Q1 2026 Cheesecake Factory Inc Earnings Call

April 29, 2026

Operator: Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory Incorporated Q1 2026 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 during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I will now turn the call over to Etienne Marcus, Vice President of Finance and Investor Relations. Please go ahead.

Speaker #1: have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad, if you would like to withdraw your question, press star 1 again. you. to Etienne Marcus, Vice President of Finance and Investor Relations, please go ahead.

Etienne Marcus: Good afternoon, welcome to our Q1 fiscal 2026 Earnings Call. On the call with me today are David Overton, our Chairman and Chief Executive Officer, David Gordon, our President, and Matthew 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 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: 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 expense 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 Q1 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 will begin today's call with some opening remarks and David Gordon will provide an operational update. Matt will then review our first quarter of financial results and provide commentary on our financial outlooks or opening the call up to questions.

With that, I'll turn the call over to David Overton.

David Overton: Thank you, Etienne. We delivered strong results in Q1, exceeding expectations across revenue, margins, and adjusted diluted EPS. This performance reflects disciplined execution across our restaurants and continued demand for our differentiated high-quality concepts. Q1 comparable sales at The Cheesecake Factory restaurants increased 1.6%, outperforming the industry and reflecting the strong affinity for our namesake concept. Culinary innovation continues to be a core strength of our business. Our recent menu additions, including new bites and expanded bowl options, have been well-received by guests and highlight the broad appeal of our menu and the value we deliver to our guests. Importantly, these offerings keep the concept fresh and competitively positioned without relying on discounting. To this point, The Cheesecake Factory average weekly sales reached a new all-time high during the quarter, bringing our industry-leading AUV to nearly $12.8 million.

Thank you etn. We delivered strong results. In the first quarter, exceeding expectations, across Revenue, margins and adjusted diluted earnings per share.

This performance reflects discipline execution, across our restaurants, and continued demand for our differentiated high quality Concepts.

First quarter comparable sales at the Cheesecake Factory restaurants increased 1.6% outperforming the industry and reflecting the strong affinity for our namesake concept.

Culinary Innovation continues to be a core strength of our business.

Our recent menu additions, including new bites and expanded Bowl options, have been well received by guests and highlight the broad appeal of our menu and the value we deliver to our guests. Importantly, these offerings keep the concept fresh and competitively positioned without relying on discounting.

David Overton: Strong sales and exceptional execution drove further improvement in The Cheesecake Factory's restaurant level profit margins, and we delivered double-digit growth in adjusted diluted earnings per share year over year. Turning to development, during Q1, we opened 3 restaurants, including a North Italia, The Henry, and a Flower Child. In addition, 1 The Cheesecake Factory restaurant opened in Q1 in Mexico under a licensing agreement, the only international opening we expect this year. Subsequent to quarter end, we opened a North Italia, marking our 50th location for the concept. With these openings, we remain on track to meet our objective of opening as many as 26 new restaurants this year. In summary, we delivered a strong quarter, and as we look ahead, we will remain focused on delivering exceptional food, service, and hospitality, the hallmarks of our success, while continuing to execute our long-term growth strategy.

to this point Cheesecake Factory average, weekly sales, reach a new all-time high. During the quarter. Bringing our industry-leading annualized unit volumes to nearly 1 2. 8.

Million. Strong sales and exceptional execution. Drove further improvement in The Cheesecake Factory's restaurant-level profit margins.

And we delivered double-digit growth in adjusted diluted earnings per share year-over-year.

Returns including a North Italia. A Henry and a flower child.

In addition, one Cheesecake Factory restaurant opened in the first quarter in Mexico under a licensing agreement. This is the only international opening we expect this year.

Subsequent to quarter end. We opened in North Italia, marking our 50th location for the concept.

With these openings we remain on track to meet our objective of opening as many as 26 new restaurants this year.

David Overton: Before I turn the call over, I am pleased to share we were once again recognized by Fortune as one of the 100 best companies to work for, marking our 13th consecutive year on the list. This recognition, based on direct feedback from our staff, reflects the strength of our culture and the engagement of our people. We believe this continues to be an important advantage in attracting and retaining talent in a highly competitive labor environment. With that, I will now hand the call to David Gordon to provide an operational update.

In summary we delivered a strong quarter and as we look ahead we will remain focused on delivering exceptional food service and Hospitality the Hallmarks of our success while continuing to execute our long-term growth strategy.

Before I turn the call over, I am pleased to share. We were once again recognized by Fortune as 1 of The 100 best companies to work for marking our 13th consecutive year on the list.

This recognition based on Direct feedback from our staff reflects, the strength of our culture and the engagement of our people.

We believe this continues to be an important advantage in attracting and retaining talent in a highly competitive labor environment.

David Gordon: Thank you, David. Our performance this quarter reflects the strength of our operations teams and their ability to execute at a high level in our restaurants while leveraging sales growth to drive flow-through and profitability. Operators delivered improvements in labor productivity, food cost management, and other controllable expenses while maintaining strong retention across both hourly staff and management teams, and delivering strong guest satisfaction scores. As David mentioned, our recent menu additions at The Cheesecake Factory restaurants have been well received, which we believe has contributed to the sequential improvements in traffic and check mix. This has allowed us to moderate menu pricing without impacting restaurant level margins. Moving on to Cheesecake Rewards. The recent launch of our new mobile app has exceeded expectations with top-tier download rankings, including number three overall and number one in food and drink during the rollout week.

With that, I will now hand the call to David Gordon to provide an operational update.

Thank you, David.

Our performance, this quarter reflects the strength of our operations teams and their ability to execute at a high level in our restaurants while leveraging sales growth to drive flow through and profitability.

Operators delivered improvements in labor productivity.

Food cost management and other controllable expenses while maintaining strong retention across. Both hourly staff and management teams and delivering strong guest satisfaction scores.

As David mentioned, our recent menu, additions at the Cheesecake Factory restaurant have been well received which we believe has contributed to the sequential improvements and traffic and check mix.

Cheesecake Rewards.

David Gordon: Early guest feedback has been overwhelmingly positive, particularly around the app’s ease of use, from making reservations and browsing the menu to place orders, reordering favorites, and accessing rewards all within the app. We are also seeing solid early traction with increasing adoption of the apps for digital ordering, reflecting strong early engagement with the platform. At the same time, we continue to refine the program toward more targeted, behavior-based personalized offers with an increased focus on lifecycle management. So far this year, we’ve seen higher engagement, improved incrementality, and greater offer efficiency. I’ll now turn to additional concept performance details. The Cheesecake Factory’s Q1 comparable sales outperformed the Black Box Casual Dining Index by 40 basis points and resulted in annualized AUVs of $12.8 million for the quarter.

The recent launch of our new mobile app. Has exceeded expectations with top tier download rankings. Including number 3, overall, and number 1 at food and drink during the rollout week.

An early guest feedback has been overwhelmingly positive, particularly around the app's, ease of use for making reservations and browsing the menu to place orders.

Reordering favorites and accessing rewards all within the app.

We are also seeing solid early traction, with increasing adoption of the apps for digital ordering, reflecting strong early engagement with the platform.

