Restaurant company Cheesecake Factory (NASDAQ: CAKE) missed Wall Street’s revenue expectations in Q3 CY2025 as sales rose 4.8% year on year to $907.2 million. Its non-GAAP profit of $0.68 per share was 13% above analysts’ consensus estimates.
Is now the time to buy CAKE? Find out in our full research report (it’s free for active Edge members).
The Cheesecake Factory (CAKE) Q3 CY2025 Highlights:
- Revenue: $907.2 million vs analyst estimates of $911.9 million (4.8% year-on-year growth, 0.5% miss)
- Adjusted EPS: $0.68 vs analyst estimates of $0.60 (13% beat)
- Adjusted EBITDA: $65.49 million vs analyst estimates of $64.59 million (7.2% margin, 1.4% beat)
- Operating Margin: 4.1%, in line with the same quarter last year
- Locations: 399 at quarter end, up from 375 in the same quarter last year
- Same-Store Sales were flat year on year (1.7% in the same quarter last year)
- Market Capitalization: $2.71 billion
StockStory’s Take
The Cheesecake Factory delivered third quarter results that met most Wall Street expectations, with revenue growth driven by modest comparable sales gains at its flagship brand and ongoing margin improvements across its portfolio. Management highlighted the continued effectiveness of menu innovation, such as new appetizer and bowl offerings, which contributed to higher check mixes without increasing average guest spend. CEO David Overton pointed to “the strength and resilience of our brands” in a softer consumer environment, while operational efficiency and improved staff retention helped support healthy profitability.
Looking forward, management’s guidance reflects a cautious approach shaped by persistent industry-wide consumer softness and heightened competition. The company plans to accelerate restaurant development and lean further into menu innovation, while also focusing on digital engagement through an upcoming dedicated rewards app. CFO Matthew Clark noted, “We are well positioned to manage into next year, and that’s the guidance that we gave,” but signaled that macroeconomic headwinds could continue to weigh on traffic and sales trends into early 2026.
Key Insights from Management’s Remarks
Management credited stable comparable sales at The Cheesecake Factory and margin improvement at its other brands to menu updates, retention gains, and operational discipline.
- Menu innovation impact: New appetizers and bowls at The Cheesecake Factory drove increased attachment rates and helped enhance the mix, supporting stable check averages despite lower guest traffic.
- Loyalty program traction: The Cheesecake Rewards program continued to grow, with management citing strong member engagement and plans for a dedicated app to further personalize offers and encourage repeat visits.
- Operational efficiency: Improved staff retention and labor management contributed to higher restaurant-level profit margins at The Cheesecake Factory, North Italia, and Flower Child, with wage inflation kept in check by stable applicant flow and lower turnover.
- Brand performance divergence: While Flower Child outperformed the broader fast casual segment with strong same-store sales and margin growth, North Italia faced headwinds from industry softness, sales transfer from new locations, and regional disruptions like the Los Angeles fires.
- Competitive environment: Management described a more competitive landscape marked by increased promotional activity across the industry, with many restaurants offering deals and discounts at historic highs, impacting traffic and guest behavior.
Drivers of Future Performance
The upcoming quarters will be shaped by ongoing menu development, digital loyalty initiatives, and a cautious outlook on consumer demand.
- Menu and value focus: The company intends to build on its menu innovation strategy, introducing new items at attractive price points to appeal to price-sensitive guests and support traffic recovery as economic conditions stabilize.
- Restaurant expansion plans: Management is targeting up to 25 new restaurant openings in 2025 and 26 in 2026, spanning The Cheesecake Factory, North Italia, Flower Child, and other concepts, with a heavier concentration of openings in the second half of next year.
- Operational cost management: Expectations for low to mid-single-digit inflation in commodities and labor will be offset by continued focus on productivity, disciplined wage management, and leveraging the growing loyalty program to drive incremental sales and margin stability.
Catalysts in Upcoming Quarters
Looking ahead, our analyst team is monitoring (1) the pace of loyalty program adoption and the rollout of the new rewards app, (2) the impact of ongoing menu innovation on guest traffic and check mix, and (3) whether new restaurant openings, particularly for Flower Child and North Italia, can drive incremental growth. Execution on cost control and adaptation to consumer sentiment shifts will also be critical watchpoints.
The Cheesecake Factory currently trades at $54.15, in line with $54.40 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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