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 the team from Cheesecake Factory, which, of course, owns the core Cheesecake Factory brand, as well as a portfolio of growth concepts led by North Italia and Flower Child. Presenting from the company is President David Gordon, who'll be followed by CFO Matt Clark. David?
Thank you, Brian. Good morning. Before we start, I need to remind everyone that this presentation contains forward-looking statements which are covered in detail on this slide. 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 have driven strong performance across our portfolio, supporting our confidence in the strength of our concepts and their long-term growth potential. We believe we have 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 complex restaurants. Our operators have done an incredible job driving improved operational execution, enabling us to deliver solid top and bottom-line results.
We continue to generate meaningful free cash flow, which allows us to invest in the business while returning capital to shareholders through our dividend and share repurchase program. Lastly, with a diversified portfolio of high-quality growth vehicles, we believe we are well-positioned to drive long-term, profitable growth moving forward. We currently operate 216 The Cheesecake Factory restaurants throughout the United States and Canada. We believe we have a long runway of potential growth ahead as we continue to open in new and existing markets, working towards an opportunity of 300 domestic The Cheesecake Factory locations. This is complemented by our 35 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 pizzas.
North also offers a thoughtfully curated selection of wines, beers, and house-made cocktails, driving a 23% alcohol mix. We now operate 48 North Italia restaurants across 16 states, plus Washington, D.C. Overall sales volumes at North Italia remain solid, reflecting strong guest affinity for the concept. Our new restaurant openings continue to generate attractive sales trends and returns, reinforcing our confidence in its long-term potential. Importantly, Italian cuisine remains one of the most popular categories in the United States. With the continued strong national reception of North Italia, we believe there is potential for 200 domestic locations over time, supporting our plan for roughly 20% average annual unit growth. Flower Child is a differentiated healthy concept in the fast casual dining segment, offering a balanced dining experience with organic, gluten-free, and vegan dishes, all made fresh from scratch daily.
The menu features customizable bowls, wraps, salads, veggies, and healthy proteins, catering to a broad audience seeking nutritious and flavorful dishes. Off-premise dining is a significant driver of sales, accounting for over 50% of sales, supported by a dedicated takeout area for third-party delivery and pickup orders. Flower Child currently operates 43 locations across 15 states, with planned expansion into new and existing markets. Flower Child continues to meaningfully outpace the broader fast casual segment. Importantly, our new restaurant openings, including those in new markets, are driving sales volumes that exceed our expectations, reinforcing the strength and portability of the concept. With a target of 20% average annual unit growth and the potential for 700 domestic locations over time, we see significant runway for growth and are excited about Flower Child's future potential.
FRC is comprised of a group of concepts that are diverse in industry segment, occasions, square footage, and geography. It serves as an incubation engine to develop innovative concepts for potential growth. Excluding Flower Child, FRC currently operates 55 restaurants, and together, these concepts serve as an ecosystem for talent, menu, and design development. Other FRC potential growth concepts include Culinary Dropout and The Henry that we believe could be future growth potential. Over the past three years, we have meaningfully accelerated development across our portfolio. We opened 16 restaurants in 2023, 23 in 2024, and 25 in 2025, achieving approximately 7% unit growth.
Building on this momentum, we expect to open as many as 26 new restaurants this year across our portfolio. Looking ahead, we believe our diverse portfolio of high-quality concepts combined with our strong financial position provides a solid foundation to support strong unit growth for years to come. Let me provide some key takeaways as to why we believe The 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 remain the same. Great food, service, 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 4 strategic defined points that set us apart from other restaurant companies and drive our consistent performance.