At the same time, we continue to refine the program toward more targeted, behavior-based personalized offers, with an increased focus on life cycle management.

So far this year we've seen higher engagement improved incrementality and greater offer efficiency.

I'll now turn to additional concept performance details.

David Gordon: This performance was supported by an off-premise mix of 22%, in line with the prior quarter and prior year. Restaurant level profit margins increased 10 basis points year over year to 17.5%. North Italia's Q1 annualized AUVs totaled $7.4 million, with comparable sales declining 2%. Our focus remains on returning to positive sales growth, and we remain confident in the concept's competitive positioning and long-term opportunity. At the same time, we're seeing encouraging trends, including improved retention across both managers and hourly staff, as well as strong early results at new restaurant openings, with average weekly sales at recent openings meaningfully above the system average.

The Cheesecake Factories first quarter comparable sales, outperform the Black Box, casual dining index, by 40 basis points, and resulted in annualized auvs of 12.8 million for the quarter.

This performance was supported by an off-premise mix of 22%.

In line with the prior quarter and prior year.

Restaurant level profit margins. Increased 10 basis points year-over-year to 17.5%.

North italus first quarter, annualized, auvs totaled 7.4 million with comparable sales declining to percent.

Our Focus remains on returning, deposits of sales growth.

And we remain confident in the concepts, competitive positioning, and long-term opportunity.

David Gordon: We recently implemented at North Italia the guest feedback platform used at The Cheesecake Factory, which we believe will provide valuable insights into execution and support ongoing improvement. Our new menu currently being rolled out introduces a dedicated lunch section featuring lighter options, including refreshed salads and additional protein offerings, aligned with current guest preferences and thoughtfully priced. We believe this will increase awareness of our lunch offering and strengthen our value proposition in the lunch daypart. Restaurant level profit margin for the adjusted mature North Italia locations was 14.8% for the quarter versus 16.6% for the prior year. The decline primarily reflects sales deleverage along with higher building expenses, including repairs and maintenance and utilities. Flower Child delivered another standout quarter, meaningfully outpacing the fast casual segment, underscoring the strong affinity for the concept as it continues to take market share.

The same time we're seeing Trends, including improved retention across both managers and hourly staff as well as strong early results at new restaurant. Openings with average weekly sales at recent openings. Meaningfully about the system average.

In addition, we recently implemented, the north Italia, the guest feedback platform used at the Cheesecake Factory, which we believe will provide valuable insights into execution and support ongoing Improvement.

Our new menu currently being rolled out. Introduces, a dedicated lunch section, featuring lighter options, including refreshed, salads, and additional protein offerings aligned with current guest preferences, and thoughtfully priced,

We believe this will increase awareness of our lunch offering and strengthen our value proposition in the lunch Day, part.

Restaurant-level profit margin for the adjusted mature North Italia locations was 14.8% for the quarter, versus 16.6% for the prior year.

The decline primarily reflects sales, deleverage along with higher building expenses, including repairs and maintenance and utilities.

David Gordon: Q1 comparable sales increased 10% for a two-year comparable sales increase of 15%. This strong performance translated into annualized AUVs of $4.9 million, a new quarterly high for the concept. Restaurant level profit margin for the adjusted mature Flower Child locations was 19.6% in Q1, up 100 basis points from the prior year. This performance reflects the concept's highly differentiated positioning with a made-from-scratch menu that is both health-focused and craveable, delivering compelling value across a broad range of offerings, all within thoughtfully designed restaurants that provide a more elevated experiential dining experience. Combined with consistent strong execution by our restaurant teams, these strengths continue to drive momentum and strong sales trends. We remain focused on building strong teams to support the concept's continued growth, and we're increasingly confident in the opportunity ahead.

Flowerchild delivered, another standout quarter meaningfully outpacing the fast. Casual segment, underscoring. The strong affinity for the concept is it continues to take market share

First quarter comparable sales increased 10%, for a two-year comparable sales increase of 15%.

The strong performance translated into annualized auvs of 4.9 million, a new quarterly high for the concept.

Restaurant level profit margin for the adjusted and mature flower. Child locations was 19.6% in the first quarter of 100 basis points from the prior year.

This performance reflects the concepts, highly differentiated positioning with a made from scratch menu. That is both Health focused and craveable delivering compelling value of a broad range of offerings. All within thoughtfully designed restaurants to provide a more elevated experiential dining experience.

David Gordon: Lastly, we expanded our FRC portfolio with the opening of a Henry in Phoenix, which opened a strong demand. Average weekly sales have exceeded $280,000 in the first 4 weeks for an annualized AUV of over $14 million. With that, let me turn the call over to Matt for our financial review.

Combined with consistent strong execution, by our restaurant teams, these strengths can continue to drive momentum and strong sales trends.

We remain focused on building strong teams to support the concepts continued growth and we're increasingly confident in the opportunity ahead.

And lastly, we expanded our FRC portfolio with the opening of a Henry in Phoenix which opened a strong demand.

Average weekly sales have exceeded 290,000 in the first 4 weeks for an annualized, awe of over 1 4.

And with that, let me turn the call over to Matt for our financial review.

Matthew Clark: Thank you, David. Let me first provide a high-level recap of our Q1 results versus our expectations I outlined last quarter. Total revenues were $978.8 million, meaningfully above the high end of the range we provided. Adjusted net income margin was 5.2%, and adjusted diluted earnings per share was $1.05, both finishing above our expectations. We returned $32.6 million to our shareholders in the form of dividends and stock repurchases. Now turning to some more specific details around the quarter. Q1 total sales at The Cheesecake Factory restaurants were $690.5 million, up 3% from the prior year. Total sales for North Italia were $89.5 million, up 7% from the prior year period.

Let me first provide a high-level recap of our first quarter results versus our expectations. I outlined last quarter.

Total revenues were 978.8 million meaningfully above the high end of the range. We provided

Adjusted net income margin was 5.2%.

And adjusted diluted earnings per share was $15.

Both finishing above our expectations.

And we returned 32.6 million to our shareholders, in the form of dividends and stock repurchases.

Now turning to some more specific details around the quarter.

First quarter total sales at the TK Factory restaurants or 690.5 million top 3% from the prior year.

Total sales for North Italia were $89.5 million, up 7% from the prior-year period.

Matthew Clark: Other FRC sales totaled $104.5 million, up 20% from the prior year, and sales per operating week were $145,200. Flower Child sales totaled $52.6 million, up 21% from the prior year, and sales per operating week were $94,500. External bakery sales were $13.9 million. Now moving to year-over-year expense variance commentary. Specifically, cost of sales decreased 10 basis points, primarily driven by favorable dairy costs, partially offset by higher beef and seafood costs. Labor as a percent of sales declined 20 basis points, primarily driven by labor productivity gains, partially offset by higher group medical. Other operating expenses increased 40 basis points, primarily driven by higher utility and bakery overhead costs.

Other FRC sales told 104.5, million up 20% from the prior year and sales per operating week were 145,200.

Flower child, Tails total. 52.6 million up 21% from the prior year and sales per operating week were 94,500.

And external Bakery, sales were 13.9 million.

Year-over-year. Expense variance commentary.

Specifically cost of sales decreased 10 basis points primarily driven by favorable Dairy costs.

