1.41. Adjusted diluted net income per share was $1.44. Now turning to our balance sheet and capital allocation. We ended the quarter with total available liquidity of $561.7 million, including a cash balance of $195.2 million and $366.5 million available on a revolving credit facility. During the quarter, we repaid the remaining $69 million principal amount on the convertible senior notes that were due in June 2026.

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

As a result, our debt outstanding at quarter end consisted entirely of $575 million principal amount of our 2% convertible senior notes due 2030. CapEx totaled approximately $43 million during the second quarter for new unit development and maintenance. During the quarter, we completed approximately $9.3 million in share repurchases and returned $15.7 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 Q3 and full year 2026. Our assumptions factor in everything we know as of today, including net restaurant counts, quarter to date trends, our expectations for the weeks ahead, and anticipated impacts associated with holiday shifts. Specifically for Q3, we anticipate total revenues to be between $980 million and $990 million.

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

At this time, we expect effective commodity inflation of low-single digits for Q3 as our broad market basket remains stable. 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 between $63 million and $64 million. Depreciation is estimated to be $29 million and pre-opening expenses to be $10 million-$11 million to support six openings in the quarter. Based on these assumptions, we would anticipate adjusted net income margin to be about 4.3% at the midpoint of the sales range provided.

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

For modeling purposes, we are assuming a tax rate of approximately 13%-14% and weighted average diluted shares outstanding of approximately 3%-4% higher than prior year, primarily reflecting convertible note dilution and increased stock-based compensation dilution associated with a higher share price. Now for the full year. Based on similar assumptions and no material operating or consumer disruptions, we now anticipate total revenues for fiscal 2026 to be approximately $4 billion at the midpoint of our estimates. 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 6.4% of sales. Depreciation is expected to be about $116 million for the year. Given our unit growth expectations, we are estimating pre-opening expenses to be approximately $35 million-$36 million.

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

Based on these assumptions, we would expect full-year net income margin to be approximately 5.4% at the sales estimate provided. For modeling purposes, we are assuming a tax rate of approximately 11% and weighted average shares outstanding of 49.5 million, primarily reflecting convertible note dilution and increased stock-based compensation dilution associated with a higher share price. As a reminder, the fourth quarter of 2025 included a one-time gift card breakage benefit in The Cheesecake Factory segment revenue. With regard to development, we remain on track to open as many as 26 new restaurants in 2026, including six in the third quarter, with the remaining openings expected in the fourth quarter. For the full year, this includes as many as five to six Cheesecake Factories, six to seven North Italia, seven Flower Childs, and as many as 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 the 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, our record second quarter revenue and net income and substantial operating cash flow, together with continued margin expansion, demonstrate the strength of our business. Exceptional execution continues to support high guest satisfaction, while menu innovation, our rewards program, and marketing efforts are increasing awareness and driving traffic. Our comparable sales and traffic outperformance reflects healthy demand, complemented by successful new restaurant openings, impressive off-premise performance, and a robust development pipeline. These strengths continue to drive the sustained momentum we are seeing across the business.

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

Our cash generation and healthy balance sheet provide the financial flexibility to continue investing in our business while returning capital to shareholders. Looking ahead, we believe our differentiated concepts, seasoned operators, and disciplined business model provide a strong foundation for profitable growth and long-term value creation. With that said, we will take your questions.

[Operator]

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jon Tower with Citi. Jon, your line is open. Please go ahead.

[Jon Tower, Analyst at Citi]

Great. Thanks for taking the question. I appreciate it. Maybe just a quick clarification and then a question. Matt, I think you had said in the prepared remarks the net interest margin target for the year was 5.4% on the midpoint of the range you discussed. The slide deck that you guys published this afternoon I think was closer to 5%. I just wanted to make sure that I heard you correctly with the 5.4%?

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

Yeah. No, we unfortunately caught that slide deck error, and we'll repost it. 5.4%, just for everybody on the line, it is 5.4%.

[Jon Tower, Analyst at Citi]

Okay, great. Thanks. Obviously, it's great to see The Cheesecake Factory brand get back to positive traffic growth in the period. I'm curious how much you would attribute that to maybe a short-term lift related to the launch of the app and that coming out and obviously potentially having a very strong early on redemption. I believe there was a free slice of cheesecake if you signed up to the rewards program through the app early on. Versus you have quite a few other things going on in your business. Importantly, I'm also curious if you could speak to whether or not you're seeing younger guests come through the door more consistently than what you've seen in the past and maybe benchmarking that against the industry?

