The Cheesecake Factory Incorporated · NASDAQ:CAKE
The Cheesecake Factory — Cheesecake Factory — Investor Presentation (March 2019)
42 slides from The Cheesecake Factory's investor presentation, Mar 5, 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 (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934,
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 * AMBIGU ie i oS ; ECO Ears Power of Social Media Labor Force Trends & Availability 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: 15China, Including Hong Kong: 3 ey Mexico (2) Toronto Company-Owned: 201 Monterr Guadalajara City Beijing Shanghai Hong Kong Lebanon (1)Kuwait (3) Bahr
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 690K 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% lion aurant 2013 2017 2018 New Takeout Packaging 15 12% 9%~$1.5 mil per rest
Slide 15: Increasing Unaided Awareness to Drive Comparable Sales Growth
Increasing Unaided Awareness to Comparable Sales Growth Drive Attain Top of Mind Status 16
Slide 16: Capitalizing on the Power of the Brand
Capitalizing on the Power of the Brand Home® The Cheesecake Factory At 17
Slide 17: Best-in-Class Operational Execution Has Driven Our Success
Best-in-Class Operational Execution Has Driven Our Success Guest Experience Efficiencies Cost Management Retention Labor Productivity Forecasting 18
Slide 18: Being A Great Place to Work
Being A Great Place to Work • - FORTUNE for 01vers1ty 2018 USA • • - 2018 USA - BEST USA 2018 COMPANIES TO WORK FOR. OYERS ========== 201g =::::::::::::::: From FORTUNE. ©2019 Fortune Media IP Limbed. FORTUNE 100 Best Companies to Work For is a tredemark of Fortune Media IP Limbed and is used under
Slide 19: We Raise the Bar
We Raise the Bar Drives Best-in-class training Culture of fun Industry-Leading Retention • • • • • Recognition Commitment to our communities, charitable giving and a sustainable future Industry-leading benefits 21 21
Slide 20: Looking Ahead - Diversified Growth Drivers
Looking Ahead-Diversified Growth Drivers 222
Slide 21: The Cheesecake Factory – Returns-Focused Opportunity for Domestic & Canadian Growth
The Cheesecake Factory – Returns-Focused Opportunity for 300 Domestic & Growth 8 - 10 Canadian Locations Over Time * Illustrative example of target returns for new restaurant openings. 23 Philadelphia Average Unit Economics* ($ millions) Sales $10.7 ~18% $8+ 20% - 25% EBITDA % Cash Capex Investment
Slide 22: 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 $0 Capital Expenditure +1¢ Per Restaurant in EPS, on Average
Slide 23: Diversifying Our Portfolio For Growth
Diversifying Our Portfolio Across Upscale Casual, Experiential For Growth Culinary forward. First class hospitality. Concepts like no other. 25
Slide 24: North Italia – Significant Accretive Growth Opportunity
North Italia – Significant Accretive Growth Opportunity Potential for 200 Domestic Locations Over Time * Illustrative example of target returns for new restaurant openings. 26 Average Unit Economics* ($ millions) Sales ~$7 ~18% - 20% $3 - $3.5 35%+ EBITDA % Cash Capex Investment Cash-on-Cash Return
Slide 25: 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 26: 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 27: 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 28: All Supports Our Long-Term Financial Objective
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 29: 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 30: Track Record of Consistent Financial Performance
Track Record of Consistent Financial Performance cakefictcry -----------
Slide 31: Continuing to Outperform the Industry
Continuing to Outperform the Industry Comparable Sales - Historical 2-year Stack 2011 4.0% 2012 4.2% 2013 2014 2015 4.1% 2016 2017 2018 3.8% 3.3% 2.6% 2.0% 1.0% 0.9% 0.8% 0.5% 0.4% (0.4)% (0.9)% (1.6)% (2.2)% Knapp-Track Index 33
Slide 32: Leveraged Sales and Managed Costs to 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 $1.42
Slide 33: Our Restaurants Generate Significant Cash Flow
Our Restaurants Generate Significant Cash Flow Free Cash Flow and Strong Balance Sheet Provide Significant Financial ($ 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 34: 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 $50
Slide 35: Disciplined, Returns-Focused Growth Has Paid Off
Disciplined, Returns-Focused Growth Has Paid Off Return on Invested Capital (ROIC) 17% 14% 13% 2010 2011 2012 2013 2014 2015 2016 2017 2018 ROIC = NOPAT / Average invested capital NOPAT = Income from operations excluding non-recurring expenses (-) income tax provision Invested Capital = Total assets
Slide 36: A Compelling Investment Opportunity
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Diversified growth drivers Sustained track record of consistent financial performance • • • • Robust cash flow to support growth and maximize shareholder value 38
Slide 37: A Compelling Investment Opportunity
A Compelling Investment Opportunity Highly differentiated concepts delivering a unique guest experience Diversified growth drivers Sustained track record of consistent financial performance Robust cash flow to support growth and maximize shareholder value @esecakeFactory. 38
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations In addition to the results provided in accordance with the Generally Accepted Accounting Principles (“GAAP”) in this presentation, the Company is providing non-GAAP measurements which present diluted net income per share excluding the impact of certain items and free cash fl
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation The Cheesecake Factory Incorporated Reconciliation of Non-GAAP Financial Measures ($ 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 40: 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 41: 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 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation Operating income Impairment Less: Estimated income tax expense") Net operating profit after taxes (NOPAT) Total assets Less: Current liabilities Less: Cash and cash equivalents Capital Invested Average invested capital Return on invested capital (ROIC) The Cheesecake Factory
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