Q2 2026 Cheesecake Factory Inc Earnings Call

July 28, 2026

Operator: 2 of 2026. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Etienne Marcus, VP of Finance and Investor Relations. Etienne, please go ahead.

Speaker #1: Of 2026. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. I will now hand the conference over to Etienne Marcus, VP of Finance and Investor Relations, Etienne, please go ahead.

Speaker #2: Good afternoon, and 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.

Etienne Marcus: Good afternoon, and welcome to our Q2 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, and the company undertakes no duty to update any forward-looking statements.

Speaker #2: 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.

Speaker #1: Hello everyone. Thank you for joining us, and welcome to the Cheesecake Factory Incorporated earnings call for Q2 of 2026. After today's prepared remarks, we will host a question-and-answer session.

Speaker #2: 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.

Etienne Marcus: 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, and the company undertakes no duty to update any forward-looking statements.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Etienne Marcus, VP of Finance and Investor Relations.

Speaker #2: All forward-looking statements made on this call speak only as of today's date in 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.

Speaker #1: Etienne, please go ahead.

Etienne Marcus: In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude acquisition-related items, impairment of assets, and lease termination expenses and other items. Explanations of the use of our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in a 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 Q2 financial results and provide commentary on our financial outlook. We are opening the call up to questions. With that, I will turn the call over to David Overton.

Speaker #2: Which exclude 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 a press release on our website as previously described.

Speaker #2: Before we begin, let me call out that 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.

Speaker #2: David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our second quarter financial results and provide commentary on our financial outlook.

Speaker #2: We're opening the call up to questions. With that, I'll turn the call over to David Overton.

Speaker #3: 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, and adjusted diluted earnings per share increased 24% year over year.

David Overton: Thank you, Etienne. We delivered an outstanding Q2 with revenue, margins, and earnings all exceeding our expectations. Quarterly revenue surpassed $1 billion for the first time, and 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, and 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.

Speaker #2: All forward-looking statements made on this call speak only as of today's date and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude acquisition-related items, impairment of assets, and lease termination expenses, and other items.

Speaker #3: 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.

Speaker #2: Explanations of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in a press release on our website, as previously described.

Speaker #3: As a result, traffic trends improved and 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.

David Overton: As a result, traffic trends improved, and 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.

Speaker #2: With that, I'll turn the call over to David Overton.

Speaker #3: 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, and adjusted diluted earnings per share increased 24% year over year.

Speaker #3: 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.

Speaker #3: Our new offerings highlight the breadth and relevance of our menu, helping to drive frequency, attract new guests, and reinforce value through innovation rather than discounting, later this week we will celebrate National Cheesecake Day with the debut of our Brownie Crunch Chocolat Cheesecake.

David Overton: Our new offerings highlight the breadth and relevance of our menu, helping to drive frequency, attract new guests, and 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 are especially excited about this year's flavor and believe it will resonate well with our guests. Turning to development, we opened 4 restaurants during Q2, including 2 North Italia locations, a Flower Child, and a Henry's. Subsequent to quarter end, we opened 1 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 enter the H2 of the year from a position of strength.

Speaker #3: Our performance delivered 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 and we captured market share.

Speaker #3: We are 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 Henry.

Speaker #3: 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 the highest level in a decade.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: In summary, we delivered a record-setting quarter and entered the second half of the year from a position of strength. Our success remains rooted in the fundamentals that have defined us for decades, exceptional hospitality, high-quality food, and memorable dining experiences.

David Overton: 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.

Speaker #3: 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.

Speaker #3: With that, I will now hand the call over to David Gordon to provide an operational update.

Speaker #2: Thank you, David. As David highlighted, 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.

David Gordon: Thank you, David. As David highlighted, Cheesecake Factory delivered positive traffic in Q2, 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 3 key areas. First, best-in-class operational execution and industry-leading retention. Second, ongoing menu innovation. And third, the continued growth and evolution of our Cheesecake Rewards program. Since launching 3 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.

Speaker #2: 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; and third, the continued growth and evolution of our Cheesecake Rewards program.

Speaker #3: With that, I will now hand the call over to David Gordon to provide an operational update.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Starting with operations, 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.

Etienne Marcus: Starting with operations, 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.

David Gordon: Starting with operations, 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.

Speaker #2: Industry-leading retention among both our management and our lead teams creates greater consistency in our restaurants, and helps us deliver a high-quality experience for our guests.

David Gordon: 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. Next, 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. Moving on to Cheesecake Rewards, we are extremely pleased with the successful launch and early performance of the app.

Speaker #2: 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.

Speaker #2: Next, 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.

Speaker #2: Starting with operations, 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.

Speaker #2: 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.

Speaker #2: Industry-leading retention among both our management and lead teams creates greater consistency in our restaurants and helps us deliver a high-quality experience for our guests.

Speaker #2: Moving on to 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.

David Gordon: 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. 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.

Speaker #2: 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.

Speaker #2: Next, 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.

Speaker #2: 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.

Speaker #2: This coordinated approach across marketing, operations, and technology helps strengthen guest engagement and brand visibility, y, 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.

Speaker #2: I'll now turn to performance of our other concepts. North Italia's second quarter annualized AUVs totaled 7.9 million dollars, and comparable sales declined 3%. We continue to see healthy demand in new restaurants, with both locations open during the quarter generating average weekly sales well above 200,000 dollars.

David Gordon: I will now turn to performance of our other concepts. North Italia's Q2 annualized AUVs totaled $7.9 million, and comparable sales declined 3%. We continued to see healthy demand at new restaurants, with both locations open during the quarter, generating average weekly sales well above $200,000. Through the H1 of the year, retention has improved among both management and hourly teams. Against a competitive industry backdrop, we are 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.

Speaker #2: Through the first half of the year, retention has improved among both management and our lead teams. Against a 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.

Speaker #2: 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 positions us well to sustain momentum and deliver long-term profitable growth.

Speaker #2: These include more value-oriented menu offerings and accessible price points, such as lower-priced pasta options among specials to enhance affordability and strengthen guest perception of value.

Speaker #2: 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 in new restaurants, with both locations open during the quarter generating average weekly sales well above $200,000.

Speaker #2: 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.

David Gordon: 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 H2 of the year. While 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. 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. Q2 comparable sales increased 13%, for a 2-year comp sales increase of 17%. This sales performance translated to annualized AUVs of $5.3 million.

Speaker #2: We plan to test these initiatives during the second half of the year. While 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.

Speaker #2: Our focus is on strengthening the brand for durable, long-term growth. Restaurant-level profit margin for the adjusted mature North Italia locations was 15.6% for the quarter, versus 18.2% for the prior year.

Speaker #2: 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.

Speaker #2: 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 dollars.

Speaker #2: We plan to test these initiatives during the second half of the year. While 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.

Speaker #2: 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.

David Gordon: 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. Combined with disciplined execution in our restaurants, these attributes are driving repeat visits, traffic growth, and impressive sales results. We are 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.

Speaker #2: Our focus is on strengthening the brand for a durable, long-term growth. Restaurant-level profit margin for the adjusted mature North Italian locations was 15.6% for the quarter, versus 18.2% for the prior year.

Speaker #2: It's made from scratch menu, as both health-forward and craveable, with a broad range of offerings at accessible price points. Complimented by thoughtfully designed restaurants, that provide a more elevated experience than traditional fast casual.

Speaker #2: 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%.

Speaker #2: Combined with discipline execution in our restaurants, these attributes are driving repeat visits, traffic growth, and impressive sales results. We're continuing to build on the concepts talent pipeline and operating capabilities while leveraging the Cheesecake Factory's scale, systems, and expertise to support its expansion.

Speaker #2: 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.

Speaker #2: We remain very excited about the opportunity ahead and Flower Child's potential for meaningful, long-term growth. And 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 dollars for the first six weeks, for an annualized AUV of over 10 million dollars.

David Gordon: Lastly, we opened another location of The Henry in Wilmette, a suburb of Chicago, to solid demand, with average weekly sales trending at $200,000 for the first 6 weeks, for an annualized AUV of over $10 million. With that, let me turn the call over to Matt for our financial review.

Speaker #2: 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.

Speaker #2: And with that, let me turn the call over to Matt for our financial review.

Speaker #2: Complemented by thoughtfully designed restaurants that provide a more elevated experience than traditional fast-casual. Combined with disciplined execution in our restaurants, these attributes are driving repeat visits, traffic growth, and impressive sales results.

Speaker #3: 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 dollars.

Matt Clark: Thank you, David. Let me first provide a high-level recap of our Q2 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 also 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. Now, turning to some more specific details around the quarter. Q2 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.

Speaker #2: We're continuing to build on the concepts of talent pipeline and operating capabilities, while leveraging The Cheesecake Factory's scale, systems, and expertise to support its expansion.

Speaker #3: 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 dollar and 44 cents.

Speaker #2: We remain very excited about the opportunity ahead and Flower Child's potential for meaningful, long-term growth. And lastly, we opened another location at the Henry in Wilmette, a suburb of Chicago, to solve a demand with average weekly sales trending at 200,000 dollars for the first six weeks, for an annualized AUV of over 10 million.

Speaker #3: Both finishing well above our expectations. And we returned 25 million dollars to our shareholders, in the form of dividends and stock repurchases. We also generated record quarterly net income of 68 million dollars, up 25% year over year.

Speaker #2: And with that, let me turn the call over to Matt for our financial review.

Speaker #3: And record adjusted EBITDA of 118 million dollars, up 18%, underscoring the strength of our earnings performance. Now turning to some more specific details around the quarter.

Speaker #3: 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.

