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    CAKE
    Earnings call· Jun 2026(Q2 FY26)

    CHEESECAKE FACTORY Q2 FY26 earnings call CAKE

    Jul 28, 2026 Source

    Executive summary

    The Cheesecake Factory Q2 FY26 — Record Revenue and Strong Comps Driven by Innovation and Digital Engagement

    The Cheesecake Factory delivered a record-setting quarter, exceeding $1 billion in revenue, driven by strong comparable sales and positive traffic at its namesake brand. Culinary innovation, the successful Cheesecake Rewards app launch, and effective social media engagement fueled this momentum. While North Italia faced sales declines, the company is implementing targeted initiatives to improve its performance, leveraging learnings from its successful concepts.

    Highlights

    5

    • Quarterly revenue surpassed $1 billion for the first time.

    • Adjusted diluted EPS increased 24% year-over-year to $1.44.

    • The Cheesecake Factory comparable sales grew 5.8% with positive traffic of 2.7%.

    • The Cheesecake Factory restaurant-level margin reached 20%, its highest in a decade.

    • Flower Child comparable sales increased 13%, with annualized AUVs of $5.3 million.

    Concerns

    2

    • North Italia comparable sales declined 3%.

    • North Italia restaurant-level profit margin decreased to 15.6% from 18.2% YoY due to sales deleverage and higher commodity inflation.

    Guidance & targets

    23
    CategoryTargetConfidence
    Total Revenues
    $980 million and $990 million
    high materiality
    High
    Effective Commodity Inflation
    low single digits
    medium materiality
    High
    Net Total Labor Inflation
    low to mid-single digits
    medium materiality
    High
    G&A
    $63 million and $64 million
    medium materiality
    High
    Depreciation
    $29 million
    medium materiality
    High
    Preopening Expenses
    $10 million to $11 million
    medium materiality
    High
    Adjusted Net Income Margin
    about 4.3%
    high materiality
    High
    Tax Rate
    approximately 13% to 14%
    low materiality
    High
    Weighted Average Diluted Shares Outstanding
    approximately 3% to 4% higher than prior year
    low materiality
    High
    Total Revenues
    approximately $4 billion
    high materiality
    High
    Total Inflation (commodity, labor, other OpEx)
    low to mid-single-digit range
    medium materiality
    High
    G&A as % of sales
    about 6.4%
    medium materiality
    High
    Depreciation
    about $116 million
    medium materiality
    High
    Preopening Expenses
    approximately $35 million to $36 million
    medium materiality
    High
    Net Income Margin
    approximately 5.4%
    high materiality
    High
    Tax Rate
    approximately 11%
    low materiality
    High
    Weighted Average Shares Outstanding
    49.5 million
    low materiality
    High
    New Restaurant Openings
    as many as 26
    high materiality
    High
    New Cheesecake Factory Openings
    as many as five to six
    medium materiality
    High
    New North Italia Openings
    six to seven
    medium materiality
    High
    New Flower Child Openings
    seven
    medium materiality
    High
    New FRC Restaurants Openings
    as many as seven
    medium materiality
    High
    Cash CapEx
    approximately $210 million
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    The Cheesecake Factory
    Led performance with strong top-line sales, positive traffic, and market share capture, driving solid flow-through and highest restaurant-level margin in a decade.
    Comparable sales growth: 5.8%Traffic growth: 2.7%Annualized unit volumes: >$13.5 millionAverage weekly sales: new all-time high
    		$729.5 million7%—20%
    North Italia
    Experienced comparable sales decline and margin pressure due to sales deleverage and higher commodity inflation. Implementing value-oriented menu offerings and targeted marketing.
    Comparable sales decline: 3%Annualized AUVs: $7.9 millionNew restaurant average weekly sales: >$200,000
    		$98.4 million8%—15.6%
    Other FRC
    Includes The Henry, which opened a new location in Wilmette with strong initial sales.
    Sales per operating week: $142,100
    		$104 million15%——
    Flower Child
    Continued exceptional performance, outperforming the fast casual segment with strong sales, traffic, and restaurant-level profit margin. Differentiated menu and elevated experience driving repeat visits.
    Comparable sales increase: 13%2-year comp sales increase: 17%Annualized AUVs: $5.3 millionSales per operating week: $101,300Traffic growth: ~8%
    		$56.6 million18%—20.1%
    External Bakery
    		$15.4 million———
    The Henry (Wilmette)
    New location opened subsequent to quarter end, showing strong initial sales performance.
    Average weekly sales (first six weeks): $200,000Annualized AUV: >$10 million
    		————

    Operational metrics

    31
    Adjusted diluted EPS
    $1.44up 24% YoY
    Q2 FY26
    Adjusted net income margin
    6.8%
    Q2 FY26
    Adjusted EBITDA
    $118 millionup 18%
    Q2 FY26
    Share repurchases
    $9.3 million
    Q2 FY26
    Dividends
    $15.7 million
    Q2 FY26
    Total capital returned to shareholders
    $25 million
    Q2 FY26
    Net income
    $68 millionup 25% YoY
    Q2 FY26
    Cost of sales increase
    20 bpsYoY
    Q2 FY26
    Labor as % of sales
    declined 80 bpsYoY
    Q2 FY26
    Other operating expenses
    decreased 30 bpsYoY
    Q2 FY26
    G&A increase
    30 bpsYoY
    Q2 FY26
    Depreciation as % of sales
    relatively flat
    Q2 FY26
    Preopening costs
    $7 millionvs $9 million prior year
    Q2 FY26
    GAAP diluted net income per share
    $1.41
    Q2 FY26
    Total available liquidity
    $561.7 million
    Q2 FY26

    As of quarter end

    Cash balance
    $195.2 million
    Q2 FY26

    As of quarter end

    Revolving credit facility available
    $366.5 million
    Q2 FY26

    As of quarter end

    Debt outstanding
    $575 million
    Q2 FY26

    As of quarter end, after repaying other notes.

