Cheesecake Factory (NASDAQ:CAKE) executives said the company finished fiscal 2025 with a “solid” fourth quarter, citing stable revenue performance, improved operational execution, and continued development momentum across its portfolio of brands.
Fourth-quarter performance and full-year results
Chairman and CEO David Overton said the restaurant industry faced a “more challenging operating environment,” including weather-related impacts, but that the company’s business “remained steady,” with quarterly revenue ending within the expected range. He credited operators with improvements in labor productivity, wage management, retention, and guest satisfaction, which helped support margins and adjusted diluted EPS toward the higher end of expectations.
For the full year, the company reported total revenues of $3.75 billion, up 5% year over year. Adjusted diluted EPS increased 10% to $3.77, and adjusted EBITDA was $354 million. Clark said the company returned more than $206 million to shareholders in 2025 through dividends and share repurchases.
Brand-level sales trends and margins
In the quarter, total sales at The Cheesecake Factory restaurants were $681.4 million, up 2% from the prior year. Comparable sales declined 2.2% (not impacted by the gift card breakage adjustment). Adjusted annualized AUVs were $12.2 million, supported by an off-premise mix of 22%, which management said was a slight improvement from recent quarters.
President David Gordon said industry sales decelerated in the fourth quarter, citing the Black Box Casual Dining Index declining sequentially by 410 basis points from the third quarter. He said the company’s comparable sales results “demonstrat[ed] relative stability” compared with the broader industry’s sequential declines.
Other brand performance highlights included:
- North Italia: Fourth-quarter sales were $88.2 million, up 8% year over year, with annualized AUVs of $7.6 million. Comparable sales declined 4%, which management attributed to broader industry trends, sales transfer from recently opened restaurants, and lingering impact of Los Angeles fires. Restaurant-level profit margin for adjusted mature locations was 17.5% for the quarter, and 17% for the full year.
- Flower Child: Sales were $45.5 million, up 19% year over year, with comparable sales up 4% (two-year comp up 15%). Annualized AUVs were $4.3 million for the quarter and $4.6 million for the full year. Restaurant-level profit margin for adjusted mature locations was 17.5% in the quarter and 18.5% for the full year.
- Other FRC: Sales were $99.4 million, up 17% year over year, with sales per operating week of $139,100. The company also reported that three new FRC restaurants opened to strong demand, with average weekly sales equating to annualized AUVs above $8.7 million.
Overton said adjusted restaurant-level profit margins at The Cheesecake Factory increased 60 basis points year over year to 17.6% for 2025, with margin expansion also realized at North Italia and Flower Child.
Menu innovation, value messaging, and mix
Management repeatedly pointed to menu innovation—particularly “bites and bowls”—as an important driver of guest response. Gordon said the rollout has produced year-over-year growth in appetizer attachment rates and improved entree ordering patterns. In response to a question about value messaging, Gordon said the company used a separate menu card and increased social marketing to build awareness, and suggested the company may continue emphasizing value through visibility and marketing rather than discounting.
Clark provided additional color on check components and mix. For the fourth quarter at Cheesecake Factory, pricing was about 3.5% to 4%, mix was negative 1.8%, and traffic made up the remainder of the comp. He said management expects negative mix to continue in 2026, but at a lesser rate as ordering rates improve, and described modeling “probably a negative one” for the year from mix as bites and bowls continue rolling out, offset by higher incident rates over time.
Development, closures, and capital allocation
During the fourth quarter, the company opened seven restaurants: two Cheesecake Factory locations, two North Italia locations, and three FRC restaurants. Subsequent to quarter end, the company opened one Flower Child and closed four restaurants (two Cheesecake Factory locations, one Grand Lux Cafe, and one FRC restaurant). Overton said the company ended 2025 with 25 new openings, representing roughly 7% unit growth.
Looking to 2026, management said it expects to open as many as 26 restaurants, with roughly three-quarters of openings planned for the second half of the year. Clark said the plan includes as many as six Cheesecake Factories, six to seven North Italia locations, six to seven Flower Child locations, and seven FRC restaurants. Overton also said the company anticipates one to two international Cheesecake Factory openings under licensing agreements.
On the earnings call, management said the company increased its share repurchase authorization and raised its quarterly dividend for the first quarter. In the fourth quarter, it returned $24 million to shareholders via dividends and stock repurchases.
Outlook assumptions for 2026 and rewards app plans
While the company did not provide specific comparable-sales or earnings guidance, Clark outlined modeling assumptions. For the first quarter of 2026, management expects total revenues between $955 million and $970 million, including the estimated impact of inclement weather and the late-January restaurant closures. Clark said weather to date was estimated to be about a 1% negative net impact on the quarter, assuming no additional weather disruptions.
For the first quarter, the company expects low single-digit effective commodity inflation and low- to mid-single-digit net labor inflation. Management estimated first-quarter G&A at approximately $63 million to $64 million, depreciation at about $28 million, and pre-opening expenses of roughly $4 million to $5 million, with adjusted net income margin around 5% at the midpoint of the sales range. For the full fiscal year 2026, management modeled revenue of about $3.9 billion at the midpoint (with a sensitivity range of plus or minus 1%), net income margin around 5%, depreciation of about $115 million, and pre-opening expenses of roughly $35 million to $36 million.
Gordon also said the company expects to launch a dedicated Cheesecake Rewards app in the second quarter, supported by social media promotion, an offer to encourage downloads, and in-restaurant marketing. Executives said the company has seen strong membership growth and engagement over the last 12 months and plans to use expanded capabilities to refine offers and deepen engagement.
About Cheesecake Factory (NASDAQ:CAKE)
The Cheesecake Factory Incorporated (NASDAQ:CAKE) is an American restaurant company and distributor renowned for its full-service casual-dining concept and specialty cheesecakes. Headquartered in Calabasas Hills, California, the company operates more than 200 restaurants under The Cheesecake Factory® brand across the United States, Puerto Rico and select international markets. In addition to sit-down dining, Cheesecake Factory franchised locations offer catering and take-out services, while a separate manufacturing arm supplies branded cheesecakes and desserts to supermarkets, hotels and other foodservice operators.
The origins of the brand trace back to a small cheesecake bakery founded in Detroit in the 1940s.
