Sign in

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

CF

CHEESECAKE FACTORY INC (CAKE)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered record revenue ($0.956B) and adjusted EPS of $1.16, both modest beats versus S&P Global consensus; revenue +5.7% YoY and operating margin expanded 30 bps YoY to 6.8% . Actuals vs consensus: EPS $1.16 vs $1.06*, revenue $955.8M vs $947.3M*.
  • The Cheesecake Factory comp sales rose 1.2% YoY; four-wall margins reached 18.5%, the highest in eight years, driven by commodity cost favorability and retention-led productivity .
  • Flower Child continued outsized momentum: comps +4%, annualized AUV >$4.8M, and mature restaurant-level margins 20.4% . North Italia AUVs reached $8M with mature margins 18.2%; comps -1% amid L.A. fire effects and sales transfer from new openings .
  • Guidance: Q3 revenues $905–$915M; full-year adjusted net income margin raised to ~4.9% (from ~4.75% in Q1), tax rate to ~11.5%; pre-opening now ~$34M for FY25 . Dividend maintained at $0.27 per share .
  • Near-term catalysts: operational momentum with Bowls & Bites value mix, continued margin discipline, and accelerating unit development; watch tariff/other OpEx drift and North Italia comp sensitivity to infill openings .

What Went Well and What Went Wrong

What Went Well

  • “Record-high revenue, continued margin expansion, and profitability that exceeded our guidance” (CEO Overton) . Cheesecake Factory four-wall margin rose to 18.5%, up 80 bps YoY—the highest in eight years .
  • Operational execution: cost of sales -70 bps YoY on favorable commodities; labor -20 bps YoY from retention/productivity; adjusted EPS $1.16 vs $1.09 prior year .
  • Flower Child strength: comps +4%, AUV >$4.8M, mature margins 20.4%, with catering, KDS, and ops dashboards cited as drivers; returns “mid-30%” on the brand per CFO .

What Went Wrong

  • North Italia comps -1% (traffic -4%, price ~4%, mix -1%) due to L.A. fires and sales transfer from new units; comps would be “flat” ex-L.A. .
  • Other operating expenses +40 bps YoY, driven by facility-related costs; pre-opening costs elevated ($9M vs $7M prior year) due to higher opening cadence .
  • Mix headwinds persist as strategy tilts to value (Bowls & Bites) and nonalcoholic attachment; CFO models another ~100 bps negative mix in back half .

Financial Results

Headline P&L vs prior quarters

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$920.963 $927.197 $955.825
GAAP Diluted EPS ($)$0.83 $0.67 $1.14
Adjusted Diluted EPS ($)$1.04 $0.93 $1.16
Income from Operations Margin (%)5.1% 5.6% 6.8%
Food & Beverage Costs (% of Rev)22.3% 21.8% 21.6%
Labor (% of Rev)34.2% 35.7% 34.9%
Other Operating (% of Rev)26.8% 26.7% 26.8%

Actual vs S&P Global Consensus (Q2 2025)

MetricConsensus*Actual
Revenue ($USD Millions)947.307*955.825
Primary EPS ($)1.063*1.16
EPS - # of Estimates17*—
Revenue - # of Estimates16*—
Values retrieved from S&P Global.

Segment Revenue and Operating Income (Q2 2025 vs Q2 2024)

SegmentRevenue Q2 2024 ($000s)Revenue Q2 2025 ($000s)Operating Income Q2 2024 ($000s)Operating Income Q2 2025 ($000s)
The Cheesecake Factory restaurants$676,697 $683,257 $101,035 $106,547
North Italia$75,514 $90,830 $5,507 $8,399
Other FRC (ex-Flower Child)$73,637 $90,178 $3,590 $3,914
Other (Flower Child, Grand Lux, Social Monk, Bakery, etc.)$78,194 $91,560 $(51,440) $(54,038)
Total$904,042 $955,825 $58,692 $64,822

KPIs and Operating Stats

KPIQ4 2024Q1 2025Q2 2025
Cheesecake Factory comp sales YoY (%)1.7% 1.0% 1.2%
Cheesecake Factory off-premise mix (%)21% 22% 21%
Cheesecake Factory annualized AUV ($M)$12.5 >$12.5 ~$12.8
North Italia comp sales YoY (%)1% (1%) (1%)
North Italia annualized AUV ($M)$7.9 $7.75 $8.0
Flower Child comp sales YoY (%)11% 5% 4%
Flower Child annualized AUV ($M)>$4.5 >$4.6 >$4.8
Company-owned restaurants (period-end)348 355 362 / 362–363
Cash & Cash Equivalents ($000s)$84,176 $135,411 $148,763
Debt (net of issuance costs) ($000s)$452,062 $627,306 $628,237

