Stock Story -
Restaurant company Cheesecake Factory (NASDAQ:CAKE) fell short of analysts' expectations in Q2 CY2024, with revenue up 4.4% year on year to $904 million. It made a non-GAAP profit of $1.09 per share, improving from its profit of $0.88 per share in the same quarter last year.
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The Cheesecake Factory (CAKE) Q2 CY2024 Highlights:
- Revenue: $904 million vs analyst estimates of $909.2 million (small miss)
- EPS (non-GAAP): $1.09 vs analyst estimates of $1.00 (9.2% beat)
- Gross Margin (GAAP): 42.6%, up from 41.4% in the same quarter last year
- Locations: 340 at quarter end, down from 351 in the same quarter last year
- Same-Store Sales rose 1.4% year on year, in line with the same quarter last year
- Market Capitalization: $1.98 billion
Sit-Down DiningSit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.
Sales GrowthThe Cheesecake Factory is one of the larger restaurant chains in the industry and benefits from a strong brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 8.1% over the last five years was decent as it opened new restaurants and grew sales at existing, established dining locations.
This quarter, The Cheesecake Factory's revenue grew 4.4% year on year to $904 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 6.2% over the next 12 months, an acceleration from this quarter.
Same-Store SalesSame-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.
The Cheesecake Factory's demand within its existing restaurants has been relatively stable over the last eight quarters but fell behind the broader sector. On average, the company's same-store sales have grown by 2.4% year on year. With positive same-store sales growth amid an increasing number of restaurants, The Cheesecake Factory is reaching more diners and growing sales.
In the latest quarter, The Cheesecake Factory's same-store sales rose 1.4% year on year. This growth was a deceleration from the 1.7% year-on-year increase it posted 12 months ago, showing the business is still performing well but lost a bit of steam.
Key Takeaways from The Cheesecake Factory's Q2 Results We were impressed by how significantly The Cheesecake Factory blew past analysts' gross margin expectations this quarter. We were also happy its EPS narrowly outperformed Wall Street's estimates. On the other hand, its revenue unfortunately missed. Overall, we think this was a really good quarter that should please shareholders. The stock remained flat at $38.90 immediately following the results.
