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1. Company Snapshot

1.a. Company Description

The Cheesecake Factory Incorporated operates restaurants.It operates two bakeries that produces cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors.The company owns and operates 306 restaurants throughout the United States and Canada under brands, including 208 The Cheesecake Factory and 29 North Italia; and a collection of Fox Restaurant Concepts, as well as 29 The Cheesecake Factory restaurants under licensing agreements internationally.


The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.

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1.b. Last Insights on CAKE

The Cheesecake Factory Incorporated's recent performance was negatively impacted by increasing competition in the casual dining industry. Despite reporting strong Q2 FY2025 earnings, with revenue growth of 6%, and beating analyst estimates, concerns about the company's ability to maintain pricing power amid inflationary pressures persist. According to a recent report, the company's strategic price hikes and loyalty efforts are lifting sales, but may not be enough to offset rising costs. Additionally, while the company's expansion plans, menu innovations, and digital strategies are promising, they may take time to yield significant returns. A recent upgrade to a Zacks Rank #2 (Buy) suggests growing optimism about the company's earnings prospects.

1.c. Company Highlights

2. The Cheesecake Factory's Q3 Earnings: A Closer Look

The Cheesecake Factory's third-quarter results were solid, with consolidated revenues of $907 million and an adjusted net income margin of 3.7%. Earnings per share (EPS) came in at $0.68, beating estimates of $0.6. The company's restaurant-level profit margin increased 60 basis points year-over-year to 16.3%, driven by positive comparable sales of 0.3% at The Cheesecake Factory restaurants. The annualized unit volumes (AUVs) for The Cheesecake Factory averaged over $12 million, while North Italia's AUVs reached $7.3 million, and Flower Child's comparable sales increased 7% with AUVs of $4.6 million.

Publication Date: Nov -11

📋 Highlights
  • Q3 Revenue & Earnings Beat:: Consolidated revenue of $907M within guidance, earnings above expectations with 16.3% restaurant-level profit margin (up 60 bps YoY).
  • Shareholder Returns:: $13.8M returned via dividends and buybacks, with adjusted net income margin at 3.7%.
  • Brand Performance:: North Italia achieved $7.3M AUVs, Flower Child saw 7% comp sales growth and $4.6M AUVs.
  • 2026 Growth Strategy:: Plans to open 26 new restaurants, targeting 4-5% revenue growth, with 75% of openings in H2.
  • Margin Guidance:: 2026 adjusted net income margin expected at 5.1%, with 25 bps 4-wall margin improvement embedded despite lower traffic trends.

Operational Highlights

The company continued to drive growth through menu innovation, particularly with bowls and bites at The Cheesecake Factory, which have seen strong attachment rates. Flower Child showed resilience, driven by its differentiated offerings, strong price points, and high-quality food. Labor productivity benefits have been a positive factor, driven by lower turnover and a more stable wage environment.

Guidance and Outlook

For Q4, the company expects total revenues to be between $940 million and $955 million, representing a 1% step down from Q3 sales trends. The company anticipates adjusted net income margin to be about 5.1% at the midpoint of the sales range. For 2026, the company expects to open as many as 26 new restaurants, with total revenue growth of approximately 4% to 5% over 2025. Analysts estimate next year's revenue growth at 4.6%.

Valuation and Pricing

The company's valuation metrics suggest a relatively stable outlook. The P/E Ratio is 13.32, P/B Ratio is 5.04, and P/S Ratio is 0.62. With a Dividend Yield of 2.35%, the company appears to be offering a relatively attractive return. The ROE is 39.97%, indicating a strong return on equity. The company's guidance suggests that the P&L has the potential to be resilient due to stable labor and relatively stable and lower commodities.

Challenges and Risks

The company noted a softer consumer environment, particularly affecting lower-income customers, with some weakness observed in October. This softness might be linked to government shutdowns, which historically have resulted in a 1% to 2% decline in sales. Despite this, the company remains optimistic about its value proposition and competitive pricing.

3. NewsRoom

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The Cheesecake Factory's Peppermint Stick Chocolate Swirl Cheesecake and Special Holiday Gift Card Offer Return

Dec -02

Source: businesswire.com

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The Cheesecake Factory to Present at Upcoming Investor Conferences

Nov -18

Source: businesswire.com

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The Cheesecake Factory Makes Holiday Shopping Sweeter With Special Gift Card Offer

Nov -13

Source: businesswire.com

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Cheesecake Factory (NASDAQ:CAKE) Trading Down 5.9% on Analyst Downgrade

Oct -30

Source: defenseworld.net

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Cheesecake Factory: Growth Strategy Is Still On Track

Oct -30

Source: seekingalpha.com

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Cheesecake Factory: Impressive Cost Management As Comps Slow Down

