美国
证券交易委员会
华盛顿特区20549
表格
根据1934年证券交易法第13或15(d)条，本季度报告 |
截至季度结束日期的财务报告
或者
根据1934年证券交易法第13或15（d)条的转型报告 |
委托文件编号：001-39866
(根据其章程规定的注册人准确名称)
(所在州或其他司法管辖区) | （IRS雇主 | |
成立或组织的州） | 唯一识别号码） |
，（主要行政办公地址） | (邮政编码) |
(
(注册人电话号码，包括区号)
根据1934年证券交易法第12(b)条注册的证券:
每种类别的证券 |
| 交易代码 |
| 每个交易所的名称 |
本基金寻求于东欧地区注册的主要权益关联发行人的长期升值投资。 |
检查标记是否申报了《证券交易法》第13或15(d)条规定的所有报告，对于在过去的12个月内（或对于注册申报此类报告的较短期间）进行检查，并且是否在过去的90天内受到这些申报要求的影响。
请在12个月内（或较短期间内）向规定的“S-t条例第405规则”提交每个交互数据文件的电子版本
请在以下选项前打勾表示公司属于大型快速记录者、快速记录者、非快速记录者、小额报告公司还是新兴增长公司。可参考《交易所法规》规则120亿.2中对“大型快速记录者”、“快速记录者”、“小额报告公司”和“新兴增长公司”的定义。
☒ |
| 加速文件提交人 | ☐ | |
非加速文件提交人 | ☐ | 较小的报告公司 | ||
新兴成长公司 |
如果是新兴成长型公司，请在选择框中勾选：注册人是否选择不使用根据《1934年证券交易法第13(a)条规定》提供的任何新或修订的财务会计准则的延长过渡期。. ☐
请勾选表示注册申报人是否为外壳公司（根据交易所12b-2号规则定义）。是
截至2024年7月29日，
第一部分—财务信息
项目1。 基本报表。
芝乐坊餐馆公司股份有限公司
简明合并资产负债表
（以千为单位，除每股数据外）
7月2日 | 1月2日, | |||||
| 2024 |
| 2024 | |||
(未经审计) | ||||||
资产 | ||||||
流动资产： | ||||||
现金及现金等价物 | $ | | $ | | ||
应收账款及其他应收款项 | | | ||||
应收所得税款项 |
| |
| | ||
存货 |
| |
| | ||
预付费用 |
| |
| | ||
总流动资产 |
| |
| | ||
资产和设备，净值 |
| |
| | ||
8,070,041 | ||||||
无形资产, 净额 |
| |
| | ||
营业租赁资产 |
| |
| | ||
其他 | | | ||||
其他资产总计 | | | ||||
总资产 | $ | | $ | | ||
负债和股东权益 | ||||||
流动负债: | ||||||
应付账款 | $ | | $ | | ||
礼品卡负债 |
| |
| | ||
经营租赁负债 | | | ||||
其他应计费用 | | | ||||
流动负债合计 | | | ||||
长期债务 |
| |
| | ||
经营租赁负债 |
| |
| | ||
其他非流动负债 | | | ||||
负债合计 | | | ||||
承诺和 contingencies（注 7） |
|
| ||||
股东权益: | ||||||
优先股，$0.0001 | ||||||
普通股，每股面值为 $0.0001； | | | ||||
额外实收资本 |
| |
| | ||
保留盈余 |
| |
| | ||
包括消费税在内的国库股 |
| ( |
| ( | ||
累计其他综合损失 |
| ( |
| ( | ||
股东权益总额 |
| |
| | ||
负债和股东权益总额 | $ | | $ | | ||
“Rule 10b5-1交易安排”或“非Rule 10b5-1交易安排”，即根据S-k资料第408项规定定义的交易安排。
1
芝乐坊餐馆公司股份有限公司
简明合并利润表
（以千为单位，除每股数据外）
(未经审计)
十三 | 十三 | 二十六 | 二十六 | |||||||||
| 13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | ||||||||
2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | ||||||
收入 | $ | | $ | | $ | | $ | | ||||
成本和费用： | ||||||||||||
食品和饮料成本 |
| |
| |
| |
| | ||||
劳务费用 |
| |
| |
| |
| | ||||
其他经营成本和费用 |
| |
| |
| |
| | ||||
一般及管理费用 |
| |
| |
| |
| | ||||
折旧和摊销费用 |
| |
| |
| |
| | ||||
资产减值和租约终止（收入）/费用 | ( | ( | | | ||||||||
收购相关的待定对赌、补偿和摊销费用 | | | | | ||||||||
开业前费用 |
| |
| |
| |
| | ||||
总成本和费用 |
| |
| |
| |
| | ||||
营业利润 |
| |
| |
| |
| | ||||
利息和其他费用，净额 |
| ( |
| ( |
| ( |
| ( | ||||
税前收入 |
| |
| |
| |
| | ||||
所得税费用 |
| |
| |
| |
| | ||||
净收入 | $ | | $ | | $ | | $ | | ||||
每股净利润： | ||||||||||||
基本 | $ | | $ | | $ | | $ | | ||||
稀释（注10） | $ | | $ | | $ | | $ | | ||||
| ||||||||||||
基本 |
| |
| |
| |
| | ||||
稀释的 |
| |
| |
| |
| | ||||
“Rule 10b5-1交易安排”或“非Rule 10b5-1交易安排”，即根据S-k资料第408项规定定义的交易安排。
2
芝乐坊餐馆公司股份有限公司
综合收益简明合并报表
（以千为单位）
(未经审计)
十三 | 十三 | 二十六 | 二十六 | |||||||||
| 13个星期结束 |
| 13个星期结束 |
| 13个星期结束 |
| 13个星期结束 | |||||
2024年7月2日 | 2023年7月4日 | 2024年7月2日 | 2023年7月4日 | |||||||||
净收入 | $ | | $ | | $ | | $ | | ||||
其他综合损益： |
|
|
|
| ||||||||
外币翻译调整 |
| ( |
| |
| ( |
| | ||||
其他全面损益/(增益) |
| ( |
| |
| ( |
| | ||||
总综合收益 | $ | | $ | | $ | | $ | | ||||
“Rule 10b5-1交易安排”或“非Rule 10b5-1交易安排”，即根据S-k资料第408项规定定义的交易安排。
3
芝乐坊餐馆公司股份有限公司
股东权益的简明合并报表
（以千为单位，除每股数据外）
(未经审计)
截至2024年7月2日止二十六周：
|
|
|
|
|
| 累积的 |
| |||||||||||||
| 额外的 | 其他 | ||||||||||||||||||
普通股 | 实收资本 | 留存收益 | 国库 | 综合 | ||||||||||||||||
| 股份 |
| 数量 |
| 资本 |
| 收益 |
| 股票 |
| （亏损）/收入 |
| 总费用 | |||||||
2024年1月2日余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
净收入 | — | — | — | | — | — | | |||||||||||||
外币翻译调整 | — | — | — | — | — | ( | ( | |||||||||||||
宣布普通股现金分红，扣除没收部分，$ | — | — | — | ( | — | — | ( | |||||||||||||
以股票为基础的报酬计划 | | | | — | — | — | | |||||||||||||
库藏股购买，包括消费税 | — | — | — | — | ( | — | ( | |||||||||||||
2024年4月2日的余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
净收入 | — | — | — | | — | — | | |||||||||||||
外币翻译调整 | — | — | — | — | — | ( | ( | |||||||||||||
现金分红宣布普通股，减去没收部分，$ | — | — | — | ( | — | — | ( | |||||||||||||
以股票为基础的报酬计划 | | | | — | — | — | | |||||||||||||
购买库藏股，含增值税 | — | — | — | — | ( | — | ( | |||||||||||||
2024年7月2日余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
截至2023年7月4日止的26周内：
|
|
|
|
|
| 累积的 |
| |||||||||||||
额外的 | 其他 | |||||||||||||||||||
普通股 | 实收资本 | 留存收益 | 国库 | 综合 | ||||||||||||||||
股份 | 数量 | 资本 | 收益 | 股票 | （亏损）/收入 | 总费用 | ||||||||||||||
2023年1月3日余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
净收入 | — | — | — | | — | — | | |||||||||||||
外币翻译调整 | — | — | — | — | — | | | |||||||||||||
现金分红声明普通股，扣除被没收的部分，$ | — | — | — | ( | — | — | ( | |||||||||||||
以股票为基础的报酬计划 | | | | — | — | — | | |||||||||||||
公司回购股份 | — | — | — | — | ( | — | ( | |||||||||||||
2023年4月4日的余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
净收入 | — | — | — | | — | — | | |||||||||||||
外币翻译调整 | — | — | — | — | — | | | |||||||||||||
普通股股息宣布，扣除没收，$ | — | — | — | ( | — | — | ( | |||||||||||||
以股票为基础的报酬计划 | | | | — | — | — | | |||||||||||||
公司财务账户购入国库存货，包括消费税 | — | — | — | — | ( | — | ( | |||||||||||||
2023年7月4日余额 | | $ | | $ | | $ | | $ | ( | $ | ( | $ | | |||||||
“Rule 10b5-1交易安排”或“非Rule 10b5-1交易安排”，即根据S-k资料第408项规定定义的交易安排。
4
芝乐坊餐馆公司股份有限公司
现金流量表简明综合报表
（以千为单位）
(未经审计)
| 二十六 |
| 二十六 | |||
13个星期结束 | 13个星期结束 | |||||
| 2024年7月2日 |
| 2023年7月4日 | |||
