Sign in

You're signed outSign in or to get full access.

CF

CHEESECAKE FACTORY INC (CAKE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat on adjusted EPS and an in-line revenue print: adjusted EPS $0.93 vs consensus $0.82; revenue $927.2M vs $925.7M consensus. Management highlighted 140 bps Y/Y 4‑wall margin expansion at The Cheesecake Factory to 17.4% and strong execution across operations . Estimates marked with * are from S&P Global.
  • Guidance was recalibrated: FY25 total revenue outlook trimmed to ~$3.76B (from ~$3.8B prior); Q2 revenue guided to $935–$950M with adjusted net income margin ~5.3–5.4%, absorbing proposed tariff impacts without changing margin expectations .
  • Portfolio momentum mixed: CAKE comps +1.0% with off‑premise steady at 22%; North Italia comps −1% (L.A. fires, alcohol mix headwinds) but mature margins improved; Flower Child comps +5% and AUV >$4.6M with margin gains .
  • Capital structure/capital return: issued $575M 2.00% converts due 2030; repurchased ~$141.4M of stock (~2.6M shares) and declared a $0.27 dividend; total liquidity $501.9M; net interest expense expected +$1–$1.5M Y/Y (factored into guidance) .
  • Stock reaction catalysts: EPS beat, margin expansion and Flower Child outperformance vs a more cautious macro tone and lowered FY revenue guide; tariff absorption and Q2 margin guidance should mitigate estimate risk near term .

What Went Well and What Went Wrong

What Went Well

  • “Profit flow-through and margin expansion” driven by labor productivity, food efficiency, wage management, and retention, with Cheesecake Factory 4‑wall margins up to 17.4% (+140 bps Y/Y) .
  • Flower Child momentum: comps +5%, AWS ~$88.5K, annualized AUV >$4.6M, mature location margins up to 18.6%, with strong new unit openings and operations stability .
  • Development cadence: 8 openings in Q1 (3 North Italia, 3 Flower Child, 2 FRC) with additional 3 post‑quarter; plan for as many as 25 new restaurants in 2025 maintained .

What Went Wrong

  • North Italia comps −1% with headwinds from L.A. fires and alcohol mix; traffic −4% and mix −2% offset by mature margin improvement to 16.6% .
  • Macro caution prompted lowering FY25 revenue outlook to ~$3.76B from ~$3.8B prior, reflecting softer real disposable income forecasts and other noise (weather, holiday shifts) .
  • Other OpEx rose ~40 bps Y/Y in Q1, partially from marketing/rewards and slightly higher facility costs; pretax net expense of $17.3M from debt extinguishment, FRC items, and impairment/lease closures weighed on GAAP EPS .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$865.5 $921.0 $927.2
GAAP Diluted EPS ($)$0.61 $0.83 $0.67
Adjusted Diluted EPS ($)$0.58 $1.04 $0.93
Net Income Margin (%)3.5% 4.5% 3.6%
Income from Operations Margin (%)3.9% 5.1% 5.6%
Segment Revenues ($USD Thousands)Q1 2024Q1 2025
The Cheesecake Factory restaurants$667,794 $672,734
North Italia$70,874 $83,410
Other FRC$74,229 $87,424
Other$78,326 $83,629
Total$891,223 $927,197
Segment Operating Income ($USD Thousands)Q1 2024Q1 2025
The Cheesecake Factory restaurants$86,071 $99,433
North Italia$3,170 $4,980
Other FRC$6,292 $4,704
Other$(56,240) $(57,158)
Total$39,293 $51,959
KPIsQ1 2024Q1 2025
CAKE comparable sales (%)−0.6% 1.0%
CAKE off-premise mix (%)22% 22%
CAKE annualized AUV ($)—~$12.5M
North Italia comparable sales (%)3% −1%
North Italia annualized AUV ($)—~$7.75M
Flower Child comparable sales (%)—5%
Flower Child annualized AUV ($)—>$4.6M
Restaurants open at period-end (Company-owned)CAKE 216; North 38; Other FRC 42; Other 40 CAKE 215; North 45; Other FRC 49; Other 46
Restaurant operating weeks (CAKE)2,807 2,795
Q1 2025 vs Consensus (S&P Global)ConsensusActual
Revenue ($USD Millions)925.7*927.2
Adjusted EPS ($)0.82*0.93
EBITDA ($USD Millions)72.9*79.4*

