All right, good morning, everyone. I'm Brian Vaccaro, the restaurant analyst here at Raymond James, and we're excited to kick off day two of our conference with Cheesecake Factory. Presenting from the company, we're going to start with President David Gordon. He'll be followed by Chief Financial Officer Matt Clark. So, David.
Thank you, Brian. Good morning, everybody. Good to see you all here this morning. Thank you for attending our presentation today. Before we start, I need to remind everyone that this presentation contains forward-looking statements which are covered in detail on this slide. Now, let's get started. The Cheesecake Factory Incorporated is a leader in experiential dining with highly differentiated, well-positioned concepts that deliver a unique guest experience, which we believe creates a significant competitive advantage. We've driven strong performance across our portfolio, supporting our confidence in the strength of our concepts and their long-term growth potential. We continue to leverage our strong foothold in the off-premise channel to support the business and have seen off-premise sales stabilize at a higher level as compared to pre-pandemic levels.
We believe we have some of the best operators in the business, and with industry-leading retention, we have experienced managers and staff who can successfully operate our high-volume and very complex restaurants. Our operators have done an incredible job continuing to navigate the dynamic operating environment, enabling us to deliver solid sales results. And lastly, with a diversified portfolio of high-quality growth vehicles following our acquisition of North Italia and Fox Restaurant Concepts, we believe we are well-positioned to drive long-term, profitable growth moving forward. We currently operate 216 Cheesecake Factory restaurants domestically and one Cheesecake Factory in Toronto, Canada. We believe we have a long runway of potential growth ahead of us as we continue to open in new and existing markets, working towards an opportunity of 300 domestic Cheesecake Factory locations.
This is complemented by our 33 international locations that operate under licensing agreements across the Middle East, Latin America, and Asia. North Italia is a modern interpretation of Italian cooking in the upscale casual dining segment, with dishes that are handmade from scratch daily, including all the pastas and pizza. North also offers a thoughtfully crafted selection of wine, beer, and house-made cocktails, driving an approximately 24% alcohol mix. We now operate 37 North Italia restaurants across 13 states plus Washington, D.C. With Italian cuisine being the number one ethnic food category in the United States, coupled with strong national reception of the North Italia concept to date, we believe there is a potential for 200 domestic locations over time, which supports our plan for approximately 20% average annual unit growth. FRC is comprised of a group of concepts that are diverse in industry segment, occasions, square footage, and geography.
Led by Sam Fox, its founder, it serves as an incubation engine to develop innovative concepts for the future. Excluding Flower Child, FRC currently operates 41 restaurants, and together, these concepts serve as an ecosystem for talent, menu, and design development and innovation. Other FRC potential growth concepts include Culinary Dropout, Blanco, and The Henry. Flower Child, a fast-casual wellness lifestyle offering with a customizable menu made fresh from scratch ingredients, featuring locally sourced, all-natural, and organic foods, now has 32 locations nationwide. The integration of Flower Child is now complete, with oversight directly under The Cheesecake Factory umbrella. We have successfully transitioned all of the plan support functions, including development, leasing, and supply chain, in order to capture the benefits of our scale and experience in sustainably growing a national concept.
We believe the concept is well-positioned for growth, as we look to accelerate development for this concept to about 15%-20% growth annually. In 2022, we resumed our unit growth reacceleration with the opening of 13 new restaurants across our portfolio of high-quality growth vehicles. Last year, we opened 16 new restaurants. And building on this momentum, this year, we are planning to open as many as 22 new restaurants, putting us back on track to achieve our annual unit growth goal of 7%. Looking further ahead, we believe our collection of high-quality concepts, coupled with our financial position, has the potential to support strong unit growth for years to come. Let me provide some key points as to why we believe Cheesecake Factory remains resilient and continues to be well-positioned.
Now, while the world is evolving faster than ever, the fundamentals of the restaurant industry always remain the same. Great food, service, hospitality, and ambiance are still, and likely always will be, the hallmarks of a successful restaurant. The Cheesecake Factory is one of the most differentiated casual dining concepts, with four strategic defining points that set us apart from other restaurant companies and drive our consistent performance. First and foremost, we are the leader in menu innovation and have developed one of the broadest menus in casual dining. Second, we offer a unique, high-energy ambiance coupled with exceptional service and hospitality. Third, we believe we deliver best-in-class operational execution. And lastly, we have an integrated bakery producing our award-winning desserts. At The Cheesecake Factory, culinary R&D is essential to our concept.