经营活动现金流量： |
|
|
| |||
净收入 | $ | $ | | |||
调整净收益以使其与经营活动提供的现金流量相一致： | ||||||
折旧和摊销费用 | | | ||||
资产减值和租约终止（收入）/费用 |
| |
| ( | ||
延迟所得税 | | | ||||
以股票为基础的报酬计划 |
| |
| | ||
支付递延考虑和超过收购日公允价值的补偿 | ( | — | ||||
资产和负债变动： | ||||||
应收账款及其他应收款项 | | | ||||
所得税应收/应付款 |
| ( |
| ( | ||
存货 |
| ( |
| ( | ||
预付费用 |
| ( |
| ( | ||
经营租赁资产/负债 |
| ( |
| ( | ||
其他 | ( | ( | ||||
应付账款 |
| |
| | ||
礼品卡负债 |
| ( |
| ( | ||
其他应计费用 | ( | | ||||
经营活动产生的现金流量 |
| |
| | ||
投资活动现金流量： | ||||||
固定资产的增加 |
| ( |
| ( | ||
无形资产的增加 |
| ( |
| ( | ||
其他 | | ( | ||||
投资活动中使用的现金 |
| ( |
| ( | ||
筹集资金的现金流量： | ||||||
与收购相关的递延考虑和补偿 | — | ( | ||||
2021 |
| ( |
| ( | ||
公司回购股份 |
| ( |
| ( | ||
融资活动使用的现金 |
| ( |
| ( | ||
外币翻译调整 |
| ( |
| | ||
现金及现金等价物净变动额 | ( | ( | ||||
期初现金及现金等价物余额 |
| |
| | ||
期末现金及现金等价物 | $ | | $ | | ||
补充披露： | ||||||
支付的利息 | $ | | $ | | ||
所得税已付款项 | $ | | $ | | ||
施工应付款 | $ | | $ | | ||
“Rule 10b5-1交易安排”或“非Rule 10b5-1交易安排”，即根据S-k资料第408项规定定义的交易安排。
5
芝乐坊餐馆公司股份有限公司
简明合并财务报表附注
(未经审计)
1. 重要会计政策
报告范围
附带的简明合并 基本报表 包括芝乐坊餐馆股份有限公司及其全资子公司的账户（以下简称为“公司”，“我们”，“我们”和“我们”）并依据美国通用会计准则（“GAAP”）编制。 所呈现期间的公司间账户和交易已在合并中予以消除。 这里呈现的未经审计的财务报表包括在管理层意见中认为对财务状况、经营成果和现金流量的公允表述必要的所有重大调整（由常规重复调整组成）。 但是，这些结果不一定能反映出任何其他中期时段或整个财政年度可能实现的结果。 根据证券交易委员会（“SEC”）规则，未包括 一些通常包含在依据GAAP编制的财务报表中的信息和脚注披露。 附带的简明合并 基本报表 应与我们于2024年2月26日向SEC提交的关于截至2024年1月2日财政年度的年度报告在一块阅读 的合并财务报表和相关注释。
我们利用以最接近12月31日的星期二结束的 52/53周财政年度进行财务报告。 2024财政年度共包括
使用估计
根据通用会计准则编制财务报表需要我们针对财务报表所涵盖的报告期进行估计和假设。这些估计和假设会影响资产、负债、收入和支出的报告金额，以及对可能负有的有条件负债的披露。实际结果可能会与这些估计有所不同。
地缘政治和其他宏观经济影响我们的经营环境
从2021年开始，我们的运营结果受地缘政治和其他宏观经济事件的影响，导致供应链挑战和商品和工资膨胀显著增加。尽管我们在许多领域看到了改善，但其中一些因素继续影响我们在2024财政年度的运营结果，导致商品和其他成本显着增加。我们还因准入许可和房东准备延迟，以及供应链挑战，而遇到了新餐厅开业延迟的情况。
地缘政治和宏观经济事件的持续影响可能导致消费者行为、工资膨胀、人员配置挑战、产品和服务成本膨胀、供应链中断以及新餐厅开业延迟的进一步变化。气候变化可能进一步恶化这些因素。有关我们业务与地缘政治和宏观经济事件相关的风险的更多信息，请参阅我们2024年1月2日结束的财政年度10-K表格“风险因素”中的内容。
最近的会计声明
2023年11月，财务会计准则委员会（“FASB”）发布了会计准则更新（“ASU”）2023-07号，分部报告（主题280）：改进报告性分部披露，通过对重要分部费用进行增强披露来更新报告性分部披露要求。修正案将于2023年12月15日后开始的财政年度生效，并应于2024年12月15日后开始的财政年度内的中期期间生效。允许提前采纳。修订案应当对财务报表中呈现的所有以往期间进行追溯。管理层目前正在评估这一ASU，以判断其对我们披露的影响。
6
2023年12月，FASb发布了ASU 2023-09《所得税（主题740）：改进所得税披露》，更新了与利润调解相关的所得税披露，并要求披露按司法管辖区域支付的所得税。修正案还提供了更进一步的披露可比性。修正案将于2024年12月15日后开始的财政年度生效。允许提前采用。修正案应按前瞻性应用。但也允许追溯应用。管理层目前正在评估此ASU，以判断其对我们披露的影响。
2. 公允值度量
公允值度量是根据评估技术和分类为以下内容的输入估算的：
| ● | 一级：同一资产或负债的活跃市场报价 |
| ● | 2级：在活跃市场中，除了相同的资产和负债的报价价格外，还有其他可观察的输入 |
| ● | 3级：不可观察的输入，在其中几乎没有市场活动存在，因此需要我们开发自己的假设 |
以下表格展示了我们资产和负债的组成部分和分类，这些资产和负债是根据定期基准价值衡量的（以千为单位）：
| 2024年7月2日 | ||||||||
| 一级 |
| 二级 |
| 三级 | ||||
资产/(负债) |
| ||||||||
不符合资格的递延薪酬资产 | $ | | $ | — | $ | — | |||
不符合资格的递延薪酬负债 | ( | — | — | ||||||
收购相关的待定考量和补偿责任 | — | — | ( | ||||||
| 2024年1月2日 | ||||||||
| 一级 |
| 二级 |
| 三级 | ||||
资产/(负债) | |||||||||
非合格的推迟支付资产 | $ | | $ | — | $ | — | |||
不符合条件的递延支付责任 | ( | — | — | ||||||
与收购相关的待定对价和补偿责任 | — | — | ( | ||||||
下表显示了收购相关的待定条件考虑和作为第3级别（以千为单位）分类的补偿责任的公允价值起始金额和结束金额的对账。
| 二十六 |
| 二十六 | |||
13个星期结束 | 13个星期结束 | |||||
| 2024年7月2日 |
| 市场为基础的授予的公平价值 | |||
期初余额 | $ | | $ | | ||
适用于拖欠余额的合格住宅客户的分期付款安排长达12个月。先支付欠款金额的定金，然后通过分期支付剩余金额，加上常规月度账单。 | ( | ( | ||||
公允价值变动 |
| |
| | ||
期末余额 | $ | | $ | | ||
利用蒙特卡洛模型，根据预估的未来收入、利润和波动性等变量和估计值判断收购相关的待偿条件和补偿责任的公允价值，并没有最低或最高支付额。截至2024年7月2日，使用蒙特卡洛模型的未贴现结果区间用于判断收购相关的待偿条件和补偿责任的公允价值为 $
由于短期性质，我们的现金及现金等价物、应收账款及其他应收账款、应收所得税、预付费用、应付账款、应交所得税、及其他应计负债的公允价值约等于其账面价值。
7
截至2024年7月2日，我们拥有 $
3. 库存
存货包括(以千计):
| 2024年7月2日 |
| 2024年1月2日 | |||
餐厅食品和用品 | $ | | $ | | ||
面包店成品和在制品 (1) |
| |
| | ||
面包店原材料和供应品 |
| |
| | ||
总 | $ | | $ | | ||
(1) | 面包店成品和生产中存货的增加主要是由于存货周转周期的增加，以提高我们的供应韧性。 |
4. 礼品卡
以下表格提供了与礼品卡相关的信息（以千为单位）：
| 十三 | 十三 | 二十六 | 二十六 | ||||||||
13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | |||||||||
2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | ||||||
礼品卡责任： | ||||||||||||
期初余额 |
| $ | |
| $ | | $ | |
| $ | | |
激活 |
| |
| |
| |
| | ||||
赎回和作废 |
| ( |
| ( |
| ( |
| ( | ||||
期末余额 |
| $ | |
| $ | | $ | |
| $ | | |
| 十三 | 十三 | 二十六 | 二十六 | ||||||||
13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | |||||||||
| 2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | |||||
礼品卡合同资产: | ||||||||||||
期初余额 |
| $ | |
| $ | | $ | |
| $ | | |
Deferrals |
| |
| |
| |
| | ||||
摊销 |
| ( |
| ( |
| ( |
| ( | ||||
期末余额 |
| $ | |
| $ | | $ | |
| $ | | |
5. 开多期债务
循环授信设施
On October 6, 2022, we entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement” and the revolving credit facility provided thereunder, the “Revolver Facility”). The Loan Agreement amends and restates in its entirety our prior credit agreement. The Revolver Facility, which terminates on October 6, 2027, provides us with revolving loan commitments that total $
As of July 2, 2024, we had net availability for borrowings of $
8
根据可用额度，我们在每个财政季度的最后一天受以下财务契约约束：(i)资产调整后的净债务与EBITDAR的最高比率(“修订后的净调整杠杆比率”)为
贷款协议下的借款根据公司的选择，计息利率为：(i)调整后的期限SOFR之和(在贷款协议中定义为“期限SOFR利率”)加上(B)基于修订后的净调整杠杆比率的变量利率，范围从
We are also subject to customary events of default that, if triggered, could result in acceleration of the maturity of the Revolver Facility. Subject to certain exceptions, the Revolver Facility also limits distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters.
