The Cheesecake Factory Incorporated · NASDAQ:CAKE
The Cheesecake Factory — Cheesecake Factory — Investor Presentation (May 2019)
43 slides from The Cheesecake Factory's investor presentation, May 1, 2019
Slide 1: Safe Harbor Statement
Safe Harbor Statement This presentation contains 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, and Section 21E of the Securities Exchange Act of 1934, as amended. This inclu
Slide 2: A Compelling Investment Opportunity
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Diversified growth drivers Sustained track record of consistent financial performance • • • • Robust cash flow to support growth and maximize shareholder value 3
Slide 3: Current Environment – Consumer & Industry Trends
Current Environment – Consumer & Industry Trends 4
Slide 4: What Always Remains the Same
What Always “Consumers don't just want to eat, they want to experience something memorable.” – NPD Group Remains the Same “Superior service and ambiance grow guest counts for top performing restaurant brands.” – TDn2K “Food quality is the most important factor in selecting a restaurant to visit.” –
Slide 5: What's Evolving
What’s Evolving More Discerning Guests Retail Trends Need for Convenience Desire for Value – “Deal Economy” Power of Social Media Labor Force Trends & Availability 6
Slide 6: What's Evolving
What’s Evolving == ECO Ni ot JOBS; eggvonk ro = Power of Social Media Labor Force ans & al Desire for Value — “Deal Economy”
Slide 7: The Cheesecake Factory - Global Footprint
The Cheesecake Factory - Global Footprint High quality, high profile locations worldwide Arabia (5) 8 International - Licensed Mexico: 4Middle East: 14China, Including Hong Kong: 3 y Mexico Toronto Company-Owned: 202 Monterre Guadalajara City (2) Beijing Shanghai Hong Kong Kuwait (3) Bahrain (1) Qat
Slide 8: The Cheesecake Factory - A Highly Differentiated Concept
The Cheesecake Factory - A Highly Differentiated Concept Service and 9 Ambiance, Hospitality Integrated Bakery Best-in-Class Operational Execution Breadth of Menu & Innovation
Slide 9: Breadth of Menu & Innovation are Key Competitive Advantages
Breadth of Menu & Innovation are Key Competitive Advantages 250 Menu Items - Made Fresh, From Scratch 10
Slide 10: Dining With Us Is an Experience
Dining With Us Is an Experience Ambiance, Service and Hospitality Drive Sales 11
Slide 11: Integrated Bakery – The "Cheesecake" Magic
Integrated Bakery – The “Cheesecake” Magic • Produces over 70 cheesecakes and other baked desserts Enables creativity, quality control Industry-Leading Dessert Sales 16% • and supply chain efficiencies 12
Slide 12: Cult Status & Strong Consumer Engagement
Cult Status & Strong Consumer Engagement A division of Vice Media LLC 5M+ fans 720K followers 370K followers Millions of Viewers 13
Slide 13: Broad Consumer Demographic and Appeal
Broad Consumer Demographic and Appeal #2 Top Large Chain With a Moderate Average Check Highest Unit Volumes ($ in millions) $33 $10.7 $28 $27 $23 $23 $23 $22 $19 $17 $5.5 $5.2 $4.8 $3.6 $3.4 $3.0 $2.9 Maggianos Yard House BJ's Texas Olive Outback LongHorn Bonefish Carrabbas Yard House Maggianos Bone
Slide 14: Leveraging This Differentiation in the Off-Premise Channel
