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CF

CHEESECAKE FACTORY INC (CAKE)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 results have not been reported yet; management guided Q4 revenues to $940–$955M and an adjusted net income margin of ~5.1% at the midpoint, citing softer traffic and macro factors including the government shutdown .
  • Q3 2025 delivered revenue of $907.2M and adjusted EPS of $0.68, with Cheesecake Factory comps +0.3% and restaurant-level margin up 60 bps YoY to 16.3%; off-premise remained stable at ~21% of sales .
  • Q2 2025 was a record quarter: revenue $955.8M, adjusted EPS $1.16, Cheesecake Factory comps +1.2%, and restaurant-level margin reached 18.5% (8-year high) .
  • Guidance for Q4 implies a revenue outcome below some third-party consensus figures, setting up potential estimate revisions; S&P Global consensus data was unavailable via our feed at this time .
  • Near-term stock catalysts: trajectory of Q4 traffic vs guidance, updates on commodity (beef) inflation, loyalty app timing, and development cadence into 2026 .

What Went Well and What Went Wrong

What Went Well

  • Operational execution sustained margin resilience: Cheesecake Factory restaurant-level margin +60 bps YoY to 16.3% in Q3; Q2 margin peaked at 18.5% on improved retention and productivity .
  • Flower Child outperformed: Q3 comps +7% with adjusted mature margins up 140 bps to 17.4%; Q2 AUV exceeded $4.8M with mature margins at 20.4% .
  • Stable off-premise and disciplined pricing/value strategy: off-premise ~21% of sales; bites/bowls strategy moderates headline pricing to ~3.5% in Q4 (~2–2.5% effective) while supporting mix and engagement .

What Went Wrong

  • Macro softness and traffic pressure: Management expects ~1 point lower traffic in Q4 versus Q3, citing government shutdown impact and competitive deal intensity .
  • North Italia comps declined: Q3 comps -3% (pricing ~4%, traffic ~-6%, mix -1%), affected by sales transfer from new units and LA fires; Q2 comps -1% .
  • Beef inflation headwind into Q4: commodity favorability in Q3 was ~flat; Q4 expected ~2% basket inflation driven by beef; facility-related costs also a modest headwind .

Financial Results

MetricQ2 2025Q3 2025Q4 2025 (Guidance)
Revenue ($USD Millions)$955.8 $907.2 $940–$955
Diluted EPS ($USD)$1.14 $0.66 N/A
Adjusted Diluted EPS ($USD)$1.16 $0.68 N/A
Operating Margin % (Income from Ops/Rev)6.8% 4.1% N/A
Net Income Margin %5.7% 3.5% N/A
The Cheesecake Factory Comps %+1.2% +0.3% ~-1% to 0%
Segment Revenues ($USD Millions)Q2 2025Q3 2025
The Cheesecake Factory restaurants$683.3 $651.4
North Italia$90.8 $83.5
Other FRC$90.2 $78.0
Other (incl. Flower Child, Grand Lux, bakery, CPG, etc.)$91.6 $94.4
Total$955.8 $907.2
KPIsQ2 2025Q3 2025Q4 2025 (Guidance/Commentary)
Cheesecake Factory Restaurant-Level Margin %18.5% (8-year high) 16.3% (+60 bps YoY) N/A
Off-Premise % of Sales~21% ~21% (Delivery ~10%) N/A
North Italia Comps %-1% -3% N/A
Flower Child Comps %+4% +7% N/A
Cheesecake Factory AUV ($M, annualized)~12.8 >12 N/A
North Italia AUV ($M)~8.0 ~7.3 N/A
Flower Child AUV ($M)>4.8 ~4.6 N/A

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenues ($USD)Q4 2025Not provided prior$940–$955M Initiated
Adjusted Net Income Margin %Q4 2025Not provided prior~5.1% (midpoint) Initiated
G&A ($USD)Q4 2025Not provided prior~$60M Initiated
Depreciation ($USD)Q4 2025Not provided prior~$28M Initiated
Pre-opening Expenses ($USD)Q4 2025Not provided prior$8–$9M Initiated
Tax RateQ4 2025Not provided prior~12% Initiated
Weighted Avg Shares OutstandingQ4 2025Not provided prior~49M Initiated
Adjusted Net Income Margin %FY 2025~4.75% ~4.9% (reaffirmed) Raised, then Maintained
Cash CapEx ($USD)FY 2025$190–$200M $190–$200M (maintained) Maintained
Quarterly DividendQ3 2025 payout$0.27/sh on Nov 25, 2025 $0.27/sh (ongoing policy context) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Current Period (Q3 commentary for Q4 setup)Trend
Macro/trafficStable sales; cautious on H2; tariffs included in inflation assumptions Softer consumer; gov’t shutdown impact; ~1pt lower traffic expected in Q4 Deteriorating near term
Pricing/value strategyHeadline pricing ~4%; introduce bites/bowls to lower effective price Q4 headline ~3.5%, effective ~2–2.5% with bites/bowls adoption Value-forward
CommoditiesFavorable basket; low-single-digit inflation incl. tariffs Q3 ~flat; Q4 ~2% inflation driven by beef; dairy favorable Mixed; beef up
Loyalty/technologyRewards ramping; personalized offers; Flower Child app Planning Cheesecake Factory app for 1H 2026 to reduce friction Building capabilities
Off-premise~21% of sales consistent ~21% of sales; delivery ~10% Stable
Development25 openings in 2025 Reiterated; 26 openings targeted for 2026 Accelerating
Brand performanceFlower Child comps +4% Flower Child comps +7%; North comps -3% amid transfer and fires Divergent; FC strong