可转换资本性债券
On June 15, 2021, we issued $
这些票据是优先的、无担保的债务，(i)在支付权利上与我们现有和未来的优先、无担保债务平等；(ii)在支付权利上优先于我们现有和未来的明确次级于票据的债务；(iii)在价值与担保该债务的抵押品相等的情况下，有效次级于我们现有和未来的担保债务；(iv)在结构上次级于所有现有和未来的债务和其他负债，包括应付账款，以及我们子公司的优先股权(在我们不是其持有者的情况下)。这些票据是根据我们和受托人(“受托人”)之间于2021年6月15日签署的信托契约(“基础契约”)发行并受其管理，截至2021年6月15日签署的首要补充契约(“补充契约”，和基础契约，经补充契约后称为“契约”)，公司与受托人之间。
Robert W. Leasure, Jr.
9
票据可在2024年6月20日或之后以及到期日前的第30个预定交易日当天或之前，随时按我们的选择全部或部分（受如下所述的某些限制）进行兑换，现金赎回价格等于待赎回票据的本金加上应计和未付利息（如果有），但不包括赎回日，但仅限于赎回日如果我们上次报告的普通股每股销售价格超过
如果发生构成 “基本变革”（定义见契约）的某些公司事件，那么，除某些现金合并的有限例外情况外，票据持有人可能会要求我们在基本变更回购日之前以现金回购价格回购票据，外加应计和未付利息（如果有），以现金回购价格回购票据。基本变革的定义包括涉及我们的某些业务合并交易以及与普通股相关的某些除名事件。
这些票据有与 “违约事件”（定义见契约）的发生有关的习惯条款，其中包括以下内容：（i）票据的某些付款违约（如果票据利息支付违约，则将受以下约束）
如果发生涉及我们（而不仅仅是我们的重要子公司）的破产、破产或重组事件的违约事件，则当时未偿还的所有票据的本金以及所有应计和未付利息将立即到期并支付，无需任何人采取任何进一步行动或通知。如果任何其他违约事件发生并仍在继续，则受托人通过通知我们，或至少是
截至2024年7月2日，该票据的本金余额总额为美元
10
6. 租赁合同
租赁费用的组成如下（以千为单位）：
| 十三 |
| 十三 | 二十六 | 二十六 | |||||||
| 2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | |||||
运营 | $ | | $ | | $ | | $ | | ||||
变量 |
| |
| | | | ||||||
长期（2） |
| |
| | | | ||||||
总费用 | $ | | $ | | $ | | $ | | ||||
与租约相关的补充信息（以千为单位）：
二十六 | 二十六 | |||||
周结束日期 | 周期结束 | |||||
| 2024年7月2日 |
| 2023年7月4日 | |||
支付与租赁负债计量相关的现金： | ||||||
经营租约的经营现金流量 | $ | | $ | | ||
新的资产租赁负债所获得的租赁权资产 | | | ||||
7. 承诺和附带条件
在我们业务的正常过程中，我们会受到私人诉讼、政府审计和调查、行政诉讼和其他索赔的影响。这些事项通常涉及客户、员工和其他与餐饮行业常见运营和雇佣问题相关的索赔。在任何特定时间可能存在多项这类索赔，其中一些可能被作为集体诉讼提出。我们偶尔也会涉及侵犯或挑战我们在国内外注册商标和其他知识产权的诉讼。我们可能会受到不良宣传和诉讼费用的影响，这些费用是由于此类指控而产生的，无论这些指控是否属实或我们是否在法律上被认定有责任。
目前，我们相信由于最终解决任何未决诉讼、审计、调查、诉讼和索赔所产生的可能损失数量不会对我们的财务状况、经营业绩或流动性产生单独或合计重大不利影响。然而，我们未来某个季度或财政年度的经营业绩可能会受到与诉讼、审计、诉讼或索赔相关的情况变化的影响。与此类索赔相关的法律费用将在发生时支付。
8. 股东权益
普通股 – 分红和股票分割
2024年6月4日，Realty Income公司（以下简称“公司”）发布了一份新闻稿，公布了截至2024年12月31日更新的收益和投资成交量预测。新闻稿的副本作为Exhibit 99.1附在此，作为本报告的一部分。此报告的Exhibit 99.1作为第7.01项目，根据8-K表格的规定提供，不视为1934年证券交易法第18条的“报告文件”，无论此后公司做出的任何注册文件，也不管任何这类文件的一般包含语言，都不作为参考依据。
根据董事会授权，我们可以回购高达 元件
11
我们的股票回购计划没有到期日期，也不要求我们购买特定数量的股票，并且可以随时进行修改、暂停或终止。股票回购可能会在公开市场购买、私下协商的交易、加速股票回购计划、公司自行认购要约或其他方式的情况下不时进行。未来决定回购股票的权利属于董事会，取决于多个因素，包括目前和预期的经营现金流量、与新餐厅开发和现有位置维护相关的资本需求、股利支付、债务水平和借款成本、与FRC收购协议相关的义务、我们的股价和当前市场条件。回购股份的时间和数量也受限于根据贷款协议制定的法律约束和契约，这些法律约束和契约限制根据定义的比率进行股票回购。 （有关我们长期债务的讨论，请参见注5。）
9. 股权激励
我们制定了股权激励计划，其中可以授予员工、顾问和非雇员董事激励股票期权、非合格股票期权、股票增值权益、受限股票和受限股份单位。
十三 | 十三 | 二十六 | 二十六 | |||||||||
13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | |||||||||
| 2024年7月2日 |
| 市场为基础的授予的公平价值 |
| 2024年7月2日 |
| 2023年7月4日 | |||||
劳动成本 | $ | | $ | $ | | $ | | |||||
其他营运成本和费用 |
| |
| |
| |
| | ||||
总务及行政管理费用 |
| |
| |
| |
| | ||||
股权报酬总额 |
| |
| |
| |
| | ||||
所得税收益 |
| |
| |
| |
| | ||||
股权激励支出总额，减税后 | $ | | $ | | $ | | $ | | ||||
股权激励中的大写股票补偿(1) | $ | | $ | | $ | | $ | | ||||
| (1) | 我们的政策是资本化股权激励成本的部分，用于我们的内部开发部门，涉及可资本化活动，如设计和施工新餐厅，改造现有地点和设备安装。资本化的股权激励费用包含在资产和设备净额中，列入合并资产负债表。 |
股票期权
我们在2024财年第二季度和2023财年未发行任何期权。截至2024年7月2日结束的26周内的期权活动如下：
加权授予日期公允价值的平均数 | ||||||||||
平均数 | ||||||||||
加权授予日期公允价值的平均数 | 剩余 | |||||||||
平均数 | 加权 | 总计 | ||||||||
| 股份 |
| 行权价格 |
| 术语 |
| 内在价值(1) | |||
（以千为单位) | (每股) | （年） | （以千为单位) | |||||||
截至2024年1月2日未行权股票单位数为 | | $ | | $ | | |||||
已行权 |
| | | |||||||
行使 |
| — | — | |||||||
被剥夺或取消的 |
| ( | | |||||||
截至2024年7月2日未行权股票单位数为 | | $ | | $ | | |||||
2024年7月2日可以行使 |
| | $ | | $ | | ||||
| (1) | 聚合内在价值是根据我们在财政期末的收盘股价与行权价之间的差额计算得出的，再乘以虚值期权的数量，代表着在财政期末日期行权的所有期权持有人未税金额。 |
12
截至2023年7月31日，续借贷款协议下未偿还的借款额为
受限股份和受限股份单位
2024年7月2日结束的26周内，受限股份和受限股份单位的活动如下：
加权授予日期公允价值的平均数 | |||||
平均数 | |||||
| 股份 |
| 公正价值 | ||
（以千为单位) | (每股) | ||||
截至2024年1月2日未行权股票单位数为 |
| | $ | | |
已行权 |
| | | ||
34,105 |
| ( | | ||
被取消 |
| ( | | ||
截至2024年7月2日未行权股票单位数为 |
| | $ | | |
受限股份和受限股份单位的公允价值基于授予日的收盘股价。2024财年第二季度和2023财年发行的受限股份和受限股份单位的加权平均公允价值分别为$
10. 每股净收益
基本每股净利润是通过将净利润除以期间内流通的未归属限制性股份奖励减少的普通股加权平均数而计算的。截至2024年7月2日和2023年7月4日
稀释后的每股净利润是通过将净利润除以期间内未实现的共同股等权重平均数计算得出的。 有关说明的普通股等效权益是通过采用如换股法来确定，而截至日期的期权、受限股票和受限股票单位的普通股等效权益是通过采用库存股法确定的。
十三 | 十三 | 二十六 | 二十六 | |||||||||
13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | |||||||||
| 2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | |||||
(以千为单位，除每股数据外) | ||||||||||||
净收入 | $ | | $ | |
| $ | | $ | | |||
基本平均流通股数 | | |
| | | |||||||
股权奖励的稀释效应 (1) | | | | | ||||||||
摊薄加权平均股份数 | | | | | ||||||||
基本每股净收益 | $ | | $ | | $ | | $ | | ||||
摊薄每股净收益 | $ | | $ | | $ | | $ | | ||||
| (1) | 与未行使的期权、限制性股票和限制性股票单位相关的普通股等价物的股份 |
13
11. 分部信息
我们的经营分部是管理层为了决策目的而审阅离散财务信息的业务，包括芝乐坊餐馆、North Italia、Flower Child、其他FRC品牌和我们的面包店部门。根据会计准则法典（"ASC"）280，分部报告，芝乐坊餐馆、North Italia和其他FRC品牌是唯一符合报告性经营分部标准的业务。其余经营分部（Flower Child和我们的面包店部门）以及不符合经营分部条件的业务合并为其他。未分配的公司费用、资本支出和资产也合并在其他中。
以下是分部信息（以千为单位）：
十三 | 十三 | 二十六 | 二十六 | |||||||||
13个星期结束 | 13个星期结束 | 13个星期结束 | 13个星期结束 | |||||||||
| 2024年7月2日 |
| 2023年7月4日 |
| 2024年7月2日 |
| 2023年7月4日 | |||||
营收： | ||||||||||||
芝乐坊餐馆 | $ | | $ | | $ | | $ | | ||||
North Italia | | | | | ||||||||
其他FRC | | | | | ||||||||
其他 |
| |
| |
| |
| | ||||
总费用 | $ | | $ | | $ | | $ | | ||||
营业收入： | ||||||||||||
芝乐坊餐馆餐厅 | $ | | $ | | $ | | $ | | ||||
北意大利 | | | | | ||||||||
其他FRC | | | | | ||||||||
其他 |
| ( |
| ( |
| ( |
| ( | ||||
总费用 | $ | | $ | | $ | | $ | | ||||
折旧和摊销费用： | ||||||||||||
芝乐坊餐馆 | $ | | $ | | $ | | $ | | ||||
North Italia | | | | | ||||||||
其他FRC | | | | | ||||||||
其他 |
| |
| |
| |
| | ||||
总费用 | $ | | $ | | $ | | $ | | ||||
资产减值和租赁终止（收入）/费用： | ||||||||||||
芝乐坊餐馆 | $ | | $ | | $ | | $ | | ||||
North Italia | — | — | — | — | ||||||||
其他 FRC | — | — | — | | ||||||||
其他 | ( | ( | ( | | ||||||||
总费用 | $ | ( | $ | ( | $ | | $ | | ||||
预开支: | ||||||||||||
芝乐坊餐馆 | $ | | $ | | $ | | $ | | ||||
North Italia | | | | | ||||||||
其他FRC | | | | | ||||||||
其他 | | | | | ||||||||
总费用 | $ | | $ | | $ | | $ | | ||||
我们已经确定了财务报告内部控制的重大缺陷。重大缺陷是指财务报告内部控制的缺陷或多个缺陷，导致公司年度或中期财务报表可能存在重大错误的合理可能性，并且不会及时被预防或检测到。 | ||||||||||||
芝乐坊餐馆 | $ | | $ | | $ | | $ | | ||||
北意大利 | | | | | ||||||||
其他FRC | | | | | ||||||||
其他 | | | | | ||||||||
总费用 | $ | | $ | | $ | | $ | | ||||
14
| July 2, 2024 |
| January 2, 2024 | |||
Total assets: | ||||||
The Cheesecake Factory restaurants | $ | | $ | | ||
North Italia | | | ||||
Other FRC |
| |
| | ||
Other |
| |
| | ||
Total | $ | | $ | | ||
12. Subsequent Events
On
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
Certain information included in this Form 10-Q and other materials we have filed or may file with the Securities and Exchange Commission (“SEC”), as well as information included in oral or written statements made by us or on our behalf, may contain forward-looking statements about our current and presently expected performance trends, growth plans, business goals and other matters.
