Morning, and thank you for joining us. My name is Jeff Bernstein, and I am the restaurant and food service distribution analyst at Barclays. I did recently announce my plans to retire, which is actually happening at the end of this month. I guess I'm the official outgoing analyst, with the next analyst still to be named. But it's bittersweet. I guess they threw me a party to say goodbye, so this is great. I want to welcome all to day one of our 19th Annual Global Consumer Conference. I think even more importantly, this is the first year where we have combined our two consumer conferences. We've got the Back to School Consumer Staples Conference, which has historically held this spot, and we have our Eat, Sleep, Play, Shop Consumer Discretionary Conference.
Within my world, we have 14 restaurant and food service distributors here with us. That's the most we've ever had. I think the combination of staple and discretionary is going to work really well. Of those, today we have Cheesecake, BJ's Restaurants, and Kura Sushi. Tomorrow we have Bloomin' Brands and Dine Brands and First Watch Restaurant Brands, Sysco, Texas Roadhouse, Wendy's, US Foods, Yum! Brands, and Wingstop. Then day three, all by themselves, we have Performance Food Group. We hope you find the next three days a good use of time, and we get to chat in the halls between meetings. But at this point, I'd love to introduce our first presenting restaurant company, which is The Cheesecake Factory.
So with us on stage this morning from Calabasas Hills, California, we have Matt Clark to my immediate right. He's the CFO. We have Etienne Marcus to his right, who's the VP of Finance and IR. By way of background, if it's possible for those not familiar, The Cheesecake Factory U.S. portfolio is led by 220 or so Cheesecake Factory restaurants and 50 North Italia units, along with 40 Flower Child fast casual units. And they have other brands in their portfolio as well. So it is a portfolio company. Looking at 2026, and again, we are moving our way through it quite quickly, but their guidance projects total revenues of approximately $4 billion and an updated net income margin of roughly 5.4%. They're opening up to 26 new units this year.
That kind of aligns with management's long-term goal for 7% unit growth. So we want to thank Cheesecake Factory very much for joining us. I will kick it off with some questions, and hopefully you have a chance to see Cheesecake, if not now, but otherwise throughout the halls today. So thank you very much for joining us this morning as our first restaurant company here.
Well, thank you for having us, and thank you for being a great partner for many years. We wish you only the best as you move to the next part of your journey.
Thank you. I'll still be visiting Cheesecake. We'll never be apart.
A guest for life.
A guest for life. I had a couple of broader consumer discretionary questions because I think you have a pretty good look at what's going on with the consumer. I'd love to just start with that, maybe the health of the consumer broadly and maybe by cohort. Just wondering, what do you even look at to assess and whether you see any change in trend, whether it's by age group or by income or by ethnicity, how you would assess the current environment?
Well, I think for our namesake concept as well as the rest of our portfolio, it has been strong. I think that the consumer has money to spend. Maybe they are a little bit more discerning with where they spend it. You have to execute well. You have to meet them where they are at with the value proposition for whatever that means for you. Obviously, with The Cheesecake Factory, part of that is the large portions, for example. You still have to have price points that matter, though. So I think it is a winnable scenario, albeit not easy. We do track a lot of data, and we, I think, have a benefit of having multiple types of concepts in many geographies. We do see ourselves continuing to attract, I think, importantly, younger guests.
I know there has been some concern about that cohort, for example, but particularly with the launch of our app at The Cheesecake Factory earlier this year as well as some of the social media that we have been doing, we know we are bringing in new, younger guests as well as continuing to refill the funnel across the broad demographic. So I think it is steady. I think there is market share to be had, but I think that restaurants in general are performing as well as any consumer sector, and probably casual dining better than most, as I think what guests are really looking for is experiences. And we provide great experiential dining opportunities for people to come together and have a little escape from life. And our own recent research points directly to that.