Partially offset by higher beef and seafood costs.

Labor as a percent of sales declined 20 basis points.

Primarily driven by labor productivity gains.

Partially offset by higher Group Medical.

Other operating expenses, increased 40 basis points.

Primarily driven by higher utility and bakery, overhead costs.

Matthew Clark: G&A remained relatively flat as a percent of sales, and depreciation increased 10 basis points from the prior year. Pre-opening costs for the quarter, including some expenses related to early Q2 openings, totaled $5.5 million compared to $8.1 million in the prior year period. We opened 3 restaurants during Q1 versus 8 restaurants in Q1 of 2025. In Q1, we recorded a pre-tax net expense of $2 million, primarily related to impairment of assets and lease termination expenses and FRC acquisition-related items. Q1 GAAP diluted net income per share was $1.02. Adjusted diluted net income per share was $1.05. Now turning to our balance sheet and capital allocation.

GNA remained relatively flat as a percent of sales.

and appreciation increased 10 basis points from the prior year,

Pre-opening costs for the quarter, including some expenses related, to early second quarter openings, totaled 5.5 million compared to 8.1 million and the prior year period.

We opened 3 restaurants during the first quarter versus 8 restaurants and the first quarter of 2025.

and in the first quarter, we recorded a pre-tax net expense of dollars primarily related to impairment of assets and

lease termination expenses and FRC acquisition related items.

First quarter Gap, diluted. Net income per share was $12.

Adjusted diluted net income per share was $15.

Now, turning to our balance sheet and capital allocation,

Matthew Clark: The company ended the quarter with total available liquidity of $601.6 million, including a cash balance of $235.1 million and $366.5 million available on a revolving credit facility. Total principal amount of debt outstanding was $644 million, including $69 million in principal amount of 0.375% convertible senior notes due 2026, and $575 million in principal amount of 2% convertible senior notes due 2030. CapEx totaled approximately $43 million during Q1 for new unit development and maintenance. During the quarter, we completed approximately $18.4 million in share repurchases and returned $14.2 million to shareholders via our dividend. Now let me turn to our outlook.

The company ended the quarter with total available liquidity of 601.6 million including a cash balance of 235.1 million and 366.5 million dollars available on a revolving credit facility.

Total principal amount of debt outstanding with 644 million.

Including 69 million in principal amount of 375% convertible, senior notes due 2026.

And $575 million in principal amount of 2% convertible senior notes, due 2030.

Capex 12, approximately 43 million during the first quarter for new unit development and maintenance.

During the quarter, we completed approximately 18.4 million in Sherry purchases and returned 14.2 million to shareholders via our dividend.

Matthew Clark: While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q2 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, anticipated impacts associated with holiday shifts, the recent softness in industry sales trends, and the current consumer environment. Specifically for Q2, we anticipate total revenues to be between $990 million and $1 billion. At this time, we expect effective commodity inflation of low to mid-single digits for Q2 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.

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 Q2 and 4 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.

Anticipated impacts associated with holiday shifts.

Industry sales Trends, and the current consumer environment.

Specifically for Q2 we anticipate total revenues to be between 900 and 900 million and 1 billion dollars.

Next at this time, we expect effective commodity inflation of low to mid single digits for Q2 as our broad Market Basket remains stable.

Matthew Clark: Other operating expenses are estimated to be approximately 20 basis points higher than prior year, reflecting higher marketing spend to support the launch of our rewards app. G&A is estimated to be approximately $63 to $64 million. Depreciation is estimated to be approximately $28 to $29 million. We are estimating pre-opening expenses to be approximately $7 million. Based on these assumptions, we would anticipate adjusted net income margin to be about 5.5% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 13% and weighted average shares outstanding of approximately 48.5 million. 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 $3.91 billion at the midpoint of our sensitivity modeling.

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.

Other operating expenses are estimated to be approximately 20 basis points higher than the prior year, reflecting higher marketing spend to support the launch of our Rewards app.

GNA is estimated to be, approximately 63 to 64 million.

Depreciation is estimated to be approximately 28 to 29 billion dollars.

We are estimating pre-opening expenses to be approximately $7 million.

based on these assumptions, we would anticipate adjusted net income margin to be about 5.5% at the midpoint of the sales range provided

For modeling purposes, we are assuming a tax rate of approximately 13%.

And weighted average shares outstanding of approximately 48.5 million.

Turning to fiscal 2026.

Based on similar assumptions and no material operating or consumer disruptions.

Matthew Clark: 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. Given our unit growth expectations, we are 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.

We anticipate total revenues for fiscal 2026 to be approximately 3.91 billion at the midpoint of our sensitivity modeling.

For sensitivity purposes.

We're using a range of plus or minus 1%.

We currently estimate total inflation across our commodity, baskets, labor, and other operating expenses to be in the low to mid single digit range and fairly consistent across the quarters.

We are estimating GNA 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 trips related to stock-based compensation.

Depreciation is expected to be about $115 million for the year.

And given our unit growth expectations. We are estimating, pre-opening expenses to be approximately 35 million to 36 million.

Matthew Clark: For modeling purposes, we are assuming a tax rate of approximately 11% and weighted average shares outstanding relatively flat to 2025. With regard to development, 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, 6 to 7 North Italias, 6 to 7 Flower Childs, and 7 FRC restaurants. 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.

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 11%

And weighted average shares outstanding relatively flat to 2025.

With regard to development, 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 3/4 of those openings planned for the second half of the year.

This includes as many as 6 Cheesecake Factories.

6 to 7, North Italians.

6 to 7, flower jobs and 7, F FRC restaurants.

And we would anticipate approximately $210 million in cash, CapEx to support unit development as well as required maintenance on our restaurants.

no, 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,

Matthew Clark: In closing, our Q1 results reflect a healthy business, solid top-line momentum, disciplined cost management, and strong operational execution. Our financial position continues to provide the flexibility to support new unit growth while investing in the business and returning capital to shareholders. With a diversified portfolio of high-quality concepts, experienced operators, and a strong balance sheet, we believe we are well positioned as we move through the year. Looking ahead, we remain focused on consistent execution, comparable sales growth, margin expansion, and long-term shareholder value creation. With that said, we'll take your questions.

In closing.

Our first quarter results, reflect a healthy business.

Solid Topline momentum.

Discipline cost management and strong operational execution.

Our financial position continues to provide the flexibility to support new unit growth while investing in the business and returning Capital to shareholders.

With a diversified portfolio of high-quality concepts.

Experienced operators and the strong balance sheet. We believe we are well positioned as we move through the year.

Looking ahead. We remain focused on consistent execution, comparable, sales, growth, margin expansion, and long-term shareholder value creation.

With that said, we'll take your questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Please ask one question and a follow-up due to time restrictions. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Andy Barish with Jefferies. Please, your line is open.

To ask a question. Press star. Then the number 1 on your telephone keypad. Please ask 1 question and a follow-up due to time. Restrictions will pause for just a moment. To compile the Q&A roster.

Your first question constantly line of Andy barish with Jeffries, please, your line is open.

