The Cheesecake Factory(CAKE) - 2025 Q3 - Quarterly Report

Revenue Growth and Financial Performance - Revenues increased 4.3% to $865.5 million for the fiscal quarter ended October 1, 2024 compared to$830.2 million for the comparable prior year period[85] - Net income increased to 3.5% of revenues in Q3 2024 from 2.2% in Q3 2023[84] - Adjusted net income for the thirteen weeks ended October 1, 2024, was $28.18 million, compared to$19.03 million for the same period in 2023[117] - The company anticipates total revenue for fiscal 2024 to be approximately $3.57 billion, with a net income margin of approximately 4.5$905 million and $915 million, with a net income margin of 4.8$3.75 billion, with a net income margin of around 4.75% at the mid-point of the estimated revenue[116] Restaurant Operations and Expansion - The company operates 344 restaurants in the US and Canada, including 215 The Cheesecake Factory locations, 40 North Italia locations, and 35 Flower Child locations[73] - The company plans to continue expanding The Cheesecake Factory, North Italia, and Flower Child concepts, with a focus on premier locations[75] - The company targets annual unit growth of 7% across its concepts, combined with comparable sales growth[81] - The company plans to open up to 22 new restaurants in fiscal 2024, including 3 The Cheesecake Factory, 6 North Italia, 6-7 Flower Child, and 8 Other FRC locations, with anticipated cash capital expenditures of $180 to$200 million[114] - The company expects to open up to 24 new restaurants in 2025, with cash capital expenditures of $190 to$210 million[118] - Preopening costs were $7.0 million in Q3 2024, with one Flower Child and three Other FRC locations opened during the quarter[98] Cost Management and Margins - Food and beverage costs decreased to 22.6$647.8 million in Q3 2024 compared to $628.1 million in Q3 2023, with comparable sales up 1.6$71.9 million in Q3 2024, with comparable sales up 2% driven by a 4% increase in average check, despite a 2% decline in customer traffic[87] - Flower Child sales increased 13.7% to $36.6 million in Q3 2024, with sales per restaurant operating week up 6.5$85,225[89] - Other FRC sales increased 14.3% to $67.0 million in Q3 2024, despite a 4.4$116,493[90] Financial Position and Liquidity - Cash flows from operations increased by $23.8 million in the first nine months of fiscal 2024 compared to the same period in 2023, primarily due to higher net income and increased accounts payables[121] - Capital expenditures for new restaurants in the first nine months of fiscal 2024 were$76.1 million, compared to $61.6 million in the same period in 2023[122] - The company repurchased 0.5 million shares at a cost of$17.5 million in the first nine months of fiscal 2024, compared to 1.1 million shares at a cost of $36.3 million in the same period in 2023[129] - The company had net availability for borrowings of$236.5 million under the Revolver Facility as of October 1, 2024[126] - The company believes its cash and cash equivalents, combined with expected cash flows from operations and available borrowings, will provide adequate liquidity for the next 12 months and the foreseeable future[131] Commodity and Supply Chain Risks - The company is negotiating short-term and long-term agreements for principal commodities like dairy and poultry, but these efforts may not yield intended benefits for fiscal 2025[138] - A hypothetical 1% increase in food costs would negatively impact cost of sales by $2.0 million in Q3 2024 and$1.9 million in Q3 2023[139] - Commodities not under contract are subject to significant supply and cost fluctuations, especially those regulated by governments like dairy and corn[139] - International market purchases are susceptible to cost and availability fluctuations due to currency values, trade disputes, tariffs, and geopolitical unrest[139] - The company may lack the ability to adjust menu prices or items in response to food commodity price increases[139] - Operating results in fiscal 2024 continue to be impacted by supply chain challenges and increased commodity and wage inflation[137] - Climate change may exacerbate factors like labor availability, weather, and natural disasters, further impacting product and service costs[137] Financial Risks and Hedging - A hypothetical 1% rise in interest rates would increase annual interest expense by $1.3 million based on outstanding borrowings as of October 1, 2024, and January 2, 2024[140] - A hypothetical 10$2.8 million as of October 1, 2024, and $2.4 million as of January 2, 2024[140] - The company has no hedging contracts in place as of October 1, 2024[138] Tax and Impairment - The effective income tax rate increased to 5.8$3.5 million in Q3 2024, compared to an expense of $48,000 in Q3 2023[96]