Each of our 225 menu items is made fresh from scratch in-house with fresh ingredients, including more than 70 different sauces, dressings, and marinades. We pride ourselves on offering something for everyone across every price point. We change our menu two times a year, adding new menu items and sometimes entirely new categories. This ongoing menu innovation drives a high degree of relevance without having to discount. In addition to our innovative menu and warm hospitality, we place significant emphasis on the distinctive interior design and décor of our restaurants, which create a high-energy ambiance in a casual setting. Our guests love our cheesecake, and our bakery is definitely an essential element in creating the cheesecake magic. This drives our industry-leading dessert sales of approximately 17%.
Importantly, we maintain creative and quality control, producing over 60 innovative cheesecakes and other baked desserts for our restaurants and those of our international licensee partners. Of course, none of what I have discussed would be possible today without a persistent focus on best-in-class operational execution. The ability to effectively and consistently execute a concept as complex as ours is dependent on our strong organizational structure and great teams to ensure excellence in quality, in service, and food safety. We believe we have some of the best operators in the business, with a field operations team of Cheesecake Factory veterans whose careers span between 11 and 34 years. Industry research continues to confirm the influence of strong retention on service levels, guest sentiment, and ultimately restaurant sales.
We believe we have such incredible tenure because we focus a significant amount of energy and resources on ensuring that we are a great place to work. We're very proud that we have been named to the Fortune magazine 100 Best Companies to Work For list for 10 consecutive years, as well as recognized as a top workplace for diversity, millennials, and for women. We were also recently recognized by Forbes as one of America's Best Large Employers for 2023. These accolades support our belief that we are well-positioned with respect to attracting and retaining talent relative to many others in the restaurant industry, as we continue to remain an employer of choice in this tight labor environment. The affinity for our cheesecakes and the Cheesecake Factory brand more broadly drives strong consumer engagement and has enabled us to achieve cult-like status in the restaurant industry.
The attributes of our frequent guests underscore the tremendous brand loyalty that we possess. Approximately 70% of those guests are under 45 years old, and overall, they skew higher educated and higher income. As a company that hasn't historically used traditional paid advertising, we've built our success by word of mouth. Today, we continue to do so by leveraging social media across many channels, as well as broadcast, print, and digital media to engage with our guests and further enhance brand awareness. The brand is entrenched in pop culture, with a high degree of unsolicited celebrity endorsements, including mentions in song lyrics, Twitter feeds, and we even served as a setting on The Big Bang Theory TV show, resulting in international brand recognition. Additionally, the experiential nature of the Cheesecake Factory and the wow factor of our food play very well in today's current visual content trends.
So now I'd like to pause for a moment, give you a glimpse of some of the great press that we've received that really underscores the tremendous affinity for the Cheesecake Factory as a brand, as well as our position as an employer of choice in the restaurant industry.
It makes you feel good if you're excited. Feel good.
Let's talk about this because this woman went viral for shaming her date for choosing the Cheesecake Factory for dinner.
Look at me. I cannot go in the Cheesecake Factory.
I want to stand up for The Cheesecake Factory because I go there every week. Sarah and I agree that they make the best dirty.
Martini stuffed olives in a Dirty Martini.
In a Dirty Martini.
It's really good.
I order it with Tex Mex Eggrolls, and I have a very nice time, and everybody's lovely.
You, yeah, you are a dreamer.
The list has exploded on the internet, telling women where they should absolutely refuse to go on a first date. At the top of the list, The Cheesecake Factory. What do you guys think of this? I mean, I bar.
I am so sorry. The Cheesecake Factory, 15 years ago, is where I met my wife.
Yes.
We go there every single year to celebrate our anniversary. It has an encyclopedia.
Yes, of a menu.
Of the menu. I mean, anything you want. This is a place where you go. Okay, I'm excited, all right? This is a place where you go. And there's no way you're going to go on a date and say, "Oh, there's nothing for me to eat." No, no, no, no. Turn the page. Then turn it around again. Flip it upside down.
Baby, you could. Me under the lights, diamonds under my eyes. Turn the rhythm up. Don't you want to just come along for the ride? Ooh, my outfit's so tight. You can see my heartbeat tonight. I can take the heat, baby. Best believe that's the moment I shine. 'Cause every romance shakes and it bends. Don't give a damn. I could dance. I could dance. I could dance. Watch me dance. Dance the night away. I could dance. I could dance. I could dance.
We're going to start with the most popular guy in the NFL right now, Travis Kelce.
Oh, that guy?
He went viral for wearing a statement-making suit ensemble.
Yellow suit with a striped turtleneck, looking like a Cheesecake Factory menu right there. Look at that. Look at it. Just like a Cheesecake Factory menu.
I like this. Watch me dance. Dance the night away. My heart could be burning, but you won't see it on my face.
It's me. Hi. I'm the problem. It's me. At tee time, everybody agrees. I'll stare directly at the sun, but never in the mirror. It must be exhausting, always rooting for the anti-hero.