Speaker #3: Second quarter total sales at the Cheesecake Factory restaurants were 729.5 million dollars. Up 7% from the prior year. Total sales for North Italia were 98.4 million dollars, up 8% from the prior year period.

Speaker #3: 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.

Speaker #3: Other FRC sales totaled 104 million dollars, up 15% from the prior year. And sales per operating week were 142,100 dollars. Flower Child sales totaled 56.6 million dollars, up 18% from the prior year.

Matt Clark: 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. Now, 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.

Speaker #3: And we returned 25 million dollars to our shareholders, in the form of dividends and stock repurchases. We also generated record quarterly net income of 68 million dollars, up 25% year over year.

Speaker #3: And record adjusted EBITDA of 118 million dollars, up 18%, underscoring the strength of our earnings performance. Now turning to some more specific details around the quarter.

Speaker #3: And sales per operating week were 101,300 dollars. And external bakery sales were 15.4 million dollars. Now 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: Other FRC sales totaled $104 million, up 15% from the prior year. Sales per operating week were $142,100. Flower Child sales totaled $56.6 million, up 18% from the prior year.

Speaker #3: 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.

Speaker #3: And sales per operating week were $101,300. External bakery sales were $15.4 million. Now, 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.

Speaker #3: Pre-opening costs were 7 million dollars in the quarter, compared to 9 million dollars in the prior year period. We opened four restaurants during the second quarter versus eight restaurants in the second quarter of 2025.

Matt Clark: Pre-opening costs were $7 million in the quarter, compared to $9 million in the prior year period. We opened 4 restaurants during Q2 versus 8 restaurants in Q2 2025. In Q2, we recorded a pre-tax net expense of $1.4 million, primarily related to FRC acquisition related expenses. Q2 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.

Speaker #3: And in the second quarter, we recorded a pre-tax net expense of 1.4 million dollars, primarily related to FRC acquisition-related expenses. Second quarter gap diluted net income per share was 1 dollar and 41 cents.

Speaker #3: Adjusted diluted net income per share was 1 dollar and 44 cents. Now turning to our balance sheet and capital allocation. We ended the quarter with total available liquidity of 561.7 million dollars, including a cash balance of 195.2 million dollars, and 366.5 million dollars available on a revolving credit facility.

Speaker #3: 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.

Speaker #3: During the quarter, we repaid the remaining 69 million dollars principal amount on the convertible senior notes that were due in June 2026. As a result, our debt outstanding at quarter end consisted entirely of 575 million dollars principal amount of our 2% convertible senior notes due 2030.

Speaker #3: And 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.

Matt Clark: 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 Q2 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 and $990 million.

Speaker #3: 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.

Speaker #3: Capex totaled approximately 43 million dollars during the second quarter for new unit development and maintenance. During the quarter, we completed approximately 9.3 million dollars in share repurchases and returned 15.7 dividend.

Speaker #3: 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.

Speaker #3: During the quarter, we repaid the remaining $69 million principal amount on the convertible senior notes that were due in June 2026. As a result, our debt outstanding at quarter end consisted entirely of $575 million principal amount of our 2% convertible senior notes due 2030.

Speaker #3: 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.

Speaker #3: Specifically for Q3, we anticipate total revenues to be between 980 and 990 million dollars. Next, at this time, we expect effective commodity inflation of low single digits for Q3, as a broad market basket remains stable.

Speaker #3: 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.

Matt Clark: Next, at this time, we expect effective commodity inflation of low single digits for Q3 as our raw 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 and $64 million. Depreciation is estimated to be $29 million and pre-opening expenses to be $10 million to $11 million to support 6 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.

Speaker #3: 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.

Speaker #3: G&A is estimated to be between 63 and 64 million dollars. Depreciation is estimated to be 29 million dollars. And pre-opening expenses to be 10 million to 11 million dollars to support six openings in the quarter.

Speaker #3: Based on these assumptions, we would anticipate adjusted net income margin to be about 4.3% at the midpoint of the sales range provided. For modeling purposes, we are assuming a tax rate of approximately 13 to 14 percent, and weighted average diluted shares outstanding of approximately 3 to 4 percent higher than prior year.

Matt Clark: For modeling purposes, we are assuming a tax rate of approximately 13% to 14% and weighted average diluted shares outstanding of approximately 3% to 4% higher than prior year 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 to $36 million.

Speaker #3: We are modeling net total labor inflation in the low to mid single digits when factoring in the latest trends in wage rates, minimum wage increases, as well as other components of labor.

Speaker #3: 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 dollars at the midpoint of our estimates.

Speaker #3: G&A is estimated to be between $63 and $64 million. Depreciation is estimated to be $29 million. And pre-opening expenses are expected to be $10 million to $11 million to support six openings in the quarter.

Speaker #3: 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.

Speaker #3: We are estimating G&A to be about 6.4% of sales. Depreciation is expected to be about 116 million dollars for the year. And given our unit growth expectations, we are estimating pre-opening expenses to be approximately 35 million to 36 million dollars.

Speaker #3: 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 dollars at the midpoint of our estimates.

Speaker #3: 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.

Matt Clark: 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 Q4 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 Q3, with the remaining openings expected in the Q4. For the full year, this includes as many as five to six Cheesecake Factories, six to seven North Italia's, seven Flower Child's, and as many as seven FRC restaurants.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: 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.

Speaker #3: For the full year, this includes as many as five to six Cheesecake Factories, six to seven North Italias, seven Flower Childs, and as many as seven FRC restaurants.

Speaker #3: And we would anticipate approximately 210 million dollars in cash capex to support unit development, as well as a 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.

Matt Clark: 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 Q2 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 Cheesecake 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.

Speaker #3: 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.

Speaker #3: Exceptional execution continues to support high guest satisfaction while menu innovation and 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.

Speaker #3: For the full year, this includes as many as five to six Cheesecake Factories, six to seven North Italias, seven Flower Childs, and as many as seven FRC restaurants.

Speaker #3: And 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.

Speaker #3: These strengths continue to drive the sustained momentum we are seeing across the business. Our cash generation and healthy balance sheet provide the financial flexibility to continue investing in our business while returning capital to shareholders.

Matt Clark: 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.

Speaker #3: 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.

Speaker #3: 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'll take your questions.

Speaker #3: Exceptional execution continues to support high guest satisfaction, while menu innovation, 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.

Speaker #1: 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.

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.

Speaker #1: 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.

Speaker #1: 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 John Tower with City.

Speaker #3: 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'll take your questions.

Speaker #1: John, your line is open. Please go ahead.

Speaker #2: Great. Thanks for taking the question. I appreciate it. Maybe just a quick clarification and then a question. Matt, I think you had said it in the prepared remarks, the net interest margin target for the year was 5.4% on the midpoint of the range you discussed.

Jon Tower: Great. Thanks for taking the question. I appreciate it. Maybe just a quick clarification and then a question. Matt, I think you had said it 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%, so I just wanted to make sure that I heard you correctly with the 5.4.

Speaker #2: The slide deck that you guys published this afternoon, I think, was closer to 5%. So I just wanted to make sure that I heard you correctly.

Speaker #3: Yeah, John, we unfortunately caught that slide deck error and we'll repost it. 5.4%, just for everybody on the line, it is 5.4%.

Matt Clark: Yeah. John, we unfortunately caught that slide deck error, and we'll repost it. 5.4%, just for everybody online, it is 5.4%.

Speaker #1: To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: 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 John Tower with Citi.

Speaker #2: Okay. Great. Thanks. And maybe 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's a Cheesecake free slice of Cheesecake if you signed up.

Jon Tower: Okay, great. Thanks. Maybe, 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's 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.

Speaker #1: John, your line is open. Please go ahead.

Speaker #2: 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 that the net interest margin target for the year was 5.4% at the midpoint of the range you discussed.

Speaker #2: To the rewards program through the app early on versus you have quite a few other things going on in your business. And importantly, I'm also curious if you could speak to how 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.

Speaker #2: The slide deck that you guys published this afternoon, I think, was closer to 5%. So I just wanted to make sure that I heard you correctly.

Speaker #3: Yeah, John, we unfortunately caught that slide deck error and we'll repost it. 5.4%—just for everybody online, it is 5.4%.

Speaker #2: Okay, great, thanks. And obviously, it's great to see the Cheesecake Factory brand get back to positive traffic growth in the period. I'm curious, how much would you 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 redemption? I believe there’s a free slice of cheesecake if you sign up.

Speaker #3: Sure, John. 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.

David Gordon: Sure, John. 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 a 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. So 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 Cheesecake Factory.

Speaker #3: 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 a focus that I think our guests are appreciating.

Speaker #3: And that in combination with the strong industry leading retention our restaurants are as stable as ever. So 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 Cheesecake Factory.

Speaker #2: To the rewards program through the app early on, versus—you have quite a few other things going on in your business. And 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.

Speaker #3: 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.

David Gordon: Secondly, the culinary innovation that has 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, and I think we are seeing the benefits of that, and we will 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 it got us some terrific awareness. But 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 are in the restaurant or redeem much more easily.

Speaker #2: And maybe benchmarking that against the industry.

Speaker #3: Sure, John. This is David Gordon. Thanks for the question. I think that there are a few factors at play. One, I think we've had terrific momentum moving into the quarter.

Speaker #3: And I think we're seeing the benefits of that and we'll continue down that menu innovation path. And to your point on Cheesecake rewards, certainly there was a good amount of lift from the app launch.

Speaker #3: 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—continue to be a focus that I think our guests are appreciating.

Speaker #3: We did our best to launch that in a way that we thought was the most appropriate and we got us some terrific awareness. But ongoing, we continue to see terrific engagement from guests that have downloaded the app.

Speaker #3: And that, in combination with the strong, industry-leading retention, our restaurants are as stable as ever. So 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.

