The Cheesecake Factory Inc. (NYSE:CAKE) reported results for the first quarter of fiscal 2023. Profitability exceeded expectations, but revenues fell short. Year over year, both the top and bottom lines increased. Despite ongoing inflation, volatility, and a complex operating environment, incremental pricing and cost-saving initiatives led to the gain.

“We were pleased with our first quarter performance, highlighted by comparable sales growth across our portfolio of concepts,” said David Overton, chairman and CEO of Cheesecake Factory. “We delivered a solid start to the year with revenue finishing in-line with our expectations and adjusted net income margin at the high end of our guidance range.”

Revenue and Earnings Discussion

The company outperformed the Consensus Estimate of 59 cents for the quarter under review, reporting adjusted earnings per share (EPS) of 61 cents. The reported amount indicated an increase of 29.8% from the previous year.

$866.1 million in total revenues fell 0.3% short of the Consensus Estimate. However, on a yearly basis, the top line grew by 9.1%.

Comparing the reported quarter to the prior-year quarter, comps at Cheesecake Factory locations climbed 5.7% year over year in the reported quarter. Comps increased 14.9% from the level in 2019.

Detailed Costs

The cost of food and beverages as a percentage of sales grew by 10 basis points (bps) from the prior year to 23.8% in the first quarter of the current fiscal year. Amounting 36% of total revenues, labor costs were down 130 basis points from the same quarter last year. Other operating expenses as a proportion of total revenues were 26.7%, an increase of 50 basis points over the same quarter last year.

6.2% of revenues were made up of general and administrative costs, which did not change from the previous year. Pre-opening costs made up 0.3% of revenues in the first quarter of the fiscal year, an increase of 10 basis points from the previous year.

Account Statement

As of April 4, Cheesecake Factory had $116.2 million in cash and cash equivalents, down from $114.8 million the previous quarter. In comparison to the prior quarter, long-term debt (net of issuance expenses) increased to $468.5 million from $468 million. The company had $355 million in total available liquidity as of April 4.

A 27-cent per share quarterly cash dividend was declared by management. To shareholders with records as of May 24, the dividend will be paid on June 6th. Additionally, CAKE repurchased 341,500 shares for $12.4 million in the first quarter of the fiscal year.

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