[David Gordon, President at The Cheesecake Factory]

Sure, Jon, this is David Gordon. Thanks for the question. I think that there's a few factors at play. One, I think we've had terrific momentum moving into the quarter. I think all three of the items that I touched on in my prepared remarks, number one, starting with just really strong, good, consistent operations by our operations teams continues to be the focus that I think our guests are appreciating, and that in combination with the strong industry-leading retention, our restaurants are as stable as ever. Kudos to the operations team. I think that we always like to talk about that first because delicious, memorable food and strong hospitality is the foundation of everything at The Cheesecake Factory.

[David Gordon, President at The Cheesecake Factory]

Secondly, the culinary innovation that's happened for the past couple of quarters with the Bites and the Bowls, has been very compelling and great offerings for guests from the flavor profiles to the price points. I think we're seeing the benefits of that, and we'll continue down that menu innovation path. To your point on Cheesecake Rewards, certainly there was a good amount of lift from the app launch. We did our best to launch that, in a way that we thought was the most appropriate, and we gathered some terrific awareness. Ongoing, we continue to see terrific engagement from guests that have downloaded the app and are appreciating all the benefits from making reservations. You mentioned the complimentary birthday slice, tracking their rewards and being able to engage with the reward when they're in the restaurant or redeem much more easily.

[David Gordon, President at The Cheesecake Factory]

The seamless online ordering platform that is now built into the app has been greatly appreciated. I think all of those elements are creating a bit of a flywheel, and the team's executing well against that. We definitely are seeing a pickup in younger guests in some of our own internal research, that we've looked at. We know that younger guests are returning to malls. There's been a lot that's been written about that, and we're benefiting from that. I also think our engagement in our social channels has been very strong. You may have seen some of the more recent activity over the past quarter, some of that planned and some of that unplanned, that certainly is resonating. Those younger consumer guests are seeing that, I think we're benefiting from that as well.

[Jon Tower, Analyst at Citi]

Great. Thanks. I'll follow up later. Appreciate it.

[Operator]

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

[Brian Vaccaro, Analyst at Raymond James]

Thanks very much. Good evening. Congrats on the meaningful comp acceleration at Cheesecake. Could you provide a little more color on the monthly cadence that you saw through the quarter? Matt, maybe you could give us the mix and price dynamics. Beyond just some quantification, could you provide a little more color on the levers that you're pulling in social media channels specifically and any metrics you can share around social media engagement, impressions, etc., to help us frame how much that could be up year-over-year?

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

Sure, Brian, this is Matt. I'll start with some of the data side of it. Specifically in the quarter for Cheesecake, pricing was 3.0%, traffic was a +2.7%, mix was almost zero. It was 0.1%+, so pretty much balanced out. With respect to the trends throughout the quarter, we did see a modest acceleration in the back half compared to the first half, which I think also speaks to what David Gordon was saying about the positive flywheel and not just being based on the launch of the app and the free giveaway, which ended in early May. We exited at a better rate than what the average is. Our expectations in the guidance that we provided, calls for that slightly elevated rate to continue through the third quarter.

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

I think some of that also has been aided by, as you mentioned, the viral activity on social media. We have seen data points that, on a unit basis, were well above the average in casual dining, maybe 2x-3x in terms of mentions on social media. Certainly that's playing a part. David, I don't know if there's other components, but we know that we've had a couple of hit products out there that people might have seen. One of them is named after Linda Candiotti, who's a famous executive with the company and been with David for all these years. It's about eating her fudge cake with your hands in the car. It sounds a little bit corny, but it drives real traffic. We can measure that, and we're seeing it across a couple of other menu hacks as well.

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

It is identifiable, it is measurable, and it is supporting the overall trend in the business.

[Brian Vaccaro, Analyst at Raymond James]

Yeah, I have seen some of those. Thank you for highlighting that. If I could just ask a quick follow-up just on the updated annual margin guidance. Could you just walk us through some of the key line items, COGS, labor, other OpEx, and any unusual lumpiness that we should be mindful of in either Q3 or Q4? Thanks very much.

