The Cheesecake Factory’s same-store sales rose 4 percent year-over-year amid “an exceptionally high inflationary environment.”
Here’s the slice: For the first time in company history, The Cheesecake Factory exceeded $3 billion in annual sales, ending 2022 with a total of $3.3 billion—not a shabby gift for its 45th anniversary. Menu innovation, hospitality, and operational excellence drove its strong top-line performance, according to CEO David Overton.
Same-store restaurant sales rose 4 percent during the fourth quarter of 2022, and average unit volumes topped $12 million at domestic Cheesecake Factory restaurants. Total revenues for Q4 were $892.8 million.
The cherry on top? The brand opened eight new restaurants during Q4, including two Cheesecake Factories, two North Italia, and two Flower Child locations, and plans on opening upwards of 22 new restaurants in 2023 across its portfolio.
Overall, Cheesecake Factory ended the year with 211 locations, North Italia with 33, and Flower Child with 30.
"We'd anticipate Flower Child is going to be the next concept that we will bring under our umbrella a little more closely and help continue to launch nationally. We're excited to get that going this year," said David Gordon, Cheesecake Factory president.
Now, the not-so-good slice: Shares of the California-based restaurant wavered on Thursday morning after coming up short of earnings expectations. Like all restaurants, inflationary pressures took its toll on the brand, even after increasing menu prices at the start of December. The brand plans to raise prices another 3.5 percent at Cheesecake Factory restaurants during the middle of Q1 in an attempt to recover margins, while hoping traffic trends remain steady.
“2022 was undeniably an extremely challenging year with respect to our margin performance. And clearly, the cost environment remains heightened relative to historical standards, and there can be no guarantees it will abate in 2023,” Matt Clark, Cheesecake Factory CFO, told analysts on a Q4 earnings call.
“That said, in December, our pricing actions appear to have caught up with our costs, and while some degree of volatility and uncertainty should still be expected quarter-to-quarter, it is our goal to keep a tighter correlation between pricing and the inflation we experience going forward,” he added.
Overton believes commodity inflation will improve throughout 2023, and is optimistic that labor further stabilizing and accelerating the brand’s unit growth plan will lead to positive results.
“Our goal is to also maintain our recent sales and guest traffic trends as both sales and margins are critical to driving shareholder value in the short and long term,” Overton said.
“We remain deeply focused on driving menu innovation, maintaining a contemporary design and decor of our restaurants, and ensuring our guests receive excellent service,” he added. “These pillars form the foundation of our 4.5 decades of success and will continue to pave the way for a bright future.”