Before we go, I'd love to read an excerpt from the one book that will never be banned in America. It's called Menu by the Cheesecake Factory.
Today, I'm eating everything from the Cheesecake Factory. It's the most anticipated restaurant of all time. Can you believe it? 250 items. Let's eat the menu. Cheesecake Factory. There's so many parts of this menu. I think there's 13 categories of like 26 subcategories. There's 40 cheesecakes, and there's other desserts too.
Hey, you feel like summer, baby, eating up our bodies. Too much decay but now we're dancing in the lobby. Know every inch I'm on that body, but the feeling is new. Still catching feelings for you. Feels for you. The feelings for you. I'm catching feels.
We have a holiday spread here, Peppermint Stick Chocolate Swirl Cheesecake from The Cheesecake Factory.
I don't care if it's real or not. I'm so happy that National Cheesecake Day is this Sunday.
Sounds made up.
I love it.
It doesn't matter. Doesn't matter. We're celebrating early with a look at how one recipe helps jump-start a global chain, the Cheesecake Factory.
Best assignment ever. Good morning, guys.
My mother, she wasn't really a professional baker, but she got a recipe out of the newspaper. She said she changed it. We're not sure she really did. But everyone loved this cheesecake.
The original restaurant opened with 12 cheesecake varieties, and today there are more than 30.
Wow, wow, wow. The Cheesecake Factory created a new flavor. This is cookie dough.
It's another one.
Cheesecake with pecans.
It's good.
Take a look here. This whole entire top, that's all cookie dough. They don't skimp at all.
Yeah. This is a winner.
Way to go.
Johnny, that's a good one.
Perfection.
Don't say I didn't. Say I didn't warn ya. So it's going to be forever.
Okay. Ooh, these are from North Italia Modern Italian here in L.A. This is a spicy Calabrian buffalo chicken pizza with house giardiniera. Three kinds of cheese. You got Fontina, Gorgonzola, and smoked mozzarella.
Ooh, I like that.
That's a fancy schmancy.
That's my new favorite one. A lot.
Oh, yeah.
Okay. Here we go. Uh-huh. Oh, yeah. That's good.
Oh, that's good.
Oh, boy, it's good!
I like me an array of cheeses.
Watch me dance. Dance the night away. My heart could be burning, but you won't see it on my face. Watch me dance. Dance the night away. I'll still keep the party running. I want me out of place when my heart breaks. When my world shakes, I feel alive. I feel alive. I don't play safe. Don't you know about me? I could dance. I could dance. I could dance. Dance the night.
As you can see from that particular marketing reel, The Cheesecake Factory resonates across demographics, from Gen Z to baby boomers to everybody in between. That gentleman did eat the entire menu, by the way. It took him three days to finish the whole menu. But that one video actually had over 8 million views. So pretty impactful social media and marketing in many different broad different ways. In many ways, we deliver to our guests fine dining quality at a casual dining price. This is what enables us to generate industry-leading average unit volumes with a moderate check average. Leveraging our differentiated positioning, high-quality, made-fresh-from-scratch menu, and value proposition supported by creative on-brand marketing, we have driven meaningful and, importantly, incremental growth in off-premise sales. Delivery is available in all of our restaurants through an exclusive national delivery arrangement with DoorDash.
With our shared focus on quality and operational excellence, this relationship enhances the guest experience and the guest delivery experience while enabling us to realize meaningful profits from this channel. All of our restaurants nationwide also offer online ordering for guests that opt to pick up their orders. Total Off-Premise sales have grown significantly since the pandemic and have since stabilized over the last few quarters meaningfully above pre-pandemic levels at 22% of sales. This reflects the contribution from delivery as well as continued growth of our takeout business. To put this in perspective, that equates to about $2.7 million per restaurant per year on average, significantly higher than pre-pandemic levels. We also continue to innovate operationally to increase convenience for our guests. The following are a few enhancements that we've recently rolled out.
Reservations, one of the biggest hurdles for our guests, can be an offset to our long wait times. We rolled out access to reservations with the launch of our Cheesecake Rewards program last summer to encourage guests who are more pressed for time to come dine with us. Texting for curbside pickup. A guest can notify the restaurant staff of their arrival via text from their vehicle, and a staff member will bring their food right out to their car. Lastly, we're in the process of implementing further enhancements such as enabling guests payment via text and GPS, which could automate the guest arrival notification. Additionally, on the topic of the Cheesecake Rewards program, let me provide a brief update. As a reminder, our overarching objective is to leverage data analytics and insights to engage more effectively with our guests and drive incremental sales while maintaining our restaurant-level margins.