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

Yeah. Let me start by re-reminding everybody about the Q4 gift card breakage last time. We did see some of the modeling doesn't necessarily pick that up. If you're comparing to GAAP, make sure you go back and reconcile it on our non-GAAP tables when you're doing your modeling, in that regard, in Q4 specifically. When you look at the overall margin for the full year, with the guidance we provided, we're taking up that four-wall improvement from previously we said about 25 basis points. Now it's about 60 basis points. About half of the improvement coming from the commodities and about half from labor, so 30 and 30 with about flat on other OpEx.

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

One of the reasons that continues to be flattish is because with the positive results that we're getting, we're taking the opportunity to reinvest in the business and continuing to build on our marketing successes. We'll look to invest to build even more sales in the future.

[Brian Vaccaro, Analyst at Raymond James]

I'll pass along. Thank you.

[Operator]

Your next question comes from the line of Andy Barish with Jefferies. Andy, your line is open. Please go ahead.

[Andy Barish, Analyst at Jefferies]

Hey, guys. Nice results. Just on that last comment, Matt, are you willing to share where you are on marketing expense as a percentage of sales within that line, just given it hasn't been a big focus in the past for the brand?

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

Sure. We think about it, Andy, and this is systematic and in totality, right? We don't separate out the components of it, and Cheesecake Rewards is embedded in the number, but it's about 1.2%. Over time, it has moved up a little bit. I think also since we're growing sales, we've got a bigger opportunity there as well.

[Andy Barish, Analyst at Jefferies]

Got it. Just finally, any commentary on World Cup, given you're in all of the markets it was, then into July?

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

Interestingly, we did track this at a very detailed level, Andy, because we knew we were going to get the question. There was almost no discernible difference between specific markets in totality. There were some one-off locations where clearly they were by a hotel where there were a lot of fans. Broadly across the country, the comp outperformance was in every region. Very little differentiation. We're also glad that the World Cup was done before our call because we know that it really wasn't impacting it based on the trends that we're seeing now too as well.

[Andy Barish, Analyst at Jefferies]

Got you. Thank you.

[Operator]

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

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

Lauren, you might be muted.

[Lauren Silberman, Analyst at Deutsche Bank]

Can you hear me here?

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

Yes.

[Lauren Silberman, Analyst at Deutsche Bank]

Hello. Okay, sorry. Congrats on the quarter. Really impressive comps. A lot of contributing factors, social media, innovation, Cheesecake Rewards, ops. When did you start to see the inflection? It's been a material improvement with the best comps in years, and it looks like you could be implying something like 7% comps in Q3 and mid-singles in Q4. I guess, am I doing that right? It's not even just monthly, I guess, just underlying, when did you start to see the real change with the flywheel?

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

This is Matt, Lauren. As David Gordon noted, there were many contributing factors. If you think even going back into Q1 on a weather-adjusted basis, we were already seeing some of those results, right? We were improving month-over-month on an adjusted basis. Cake would have been between 2.5% and 3%. Clearly the momentum had already started. I think it's fair to say that the launch of the app was a catalyst because it drove significant downloads early on. I think we were number three on the app list for a day behind just a couple of the massive AI companies. That was a piece that I think rippled through for a period of time. It was very closely aligned with the timing with some of the social activity and some of the new media campaigns that we did.

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

I don't think that I would single it out only, but that in totality, it was a highly orchestrated effort by our company to get that inflection point. Like I said about the quarter, we did see a modest acceleration in the second half. All of those initiatives are sticky, right? It wasn't just the free slice of cheesecake. It's now we're seeing increased number of reservations. We're seeing increased activation. Amongst that, we're still acquiring new guests through the app. I think it really was in total.

[Lauren Silberman, Analyst at Deutsche Bank]

Great. Your stock is also outperforming some of these AI companies, so kudos to that. Just a follow-up, I guess, are you seeing any differences in how customers are ordering from your menu or different parts of the menu with the increased traffic?

[David Gordon, President at The Cheesecake Factory]

Hi, Lauren, this is David. Really nothing unique other than maybe some outside ordering of some of those items that we talked about that are showing up in social media channels. Whether that's a couple of desserts or a couple of entrees that have been very popular over the past month when people are sort of hacking those items. We see some of that activity. Outside of that, ordering patterns are very consistent. Dessert as a percentage of sales, very consistent. Beverage incident rate is consistent. Consistent in restaurant across day part and really across geography.