Speaker #3: And our 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.

Speaker #3: Secondly, the culinary innovation that’s happened over the past couple of quarters with the bites and the bowls has been very compelling, with great offerings for guests — from the flavor profiles to the price points.

Speaker #3: The seamless online ordering platform that is now built into the app has been greatly appreciated. So I think all of those elements are creating a bit of a flywheel and the teams executing well against that.

David Gordon: The seamless online ordering platform that is now built into the app has been greatly appreciated. So I think all of those elements are creating a bit of a flywheel, and the team is executing well against that. We definitely are seeing a pickup in younger guests in some of our own internal research that we have looked at. We know that younger guests are returning to malls. There has been a lot that has been written about that, and we are benefiting from that. I also think our engagement in our social channels has been very, 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, and that certainly is resonating. Those younger consumer guests are seeing that, and I think we are benefiting from that as well.

Speaker #3: And I think we're seeing the benefits of that, and we'll continue down that menu innovation path. And to your point on Cheesecake Rewards, certainly there was a good amount of lift from the app launch.

Speaker #3: 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.

Speaker #3: There's been a lot that's been written about that. And we're benefiting from that. But I also think our engagement and our social channels has been very, very strong.

Speaker #3: We did our best to launch that in a way that we thought was the most appropriate, and we got us some terrific awareness. But, ongoing, we continue to see terrific engagement from guests that have downloaded the app.

Speaker #3: And you may have seen some of the more recent activity over the past quarter some of that planned and some of that unplanned. And that certainly is resonating those younger consumer guests are seeing that.

Speaker #3: 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 and redeem much more easily.

Speaker #3: And I think we're benefiting from that as well.

Speaker #2: Great. Thanks. I'll follow up later. Appreciate it.

Jon Tower: Great. Thanks. I will follow up later. Appreciate it.

Speaker #3: The seamless online ordering platform that is now built into the app has been greatly appreciated. So I think all of those elements are creating a bit of a flywheel, and the team is executing well against that.

Speaker #1: Your next question comes from the line of Brian Vaccaro with Raymond James. Brian, your line is open. Please go ahead.

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

Speaker #4: Thanks very much. And good evening. And 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?

Brian Vaccaro: Thanks very much, and 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, but beyond just some quantification, could you provide a little more color on the levers that you are pulling in social media channels specifically and any metrics you can share around social media engagement, impressions, et cetera, to help us frame how much that could be up year-on-year?

Speaker #3: 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.

Speaker #3: There's been a lot that's been written about that, and we're benefiting from that. But I also think our engagement in our social channels has been very, very strong.

Speaker #4: And Matt, maybe you could give us the mix and price dynamics. But 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.

Speaker #3: And you may have seen some of the more recent activity over the past quarter—some of that planned and some of that unplanned. And that certainly is resonating; those younger consumer guests are seeing that.

Speaker #4: to help us frame how much that could be up year on year?

Speaker #3: And I think we're benefiting from that as well.

Speaker #3: 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 positive, 2.7%.

Matt Clark: Sure, Brian, this is Matt. I will start with some of the data side of it. Specifically in the quarter for Cheesecake, pricing was 3.0%, traffic was a positive 2.7%, and mix was almost zero. It was 0.1 positive, 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 Q3.

Speaker #2: Great, thanks. I'll follow up later. Appreciate it.

Speaker #1: Your next question comes from the line of Brian Vaccaro with Raymond James. Brian, your line is open. Please go ahead.

Speaker #4: Thanks very much, and good evening. And 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?

Speaker #3: And then mix was almost zero, it was 0.1 positive. So pretty much balanced out. With respect to the trends throughout the quarter, we did see a modest acceleration in the back half.

Speaker #4: And Matt, maybe you could give us the mix and price dynamics. But 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.

Speaker #3: 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.

Speaker #3: And so we exited at a better rate than what the average is. And our expectations in the guidance that we provided calls for that slightly elevated rate to continue through the third quarter.

Speaker #4: To help us frame how much that could be up year on year?

Speaker #3: 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 positive 2.7%.

Speaker #3: And 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, we're well above the average in casual dining, maybe two to three X in terms of mentions on social media.

David Gordon: 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 2 to 3x in terms of mentions on social media. Certainly that is playing a part. David, I do not know if there are other components, but we know that we have had a couple of hit products out there that people might have seen. One of them is named after Linda Candiotti, who is a famous executive with the company and been with David for all these years. It is 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 are seeing it across a couple of other menu hacks as well.

Matt Clark: 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 2 to 3x in terms of mentions on social media. Certainly that is playing a part. David, I do not know if there are other components, but we know that we have had a couple of hit products out there that people might have seen. One of them is named after Linda Candiotti, who is a famous executive with the company and been with David for all these years. It is 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 are seeing it across a couple of other menu hacks as well.

Speaker #3: And then mix was almost a zero; it's 0.1 positive, so pretty much balanced out. With respect to the trends throughout the quarter, we did see a modest acceleration in the back half.

Speaker #3: And so certainly that's playing a part, David. I don't know if there's other components that we know that we've had a couple of hit products out there that people might have seen.

Speaker #3: One of them is named after Linda Candiotti, who's a famous executive with a company and been with David for all these years. And it's about eating her fudge cake with your hands in the car.

Speaker #3: And so we exited at a better rate than the average. Our expectations in the guidance we provided call for that slightly elevated rate to continue through the third quarter.

Speaker #3: And 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.

Speaker #3: And 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 two to three times—in terms of mentions on social media.

Speaker #3: So it is identifiable. It is measurable. And it is supporting the overall trend in the business.

David Gordon: So it is identifiable, it is measurable, and it is supporting the overall trend in the business.

Matt Clark: So it is identifiable, it is measurable, and it is supporting the overall trend in the business.

Speaker #4: Yeah, I have seen some of those. So thank you for highlighting that. And 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?

Brian Vaccaro: 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.

Speaker #3: And so certainly that's playing a part, David. I don't know if there are other components that—we know that we've had a couple of hit products out there that people might have seen.

Speaker #3: One of them is named after Linda Candiotti, who's a famous executive with the company and has been with David for all these years. And it's about eating her fudge cake with your hands in the car.

Speaker #4: Thanks very much.

Speaker #3: 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 at that up.

Matt Clark: Well, 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, and so if you're comparing to GAAP, make sure you go back and reconcile our non-GAAP tables when you're doing your modeling, in that regards, 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.

Speaker #3: And 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.

Speaker #3: And so if you're comparing the gap, make sure you go back and reconcile on our non-gap tables. When you're doing your modeling, in that regards, in Q4 specifically.

Speaker #3: So, it is identifiable, it is measurable, and it is supporting the overall trend in the business.

Speaker #3: 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.

Speaker #4: Yeah, I have seen some of those, so thank you for highlighting that. And if I could just ask a quick follow-up, just on the updated annual margin guidance—could you 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?

Speaker #3: 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: About half of the improvement coming from the commodities and about half from labor, so 30 and 30, with about flat on other OPEX. 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.

Speaker #3: And 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.

Speaker #4: Thanks very much.

Speaker #3: Yeah. Let me start by reminding everybody about the Q4 gift card breakage last time. We did see some of the modeling doesn't necessarily pick that up.

Speaker #3: And so we'll look to invest to build even more sales in the future.

Speaker #3: And so, if you're comparing the GAAP, make sure you go back and reconcile on a non-GAAP table when you're doing your modeling. In that regard, in Q4 specifically.

Speaker #4: Well, that's the long. Thank you.

Brian Vaccaro: I'll pass along. Thank you.

Speaker #1: Your next question comes from the line of Andy Barish with Jeffrey's. Andy, your line is open. Please go ahead.

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

Speaker #3: 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.

Speaker #5: Hey guys. Nice results. And just on that last comment, Matt, are you willing to share kind of 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.

Andy Barish: 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?

Speaker #3: Now, it's about 60 basis points—about half of the improvement coming from commodities and about half from labor, so 30 and 30, with about flat on other opex.

Speaker #3: And 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 continue to build on our marketing successes.

Speaker #3: Sure, sure. We sort of think about it, Andy, and this is Matt again. In totality, right? So we don't separate out the components of it and rewards as embedded in the number.

Matt Clark: Sure. We sort of think about it, Andy, and this is Matt again, in totality, right? We don't separate out the components of it, and rewards is embedded in the number. But it's about 1.2%. So, 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.

Speaker #3: But it's about 1.2%. So over time, it has moved up a little bit. And I think also since we're growing sales, we've got a bigger opportunity there as well.

Speaker #3: And so, we'll look to invest to build even more sales in the future.

Speaker #4: I'll pass along. Thank you.

Speaker #1: Your next question comes from the line of Andy Barish with Jefferies. Andy, your line is open. Please go ahead.

Speaker #5: Got it. And then just finally, any commentary on sort of World Cup, given your in all of the markets it was, and then into July?

Andy Barish: Got it. Then, just finally, any commentary on World Cup, given you're in all of the markets it was and then into July. Any thoughts on the momentum in the business that you're willing to share with us?

Speaker #5: Hey guys, nice results. And just on that last comment, Matt, are you willing to share kind of 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?

Speaker #5: Any thoughts on the momentum in the business that you're willing to share with us?

Speaker #3: Interestingly, I mean, we did track this at a very, very detailed level, Andy, because we knew we were going to get the question and there was almost no discernible difference between specific markets in totality.

Matt Clark: Interestingly, we did track this at a very detailed level, Andy, because we knew we were going to get the question, and 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, but broadly across the country, the comp outperformance was in every region. Very little differentiation. We are also glad that the World Cup was done before our call because we know that it really was not impacting it based on the trends that we are seeing now too as well.