    CapEx
    $43 million
    Q2 FY26
    The Cheesecake Factory pricing
    3.0%
    Q2 FY26
    The Cheesecake Factory traffic
    2.7%
    Q2 FY26
    The Cheesecake Factory mix
    0.1%
    Q2 FY26
    Marketing expense as % of sales
    about 1.2%
    Q2 FY26

    Includes rewards program costs.

    Flower Child traffic
    ~8%
    Q2 FY26

    Estimated as 2/3 of the 13% comp sales growth.

    Flower Child pricing
    2.5%
    Q2 FY26
    Flower Child dinner mix
    30%-35%
    Q2 FY26

    Higher than typical fast casual.

    Flower Child off-premise mix
    55%very, very steady
    Q2 FY26
    Full-year four-wall improvement
    about 60 bpsvs previously 25 bps
    FY26
    Q3 Cheesecake Factory pricing
    just under 3%
    Q3 FY26

    Related to some timing year-over-year.

    Q4 Cheesecake Factory pricing
    3%
    Q4 FY26
    Convertible Senior Notes Repayment
    $69 million
    Q2 FY26

    Repaid the remaining principal amount of convertible senior notes.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps5.8%%
    Net unit growth development pipeline26restaurants

    Product announcements

    1
    ProductTypeDetails
    Brownie Crunch Choc-a-Lot Cheesecakelaunch

    Risks & headwinds

    2
    North Italia sales deleverage and higher commodity inflationQ2 FY26

    260 bps margin decline (18.2% to 15.6%)

    Mitigation: Implementing value-oriented menu offerings (lower-priced pasta, lunch specials) and increased targeted marketing to build brand awareness and improve value perception.

    Geopolitical risk, midterm elections, government shutdownnear-term

    unquantified

    Mitigation: Monitoring external factors; no specific mitigation stated beyond general awareness.

    What to watch in Q3 FY26

    4

    North Italia Traffic Trends

    next several quarters
    Currentdeclined 3%
    Targetimprovement

    Why it matters

    North Italia's performance is a key focus, and the effectiveness of new value-oriented menu offerings and marketing initiatives will be crucial for its long-term growth and margin recovery.

    improvement will take time, and we expect some variability in traffic trends over the next several quarters as we begin to see the impact of these efforts.

    Q&A highlights

    6

    How much of the positive traffic at Cheesecake Factory is due to the app launch vs. other factors? Are younger guests coming in more?

    David Gordon attributed the positive traffic to strong operations, culinary innovation (Bites & Bowls), and the app launch. He noted a pickup in younger guests due to social media engagement and mall trends, with some planned and unplanned social media activity resonating.

    “I think that there's a few factors at play. One, I think we've had terrific momentum moving into the quarter. I think all three of the items that I touched on in my prepared remarks, number one, starting with just really strong, good, consistent operations by our operations teams continues to be a focus that I think our guests are appreciating.”

    asked by Jon Tower · answered by David Gordon

    2 min read5 chapters

    Detailed Narrative

    01

    The Cheesecake Factory's Strong Performance Drivers

    The Cheesecake Factory brand achieved record revenue and comparable sales growth of 5.8%, driven by positive traffic of 2.7%. This outperformance was attributed to best-in-class operational execution, ongoing culinary innovation with new menu items like Bites and Bowls, and the successful launch and engagement of the Cheesecake Rewards app. The brand also benefited from increased marketing activity, including social media and influencer partnerships, which resonated with younger guests and contributed to market share gains.

    02

    North Italia's Challenges and Strategic Response

    North Italia experienced a 3% decline in comparable sales and a decrease in restaurant-level profit margin to 15.6% from 18.2% year-over-year, primarily due to sales deleverage and higher commodity inflation. In response, management is implementing targeted initiatives, including more value-oriented menu offerings like lower-priced pasta and lunch specials, and increased local marketing efforts to build brand awareness and improve guest perception of value. These efforts are expected to take time to yield sustainable traffic improvements.

    03

    Flower Child's Exceptional Growth

    Flower Child continued its strong performance, with comparable sales increasing 13% and a 2-year comp sales increase of 17%. Annualized AUVs reached $5.3 million, and restaurant-level profit margin was 20.1%. The brand's success is attributed to its differentiated health-forward, made-from-scratch menu at accessible price points, combined with an elevated dining experience and disciplined execution. Management sees significant long-term growth potential for Flower Child.

    04

    Financial Highlights and Capital Allocation

    The company reported record quarterly revenue exceeding $1 billion and adjusted diluted EPS of $1.44, up 24% year-over-year. Adjusted EBITDA reached a record $118 million, up 18%. The company ended the quarter with $561.7 million in total available liquidity. Capital allocation included $43 million in CapEx, $9.3 million in share repurchases, and $15.7 million in dividends, demonstrating financial flexibility and commitment to shareholder returns.

    05

    Impact of Digital Engagement and Social Media

    The Cheesecake Rewards app launch significantly boosted member acquisition and engagement, providing valuable insights into guest behavior and enabling personalized offers. The company also leveraged social media and influencer partnerships, which contributed to increased brand visibility and traffic, particularly among younger demographics. Management noted that some viral menu items, including long-standing ones, have driven measurable traffic.

    AI-generated summary of the company’s earnings call. Not investment advice.