Management Commentary

  • “Our performance was led by The Cheesecake Factory restaurants, delivering positive comparable sales results amid a more challenging and competitive environment… Our operators once again executed exceptionally well… supporting healthy margin performance.”
  • “Specifically, for Q4, we anticipate total revenues to be between $940 million and $955 million, representing an approximate 1% step down from the Q3 sales trend… we would anticipate adjusted net income margin to be about 5.1% at the midpoint.”
  • “Pricing [in Q4] is already going to be down to about 3.5%… effectiveness is about 100 bps less… maybe 2% in the first half of next year… well below food away-from-home inflation.”
  • “When we think about commodities… beef has moved up another step… Q3 ~flattish… Q4 more like a full 2% [inflation]… favorability will be cut in half on cost of sales.”
  • “Off-premise continues to stay very, very stable… Total off-premise was 21% of sales… delivery was about 10%.”

Q&A Highlights

  • Macro softness and traffic: Management attributes softer traffic to government shutdown and heightened competitive discounting; expects ~1pt lower Q4 traffic vs Q3 .
  • Pricing/value: Headline pricing moderates to ~3.5% in Q4; effective ~2–2.5% due to bites/bowls; value communication via rewards/social channels .
  • Commodities: Beef inflation a Q4 headwind; Q3 was ~flat; overall basket ~1–2% in 2026 with dairy favorable; facility costs modestly negative .
  • Brand performance: Flower Child strength continues; North Italia comps pressured by sales transfer and LA fires; mature margins improving .
  • Loyalty/app: Cheesecake Factory app targeted for 1H 2026 to enable reservations, off-premise ordering, and rewards redemption .
  • Capital structure: Convert notes dilution at higher stock prices would be modest; strike ~$70–71; at ~$80, dilution ~1.5% .

Estimates Context

  • S&P Global consensus data was unavailable via our feed at this time.
  • Third-party sources indicate Q4 2025 consensus revenue ~$969.8M and EPS ~$1.25; CAKE’s Q4 revenue guidance ($940–$955M) is below these figures, implying potential downward estimate revisions absent upside from holiday or mix .
  • Note: We will anchor comparisons to S&P Global once access is restored; until then, treat third-party consensus as indicative rather than definitive.

Key Takeaways for Investors

  • Near-term setup cautious: Q4 guidance embeds softer traffic and beef inflation; headline pricing moderates—watch comps, margin flow-through, and any holiday uplift .
  • Value strategy should support resilience: Bites/bowls and personalized rewards aim to protect traffic without heavy discounting; effective pricing trails industry inflation .
  • Mix of concepts diversifies performance: Flower Child’s momentum and North Italia’s improving mature margins offset pressure from comps transfer .
  • Margin durability: Retention-driven productivity and stable off-premise underpin four-wall margin stability even in a softer environment .
  • Development accelerates in 2026: Up to 26 new units planned; monitor returns and regional cannibalization risk management .
  • Estimates likely to recalibrate: Guidance implies revenue below some third-party consensus; expect revisions pending holiday trends and Q4 execution .
  • Watchlist items: Government shutdown resolution, beef/dairy commodity trajectory, loyalty app launch timing, facility cost control, and dividend continuity .

Additional Documents Reviewed

  • Q3 2025 earnings press release and detailed financial tables .
  • Q3 2025 earnings call transcript (prepared remarks and Q&A) .
  • Q2 2025 earnings press release and segment tables .
  • Q2 2025 earnings call transcript (prepared remarks and Q&A) .
  • Holiday gift card press release (promotional cadence relevant to Q4) .

Notes: Q4 2025 8-K 2.02 and call transcript were not available as of Nov 20, 2025; analysis reflects prior-quarter results and Q4 guidance to frame investor implications .