The Cheesecake Factory Incorporated

Ladies and gentlemen, thank you for standing by and welcome to the Cheesecake Factory fourth quarter fiscal 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the comments over to your speaker today, Stacey Fite, Vice President of Investor Relations. Thank you. Please go ahead.

Stacey Fite Thanks, Rob. Good afternoon and welcome to our fourth quarter fiscal 2020 earnings call. On the call today are David Overton, our Chairman and Chief Executive Officer, David Gordon, our President, and Matt Clark, our Executive Vice President and Chief Financial Officer. Before we begin, let me quickly remind you that during this call, Items will be discussed that are not based on historical fact and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission. All forward-looking statements made in this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. In addition, throughout this conference call, we will be presenting results on an adjusted basis, which reflects the potential impact of the conversion of the company's convertible preferred stock into common stock. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described. David Overton will begin today's call with some opening remarks and David Gordon will provide an operational update. Matt will then briefly review our fourth quarter results and provide a financial update. With that, I'll turn the call over to David Overton.

Thank you, Stacey. We had a good start to the fourth quarter with comparable sales at the Cheesecake Factory restaurants down just high single digits in October despite mandated capacity restrictions. At that time, we had approximately 90% of our locations operating with reopened dining rooms. Through the balance of the quarter, sales softened given the impact of additional dining room closures and capacity restrictions in response to rising COVID-19 cases in the number of our markets. For context, we exited the fourth quarter with 75 Cheesecake Factory restaurants transitioned to an off-premise only operating model and just over 60% of the locations with indoor dining rooms open with capacity restrictions. Our restaurant teams demonstrated exceptional resilience, again, in response to these abrupt shifts. Operational execution was solid during the fourth quarter. Despite the challenges faced, with year-over-year increases in both the Cheesecake Factory labor productivity and food efficiency. In addition, our strong position in the off-premise channel helped support the business during this period with sales at the Cheesecake Factory restaurants that were operating an off-premise-only model far exceeding prior peak off-premise sales volumes seen earlier in the COVID-19 pandemic. and our restaurants with reopened dining rooms continue to demonstrate strong performance in the off-premise channel as well during the fourth quarter. Notably, we had 24 Cheesecake Factory locations with positive comparable sales during the fourth quarter despite capacity restrictions. On the development front, since our last call, we opened the Cheesecake Factory in Clearwater, Florida in late December to tremendous demand. This location did nearly $200,000 in sales in its first week, even with restrictions. One of the FRC incubation brands, Blanco, opened another location in Arizona, further scaling the concept in the market. And the sixth Cheesecake Factory location in Mexico opened under licensing agreement during the fourth quarter. With a solid pipeline of sites, we believe we are on track to open as many as 12 to 15 new restaurants across our concepts this year. And internationally, we expect as many as three Cheesecake Factory locations to open under licensing agreements. While we are not out of the woods yet with respect to COVID-19, we believe that with vaccination on the horizon, our concepts are well positioned for recovery as dining restrictions ease. and looking further ahead, we believe our collection of strong concepts coupled with our financial position will enable us to further accelerate growth as we emerge from the pandemic. With that, I'll now turn the call over to David Gordon.