These statements may be contained in our filings with the SEC, in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (together with the Securities Act, the “Acts”). This includes, without limitation, statements regarding corporate social responsibility (“CSR”) and in our CSR report, the effects of geopolitical and macroeconomic factors on our financial condition and our results of operations, financial guidance and projections, as well as expectations of our future financial condition, results of operations, sales, target growth rates, cash flows, quarterly dividends, share repurchases, corporate strategy , potential price increases, plans, targets, goals, objectives, performance, growth potential, competitive position and business, and statements regarding our ability to: leverage our competitive strengths, including developing and investing in new restaurant concepts and expanding The Cheesecake Factory® brand to other retail opportunities; maintain our aggregate sales volumes; deliver comparable sales growth; provide a differentiated experience to customers; outperform the casual dining industry and increase our market share; leverage sales increases and manage flow through; manage cost pressures, including, increasing wage rates and insurance costs, and increase margins; grow earnings; remain relevant to consumers; attract and retain qualified management and other staff; increase shareholder value; find suitable sites and manage increasing construction costs; profitably expand our concepts domestically and in Canada, and work with our licensees to expand The Cheesecake Factory internationally; support the growth of North Italia, Flower Child and Other FRC restaurants; and utilize our capital effectively. These forward-looking statements may be affected by various factors including: economic, public health and political conditions that impact consumer confidence and spending, including rising interest rates, periods of heightened inflation and market instability, and armed conflicts; supply chain disruptions; demonstrations, political unrest, potential damage to or closure of our restaurants and potential reputational damage to us or any of our brands; pandemics and related containment measures, including the potential for quarantines or restriction on in-person dining; acceptance and success of The Cheesecake Factory in international markets; acceptance and success of North Italia, Flower Child and Other FRC concepts; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreign exchange rates, tariffs and cross border taxation; changes in unemployment rates; increases in minimum wages and benefit costs; the economic health of our landlords and other tenants in retail centers in which our restaurants are located, and our ability to successfully manage our lease arrangements with landlords; the economic health of suppliers, licensees, vendors and other third parties providing goods or services to us; the timing of our new unit development and related permitting; compliance with debt covenants; strategic capital allocation decisions including with respect to share repurchases or dividends; the ability to achieve projected financial results; the resolution of uncertain tax positions with the Internal Revenue Service and the impact of tax reform legislation; changes in laws impacting our business; adverse weather conditions in regions in which our restaurants are located; factors that are under the control of government agencies, landlords and other third parties; the risks, costs and uncertainties associated with opening new restaurants; and other risks and uncertainties detailed from time to time in our filings with the SEC. Such forward-looking statements include all other statements that are not historical facts, as well as statements that are preceded by, followed by or that include words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should” and similar expressions. These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements.
In connection with the “safe harbor” provisions of the Acts, we have identified and are disclosing important factors, risks and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements made by us, or on our behalf. (See Part II, Item 1A of this report, “Risk Factors,” and Part I, Item 1A, “Risk Factors,” included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2024.) These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the SEC. Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking statements. Although we believe that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there
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can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law.
The below discussion and analysis, which contains forward-looking statements, should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this report and with the following items included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2024: the audited consolidated financial statements and related notes in Part IV, Item 15; “Risk Factors” included in Part I, Item 1A; “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Part II, Item 7; and the cautionary statements included throughout this Form 10-Q. The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position.
Geopolitical and Other Macroeconomic Impacts to our Operating Environment
Beginning in 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation. While we have seen improvements in many of these areas, some of these factors continue to impact our operating results in fiscal 2024, contributing to significantly increased commodity and other costs. We have also encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges.
The ongoing impact of geopolitical and macroeconomic events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in the supply chain and delay in new restaurant openings. Climate change may further exacerbate a number of these factors. For more information regarding the risks to our business relating to the geopolitical and macroeconomic events, see “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 2, 2024.
General
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate 340 restaurants throughout the United States and Canada under brands including The Cheesecake Factory® (216 locations), North Italia® (39 locations), Flower Child® (33 locations) and additional brands within our FRC portfolio (44 locations). Internationally, 34 The Cheesecake Factory® restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers.
Overview
Our strategy is driven by our commitment to customer satisfaction and is focused primarily on menu innovation, service and operational execution to continue to differentiate ourselves from other restaurant concepts, as well as to drive competitively strong performance that is sustainable. Financially, we are focused on prudently managing expenses at our restaurants, bakery facilities and corporate support center, and leveraging our size to make the best use of our purchasing power.
