CAKE +0.79% Despite 10.43% 7-Day Drop Amid Q3 Earnings Beat and Sales Gains

On OCT 30 2025, CAKE rose by 0.79% within 24 hours to reach $2.402, CAKE dropped by 10.43% within 7 days, dropped by 3.43% within 1 month, and dropped by 3.51% within 1 year.

Cheesecake Factory Inc (NASDAQ:CAKE) delivered Q3 2025 results that outperformed expectations, posting total revenue of $907 million—aligned with the midpoint of guidance—and adjusted net income margin of 3.7%, surpassing the high end of guidance. The company’s core Cheesecake Factory brand posted $651.4 million in sales, up 1% year-over-year, with comparable sales increasing by 0.3%. Unit-level performance also improved, with average annual unit volumes exceeding $12 million. Profit margins at the restaurant level rose by 60 basis points to 16.3%, driven by better labor productivity and wage management.

Franchise and off-premise concepts showed significant momentum. North Italia, the Italian fine-dining concept, generated $83.5 million in sales, up 16% year-over-year, while Flower Child, the casual dining concept, saw a 31% rise in sales to $48.1 million. External bakery sales also climbed by 20% to $18 million. Profitability at the restaurant level improved across these brands: North Italia by 70 basis points to 15.7%, and Flower Child by a notable 140 basis points to 17.4%. These results underscore the company’s strategy of leveraging under-the-radar brands for growth.

New unit development continued to meet targets, with 19 new restaurants opened year-to-date, bringing the 2025 total to 25. Looking ahead, the company plans to open up to 26 new restaurants in 2026. Liquidity remains robust, with $556.5 million in total available liquidity, including $190 million in cash. Shareholders also benefited from $13.8 million in returns through dividends and repurchases in Q3.

Despite the positive earnings report, the stock fell 5.3% in the week following the earnings release, as mixed revenue performance and forward-looking guidance weighed on investor sentiment. While the company exceeded EPS expectations with a 13.33% surprise, revenue fell short of Zacks estimates by 0.63%. Management cited a softer consumer environment and ongoing commodity inflation—particularly in beef—as near-term headwinds.

The Cheesecake Rewards loyalty program, however, showed strong engagement, with rising membership and positive feedback from members, suggesting the company is making progress in customer retention and satisfaction.