That is great and very encouraging, obviously. As you think about the broader restaurant industry, there is always talk of the battle between food at home, and now we are with our staples brethren right upstairs, so I will not speak too loud, but versus food away from home. We have always said that food away from home is going to continue to take share from food at home. Do you think the most recent value focus across the industry has given that upper hand to food away from home? Or often we will hear the staple sale. People are trading down into food at home at this point.
Yeah. We like to believe that we are more staple-like than we have ever been before. But if you look at the long-term trends of where consumers are spending their share of wallet, it continues to increase for food away from home. We joke about the fact that people do not know how to cook anymore. But they also grew up watching the Food Network and all of those attributes about socialization. You even see that in mall traffic today, that the younger guests want to go back to the mall to have those social events. So I think there are multiple contributing factors. I think you are right, Jeff, on the value piece. A lot of that is optics, but that first view that a guest might have to say, "Can I afford to go out?
Do I feel like the company is respecting my price points?" They usually trade up. But it is about making sure that the consumer has that choice when they come into your restaurant, that they can decide do they want to have a piece of cheesecake or do they just want to have a salad and the free bread, and that is their choice for that day. So I think value has been important, but I also think there is a huge experiential component that is also continuing to go on and probably grow.
Yep. Right. You have been in the seat for quite a while. An investor misunderstanding, what questions do you get, whether it is today or over the past year, that surprises you? Or questions that you do not get that you say, "You know what? You should be asking about this aspect of our business." What surprises you either way?
Well, I think the biggest surprise, if you go back a year or nine months, when we were in the middle of a government shutdown and traffic was pressured, it was about where is the recovery? Can you get the positive traffic? Now I would say it is surprising in my long tenure here, the question is, well, how much traffic can you get and how sustainable is it, right? So the dynamic has completely shifted, and I think a lot of that is what we are doing, and a little bit of that is some spark from social media. So they want to understand, our investors want to understand how much of it is in your control, where can it be in the future, and all of the attributes around sort of the growth algorithm sort of permanently shifting to the upside.
We certainly see that in some of the investor response to the stock. So I think that is great, and is a different platform. I think that we are also getting many, many more questions around Flower Child. You brought them up, and certainly a tremendous growth opportunity for the company. What maybe investors, they probably understand but underappreciate is that we are only going to grow at the pace that makes sense for us, for Flower Child, whether that is from a site selection perspective or a labor perspective, that we want to have the right management teams in place. So I think we are continuously re-educating. Wall Street just loves growth, and we want to make sure that it is quality growth.
Well, the Flower Child results, while you probably don't get too many questions about it, were incredible recently, so congratulations. Anything to mention on the GLP-1 topic? Again, we're with staple investors, and it's just more and more people who are on some sort of version of it to help them reduce calorie counts. I would think that Cheesecake would say, "Oh, we're probably the most vulnerable considering we have such abundant portions and delicious cheesecake." So, are you getting more questions? Do you think there's more concern ahead, or how are you positioned?
Well, you would remember. You were around when calorie counts went on the menus in the first place, and everybody said that was the demise of Cheesecake Factory back then, right? In fact, all we've seen is the order rate of cheesecakes go up over time. Again, what our research says, and what we read sort of more generically as well, is that guests choose how to allocate not only their money but their calories. Maybe they're going to skip a couple snacks, but they're going to save those calories up because when they go out on Thursday night to The Cheesecake Factory, they want to have the full experience. Many of you might know we have a SkinnyLicious® menu, which is probably as big as many restaurants' total menu, and it's all under 590 calories.
I think that would be a good indicator if we thought our guests was skewing more towards low-cals, smaller portions. But in fact, it's about the same percentage of sales as it always has been. We don't think that for our occasions, that's a big component of how our guests decide to spend their money and consume The Cheesecake Factory.
All right. Lastly, just from a bigger picture perspective, as we are now in September, I'm sure you guys are thinking about calendar 2027. Is there something in particular that you'd say that this is the next big exciting thing going on at Cheesecake Factory, whether it's front of house, back of house, or AI, or just what's the topic du jour as we look to next year?