1st and foremost, we are a leader in menu innovation and have developed one of the broadest menus in casual dining. 2nd, we believe we deliver best-in-class operational execution. 3rd, we offer a unique, high-energy ambiance coupled with execution and exceptional service and hospitality. Lastly, we have an integrated bakery producing our award-winning desserts. At The Cheesecake Factory, culinary innovation has always been central to our concept. Each of our more than 225 menu items is made fresh from scratch in-house using fresh ingredients, including over 70 different sauces, dressings, and marinades. We offer something for everyone across a broad range of price points, and we change our menu twice a year to keep it highly relevant without relying on discounting. Most recently, we introduced two new categories, Bowls and Bites, giving guests new ways to enjoy the menu.
Our new bowl selections include items such as the Teriyaki Salmon Bowl, Chicken Katsu Bowl, and Peruvian Chicken Bowl, offering contemporary flavors in a format that resonates with today's guests. Our new Bites menu features smaller plates at attractive price points, including Barbecue Pork Belly Buns, Asian Chicken Nachos, and New Orleans Cajun Shrimp. Early results have been encouraging. We're seeing strong interest in the new categories and improved appetizer attachment rates. These new offerings keep our menu fresh and relevant, and together with strong operational execution, help drive sales and traffic. In addition to our innovative menu and warm hospitality, we place significant emphasis on the distinctive interior design and decor of our restaurants, which creates a high-energy ambiance in a casual setting. Our guests love our cheesecakes, and our bakery is definitely an essential element in creating that cheesecake magic.
This drives our industry-leading dessert sales of approximately 17%. Importantly, we maintain creative and quality control, producing 58 innovative cheesecakes and other baked desserts for our restaurants and those of our international licensee partners, as well as retail CPG sales. Of course, none of what I have discussed today would be possible without a relentless focus on operational execution. Our best-in-class operational execution is the foundation of our success, ensuring we consistently deliver exceptional food quality, service, and hospitality across our complex, high-volume restaurants. This level of execution is made possible by our strong organizational structure and experienced field operations team, many of who are The Cheesecake Factory veterans with tenures spanning 16-37 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 significant energy and resources on ensuring that we are a great place to work. We are very proud to have been recognized on Fortune's 100 Best Companies to Work For list for 12 consecutive years and as a 2025 Black Box Intelligence Employer of Choice in upscale dining. 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. The affinity for our cheesecakes and The Cheesecake Factory brand more broadly drives strong consumer engagement and has enabled us to achieve cult status in the restaurant industry. Unlike many of our peers, we have not historically used traditional paid advertising, instead building strong brand affinity and awareness through word of mouth and organic buzz.
Today, we continue to do so by leveraging social media across channels as well as broadcast, print, and digital media. Our social media presence is unmatched, with more Instagram followers than any other major casual dining brand, highlighting our guest enthusiasm for interacting with us across all digital platforms. The Cheesecake Factory's cultural influence extends beyond the restaurant, with a high degree of unsolicited celebrity endorsements and references in TV shows, late-night talk shows, movies, and music lyrics.From serving as a setting in The Big Bang Theory, to being featured in viral social media trends, our brand continues to be a mainstay in pop culture. Additionally, the highly visual experiential nature of dining at The Cheesecake Factory and the wow factor of our menu naturally align with today's content-driven digital landscape, further amplifying our reach across media platforms.
Now I'd like to pause for a moment and give you a glimpse of some of the great press we've received that really underscores the tremendous affinity for The Cheesecake Factory brand, as well as our position as an Employer of Choice in the restaurant industry.
Well, this is wild. I saw that a cream cheese festival in New York just served the world's largest cheesecake at 15,000 lbs. 15,000 lbs of cheesecake, which is almost as heavy as the menu at The Cheesecake Factory. Almost.
What do you order at The Cheesecake Factory, Paige?
Gotta have options. Need options.
I know you feel it. Can you believe it? I found love in your hands and then repeated. I know you feel it. Can you believe it?
Cheesecake Factory, would you believe, ready for this one? There's a burger on that menu that is perfect. In the appetizer section of the menu, there's a very special thing called Roadside Sliders. It isn't really a slider. These guys know what they're doing.
They do.
Interesting.