[Lauren Silberman, Analyst at Deutsche Bank]

Great. Just final one from a mix perspective, now back to flattish. Is that your expectation as we drink through the back half of the year?

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

Yeah, I would say that's right. Going back to the menu ordering question. As we've increased even the number of Bites offerings, we've seen that incident rate move up, that's been a real positive. As we've noted before, I think it's very interesting. We're at 3% pricing, in effect, it's a little bit under 2% based on the price points of the bowls. It's being completely made up for on a one-for-one basis with the increased ordering rate of Bites. Working exactly as we had hoped and planned it would.

[Lauren Silberman, Analyst at Deutsche Bank]

Awesome. Thank you very much.

[Operator]

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

[Drew North, Analyst at Baird]

Great. Thanks for taking the question and congrats on the strong results. I wanted to ask a follow-up on The Cheesecake Factory and maybe a follow-up to Lauren's question on how we should be thinking about pricing in the back half, maybe between Q3 and Q4. Maybe bigger picture, if the traffic momentum in the business would change how you think about the opportunity to reinvest in the consumer by pricing further below inflation, maybe exiting this year or into next? Any perspective on your philosophy there would be helpful.

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

We'll be just under 3% in Q3, and that's just related to some timing year-over-year. Q4 will be at 3%. As I noted, it's really below 2% when you think about the investments we're already making. Certainly, we'll continue to evaluate all of the options. The pricing really is only to offset the inflation, which, if you look at the core costs, are right in that bucket that we're at 3%. We take it twice a year. We evaluate the business conditions at those points in time. We'll continue to invest in all ways, whether it's in price points or in marketing or making sure that our restaurants are fully staffed to execute, as David Gordon mentioned upfront.

[Drew North, Analyst at Baird]

That's helpful. Maybe just one more from me. With you operating a portfolio of brands, I thought it might be interesting to know what insights or learnings you may be taking from the recent successes at The Cheesecake Factory and what might be or might not be applicable to other brands? Maybe if you could just add some context as to what you think could work at North Italia or some of your other concepts or what might be unique to The Cheesecake Factory and their recent success? Thanks.

[David Gordon, President at The Cheesecake Factory]

Sure, Drew. This is David Gordon. I think that's a very relevant question. We've been learning across the ecosystem of concepts for eight years now. Everything from service and hospitality systems and processes that work at The Cheesecake Factory that we've now begun to implement in some of the other concepts to even some of the more recent learnings at Cheesecake around the value on the menu and some of the marketing approach that we're now going to take to North and look at how we can ensure that guests understand the value propositions at North as much as I think they're starting to understand at The Cheesecake Factory for the past couple of quarters. A lot of the people practices at The Cheesecake Factory are things that we've talked about and implemented with Flower Child and North as we position those concepts for growth.

[David Gordon, President at The Cheesecake Factory]

Talked about having the right type of talent to enable growth and execute at a very high level at new restaurant openings. We've had so much experience with that at The Cheesecake Factory for the past 40+ years. Using those same systems and people practices have really enabled us to be ready to ramp up what we want to do with Flower Child and to have some strong, consistent growth because we have a long-term outlook on North Italia as well. Those are just a few areas. I could go on with supply chain and technology updates. I think we've done a really good job over the past 12 months, really leveraging the scale of Cheesecake and empowering the teams at FRC to take on some of the systems and processes that we know work well for strong, consistent execution.

[Drew North, Analyst at Baird]

Thanks for that. I'll pass it on.

[Operator]

Your next question comes from Sara Senatore with Bank of America. Sara, your line is open. Please go ahead.

[Sara Senatore, Analyst at Bank of America]

Thank you. I guess maybe two questions, if I may. It seems to be the trend. I wanted to ask one about the, again, the culinary innovation. It sounds like a lot of what you referred to are things that have been on the menu for a while which I guess is consistent with you saying kind of this flywheel. I wanted to confirm that that was the case, the Bowls and the Bites. It really has to do with more of the, maybe some of the app or the social media attention really driving take up for some of the menu items as opposed to something brand new. I guess related to that, there's sort of a view that sometimes social media attention can be transitory.

[Sara Senatore, Analyst at Bank of America]

Have you done anything in terms of standing up a social media listening team or something new that kind of gives you confidence that this type of momentum can sustain? We certainly have seen that with other casual diners, but just kind of curious about the infrastructure?