Well, I think we have some fun and interesting add-ons to our existing programs, whether it is menu innovation, the rewards program, or the app that we feel like will continue to fuel and sustain the comp growth we have seen at The Cheesecake Factory. In our historical approach, we are not going to tell anybody about those. They are in the pipeline. I think the thing that is exciting, too, is that we will step up Flower Child growth. I think it will be a meaningful step up, probably into that 20%-25% growth range that investors are looking for. We feel great about where that pipeline is. We have got a real clear roadmap for continued value creation for our investors.
Got you. Well, as we think about specifics and kind of diving in, the comp growth, I think this past quarter, it was close to 6% comps, which is incredible for a company that you usually cannot get into the restaurant to be able to drive that with close to three points of traffic. I think you said trends accelerated into the third quarter when you last shared that with us. Not to say you are necessarily going to make, I do not want any comments about the third quarter if you cannot provide that, but anything you would say are key drivers, whether it is, I think you talked about operations and staff retention, culinary. How would you prioritize what has been the biggest drivers of your most recent acceleration? That would be perfect.
Okay. Well, I would say we believe that we are more in control of our ability to drive traffic and ticket than we have been in quite a while. I think that the overall marketing program, if you dial back three years when we launched Rewards, it was a tipping point for us to spend and invest more, but also to get the data and to connect with our guests. We have continued to move that program forward. We have heightened that with the app this year, which gives us a whole another level. It also engages the guest more, we are seeing rewards pick up. We are seeing engagement at the 30- and 60- and 90-day critical time marks for our new guest increase.
All of those things are positive, and we have really integrated that with the two foundational components of our company, which is operational excellence and menu innovation. We are more willing to talk about the menu today, and we are more willing to engage in social media today and have a more confident and playful tone with the way that we are going about that. We are talking about things like more is more. We are embracing the large portions. We are showing ginormous pieces of chocolate cake, which are then getting picked up on social media, and then we are engaging with them.
I think that that third leg of the stool is really kind of a new story for The Cheesecake Factory to figure it out, to embrace that, and to propel the other two sort of core components, and I think that is what is making the difference.
I know Cheesecake has always kind of taken a slow and steady approach to some of these new initiatives, saying, "Let's wait and see how they go," and then we don't get a lot of data on them in the early days. The concerns you had about any of those things, have any of those actually come to fruition, or thus far have all of your newer technology initiatives played out the way you would've expected?
Maybe better. I think that it's always hard to know going into it. When we did the rewards program, we did a lot of research. I mean, we're big on data, and we wanted to understand what was working and what wasn't working for the guests. The number one thing that our guests told us was, "Well, you should have an app." We felt like pre-COVID that maybe the casual dining wasn't ready for it, but that coming out of it, that sort of digital natives really did want that, and they would use the space on their phone for an app for some place that they're going to go once a quarter, which is kind of interesting.
It was about this time last year, we said, "Okay, we just got the research back, and rewards is going well, but we need that sort of spark." We said we want to have an app in six months, and the development team went to work, and we launched it, and it was way better than we thought, and then the adoption and the engagement piece of that. I think that in addition to sort of our new approach to media combined, has been really the spark to the flywheel.
That's great. You haven't shared any metrics specific to app specific or along those lines?
We have not. Maybe in the future, but my IR team tells me probably not. Yeah, they are shaking their heads.
Yeah. Okay. The other big driver of top line, presumably even bigger if you can get 7% unit growth, although your comp growth have been coming close, so that is great to have a race there. I think you said 26 new units this year, kind of that 7% long-term target. I think you just said you can get into the 25% range for Flower Child.
For Flower Child, yep.
Which has only 40 or so units.
Right.
We are talking about 10 units on 40, that is a lot of unit growth. I am just wondering where each brand fits. It sounds like Flower Child is the lead horse, but how you think about the positioning of each brand and what it takes to move to the top of the list in terms of how many units they each get.