Investing in new Company-owned restaurant development is our top long-term capital allocation priority, with a focus on opening our concepts in premier locations within both new and existing markets. We plan to continue expanding The Cheesecake Factory and North Italia concepts, and in addition, our FRC subsidiary serves as an incubation engine,innovating new food, dining and hospitality experiences to create fresh, exciting concepts.
Our overall revenue growth is primarily driven by revenues from new restaurant openings and increases in comparable restaurant sales.
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For The Cheesecake Factory concept, our strategy is to increase comparable restaurant sales by growing average check and maintaining customer traffic through (1) continuing to offer innovative, high quality menu items that offer customers a wide range of options in terms of flavor, price and value, (2) focusing on service and hospitality with the goal of delivering an exceptional customer experience and (3) continuing to provide our customers with convenient options for off-premise dining. We are continuing our efforts on a number of initiatives, including menu innovation, a greater focus on increasing customer throughput in our restaurants, leveraging our gift card program, working with a third party to provide delivery services for our restaurants, increasing customer awareness of our online ordering capabilities, improving the pick-up experience, augmenting our marketing programs, including our Cheesecake RewardsTM program, enhancing our training programs and leveraging our customer satisfaction measurement platform.
Average check variations are driven by menu price increases and/or changes in menu mix. We generally update The Cheesecake Factory menus twice each year, and our philosophy is to use price increases to help offset key operating cost increases in a manner that balances supporting both our margin objectives and customer traffic levels, utilizing a market-based strategy to help mitigate cost pressure in higher-wage geographies. Prior to fiscal 2022, we targeted menu price increases of approximately 2% to 3% annually. Beginning in 2022, we have implemented menu price increases above our historical levels to help offset significant inflationary cost pressures. Current and future near-term pricing actions may also be at levels above historical norms to keep pace with any significant cost increases. In addition, on a regular basis, we carefully consider opportunities to adjust our menu offerings or ingredients to help manage product availability and cost.
Margins are subject to fluctuations in commodity costs, labor, restaurant-level occupancy expenses, general and administrative (“G&A”) expenses and preopening expenses. Our objective is to recapture our pre-COVID-19 pandemic margins and longer-term to drive margin expansion, by leveraging incremental sales to increase restaurant-level margins at The Cheesecake Factory concept, leveraging our bakery operations, international and consumer packaged goods royalty revenue streams and G&A expense over time, and optimizing our restaurant portfolio.
We plan to employ a balanced capital allocation strategy comprised of investing in new restaurants that are expected to meet our targeted returns, repaying borrowings under our Revolving Facility and returning capital to shareholders through our dividend and share repurchase programs, the latter of which offsets dilution from our equity compensation program and supports our earnings per share growth. Future decisions to pay or to increase or decrease dividends or to repurchase shares are at the discretion of the Board and will be dependent on a number of factors, including limitations pursuant to the terms and conditions of the Loan Agreement and applicable law.
Longer-term, we believe our domestic revenue growth (comprised of our targeted annual unit growth of 7%, in aggregate across concepts, and comparable sales growth), combined with margin expansion, planned debt repayments and an anticipated capital return program will support our long-term financial objective of 13% to 14% total return to shareholders, on average. We define our total return as earnings per share growth plus our dividend yield.
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Results of Operations
The following table presents, for the periods indicated, information from our condensed consolidated statements of income expressed as percentages of revenues. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any other interim period or for the full fiscal year.
| Thirteen |
| Thirteen |
| Twenty-Six |
| Twenty-Six | ||
Weeks Ended | Weeks Ended |
| Weeks Ended | Weeks Ended | |||||
July 2, 2024 | July 4, 2023 | July 2, 2024 | July 4, 2023 | ||||||
Revenues |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Costs and expenses: |
|
| |||||||
Food and beverage costs | 22.3 | 23.2 | 22.6 |
| 23.5 | ||||
Labor expenses | 35.1 |
| 35.3 | 35.5 |
| 35.7 | |||
Other operating costs and expenses | 26.4 |
| 26.2 | 26.3 |
| 26.4 | |||
General and administrative expenses | 6.0 |
| 6.4 | 6.4 |
| 6.3 | |||
Depreciation and amortization expenses | 2.8 |
| 2.7 | 2.8 |
| 2.7 | |||
Impairment of assets and lease termination (income)/expenses | 0.0 | (0.1) | 0.1 | 0.1 | |||||
Acquisition-related contingent consideration, compensation and amortization expenses | 0.1 | 0.1 | 0.1 | 0.1 | |||||
Preopening costs | 0.8 |
| 0.7 | 0.7 |
| 0.5 | |||
Total costs and expenses | 93.5 |
| 94.5 | 94.5 |
| 95.3 | |||
Income from operations | 6.5 |
| 5.5 |
| 5.5 | 4.7 | |||
Interest and other expense, net | (0.3) |
| (0.3) | (0.3) |
| (0.2) | |||
Income before income taxes | 6.2 |
| 5.2 | 5.2 |
| 4.5 | |||
Income tax provision | 0.4 |
| 0.3 | 0.4 |
| 0.4 | |||
Net income | 5.8 | % | 4.9 | % | 4.8 | % | 4.1 | % |
Thirteen Weeks Ended July 2, 2024 Compared to Thirteen Weeks Ended July 4, 2023
Revenues
Revenues increased 4.4% to $904.0 million for the fiscal quarter ended July 2, 2024 compared to $866.2 million for the comparable prior year period, primarily due to additional revenue related to new restaurant openings and an increase in comparable restaurant sales.
The Cheesecake Factory sales increased 3.7% to $676.7 million for the second quarter of fiscal 2024 compared to $652.5 million for the second quarter of fiscal 2023. Average sales per restaurant operating week increased 1.0% to $240,989 in the second quarter of fiscal 2024 from $238,654 in the second quarter of fiscal 2023. Total operating weeks at The Cheesecake Factory restaurants increased 2.7% to 2,808 in the second quarter of fiscal 2024 compared to 2,734 in the prior year. The Cheesecake Factory comparable sales increased by 1.4%, or $9.2 million, from the second quarter of fiscal 2023. The increase from fiscal 2023 was primarily driven by an increase in average check of 1.6% (based on an increase of 4.5% in menu pricing and 2.9% negative impact from mix), partially offset by decreased customer traffic of 0.2%. We implemented effective menu price increases of approximately 2.5% and 2.0% in the first quarter of fiscal 2024 and the third quarter of fiscal 2023, respectively. We are in the process of implementing approximately a 1.9% price increase in the third quarter of fiscal 2024. Sales through the off-premise channel comprised approximately 21% of our restaurant sales during the second quarter of fiscal 2024 as compared to 22% in the second quarter of fiscal 2023. We account for each off-premise order as one customer for traffic measurement purposes. Therefore, average check is generally higher for off-premise orders as most are for more than one customer.
North Italia sales increased 14.6% to $75.5 million for the second quarter of fiscal 2024, compared to $65.9 million for the second quarter of fiscal 2023. Average sales per restaurant operating week decreased 1.5% to $151,330 in the second quarter of fiscal 2024 from $153,692 in the second quarter of fiscal 2023. Total operating weeks at North Italia increased 16.3% to 499 in the second quarter of fiscal 2024 compared to 429 in the prior year. North Italia comparable sales increased approximately 2% from the second quarter of fiscal 2023. The increase from fiscal 2023 was primarily driven by an increase in average check of 3% (based on an increase of 6.5% in menu pricing, partially offset by a 3.5% negative impact from mix), partially offset by decreased customer traffic
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of 1%. We implemented effective menu price increases of approximately 2.2% and 3.7% in the second quarter of fiscal 2024 and the fourth quarter of fiscal 2023, respectively.
Flower Child sales increased 6.6% to $35.7 million for the second quarter of fiscal 2024, compared to $33.5 million for the second quarter of fiscal 2023. Flower Child sales per restaurant operating week was $85,867 in the second quarter of fiscal 2024 as compared to $85,863 in the second quarter of fiscal 2023. Total operating weeks at Flower Child increased 6.7% to 416 in the second quarter of fiscal 2024 compared to 390 in the prior year.
Other FRC sales increased 12.0% to $73.6 million for the second quarter of fiscal 2024, compared to $65.7 million for the second quarter of fiscal 2023. Other FRC average sales per restaurant operating week decreased 5.7% to $134,131 in the second quarter of fiscal 2024 from $142,270 in the second quarter of fiscal 2023. Average sales per restaurant operating week were impacted by new restaurant openings, as well as the concept mix and a decline in comparable sales. Total operating weeks at Other FRC increased 18.8% to 549 in the second quarter of fiscal 2024 compared to 462 in the prior year.
Restaurants become eligible to enter the comparable sales base in their 19th month of operation. As of July 2, 2024, there were six The Cheesecake Factory restaurants and six North Italia restaurants not yet in the comparable sales base. International licensed locations and restaurants that are no longer in operation, including those which we have relocated, are excluded from comparable sales calculations.
Food and Beverage Costs
Food and beverage costs consist of raw materials and ingredients used in the food and beverage products sold in our restaurants and to our third-party customers. As a percentage of revenues, food and beverage costs were 22.3% and 23.2% in the second quarters of fiscal 2024 and 2023, respectively, primarily due to menu price increases in excess of inflation across most categories (0.4%) and a shift in sales mix (0.4%).