Speaker #3: Sure, sure. We sort of think about it, Andy—and this is Matt again—in totality, right? So we don't separate out the components of it, and rewards are embedded in the number.

Speaker #3: There were some one-off locations where clearly they were by a hotel where there were a lot of fans, but broadly across the country, the comp outperformance was in every region.

Speaker #3: But it's about 1.2%, so over time, it has moved up a little bit. And I think also, since we're growing sales, we've got a bigger opportunity there as well.

Speaker #3: And so very, very little differentiation. And 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.

Speaker #5: Got it. And then just finally, any commentary on the World Cup, given you're in all of the markets it was in, and then into July?

Speaker #5: Gotcha. Thank you.

Andy Barish: Got you. Thank you.

Speaker #1: Your next question comes from the line of Lauren Silberman with Dutch Bank. Lauren, your line is open. Please go ahead.

Speaker #5: Any thoughts on the momentum in the business that you're willing to share with us?

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

Speaker #3: Interestingly, I mean, we did track this at a very, very detailed level, Andy, because we knew we were going to get the question, and there was almost no discernible difference between specific markets in totality.

Speaker #5: Lauren, you might be muted.

Matt Clark: Lauren, you might be muted.

David Gordon: Lauren, you might be muted.

Speaker #3: There were some one-off locations where, clearly, they were by a hotel where there were a lot of fans, but broadly across the country, the comp outperformance was in every region.

Speaker #2: Can you hear me here? Hello? Okay, sorry. Congrats on the quarter. Just really impressive comps. A lot of contributing factors, social media, innovation, rewards, ops.

Lauren Silberman: Can you hear me here?

Matt Clark: We are.

David Gordon: We are.

Lauren Silberman: Hello? Okay, sorry. Congrats on the quarter. Just really impressive comps. A lot of contributing factors, social media innovation, rewards, ops. When did you start to see the inflection? It's just 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?

Speaker #3: And so, very, very little differentiation. And 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.

Speaker #2: I guess when did you start to see the inflection? It's just that 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.

Speaker #5: Gotcha. Thank you.

Speaker #1: Your next question comes from the line of Lauren Silberman with Deutsche Bank. Lauren, your line is open. Please go ahead.

Speaker #2: I guess am I doing that right? And I'm not even just monthly, I guess, just underlying when did you start to see the real change with the flywheel?

Speaker #3: Yeah. I mean, this is Matt, Lauren, and as David Gordon noted, there were many contributing factors. I mean, if you think even going back into Q1 on a whether adjusted basis, we were already seeing some of those results, right?

Matt Clark: Yeah. This is Matt, Lauren, and 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-to-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 then that the launch of the app was a catalyst, and because it drove significant downloads early on. I think we were number 3 on the app list for a day behind just a couple of the massive AI companies, and that was a piece that I think rippled through for a period of time. But it was very closely aligned with the timing with some of the social activity and some of the new media campaigns that we did.

Speaker #5: Lauren, you might be muted.

Speaker #2: Can you hear me here? Hello? Okay, sorry. Congrats on the quarter. Just really impressive comps—a lot of contributing factors: social media, innovation, rewards, ops.

Speaker #3: We were improving month to month and on an an adjusted basis, cake would have been between two and a half and 3%. And so clearly the momentum had already started.

Speaker #2: I guess, when did you start to see the inflection? It's just that—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-single digits in Q4.

Speaker #3: I think it's fair to say then that the launch of the app was a catalyst. And 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.

Speaker #2: I guess—am I doing that right? And I'm not even just asking monthly, I guess, just underlying—when did you start to see the real change with the flywheel?

Speaker #3: And that was a piece that I think rippled through for a period of time. But it was very closely aligned with the timing with some of the social activity and some of the new media campaigns that we did.

Speaker #3: Yeah, I mean, I think this is Matt, and as David Gordon noted, there were many contributing factors. I mean, if you think, even going back into Q1 on a weather-adjusted basis, we were already seeing some of those results, right?

Speaker #3: So 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.

Matt Clark: I do not 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, so all of those initiatives are sticky, right? It was not just the free slice of cheesecake. It is now we are seeing increased number of reservations. We are seeing increased activation. Amongst that, we are still acquiring new guests through the app. I think it really was in total.

Speaker #3: We were improving month to month, and on an adjusted basis, CAKE would have been between 2.5% and 3%. And so, clearly, the momentum had already started.

Speaker #3: And like I said, about the quarter, we did see a modest acceleration in the second half. And so all of those initiatives are sticky, right?

Speaker #3: I think it's fair to say, then, that the launch of the app was a catalyst. And 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.

Speaker #3: It wasn't just the free slice of cheesecake. It's now we're seeing increased number of reservations or seeing increased activation amongst that. We're still acquiring new guests through the app.

Speaker #3: So I think it really was in total.

Speaker #3: And that was a piece that I think rippled through for a period of time. But it was very closely aligned with the timing of some of the social activity and some of the new media campaigns that we did.

Speaker #2: Great. Your stock is also outperforming. Some of these AI companies. So kudos to that. And then just to follow up, I guess, are you guys ordering anything or are you seeing any differences in how customers are ordering from your menu or different parts of the menu with the increased traffic?

Lauren Silberman: Great. Your stock is also outperforming some of these AI companies, so kudos to that. Just to 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?

Speaker #3: So, 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 to that inflection point.

Speaker #5: Oh, 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.

David Gordon: 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 is a couple 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, but outside of that, ordering patterns are very consistent. Dessert as a percentage of sales, very consistent. Beverage incident rate is consistent. So consistent in restaurant across day part and really across geography.

Speaker #3: And like I said, about the quarter, we did see a modest acceleration in the second half. And so, all of those initiatives are sticky, right?

Speaker #5: 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.

Speaker #5: We see some of that activity. But outside of that, ordering patterns are very consistent. Dessert as a percentage of sales very consistent. Beverages and rates consistent.

Speaker #3: It wasn't just the free slice of cheesecake. It's that we're now seeing an increased number of reservations and increased activation among those guests. We're still acquiring new guests through the app.

Speaker #5: So consistent in restaurant across day part and really across geography.

Speaker #3: So I think it really was, in total.

Speaker #2: Great. And then just final one from a mixed perspective. Now back to kind of flattish. Is that your expectation as we think through the back half of the year?

Lauren Silberman: Great. Just final one from a mixed perspective. Now back to kind of flattish. Is that your expectation as we think through the back half of the year?

Speaker #2: Great. Your stock is also outperforming some of these AI companies, so kudos to that. And then just to follow up—I guess, are you guys ordering anything, or are you seeing any differences in how customers are ordering from your menu, or different parts of the menu, with the increased traffic?

Speaker #3: Yeah. I would say that's right. And then 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.

Matt Clark: 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, and so that's been a real positive. As we've noted before, I think it's very interesting. We're at 3% pricing, but in effect, it's a little bit under 2% based on the price points of the bowls, but ends up being completely made up for on a one-for-one basis with the increased ordering rate of bites. So, it's working exactly as we had hoped and planned it would.

Speaker #5: Oh, 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.

Speaker #3: And so that's been a real positive. As we've noted before, I think it's very interesting we're at 3% pricing, but in effect, it's a little bit under two based on the price points of the bowls.

Speaker #5: 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.

Speaker #3: But it's being completely made up for on a one-for-one basis with the increased ordering rate of bites. So working exactly as we had hoped and planned it would.

Speaker #5: We see some of that activity, but outside of that, ordering patterns are very consistent. Dessert as a percentage of sales is very consistent. Beverage incident rates are consistent.

Speaker #5: So consistent in the restaurant across daypart, and really across geography.

Speaker #2: Awesome. Thank you very much.

Lauren Silberman: Awesome. Thank you very much.

Speaker #1: Your next question comes from the line of Drew North with Baird. Drew, your line is open. Please go ahead.

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

Speaker #2: Great. And then just a final one from a mixed perspective. Now back to kind of flattish—is that your expectation as we think through the back half of the year?

Speaker #4: Great. Thanks for taking the question and congrats on the strong results. I wanted to ask a follow-up on 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.

Andrew North: 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.

Drew North: 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.

Speaker #3: Yeah, I would say that's right. And then, going back to the menu ordering question, as we've increased even the number of flights offerings, we've seen that incident rate move up.

Speaker #3: And so that's been a real positive. As we've noted before, I think it's very interesting—we're at 3% pricing, but in effect, it's a little bit under 2% based on the price points of the bowls.

Speaker #4: 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.

Speaker #3: But it’s being completely made up for on a one-for-one basis with the increased ordering rate of Bites, so it’s working exactly as we had hoped and planned it would.

Speaker #4: And any perspective on your philosophy there would be helpful.

Speaker #3: Yeah. So we'll be just under 3% in Q3. And that's just related to some timing year over year. And then Q4 will be at 3%.

Matt Clark: Yeah. We will be just under 3% in Q3, and that is just related to some timing year over year. Then Q4 will be at 3%. As I noted, it is really below 2% when you think about the investments we are already making. Certainly, we will 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 are at 3%. We take it twice a year. We evaluate the business conditions at those points in time, and we will continue to invest in all ways, whether it is in price points or in marketing or making sure that our restaurants are fully staffed to execute, as David Gordon mentioned upfront.

Speaker #2: Awesome. Thank you very much.

Speaker #1: Your next question comes from the line of Drew North with Baird. Drew, your line is open. Please go ahead.

Speaker #3: And as I noted, it's really below 2% when you think about the investments we're already making. And certainly, we'll continue to evaluate all of the options.

Speaker #4: Great, thanks for taking the question and congrats on the strong results. I wanted to ask a follow-up on Cheesecake Factory, and maybe a follow-up to Lauren's question on how we should be thinking about pricing in the back half.