Well, Flower Child certainly has the best unit economics. So in terms of disciplined capital allocation, it is our number one priority. It is about a 33% cash on cash. It has got the largest TAM. It fits in any geography, smaller cities, bigger cities. We know that when we densify, which we have done in Dallas and in Phoenix, the performance is actually better because awareness is increased. So that sits at the top. If you really think about The Cheesecake Factory, it is going to be five or so units, plus or minus a year, sort of as a more mature vehicle. But we will open as many as we can. If there are great sites, we will go there. And the risk profile of opening a The Cheesecake Factory is very, very low.
So from a returns perspective, we know exactly what we are going to get. North Italia has had a little bit of a bumpier ride with comps. We are reinvesting in that concept. We believe in the long term. The last three openings have been the strongest that we have ever had, and we continue to learn and develop and find space for that. So we will continue, maybe slow that down a little bit next year as there are some trade-offs. And we continue to test portability of a couple of the Fox Restaurant Concepts that we really like, The Henry and Culinary Dropout. And we have got a very good overall runway for the next two to three years. Probably the strongest real estate roadmap that we have had.
Right. And for those that are not as familiar with Flower Child, the 30-second pitch on that is fast casual, but fully customized for exactly what you want, would you?
Yeah, we like to call it The Cheesecake Factory of fast casual. It's not an assembly line. It's a scratch kitchen, and you can see it being made when you go in there. And it's got a huge defensible moat because not only does it have the price points of fast casual, the breadth of the menu, it's got a vibe in the restaurant. If you think about the four quadrants of business potential, it's pretty evenly split. We're about a little over 40% dinner versus a little under 60% lunch, which for fast casual is very differentiated. We're just about evenly split off-premise and on-premise, which was also incredibly differentiated. We really think that there's the same story as The Cheesecake Factory. We compete against everybody and nobody. It's a great value proposition.
We find that it's also very friendly for families. You can get something healthy for your kids that tastes great as well, and you can get it to go, or you can go there.
Just to go back to Flower Child a little bit on the growth. I think the other area that we've been focused on to make sure that we're ready for the 25% growth is we've been investing in the real estate team, making sure that we have a healthy pipeline, which we feel pretty good about. The other piece is on the operational side, making sure that we have management ready. That's the gating factor for that concept in terms of how fast we can grow. We've been ensuring that we have a good pipeline of managers, and so that we're ready to execute on that higher level of growth.
Right. If there was ever a downside, I feel like when investors are always pushing for more growth, it's just what's too fast? You have a big portfolio now. Do you take managers from a Cheesecake and move it over, or you have to develop a Flower Child manager to then move on? How do you assure that 10 units is manageable on a big portfolio?
Yeah. They're typically grown in from the concept. It is a differentiated concept, and so we've been taking people up from the pipeline inside of Flower Child.
That's great. Then in terms of the restaurant, actually you just mentioned before, you said it was a bumpier road for North Italia, and you're investing in it. So what have you found to be the biggest challenge, when your big brother is The Cheesecake Factory? I'm sure North Italia has big shoes to fill, but what's been the biggest challenge that you see you can overcome in the short and long term?
Well, I think coming out of the hyperinflation post-COVID that we all took pricing, and we took pricing at North a little bit later. But in the last couple of years, it was elevated. I think that in general, what we've seen is consumers, again, as we talked about what's important at Cheesecake and Flower, you've got to give them options. You've got to put them in control. We probably crossed some psychological barriers, and we need to broaden those menus to have some anchor price points and make sure that we're bringing in guests of all cohorts. The NPS score, importantly, at North, is about seven points higher than Cheesecake, so we know that the guests that are going in are having a great experience.
But as an example, we'll roll out a new happy hour program where we can compete at a price point that isn't discounting, because that's not who we are, but can bring in a guest to experience a North Italia at a price that is affordable for anybody. Then if we win them over, maybe they'll come back for lunch or dinner at a different time period, right? We're going to do some menu architecture, and then we're also just going to widen the funnel with some media. So what we've seen at The Cheesecake Factory has really been working. We're going to take some of those and really test two pretty big markets, but at a measurable higher spend.