Labor Expenses
As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery production labor, including associated fringe benefits, were 35.1% and 35.3% in the second quarters of fiscal 2024 and 2023, respectively. This decrease is primarily driven by menu price increases in excess of wage rate inflation and improved productivity (0.4%), partially offset by an increase in management labor due to higher staffing levels (0.2%).
Other Operating Costs and Expenses
Other operating costs and expenses consist of all other restaurant-level operating costs, the major components of which are occupancy expenses (rent, common area expenses, insurance, licenses, taxes and utilities), dining room and to-go supplies, repairs and maintenance, janitorial expenses, credit card processing fees, marketing including delivery commissions, and incentive compensation, as well as bakery production overhead. As a percentage of revenues, other operating costs and expenses were 26.4% and 26.2% in the second quarters of fiscal 2024 and 2023, respectively. This variance was primarily driven by increased occupancy and building related costs (0.4%), partially offset by a shift in sales mix (0.2%).
G&A Expenses
G&A expenses consist of the restaurant management recruiting and training program, restaurant field supervision, corporate support and bakery administrative organizations, as well as gift card commissions to third-party distributors. As a percentage of revenues, G&A expenses were 6.0% and 6.4% in the second quarter of fiscal 2024 and 2023, respectively. This variance was primarily due to lower legal fees (0.2%).
Impairment of Assets and Lease Termination (Income)/Expenses
During the second quarter of fiscal 2024, we recorded impairment of assets and lease terminations income of $0.2 million primarily related to lease termination income for one Flower Child location. During the second quarter of fiscal 2023, we recorded impairment of assets and lease terminations income of $0.7 million primarily related to lease termination income for one Grand Lux Cafe location.
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Preopening Costs
Preopening costs were $7.0 million and $6.0 million in the second quarters of fiscal 2024 and 2023, respectively. We opened one The Cheesecake Factory, one North Italia, two Flower Child and one Other FRC locations in the second quarter of fiscal 2024 compared to one The Cheesecake Factory and two Other FRC locations in the second quarter of fiscal 2023. Restaurant-level preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included in preopening costs are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs. Preopening costs can fluctuate significantly from period to period based on the number, mix and timing of restaurant openings and the specific preopening costs incurred for each restaurant.
Income Tax Provision
Our effective income tax rate was 6.9% and 5.8% for the second quarters of fiscal 2024 and 2023, respectively. The increase was primarily due to a lower proportion of employment credits in relation to income before income taxes (3.0%) in the second quarter of fiscal 2024 and a lower proportion of non-taxable gains on our investments in variable life insurance contracts used to support our non-qualified deferred compensation plan in relation to income before income taxes (0.3%) in the second quarter of fiscal 2024. These factors were partially offset by a change to our reserve for uncertain tax positions (1.6%) and a lower proportion of state taxes expense in relation to income before taxes in the second quarter of fiscal 2024 (0.5%).
Twenty-Six Weeks Ended July 2, 2024 Compared to Twenty-Six Weeks Ended July 4, 2023
Revenues
Revenues increased 3.6% to $1,795.3 million for the first six months ended July 2, 2024 compared to $1,732.3 million for the comparable prior year period, primarily due to additional revenue related to new restaurant openings and an increase in comparable restaurant sales.
The Cheesecake Factory sales increased 2.8% to $1,344.5 million for the first six months of fiscal 2024 compared to $1,308.5 million for the first six months of fiscal 2023. Average sales per restaurant operating week increased 0.1% to $239,446 in the first six months of fiscal 2024 from $239,167 in the first six months of fiscal 2023. Total operating weeks at The Cheesecake Factory restaurants increased 2.6% to 5,615 in the first six months of fiscal 2024 compared to 5,471 in the prior year. The Cheesecake Factory comparable sales increased by 0.4%, or $5.3 million, from the first six months of fiscal 2023. The increase from fiscal 2023 was primarily driven by an increase in average check of 1.3% (based on an increase of 4.8% in menu pricing and 3.5% negative impact from mix), partially offset by decreased customer traffic of 0.9%. Sales through the off-premise channel comprised approximately 21% of our restaurant sales during the first six months of fiscal 2024 as compared to 22% in the first six months of fiscal 2023.
North Italia sales increased 13.3% to $146.4 million for the first six months of fiscal 2024, compared to $129.2 million for the first six months of fiscal 2023. Average sales per restaurant operating week decreased 0.7% to $149,528 in the first six months of fiscal 2024 from $150,626 in the first six months of fiscal 2023. Total operating weeks at North Italia increased 14.1% to 979 in the first six months of fiscal 2024 compared to 858 in the prior year. North Italia comparable sales increased approximately 3% from the first six months of fiscal 2023. The increase from fiscal 2023 was primarily driven by an increase in average check of 4% (based on an increase of 7% in menu pricing, partially offset by a 3% negative impact from mix), partially offset by decreased customer traffic of 1%.
Flower Child sales increased 8.3% to $70.2 million for the first six months of fiscal 2024, compared to $64.8 million for the first six months of fiscal 2023. Flower Child sales per restaurant operating week increased 3.7% to $84,775 in first six months of fiscal 2024 from $81,711 in the first six months of fiscal 2023. Total operating weeks at Flower Child increased 4.4% to 828 in the first six months of fiscal 2024 compared to 793 in the prior year.
Other FRC sales increased 10.0% to $147.9 million for the first six months of fiscal 2024, compared to $134.4 million for the first six months of fiscal 2023. Other FRC average sales per restaurant operating week decreased 6.9% to $137,040 in the first six months of fiscal 2024 from $147,172 in the first six months of fiscal 2023. Average sales per restaurant operating week were impacted
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by new restaurant openings, as well as the concept mix and a decline in comparable sales. Total operating weeks at Other FRC increased 18.2% to 1,079 in the first six months of fiscal 2024 compared to 913 in the prior year.
Food and Beverage Costs
As a percentage of revenues, food and beverage costs were 22.6% and 23.5% in the first six months of fiscal 2024 and 2023, respectively, primarily due to menu price increases in excess of inflation across most categories (0.5%) and a shift in sales mix (0.3%).
Labor Expenses
As a percentage of revenues, labor expenses were 35.5% and 35.7% in the first six months of fiscal 2024 and 2023, respectively. This decrease is primarily due to menu price increases in excess of wage rate inflation (0.3%), partially offset by increased management labor due to improved staffing levels (0.2%).
Other Operating Costs and Expenses
As a percentage of revenues, other operating costs and expenses were 26.3% and 26.4% in the first six months of fiscal 2024 and 2023, respectively. This variance was primarily driven by a shift in sales mix (0.2%), partially offset by increased restaurant-level incentive compensation expense (0.1%).
G&A Expenses
As a percentage of revenues, G&A expenses were 6.4% and 6.3% in the first six months of fiscal 2024 and 2023, respectively. This variance was primarily due to increased labor expense (0.1%).
Impairment of Assets and Lease Termination (Income)/Expenses
During the first six months of fiscal 2024, we recorded impairment of assets and lease terminations expense of $1.9 million primarily related to impairment of assets for one The Cheesecake Factory location and lease termination costs for one The Cheesecake Factory and one Flower Child location. During the first six months of fiscal 2023, we recorded impairment of assets and lease terminations expense of $1.6 million primarily related to lease termination costs for one Grand Lux Cafe location.
Preopening Costs
Preopening costs were $12.9 million and $9.1 million in the first six months of fiscal 2024 and 2023, respectively. We opened one The Cheesecake Factory, three North Italia, three Flower Child and three Other FRC locations in the first half of fiscal 2024 compared to one The Cheesecake Factory, one Flower Child and three Other FRC locations in the first half of fiscal 2023.
Income Tax Provision
Our effective income tax rate was 8.8% and 8.6% for the first six months of fiscal 2024 and 2023, respectively. The increase was primarily due to a lower proportion of employment credits in relation to income before income taxes (1.7%) in the first six months of fiscal 2024 and a higher proportion of tax shortfall related to equity compensation in relation to income before income taxes in the first six months of fiscal 2024 (0.5%). These factors were partially offset by a change to our reserve for uncertain tax positions (1.6%) and a lower proportion of state taxes expense in relation to income before taxes (0.2%).
Non-GAAP Measures
Adjusted net income and adjusted diluted net income per share are supplemental measures of our performance that are not required by or presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly-titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. We calculate these non-GAAP measures by eliminating from net income and diluted net income per share the impact of items we do not consider indicative of our ongoing operations. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our inclusion of these adjusted measures
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should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. In the future, we may incur expenses or generate income similar to the adjusted items.
