Cheesecake Factory 2Q16 Earnings Call Notes

National campaign with MasterCard coming up

We are very excited to have been chosen by MasterCard to be featured in an upcoming national advertising campaign for their Masterpass digital wallet solution. This campaign will garner significant awareness for both CakePay and our restaurants. David M. Overton – Chairman & Chief Executive Officer


Restaurants face competition from non-restaurants

And the competition is coming from all over, including non-restaurants such as grocery stores. But we’ve all seen this before too, it’s happened four, or five times in just my career in the restaurant business. W. Douglas Benn – Chief Financial Officer & Executive Vice President


Benn believes that the expansion cycle of the restaurant business has ended

The restaurant world gets a little ahead of itself and overbuilt, it’s considered a safe place to invest capital, and when that gets to be too much, then the expansion slows and the bifurcation begins and there’s winners and losers. So, I think that’s where we are. I think there’s a lot of restaurants out there, it’s not something that couldn’t be solved with a little more vibrant economy, though, in the short-term. W. Douglas Benn – Chief Financial Officer & Executive Vice President


Service is an important focus for CAKE

Well overall, our hope was to increase the service and hospitality for guests and just make those dining experiences more compelling. That was goal number one. Around other metrics and benefits we’ve seen, we’ve already seen higher retention in servers that actually have gone through this new server training. We’ve seen higher guest satisfaction scores for the servers that have actually gone through the new server training. Those are two of our biggest goals. David M. Gordon – President


CAKE uses contracts to keep COGS stable

I certainly wouldn’t second-guess in any way the fact that we’re fully contracted, and maybe we could be paying less. Our objective really with respect to commodity cost management is to try to put predictability into our COGS model, and that would mean that we’re already looking at whether we should do booking for next year, and one of the criteria for booking for next year is not necessarily, let’s get the absolute lowest price, but if we can get a lower price than we had this year, then that’s pretty darn good. So that’s sort of the way we look at it. We look at predictability and control on volatility in the pricing of the commodities, and that’s worked out really well for us this year. Could we’ve gotten a little bit lower pricing if we were less contracted? Maybe, I’m not sure. But certainly it’s worked out well for us this year. W. Douglas Benn – Chief Financial Officer & Executive Vice President