The Cheesecake Factory(CAKE)2025-02-24 21:00Company Operations - The Cheesecake Factory operates 334 restaurants across the U.S. and Canada, including 216 locations of The Cheesecake Factory, 37 North Italia, and 32 Flower Child[9]. - The company operates two bakery facilities producing cheesecakes and other baked goods for its restaurants and third-party customers[9]. - The company operates a total of 33 restaurants across various international locations, including 6 in the United Arab Emirates and 8 in Mexico[39]. - The company employs approximately 47,900 people, with about 46,250 in restaurants and the remainder in corporate support and bakery operations[57]. - The company has dedicated corporate personnel to support international development and operations, emphasizing the importance of training for licensees[148]. Financial Performance - The Cheesecake Factory's average sales per restaurant for fiscal 2023 were approximately 1,132[27]. - The average check per customer, including beverages and desserts, was approximately 7.8 million per location for fiscal 2023, with an average check of 43.25 for dinner[45]. - Flower Child restaurants reported average sales of approximately 29.5 million during fiscal 2023, primarily related to three The Cheesecake Factory locations and one North Italia location[150]. Sales and Marketing - During fiscal 2023, alcoholic beverage sales accounted for 11% of total restaurant sales, while off-premise sales represented approximately 22%[15]. - Dessert sales accounted for approximately 17% of total sales during fiscal 2023, highlighting the importance of the company's dessert offerings[16]. - The Cheesecake RewardsTM program was launched nationally in 2023 to enhance customer engagement and drive incremental sales[71]. - The company generated approximately 15.1 billion media impressions in fiscal 2023 at minimal cost, leveraging public relations and social media strategies[72]. Expansion Plans - The company aims to expand its brand internationally and grow its other concepts, including North Italia and Flower Child[5]. - The company plans to open as many locations as possible that meet its site selection criteria, targeting approximately 300 company-owned restaurants domestically over time[23]. - The company plans to expand its North Italia concept to approximately 200 domestic locations over time, supporting a 20% average annual unit growth[45]. - The company operates 32 Flower Child locations and targets approximately 15% to 20% average annual unit growth for this concept[46]. Cost and Inflation - The company faced significant commodity and wage inflation, impacting operating results and contributing to increased costs[12]. - The company has experienced inflationary cost pressures, leading to price increases above historical levels to maintain restaurant-level margins[125]. - The company implemented price increases above historical levels in fiscal years 2022 and 2023 to offset significant inflationary cost pressures[19]. - Significant labor cost inflation has been experienced, driven by low unemployment and increased minimum wages, which may continue to impact financial performance[98]. Risks and Challenges - The company has identified risks related to economic conditions, labor costs, and public health emergencies that could adversely affect financial performance[8]. - The company experienced significant cost inflation due to supply shortages and transportation delays, largely attributed to the COVID-19 pandemic and exacerbated by geopolitical unrest[65]. - The ongoing geopolitical and macroeconomic events may lead to shifts in consumer behavior and further operational challenges, adversely affecting financial performance[103]. - The company faces risks related to food safety, including potential contamination and food-borne illnesses, which could lead to litigation and damage reputation[104]. Technology and Operations - The company has implemented technology solutions for inventory management, labor management, and guest payment security to improve operational efficiency[69]. - The company utilizes a data warehouse architecture to provide insights into key operational metrics and performance indicators[67]. - The company maintains a focus on food safety and quality assurance, with its bakery facilities certified under the Safe Quality Food program[77]. Employee Relations - The company has been recognized on Fortune magazine's list of "100 Best Companies to Work For®" in 2023 for the tenth consecutive year, reflecting its commitment to employee satisfaction[21]. - The company has a fiscal 2023 internal management promotion rate of 41%, reflecting its commitment to staff development[53]. Legal and Compliance - The company is subject to various federal, state, and local laws and regulations, impacting operations including health, sanitation, and labor[79]. - The company is subject to various legal proceedings, including class action lawsuits, which could result in significant legal fees and adversely impact financial performance[154]. - The company faces potential legal liabilities and penalties related to data protection and privacy laws, which could adversely affect financial performance[166]. Financial Structure - The company completed the offering of 175.0 million in common stock, using net proceeds to fund approximately 475 million in consolidated indebtedness, which may limit its ability to obtain additional financing and increase vulnerability to adverse economic conditions[179]. - The company is subject to financial covenants under its Revolver Facility, including a maximum net adjusted debt to EBITDAR ratio of 4.25 and a minimum EBITDAR to interest and rent expense ratio of 1.90[175].