Leveraging This Differentiation in the Off-Premise Channel To Go Sales (% of Total Revenue) 14% 15% 13% 11% 9% 7% 5% on per ant 2013 2017 2018 New Takeout Packaging 15 12% 9%~$1.5 milli restaur
Slide 15: Increasing Unaided Awareness to Drive Comparable Sales Growth
Increasing Unaided Awareness to Comparable Sales Growth Drive Attain Top of Mind Status 16
Slide 16: Capitalizing on the Power of the Brand
Capitalizing on the Power of the Brand Home® The Cheesecake Factory At 17
Slide 17: Best-in-Class Operational Execution Has Driven Our Success
Best-in-Class Operational Execution Has Driven Our Success Guest Experience Efficiencies Cost Management Retention Labor Productivity Forecasting 18
Slide 18: Supported by Our Tenured Teams
Supported by Our Tenured Teams Who Execute Our Complex Concept Everyday Average Tenure by Position 30 years Senior VP of Operations Regional Vice Presidents 21 years “What we found is that food and beverage innovation is Area Directors of Operations 19 years table stakes; you need to do it, but it’s
Slide 19: Being A Great Place to Work
Being A Great Place to Work · • . FORTUNE fer D•ve•s•ty 2018 USA ·· • - kr Mtllerm a , 2018 USA " • . for Women BEST 2018 USA COMPANIES TO WORK FOR. 2019 =========== FromFORTUNE.@2019 Fcxti¥>9Mede/P ed. FORTUNE 100 BeslC«<J)ani?s toWork Fais a tradeff'l<lkof • 2Q Foll!neMedia IP Lhilec1 and15 ussd l
Slide 20: We Raise the Bar
We Raise the Bar Drives Best-in-class training Culture of fun Industry-Leading Retention • • • • • Recognition Commitment to our communities, charitable giving and a sustainable future Industry-leading benefits 21 21
Slide 21: Looking Ahead - Diversified Growth Drivers
Looking Ahead - Diversified Growth Drivers 222
Slide 22: The Cheesecake Factory – Returns-Focused Opportunity for Domestic & Canadian Growth
The Cheesecake Factory – Returns-Focused Opportunity for 300 Domestic & Growth 8 - 10 Canadian Locations Over Time * Illustrative example of target returns for new restaurant openings. 23 Philadelphia Average Unit Economics* ($ millions) Sales $10.7 ~18% $8+ 20% - 25% EBITDA % Cash Capex Investment
Slide 23: The Cheesecake Factory – Expanding International Licensed Presence
The Cheesecake Factory – Expanding International Licensed Presence • Continued expansion within current geographies Potential for additional geographies with current licensees Opportunity to add licensees and territories • • Shanghai 24 $0 Capital Expenditure +1¢ Per Restaurant in EPS, on Average
Slide 24: Diversifying Our Portfolio For Growth
Diversifying Our Portfolio Across Upscale Casual, Experiential For Growth Culinary forward. First class hospitality. Concepts like no other. 25
Slide 25: North Italia – Significant Accretive Growth Opportunity
North Italia – Significant Accretive Growth Opportunity Potential for 200 Domestic Locations Over Time * Illustrative example of target returns for new restaurant openings. 26 Average Unit Economics* ($ millions) Sales ~$7 ~18% - 20% $3 - $3.5 35%+ EBITDA % Cash Capex Investment Cash-on-Cash Return
Slide 26: The Future CAKE
The Future CAKE Multi-concept with segment, price point, occasion, real estate and labor model diversification • • Leveraging brand power, operational excellence, scale, supply estate development expertise chain and real Anticipated Unit Growth Roadmap Near-Term Longer-Term 27 Target Size (sq. ft.)