Speaker #3: 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%.

Speaker #4: 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.

Speaker #3: But we take it twice a year. We evaluate the business conditions at those points in time. And 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 up front.

Speaker #4: And any perspective on your philosophy there would be helpful.

Speaker #3: Yeah. So we'll be just under 3% in Q3, and that's just related to some timing year over year. Then Q4 will be at 3%.

Speaker #4: That's helpful. And maybe just one more from me. Would you operate in a portfolio brand? I thought it might be interesting to know what insights or learnings you may be taking from the recent successes at Cheesecake Factory and what might be or might not be applicable to other brands.

Andrew North: That is 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 Cheesecake Factory and what might 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 Cheesecake Factory and their recent success. Thanks.

Drew North: That is 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 Cheesecake Factory and what might 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 Cheesecake Factory and their recent success. Thanks.

Speaker #3: And as I noted, it's really below 2% when you think about the investments we're already making. And certainly, we'll continue to evaluate all of the options.

Speaker #4: So 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 Cheesecake Factory and the recent success.

Speaker #3: 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%.

Speaker #4: Thanks.

Speaker #3: 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.

David Gordon: Sure, Drew. This is David Gordon. I think that is a very relevant question. We have been learning across the ecosystem of concepts for eight years now. Everything from service and hospitality systems and processes that work at Cheesecake Factory that we have now begun to implement at 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 are now going to take to North and look at how we can ensure that guests understand the value proposition at North as much as I think they are starting to understand the Cheesecake Factory for the past couple of quarters. A lot of the people practices at Cheesecake Factory are things that we have talked about and implemented at Flower Child and North as we position those concepts for growth.

Speaker #3: But we take it twice a year. We evaluate the business conditions at those points in time and adjust in various 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 up front.

Speaker #3: Everything from service and hospitality systems and processes that work at Cheesecake Factory that we've now begun to implement at some of the other concepts to even some of the more recent learnings at Cheesecake around the value on the menu.

Speaker #4: That's helpful. And maybe just one more from me. Would you operate in 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.

Speaker #3: And some of the marketing approach that we're now going to take to North and look at how we can ensure the guest understand the value proposition that North as much as I think they're starting to understand the Cheesecake Factory for the past couple of quarters.

Speaker #4: And what might be or might not be applicable to other brands. So 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 Cheesecake Factory and the recent success.

Speaker #3: A lot of the people practices at Cheesecake Factory are things that we've talked about and implemented the flour child and North as we position those concepts for growth.

Speaker #4: Thanks.

Speaker #3: Talked about having the right type of talent, to enable growth and execute at a very high level at new restaurant openings. And we've had so much experience of that at Cheesecake Factory for the past 40 plus years.

David Gordon: Talked about having the right type of talent to enable growth and execute at a very high level at new restaurant openings, and we have had so much experience of that at Cheesecake Factory for the past 40-plus years. Using those same systems and people practices have really enabled us to be ready to ramp up what we want to do at 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 have 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.

Speaker #3: 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.

Speaker #3: Everything from service and hospitality systems and processes that work at Cheesecake Factory, that we've now begun to implement at some of the other concepts, to even some of the more recent learnings at Cheesecake around the value on the menu.

Speaker #3: And using those same systems and people practices have really enabled us to be ready to ramp up what we want to do at flour child and to have some strong consistent growth because we have a long-term outlook on North Italia as well.

Speaker #3: So 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.

Speaker #3: And some of the marketing approach that we're now going to take to North and look at how we can ensure the guest understands the value proposition at North, as much as I think they're starting to understand that at Cheesecake Factory for the past couple of quarters.

Speaker #3: A lot of the people practices at Cheesecake Factory are things that we've talked about and implemented with Flour Child and North as we position those concepts for growth.

Speaker #4: Thanks for that. I'll pass it on.

Andrew North: Thanks for that. I'll pass it on.

Drew North: Thanks for that. I'll pass it on.

Speaker #3: We 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 over the past 40-plus years.

Speaker #1: Your next question comes from Sara Senatore with Bank of America. Sara, your line is open. Please go ahead.

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

Speaker #2: Thank you. I guess maybe two questions if I may. It seems to be the trend. I wanted to ask one about sort of the, again, the culinary innovation.

Sara Senatore: Thank you. I guess maybe two questions, if I may. It seems to be the trend. I wanted to ask one about like, 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 the flywheel. But I wanted to confirm that that was the case, the bowls and the bites. It really has to do with more of 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 a view that sometimes social media attention can be transitory.

Speaker #3: And using those same systems and people practices has really enabled us to be ready to ramp up what we want to do at Flour Child and to grow, because we have a long-term outlook on North Italia as well.

Speaker #2: 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 the flywheel.

Speaker #3: So 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.

Speaker #2: But I wanted to confirm that that was the case. The bowls and the bites. And 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.

Speaker #3: 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.

Speaker #2: And I guess related to that, there's sort of a view that sometimes social media attention can be transitory. 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?

Speaker #4: Thanks for that. I'll pass it on.

Sara Senatore: Have you done anything in terms of, like, 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.

Speaker #1: Your next question comes from Sarah Senatori with Bank of America. Sarah, your line is open. Please go ahead.

Speaker #2: We certainly have seen that with other casual diners, but just kind of curious about the infrastructure.

Speaker #2: Thank you. I guess maybe two questions, if I may—it seems to be the trend. I wanted to ask one about, sort of, again, the culinary innovation.

Speaker #3: Sure, Sara. This is David Gordon again. Just a remind everyone that we changed the menu at Cheesecake Factory every six months. So we put on new bites and bowls.

David Gordon: Sure, Sarah. This is David Gordon again. Just to remind everyone that we change the menu at The Cheesecake Factory every six months. So we put on new bites and bowls about six months ago, and we are launching a new menu right now. It is rolling out across the country through September, and it has some new bites and bowls on it, but it also has some new entree items that are in the "regular menu" as well. I think one of the things we have 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, and that really helped with the awareness. Our plan is to continue to do that over time.

Speaker #2: 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 the flywheel. But I wanted to confirm that that was the case.

Speaker #3: s. About six months ago, and we're launching a new menu right now. It's rolling out across the country through September. And it has some new bites and bowls on it, but it also has some new entree items that are in the quote-unquote "regular menu" as well.

Speaker #2: The bowls and the bites. And it really has to do more with 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.

Speaker #3: 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.

Speaker #3: And that really helped with the awareness. And our plan is to continue to do that over time. And if we find delicious bites and bowls that you want to put on the menu, we will put them on.

David Gordon: If we find delicious bites and bowls that we want to put on the menu, we will put them on. But we will also search across every other category on the menu to make sure that the innovation is not just on bites and bowls, but it is whatever the culinary trends may be in America, we can put those items on the menu, and we are excited to be able to do that. That has 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 is within our own internal team or external teams that we have in place that are listening to what is being said out there about The Cheesecake Factory. We are investing in that conversation to keep it going in the ways that we think are most valuable for us.

Speaker #2: We certainly have seen that with other casual diners, but I'm just kind of curious about the infrastructure.

Speaker #3: But we'll also search across every other category on the menu to make sure that the innovation is not just on bites and bowls, but it's whatever the culinary trends may be in America we can put those items on the menu and we're excited to be able to do that.

Speaker #3: Sure, Sarah. This is David Gordon again. Just to remind everyone, we change the menu at The Cheesecake Factory every six months. So we put on new bites and bowls.

Speaker #3: That's been the hallmark of Cheesecake Factory since its founding. As far as the marketing team, we have a very strong foundation today. Social listening, whether that's within our own internal team or external teams that we have in place, that are listening to what's being said out there about Cheesecake Factory.

Speaker #3: About six months ago, and we're launching a new menu right now. It's rolling out across the country through September, and it has some new bites and bowls on it, but it also has some new entree items that are in the, quote-unquote, regular menu as well.

Speaker #3: Reinvesting in that conversation to keep it going in the ways that we think are most valuable for us. And 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.

Speaker #3: I think one of the things we've done for the past couple of years now, when we launch Bites and Bowls, was put a lot of those menu items on a separate menu.

David Gordon: 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 is resonating with guests, and we are getting the type of attention and awareness that we think will continue our success moving forward.

Speaker #3: So the guests could see them outside of the main menu, and that really helped with the awareness. And our plan is to continue to do that over time.

Speaker #3: 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.

Speaker #3: And if we find delicious bites and bowls that you want to put on the menu, we will put them on. But we'll also search across every other category on the menu to make sure that the innovation is not just on bites and bowls, but that it's whatever the culinary trends may be in America—we can put those items on the menu, and we're excited to be able to do that.

Speaker #2: Great. Thank you. Sorry. Just on the trends, I guess if you have any thoughts on macro. I know Matt has in the past kind of talked about the environment, feeling better or worse or where you've seen maybe slower parts of think that it might be slowing given your trends.

Sara Senatore: Great. Thank you. Sorry, just on the trends, I guess, any thoughts on macro? I know Matt has in the past talked about the environment feeling better or worse or where you have seen maybe slower. Hard to think that it might be slowing, given your trends, but any thoughts on that would be helpful. Thank you.

Speaker #3: That's been the hallmark of Cheesecake Factory since its founding. As far as the marketing team, we have a very strong foundation today. Social listening—whether that's within our own internal team or with external teams that we have in place—is focused on listening to what's being said out there about Cheesecake Factory.

Speaker #2: But any thoughts on that would be helpful. Thank you.

Speaker #3: 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.

Matt Clark: 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, 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 to 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.

Speaker #3: Reinvesting in that conversation to keep it going in the ways that we think are most valuable for us—and not just resting on our laurels or relying on any one point in time, or something being the hot topic for a particular month or particular quarter.