Got it. It seems like that was always with Cheesecake, it was never going to be a national advertised brand. Do you ever do any connect-the-dots for consumers at Cheesecake, North Italia, same family or?
We really don't, because we really want North to be more believed as to be your local Italian restaurant, right? There's a cohort that loves chains because of the consistency and the predictability, and there's a cohort that wants to go to some place that nobody's discovered. We try to keep the brand separate.
Got it. Right. Shifting from the top line to more the margin and cost side of things, the restaurant margin at the core Cheesecake, I think it reached a decade high, approaching like 20% or so. Flower Child's in that 20% range as well. How do you think about your primary margin drivers? I think most would dream of 20%, and they'd say, "Let's just hold 20%." Others say, "Well, we could go higher than that." How do you think about whether it's commodities or labor or leveraging your greater sales? What's the biggest opportunity on the margin front, either for a brand or for the portfolio?
Well, maybe I'll start off with the commodity side, and then you can jump in on some of your initiatives, too. I would frame up inflation as very manageable at this stage. If I just drill into COGS a little bit more, the reality is The Cheesecake Factory benefits from the broad basket that we have, and so none of the categories really move us up or down too much, and it gets manageable from that standpoint. That said, we're not immune to beef prices. They've been elevated. The good news for us is dairy's really been favorable, and so that's really offset the inflation that comes from beef. We've said low single digit for the back half of the year. I think labor's also been very constructive for us, very stable.
Inflation there has been low to mid-single digit for some period of time, and we anticipate that to be about the same here going forward.
If you take that backdrop, we have taken less price this year than last year, and we have reinvested in the menu with lower price points that bring that actual realized price point down another point and a quarter. We are effectively, in the eyes of the consumer, under 2%. We will continue to reinvest in the menu that way. We have always said, look, if we get to 18% margins for an annualized basis, because Q2 is seasonally high, then we will just invest to drive traffic. Those margins, I think there is an economic push and pull point.
We want to make sure the consumer gets everything they are coming in for. We have opportunities in our other concepts, in North Italia and Fox Restaurant Concepts, to bring the aggregate margin up, as well as leverage G&A to continue to drive aggregate EBIT margins higher.
Is there a, I think within your long-term guidance, there is a suggestion for a certain amount of margin expansion every year. In fact, as I think about it, we talk a lot about the restaurant margin. You guys focus a lot on the net income margin. How do you think about restaurant margin getting to net income margin, I guess presumably from the G&A perspective?
It is about the same, like in totality. If you ever think about the four-wall margin improvement of 25- 30 basis points a year, that should flow through. Maybe there is a little bit gained from G&A as well, but then you have a little bit higher tax rate if you are more profitable, so net income margin of the same sort of 25- 30 basis points.
Got it. You think, while you haven't given guidance yet, looking at 2027, it doesn't seem like there's a big differential in commodities and labor in that low, maybe mid-single digit range on both those line items.
I think right now, typically the contracting season is the fourth quarter, so we're just about to enter that. As crazy as it seems, the U.S. food industry is pretty archaic, and it still holds to that sort of annualized process there. I think the one we're watching a little bit more is obviously labor, which as Etienne mentioned, has been constructive for us and I think for the industry as well. But certainly, we're not adding to the labor pool in this political climate right now. So, we have to make sure we continue with our amazing retention. I think that'll be a key important driver as we go forward.
Do you share. It seems like your retention at Cheesecake and the broader portfolio tends to be a competitive advantage of yours. Where does that sit relative to the industry, and your ability to sustain that industry leading low turnover?
Yeah, we see that through, is it Black Box or White Box or whatever the data set is there.
People Report.
Yeah. We're best in class, both at the manager and staffing level. We've been sustaining that at that level now. We improved for a couple of years. We got to that level. We're sustaining it. What we're talking about with investors now is reinvesting in our staff and discretionary bonus income might be higher. In some of those areas where we know that our talent is really looked at, people try to poach and all of that, we're going to make sure that we do what we need to do. As comps continue to outperform and we get the flow-through, we're going to put some of that back into the business and our people.
