Cheesecake Factory (CAKE) Q1 FY26 earnings call: guidance and Q&A

What are the quarter-to-date trends, guest behavior, and check management observations, especially with Easter and spring break shifts?

Matt Clark expressed cautious optimism, noting consistent trends for The Cheesecake Factory, potential incrementality from the new app, and positive reception for new menu items, leading to a bullish outlook.

“I mean, as you know, we're not going to give a specific number. But I think if you interpolate the revenue guidance for the second quarter, we're expecting to have consistent trends continue for the Cheesecake Factory. And I think we feel cautiously optimistic about the rollout of the app and the incrementality that we have potential to drive there.”

asked by Andrew Barish · answered by Matthew Clark

What were the primary drivers for Q1 revenue exceeding guidance?

Matt Clark stated that Cheesecake Factory comparable sales and Flower Child comparable sales both came in above expectations, each contributing approximately 50% to the beat.

“It was a couple of factors. I mean, obviously, Cheesecake Factory comps came in above the range that we had provided there. And I think they were very stable throughout the quarter. So I think that was a positive. And then certainly, Flower Child, that 10% was above our expectations that we had thought more in the mid-single digits. And each of those probably contributed about 50% of the beat.”

asked by Jeffrey Farmer · answered by Matthew Clark

Did the conflict in Iran, gas price jumps, or other macro events impact same-store sales for any businesses during the quarter?

Matt Clark reported that performance was steady across the portfolio throughout the quarter, with no significant impact from external events or trade-down behavior, and spring break movement was more muted than anticipated.

“We were pretty steady throughout the quarter. Honestly, we were looking at that as well and parsing it. And throughout the portfolio, we continue to be, I think, steady. There's a little bit of spring break movement, but even that was probably more muted than we thought. And so it was very balanced throughout the quarter, and we didn't see any trade down either.”

asked by Jeffrey Farmer · answered by Matthew Clark

Can you provide the traffic, pricing, and mix components for Cheesecake Factory comps, and explain why the company is outperforming despite a slowing macro backdrop?

Matt Clark detailed Cheesecake Factory's pricing at 3.3%, mix at -0.3%, and traffic at -1.4%, noting a material improvement in traffic. He attributed outperformance to benefiting from higher-income cohorts, a flexible menu, experiential dining, and strong operational execution and talent retention.

“Pricing was at 3.3%. As we have noted previously, that's coming down. It will be 3% in the subsequent quarters, just given the timing of what was rolling off in the quarter, it was at 3.3%. And then the mix was a negative 0.3%. So we saw a pretty material stabilization there, really benefiting particularly from the bites being add-ons and not substitutions. And so we feel really positive about that. And the traffic was a negative 1.4%, which was a material improvement over the Q4 results.”

asked by James Salera · answered by Matthew Clark

Can you provide the comp components for North Italia, and are you seeing trade-down from fine dining or check management within your brands due to consumer frustration?

Etienne Marcus provided North Italia's mix at 1%, price at 3%, and traffic at -6%. David Gordon noted consistent incident rates and add-ons, and suggested Flower Child might be taking market share from QSR/fast casual rather than direct trade-down from fine dining.

“Yes. This is Etienne. I'm happy to provide that for the components. So mix was positive 1% for the quarter. Price was about 3% that came down a little bit, and then traffic was negative 6%.”

asked by Pratik Patel · answered by Etienne Marcus

Flower Child's 10% comp is strong. Where are you with the management pipeline (GM and Executive Chef) to support its rapid growth?

David Gordon confirmed that the management pipeline is in place to meet current growth expectations for Flower Child. He highlighted continued retention benefits at Flower Child as key for career growth and enabling talent to reach GM and Executive Chef levels.

“And we feel confident in our current growth trajectory that we have the pipeline in place to meet those expectations. And that team is very, very focused. If we decided we wanted to ramp up just a little bit from where we are today, they remain focused in the most important areas to enable the growth in that talent level to have the general managers and executive chefs in place in time for that growth.”

asked by John Ivankoe · answered by David Gordon

North Italia's store margin was lower than expected. What are the remedies to improve it, and how would leaning into lunch impact store margin?

Matt Clark attributed margin pressure to comp deleverage, fixed costs, and the mix of mature locations. He emphasized that positive comp store sales are the primary lever for margin recovery, aiming for 16-18%. Leaning into lunch would improve margins by leveraging existing staffing for incremental traffic.

“I think the most important thing, though, is to continue to focus, as David said, on positive comp store sales, right? That's really the primary attribute to recapturing the margin piece. Overall, we feel very confident that the mature margins should be in that 16% to 18% range on an ongoing basis that we've talked about.”

asked by James Sanderson · answered by Matthew Clark

How should we view the ability to consistently expand consolidated store margin over time, given it's currently flattish?

Matt Clark reiterated the full-year guidance for about 25 basis points of 4-wall margin expansion in totality. He expressed confidence that this target is attainable across the portfolio, even with the growth of adding 26 new restaurants.

“Our full year guidance still calls for about 25 basis points of 4-wall margin expansion in totality. Certainly, every quarter is going to have a little bit of ups and downs depending on, as we noted, group medical or one of the things that we saw in the first quarter was that produce prices were higher just because of weather conditions, right? But our outlook for the year remains unchanged because a lot of that just is timing that was already anticipated by us and built into our expectations for the quarter.”

asked by James Sanderson · answered by Matthew Clark