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 2023 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you. Etienne Marcus, Vice President of Finance and Investor Relations. You may begin your conference.

Good afternoon and welcome to our third quarter fiscal 2023 earnings call. On the call with me 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 facts and are considered forward-looking statements within the meeting 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 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, when discussing comparable sales, we will be referring to comparable sales on an operating week basis unless specifically stated otherwise. We will also be presenting results on an adjusted basis, which exclude impairment of assets, lease terminations, and acquisition-related expenses. 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 review our third quarter results and provide a financial update. Following that, we'll open the call to questions. With that, I'll turn the call over to David Overton.

Thank you, Etienne. Third quarter consolidated revenues increased 5.9% over the prior year to $830 million, led by comparable sales growth at the Cheesecake Factory restaurants of 2.4% versus the prior year and 12.6% versus 2019, exceeding the nap track and black box casual dining indices for both time periods. Our strategy will always revolve around what we do best, delivering exceptional service and hospitality and delicious, memorable experiences for our valued guests. We believe our position as an experiential dining leader will continue to differentiate us in the industry and drive profitable sales growth over the long term. And with improved restaurant staffing levels, our best-in-class operators have been able to increase their focus on consistently executing our strategy. We believe this contributed to third quarter comparable sales at the Cheesecake Factory increasing sequentially despite the softening sales environment. And importantly, traffic at the Cheesecake Factory meaningfully outperformed the broader casual dining industry. On the development front, we opened two Cheesecake Factory restaurants to strong demand during the third quarter and subsequent to quarter end to FRC locations. We continue to make progress against our pipeline and construction is ongoing on all of our restaurants we had previously planned to open this year. However, consistent with the trend seen throughout the industry, we continue to experience challenges beyond our control, particularly with permitting delays pushing some of our opening dates to late December. In order to adhere to our proven development process and ensure new restaurants open well positioned to succeed, we have strategically decided to move some of our openings into the first quarter of next year. As such, we now expect to open as many as 16 new restaurants in 2023 and four to six new restaurants in the first quarter of 2024. Thus, between 16 openings for this year and four to six for next quarter, we are effectively at the 20 to 22 new restaurant openings we had previously anticipated earlier this year. The new restaurant openings for 2023 include as many as five Cheesecake Factories, four North Italia's, and seven FRC restaurants, including one Flower Child location. Last week, our fifth location in mainland China opened, including this location. We now expect two Cheesecake Factory restaurants to open internationally under licensing agreements in 2023. Despite the ongoing permitting challenges, we continue to accelerate our development activity and build our pipeline. At this time, our expectations for 2024 are to take another measurable step towards achieving our objective of 7% annual unit growth. I'm also excited to share that last week we announced plans to develop our third bakery production facility in Charlestown, Indiana. Upon completion, the facility will produce the Cheesecake Factory's cheesecakes and signature bakery products for our restaurants and other retailers. in addition to providing anticipated distribution efficiencies. Our vertically integrated bakery is a distinct competitive advantage, with our desserts driving the strong affinity for the Cheesecake Factory brand, as illustrated by our industry-leading dessert sales. Looking ahead, we will continue to leverage our competitive strengths, including the scale of our business, our differentiated brands, best-in-class operators, and balance sheet to drive shareholder value and market share gain. With that, I will now turn the call over to David Gordon to provide some additional details on our operations and marketing.