Got it. The menu pricing, I think you touched on that. So it's 3%. Effectively, it's 2% or less based on the lower priced menu options and bowls, presumably. I guess you're seeing that that's driving value perception, that you believe that to be below where the industry's running from a menu pricing perspective at this point.
I just saw a report this week or maybe the end of last week that was talking about value perception, and we had markedly improved in the past 12 months. So when we know that the guests on the rewards program, they come in and order a bowl, which is under $20, it's bigger portion sizes than fast casual, again, table service, free bread, that they're more likely to come back and order that bowl again or a similar product. So, on the bites, which are roughly $10 mini appetizers, as we've rolled out numerous legs of that, it's been additive each time. So the guests really see that as something differentiated. It's fun, and it's affordable. So both of those are really working great.
Presumably, you take some learnings from a Cheesecake value, and that is what you are talking about bringing over to North Italia.
For sure, exactly. We know also, we talk about it, but it is a competitive mode because we have more menu items than anybody. Our competitors do not really want to add another category with 20 items again, right? We know it is not easily replicated.
I do not know if we could bring investors into the kitchen. I have been into a Cheesecake Factory kitchen. I cannot believe to generate $13 million-$14 million of volume in a restaurant, all scratch cooking is incredible.
If they put on a chef coat.
What?
If they put on a chef coat, yeah. They get in line.
I think you notice pretty quickly when the busy season comes. But in the corporate costs, so the G&A, I think it is 6.0, 6.4% as a percentage of sales. The leverage opportunity there, we did not talk about AI, but everyone likes to bring it up. I do not know. I am assuming you are going to take a slower approach to AI as you might have taken with other things. But what do you think is the opportunity for economies of scale across the brands from a G&A perspective?
Well, I think the most important part for us is the growth, right? As we have ramped up the comp on The Cheesecake Factory, as we continue to accelerate the unit growth, our top-line outlook is improving, and so we will get the leverage. We have talked about 6%, been a little bit elusive because of the growth piece of it, but I think we feel really confident in the next couple of years to achieve that mark, just on leverage alone. I think AI is in the early innings. We are looking at some places. I think marketing is one which may not be a savings, but more an efficiency driver and a productivity driver. That is the flywheel. Get more comps coming in the door. We are looking at a big project with supply chain.
There is probably some opportunities there. When we think about true back of house, whether it is HR, finance, et cetera, I think that is where we will look to say, "Can we just hold headcount, hold expenses flat and grow?" Get some efficiencies with that. But that will take a little bit more time. Ultimately, we are still not that big of a company when you think about the G&A infrastructure.
The marketing, I know not necessarily national, but where does that marketing sit and how much It seems like it is proven to be quite effective for you. So where do you think that marketing spend or however you think about it, goes over the next few years?
Yeah, it has been growing a little bit from the past couple of years as we have invested into the rewards program and some of the social media investments as well. I think today we are sitting for The Cheesecake Factory at about 1.2%. At this stage, that is sort of how we are thinking about going forward. That said, if these investments continue to reap benefits and drive traffic, there is a chance that maybe we will evaluate that and maybe increase it a little bit, reinvest back into that.
I guess it is a good problem to have. The confidence level that if you ratchet up marketing, it drives more traffic. I would think a Cheesecake operator would say, "Hold up, we got a lot of traffic." So how do you balance Can you handle a lot more traffic, or are there certain ways to market it to come in at different times of the day or different days of the week to kind of balance it out better?
Well, I think with the rewards program, that is what we are doing, right? We are trying to drive traffic into those day parts where we have more capacity. That said, the reality is if we look pre-pandemic, our traffic today on-premise is probably down 10%-15% from where it was. So there is growth, there is capacity to be had, and we can always build shoulders. Look, we have stores today or restaurants today that are doing $16 million, $18 million in average footprint, and our system average is $12.5 million, $13 million. So there is capacity. It is a good problem to have.
