The Cheesecake Factory Incorporated

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Cheesecake Factory third quarter fiscal 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. Thank you. I will now hand the call over to Mr. Etienne Marcus, Vice President of Finance and Investor Relations. You may begin your conference.

Thank you, Emma. Good afternoon and welcome to our third quarter fiscal 2021 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 than 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 on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, We will be presenting Results on an Adjusted Basis, which excludes non-cash acquisition-related contingent consideration and amortization expense. 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 third quarter results and provide a financial update. With that, I'll turn the call over to David Overton. Thank you, Etienne.

Comparable sales at the Cheesecake Factory restaurants increased 8.3% relative to the third quarter fiscal 2019, solidly outperforming both the NAPTRAC and Black Box casual dining indices. We believe this performance was particularly strong given the surge in COVID-19 cases from the Delta variant the company was experiencing at the time. Our teams generated solid profitability in the face of higher than anticipated group medical insurance costs and incremental costs associated with the pandemic environment, which Matt will provide more detail later on the call. Sales across our concepts further strengthened early in the fourth quarter with continued strong contribution from off-premise channel. Physical 2021 fourth quarter to date through November 2nd, comparable sales at the Cheesecake Factory restaurants increased approximately 10.5% versus 2019. And we have seen relative consistency in this metric each week. On the development front, four new restaurants opened during the third quarter, including North Italia and Flower Child, in Gilbert, Arizona, which is a growing suburb in the Phoenix market, and the second North Italia location in the national area in Franklin, where we continue to see a great response to the brand. And Blanco in the Chicago area, which is a new market for both that concept and the broader FRC portfolio, Blanco is a very differentiated offering in this market and has received a very warm welcome from guests so far. Subsequent to quarter end, the Cheesecake Factory opened in Huntsville, Alabama to a tremendous demand. And with three openings today, North Italia and Orlando, and both Blanco and Culinary Dropout in Denver, we met our development objective of opening 14 new restaurants across our concepts this year. This is a marked achievement considering the pandemic environment and the associated challenges We have been operating with throughout 2021. On the international front, a third Cheesecake Factory location in Shanghai opened this week under a licensing agreement, and we are seeing all three of our international licensees recapture their pre-pandemic sales levels. Looking ahead, we have a strong pipeline in place, which we believe positions us well to achieve our targeted 7% unit growth next year. At the same time, we will continue to focus on driving comparable sales growth and managing through this operating environment. Should the cost pressures prove not to be transitory in nature, we are committed to implementing further cost management initiatives and leveraging the breadth of our menu to take additional pricing to protect margins. With that, I'll now turn the call over to David Gordon.