Andy Barish: Hey, guys. I know, you know, the Cheesecake business has been very consistent on the top line. Just anything quarter to date. I know it's been noisy with, you know, Easter and Spring Break shifts, but just, you know, anything you're seeing in your guests, any check management that you'd be willing to comment on would be helpful.

Hey guys, um, can you just kind of go through? I know, um, you know, the Cheesecake business has been very consistent on the top line, just

Matthew Clark: Sure, Andy. This is Matt. I mean, as you know, we're not gonna give a specific number, but I think if you know, interpolate the revenue guidance for Q2, you know, we're expecting to have consistent trends continue for The Cheesecake Factory. I think we feel cautiously optimistic about the rollout of the app and the incrementality that we have potential to drive there. We rolled out incremental more new menu items in Q1 and, you know, we saw progressively improving incident rate trends on those. Generally, I would say we have a bullish outlook on our business at this time.

Anything quarter to date. I know it's been noisy with, you know, Easter and spring break shifts but just you know anything you're seeing in your guests any check management that you'd be willing to comment on would be helpful.

Uh, sure Andy. This is Matt. I mean as you know, we're not going to give a specific number, but I think if you, you know, interpolate, the the revenue guidance for the second quarter, you were expecting to have consistent Trends, continue for the Cheesecake Factory and and I think we feel cautiously optimistic about the rollout of of the app and the incrementality that we have potential to drive there. We uh we rolled out incremental more new menu items in the first quarter and you know we saw progressively, uh, improving uh, incident rate trends on those. So generally I would say we we have a a bullet

Which I'll look on on our business at this time.

Andy Barish: Thanks. Appreciate it.

Thanks, appreciate it.

Operator: Your next question comes to the line of Jeff Farmer with Gordon Haskett. Your line is open.

Jeff Farmer: Thanks. Matt, you mentioned that, the Q1 revenue performance exceeded, obviously the guidance. What was the primary driver of that outperformance relative to your guidance?

Your next question comes in line of Jeff farmer with Gordon haskett, your line is open.

Matthew Clark: Yeah. Jeff, this is Matt. It was a couple of factors. I mean, obviously The Cheesecake Factory comps came in above the range that we had provided there. You know, I think they were very stable throughout the quarter, so I think that was a positive. You know, certainly Flower Child, that 10% was above our expectations, that we had thought more in the mid-single digits. Each of those probably contributed about 50% of the beat.

Thanks. Uh, Matt, you mentioned that, uh, the Q1 revenue performance exceeded, um, obviously, the guidance. But what was the primary driver of that outperformance relative to your guidance?

Jeff Farmer: Okay. Then one more. As it relates to intra-quarter same-store sales trends, when the conflict in Iran really kicked off in early March and gas prices jumped, did you see any impact on same-store sales for any of the businesses?

Yeah, Jeff this Matt, it. It was a couple of factors. I mean, obviously, Cheesecake Factory comps came in about the range that we had provided there. And, you know, I think they were very stable throughout the quarter, so I think that was a positive. And then, you know, certainly for our child. That 10% was above our expectations that we had thought more in the mid single digits and, and, uh, each of those probably contributed about 50% of the beat.

Okay, and then 1 more um as it relates to intra quarter, same for sales trends, when the conflict in Iran really kicked off in, in in early March, and, and gas prices jumped.

Did you see any impact on same-store sales for any of the businesses?

Matthew Clark: We were pretty steady throughout the quarter. You know, honestly, we were looking at that as well and parsing it, and throughout the portfolio, we continued to be, I think, steady. I, you know, there was a little bit of spring break movement, but even that was probably more muted than we thought. It was very balanced throughout the quarter, and we didn't see any trade-down either. I would say both the guest traffic and the mix were both steady throughout.

Jeff Farmer: Okay. Thank you.

We were pretty steady throughout the quarter uh um, you know, honestly we were looking at that as well and parsing it and throughout the portfolio. We continued to be, I think steady. I uh you know, there's a little bit of spring break movement but even that was probably more muted than we thought. And so it was it was very balanced throughout the quarter and we didn't see any any trade down either. So I would say both the guest traffic and the the mix were both steady throughout.

Okay, thank you.

Operator: Your next question comes to the line of Jim Salera with Stephens. Your line is open.

Your next question comes from the line of Jim SRA with Stevens. Your line is open.

Jim Salera: Hey, guys. Good afternoon. Thanks for taking our questions. Maybe a two-part question. One, just some housekeeping. Are you able to provide the breakout of Cheesecake Factory comps, the traffic, the pricing, and then the mix components? As we look at the strong results in the quarter, I know historically you've talked about kind of GDP and jobs numbers as having a big influence on, you know, guest traffic and engagement with the brand. I don't think we've had necessarily very good jobs numbers this year. They haven't been horrible, but I think kind of continuing the slow growth from 2025.

Hey guys, good afternoon. Thanks for taking our questions.

Jim Salera: You know, we see your results accelerating. I was hoping maybe you could just kind of bridge what's happening with your restaurants that's maybe leading you to outperform relative to kind of the macro backdrop as a whole.

Uh yeah, a 2-part question, 1, just some housekeeping. You want to provide the breakout of Cheesecake Factory comps the, the traffic, the pricing, and then the, the mixed components. And then as we look at the the strong results in the quarter, I know you historically, you've talked about kind of GDP and jobs numbers as having a big influence on, you know, guests traffic and and engagement with the brand. I don't think we've had necessarily very good jobs numbers this year. They haven't been horrible, but I think kind of continuing the slow growth in 2025. Uh, but then you know, we see your results accelerating and so,

Matthew Clark: Sure, Jim. This is Matt. I'll start here. On the specifics with The Cheesecake Factory, pricing was at 3.3%. As we have noted previously, that's coming down. It will be 3% in the subsequent quarters. Just given the timing of what was rolling off in the quarter, it was at 3.3. Then the mix was a -0.3. We saw pretty material stabilization there, really, benefiting particularly from the bites being add-ons and not substitutions. We feel really positive about that. The traffic was a -1.4, which was a material improvement over the Q4 results. Just also note for everybody, for the record, the total weather impact for the company was about 1.7% of sales.

I was hoping maybe you could just kind of bridge what's happening at your restaurants. That's maybe lead to eat outperform relative to kind of the macro backdrop as a whole

Matthew Clark: Of course, there was weather the prior year, the net really was about 70, 75 basis points if you think about that. Pretty close to getting back to that flat traffic for Cheesecake Factory, really on a like-for-like basis. Really positive of movement there. You know, I think, Jim, there's a lot of factors at play regarding sort of the economy. Certainly if you believe in or subscribe to the K-shaped economy component of it, you know, many of our concepts in our portfolio benefit from higher income cohorts. I think that there's a piece of that. I think the flexibility of the menu, particularly at Cheesecake Factory and Flower Child, will benefit us with a tail here in the whole GLP-1 thing, right?

And the traffic was a negative 1.4 which was a material improvement over the Q4 results. And just also note for everybody for the record, the total weather impact for the company was about 1.7% of sales. Of course, there was whether the prior year. So the net really was about 7075 basis points. If you think about that. So, pretty close to getting back to that flat traffic for Cheesecake Factory, really in a like for like basis. So really positive of movement there and you know, I I think Jim there's a there's a lot of factors at play regarding sort of the economy. Um certainly if you uh if you believe in or subscribe to the K economy component of it, you know, many of our Concepts and our portfolio benefit from higher income uh cohorts. And so I think that there's a piece of that I think the flexibility of the menu particularly at Cheesecake Factory in flower child will benefit.