[David Gordon, President at The Cheesecake Factory]

Sure, Sara, this is David Gordon again. Just to remind everyone that we change the menu at The Cheesecake Factory every six months. We put on new Bites and Bowls about six months ago, and we're launching a new menu right now. It's rolling out across the country through September. It has some new Bites and Bowls on it. It also has some new entree items that are in the "regular menu" as well. I think one of the things we've done for the past couple of years now when we launched Bites and Bowls was put a lot of those menu items on a separate menu so the guests could see them outside of the main menu. That really helped with the awareness.

[David Gordon, President at The Cheesecake Factory]

Our plan is to continue to do that over time. If we find delicious Bites and Bowls that we want to put on the menu, we will put them on. We'll also search across every other category on the menu to make sure that the innovation is not just on Bites and Bowls. It's whatever the culinary trends may be in America. We can put those items on the menu. We're excited to be able to do that. That's been the hallmark of The Cheesecake Factory since its founding. As far as the marketing team, we have a very strong foundation today of social listening, whether that's within our own internal team or external teams that we have in place.

[David Gordon, President at The Cheesecake Factory]

That are listening to what's being said out there about The Cheesecake Factory, we're investing in that conversation to keep it going in the ways that we think are most valuable for us, not just resting on our laurels or any one point in time of something being the hot topic for any particular month or particular quarter. We think that we have a very strong team in place to continue the conversation and make sure that it's resonating with guests, and we're getting the type of attention and awareness that we think will continue our success moving forward.

[Sara Senatore, Analyst at Bank of America]

Great. Thank you. Sorry. Just on the trends, I guess, any thoughts on macro? I know Matt has in the past kind of talked about the environment feeling better or worse or where are you seeing maybe slower. Hard to think that it might be slowing, given your trends, but any thoughts on that would be helpful. Thank you.

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

Yeah, I think that the environment is better than we anticipated when we started the year. The underlying job growth has been stable enough to keep unemployment at the same rate. I do think there is a little bit of inflationary pressure, and we still adhere to some of the commentary around a K-shaped economy and certainly our concepts, The Cheesecake Factory particularly benefits from a higher consumer than average. I also think, though, it's just a very bifurcated performance environment where if you're executing well, you have strong business fundamentals. You have your key operations teams in place to deliver on the promise of the guest, and you have innovative menu and marketing that there is share to be taken. There's opportunity there, and I think we're benefiting from all of those things because it's not a high growth environment.

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

It's just maybe a little more stable than we had anticipated.

[Sara Senatore, Analyst at Bank of America]

Thank you.

[Operator]

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

[Brian Harbour, Analyst at Morgan Stanley]

Yeah, thanks. Good afternoon, guys. Curious what the rewards program, what the usage is there and also, I guess, the app more recently. Are there any stats you could provide around percent of customers that are using those or anything you could say about that?

[David Gordon, President at The Cheesecake Factory]

Yeah. Hi, Brian, this is David. Unfortunately, we're still not talking about any specific numbers. Fortunately, we feel really good about what those numbers are, and we feel good about the level of engagement, the amount of sign-ups we're seeing, people using the app on a regular basis. We're positive, and I wouldn't anticipate we'll be sharing any of those numbers anytime soon. We'll continue to track them. If and when that time comes, we'll certainly share them with you.

[Brian Harbour, Analyst at Morgan Stanley]

Okay. What would you attribute Flower Child's performance to? It's remained quite strong, I think much better than the fast-casual segment, but I know it's a bit of a fast-casual plus type of concept. Is that performance pretty consistent across the store base, or what would you attribute that to?

[David Gordon, President at The Cheesecake Factory]

Yeah, that's a great question. Certainly, it's across the new markets and existing markets and really across all geographies. We continue to believe that Flower Child is very differentiated from your typical fast-casual, that guests are appreciating the vast menu choices and also the very value-oriented price points, that whether you're getting a Mother Earth Bowl at $13-$14.95 or deciding to get a protein plate, I think it's meeting guests also for many different need states when it comes to going out to eat, right? Could be a quick lunch, could be sitting down at dinner. We talk frequently about the dinner mix being much more than your typical fast-casual, closer to 30%-35%, which is unique for a fast-casual. The 55% off-premise mix continues to be very steady.

