Executive Summary

Q3 revenue of $907.2M grew 4.8% YoY but declined sequentially; adjusted EPS of $0.68 beat S&P Global consensus by ~8c while revenue came in ~0.6% below estimates, and adjusted EBITDA slightly exceeded consensus; consolidated operating margin was 4.1% and adjusted net income margin ~3.7% (consensus/actual: Revenue $912.6M*/$907.2M, EPS $0.60*/$0.68, EBITDA $64.6M*/$65.5M*)*.
The Cheesecake Factory comps were +0.3% with pricing ~4% and traffic -2.5%; North Italia comps -3% amid sales transfers and LA fires; Flower Child comps +7% and margin strength; off-premise remained 21% of sales, with delivery ~10% .
Q4 guidance: revenue $940–$955M, adjusted net income margin ~5.1% implying margin expansion despite softer traffic; FY25 net income margin outlook 4.9% maintained; initial FY26 outlook calls for 4–5% revenue growth, ~5% net income margin, ~26 openings, and $200–$210M capex .
Liquidity remains strong ($556.5M), debt $644M; dividend of $0.27/share declared and modest buybacks ($1.2M) in Q3; development targets for 2025 (as many as 25 openings) reiterated, including North Italia and Flower Child .
Potential stock reaction catalysts: EPS/margin beat vs consensus, Q4/FY26 outlook resiliency vs softer industry traffic, and evidence of cost control offsetting beef/medical headwinds .

What Went Well and What Went Wrong

What Went Well
- Cheesecake Factory restaurant-level margin expanded 60 bps YoY to 16.3% on labor productivity and wage management; Flower Child comps +7% with adjusted mature-unit margins 17.4% (+140 bps YoY) .
- Adjusted EPS ($0.68) beat consensus ($0.60*) with adjusted EBITDA modestly above consensus ($65.5M* vs $64.6M*) despite a competitive backdrop; cost of sales improved ~80 bps on commodities (ex-beef) (consensus/actual: EPS $0.60*/$0.68; EBITDA $64.6M*/$65.5M*)*.
- Development on track (two FRC openings in Q3; additional FRC post-quarter; two licensed Cheesecake openings in Mexico) with 2025 plan of as many as 25 openings reiterated and an acceleration to ~26 openings in 2026 .
What Went Wrong
- Revenue ($907.2M) slightly missed consensus ($912.6M*) and declined sequentially from Q2’s $955.8M; consolidated operating margin compressed to 4.1% from 6.8% in Q2 on deleverage and facility costs .
- Traffic softness industry-wide weighed on comps (Cheesecake traffic -2.5% with ~4% price; North traffic ~-6% with sales transfers and LA fires impact) .
- Q4 headwinds include rising beef (pivot from flattish commodities in Q3 to ~2% in Q4) and ~50 bps YoY labor headwind from group medical; management still expects Q4 adjusted net income margin ~5.1% via cost control .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$865.5	$927.2	$955.8	$907.2
GAAP Diluted EPS ($)	$0.61	$0.67	$1.14	$0.66
Adjusted Diluted EPS ($)	$0.58	$0.93	$1.16	$0.68
Operating Income Margin (%)	3.9%	5.6%	6.8%	4.1%
Net Income Margin (%)	3.5%	3.6%	5.7%	3.5%

Segment revenue breakdown

Segment ($USD Millions)	Q3 2024	Q2 2025	Q3 2025
The Cheesecake Factory restaurants	$647.8	$683.3	$651.4
North Italia	$71.9	$90.8	$83.5
Other FRC	$67.0	$90.2	$78.0
Other (incl. Flower Child, bakery, etc.)	$78.9	$91.6	$94.4
Total	$865.5	$955.8	$907.2

KPIs (Q3 snapshot)

KPI	Q3 2025
Cheesecake Factory comps YoY (%)	+0.3%
North Italia comps YoY (%)	-3%
Flower Child comps YoY (%)	+7%
Off-premise % of sales	21%
Delivery % of sales	~10%
Cheesecake Factory annualized AUV ($M)	>$12
North Italia annualized AUV ($M)	$7.3
Flower Child annualized AUV ($M)	$4.6
Cheesecake Factory restaurant-level margin (%)	16.3%

Performance vs S&P Global consensus (Q3 2025)

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$912.6*	$907.2	-$5.4 (-0.6% vs cons.)
Adjusted EPS ($)	$0.60*	$0.68	+$0.08
EBITDA ($USD Millions)	$64.6*	$65.5*	+$0.9