Values retrieved from S&P Global (cells marked with *).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY 2025~$3.80B at midpoint ~$3.76B at midpoint Lowered
Total Revenue ($USD Millions)Q2 2025—$935–$950 New
Adjusted Net Income Margin (%)Q2 2025—~5.3–5.4 New
Adjusted Net Income Margin (%)FY 2025~4.75 ~4.75 Maintained
G&A ($USD Millions)Q2 2025~$60 (Q1 2025 guide baseline) ~$60 Maintained
Depreciation ($USD Millions)Q2 2025~$27 (Q1 2025 guide baseline) ~$27 Maintained
Preopening ($USD Millions)Q2 2025~$10 (Q1 2025) ~$9.5 Lowered
Effective Tax Rate (%)Q2 2025~8 (Q1 2025) ~9–10 Raised
Weighted Avg Shares (Millions)Q2 2025~50 (Q1 2025) Just above 48 Lowered
New Units (count)FY 2025As many as 25 As many as 25 Maintained
Dividend per Share ($)Q2 2025$0.27 (declared in Q1) $0.27 (paid May 27, 2025) Maintained
Tariff impact handlingFY/Q2 2025—Absorb without changing margin outlook Policy affirmed
Net Interest Expense ($)FY 2025—+$1–$1.5M from refinancing (embedded in guide) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Labor retention/productivityExecution improvements and retention gains supporting margins Record retention; CAKE 4‑wall margins 18.4% (seasonal high) Continued retention gains, driving margin expansion; CAKE 4‑wall 17.4% (+140 bps Y/Y) Positive, sustained
Off‑premise mixStable 21% CAKE off‑prem 21% CAKE off‑prem 22% CAKE off‑prem, very stable; North ~14% Stable
Menu innovation/valueOngoing innovation drives relevance 20+ new items; balanced price points Continued PR/engagement; mix headwind from lower price point items added Value emphasis; mix down
Tariffs/supply chain——Assessing tariffs; absorb impact via efficiencies/vendor offsets; small pricing optionality (50–75 bps) New risk; managed
Macro tone—Predictable, resilient; modest weather holiday noise More cautious; lowered FY revenue outlook; noise persists Cautious
Brand performanceCAKE outperforms industry CAKE comps +1.7%; Flower Child comps +11% CAKE comps +1.0%; North comps −1%; Flower Child comps +5% Mixed by concept
Loyalty/marketing—Rewards gaining; experiential, not points based Shift to personalized daypart offers; ~15 bps OpEx impact Scaling selectively

Management Commentary

  • CEO: “Sales finished towards the higher end of our expectations… execution within our restaurants was exceptional… driving strong profit flow‑through and margin expansion.”
  • CFO: “Adjusted net income margin of 4.9% exceeded the high end of the guidance range… we are updating our total revenue outlook to align more closely with the lower end of previous expectations.”
  • President: “Flower Child continues on a strong upward trajectory… restaurant level profit margin… rose to 18.6%... rewards program… shifting to more personalized strategy driving higher engagement.”

Q&A Highlights

  • Macro/guidance: Tone more cautious given revised GDP/real income forecasts; FY25 revenue trimmed; Q2 revenue $935–$950M with adjusted net income margin ~5.3–5.4% .
  • Tariffs: Biggest P&L impact likely in other OpEx; plan to offset through efficiencies/vendor terms; potential pricing of 50–75 bps if needed; margin outlook unchanged .
  • Comps composition: CAKE ~4% price, traffic −1.2%, mix negative from lower‑priced items and alcohol softness; North similar pricing mid‑4s, traffic −4%, heavier negative mix from alcohol .
  • Loyalty/marketing: Personalized offers progressing; ~15 bps Q1 impact in other OpEx; member acquisition above expectations though specifics withheld .
  • Development/closures: Target 25 openings in 2025; one CAKE closure (Seattle) mid‑Q2 embedded in outlook; construction costs back in line; no tariff impact yet on build costs .

Estimates Context

  • Q1 2025 EPS and revenue beat Street: adjusted EPS $0.93 vs $0.82*; revenue $927.2M vs $925.7M*. EBITDA delivered above consensus ($79.4M* actual vs $72.9M* consensus), while investor materials cited adjusted EBITDA of $88M (+16% Y/Y) .
  • Prior quarters tracked in-line to modest beats: Q4 2024 adjusted EPS $1.04 vs $0.92*; revenue $921.0M vs $912.9M*; Q3 2024 adjusted EPS $0.58 vs $0.49*; revenue $865.5M vs $866.1M* .
  • FY25 consensus EPS at $3.76* and revenue $3.74B* face minor top‑line guide risk; CFO maintained margin framework, suggesting limited EPS estimate downside absent macro deterioration .

Values retrieved from S&P Global (cells/metrics marked with *).

Key Takeaways for Investors

  • Quality beat: EPS beat and margin expansion underpin confidence in operating momentum despite a softer macro narrative; off‑premise and retention support durability .
  • Guide reset: FY revenue trimmed but Q2 margin guide raised vs Q1 baseline, signaling continued cost discipline and tariff absorption without sacrificing profitability .
  • Concept differentiation: Flower Child strength and North Italia mature margin gains diversify growth; monitor North comps for normalization as transitory fire/weather impacts fade .
  • Capital actions: $575M convert refinancing, $141.4M buybacks, and ongoing $0.27 dividend improve flexibility; modest net interest expense headwind is incorporated in FY25 guide .
  • Near‑term trading: Beat + disciplined Q2 margin outlook vs lowered FY revenue should anchor shares; watch macro/tariff headlines and comps/mix to gauge estimate revisions .
  • Medium‑term thesis: Unit growth (as many as 25 in 2025) and loyalty personalization can drive incremental traffic and margin scale; portfolio mix (Flower Child/North) offers incremental runway .
  • Risk checks: Tariffs (other OpEx), alcohol mix pressure, and macro sensitivity to real income; management contingency plans (pricing, vendor offsets) lower downside risk to margins .