The Cheesecake Factory’s first quarter results were met with a notably negative market reaction, despite the company meeting Wall Street’s revenue expectations and delivering non-GAAP earnings per share above consensus. Management pointed to operational improvements, menu innovation, and enhanced retention as key drivers of profitability. CEO David Overton credited “improving manager and staff retention” and a successful rollout of over 20 new menu items for supporting guest satisfaction and margin gains. However, the company acknowledged that the broader environment was less robust than in prior quarters, with President David Gordon describing the competitive landscape as “increasingly challenging.”
Is now the time to buy CAKE? Find out in our full research report (it’s free).
The Cheesecake Factory (CAKE) Q1 CY2025 Highlights:
- Revenue: $927.2 million vs analyst estimates of $925.8 million (4% year-on-year growth, in line)
- Adjusted EPS: $0.93 vs analyst estimates of $0.82 (13.9% beat)
- Adjusted EBITDA: $79.42 million vs analyst estimates of $72.87 million (8.6% margin, 9% beat)
- Operating Margin: 5.6%, up from 4.4% in the same quarter last year
- Locations: 388 at quarter end, up from 369 in the same quarter last year
- Same-Store Sales were flat year on year (-0.3% in the same quarter last year)
- Market Capitalization: $2.96 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions The Cheesecake Factory’s Q1 Earnings Call
- David Tarantino (Baird) asked if macroeconomic caution was already evident in results or mainly a projection. CFO Matt Clark replied it was “a little bit of both,” noting stable business but a less robust environment than earlier in the year.
- Sharon Zackfia (William Blair) inquired about the impact of new tariffs and how costs would be absorbed. Clark explained that most food commodities are domestically sourced, so tariffs would mostly affect operating expenses, with cost reductions and minor pricing as potential offsets.
- Andy Barish (Jefferies) questioned same-store sales components and the effect of menu changes on pricing. Clark detailed that recent lower-priced menu items affected mix, but this strategy supports long-term value for guests.
- Jon Tower (Citigroup) asked about sustainability of labor productivity improvements. Clark credited ongoing retention initiatives but cautioned that incremental gains may moderate through the year.
- Lauren Silberman (Deutsche Bank) probed for regional or behavioral shifts in consumer spending. Clark reported consistent patterns across regions and dayparts, with stability in off-premise business and no major changes in customer composition.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the effectiveness of personalized loyalty offers in driving traffic and check growth, (2) the company’s ability to maintain margin improvements amid inflation and tariff pressures, and (3) the pace and success of new restaurant openings across the portfolio. Sustained menu innovation and operational discipline will also be key indicators of resilience in a cautious consumer environment.
The Cheesecake Factory currently trades at $60, up from $50.47 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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