Slide 27: Levers to Rebuild Margins
Levers to Rebuild Margins Leverage Bakery Technology & Projected Sales Growth Maintain flat restaurant margins International & CPG Flow Through Portfolio Management G&A Leverage Efficiencies, Pricing, Cost Management Labor & Other Inflationary Pressures +20 bps +30 bps + 30 bps +50 bps 28 Five Pilla
Slide 28: Balanced Capital Allocation Strategy to Create Value for Shareholders
Balanced Capital Allocation Strategy to Create Value for Shareholders Dividend Growth & Maintenance Capex ~$275 million Operating Cash Flow (E) Share Repurchase Program 29
Slide 29: Long-Term Financial Objective: Total Return to Shareholders
All Supports Our Long-Term Financial Objective 13% - 14% Total Return to Shareholders, on Average (EPS + Dividend) Revenue Growth ~6% - 7% Operating Margin Expansion ~25 bps Share Repurchases ~3% Dividend ~2% - 3% 30 Total Return to Shareholders (E)
Slide 30: CAKE 5-Year Plan
CAKE 5-Year Plan 31 Top-Line Growth Drivers Comparable Sales Growth ~1% - 2% ~5% Unit Growth Total Expected Top-Line Growth 6% - 7% 2023E Financial Targets Revenues ~$3 billion 6%+ $4.50 15% Net Income Margin EPS ROIC
Slide 31: Track Record of Consistent Financial Performance
Track Record of Consistent Financial Performance factory -------------
Slide 32: Continuing to Outperform the Industry
Continuing to Outperform the Industry Comparable Sales - Historical 2-year Stack 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 4.2% 4.1% 4.0% 3.8% 3.4% 3.3% 2.6% 2.0% 1.0% 1.0% 0.9% 0.8% 0.5% 0.4% (0.4)% (0.9)% (1.6)% (2.2)% Knapp-Track Index 33
Slide 33: Leveraged Sales and Managed Costs Support Adjusted Earnings Per Share
Leveraged Sales and Managed Costs Profitability to Support Adjusted Earnings Per Share* $2.83 $2.43 $1.88 2010 2011 2012 2013 2014 2015 2016 2017 2018 *Please see Appendix for GAAP to non-GAAP reconciliations. 34 $2.37 $2.60 $2.10$1.97 $1.64 $1.42
Slide 34: Our Restaurants Generate Significant Cash Flow
Our Restaurants Generate Significant Cash Flow Free Cash Flow and Strong Balance Sheet Provide Significant Financial ($ millions) Flexibility $163 $158 $128 $120 $112 $107 2010 2011 2012 2013 2014 2015 2016 2017 2018 Free cash flow defined as cash flow from operations less capital expenditures/inves
Slide 35: Effective Capital Allocation Supports Our Financial Objectives
Effective Capital Allocation Supports Our Financial Objectives $1+ Billion in Share Repurchases Reducing WASO 3% Per Year Committed to Supporting ($ millions) the Dividend 60,446 46,215 $13 2010 2011 2012 2013 2014 2015 2016 Dividend 2017 WASO 2018 Capex / Investment Share Repurchases 36 $42 $27 $50
Slide 36: Disciplined, Returns-Focused Growth Has Paid Off
Disciplined, Returns-Focused Growth Has Paid Off Return on Invested Capital (ROIC) 17% 14% 13% 2010 2011 2012 2013 2014 2015 2016 2017 2018 ROIC = NOPAT / Average invested capital NOPAT = Income from operations excluding non-recurring expenses (-) income tax provision Invested Capital = Total assets
Slide 37: A Compelling Investment Opportunity
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Diversified growth drivers Sustained track record of consistent financial performance • • • • Robust cash flow to support growth and maximize shareholder value 38
Slide 38: A Compelling Investment Opportunity
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Diversified growth drivers Sustained track record of consistent financial performance Robust cash flow to support growth and maximize shareholder value Q@esecakeFactory. 38
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations In addition to the results provided in accordance with the Generally Accepted Accounting Principles (“GAAP”) in this presentation, the Company is providing non-GAAP measurements which present diluted net income per share excluding the impact of certain items and free cash fl
Slide 40: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in thousands, except per share data) Fiscal Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 Net Income (GAAP) After-tax impact from: - Impairment of assets and lease terminations (1) - Part
Slide 41: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in millions) Fiscal Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cash flow from operations (1) Capital expenditures / investments Free cash flow $ 170 42 $ 197 77 $ 198 86 $ 213 106 $ 24
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in millions) Fiscal Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Operating income Impairment Less: Estimated income tax expense (1) Net operating profit after taxes (NOPAT) (2) Tota
Slide 43: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ in millions) Fiscal Year 2009 2010 2011 212-2013 201401208 2017 2018 Operating income S 737 § 1282 $ 185 $ 187 $ 1610 $ 1447 $ 1652 $ 210 S$ 1628 S$ 1189 Impairment 265 - 15 95 06) 07 60 o4 1
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