Cheesecake Factory Refuses To Extrapolate Its Traffic Surge, Pegs 2027 To Its 'Historical Algorithm'
The CFO called the sales jump encouraging but early, and 2027 targets revenue of about $4.425 billion.
Cheesecake Factory CFO Matt Clark said on the company's third-quarter earnings call Tuesday that its 2027 plan does not assume the sales surge lasts, even after comparable sales at the flagship restaurants rose 15.2%. The company, which owns and operates restaurants and a bakery, built next year's targets on its long-run formula instead.
A deliberately cautious 2027
Clark said the company is "very encouraged by the Cheesecake Factory's recent sales inflection," but "it is early and we believe it is prudent to remain measured in our outlook." Sales growth and margin assumptions for 2027 are "more closely aligned with our historical algorithm objectives," he said.
The company is targeting revenue of about $4.425 billion for 2027 and a net income margin of 6.0% to 6.1%, in line with its long-term pace of 25 to 35 basis points (0.25 to 0.35 percentage points) of annual margin expansion. It assumes a tax rate of about 12% and roughly 52 million diluted shares. Management said it will update expectations as it gets more visibility into the trend.
It plans to open as many as 27 restaurants in 2027, roughly three quarters of them in the second half, and still expects as many as 26 in 2026. Flower Child is slated for 11 to 13 openings next year.
Fourth-quarter math under questioning
For the fourth quarter the company guided to revenue of $1.04 billion to $1.05 billion and an adjusted net income margin of about 5.8% at the midpoint. Clark said the outlook assumes third-quarter trends hold, except for the last three weeks, modeled at 3% pricing and flat traffic, less 1% for holiday timing.
An analyst at Bank of America read that as a slowdown. Clark replied that the guide does not call for deceleration, and that those final weeks typically run 25% to 30% busier than other weeks.
Third-quarter revenue was over $1.033 billion, with traffic up 9.5% at the Cheesecake Factory restaurants alongside 2.4% pricing and 3.3% mix.
Is it a sugar high?
An Oppenheimer analyst asked what evidence beyond four months of momentum shows the gain is durable, and whether it might be "a sugar high." Clark pointed to near-record guest satisfaction scores and rewards-program sign-ups running at twice the weekly pace seen before the app launched.
He also said sales trends have been consistent for four months, regardless of the swings in organic social media buzz.
Management said it will report fourth-quarter actuals on its next call.
Sources
- The Cheesecake Factory Reports Results for Third Quarter of Fiscal 2026 – Company Announcement - FT.com — Financial Times
- Cheesecake Factory, despite Obama’s gibe, is getting good reviews on Wall Street - The Washington Post — The Washington Post
- Is Cheesecake Factory (CAKE) Already Priced In Ahead Of Its October 27 Earnings? — Yahoo Finance
- Cheesecake Factory (CAKE) Stock May Be Pricey Following Its 288% Run — Yahoo Finance
- Cheesecake Factory Logs Higher 3Q Revenue After Double-Digit Growth at Namesake Restaurants — MarketWatch
