The Cheesecake Factory, Inc. (NYSE:CAKE) is expected to release the results of the first quarter of 2023 on May 10. The company’s earnings for the prior quarter were exactly the same as the consensus estimate of 56 cents.

How are Estimates Determined and Used?

The Consensus Estimate for first-quarter earnings per share (EPS) has been set at 59 cents, which indicates an increase of 25.5% from the 47 cents achieved in the same quarter of the previous year.

The majority of analysts agree that total sales will come in at close to $869.5 million, which would represent a 9.5% increase over the previous year’s same-quarter total.

Let’s talk about the elements that we think will be reflected in the upcoming quarter that are going to be reported.

Key Points to Watch

The performance of Cheesecake Factory during its fiscal first quarter is likely to have benefited from good off-premise sales, enhancement of marketing techniques, FRC-related distinctive concepts, and unit-expansion activities. These factors are all likely to have contributed to the company’s success. During the earnings call for the preceding quarter, the firm indicated that off-premise sales contributed around 23% to the total amount of revenue that the company generated through its restaurants. According to the company’s statement, off-premise sales continue to be higher than they were before the outbreak. It is likely that the momentum was carried over into the first quarter of the fiscal year thanks to an increased emphasis on targeted off-premise marketing, which was supported by an increase in client count. The company forecasts that its revenue for the first quarter would fall somewhere in the region of $850 million to $880 million.

It is anticipated that the company’s top line for the first fiscal quarter would show an increase in comparable sales. On the results call for the preceding quarter, the business said that comparable sales had climbed by around 9.5% year over year and 17% from the levels recorded in the fiscal 2019 year. This growth was based on data collected through February 21. The momentum is expected to have carried over into the first quarter of the fiscal year due to the steady increase in menu price and the emphasis placed on the roll-out of new menu items.

It is possible that operational difficulties occurred during the first quarter of the fiscal year due to issues with the supply chain and delays in the approval of permits. It is possible that the margin in the first quarter of the fiscal year was impacted negatively by inflationary pressure relating to labor and commodities. The organization forecasts that the annual rate of inflation for commodities will be in the range of 10–12% for the first quarter of fiscal year 2023. It is anticipated that the labor inflation rate for the first quarter of the fiscal year would be 6%. According to our forecast, the cost of sales and labor expenses are expected to increase year over year by 11.1% and 5.8%, respectively, to a total of $209.4 million and $312.9 million in the quarter that will be reported.

Featured Image: Pexels @ Karolina Grabowska

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