Cheesecake Factory (NASDAQ:CAKE), a full-service casual dining company best known for its broad menu and premium cheesecakes, reported earnings for Q2 FY2025 on July 29, 2025. The company delivered GAAP revenue of $955.8 million, beating analyst estimates of $947.3 million. Adjusted earnings per share (EPS) came in at $1.16 (non-GAAP), outpacing the $1.06 consensus. Overall, the quarter surpassed Wall Street’s expectations for both GAAP sales and non-GAAP profit, marked by continued revenue growth and modest margin improvement. However, growth in comparable sales slowed, particularly at the flagship brand.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.16 | $1.06 | $1.09 | 6.4% |
| Revenue (GAAP) | $955.8 million | $947.28 million | $904.0 million | 5.7 % |
| Net Income (GAAP) | $54.8 million | $52.4 million | 4.6 % | |
| Comparable Restaurant Sales – The Cheesecake Factory | 1.2 % | 1.4 % | (-0.2 pp) | |
| Cash and Cash Equivalents | $148.8 million | $84.2 million | 76.7 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Overview of Cheesecake Factory's Business and Success Drivers
Cheesecake Factory operates a portfolio of full-service restaurants, including its namesake concept, North Italia (Italian casual dining), Flower Child (health-focused fast casual), as well as other brands operated by its Fox Restaurant Concepts (FRC) unit and licensed Cheesecake Factory locations abroad. The company is recognized for its extensive menus, large portions, and signature cheesecakes, with dessert sales representing about 17% of sales at its primary brand last year.
Key priorities for the business include frequent menu innovation, selecting high-traffic, high-visibility restaurant locations, expanding internationally through licensing, maintaining high standards for employee retention, and building a resilient supply chain. In FY2024, the company generated average sales per location of $12.4 million.
Quarter in Detail: Performance, Trends, and Notable Events
For the quarter, Cheesecake Factory’s GAAP revenue reached a new high, exceeding analyst estimates by $8.5 million and totaling $955.8 million, compared to $904.0 million in the second quarter of fiscal 2024—a 5.7% increase. Adjusted EPS grew 6.4% year-over-year in the second quarter of fiscal 2025. Net income (GAAP) rose 4.5% in the second quarter of fiscal 2025 compared to the same period in fiscal 2024. Operating income (GAAP), which measures profitability before interest and taxes, also improved as a percentage of sales.
At the flagship brand, Comparable restaurant sales—a key industry metric measuring sales at locations open for at least a year—rose 1.2%. This marked a slowdown from 1.4% growth in the second quarter of fiscal 2024, as pricing contributed about 4% in Q1 FY2025. The negative traffic offset the positive impact from higher menu prices, while some guests chose lower-priced menu items, impacting overall sales mix. Food and beverage costs as a percentage of sales (GAAP) improved to 21.6% in Q2 FY2025, a 70-basis-point drop compared to Q2 FY2024.
Segment results showed a mixed picture. The Cheesecake Factory restaurants generated $683.3 million in GAAP revenue. comparable sales at existing North Italia stores declined by 1% in Q1 FY2025. The brand’s performance was affected by region-specific disruptions, including weather and fires, as well as softer beverage alcohol sales. Other FRC brands and Flower Child continued to expand. Four new FRC restaurants and six new Flower Child locations opened during Q1 and Q2 FY2025.
Off-premise sales continued to play a significant role, making up 22% of sales at The Cheesecake Factory in Q1 FY2025, with delivery, phone, and digital ordering accounting for the bulk. International efforts advanced modestly, with the opening of a new licensed restaurant in Puebla City, Mexico, bringing the total international licensed location count to 34. Pre-opening expenses increased to $9.0 million compared to $7.0 million in the same quarter last year, reflecting a faster pace of restaurant development.
The company continued to prioritize employee retention and guest satisfaction. Attrition rates for salaried managers held in the mid-teens, a best-in-class result, while hourly staff turnover remained between 60% and 70% in Q1 FY2025, comparatively low for the industry. Cheesecake Factory also maintained its track record as a top workplace, earning recognition on Fortune’s “100 Best Companies to Work For” list for the twelfth consecutive year in FY2025. General and administrative expenses increased by $4.4 million in the second quarter of fiscal 2025 compared to the same period in fiscal 2024.
Cheesecake Factory’s capital allocation remained disciplined. The company maintained its quarterly dividend at $0.27 per share and executed only minimal share repurchases ($0.1 million) in Q2 FY2025. Total available liquidity surpassed $500 million by quarter’s end. Management indicated that pre-opening costs and broader economic factors, such as tariffs on imported goods, will be closely managed through pricing, operational efficiencies, and supply chain negotiation efforts in FY2025.
Looking Ahead: Management Guidance and Investor Watchpoints
Management offered a cautious financial outlook for the coming quarter, citing a less robust consumer environment and rising external risks. Anticipated revenue for Q2 FY2025 is projected in the range of $935 million to $950 million, slightly below the period just completed. Guidance for annual comparable sales growth at The Cheesecake Factory was updated to a range of flat to 1% for FY2025, a downward revision from prior expectations of 1% to 2%.
Ongoing headwinds such as modestly negative traffic, higher pre-opening expenses, and potential impacts from tariffs remain in focus. While mix headwinds from menu strategy could negatively affect same-store sales by 1.5% to 2%. Nonetheless, plans to open up to 25 new restaurants across all concepts in FY2025 remain on track, and foundational strengths in menu innovation, staff retention, and off-premise sales should support future stability. No major changes were made to longer-term profit margin expectations.
CAKE continues to pay a quarterly dividend, which was maintained at $0.27 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