Matthew Clark: Like, you can get anything you want to eat and, you know, at The Cheesecake Factory, you can get steamed salmon with broccoli if that's what you want, and, you know, heavy up on the proteins and certainly at Flower Child as well. Yeah, I think the menu. You know, ultimately, we believe in sort of the three primary tentpoles of restaurant touring, and, you know, that's the menu and the hospitality and the service. You know, I think we're excelling in those. Probably taking some share for those reasons. I do think even though the jobs haven't been great, to your point, sort of breaking into the economist here, the news cycle around the layoffs is not also as bad as it sounds. I mean, they're the big news, but it's been steady. The job market's been steady.

Us with a tail here uh in the whole glp1 thing, right? Like you can get anything you want to eat and you know at Cheesecake Factory, you can get steamed, salmon with broccoli if that's what you want and you know heavy up on the proteins and certainly at flowerchild as well. So you know I think that the menu you know ultimately we believe in sort of the 3 primary 10 polls of restaurant touring and you know that's the menu in the hospitality and the service and so you know it I think we we're excelling in those so probably

Matthew Clark: Discretionary income is up slightly, it's up a bit more than we're taking price. From a wallet perspective, I think there's that. I think also, you know, lastly, what we've ascribed to here, I just read about this today in the journal, where people's wallets are going is for experiences, not for just goods, we're experiential dining, it's not so much transactional. I think for all of those reasons.

David Gordon: Jim, this is David Gordon. I just had one more piece, and that would be the continued retention we see in the restaurants at the hourly staff and management level quarter after quarter after quarter, I think has allowed the operations teams to execute as well as they ever have. We continue to see that type of execution. We see it in the results of our net promoter scores continuing to be positive, and that just has a flywheel effect of guests wanting to come back and having those type of experiences that Matt just mentioned. That can never be overlooked.

Probably taking some share for those reasons. I do think even though the jobs haven't been great to your point sort of breaking into the economist here. Um, the, the the news cycle around the layoffs is not also as bad as it sounds, I mean, the, the big news, but but it's been steady. The job Market's been steady. Discretionary income is up slightly. And, uh, it's it's up a bit more than we're taking price. So from a wallet perspective, I think there's that I think also, you know the lastly, what we've ascribed to here, and I I just read about this today in the, in the journal where people's wallets are going is for experiences, not for Just Goods and we're experiential dining and so it's not so much transactional. So I think we're all all of those reasons Jim, this is David Gordon, I just had 1 more piece and that would be the continued retention. We see in the restaurants that they hourly staff and management level quarter after quarter after quarter, I think has allowed the operations team to ex

Execute as well as they ever have. And we continue to see that type of execution. We see it in the results of our Net Promoter Scores continuing to be positive. Um, and that just has a flywheel effect of guests wanting to come back and having those types of experiences that Matt just mentioned, so it can never be overlooked.

Jim Salera: Great. Well, I appreciate the detailed thoughts. I'll hop back in the queue.

Great. Well I appreciate the the detailed thoughts. I'll hop back in the queue.

Operator: Your next question comes to the line of Jeffrey Bernstein with Barclays. Your line is open.

Your next question.

Jeff Bernstein with Barclays. Your line is open.

Pratik: Hi. Good afternoon. This is Pratik on for Jeff. Just a quick housekeeping question. Can we also have the components of the comp for North Italia, please? I have a real question.

[Analyst] (Barclays): Hi. Good afternoon. This is Pratik on for Jeff. Just a quick housekeeping question. Can we also have the components of the comp for North Italia, please? I have a real question.

Hi, good afternoon. This is product on for Jeff.

Um, just a quick housekeeping question. Can we also have the components of the comp for North Italia, please?

Etienne Marcus: Yeah. This is Etienne. Happy to provide that for the components. Mix was +1% for the quarter. Price was about 3%. That came down a little bit. Traffic was -6%.

And then I have a real question.

Yeah this is etn happy to provide that for the uh the components. So mix was positive. 1% for the quarter price was about 3% that came down a little bit and then traffic was negative 6%.

Pratik: Thank you for that. I appreciate it. My bigger picture question was, I appreciate that your brands skew to relatively higher income consumers, you know, with elevated gas prices, inflation north of 3%, the ongoing stock market volatility, it just seems like everyone is frustrated these days to some degree. I was just wondering if you're seeing any trade down from fine dining and other higher-end casual dining customers into your brands. Do you currently think you're capitalizing on that, or is there an opportunity to capitalize that on that frustration? Secondly, in terms of whatever read you have on your own customers, do you see any check management in terms of alcohol, appetizers, or add-ons? Thanks.

[Analyst] (Barclays): Thank you for that. I appreciate it. My bigger picture question was, I appreciate that your brands skew to relatively higher income consumers, you know, with elevated gas prices, inflation north of 3%, the ongoing stock market volatility, it just seems like everyone is frustrated these days to some degree. I was just wondering if you're seeing any trade down from fine dining and other higher-end casual dining customers into your brands. Do you currently think you're capitalizing on that, or is there an opportunity to capitalize that on that frustration? Secondly, in terms of whatever read you have on your own customers, do you see any check management in terms of alcohol, appetizers, or add-ons? Thanks.

Thank you for that. I appreciate it. And then my bigger-picture question was, um, I appreciate that your brand skews to relatively higher-income consumers. But, you know, with elevated gas prices, inflation north of 3%, and the ongoing stock market volatility, it just seems like everyone is frustrated these days to some degree.

So I was just wondering if you're seeing any trade down from fine dining and other higher-end. Casual dining uh, customers into your Brands. Um do you currently think you're capitalizing on that or is there an opportunity to capitalize that on that frustration and secondly, in terms of whatever read you have on your own customers?

David Gordon: Sure. This is David Gordon. A couple things. I think that the incident rates and the add-ons have remained incredibly consistent. As Matt touched on earlier, some of the early check management that maybe people were anticipating with the Bites, really, we didn't see. We saw people attaching Bites along with the rest of their meal at The Cheesecake Factory. As far as the high-end consumer and white tablecloth, I would say actually if you look at Flower Child, I think maybe Flower Child is taking market share from QSR or maybe from some of the folks in fast casual that have had to take much more price to protect margins over time, and Flower Child has not had to do that and has an elevated experience.

Do you see any check management uh in terms of alcohol? Appetizers or add-ons? Thanks.

David Gordon: Along with that elevated experience and the quality of the food and the menu innovation, and the ongoing LTOs, I think we are taking market share maybe from that consumer that feels pinched, whether that's is your typical fast casual or a QSR. I think that's benefited Flower Child.

Or maybe from some of the folks in fast casual that have had to take much more price to protect margins over time. And Flower Child has not had to do that and has an elevated experience. Um, and so, along with that elevated experience and the quality of the food and the menu innovation, uh, and the ongoing LTO, um, I think we are taking market share, maybe from that consumer that feels pinched. Um, whether that's at your typical fast casual or a QSR.