[David Gordon, President at The Cheesecake Factory]

The teams are executing there very well, and I think the dine-in experience, the highly designed restaurants and the higher touch of service that people really appreciate today, that we're bringing them their food, it's being served by a server, we're clearing their plates, it's being served on real plateware. I think is appreciated today, that people want experiential dining, even in that fast-casual setting, and that's playing out at Flower Child. We continue to be very positive on it and would anticipate that continue to be the trends over time.

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

Brian, this is Matt. The only thing I would add to that, which I think is a real positive for the growth opportunity that we see with Flower Child, in those markets where we have a little bit more densification, we actually have slightly stronger sales as the brand awareness grows and you get more repeat visitation. We have no concerns about continuing to move into existing markets and continuing to build the brand presence in those because we see slightly better performance when we're able to do that.

[Brian Harbour, Analyst at Morgan Stanley]

Thank you.

[Operator]

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

[Dennis Geiger, Analyst at UBS]

Great. Thanks, guys, and congrats. Curious if you have anything more to share on the new customers that you've been attracting. I know there was a question earlier on the younger customer, but curious more broadly as it relates to the new customers, anything that you would call out on how they're using the brand different than your core existing customer? Maybe it's a little early here, but do you have a sense for repeat frequency yet with that newer customer?

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

It's a little bit early, as you said. We are looking at the sociodemographic information. If you think about, relatively speaking, the inflection being over the last four, five, six months, we're still in the evaluatory stage. You would expect, the initial glimpses of the data show that we continue to attract an incredibly wide portfolio of guests, wide demographic. We have increasingly higher engagement, and I think that's reflected in the trends because we are seeing slightly better frequency. We know that the new menu items are part of that and helping to drive frequency, and we know the rewards is part of that and helping to drive frequency. As David has noted a couple of times, while we haven't shared the exact number, a significant percentage of the app downloads are also from guests that were not in the rewards program.

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

We are attracting those guests. We tend to attract higher technology savvy, higher income guests, and we would anticipate that that's what the data will continue to show.

[David Gordon, President at The Cheesecake Factory]

As we continue to have more of that data, we'll be able to have a more personalized approach with how we're communicating with those guests in a lifecycle management style to get them to repeat and come back and come visit us maybe at a time when they haven't before, and keep them top of mind, Cheesecake top of mind from an awareness standpoint, and the app really allows us to do that.

[Dennis Geiger, Analyst at UBS]

Very helpful, guys. Just a quick second question. Just within your guidance for the third quarter, I think we can maybe loosely dock into it, but just given all the focus on the core Cheesecake strength, any thought with respect to maybe level setting comp expectations for the core Cheesecake brand in the third quarter, how you're thinking about that within the context of the revenue guidance?

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

Yeah. The back half of the second quarter modestly accelerated above what the average was, and that's essentially what's incorporated into our third quarter guidance.

[Dennis Geiger, Analyst at UBS]

Thank you, Matt. Appreciate it, guys.

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

Sure.

[Operator]

Your next question comes from Jeff Farmer with Gordon Haskett. Jeff, your line is open. Please go ahead.

[Jeff Farmer, Analyst at Gordon Haskett]

Great. Thanks, good afternoon, guys. Bigger picture, in terms of thinking about the segment or the casual dining segment as a whole, which factors beyond sort of favorable income and age demographics do you think have really been driving some of this broader relative same-store sales strength that the segment has seen?

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

I think that the value equation in the consumer's mind has pivoted a little bit the price points have compressed. You see casual dining, like we're doing, making sure that you have a price point across all spectrums that's approachable for those guests that might have thought about a different type of occasion. Then those guests are realizing they get a full experience and service in a sit-down restaurant versus a drive-through or effectively just picking it up. You look at the totality of that and what people want to do in their life and get those little indulgences, those little mini vacations for an hour, that's clearly resonating across casual dining.

[Jeff Farmer, Analyst at Gordon Haskett]

Okay. Just real quick, just bringing it back to Cheesecake for a second. It does sound like the mobile app is attracting both new customers for you guys and probably driving some increased frequency from some of your existing customers. Was there anything about the mobile app launch that surprised you, either positively or negatively here through the first four months of the launch?