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Following is a reconciliation from net income and diluted net income per share to the corresponding adjusted measures (in thousands, except per share data):
| Thirteen |
| Thirteen |
| Twenty-Six |
| Twenty-Six | |||||
Weeks Ended | Weeks Ended | Weeks Ended | Weeks Ended | |||||||||
| July 2, 2024 |
| July 4, 2023 |
| July 2, 2024 |
| July 4, 2023 | |||||
Net income | $ | 52,444 | $ | 42,675 | $ | 85,635 | $ | 70,725 | ||||
Impairment of assets and lease termination (income)/expenses | (188) | (653) | 1,895 | 1,589 | ||||||||
Acquisition-related contingent consideration, compensation and amortization expenses | 1,146 | 1,287 | 2,267 | 2,476 | ||||||||
Tax effect of adjustments (1) |
| (249) |
| (165) |
| (1,082) |
| (1,057) | ||||
Adjusted net income | $ | 53,153 | $ | 43,144 | $ | 88,715 | $ | 73,733 | ||||
Diluted net income per share | $ | 1.08 | $ | 0.87 | $ | 1.76 | $ | 1.43 | ||||
Impairment of assets and lease termination (income)/expenses | (0.00) | (0.01) | 0.04 | 0.03 | ||||||||
Acquisition-related contingent consideration, compensation and amortization expenses | 0.02 | 0.03 | 0.05 | 0.05 | ||||||||
Tax effect of adjustments (1) |
| (0.01) |
| (0.00) |
| (0.02) |
| (0.02) | ||||
Adjusted diluted net income per share (2) | $ | 1.09 | $ | 0.88 | $ | 1.82 | $ | 1.50 | ||||
| (1) | Based on the federal statutory rate and an estimated blended state tax rate, the tax effect on all adjustments assumes a 26% tax rate. |
| (2) | Adjusted net income per share may not add due to rounding. |
Fiscal 2024 Outlook
Based on recent trends and assuming no material operating or consumer disruptions, we anticipate total revenue for fiscal 2024 to be approximately $3.56 billion to $3.60 billion.
During fiscal 2024, we currently estimate total inflation across our commodities, total labor (factoring in the latest trends in wage rates and channel mix, as well as in other components such as payroll taxes and benefits) and other operating costs and expenses to be in the low to mid-single digit range. However, there remains measurable risk associated with cost fluctuations driven by the current environment. We estimate G&A expenses to be slightly higher than fiscal 2023 as a percent of sales and preopening costs of approximately $28 million. Based on these factors, we expect fiscal 2024 net income margin of approximately 4.3% to 4.4% based on the estimated revenue range provided.
We plan to open as many as 22 new restaurants in fiscal 2024, including as many as three The Cheesecake Factory restaurants, six to seven North Italia restaurants, six to seven Flower Child locations and seven to eight restaurants within our Other FRC business. We anticipate approximately $180 to $200 million in cash capital expenditures to support this level of unit development, as well as required maintenance on our restaurants. Restaurant opening dates may be impacted by supply chain challenges and permit approval delays.
Total revenues for the third quarter of fiscal 2024 are expected to be between $855 million and $870 million. We anticipate commodity inflation to be in the low-single digit range and expect labor inflation to be in the mid-single digit range. Based on these factors, we expect third quarter fiscal 2024 net income margin of 2.6% to 3.0% based on the estimated revenue range provided.
24
Liquidity and Capital Resources
Our corporate financial objectives are to maintain a sufficiently strong and conservative balance sheet to support our operating initiatives and unit growth while maintaining financial flexibility to provide the financial resources necessary to protect and enhance the competitiveness of our restaurant and bakery brands and to provide a prudent level of financial capacity to manage the risks and uncertainties of conducting our business operations under various economic and industry cycles. Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance our restaurant expansion plans, ongoing maintenance of our restaurants and bakery facilities and investment in our corporate and information technology infrastructures.
Similar to many restaurant and retail chain store operations, we utilize operating lease arrangements for all of our restaurant locations. Accordingly, our lease arrangements reduce, to some extent, our capacity to utilize funded indebtedness in our capital structure. We are not limited to the use of lease arrangements as our only method of opening new restaurants. However, we believe our operating lease arrangements continue to provide appropriate leverage for our capital structure in a financially efficient manner.
During the first six months of fiscal 2024, our cash and cash equivalents decreased by $15.6 million to $40.7 million. The following table presents, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities (in millions):
Twenty-Six | Twenty-Six | |||||
Weeks Ended | Weeks Ended | |||||
| July 2, 2024 |
| July 4, 2023 | |||
Cash provided by operating activities | $ | 94.4 | $ | 101.5 | ||
Additions to property and equipment | (66.3) | (62.7) | ||||
Acquisition-related deferred consideration and compensation | (6.5) | (13.0) | ||||
Common stock dividends paid | (26.7) | (27.0) | ||||
Treasury stock purchases, inclusive of excise tax | (16.4) | (21.7) | ||||
Cash Provided by Operating Activities
Cash flows from operations decreased by $7.1 million from the first six months of fiscal 2023 primarily due to an increase in inventory levels, timing of prepaid expenses and a payment of deferred consideration and compensation in excess of acquisition-date fair value, partially offset by higher net income. Typically, our requirement for working capital has not been significant since our restaurant customers pay for their food and beverage purchases in cash or cash equivalents at the time of sale, and we are able to sell many of our restaurant inventory items before payment is due to the suppliers of such items.
Property and Equipment
Capital expenditures for new restaurants, including locations under development, were $38.9 million and $37.8 million for the first six months of fiscal 2024 and 2023, respectively. Capital expenditures also included $24.8 million and $22.0 million for our existing restaurants and $2.6 million and $2.9 million for bakery and corporate capacity and infrastructure investments in the first six months of fiscal 2024 and 2023, respectively.
We opened ten restaurants in the first six months of fiscal 2024 comprised of one The Cheesecake Factory, three North Italia, three Flower Child and three Other FRC locations compared to one The Cheesecake Factory, one Flower Child and three Other FRC location in the first six months of fiscal 2023. We expect to open as many as 22 new restaurants in fiscal 2024 across our portfolio of concepts. We anticipate approximately $180 to $200 million in capital expenditures to support this level of unit development, as well as required maintenance on our restaurants.
Acquisition-Related Deferred Consideration and Compensation
During the first six months of fiscal 2024 and 2023, we made payments of $6.5 million and $13.0 million, respectively, for contingent consideration and compensation related to the FRC acquisition.
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Convertible Senior Notes
On June 15, 2021, we issued $345.0 million in aggregate principal amount of convertible senior notes (“Notes”), which will mature on June 15, 2026, unless earlier repurchased, redeemed or converted. The net proceeds from the sale of the Notes were approximately $334.9 million after deducting issuance costs related to the Notes. As of July 2, 2024, the conversion rate for the Notes was 13.6938 shares of common stock per $1,000 principal amount of the Notes, which represents a conversion price of approximately $73.03 per share of common stock. In connection with the cash dividend that was declared by our Board on July 25, 2024, on August 13, 2024 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with the terms. (See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of the Notes.)
Credit Facility
On October 6, 2022, we entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement” and the revolving credit facility provided thereunder, the “Revolver Facility”). The Loan Agreement amends and restates in its entirety our prior credit agreement. The Revolver Facility, which terminates on October 6, 2027, provides us with revolving loan commitments that total $400 million, of which $50 million may be used for issuances of letters of credit. The Revolver Facility contains a commitment increase feature that, subject to certain conditions precedent, could provide for an additional $200 million in revolving loan commitments. Our obligations under the Revolver Facility are unsecured. Certain of our material subsidiaries have guaranteed our obligations under the Revolver Facility. As of July 2, 2024, we had net availability for borrowings of $236.5 million, based on a $130.0 million outstanding debt balance and $33.5 million in standby letters of credit under the Revolver Facility.
Under the Revolver Facility, we are subject to financial covenants, as well as to customary events of default that, if triggered, could result in acceleration of the maturity of the Revolver Facility. Subject to certain exceptions, the Revolver Facility also limits distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters. (See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)
Common Stock Dividends
Common stock dividends of $26.7 million and $27.0 million were paid in the first six months of fiscal 2024 and 2023, respectively. As further discussed in Note 12 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report, in July 2024, our Board declared a quarterly dividend to be paid in August 2024. Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Loan Agreement and applicable law, and other such factors that the Board considers relevant.
Share Repurchases
Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 57.0 million shares at a total cost of $1,828.1 million, excluding excise tax through July 2, 2024. We repurchased 0.5 million shares at a cost of $16.4 million, excluding excise tax during the first six months of fiscal 2024 compared to 0.6 million shares at a cost of $21.7 million, excluding excise tax during the comparable fiscal 2023 period.
Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the FRC acquisition, our share price and current market conditions. The timing and number of shares repurchased are also subject to legal constraints and financial covenants under our Loan Agreement that limit share repurchases based on a defined ratio. (See Note 8 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our repurchase authorization.)
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Cash Flow Outlook
We believe that our cash and cash equivalents, combined with expected cash flows provided by operations and available borrowings under the Revolving Facility, will provide us with adequate liquidity for the next 12 months and the foreseeable future.
As of July 2, 2024, we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties. Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year ended January 2, 2024.
Recent Accounting Pronouncements
See Note 1 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a summary of new accounting standards.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The following discussion of market risks contains forward-looking statements and should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this report and with the following items in our Annual Report on Form 10-K for the fiscal year ended January 2, 2024: the audited consolidated financial statements and related notes in Part IV, Item 15; the “Risk Factors” in Part I, Item 1A; the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7; and the cautionary statements included throughout the report. Actual results may differ materially from the following discussion based on general conditions in the commodity and financial markets.