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD Billions)FY 2025~$3.76B midpoint ~$3.76B midpoint Maintained
Adjusted Net Income Margin (%)FY 2025~4.75% ~4.9% Raised
Tax Rate (%)FY 2025~10% ~11.5% (Q4 11–12%) Raised
G&A ($USD Millions)FY 2025~flat % of sales ~flat % of sales Maintained
Depreciation ($USD Millions)FY 2025~108 ~109 Slight increase
Pre-opening Expense ($USD Millions)FY 2025~34 ~34 Maintained
Unit Openings (count)FY 2025As many as 25 As many as 25 Maintained
Total Revenues ($USD Millions)Q3 2025—$905–$915 New range
Adjusted Net Income Margin (%)Q3 2025—~3.25% at midpoint New
Effective Commodity InflationQ3 2025—Low single digits New
Net Total Labor InflationQ3 2025—Low–mid single digits New
G&A ($USD Millions)Q3 2025—~61 New
Depreciation ($USD Millions)Q3 2025—~28 New
Pre-opening ($USD Millions)Q3 2025—~$7–$8 New
Dividend per share ($)Q2 declaration$0.27 (paid Aug 26, 2025) $0.27 Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Prev-2)Q1 2025 (Prev-1)Q2 2025 (Current)Trend
Menu innovation & value20+ new items, value across price points Large menu change; PR reach; loyalty personalization Launching Bowls ($15–$16) & Bites (<$10); lower effective pricing Increasing emphasis on value mix
Labor retention/productivity4-wall margin strength; retention improving Seventh sequential retention improvement; labor leverage Best-in-class retention exceeding pre-pandemic; productivity gains Sustained tailwind
Off-premise mixCF ~21%; stable CF 22%; North ~14% stable CF ~21%; delivery channel fits bowl category Stable; channel optimization
Tariffs/other OpEx—Able to absorb tariffs via efficiencies; other OpEx most affected Q3 modeling low-single-digit commodity inflation; facilities costs press other OpEx Manageable; watch OpEx drift
Brand performance: Flower ChildComps +11%; AUVs rising Comps +5%; mature margins 18.6% Comps +4%; AUV >$4.8M; mature margins 20.4% Strong inflection, expanding margins
Brand performance: North ItaliaMature margins 18.8%; AUV ~$7.9M AUV $7.75M; comps -1% (fires/weather) AUV $8M; comps -1%; sales transfer from openings Solid AUV/margins; comps sensitive to infill
Development pipeline25 units in 2025; front-loaded As many as 25; 8 opens in Q2 8 opens in Q2; as many as 25 in FY25 On track; cadence sustained
Rewards/marketingDirectional; CF loyalty strengthens Personalized offers; daypart targeting; higher redemptions (~4%) Loyalty used for lunch targeting; promo around National Cheesecake Day Targeted, accretive offers

Management Commentary

  • CEO Overton: “We delivered another quarter of strong results, with record-high revenue, continued margin expansion, and profitability that exceeded our guidance… comparable sales finishing above our expectations” .
  • President Gordon: “Record The Cheesecake Factory average weekly sales… off-premise sales of 21%… launch of Bowls and Bites to reinforce menu relevance and value” .
  • CFO Clark: “Cost of sales decreased 70 bps… labor declined 20 bps… GAAP EPS $1.14; adjusted EPS $1.16… Q3 revenues $905–$915M… FY25 adjusted net income margin ~4.9%” .

Q&A Highlights

  • Margin trajectory and retention: Management reiterated raised FY25 adjusted net income margin (~4.9%) on better-than-expected four-wall margins; retention now exceeds pre-pandemic, supporting labor leverage .
  • Pricing/mix: Headline pricing to ~3.5% in H2 with Bowls & Bites creating ~100 bps negative mix; consumer “feels” ~2–2.5% effective pricing .
  • Flower Child economics: Mature margins at 20.4%; AUV >$4.8M; returns mid-30%; off-prem ~50% .
  • North Italia comps and openings: Comps -1% with L.A. fire impact and sales transfer; AUV $8M; mature margins ~16–18% annualized .
  • Capital structure: Converts strike ~$70–$71; at $80 stock, dilution ~1.5%, deemed “not that meaningful” .

Estimates Context

  • Q2 2025 beats: Adjusted EPS $1.16 vs $1.06 consensus*; revenue $955.8M vs $947.3M consensus*; 17 EPS estimates, 16 revenue estimates*. Values retrieved from S&P Global.
  • Implications: Consensus likely nudges up on tangible margin flow-through (cost of sales and labor line favorability) and raised FY25 adjusted margin guide; mix headwinds should temper aggressive SSS expectations .

Key Takeaways for Investors

  • The beat was quality: margin expansion from commodities and retention-driven labor productivity looks durable; operating margin stepped up sequentially and YoY .
  • Value mix strategy (Bowls & Bites) should support traffic and off-prem channels while keeping effective pricing consumer-friendly; expect modest mix drag but improved breadth of demand .
  • Flower Child is becoming a needle-mover with superior unit economics and margin profile; watch expansion pacing (~20%+ growth) and capacity gains from catering/KDS .
  • North Italia’s AUV/margins are strong; comps can be optically soft during market densification—focus on returns and mature margin trajectory .
  • FY25 guide improved on adjusted margin; Q3 seasonally softer margin (~3.25%) from lower sales and pre-opening timing—trade the setup around cadence and holiday shifts .
  • Balance sheet/liquidity robust post converts; dividend held at $0.27; dilution risk from converts at high stock prices is modest (~1.5%) .
  • Monitoring items: tariffs flowing through other OpEx; facility cost inflation; loyalty ROI; LA/region-specific weather impacts; any additional closures beyond the already discussed Seattle site .

Appendix: Additional Context

  • National Cheesecake Day promotion for Rewards members (any slice half-price) and Peach Perfect cheesecake launch; supports loyalty acquisition and mix strategy .
  • Liquidity and capital allocation: Q2 cash $148.8M; revolver availability $366.5M; total principal debt $644.0M; dividend maintained .
  • Development: 8 openings in Q2; as many as 25 in FY25 across concepts; two international licensed Cheesecake Factory openings expected .