Values marked with * are retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total revenues ($)	Q4 2025	N/A	$940–$955M	New
Adjusted net income margin (%)	Q4 2025	N/A	~5.1% at midpoint	New
Commodity inflation	Q4 2025	Q3 “flattish” (context)	Low single digits, ~2% driven by beef	Higher vs Q3 actual
Labor inflation	Q4 2025	N/A	Low–mid single digits; ~50 bps YoY headwind from group medical	New
G&A ($)	Q4 2025	N/A	~60M	New
Depreciation ($)	Q4 2025	N/A	~28M	New
Pre-opening ($)	Q4 2025	N/A	~$8–$9M	New
Tax rate	Q4 2025	N/A	~12%	New
Weighted avg shares	Q4 2025	N/A	~49M	New
Net income margin	FY 2025	4.9% prior (reiterated)	4.9% remains intact	Maintained
New unit openings	FY 2025	As many as 25	As many as 25	Maintained
Cash CapEx ($)	FY 2025	N/A	~$190–$200M	New/maintained vs recent commentary
Revenue growth	FY 2026	N/A	~4–5% vs 2025	New
Net income margin	FY 2026	N/A	~5%	New
New unit openings	FY 2026	N/A	As many as 26	New
Cash CapEx ($)	FY 2026	N/A	~$200–$210M	New
Dividend/share	Q4 2025	$0.27 (Q2 declaration)	$0.27 payable Nov 25, 2025; record Nov 11, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Consumer/traffic	Solid demand; comps +1.0% (Q1), +1.2% (Q2); strong execution and retention	Softer macro; traffic pressure, esp. October; gov’t shutdown cited 1–2% monthly impact historically	Softening near term
Pricing strategy	Healthy pricing taken YoY supporting comps	Pricing ~4% in Q3; moderating to ~3.5% in Q4; effective price ~100 bps lower due to mix; likely ~2% 1H26	Moderating
Menu innovation (bites/bowls)	Ongoing innovation supporting demand	High attachment, positive check mix; more items in winter menu; supports value without discounting	Positive momentum
Loyalty/technology	Rewards momentum referenced; app not yet launched	Rewards traction; dedicated app targeted 1H26 to reduce friction and drive engagement	Building
Supply chain/commodities	Favorable year-over-year trends ex pockets	Q3 “flattish”; Q4 low-single-digit inflation (~2%) driven by beef; dairy outlook favorable	Mild headwind Q4
Development	16 openings YTD at Q2; target as many as 25 in 2025	On track for 25 in 2025; planning ~26 in 2026	Accelerating in 2026
Segment performance	Broad-based growth; comps positive at Cheesecake	Cheesecake comps +0.3%; North -3% (transfer/fires); Flower Child +7%	Mixed by concept
Off-premise	Stable contribution	21% of sales; delivery 10%; stable vs Q2 and LY	Stable

Management Commentary

“We delivered another quarter of solid results…earnings and profitability finishing above the high end of our expectations…positive comparable sales…underscoring the strength and resilience of our namesake concept.” — David Overton, CEO .
“The Cheesecake Factory's restaurant-level profit margin increased 60 basis points year over year to 16.3%...margin improvement also realized at North Italia and Flower Child.” — Prepared remarks .
“Adjusted net income margin of 3.7% exceeded the high end of the guidance we provided.” — CFO .
“For Q4, we anticipate total revenues to be between $940 million and $955 million…we would anticipate adjusted net income margin to be about 5.1%.” — CFO .
“Pricing was about 4%…traffic was a negative 2.5%…North Italia price 4%…traffic roughly negative 6%.” — CFO, Q&A .

Q&A Highlights

Consumer softness and October deceleration: Management attributes incremental caution largely to traffic and potential government shutdown effects (1–2% one-month impact historically) .
Cost outlook and margins: Commodities flattish in Q3, ~2% inflation in Q4 (beef); ~50 bps YoY labor headwind from group medical in Q4; underlying labor productivity still favorable 10–20 bps; other OpEx +~20 bps from facilities .
Pricing cadence: Price moderates to ~3.5% in Q4 and ~2% 1H26 effective ~100 bps lower due to mix; positioning vs food-away-from-home inflation mid-3% .
Segment dynamics: North Italia comps impacted by sales transfer (~2 pts) and LA fires (~1 pt); Flower Child strength continues; Cheesecake bites/bowls improving mix without check dilution .
Off-premise steady: 21% sales, delivery ~10%, stable vs Q2/LY .
2026 setup: 4–5% revenue growth, ~5% net income margin, ~26 openings; capex $200–$210M .

Estimates Context

Q3 results vs S&P Global consensus: Adjusted EPS $0.68 beat $0.60*; revenue $907.2M missed $912.6M*; EBITDA $65.5M* slightly above $64.6M*. Estimate counts: EPS (18), Revenue (16) .
Implications: Street likely raises FY25 EPS on margin resilience (Q4 adj. margin ~5.1%, FY25 net income margin 4.9% reiterated) while trimming near-term comp/traffic assumptions and raising Q4 commodity/labor inputs .
Values marked with * are retrieved from S&P Global.

Key Takeaways for Investors

Margin durability amid softer traffic is the story: EPS beat came from cost control (labor productivity, favorable commodities ex beef), not top-line; Q4 guide implies further margin uplift to ~5.1% adjusted net income margin despite mixed traffic .
Near-term trading setup: watch October/early Q4 sales cadence, beef cost trajectory, and any resolution of government shutdown risks; management models ~1% traffic step down vs Q3 .
Concept mix matters: Flower Child outperformance and stable off-premise provide ballast vs North Italia near-term pressures from sales transfer; Cheesecake bites/bowls and loyalty are mitigating check risk without discounting .
2026 acceleration: ~26 openings with 4–5% revenue growth and ~5% net income margin frame a path to steady EPS growth once macro stabilizes; capex steps up to $200–$210M to fund pipeline .
Capital returns supported by strong liquidity: $556.5M available liquidity, dividend maintained at $0.27/share; modest buybacks continue .
Risks: elevated competitive discounting, beef inflation, group medical variability, and macro-sensitive traffic; management cites resiliency via operational discipline and pricing moderation .

Additional press releases noted: Q3 earnings webcast notice (Oct 7, 2025) and a holiday gift card promotion (Nov 13, 2025) that may support Q4 traffic with a $15 bonus card for $50 gift card purchases .

CHEESECAKE FACTORY INC (CAKE)·Q3 2025 Earnings Summary