I think that's benefited flower job.

Pratik: Thank you very much.

[Analyst] (Barclays): Thank you very much.

Thank you very much.

Operator: Your next question comes to the line of Samantha Chang with Goldman Sachs. Your line is open.

Samantha Chang: Hi. This is Samantha on for Christine Cho. Thanks for taking my question. Congrats on the strong results. With the new Cheesecake mobile app launched earlier this month, I know you mentioned that early guest feedback has been positive so far. Could you touch on any additional early observations that you have from the app rollout regarding member engagement and frequency? How do you expect personalized marketing to evolve following this launch?

Samantha Chiang: Hi. This is Samantha on for Christine Cho. Thanks for taking my question. Congrats on the strong results. With the new Cheesecake mobile app launched earlier this month, I know you mentioned that early guest feedback has been positive so far. Could you touch on any additional early observations that you have from the app rollout regarding member engagement and frequency? How do you expect personalized marketing to evolve following this launch?

Your next question comes from the line of Samantha Chang with Goldman Sachs your line is open.

David Gordon: Sure, Samantha. This is David again. We still haven't discussed any actual numbers around the rewards program, and I would anticipate, you should anticipate we won't be doing that either when it comes to the amount of downloads or members that have joined since they've downloaded the app. What I will say is that we are very pleased with the amount of downloads that we've seen thus far. We're also very pleased with the amount of sign-ins that we've seen after downloading because downloading is one thing, but then engaging with the app is something else.

Hi. This is Samantha on for Christine Cho. Thanks for taking my uh question and congrats on the strong results. Um with the new cheesecake mobile app launched earlier this month, I know you mentioned that really gets feedback has been positive so far. Uh, could you touch on any additional or early observations that you have from the from the app roll out regarding member engagement and frequency? And how do you expect personalized marketing to solve following this launch?

David Gordon: We're happy with the amount of folks that have enabled locations and allowed notifications because those are ways that we can engage with them on a one-on-one personalized relationship, get the best ROI out of them, try and drive the incrementality that we've talked about historically, and continue to gather data to make sure that the marketing spend is getting us the best ROI in the long run. We're super happy with the launch early on. I think as I stated that in the, in the opening prepared remarks around the amount of engagement in the App Store and the Google Play store right in the beginning, was very, very high, and that's very promising to see and continues week after week to be significant.

Sure, Samantha. This is David again. Um, we still haven't discussed any actual numbers around, um, the rewards program and I would anticipate, you should anticipate. We won't be doing, uh, that either when it comes to the amount of downloads or, um, members that have joined since they've downloaded the app. What I will say is that, we are very pleased with the amount of downloads that we've seen thus far. We're also very pleased with the amount of sign-ins that we've seen after downloading, because downloading is 1 thing, but then engaging with the app is something else. Um, and we're happy with the amount of folks that have enabled locations and allowed notifications, because those are ways that we can engage with them on a 1-on-1 personalized relationship. Get the best Roi out of them. Uh, try and drive the incrementality that we've talked about historically, and continue to gather data to make sure that, uh, the marketing spend is getting us, you know, the best Roi in the long run. So we're

Matthew Clark: Samantha, this is Matt. Just one thing qualitatively. I've been really pleased with the number of new guests that we're getting for the sign-up. Clearly, we're opening the funnel to attract incremental traffic, and it's not just about engaging with our current Cheesecake Rewards members, but making sure we're actually growing the total base.

We're super happy with the launch early on. Um, I think as I stated that in the, in the opening prepared, remarks around the amount of Engagement in the App Store and the Google Play Store right in the beginning, um, was very, very high and that that's very promising to see and continues week after week to be significant.

Pennsylvania. This is Matt. Just 1 thing qualitatively. I've been really pleased with the number of new guests that were getting for the sign up. So clearly we're we're opening the funnel to attract incremental traffic and and it's not just about engaging with our current rewards members, but making sure we're actually growing the total base

Samantha Chang: Great. That's helpful. Thank you.

Samantha Chiang: Great. That's helpful. Thank you.

Great, that's helpful. Thank you.

Operator: Your next question comes to the line of John Ivankoe with JPMorgan. Your line is open.

Your next question comes to the line of John Ivan Co with JP Morgan. Your line is open

Crystal: Hi, this is Crystal on for John. The 10% comp's really strong against a category that came in roughly at flat in the same quarter. Most of the discussion around unit growth, you said it has been dependent on your management pipeline, whether that's your general manager and your executive chef. I was wondering where are you on that, especially as the category is growing really fast compared to other segments in the restaurant.

[Analyst] (JPMorgan): Hi, this is Crystal on for John. The 10% comp's really strong against a category that came in roughly at flat in the same quarter. Most of the discussion around unit growth, you said it has been dependent on your management pipeline, whether that's your general manager and your executive chef. I was wondering where are you on that, especially as the category is growing really fast compared to other segments in the restaurant.

Hi. This is Crystal on for John. Um, my first question is on a flower child, so, the 10% comps really strong against the category that came in, roughly a flat and the same quarter, um, and most of

Of the discussion around unit growth. You said it, has been

David Gordon: Hi, Crystal, this is David. Great question. We have said that in the past that we still believe that being able to grow at the pace we want is gonna require the right type of general manager and executive chef. We still believe that. We're pleased to see continued retention benefits at Flower Child because that's a key component of career growth and enabling people to be able to grow their careers within the concept to reach that general manager and executive chef level. We feel confident in our current growth trajectory that we have the pipeline in place to meet those expectations. That team is very focused.

Dependent on your management pipeline, whether—let's say—general manager and your executive chef. I was wondering, where are you on that? Especially as the category is growing really fast compared to other segments in the restaurant.

Being able to grow at the pace. We want is going to require the right type of general manager and executive chef. We, we still believe that we're pleased to see, continued, retention benefits flower shows, because that's a, a key component of career growth. And enabling people to be able to

David Gordon: If we decided we wanted to ramp up just a little bit from where we are today, they remain focused in the most important areas to enable the growth in that talent level, to have the general managers and executive chefs in place, in time for that growth.

To grow their careers within the concept to reach that general manager and executive chef level. Uh, and we feel confident in our current growth trajectory that we have the pipeline in place to meet those expectations. Um, and that team is very, very focused. If we decided we wanted to ramp up, just a little bit from where we are today. They remain focused in the most important areas to enable the growth in that Talent level uh to have the general managers and executive chefs in place uh in time for that growth.

Crystal: All right. Thank you. On second one is on North Italia. Looking at numbers, it looks like new unit volumes came down a little bit in Q1. I was just wondering how new units are opening up and if you could give a little bit more detail.

[Analyst] (JPMorgan): All right. Thank you. On second one is on North Italia. Looking at numbers, it looks like new unit volumes came down a little bit in Q1. I was just wondering how new units are opening up and if you could give a little bit more detail.

David Gordon: Sure. We've opened up two new restaurants here recently. Actually, we just finished our first full week at our new Brea location in Southern California. It's the busiest opening week in the history of North Italia for any individual location. Very well, very well received in an existing market. In a new market in Northern California, roughly about a month ago, that would have been our busiest opening if we hadn't just opened in Brea. New markets have been very, very well received. We'll continue down the path this year of about 50% new to existing markets, we're pleased with the early results.

