The Cheesecake Factory Incorporated (NASDAQ:CAKE) is set to announce its fourth-quarter fiscal 2023 results on Feb 21, after the market closes. In the previous quarter, the company’s earnings and revenues fell short of the Consensus Estimate by 7.1% and 1.4%, respectively, although they showed improvement year over year.

Estimates and Expectations

For the upcoming quarter, the Consensus Estimate for earnings per share has remained steady at 74 cents over the past 60 days. This estimate suggests a 32.1% increase from the 56 cents per share reported in the year-ago quarter. Revenue is expected to be around $877.3 million, indicating a 1.7% decline from the same quarter last year.

Factors at Play

Cheesecake Factory’s performance in the fourth quarter is expected to be impacted by supply chain challenges, delays in permitting, construction, landlord readiness, and equipment availability. Additionally, inflation in commodities is likely to have added to these challenges. The company has expressed caution due to the uncertain macroeconomic environment and expects these headwinds to persist. Our model predicts that Cheesecake Factory Restaurants’ revenues will decline by 2.7% year over year to $656.1 million.

For the fourth quarter of fiscal 2023, management expects commodity and labor inflation to be in the low to mid-single-digit range.

Despite these challenges, strong off-premise sales, robust same-store sales growth, and expansion efforts are expected to partially offset the negatives. The increase in average check and menu pricing has been boosting CAKE’s top line. Management forecasts revenues in the range of $870-$890 million. We anticipate that Cheesecake Factory and North Italia same-store sales will increase by 4% and 8.3% year over year, respectively.

Our model predicts that North Italia Restaurants and Other FRC revenues will increase by 8.5% and 5.4% year over year to $71.1 million and $70.1 million, respectively.

Off-premise sales accounted for approximately 21% of the company’s restaurant sales in the third quarter of fiscal 2023, and this trend is expected to continue in the fourth quarter. The company’s delivery channel has been performing well.

To enhance customer convenience, management has implemented operational changes and technology upgrades, including a contactless menu and payment technology, as well as text paging. Our model estimates that the cost of sales and labor expenses will decline by 6.6% and 1.5% year over year to $206 million and $313.7 million, respectively, in the upcoming quarter.

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