Oct -29

Source: seekingalpha.com

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Cheesecake Factory Analysts Slash Their Forecasts After Q3 Earnings

Oct -29

Source: benzinga.com

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The Cheesecake Factory Incorporated (CAKE) Q3 2025 Earnings Call Transcript

Oct -29

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.39%)

6. Segments

The Cheesecake Factory Restaurants

Expected Growth: 4.5%

The Cheesecake Factory Restaurants' 4.5% growth is driven by increasing same-store sales, expansion into new markets, and menu innovation. Strong brand recognition, high-quality menu offerings, and effective marketing strategies also contribute to growth. Additionally, the company's focus on off-premise sales, including delivery and online ordering, has helped to drive sales and increase customer convenience.

Other

Expected Growth: 3.5%

The Cheesecake Factory's 3.5% growth is driven by increasing brand recognition, expansion into new markets, and a focus on off-premise sales. Additionally, menu innovation, digital marketing efforts, and strategic partnerships contribute to the growth. Furthermore, the company's ability to balance menu pricing and promotions while maintaining profitability also supports its growth momentum.

Other Fox Restaurant Concepts

Expected Growth: 4.0%

The 4.0 growth of Other Fox Restaurant Concepts is driven by increasing demand for upscale casual dining, successful menu innovation, and strategic expansion into new markets. Additionally, effective marketing campaigns, strong brand recognition, and operational efficiencies contribute to the segment's growth.

North Italia

Expected Growth: 4.8%

North Italia's 4.8% growth is driven by its upscale casual dining experience, unique Italian cuisine, and expanding off-premise sales. Strong brand recognition, effective marketing, and strategic unit growth in high-demand markets also contribute to its success. Additionally, The Cheesecake Factory's operational expertise and resources support North Italia's continued expansion and profitability.

7. Detailed Products

Cheesecakes

Wide variety of cheesecakes with unique flavors and toppings, including classic, seasonal, and limited-time offerings

American-Style Cuisine

Extensive menu featuring appetizers, salads, sandwiches, pasta, seafood, steak, and specialty dishes

Beverages

Wide selection of soft drinks, iced tea, coffee, wine, beer, and specialty cocktails

Catering Services

Customizable catering options for events, parties, and corporate functions

Online Ordering and Delivery

Convenient online ordering and delivery services for cheesecakes and menu items

Gift Cards

Physical and digital gift cards for gifting and self-purchase

Merchandise

Branded merchandise, including apparel, accessories, and souvenirs

8. The Cheesecake Factory Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The Cheesecake Factory is moderate due to the presence of alternative dining options and dessert shops. However, the company's unique menu offerings and high-quality cheesecakes help to differentiate it from competitors.

Bargaining Power Of Customers

The bargaining power of customers is relatively low due to the lack of price sensitivity and the loyalty of The Cheesecake Factory's customer base. The company's strong brand reputation and high-quality products also contribute to its ability to maintain prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's large scale of operations and its ability to negotiate favorable prices with suppliers. The company's diversified supply chain also reduces its dependence on any one supplier.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the casual dining industry, including the need for significant capital investment and the difficulty of replicating The Cheesecake Factory's brand reputation and menu offerings.

Intensity Of Rivalry

The intensity of rivalry in the casual dining industry is high due to the presence of many established competitors and the need for companies to constantly innovate and differentiate themselves to attract and retain customers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 65.54%
Debt Cost 3.95%
Equity Weight 34.46%
Equity Cost 11.41%
WACC 6.52%
Leverage 190.20%

11. Quality Control: The Cheesecake Factory Incorporated passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
The Cheesecake Factory

A-Score: 6.0/10

Value: 5.3

Growth: 5.0

Quality: 6.6

Yield: 4.0

Momentum: 8.5

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
FAT Brands

A-Score: 5.3/10

Value: 10.0

Growth: 3.3

Quality: 5.6

Yield: 10.0

Momentum: 0.0

Volatility: 2.7

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Stock-Card
Papa John's

A-Score: 4.9/10

Value: 5.7

Growth: 4.6

Quality: 4.5

Yield: 6.0

Momentum: 4.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Jack in the Box

A-Score: 4.0/10

Value: 7.7

Growth: 3.3

Quality: 3.5

Yield: 6.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Bloomin Brands

A-Score: 3.9/10

Value: 7.7

Growth: 2.0

Quality: 3.0

Yield: 8.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
Ark Restaurants

A-Score: 3.1/10

Value: 9.6

Growth: 2.1

Quality: 2.4

Yield: 1.0

Momentum: 0.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

47.22$

Current Price

47.22$

Potential

-0.00%

Expected Cash-Flows