It was a chilly end to 2025 for The Cheesecake Factory.
Same-store sales fell 2.2% year over year at the casual-dining chain in the fourth quarter, marking its first same-store sales decline since the first quarter of 2024.
Traffic was down about 4%, while prices were up 3.5% or 4%. Customers spent about 1.8% less at the chain in the quarter.
Some of the chilliness was literal. Winter weather accounted for about 1% of the same-store sales shortfall, executives said Wednesday. A shift in the timing of the holidays contributed another 0.5%.
Executives chalked up the rest to softer consumer spending that was exacerbated by the government shutdown, which lasted from Oct. 1 to Nov. 12.
It was a tough quarter industrywide: Casual-dining same-store sales declined more than 4% from the third quarter to the fourth, according to Black Box Intelligence, making Cheesecake’s decline of about 2% over that period appear fairly stable in comparison.
And trends have already begun to improve. Executives are expecting same-store sales in the current quarter to be up about 1% year over year. That is despite a 1% impact from more bad weather that caused it to close a record 120 locations on a single day.
“I do think coming out into the first quarter here that our performance is notably better,” said CFO Matthew Clark. “It feels like what we thought maybe was a two-quarter event, it’s more like a one-quarter [event] at this point in time.”
As such, the chain is not making any drastic changes to its strategy. It has found success with a selection of lower-priced bites and bowls designed to appeal to price-conscious consumers, and plans to add to that lineup. It also plans to slow price hikes to 3% for the year to further solidify its value proposition for customers.
And it continues to develop its year-old Cheesecake Rewards loyalty program, with plans to launch a mobile app later this year. Executives have provided few details on the program, but said membership and engagement are strong.
For the full year, The Cheesecake Factory is expecting total revenues of about $3.9 billion, give or take 1%. That would be about 4% higher than its 2025 revenue of $3.75 billion.
The 218-unit chain continues to excel on the bottom line, at least in its restaurants. Restaurant-level margins expanded by 0.6% in the quarter, to 17.6%. Executives pointed to Cheesecake's industry-leading employee retention as a major factor in improving its operations and profits.
But the company's net income for the quarter declined 30% year over year, to $28.7 million, due in large part to asset impairment and lease termination costs at some of its non-Cheesecake Factory concepts.
The performance of the largest of those concepts—North Italia and Flower Child—continues to be a tale of two brands.
Same-store sales fell 4% at North Italia driven by a 6% traffic decline. The 48-unit polished-casual chain has been hit harder by macroeconomic trends as well as cannibalization from new openings and the lingering effects of the Los Angeles fires. It is working to revive its lunch business as well as refreshing its food and bar menus.
Fast casual Flower Child, meanwhile, continues to soar, with a 4% same-store sales increase in the quarter for a two-year growth rate of 15%. Average unit volumes were $4.6 million for the full year, while restaurant-level margins were 18.5%.
Cheesecake picked up both brands with its acquisition of Phoenix-based Fox Restaurant Concepts in 2019.
Overall, The Cheesecake Factory opened 25 new restaurants across all of its concepts last year, increasing its footprint by 7%. It plans to open as many as 26 this year.
It also closed four restaurants in the fourth quarter—two Cheesecake Factories, a Grand Lux Cafe and a Fox concept called Blanco—all of which were anticipated, executives said. The company does not expect to close any restaurants this year.
Cheesecake Factory stock fell more than 4% in after hours trading Wednesday.
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