The cost of products and services used in our operations is subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as geopolitical events, economic conditions or other unforeseen circumstances. Climate change may further exacerbate a number of these factors. Beginning in fiscal 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation. While we have seen improvements in many of these areas, some of these factors continue to impact our operating results in fiscal 2024, contributing to significantly increased commodity and other costs.
We attempt to negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment requirements, such as certain dairy products and poultry, depending on market conditions and expected demand. While we are in the process of contracting for certain key food and non-food supplies for fiscal 2024, these efforts may not be successful or yield our intended benefits. We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities. As of July 2, 2024, we had no hedging contracts in place.
Commodities for which we have not entered into contracts can be subject to unforeseen supply and cost fluctuations, which at times may be significant. Additionally, the cost of commodities subject to governmental regulation, such as dairy and corn, can be especially susceptible to price fluctuation. Goods we purchase on the international market may be subject to even greater fluctuations in cost and availability, which could result from a variety of factors, including the value of the U.S. dollar relative to other currencies, international trade disputes, tariffs, geopolitical unrest and varying global demand. We may not have the ability to increase menu prices or vary menu items in response to food commodity price increases. For both the second quarter of fiscal 2024 and 2023, a hypothetical increase of 1% in food costs would have negatively impacted cost of sales by $2.0 million.
We are exposed to market risk from interest rate changes on our funded debt. This exposure relates to the component of the interest rate on our Loan Agreement that is indexed to market rates. Based on outstanding borrowings at both July 2, 2024 and January 2, 2024, a hypothetical 1% rise in interest rates would have increased interest expense by $1.3 million, on an annual basis. (See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)
We are also subject to market risk related to our investments in variable life insurance contracts used to support our non-qualified plans to the extent these investments are not equivalent to the related liability. In addition, because changes in these investments are not taxable, gains and losses result in tax benefit and tax expense, respectively, and directly affect net income through the income tax provision. Based on balances at July 2, 2024 and January 2, 2024, a hypothetical 10% decline in the market value of our deferred compensation asset and related liability would not have impacted income before income taxes. However, under such a scenario, net income would have declined by $2.5 million and $2.4 million at July 2, 2024 and January 2, 2024, respectively.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired control objectives, and management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. We carried out an evaluation, under the supervision and with the participation of our
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management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of July 2, 2024.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) during the fiscal quarter ended July 2, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
See Note 7 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report.
Item 1A. Risk Factors.
A description of the risk factors associated with our business is contained in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended January 2, 2024 (“Annual Report”). These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with the SEC.
Except as set forth below, there have been no material changes in our risk factors since the filing of our Annual Report.
If any of our third-party vendors experiences a failure that affects a significant aspect of our business, we may experience data loss, increased costs, operational disruption or other harm, any of which could materially adversely affect our financial performance.
In order to leverage our internal resources and information technology infrastructure, and to support our business continuity and disaster recovery planning efforts, we rely on third-party vendors to provide some of our essential business processes. For example, we rely on a network of third-party distribution warehouses to deliver ingredients and other materials to our restaurants. In some instances, these processes rely on technology and may be outsourced to the vendor in their entirety and in other instances we utilize these vendors’ externally-hosted business applications. Our vendors’ systems have experienced cybersecurity incidents, including credential stuffing attacks in which compromised user credentials were used to breach the systems, and are vulnerable to a variety of risks, including, without limitation, theft, casualties such as fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external cybersecurity threats, including from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists, as well as through diverse attack vectors, such as malfeasance by insiders, human or technological error, malicious code embedded in open-source software, or misconfigurations, “bugs” or other vulnerabilities in commercial software that is integrated into our (or our suppliers’ or service providers’) network infrastructure, products or services, security breaches, denial of service attacks, viruses, worms, malware, ransomware, social engineering/phishing, breaches of the algorithms used to encrypt and protect data and other malicious, or disruptive or unauthorized events that jeopardize the confidentiality, integrity or availability of information systems or information residing therein, including confidential information and personal information (each, a “Cybersecurity Incident” and collectively, “Cybersecurity Incidents”). For example, in July 2024, we experienced disruptions to our information technology systems as part of the CrowdStrike software update that resulted in global information technology outages, including disruptions to our ability to process customer payments at certain of our restaurants. While we experienced this disruption for a limited period of time, the incident did not have a significant impact on our business. We also rely on third party services to effectively operate our restaurants including, for example, gift card distribution and transaction processing services, point-of-sale system services, online ordering services and food delivery services, and our Cheesecake RewardsTM program. We derive substantial revenue from these aspects of our business, which could suffer in the event of any factor that adversely impacts our vendors’ ability to provide such services. Such factors include, without limitation, loss of, or significant change in contractual terms of, key vendor contracts, vendor or processor failures, technology failures, changes in applicable laws or regulations, Security
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Incidents, damage to the reputation of any key vendor and mandated employment relationships between companies that facilitate third-party delivery services and their service personnel. (See the risk factor titled “Changes in, or any failure to comply with, applicable laws or regulations could materially adversely affect our ability to operate our restaurants and/or increase our cost to do so, which could materially adversely affect our financial performance” in Item 1A of our Annual Report on Form 10-K for fiscal year ended January 2, 2024.)
We continue to review options to expand the use of third-party providers in other areas. Our general practice is to seek to work with service providers that are leading performers in their industries and with technology vendors that we understand employ up-to-date and appropriate data security practices and internal control practices. However, we cannot guarantee that failures will not occur. The failure of third-party vendors to provide adequate services, including, as result of any Security Incident, or to generally fail to employ up-to-date and appropriate data security and internal control practices, could significantly harm our operations and reputation, which could materially adversely affect our financial performance.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table presents our purchases of our common stock during the fiscal quarter ended July 2, 2024 (in thousands, except per share data):
|
|
| Total Number of |
| Maximum Number | ||||
Shares Purchased | of Shares that May | ||||||||
Total Number | as Part of Publicly | Yet be Purchased | |||||||
of Shares | Average Price | Announced Plans | Under the Plans or | ||||||
Period |
| Purchased (1) |
| Paid per Share (2) |
| or Programs |
| Programs | |
April 3 — May 7, 2024 |
| 87 | $ | 34.38 |
| 86 |
| 4,006 | |
May 8 — June 4, 2024 |
| 24 |
| 36.04 |
| 15 |
| 3,982 | |
June 5 — July 2, 2024 |
| — |
| — |
| — |
| 3,982 | |
Total |
| 111 |
|
|
| 101 |
|
| |
| (1) | The total number of shares purchased include 10,224 shares withheld upon vesting of restricted share awards to satisfy tax withholding obligations. |
(2) | The dollar value of shares repurchased excludes excise tax due under the Inflation Reduction Act of 2022. |
Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 57.0 million shares at a total cost of $1,828.1 million, excluding excise tax, through July 2, 2024 with 0.1 million shares repurchased at a cost of $3.9 million, excluding excise tax during the second quarter of fiscal 2024. Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. The timing and number of shares repurchased are subject to legal constraints and financial covenants under our Loan Agreement that limit share repurchases based on a defined ratio. (See Note 8 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our repurchase authorization.)
Item 5. Other information.
During the fiscal quarter ended July 2, 2024, no director or officer of the Company
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Item 6. Exhibits
Exhibit |
| Item |
| Form |
| File Number |
| Incorporated by |
| Filed/ |
|---|---|---|---|---|---|---|---|---|---|---|
3.1 | Restated Certificate of Incorporation of The Cheesecake Factory Incorporated | 8-K | 000-20574 | 3.1 | 6/4/24 | |||||
3.2 | Certificate of Designations of The Cheesecake Factory Incorporated, dated April 20, 2020 | 8-K | 000-20574 | 3.1 | 4/20/20 | |||||
3.3 | Bylaws of The Cheesecake Factory Incorporated, amended and restated on October 26, 2022 | 8-K | 000-20574 | 3.1 | 11/1/22 | |||||
31.1 | Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer | — | — | — | Filed herewith | |||||
31.2 |
| Rule 13a-14(a)/15d-14(a) Certification of the Principal Financial Officer | — | — | — | Filed herewith | ||||
32.1 |
| — | — | — | Furnished herewith | |||||
32.2 |
| — | — | — | Furnished herewith | |||||
101.1 |
| The following materials from The Cheesecake Factory Incorporated’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2024, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income, (iii) condensed consolidated statements of comprehensive income, (iv) condensed consolidated statement of stockholders’ equity, (v) condensed consolidated statements of cash flows, and (vi) the notes to the condensed consolidated financial statements |
| — | — | — | Filed herewith | |||
104.1 | The cover page of The Cheesecake Factory Incorporated’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2024, formatted in iXBRL (included with Exhibit 101.1) | — | — | — | Filed herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 5, 2024 | THE CHEESECAKE FACTORY INCORPORATED | |
By: | /s/ DAVID OVERTON | |
David Overton | ||
Chairman of the Board and Chief Executive Officer | ||
(Principal Executive Officer) | ||
By: | /s/ MATTHEW E. CLARK | |
Matthew E. Clark | ||
Executive Vice President and Chief Financial Officer | ||
(Principal Financial Officer) | ||
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