Oh, thank you and on. Second 1 is on North Italia. Um looking at numbers it looks like new unit volumes came down a little bit in the first quarter. I was just wondering how new units are opening up and if you can give a little bit more detail

Sure. Um,

Opened up.

2, new restaurants uh here recently actually

Being weak and the history of North Italia for any individual location. So, very, very, very well received in an existing market. And then in a new market in Northern California, uh, roughly about a month ago—that would have been our busiest opening if we hadn't just opened in Brea. So, new markets have been very, very well received. Um, we'll continue down the path this year of about 50% new to existing markets. Um, and we're pleased with the early results.

Crystal: Thank you.

[Analyst] (JPMorgan): Thank you.

Thank you.

Operator: Your next question comes from the line of Jim Sanderson with Northcoast Research. Your line is open.

Jim Sanderson: Hey, thanks for the question and congratulations on a great quarter. Wondering if you could talk a little bit more about store margin at North Italia? That was a bit lower than expected, and what the unlocks or remedies are to get that back up to the double-digit teens?

Your next question, coming from the line of Jim Sanderson with North Coast Research. Your line is open.

Hey thanks for the question and congratulations on a great quarter wondering. If you could talk a little bit more about store margin at North Italia, that was a bit lower than expected than what the unlocks are remedies, are to get that back up to the Double Digit teams.

Matthew Clark: Sure, Jim, this is Matt. I think a couple of things. You know, there's certainly a little bit of pressure there from the comp and some deleverage on more of the fixed cost piece. I think it's also about making sure that we're investing the right amounts in labor, as well as having, as David talked about on the prepared remarks, you know, the right menu offerings at thoughtful prices. There's also a little bit of the mix of mature. Right every year, the different sort of group comes into the mature margin set, and this happened to have a couple of higher margin or higher cost market in that. If, you know, more on a comp basis, it didn't move quite as much, so it's a little bit of its optics.

Sure. Again, this is Matt, I think a couple of things. You know, there are certainly a little bit of pressure there from the comp and some some de-lever are more of the fixed cost piece. I think it's also about making sure that we're investing the right amounts in in labor, as well. As having as David talked about on the prepared remarks that, you know, the right menu offerings are thoughtful prices. There's also a little bit of the mix of mature. So right every year, the the different sort of group comes into the mature margin set and this happened to have

Matthew Clark: I think the most important thing, though, is to continue to focus, as David said, on positive comp store sales, right? That's really the primary attribute to recapturing the margin piece. Overall, we feel very confident that the mature margins should be in that 16% to 18% range on an ongoing basis that we've talked about, and we're obviously, you know, very close to striking distance on that. It's not a big movement from our range, and some of it's just the moving pieces that happen to be in Q1, but certainly, a lot of focus on recovering that.

Jim Sanderson: Just a follow-up to that. How would leaning into lunch impact the store margin just in general?

A couple of higher margin or higher cost Market, uh, in in that. So if you know more on a comp basis, it didn't move quite as much. So it's a little bit of its Optics. I think the most important thing, though, is to continue to focus as David said, on positive, consort sales, right? That's really the primary attribute to recapturing the margin piece overall. We feel very confident that the mature margins should be in that 16 to 18% range on a, on an ongoing basis that we've talked about and we're, we're obviously, you know, very close to Striking Distance on that. So it's not a big movement from our range and some of it's just the moving pieces that happen to be in q1. But certainly a lot of focus on recovering that

Just to follow up to that. How would, uh, leaning into launch?

Uh, impact the store margin. Uh,

Just in general.

Matthew Clark: It's really about aggregate traffic. I think from a lunch perspective, the incrementality and recapturing that traffic there, the flow through, obviously we have the teams there, right? There's a staffing level that's already set, you're able to recapture margins at a higher rate than what the average is.

Jim Sanderson: Hmm.

Matthew Clark: I think that's the key, right? That's why ultimately we believe that's the biggest lever on the margin side of things, is to bring in more people when we have capacity.

It's really about aggregate traffic. I think from a lunch perspective, the incrementality and recapturing that traffic there, the flow through obviously. We have the teams there, right? There's a, there's a, a staffing level that's already set. And so you're able to recapture margins at a higher rate than what the average is, and I think that's the key, right? That's why ultimately, we believe that's the biggest lever on,

Jim Sanderson: All right. Just last question from me. Just stepping back, how should we look at the ability for you to consistently expand consolidated store margin over time? I think it's pretty much flattish with prior years, the trend that we're seeing right now, on an annualized basis. The formula to get back to modest expansion.

Inside of things is to bring in more people when we have capacity.

Matthew Clark: Sure. Our full year guidance still calls for about 25 basis points of wall margin expansion in totality. Certainly, every quarter is gonna have a little bit of ups and downs, depending on, as we noted, group medical or one of the things that we saw in Q1 was that produce prices were higher just because of weather conditions, right? Our outlook for the year remains unchanged because a lot of that just is timing that was already anticipated by us and built into our expectations for the quarter. We feel very confident that 25 basis points a year is still attainable across the portfolio, and that's our plan for this year. That would put us north of the 16% kind of range, and that is inclusive of the growth of adding, you know, 26 new restaurants.

All right, this last question for me—just stepping back. How should we look at the ability for you to consistently expand consolidated store margin over time? I think it's pretty much flattish with prior years, the trend we're seeing right now on an annualized basis. So, the formula to get back to modest expansion—

Matthew Clark: I would say that's still our target and still very viable, and that's our plan so far.

Jim Sanderson: All right. Thank you very much.

Sure, our our full year guidance, still calls for about 25 basis, points of 4 wall margin expansion and totality certainly every quarter is going to have a little bit of of ups and downs. Depending on as we noted Group Medical or or 1 of the things that we saw in the first quarter was the produce prices were higher just because of weather conditions, right? But our outlook for the year remains unchanged because a lot of that just is timing that was already anticipated by us and built into our expectations for the quarter. So we feel very confident that 25 basis points a year is still attainable across the portfolio and that's our plan for for this year that would put us north of the 16% kind of range and that is inclusive of the growth of of adding, you know, 26 new restaurants. So, I would say that's still our Target and still very viable and, uh, that's our plan so far.

All right. Thank you very much.

Operator: Your next question comes from the line of Jon Tower with Citi. Your line is open.

Your next question comes from the line of John Tower with Citi. Your line is open.

Karen Holthouse: Hi, this is Karen Holthouse on for Jon Tower this evening. Yeah, anecdotally, it seems that there's more social content coming out. It's, I think, showing up in, at least within our team, we've talked about it, our feeds, more often, and I think just content that's more engaging. Could you maybe comment on anything you're doing differently on your end, how you're measuring engagement in that channel? You know, how meaningful that, you know, you think that can be as a part of a go-forward marketing strategy? Thanks.