There's a reason why. You ready for this one? It's because the guy who started Cheesecake Factory, a guy named David Overton, grew up in a suburb of Detroit called Farmington. In Farmington, there was a place called Greene's Hamburgers, and they sold sliders. David Overton said that every single Cheesecake Factory they open in the world has to use fresh ground beef, onions, and he wanted to make sure that it was the exact same burger that he ate as a child. If you eat those burgers, you're actually eating a piece of, a very important piece of his history and, in a way, our hamburger history.
Baby, you and me. For infinity. My eternity. My eternity. Baby, you and me. For infinity. My eternity, yeah. I'll love you for life, lifetimes. Oh baby, you and me. Coming strong.
I think something came out, an article came out that people don't go to Cheesecake Factory on dates anymore.
Yeah.
And, uh-
What's wrong with Cheesecake Factory?
Yeah.
Cheesecake Factory's solid.
You know?
They've got everything you want on that menu.
Yeah.
The SkinnyLicious one.
If you're a kid from the East Coast and you don't know any restaurants in L.A. and you got like a hot date, I'ma take you to Cheesecake Factory.
I could lie.
Ended up with, Skye at a Cheesecake Factory in Jersey.
Bookended with Skye.
Yeah.
I love that.
She looks like she's on the verge of like saying something.
She actually said, "Pop up.
We're at The Cheesecake Factory. Thank you.
What do you think's gonna happen? Will it kill us, the AI?
I think so.
Yeah, you think so? Yeah.
It is, we're all dead.
Do you think you'll make it to The Cheesecake Factory in Tulsa on your birthday or no?
I feel like we're safe this birthday. Five years from now, on the next big birthday, we don't know. Take my heart, don't break it. You were right there all along. You and I stargazing. Intertwining souls. We were never strangers. You were right there all along.
Summer is upon us, and North Italia's kicking off its new seasonal menu. We got Chef Billy with us, who brought all the things.
I heard you guys were hungry. I came to feed you this morning. So a little bit of heat on there.
Ooh, beautiful.
Some slivered red onion.
Yes.
A fan favorite.
Wow.
It's just, it's perfect, right?
Oh my goodness, that's gorgeous.
You and I stargazing. Intertwining souls. We were never strangers. You were right there all along. Promise that you'll hold me close, don't let me go. Hey! Take my heart, don't break it. Love me to my bones. All this time I wasted. You were right there all along. Ooh.
Carlos, what do you do?
I work at The Cheesecake Factory, so you know I'll hook you up with the brown bread too.
The best part is Carlos said that he'll hook us up with the brown bread. Which is free, right?
Eh.
Which is, so I'm glad-
Eh
... That I can go into Cheesecake Factory and say, "Carlos said I get the brown bread.
Oh.
That's the hookup.
You were right there all along.
As you can see, The Cheesecake Factory resonates across all demographics, from Gen Z to baby boomers to everybody in between. 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 partnership with DoorDash. With our shared focus on quality and operational excellence, this relationship has enhanced the guest delivery experience while enabling us to realize meaningful profits from this channel. Off-premise sales now represent approximately 22% of sales, reflecting the stability and relevance of this business.
To put this in perspective, that equates to about $2.7 million per restaurant annually. As part of our continued investment in marketing and technology, we launched Cheesecake Rewards in June of 2023 as a surprise and delight membership program. Performance continues to surpass our own expectations with strong member engagement and guest satisfaction scores for members over-indexing, reinforcing our confidence in the program's momentum. Importantly, the program is driving incremental visits from existing guests while also attracting new guests, supporting our deliberate and strategic approach to development. We continue to leverage data analytics and insights, allowing us to be more targeted with our offers and more thoughtful in how we engage with our guests. Building on this momentum, we expect to launch a dedicated Cheesecake Rewards mobile app in the second quarter to provide a more seamless and connected experience for our guests.