Early demand continues to exceed our internal expectations, and we remain encouraged by the level of member activity and engagement that we're seeing thus far. As I've said previously, we're taking a very deliberate approach as we expand the program and, therefore, do not anticipate seeing measurable impact to sales for at least the first year or so. We're continuing to test acquisition tactics and activation campaigns to better understand the key elements that are resonating with rewards members and most effectively increasing membership enrollment, engagement, and driving frequency. For us, the term CSR informs how we operate in relation to not only the environment but also the food we serve, the staff members we employ, and the communities in which we are located. The past few years have been very challenging for our industry, our people, and our communities.
However, we have not shied away from our values and commitments but rather strengthened our resolve to contribute to the well-being of our staff, our local communities, and the environment. We have a dedicated sustainability department focused on creating and implementing operational programs and an overarching sustainability strategy. As part of this strategy, we were pleased to announce in April of last year our commitment to reduce our carbon emissions in alignment with the Paris Climate Agreement. We're continuing to work towards reducing our greenhouse gas emissions with the goal of achieving a 1.5-degree aligned Net-Zero Emissions by 2050. This commitment builds upon our award-winning sustainable sourcing of food recovery programs as we continue to look for ways to reduce our impact on the environment.
We've also expanded our commitment to fostering an inclusive environment with the formation of our Diversity, Equity, Inclusion, and Belonging Steering Committee and the implementation of several initiatives, including our Diverse Leaders Network, our mentoring programs, and ongoing de-escalation training for our staff and managers. And with that, I'm going to turn it over to Matt to review our sales leadership, growth opportunities, and our financial resiliency, all reasons why we are excited about the future.
Thank you, David. The unique and compelling dining experiences we create for our guests have driven consistent and competitively strong sales performance relative to the rest of the casual dining industry. While the Great Recession isn't a perfect proxy for the operating and economic challenges following the pandemic, our sales trends recovered one year earlier than the broader industry and set us up for meaningful outperformance the next few years. Importantly, despite the dynamic environment we've experienced over the last few years, comparable sales and traffic at The Cheesecake Factory restaurants has continued to outperform the casual dining segment, demonstrating the strength and resiliency of our namesake brand. Based on our performance through prior economic shocks and cycles, our business has proven to be very durable.
In 2023, the company generated over $210 million in cash flow from operating activities to support unit growth while returning nearly $100 million to shareholders in the form of dividends and stock repurchases. We believe our solid liquidity position, along with our expected cash flow levels, will support our long-term growth objectives as well as our capital shareholder returns programs. Echoing what David said earlier about the solid sales performance of The Cheesecake Factory, fourth-quarter comparable sales at The Cheesecake Factory restaurants increased 2.5% versus the prior year and 14% versus 2019. North Italia fourth-quarter comparable sales grew a solid 7% versus 2022 and 34% versus 2019. I wanted to recap some of the key underlying assumptions we provided during our last earnings call in February.
Based on extrapolating current trends and assuming no material operating or consumer disruptions, we would anticipate total revenues for the year to be approximately $3.6 billion. As we have said earlier, our goal is to effectively offset inflation with menu pricing to support our margin objectives. Assuming we achieve this goal, input costs and consumer trends remain consistent, and there are no other material exogenous factors, we would expect full-year net income margin of approximately 4.25% at the revenue level I provided. We are planning for as many as 22 new restaurant openings for 2024 and anticipate approximately $180 million-$200 million in CapEx to support this level of unit development as well as required maintenance on our restaurants. Lastly, we plan to continue to return capital to our shareholders through our regular quarterly dividend and share repurchase program.
As we look ahead, the performance of The Cheesecake Factory as well as North Italia, Flower Child, and the FRC concepts continues to reinforce our confidence in the strength of our brands and their long-term growth potential. Financially, strong unit economics are a key driver of our growth decisions as we invest in new restaurants that we believe will achieve our targeted returns. The Cheesecake Factory, North Italia, Flower Child, and FRC all possess some of the most compelling unit economics in the industry and position us to potentially drive significant accretive growth over time. Based on our anticipated roadmap for each brand, we expect to generate long-term annual unit growth of 7%, which we believe will be one of the highest unit growth rates in the casual dining industry while providing diversification with respect to restaurant segment, price point, real estate, and our labor model.
In closing, we are a leader in upscale casual dining with highly differentiated, well-positioned concepts that deliver a unique guest experience, creating what we believe is a significant competitive advantage. Our business remains healthy with top-line trends substantially stabilizing, improving profit margins, normalizing input costs, and solid operational execution. We are looking to build on this momentum and believe we are poised to once again generate our historically consistent operational and financial results and to make meaningful additional steps in 2024 towards our longer-term goals in the key areas of value creation: growing restaurant comparable sales, expanding restaurant operating margins, and accelerating accretive unit growth. And with that said, we look forward to seeing you in our Q&A breakout session in Amarante One. Thank you for coming today, everybody.