David Gordon: Sure, Karen. This is David. You know, we have a pretty strong social presence across Instagram. We just, you know, I'd say in the past 6 months, dipped our toe in the water on TikTok here and there, using influencers, paid and non-paid. I'd say for Cheesecake Factory, one of the most beneficial aspects of the concept is all the PR that we get on a regular basis, whether that's through not through paid media, but just through culture and showing up on late-night TV, et cetera. We have many different tactics across all social media platforms that we're using on a regular basis and try and take a real multi-channel approach. We'll continue to do that.

Sure, Karen. This is David, um, you know, we have a pretty strong, social presence, across Instagram. Um, we just you know, I'd say in the past 6 months, uh dip our toe, in the water on Tik Tok here and there using influencers paid and non-paid. Um, I'd say for Cheesecake Factory, 1 of the most beneficial aspects of the concept is all the pr that we get on a regular basis whether that's um through not, not through paid media, right? But just through um, culture and uh, showing up on late night TV Etc. But we have many different tactics across all social media platforms. That that we're using on a regular basis and try and take a real multi-channel approach. Um, and we'll continue to do that.

Karen Holthouse: A quick second one. You know, I think The Cheesecake Factory is probably one of the really, like, primarily US-based brands that has a pretty big brand recognition. As you move around the world, you know, the iconicness of the concept, there's a theory just The Big Bang Theory is a reason it's popular. Are you building anything explicit into your Q2 or annual outlook for potential benefit around World Cup and the associated tourism?

Then a quick, uh, a quick second 1, you know, I think Cheesecake Factory is probably 1 of the really, like, primarily us-based brands that has a pretty pretty big brand recognition. Um, as you move around the world, you know, I the iconic. This is the concept. There's the theory, just the Big Bang. Theory is the reason it's popular. Um, are you building any anything? Explicit into your second quarter or annual outlook for a potential benefit around World Cup and the associated tourism?

Matthew Clark: Hey, Karen, this is Matt. No, you know, I think that would be nice upside. I do think you're right. We do have great worldwide recognition, and we do hear that. You're also right about The Big Bang Theory, which is, you know, kind of funny but true. I think that, you know, the World Cup could be a benefit. I think if that happens, then we'll all be pleasantly surprised to the upside though.

Hey, this is Matt. Um, no, you know, I think that that would be, that would be nice upside. I do think you're right. Uh, we we do have great, worldwide recognition and we we do hear that and and you're also right about the Big Bang Theory, uh, which is, you know, kind of funny but true. Uh, but I think that, you know, the World Cup could be a benefit. I think we'll we'll if that happens, then we'll all be pleasantly surprised to the upside down.

Karen Holthouse: All right. Great. I'll pass it from here.

All right, great. I'll pass it from there.

Operator: Your next question comes from Kelly Merrill with Morgan Stanley. Your line is open.

Kelly Merrill: Hey, this is Kelly on for Brian. Thank you for taking our question. Just wanted to ask, do you have any plans to iterate on Bowls & Bites just as smaller portions become more popular among consumers? Can you remind us, is that menu going to be refreshed a few times a year like the core menu? Thank you.

Your next question comes from Kelly Merrill with Morgan Stanley. Your line is open.

David Gordon: Certainly, menu innovation is gonna remain core to everything that we do. I think you can expect in our next menu change that we'll be refreshing some new Bowls & Bites, and there'll be some new opportunities for guests to enjoy some new flavor profiles and some new interesting, innovative menu items, whether that's on the Bowls & Bites menu or on the main menu and in Bowls & Bites. Our plan is to continue to make sure we have as much variety on the menu as possible. That's across every type of cuisine and every type of price point that we can offer for guests to give them the most value in any way they choose to use Cheesecake Factory.

Hey, this is Kelly on for Brian. Thank you for taking our question. Um, just wanted to ask do you have any plans to iterate on Bowles and bites? Just as smaller portions become more popular among consumers and can you remind us? Is that menu going to be refreshed a few times a year? Like the core menu? Thank you.

Certainly menu innovation.

Is going to remain.

Our next menu change that we'll be refreshing some new bowls and bites and there'll be some new opportunities for guests to enjoy some new flavor profiles and some new interesting Innovative menu items, um, whether that's on the bosom byes menu or on the main menu and, and Bs and byes. So, um, our plan is to continue to make sure we have as much variety on the menu as possible. That's across every type of Cuisine and every type of price point uh, that we can offer for

Guests to give them the most value in any way they choose to use Cheesecake Factory.

Kelly Merrill: Thank you.

Thank you.

Operator: Your last question comes from Sara Senatore with Bank of America. Your line is open.

Sara Senatore: Oh, thank you. I just, I guess I wanted one last question on North Italia. I apologize if you've touched on this earlier. I guess AUVs are down a little bit year over year, you know, perhaps more than the same-store sales. I think one of the things that you've, or maybe two things you've talked about in the past are cannibalization on the one hand and on the other hand, you know, awareness. You know, maybe a longer ramp when awareness is low, but also last year you had, you know, perhaps more of a cannibalization impact because of where you were building those restaurants. I guess, you know, as I look out this year, is cannibalization still a factor for North Italia?

Your last question comes from Sarah Senator with Bank of America, your line is open.

Sara Senatore: Also, I guess conversely, are you opening in more new markets and is that part of why the AUV might come down? Just some insights into the development strategy.

David Gordon: Sure. That's a great question. Thanks, Sara. I think the mix for this year is about 50/50 new and existing markets. We did call out cannibalization last year, and we still have some of that lingering in some of those markets as well. As far as the new markets, as I said earlier, we opened in Northern California, very strong opening there. But we would expect what traditionally does happen at North Italia is if there's a much longer expecting that we're gonna open up at the volumes of the last 2, but that we will open up a little shy of what our targets are and grow into those over time. That's our own internal expectation. If we exceed that expectation, we're pleasantly surprised, and that creates a little bit of cannibalization in the short term.

Oh, thank you. Uh, I just, I guess I wanted 1 last question on North Italia. I apologize if you've touched on this earlier, um, but I guess auvs, uh, are down a little bit year-over-year. Um, you know, perhaps more than the same store sales, I think, 1 of the things that you've maybe 2 things you've talked about in the past are um, cannibalization on the 1 hand and on the other hand, um, you know, awareness. So you know, maybe a longer ramp and awareness is low. But also last year you had, you know, perhaps more of a canalization impact because of where you were building. Um, those restaurants, I guess, you know, as I look at out this year is canalization still a factor in for North Italian and also I guess conversely. Are you opening in more new markets and is that part of why the auv might come down? Just so just some insights into the um, development strategy.

Sure, that's a great question. Thanks Sarah. Um, I think the mix for this year is about 5050, new and existing markets. Um we did call out cannibalization um last year and we still have some of that lingering and and some of those markets as well as far as the new markets. Uh, so I I said earlier, we opened in Northern California. Very strong opening there. Um, but we would expect what traditionally does happen in North is. If there's a much longer.

Expecting that we're going to open up at the volume of the last two, but that we will open up a little shy of what our targets are and grow into those over time.

David Gordon: We're okay with that as well.

And that's our own internal expectation. If we exceed that expectation, we're pleasantly surprised. And that creates a little bit of cannibalization, um, in the short term. We're okay with that as well.

[Analyst]: Thank you.

Sara Senatore: Thank you.

Thank you.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect

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