The Cheesecake Factory 2025 Q1 Earnings Revenue Growth Amid Decline in Net Income

The Cheesecake Factory (CAKE) reported its fiscal 2025 Q1 earnings on May 05th, 2025. The company experienced a mixed performance in the quarter, with revenue increasing by 4% to $927.20 million, surpassing analyst expectations. However, net income declined by 0.8% to $32.94 million, falling short of projections. Looking ahead, The Cheesecake Factory raised its guidance for fiscal year 2025, expecting revenues to reach approximately $3.8 billion, a positive adjustment from previous forecasts. Despite the challenges in net income, the company remains optimistic about its growth strategy.

Revenue
The Cheesecake Factory saw a 4% revenue increase in 2025 Q1, reaching $927.20 million, up from $891.22 million in 2024 Q1. The Cheesecake Factory restaurants generated $672.73 million, while North Italia contributed $83.41 million. Other FRC operations added $87.42 million, with the remaining $83.63 million coming from other segments, culminating in a total revenue of $927.20 million.

Earnings/Net Income
The Cheesecake Factory's EPS declined 1.4% to $0.69 in 2025 Q1 from $0.70 in 2024 Q1, while net income decreased 0.8% to $32.94 million. This performance indicates a challenging quarter for earnings amidst revenue growth.

Price Action
The stock price of The Cheesecake Factory edged up 1.00% during the latest trading day, but declined 1.31% over the past week and 2.42% month-to-date.

Post-Earnings Price Action Review
Over the past five years, the strategy of purchasing The Cheesecake Factory (CAKE) shares post-earnings release and holding them for 30 days has yielded poor results, with a return of -15.33%, significantly underperforming the benchmark return of 63.14%. The excess return was -78.47%, and the strategy's compound annual growth rate stood at -3.47%. The maximum drawdown during this period was -60.27%, with a Sharpe ratio of -0.11 and volatility at 32.20%. These figures highlight that this approach failed to leverage market gains and was subject to considerable risks, rendering it an unsuccessful strategy.

CEO Commentary
David Overton, Chairman and Chief Executive Officer, expressed optimism regarding The Cheesecake Factory's strong financial performance in Q1 2025, highlighting a solid revenue of $927.2 million and a notable adjusted EPS of $0.93, which surpassed analysts' expectations. He emphasized the successful expansion strategy with the opening of eight new restaurants, reinforcing the company's commitment to growth. However, he acknowledged challenges such as the revised revenue outlook and external factors affecting specific brands like North Italia. Overton reaffirmed the company's focus on menu innovation and operational excellence, showcasing confidence in navigating the current economic landscape.

Guidance
For fiscal year 2025, The Cheesecake Factory expects revenues to reach approximately $3.8 billion, with a net income margin of around 4.75%. The company plans to open up to 25 new restaurants during the year, indicating a robust expansion strategy. Furthermore, capital expenditures are anticipated to be between $190 million and $210 million, reflecting a strong commitment to growth and market positioning.

Additional News
In recent weeks, The Cheesecake Factory announced plans to open several new locations across its brands. The expansion will include 3 to 4 new Cheesecake Factory restaurants, 6 to 7 North Italia outlets, and 6 to 7 Flower Child locations, along with 8 to 9 new restaurants under the Fox Restaurant Concepts brand. Additionally, the company has been named to Fortune’s ‘100 Best Companies to Work For’ list, highlighting its positive workplace culture. The Cheesecake Factory also revealed a menu update, removing 13 items while adding over 20 new selections, showcasing its commitment to refreshing offerings and staying competitive in the casual dining sector.