Cheesecake Factory Q3 Revenue Rises 14% as Adjusted EPS Climbs 50%

The Cheesecake Factory Incorporated reported a sharp increase in third-quarter earnings as revenue exceeded $1 billion, while continued restaurant openings expanded its company-operated footprint. The company also outlined 2026 assumptions that include approximately $4.09 billion in consolidated sales and as many as 26 new restaurant openings.

Revenue for the quarter ended Sept. 29 rose 14% year over year to $1.03 billion from $907.2 million. Net income increased 92% to $61.3 million, while diluted net income per share rose 80% to $1.19.

On an adjusted basis, net income increased to $52.3 million from $33.2 million. Adjusted diluted earnings per share climbed 50% to $1.02, and adjusted net income margin widened to 5.1% from 3.7%. Adjusted EBITDA rose 38% to $98.7 million.

The difference between GAAP and adjusted results included acquisition-related contingent consideration, compensation and amortization income, as well as tax-related adjustments. The company said its non-GAAP measures are intended to facilitate comparisons between periods and should not be considered substitutes for GAAP results.

Restaurant portfolio continues to expand

The company opened six restaurants during the third quarter and operated 380 locations in the U.S. and Canada as of Sept. 29, up 4% from 364 a year earlier. By Oct. 27, the portfolio had reached 383 company-operated restaurants, including 218 Cheesecake Factory locations, 52 North Italia restaurants, 47 Flower Child locations and 60 other Fox Restaurant Concepts locations. The Cheesecake Factory also had 35 licensed international restaurants.

North Italia generated third-quarter revenue of $93 million, up 11% from the prior year. The concept has 52 locations across 17 states and Washington, D.C., and the company sees potential for 200 domestic locations over time.

Flower Child posted quarterly revenue of $56 million, a 17% increase, while comparable sales rose 11%. The fast-casual concept, which derives more than half of its sales from off-premise orders, currently has 47 locations in 18 states. Management is targeting average annual unit growth of about 20% and estimates long-term domestic potential of 700 locations.

Fox Restaurant Concepts, excluding Flower Child, had 60 locations across 13 states as of Oct. 27. The company continues to position FRC as an incubator for new dining concepts and a source of portfolio diversification and unit growth.

At the core Cheesecake Factory brand, annualized third-quarter average unit volume was approximately $13.9 million, based on average weekly sales of about $267,700. Off-premise business represented 21% of total revenue, equivalent to roughly $2.9 million in annualized off-premise sales per restaurant.

2026 assumptions call for further development

For 2026, management expects consolidated sales of approximately $4.09 billion and Cheesecake Factory average unit volumes of about $13.4 million. The company is targeting a net income margin of approximately 5.75% at that sales level.

The development plan calls for as many as 26 openings during the year: five Cheesecake Factory restaurants, eight North Italia locations, seven Flower Child restaurants and six other FRC restaurants. Sixteen had opened as of Oct. 27.

Cash capital expenditures are expected to total approximately $210 million. The company spent $58 million on capital expenditures during the third quarter, excluding certain restaurant construction costs classified as operating lease assets. It also paid $14 million in dividends and used $2 million for share repurchases.

The board declared a fourth-quarter dividend of $0.30 per share. The company said future dividends and repurchases remain subject to board discretion, with repurchases intended to support earnings per share opportunistically and offset long-term dilution from employee stock-based compensation.

The outlook assumes no material disruption to operations or consumer activity. The presentation identified consumer confidence and spending, inflation, interest rates, trade policy, supply-chain disruptions, labor and benefit costs, permitting and construction timing, foreign exchange rates, tariffs, international expansion and the acceptance of newer restaurant concepts among the principal uncertainties that could affect results.