[David Gordon, President at The Cheesecake Factory]

Jeff, I don't think we would've expected on the day we launched that we would've been one of the top three downloaded apps right next to some of the most companies. We're pleasantly surprised by that. Outside of that, I think the Rewards program really being in year three has told us that there is an affinity for Cheesecake that we've always known is out there, and the more we talk about it and the more people hear about it continues to just grow and grow and grow. I think the app has proved that out. We've launched Rewards with more members than we would've anticipated when we first started. The same thing has happened with the app. I think after 45+ years, Cheesecake Factory continues to be more relevant today as an experiential dining leader with made-from-scratch food that people really appreciate.

[David Gordon, President at The Cheesecake Factory]

It's just working very well. To Matt's point earlier, people really appreciate what Cheesecake is offering today as much as they ever have. I think we're executing against that really well. The launch of the app was a pleasant surprise, but Rewards told us that we were going to have a high level of engagement. It was good to be a little surprised, but we were expecting it to continue. We expect it to be strong. We expect it to continue to be strong. Excuse me.

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

Jeff, this is Matt. Just one more note on the app. Just a shout-out to our IT and marketing and finance teams for working collaboratively on an app that's getting tremendous reviews. The amount of focus on the details, the flow, the guest experience is very strong. We took a lot of time to make sure we got it right. I think we did.

[Jeff Farmer, Analyst at Gordon Haskett]

All right. Appreciate it. Thank you.

[Operator]

Your next question comes from the line of John Ivankoe with JPMorgan. John, your line is open. Please go ahead.

[John Ivankoe, Analyst at JPMorgan]

Hi. Thank you very much. At least from our observation, some of the products that we've seen go viral In some cases, they're 20 years old on The Cheesecake Factory menu, which is just fascinating to me. Obviously, you guys continue to talk about menu innovation and going to where the consumer is in terms of new products, but how does that kind of inform you in terms of where the menu should go? Could we potentially do more by, I guess, adding more to the menu, in other words, expanding the menu? Or might there be an opportunity to kind of get back to maybe an original core, whatever that is, and get the same or even more with even less?

[John Ivankoe, Analyst at JPMorgan]

When we think about a menu, either expanding and contracting and various kind of opportunities on either side that you might get from that, how do you kind of envision the future of The Cheesecake Factory menu?

[David Gordon, President at The Cheesecake Factory]

Thanks, John. That's a great question. First time anyone's ever asked us to put more items on the menu. Thank you for that.

[John Ivankoe, Analyst at JPMorgan]

Well, I postulated both, excuse me for that.

[David Gordon, President at The Cheesecake Factory]

We know that. I think that the breadth of the menu is very, very strong. You're right, a couple of the items are items that have recently become more popular that have been on the menu for 20+ years. I think you never know what's going to just catch on. What we can do is continue to put compelling menu items on, compelling portion sizes, compelling value, and a wide variety of different types of cuisine. I think that that just widens the pool of what potentially could become something that's more popular than we expected. We would never narrow that. That's something we've been saying for a long time, right? We've never made the menu smaller.

[David Gordon, President at The Cheesecake Factory]

We want to make it consistent to execute, have as much variety that there's never a veto vote, I think there's always going to be something on that menu that could become viral. There were some new things we heard about today that are also menu items that have been on the menu for a long time. Hopefully that will continue. Our goal is just to put delicious menu items on the menu, because if it goes viral and it's not delicious and it's not fantastic and not executed well, it will make no difference. We're focused on putting delicious items on and executing against that really, really well.

[John Ivankoe, Analyst at JPMorgan]

Thank you. I think a direct follow-up on this. A lot of the call has been about social and digital type of marketing, including obviously your app, social media, what have you. Do you have an opportunity to go back and use traditional paid media for people that don't necessarily consume their media on the social media platforms? Is there an audience that might be receptive to kind of going back to the other side of top-of-the-funnel type of marketing, perhaps drive even more awareness and usage of the brand?

[David Gordon, President at The Cheesecake Factory]

Sure. I don't think it's an either/or. I think it's an and. I think we are still doing some traditional work. We will always do that. There are different core audiences for all these different touch points. Although we may be a little louder in the social channel today, we haven't gone away from what we've traditionally done over time. Since we have such a broad base of consumer, from those 15-year-olds-80-year-olds, we want to make sure we're touching all those funnels all the time, and we'll continue that approach.

[John Ivankoe, Analyst at JPMorgan]

Thank you.

[Operator]

Your next question comes from Jim Salera with Stephens. Jim, your line is open. Please go ahead.

