After launching its rewards program nationally on June 1, The Cheesecake Factory is already off to a promising start, with the number of enrollments surpassing the brand’s expectations, president David Gordon shared on a second-quarter earnings call.
“Our longer term goal is to be able to leverage the data and the insights to engage with guests and really drive incremental sales while maintaining those restaurant level margins,” Gordon said. “And since we only launched the full program in June, I would say that we’re taking time now to really analyze that data, and we’ll be doing that all throughout Q3, and then we’ll look at where we might want to start some pinpointed marketing to drive some incremental visits in the fourth quarter.”
Despite facing a slightly softer sales environment, the company demonstrated its resilience and commitment to growth in the second quarter, making significant progress toward returning profit margins to pre-pandemic levels.
“Execution within the restaurant four walls was outstanding, with our operators delivering better than planned results across several key performance indicators, including labor productivity, and wage management, driving solid flow through for improved profitability,” CEO David Overton told investors.
The Cheesecake Factory reported steady Q2 fiscal 2023 earnings, showcasing significant progress in its path to recovering pre-pandemic profit margins. The company’s adjusted net income and earnings per share for the quarter reached historic highs, demonstrating its potential for continued growth in both top and bottom lines.
“I feel like our objective this year is to rebuild our profitability and to develop the sales levers to grow off of this base, and really think about the rewards program and the operational execution,” Overton said.
The Cheesecake Factory showcased industry-leading AUVs of $12.4 million for the quarter. Same-store sales grew 1.5 percent in Q2 from the last year and 14.1 percent versus 2019, outperforming the casual dining segment—”demonstrating the strength and resilience of our namesake brand,” Overton noted.
“Our focus on menu innovation remains a key point of differentiation, contributing to our broad consumer appeal and high degree of relevancy,” he added. Off-premises sales for the second quarter mixed 22 percent, just below first quarter levels, but above 2019 levels.
Meanwhile, sales for North Italia in Q2 increased 17 percent to $65.9 million from last year, supported by same-store sales growth of 8 percent resulting in annualized AUVs totaling $8 million.
The Cheesecake Factory’s in-person Restaurant Management Development program also resumed last October at its Southern California corporate support center, and the brand’s focus on training is already showing positive results, with guest satisfaction scores improving both sequentially and year-over-year.
“In fact, all key dine in and takeout guest satisfaction metrics have surpassed the second quarter 2019 levels,” Gordon told investors. “We also had another quarter of strong staff retention, with restaurant management and hourly staff attrition rates, effectively returning back to our industry leading pre-pandemic levels.”
On the marketing front, the company’s strategy to generate publicity and increase consumer engagement through creative campaigns tied to on-brand events proved successful. The Cheesecake Factory launched its newest flavor, Cookie Dough Lover’s with Pecans, on July 30 to commemorate National Cheesecake Day. Buzz around the new offering led to 90 media placements, totaling 2.5 billion PR impressions, Gordon noted.
“Building on this PR momentum, last Friday, our Founder David Overton was featured on The Today Show and recognized our 45th anniversary and National Cheesecake Day,” Gordon said. “These are prime examples of our marketing strategy to tie our creative marketing campaigns to on brand events to generate publicity and increase consumer engagement to raise the Cheesecake Factory brands awareness and drive sales.”
Looking ahead, the company anticipates total revenues for Q3 to be between $835 million and $855 million. For fiscal 2023, total revenues are expected to be approximately $3.5 billion.
Despite uncertainties in the operating environment, The Cheesecake Factory remains confident in its ability to generate consistent operational and financial results. The company is well-positioned to continue its growth trajectory, driven by menu innovation, outstanding service, and an engaging rewards program.
“As we look ahead, we remain intently focused on delivering exceptional food quality, service, and hospitality—the hallmarks of our success to drive long-term profitable sales growth,” Overton added.