Speaker #3: I do think there is a little bit of inflationary pressure. And we still adhere to some of the commentary around a key economy and certainly our concepts, Cheesecake Factory particularly benefits from a higher consumer than average.

Speaker #3: 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.

Speaker #2: Great, thank you. Sorry—just on the trends, I guess if you have any thoughts on macro. I know Matt has, in the past, kind of talked about the environment feeling better or worse, or where you've seen maybe slower. Hard to think that it might be slowing, given your trends.

Speaker #3: 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.

Speaker #3: To deliver on the promise to the guest. And you have innovative menu and marketing that there is here to be taken. There's opportunity there.

Speaker #2: But any thoughts on that would be helpful. Thank you.

Speaker #3: 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.

Speaker #3: And I think we're benefiting from all of those things. Because it's not a high growth environment. It's just maybe a little more stable than we had anticipated.

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

Speaker #3: I do think there is a little bit of inflationary pressure, and we still adhere to some of the commentary around a key economy. And certainly, our concepts—Cheesecake Factory particularly—benefit from a higher consumer than average.

Speaker #2: Thank you.

Sara Senatore: Thank you.

Speaker #1: Your next question comes from the line of Brian Harbour with Morgan Stanley. Brian, your line is open. Please go ahead.

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

Speaker #5: 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?

Brian Harbour: 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?

Speaker #3: 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 to the guest, and you have innovative menu and marketing—that there is share here to be taken.

Speaker #3: 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.

David Gordon: 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 signups 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.

Speaker #3: There's opportunity there, and I think we're benefiting from all of those things because it's not a high-growth environment. It's just maybe a little more stable than we had anticipated.

Speaker #3: 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. So we're positive.

Speaker #2: Thank you.

Speaker #3: 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.

Speaker #1: Your next question comes from the line of Brian Harbor with Morgan Stanley. Brian, your line is open. Please go ahead.

Speaker #5: Okay. What would you attribute kind of flower child's performance to, right? It's remained quite strong. I think much better than the fast casual segment.

Brian Harbour: Okay. What would you attribute Flower Child's performance to, right? 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?

Speaker #5: Yeah, thanks. Good afternoon, guys. I'm curious about the rewards program, what the usage is there, and also, I guess, the app more recently. Are there any stats you could provide around the percent of customers that are using those, or anything you could say about that?

Speaker #5: But I know there's 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?

Speaker #3: 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.

Speaker #3: Yeah. That's a great question. Certainly, it's across the new markets and existing markets. And really across all geographies. And 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 in it oriented price points that whether you're getting a mother earth bowl, a 13, 14, 95, or deciding to get a protein plate.

David Gordon: Yeah, that's a great question. Certainly, it's across the new markets and existing markets and really across all geographies, and we continue to believe that Flower Child is very differentiated from your typical fast casual. The 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% to 35%, which is unique for a fast casual. The 55% off-premise mix continues to be very steady.

Speaker #3: And we feel good about the level of engagement, the amount of sign-ups we're seeing, and people using the app on a regular basis. So we're positive.

Speaker #3: And I wouldn't anticipate that we'll be sharing any of those numbers anytime soon. We'll continue to track them, and if and when that time comes, we'll certainly share them with you.

Speaker #5: Okay. What would you attribute kind of flower child's performance to, right? It's remained quite strong. I think much better than the fast casual segment.

Speaker #3: 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.

Speaker #3: 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 percent, which is unique for a fast casual.

Speaker #5: 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?

Speaker #3: The 55 percent off-premise mix continues to be very, very steady. The teams are executing there very, very well. And I think the dine-in experience, the highly designed restaurants and the higher touch of service that people really, really appreciate today that we're bringing them their food.

Speaker #3: Yeah. That's a great question. Certainly, it's across the new markets and existing markets and really across all geographies. And 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 in it oriented price points that whether you're getting a mother earth bowl at 13, 14, 95 or deciding to get a protein plate think it's meeting guests also for many different need states when it comes to going out to eat, right?

David Gordon: 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 it's 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 trend over time.

Speaker #3: It's being served by a server. We're clearing their plates. It's being served on real plate wear. I think it's appreciated today that people want to experiential dine eat.

Speaker #3: Even in that fast casual setting, and that's playing out at flower child. So we continue to be very positive on it. And would anticipate that continued to be the trend over time.

Speaker #6: 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.

Matt Clark: 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.

Speaker #3: It could be a quick lunch, or it could be sitting down at dinner. We talk frequently about the dinner mix being much more than your typical fast casual—closer to 30 to 35 percent—which is unique for a fast casual.

Speaker #6: 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.

Speaker #3: The 55% off-premise mix continues to be very, very steady. The teams are executing there very, very well. And I think the dine-in experience—the highly designed restaurants and the higher touch of service that people really, really appreciate today, where we're bringing them their food.

Speaker #6: So we have no concerns about continuing to move into existing markets and continuing to build in those because we see slightly better performance when we're able to do that.

Speaker #3: It's being served by a server. We're clearing their plates. It's being served on real plateware. I think it's appreciated today that people want experiential dining, even in that fast-casual setting.

Speaker #5: Thank you.

Brian Harbour: Thank you.

Speaker #1: Your next question comes from the line of Dennis Geiger with UBS. Dennis, your line is open. Please go ahead.

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

Speaker #3: And that's playing out at Flower Child. So, we continue to be very positive on it and would anticipate that to continue to be the trend over time.

Speaker #7: Great. Thanks, guys. And congrats. Curious if anything more to share on the new customers that you've been attracting. I know there was a question earlier on the younger customer.

Dennis Geiger: Great. Thanks, guys, and congrats. Curious if anything more to share on the new customers that you have 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 are using the brand different than your core existing customer? Maybe it is a little early here, but do you have a sense for repeat frequency yet with that newer customer?

Speaker #6: 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.

Speaker #7: 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?

Speaker #6: 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.

Speaker #7: And maybe it's a little early here, but do you have a sense for repeat frequency yet with that newer customer?

Speaker #6: So 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.

Speaker #3: I think it's a little bit early as you said. We are looking at the socio demographic information but if you think about relatively speaking, the inflection being over the last four, five, six months we're still in the evaluatory stage.

Matt Clark: I think it is a little bit early, as you said. We are looking at the sociodemographic information. But if you think about, relatively speaking, the inflection being over the last four, five, six months, we are still in the evaluatory stage. As you would expect, the initial glimpses of the data show that we continue to attract an incredibly wide portfolio of guests, a wide demographic. We have increasingly higher engagement, and I think that is 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 that rewards is part of that and helping to drive frequency.

Speaker #5: Thank you.

Speaker #1: Your next question comes from the line of Dennis Geiger with UBS. Dennis, your line is open. Please go ahead.

Speaker #3: I mean, as you would expect the initial glimpses of the data show that we continue to attract an incredibly wide portfolio of guests. Wide demographic.

Speaker #7: Great, thanks, guys, and congrats. Curious if there's anything more to share on the new customers that you've been attracting. I know there was a question earlier on the younger customer.

Speaker #3: 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.

Speaker #7: But curious, more broadly as it relates to the new customers, is there anything that you would call out on how they're using the brand differently than your core existing customers?

Speaker #7: And maybe it's a little early here, but do you have a sense for repeat frequency yet with that newer customer?

Speaker #3: And we know the rewards is part of that and helping to drive frequency. But as David has noted a couple of times, what we haven't shared the exact number.

Matt Clark: But as David has noted a couple of times, while we have not shared the exact number, a significant percentage of the app downloads are also from guests that were not in the rewards program, and so we are attracting those guests. We tend to attract higher technology savvy, higher income guests, and we would anticipate that that is what the data will continue to show.

Speaker #3: I think it's a little bit early, as you said. We are looking at the sociodemographic information, but if you think about it, relatively speaking, the inflection being over the last four, five, six months, we're still in the evaluatory stage.

Speaker #3: A significant percentage of the app downloads are also from guests that were not in the rewards program. And so we are attracting those guests.

Speaker #3: We tend to attract higher technology savvy, higher income guests. And we would anticipate that that's what the data will continue to show.

Speaker #4: And 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 and the lifecycle management style to get them to repeat and come back and come visit us maybe the time when they haven't before.

David Gordon: As we continue to have more of that data, we will be able to have a more personalized approach with how we are communicating with those guests in a life cycle management style to get them to repeat and come back and come visit us maybe at a time when they have not before, and keep them top of mind, Cheesecake top of mind from an awareness standpoint, and the app really allows us to do that.

Speaker #3: I mean, as you would expect, the initial glimpses of the data show that we continue to attract an incredibly wide portfolio of guests—a wide demographic.

Speaker #3: 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.

Speaker #4: And keep them top of mind. Cheesecake top of mind from an awareness standpoint. And the app really allows us to do that.

Speaker #7: Very helpful, guys. And then just a quick second question. Just within your guidance for the third quarter, I think we can maybe loosely back into it.

Dennis Geiger: Very helpful, guys. Just a quick second question. Just within your guidance for Q3, 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 Q3, how you are thinking about that within the context of the revenue guidance?

Speaker #3: And we know the rewards is part of that and helping to drive frequency. But as David has noted a couple of times, we haven't shared the exact number.

Speaker #7: 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?

Speaker #3: A significant percentage of the app downloads are also from guests who were not in the rewards program, and so we are attracting those guests.

Speaker #3: We tend to attract higher technology-savvy, higher-income guests, and we would anticipate that that's what the data will continue to show.

Speaker #3: Yeah. I mean, 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.

Matt Clark: Yeah. The back half of Q2 modestly accelerated above what the average was, that is essentially what is incorporated into our Q3 guidance.