[Jim Salera, Analyst at Stephens]

Hey, guys. Good afternoon. Thanks for taking our question. I wanted to ask a follow-up on Brian's earlier question on Flower Child. Are you able to give us the comp breakdown for the same restaurant sales at Flower Child with a particular eye on how much traffic it's contributing? Second part to that, you mentioned the AUVs are up to like $5.3 million on an annualized basis. Can you contextualize what the upper band of the restaurants are doing just so we can help think about the additional upside from where we are today, given the strength?

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

Sure. Jim, we'd be happy to share a couple of those details. This is Matt. The majority of the Flower Child sales are traffic. It's probably in the 8-ish% range, with the rest being 2.5% pricing and a little bit of other check average from some of the catering. 2/3 of that number is coming from traffic. The bands, we definitely have a few locations that are getting into the $6.5 million-$7 million range with Flower Child. It's pretty tight. Performance is pretty tight, but those locations tends to be ones that have been around a little bit longer and just keep growing, right? They continue to add guests over time to them. We certainly have figured out ways to ensure we have enough capacity in our locations to get to that level.

[Jim Salera, Analyst at Stephens]

Given the gap there and that most of the upside is coming from traffic, have you thought about what restaurant-level margins could look like for more mature Flower Child locations, given that they're already kind of above the core cheesecake and how that might contribute to the portfolio as a whole as that brand continue to scale and grow as a piece of the portfolio?

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

Yeah, Jim, this is an important point, we've talked about this a little bit before, we're at a 20% margin at $5.3 million. We really look at that as the penny profit. Those two levers are driving a huge amount of four-wall profitability. Honestly, because we do have more capacity, if we continue to grow traffic and it supports margins, we'll just take less pricing to an earlier point that someone made. We would just invest back into the business. We don't think there's a need to push past the 20% if we can continue to grow AUVs at this level. We think that perhaps some of the challenges in the more traditional fast-casual assembly line has been aggressive pricing. Probably try to balance that out.

[Jim Salera, Analyst at Stephens]

Okay, great. Appreciate the thoughts. I'll hop back with you.

[Operator]

Your next question is from the line of Sharon Zackfia with William Blair. Sharon, your line is open. Please go ahead.

[Sharon Zackfia, Analyst at William Blair]

Hey, thanks for taking the question. I guess I'm curious. I know you don't want to share a lot about rewards. I'm going to maybe phrase something a bit differently. When we think about the uptick you're having at the core cheesecake concept, is there a way to dimensionalize what you're seeing with rewards versus lapsed users or new to brand?

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

It's tough, Sharon, this is Matt, to separate them because of the coalescence of the different events. I think that it's also the sales in the quarter obviously being pretty differentiated in the first quarter. Early to say for sure. I would say we're getting relative contributions from rewards, and then also delivery has been a strength for us. It shows the same percentage, but actually it's just a little bit of rounding. It's been better. Some of the menu has contributed and some of the marketing, and I would say kind of on equal footing. That's how I would dimensionalize those four factors. Obviously the ability to execute against that.

[Sharon Zackfia, Analyst at William Blair]

Matt, when I think about the implied fourth quarter comp, excuse me, coming off a little bit from the current trends. Is that just inherent conservatism or is there something that you think is not durable with what you're seeing right now?

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

No, I think we're just early stage. There's no point in getting ahead of our skis at this point in time. The only thing that I would note that we've talked about before that's outside of us too, is there's always the geopolitical risk, and we do have midterm elections coming up, and the government did shut down last year. So those things are out there.

[Sharon Zackfia, Analyst at William Blair]

All right. Thank you.

[Operator]

This concludes our Q&A and our call. Thank you for attending. You may now disconnect.

Participants

Executives

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

Analysts

• Jon Tower, Analyst at Citi
• Brian Vaccaro, Analyst at Raymond James
• Andy Barish, Analyst at Jefferies
• Lauren Silberman, Analyst at Deutsche Bank
• Drew North, Analyst at Baird
• Sara Senatore, Analyst at Bank of America
• Brian Harbour, Analyst at Morgan Stanley
• Dennis Geiger, Analyst at UBS
• Jeff Farmer, Analyst at Gordon Haskett
• John Ivankoe, Analyst at JPMorgan
• Jim Salera, Analyst at Stephens
• Sharon Zackfia, Analyst at William Blair