As we look ahead, we believe that Cheesecake Rewards will remain an important driver of traffic and guest loyalty. With that, I'm going to turn it over to Matt Clark to review our financial performance and growth opportunities, all reasons we were excited about the future.
Thank you, David. Thank you for everybody for being here today. Over the past several years, we have delivered consistent comparable sales growth, reflecting the durability of our concepts and the consistency of our performance. That top-line momentum translated into record adjusted EBITDA of $354 million in 2025. Our financial strength and disciplined execution have enabled us to generate meaningful free cash flow while continuing to invest in future growth. In 2025, we produced over $301 million in cash flow from operating activities, opened 25 new restaurants, and returned more than $206 million to shareholders through dividends and share repurchases. Reflecting our confidence in the business and our disciplined capital allocation approach, we increased our share repurchase authorization and raised our quarterly dividend in the first quarter.
With a solid balance sheet and strong cash flow generation, we remain well-positioned to support both our growth objectives and our capital return programs. Our sustained sales momentum in a competitive casual dining landscape highlights the strong consumer demand for the distinct, high-quality dining experiences our experiential concepts consistently deliver. Echoing David's earlier remarks on The Cheesecake Factory's solid performance, total sales for 2025 at The Cheesecake Factory restaurants increased 1% from the prior year, leading to AUVs of $12.4 million. North Italia delivered 15% total sales growth for the year and AUVs of $7.6 million. Flower Child delivered a standout performance, posting 28% sales growth for 2025 over the prior year, translating to an AUV of $4.6 million.
These results demonstrate the strength and resilience of our concepts, reinforcing our confidence in their long-term growth potential. Our strong 2025 results reflect solid top-line revenue, strong operational execution, and improved profitability. Sales growth across our core concepts and the most new restaurant openings in a single year supported record annual revenue, adjusted EBITDA, and adjusted earnings per share. Our operators' consistent execution throughout the year drove meaningful profit margin expansion at The Cheesecake Factory, North Italia, and Flower Child. With this strong foundation and sustained momentum, we are well-positioned to drive continued success in 2026 and beyond. I wanted to recap some of the key underlying assumptions we provided on our last earnings call in February.
Based on current trends and assuming no material operating or consumer disruptions, we would anticipate total revenues for the year to be approximately $3.9 billion. 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 5% at the revenue level I provided. We are planning for as many as 26 NROs for 2026 and anticipate approximately $210 million in cash CapEx to support this level of unit development as well as required maintenance on our restaurants. Lastly, we will continue to return capital to our shareholders through our dividend and share repurchase programs.
Looking ahead, the performance of The Cheesecake Factory, North Italia, Flower Child, and the FRC concepts continues to reinforce our confidence in the strength of our brands and their potential to drive high quality growth over the long term. Our growth strategy is driven by strong unit economics as we invest in new restaurants that we believe will achieve our targeted returns and support long-term value creation. The Cheesecake Factory, North, Flower Child, and FRC all possess some of the most compelling unit economics in the industry and position us to 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 even our labor model.
Our large total addressable market provides substantial runway for expansion and long-term revenue growth. With The Cheesecake Factory, North Italia, and Flower Child, we see meaningful white space to expand our footprint and drive sustainable unit growth. The most mature of the three concepts, The Cheesecake Factory, currently operates 216 locations with the potential to expand to 300. North Italia has 48 locations with a path to 200 locations, and we plan to enter a mix of new and existing markets this year. Flower Child operates 43 locations today and has the largest TAM with 700 locations. With the lowest penetration, it is once again poised for the highest annual growth rate this year, with plans to enter new high growth markets, including Salt Lake City, Omaha, and Boise.
At scale, these expansion opportunities have the potential to generate over $5 billion in additional revenue. Other growth concepts such as Culinary Dropout and The Henry present incremental upside, further strengthening our long-term growth trajectory. 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 stable top-line trends, improving profit margins, 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 2026 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. Thank you for your time.
With that, we look forward to seeing you in our Q&A breakout session in Amarante 2. Thank you very much.