Speaker #4: And 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, and the life cycle management style to get them to repeat and come back and visit us—maybe at a time when they haven't before.

Speaker #7: Thank you, Matt. Appreciate it, guys.

Dennis Geiger: Thank you, Matt. Appreciate it, guys.

Speaker #3: Sure.

Matt Clark: Sure.

Speaker #1: Your next question comes from Jeffrey Farmer with Gordon Haskett. Jeffrey, your line is open. Please go ahead.

Speaker #4: And keep them top of mind—Cheesecake top of mind—from an awareness standpoint. And the app really allows us to do that.

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

Speaker #4: Great. Thanks and good afternoon, guys. Just bigger picture. In terms of thinking about this segment or the casual dine 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 of the segment has seen?

Jeffrey Farmer: Great. Thanks, and good afternoon, guys. Just bigger picture, in terms of thinking about the segment or the casual dining segment as a whole, which factors beyond 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?

Speaker #7: Very helpful, guys. And then, just a quick second question: within your guidance for the third quarter, I think we can maybe loosely back into it.

Speaker #7: 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 are you thinking about that within the context of the revenue guidance?

Speaker #3: I think that the value equation and the consumer's mind has pivoted a little bit. And the price points have compressed so 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.

Matt Clark: I think that the value equation in the consumer's mind has pivoted a little bit, and the price points have compressed. You see casual dining like we are doing, making sure that you have a price point across all spectrums that is 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 essentially 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 is clearly resonating across casual dining.

Speaker #3: Yeah. I mean, 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.

Speaker #7: Thank you, Matt. Appreciate it, guys.

Speaker #3: Sure.

Speaker #1: Your next question comes from Jeffrey Farmer with Gordon Haskett. Jeffrey, your line is open. Please go ahead.

Speaker #3: And then those guests are realizing they get a full experience right in service in a sit down restaurant versus potentially a drive through or effectively just picking it up.

Speaker #8: Great, thanks, and good afternoon, guys. Just 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?

Speaker #3: And so 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.

Speaker #4: Okay. And then 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.

Jeffrey Farmer: Okay, and then 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 4 months of the launch?

Speaker #3: I think that the value equation in the consumer's mind has pivoted a little bit. And the price points have compressed, so 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.

Speaker #4: And probably driving some increased frequency from some of your existing customers. But was there anything about the mobile app launch that surprised you? Either positively or negatively here through the first four months of the launch?

Speaker #2: Jeff, I don't think we would have expected on the day we launched that we would have been one of the top three. Downloaded apps right next to some of those AI companies.

David Gordon: Jeff, I do not think we would have expected on the day we launched that we would have been one of the top 3 downloaded apps right next to some of those AI companies. So we are pleasantly surprised by that. Outside of that, I think the rewards program really being in year 3 has told us that there is an affinity for Cheesecake that we have 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 have launched rewards with more members than we would have anticipated when we first started. The same thing has happened with the app. I think after 45-plus years, Cheesecake Factory continues to be more relevant today as an experiential dining leader with made-from-scratch food that people really appreciate.

Speaker #3: And then those guests are realizing they get a full experience, right, in service and a sit-down restaurant versus potentially a drive-through or effectively just picking it up.

Speaker #2: So 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.

Speaker #3: And so 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.

Speaker #2: And the more we talk about it and the more people hear about it, it continues to just grow and grow and grow. And I think the app has proved that out.

Speaker #8: Okay, and then just real quick, bringing it back to cheesecake for a second—it does sound like the mobile app is attracting both new customers for you guys.

Speaker #2: We've launched rewards with more members than we would have anticipated when we first started. The same thing has happened with the app. And I think after 45 plus years, Cheesecake Factory continues to be more relevant today.

Speaker #8: And probably driving some increased frequency from some of your existing customers. But was there anything about the mobile app launch that surprised you, either positively or negatively, here through the first four months of the launch?

Speaker #2: As an experiential dining leader, with made from scratch food that people really appreciate. It's just working very, very well. And people, to Matt's point earlier, people really appreciate what Cheesecake is offering today as much as they ever have.

David Gordon: It's just working very, very well. To Matt's point earlier, people really appreciate what Cheesecake is offering today as much as they ever have, and I think we're executing against that really, 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, and we expect it to continue to be strong. Excuse me.

Speaker #4: Jeff, I don't think we would have expected, on the day we launched, that we would have been one of the top three downloaded apps, right next to some of those AI companies.

Speaker #2: And I think we're executing against that really, really well. So the launch of the app was a pleasant surprise. But rewards told us that we were going to have a high level of engagement.

Speaker #4: So 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.

Speaker #2: So it was good to be a little surprised, but we were expecting it to continue we were expecting it to be strong and we would continue to expect it to continue to be strong.

Speaker #4: And the more we talk about it, and the more people hear about it, it continues to just grow and grow and grow. And I think the app has proved that out.

Speaker #2: Excuse me.

Speaker #3: And as Matt, just one more note on that. Just a shout out to our IT and marketing and finance teams for working collaboratively on an app that's getting tremendous reviews.

Matt Clark: This is Matt. Just one more note on that. Just a shout-out to our IT and marketing and finance teams for working collaboratively on an app that's getting tremendous reviews.

Speaker #4: Now we've launched Rewards, with more members than we would have anticipated when we first started. The same thing has happened with the app. And I think, after 45-plus years, The Cheesecake Factory continues to be more relevant today.

Speaker #3: So the amount of focus on the details, the flow, the guest experience is very, very strong. And so we took a lot of time to make sure we got it right.

David Gordon: 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, and I think we did.

Matt Clark: 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, and I think we did.

Speaker #4: As an experienced dining leader, with made-from-scratch food that people really appreciate, it's just working very, very well. And people, to Matt's point earlier, really appreciate what Cheesecake is offering today as much as they ever have.

Speaker #3: And I think we did.

Speaker #4: I appreciate it. Thank you.

Jeffrey Farmer: I appreciate it. Thank you.

Speaker #1: Your next question comes from the line of John Ivankoe with JP Morgan. John, your line is open. Please go ahead.

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

Speaker #4: And I think we’re executing against that really, really well. So the launch of the app was a pleasant surprise, but rewards told us that we were going to have a high level of engagement.

Speaker #5: Hi. Thank you very much. At least from our observation, some of the products that we've seen go viral in some cases are 20 years old on the Cheesecake Factory menu, which is just fascinating to me.

John Ivankoe: Hi. Thank you very much. At least from our observation, some of the products that we've seen go viral, in some cases are 20 years old on The Cheesecake Factory menu, which is just fascinating to me. So 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? I mean, 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?

Speaker #4: So it was good to be a little surprised, but we were expecting it to continue, we were expecting it to be strong, and we would continue to expect it to continue to be strong.

Speaker #4: Excuse me.

Speaker #3: And as Matt, just one more note on that—just a shout-out to our IT, marketing, and finance teams for working collaboratively on an app that's getting tremendous reviews.

Speaker #5: So 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?

Speaker #5: I mean, 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 or whatever that is and get the same or even more with even less?

Speaker #3: So the amount of focus on the details, the flow, the guest experience is very, very strong. And so, we took a lot of time to make sure we got it right.

Speaker #3: And I think we did.

Speaker #8: I appreciate it. Thank you.

Speaker #5: So when we kind of 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?

John Ivankoe: So 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?

Speaker #1: Your next question comes from the line of John Ivanko with J.P. Morgan. John, your line is open. Please go ahead.

Speaker #5: Hi, thank you very much. At least from our observation, some of the products that we've seen go viral, in some cases, are 20 years old on The Cheesecake Factory menu, which is just fascinating to me.

Speaker #2: Thanks, John. That's a great question. First time anyone's ever asked us to put more items on the menu. So thank you for that.

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

Speaker #5: Well, I postulated both. So excuse me for that.

John Ivankoe: Well, I postulated both, so excuse me for that.

Speaker #2: We know that. I think that the breadth of the menu is very, very strong. And you're right. The items a couple of the items are items that have recently become more popular that have been on the menu for 20 plus years.

David Gordon: We know that. I think that the breadth of the menu is very strong. You are right, a couple of the items are items that have recently become more popular that have been on the menu for 20-plus years. I think you never know what is 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 just widens the pool of what potentially could become something that is more popular than we expected. We would never narrow that. That is something we have been saying for a long time, right? We have never made the menu smaller.

Speaker #5: So 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 inform you in terms of where the menu should go?

Speaker #5: I mean, 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 that to maybe an original core—or whatever that is—and get the same, or even more, with even less?

Speaker #2: 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.

Speaker #2: And 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.

Speaker #2: That's something we've been saying for a long time, right? We would never make the menu smaller. We want to make it consistent to execute but have as much variety that there's never a veto vote.

Speaker #3: Thanks, John. That's a great question. First time anyone's ever asked us to put more items on the menu, so thank you for that.

David Gordon: We want to make it consistent to execute, but have as much variety that there is never a veto vote, and I think there is 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. So hopefully that will continue. Our goal is just to put delicious menu items on the menu, because if it goes viral and it is not delicious and it is not fantastic and not executed well, it will make no difference. So we are focused on putting delicious items on and executing against that really well.

Speaker #2: And 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.

Speaker #5: Well, I postulated both, so excuse me for that.

Speaker #2: That are also menu items that have been on the menu for a long time. So 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.

Speaker #3: We know that. I think the breadth of the menu is very, very strong. And you're right—the items, a couple of the items, are items that have recently become more popular but have been on the menu for 20-plus years.

Speaker #3: I think you never know what's going to just catch on. What we can do is continue to put compelling menu items on, offer compelling portion sizes, compelling value, and a wide variety of different types of cuisine.