I was going to say, traffic could be down 10, in restaurant traffic, could be down 10, 15% as a system on average from its peak.
Right.
Yet you're comping and your AUV, so we just forget the pricing component of it, I guess, and the to-go mix or whatnot. But that's a tremendous opportunity if your traffic is still down 10%+ .
At this point, with fully recovered margin. Right? We're in a good spot overall.
That's great. International doesn't get much discussion, yet I know it's been a strong lever for you and there's margin accretion and these now being licensed stores, so it's kind of a different dynamic overseas. But can you talk about the pros and cons, how the international business is going, and your outlook over the next couple of years?
Yeah. Our partners are great. Really doing well, even navigating the Middle East and thriving. We would love to open more, but we have always said there are two things you have to have for The Cheesecake Factory International. You have got to have a lot of money, because it is a huge investment and a long horizon, and you have got to have good operations, right? We typically get inbound one or the other. Somebody has a lot of money, but they have never opened a restaurant. We are not interested in taking our resources and going into another country or vice versa. We are very happy. It will continue to be 3-4 unit growth kind of pace. The operators are fantastic. But we just have not found the fourth operator that has the attributes that we are really looking for.
Right. I remember back in the day, it was always a penny per store per year, I believe, was kind of like that. Is there something that you talk about now in terms of what international contributes?
It is probably similar to that. I think that they are comping up and it is on a royalty stream on a revenue basis. So it is probably increased a little bit over time on those bases. But it has been remarkably consistent for all of them. We are actually one of their lead growth initiatives in restaurant space because they have really figured out the returns profile. Again, it is also about real estate. One of the things that happened during COVID is that international real estate was much more challenging than the U.S., particularly in places like China and the Middle East. I think as they get their feet underground a little bit, we may see some more projects come up in those two areas. With Alsea in Mexico, they are really on pace to open two or three a year.
Got it. The idea of bringing licensing into the U.S., there is not enough benefit. You are very happy to be domestic company operated, international license.
That's right. It's also control. We want to have that much control over the business and every facet of it. So yeah, we'll continue to only be domestic company owned.
So we're not going to see a licensed Cheesecake at an airport anytime.
We looked at that model once upon a time. But again, you're giving up control amongst many facets to an operator that could be a couple of miles away from a Cheesecake Factory. So that's just not something that we were interested in doing. I think we also have tremendous growth opportunities within the portfolio already. So when we look at the returns and the use of company resources, we've got plenty of irons in the fire.
Right. Then speaking of company resources from a financial perspective, the capital allocation topic, I know you run a little over $200 million in CapEx, or at least that's this year's number. Can you talk about the outlook for CapEx on this accelerated growth and how you think about the balance sheet more broadly in that environment of acceleration?
The CapEx today, two-thirds of it is going towards unit growth, and that will probably over time continue to grow as unit growth-
Right.
-commensurate with unit growth. Our philosophy has always been to maintain the fleet, the existing restaurants looking like new, and that is probably about a third of the CapEx. That will continue to be about the same going forward. I think the free cash flow that we are generating today with the performance is more than going to be able to pay for the increased CapEx over time.
Then the return profile between, I think, dividends $15 or so million, but share purchases could be pushing $10 million. What is the discussion like of what is the best use of that capital excess of the CapEx?
Yeah. Again, I think that just goes to one more point of it is a good problem to have that we are analyzing, right? The stock run-up has paused our 10b5-1. The board reevaluates capital allocation on a regular basis. Right now, our sort of goal is to earn into all of those things, and then we will figure it out. If we have $250 million of cash on the balance sheet, we will figure out how to deploy it. Our key objective is to open more restaurants. If we could choose one item, it is to grow EBITDA over time and maintain a strong balance sheet and plenty of liquidity.
That's great. Well, I think we've exhausted our time, but we wanted to thank everyone in the room and everyone on the webcast for joining us with The Cheesecake Factory this morning. So Matt, Etienne, Ariel, and the audience here, thank you very much. Hopefully you have a great day.
Thank you.