Restaurant company Cheesecake Factory (NASDAQ:CAKE) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 2.9% year on year to $891.2 million. It made a non-GAAP profit of $0.73 per share, improving from its profit of $0.61 per share in the same quarter last year.
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The Cheesecake Factory (CAKE) Q1 CY2024 Highlights:
- Revenue: $891.2 million vs analyst estimates of $889.9 million (small beat)
- EPS (non-GAAP): $0.73 vs analyst estimates of $0.64 (14.6% beat)
- Gross Margin (GAAP): 41.2%, up from 40.2% in the same quarter last year
- Same-Store Sales were down 0.6% year on year (in line with expectations)
- Store Locations: 336 at quarter end, decreasing by 12 over the last 12 months
- Market Capitalization: $1.73 billion
“The Cheesecake Factory restaurants comparable sales and traffic once again meaningfully outperformed the industry,” said David Overton, Chairman and Chief Executive Officer.
Celebrated for its delicious (and free) brown bread, gigantic portions, and delectable desserts, Cheesecake Factory (NASDAQ:CAKE) is an iconic American restaurant chain that also owns and operates a portfolio of separate restaurant brands.
Sit-Down Dining
Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales Growth
The Cheesecake Factory is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 8% over the last five years was decent as it opened new restaurants and grew sales at existing, established dining locations.
This quarter, The Cheesecake Factory grew its revenue by 2.9% year on year, and its $891.2 million in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 6.1% over the next 12 months, an acceleration from this quarter.
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Same-Store Sales
The Cheesecake Factory's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 2.8% year on year. With positive same-store sales growth amid an increasing number of restaurants, The Cheesecake Factory is reaching more diners and growing sales.
In the latest quarter, The Cheesecake Factory's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 5.7% year-on-year increase it posted 12 months ago. We'll be watching The Cheesecake Factory closely to see if it can reaccelerate growth.
Key Takeaways from The Cheesecake Factory's Q1 Results
We were impressed by how significantly The Cheesecake Factory blew past analysts' gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. On the other hand, same store sales was just in line. Overall, we still think this was a solid quarter. The stock is up 3.8% after reporting and currently trades at $35.25 per share.
The Cheesecake Factory may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.