Speaker #2: So we're focused on putting delicious items on and executing against that really, really well.

Speaker #5: Thank you. And I think a direct follow-up on this. So a lot of the call has been about social and digital type of marketing, including obviously your app, social media, what have you.

John Ivankoe: Thank you. I think a direct follow-up on this, so 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 do not 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, to perhaps drive even more awareness and usage of the brand?

Speaker #3: And I think that just widens the pool of what potentially could become something that's more popular than we expected. We would never narrow that.

Speaker #5: 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?

Speaker #3: That's something we've been saying for a long time, right? We would never make the menu smaller. We want to make it consistent to execute, but have as much variety so that there's never a veto vote.

Speaker #5: 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?

Speaker #3: And 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.

Speaker #2: 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 and we will always do that.

David Gordon: 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, and 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 to 80-year-olds, we want to make sure we're touching all those funnels all the time, and we'll continue that approach.

Speaker #3: There are also menu items that have been on the menu for a long time, so 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, not fantastic, and not executed well, it will make no difference.

Speaker #2: There are different core audiences for all these different touchpoints. So 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.

Speaker #3: So we're focused on putting delicious items on and executing against that really, really well.

Speaker #2: And since we have such a broad base of consumer, from those 15-year-olds to 80-year-olds, we want to make sure we're touching all those funnels all the time.

Speaker #5: Thank you. And I think a direct follow-up on this: So, a lot of the call has been about social and digital type of marketing, including, obviously, your app, social media, what have you.

Speaker #2: And we'll continue that approach.

Speaker #5: Thank you.

John Ivankoe: Thank you.

Speaker #5: 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?

Speaker #1: Your next question comes from Jim Salera with Stevens. Jim, your line is open. Please go ahead.

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

Speaker #6: 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 particular eye on how much traffic's contributing?

Jim Salera: 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's contributing? As a 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?

Speaker #5: 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 to drive even more awareness and usage of the brand?

Speaker #4: 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, and we will always do that.

Speaker #6: And as a 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?

Speaker #4: There are different core audiences for all these different touchpoints. So, 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.

Speaker #4: And since we have such a broad base of consumers, from those 15-year-olds to 80-year-olds, we want to make sure we're touching all those funnels all the time.

Speaker #3: Sure. 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 eight-ish percent range with the rest being two and a half percent pricing and a little bit of other check average from some of the catering.

David Gordon: Sure. Jim, we would be happy to share a couple of those details. This is Matt. The majority of the Flower Child sales are traffic. It is probably in the 8% range, with the rest being 2.5% pricing and a little bit of other check average from some of the catering. So, two-thirds of that number is coming from traffic. Then the bands, we definitely have a few locations that are getting into the $6.5 million to $7 million range with Flower Child. It is pretty tight. Performance is pretty tight, but those locations tend to be ones that have been around a little bit longer and just keep growing. 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.

Matt Clark: Sure. Jim, we would be happy to share a couple of those details. This is Matt. The majority of the Flower Child sales are traffic. It is probably in the 8% range, with the rest being 2.5% pricing and a little bit of other check average from some of the catering. So, two-thirds of that number is coming from traffic. Then the bands, we definitely have a few locations that are getting into the $6.5 million to $7 million range with Flower Child. It is pretty tight. Performance is pretty tight, but those locations tend to be ones that have been around a little bit longer and just keep growing. 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.

Speaker #4: And we'll continue that approach.

Speaker #5: Thank you.

Speaker #1: Your next question comes from Jim Solera with Stevens. Jim, your line is open. Please go ahead.

Speaker #6: Hi, 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 and Flower Child, with particular eye on how much traffic is contributing?

Speaker #3: So two-thirds of that number is coming from traffic. And then the bands, I mean, we definitely have a few locations that are getting into the 6.5 to 7 million dollar range with Flower Child.

Speaker #6: And as a second part to that, you mentioned the AVs are up to $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?

Speaker #3: It's pretty tight. Performance is pretty tight. But those locations tend to be ones that have been around a little bit longer and just keep growing.

Speaker #3: Right? So they continue to add guests over time to them. And we certainly have figured out ways to ensure we have enough capacity in our locations to get to that level.

Speaker #3: Sure. 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 eight-ish percent range with the rest being two and a half percent pricing and a little bit of other check average from some of the catering.

Speaker #6: 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 continues to scale and grow as a piece of the portfolio?

Jim Salera: 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 are already kind of above the core Cheesecake and how that might contribute to the portfolio as a whole as that brand continued to scale and grow as a piece of the portfolio?

Speaker #3: So, two-thirds of that number is coming from traffic. And then the bands—I mean, we definitely have a few locations that are getting into the $6.5 to $7 million range with Flower Child.

Speaker #3: Yeah. Jim, this is an important point. And we've talked about this a little bit before, but we're at a 20% margin, a 5.3 million dollars.

Matt Clark: Yeah, Jim, this is an important point, and we have talked about this a little bit before. We are at a 20% margin at $5.3 million, and we really look at that as the penny profit. Those two levers are driving a huge amount of store wall profitability. Honestly, because we do have more capacity.

Speaker #3: It's pretty tight. Performance is pretty tight. But those locations tend to be ones that have been around a little bit longer and just keep growing.

Speaker #3: And we really look at that as the penny profit. Those two levers are driving a huge amount of store wall profitability. And honestly, because we do have more capacity, if we continue to grow traffic and it supports margins, we'll just take less pricing.

Speaker #3: Right? So, they continue to add guests over time to them. And we certainly have figured out ways to ensure we have enough capacity in our locations to get to that level.

Matt Clark: If we continue to grow traffic and it supports margins, we will just take less pricing to an earlier point that someone made. We would just invest back into the business. We do not think there is 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. So probably try to balance that out.

Speaker #6: 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 continues to scale and grow as a piece of the portfolio?

Speaker #3: To an earlier point, that someone made. And so 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.

Speaker #3: And we think that perhaps some of the challenges in the more traditional fast casual assembly line has been aggressive pricing. So probably try to balance that out.

Speaker #3: Yeah, Jim, this is an important point. And we've talked about this a little bit before, but we're at a 20% margin—$5.3 million.

Speaker #6: Okay. Great. Appreciate the thoughts. I'll hop back in with you.

Jim Salera: Okay, great. Appreciate the thoughts. I will hop back in with you.

Speaker #1: Your next question is from the line of Sharon Zackfia with William Blair. Sharon, your line is open. Please go ahead.

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

Speaker #3: And we really look at that as the penny profit. Those two levers are driving a huge amount of store four-wall profitability. And honestly, because we do have more capacity, if we continue to grow traffic and it supports margins, we'll just take less pricing.

Speaker #7: Hey. Thanks for taking the question. I guess I'm curious and I know you don't want to share a lot about rewards. So I'm going to maybe phrase something a bit differently.

Sharon Zackfia: Hey, thanks for taking the question. I guess I am curious, and I know you do not want to share a lot about rewards, so I am going to maybe phrase something a bit differently. When we think about the uptick you are having at the core Cheesecake concept, is there a way to dimensionalize what you are seeing with rewards versus lapsed users or new to brand?

Speaker #7: 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 brands?

Speaker #3: 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.

Speaker #3: And we think that perhaps some of the challenges in the more traditional fast-casual assembly line have been aggressive pricing. So, we'll probably try to balance that out.

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

Speaker #3: It's tough. Sharon, this is Matt too. To separate them because of the sort of the coalescence of the different events. I mean, I think that it's also the sales in the quarter obviously being pretty differentiated than the first quarter early to say for sure.

Speaker #6: Okay. Great. I appreciate the thoughts. I'll hop back into Q.

Speaker #1: Your next question is from the line of Sharon Zakafia with William Blair. Sharon, your line is open. Please go ahead.

Speaker #3: But 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.

Speaker #7: Hey, thanks for taking the question. I guess I'm curious, and I know you don't want to share a lot about rewards, so I'm going to maybe phrase something a bit differently.

Speaker #3: It's been better. And then some of the menu has contributed and some of the marketing. And I would say kind of on equal footing.

Speaker #7: 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?

Speaker #3: If that's how I would dimensionalize those four factors. And then obviously the ability to execute against that.

Speaker #7: And then Matt, when I think about the implied fourth-quarter comp, kind of, 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?

Sharon Zackfia: Then Matt, when I think about the implied Q4 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 are seeing right now?

Speaker #3: It's tough. Sharon, this is Matt, too. It's difficult to separate them because of the sort of coalescence of the different events. I mean, I think that it's also the sales in the quarter obviously being pretty differentiated than the first quarter—early to say for sure.

Speaker #3: No. I think we're just early stage. There's no point in getting ahead of our skis at this point in time. And 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.

Matt Clark: No, I think we are just early stage. There is no point in getting ahead of our skis at this point in time. The only thing that I would note that we have talked about before that is outside of us, too, is there is 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.

Speaker #3: But 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.

Speaker #3: It's been better. And then some of the menu has contributed, and some of the marketing, and I would say kind of on equal footing.

Speaker #3: And so those things are out there.

Speaker #7: All right. Thank you.

Sharon Zackfia: All right. Thank you.

Speaker #3: That's how I would dimensionalize those four factors, and then, obviously, the ability to execute against that.

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

Speaker #7: And then, Matt, when I think about the implied fourth quarter comp kind of, excuse me, coming off a little bit from the current trend, is that just inherent conservatism, or is there something that you think is not durable with what you're seeing right now?

Speaker #3: 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. We do have midterm elections coming up, and the government did shut down last year.

Speaker #3: And so, those things are out there.

Speaker #7: All right. Thank you.

Q2 2026 Cheesecake Factory Inc Earnings Call

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