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Item 2. Management’s Discussion and Analysis

2026-05-04 compared with 2025-11-03 · 99 added, 150 removed, 185 unchanged (57% of the section changed)

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These statements are 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, as amended (together with the Securities Act, the “Acts”).

This includes, without limitation, statements regarding corporate social responsibility (“CSR”) and in our CSR report, the effects of geopolitical and macroeconomic factors on our financial condition and our results of operations, financial guidance and projections, as well as expectations of our future financial condition, results of operations, sales, target growth rates, cash flows, quarterly dividends, share repurchases, capital structure and leverage, corporate strategy, potential price increases, plans, targets, goals, objectives, performance, growth potential, competitive position and business, and statements regarding our ability to:

This includes, without limitation, statements regarding corporate social responsibility (“CSR”) and in our CSR report, the effects of geopolitical and macroeconomic factors, including evolving government policies and global trade dynamics, on our financial condition and our results of operations, financial guidance and projections, as well as expectations of our future financial condition, results of operations, sales, target growth rates, cash flows, quarterly dividends, share repurchases, capital structure and leverage, corporate strategy, potential price increases, plans, targets, goals, objectives, performance, growth potential, competitive position and business, and statements regarding our ability to:

leverage our competitive strengths, including developing and investing in new restaurant concepts and expanding The Cheesecake Factory ® brand to other retail opportunities;

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the ability to achieve projected financial results;

the resolution of uncertain tax positions with the Internal Revenue Service and the impact of tax reform legislation, including the provisions of H.R.

1 enacted on July 4, 2025;

the resolution of uncertain tax positions with the Internal Revenue Service and the impact of tax reform legislation;

changes in laws impacting our business;

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Our commodity and wage inflationary environment began returning to more historical levels in fiscal 2024.

The impact of ongoing geopolitical and macroeconomic events could lead to further wage inflation, product and services cost inflation, disruptions in the supply chain, staffing challenges, shifts in consumer behavior, and delays in new restaurant openings.

The impact of ongoing geopolitical and macroeconomic events, including evolving government policies and global trade and tariff dynamics, could lead to further wage inflation, product and services cost inflation, disruptions in the supply chain, staffing challenges, shifts in consumer behavior and delays in new restaurant openings.

Adverse weather conditions and natural disasters may further exacerbate a number of these factors.

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Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers.

Our strategy is driven by our commitment to customer satisfaction and is focused primarily on menu innovation, service and operational execution to differentiate ourselves from other restaurant concepts and drive competitively strong performance that is sustainable.

Financially, we are focused on prudently managing expenses at our restaurants, bakery facilities and corporate support center, and leveraging our size to make the best use of our purchasing power.

Investing in new Company-owned restaurant development is our top long-term capital allocation priority, with a focus on opening our concepts in premier locations within both new and existing markets.

Our strategy is driven by our commitment to deliver exceptional food and hospitality, and is centered primarily on menu innovation, service and operational execution to differentiate our concepts and drive competitively strong performance that is sustainable over the long-term.

Financially, we are focused on prudently managing expenses at our restaurants, bakery facilities and corporate support center, while leveraging our scale, purchasing power and operational discipline to support financial performance.

Our top long-term capital allocation priority is to develop new Company-owned restaurants, with a focus on opening our concepts in premier locations within new and existing markets.

We plan to continue expanding The Cheesecake Factory, North Italia and Flower Child concepts.

In addition, our FRC subsidiary serves as an incubator, innovating new food, dining and hospitality experiences to create fresh, exciting concepts.

In addition, our FRC subsidiary serves as an incubator, innovating new food, dining and hospitality experiences to create differentiated, high-quality concepts.

Our revenue growth is primarily driven by new restaurant openings and increases in comparable restaurant sales.

For The Cheesecake Factory Restaurants, our strategy is to increase comparable restaurant sales by growing average check and maintaining customer traffic through (1) continuing to offer innovative, high quality menu items that offer customers a wide range of options in terms of flavor, price and value, (2) focusing on service and hospitality with the goal of delivering an exceptional dining experience and (3) continuing to provide our customers with convenient options for off-premise dining.

We are continuing our efforts on a number of initiatives, including menu innovation, increasing customer throughput in our restaurants, leveraging our gift card program, partnering with a third party to provide delivery services for our restaurants, increasing customer awareness of our online ordering capabilities and improving the pick-up experience, augmenting our marketing programs, including our Cheesecake Rewards ® program, enhancing our training programs and leveraging insights from our customer satisfaction measurement platform.

For The Cheesecake Factory concept, our strategy is to increase comparable restaurant sales by growing average check while maintaining customer traffic.

We strive to accomplish this by (1) continuing to offer innovative, high quality menu items that offer customers a wide range of options in terms of flavor, price and value, (2) focusing on service and hospitality with the goal of delivering an exceptional dining experience and (3) continuing to provide our customers with convenient options for off-premise dining.

We continue to support these efforts through a number of initiatives, including menu innovation, increasing customer throughput in our restaurants, leveraging our gift card program, partnering with a third party to provide delivery services for our restaurants, increasing customer awareness of our online ordering capabilities and improving the pick-up experience, augmenting our marketing programs, including our Cheesecake Rewards ® program, enhancing our training programs and leveraging insights from our customer satisfaction measurement platform.

Average check variations are driven by menu price increases and/or changes in menu mix.

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Prior to fiscal 2022, we targeted menu price increases of approximately 2% to 3% annually, utilizing a market-based strategy to help mitigate cost pressure in higher-wage geographies.

In fiscal years 2023 and 2024, we implemented price increases above our historical levels, to help offset significant inflationary cost pressures.

In the last three fiscal years, we implemented price increases above our historical levels, to help offset significant inflationary cost pressures.

We will continue to take the cost and inflationary environment into consideration when implementing future pricing decisions.

In addition, on a regular basis, we carefully consider opportunities to adjust our menu offerings or ingredients to help manage product availability and cost.

In addition, on a regular basis, we carefully consider opportunities to adjust our menu offerings or ingredients to help manage product quality, availability and cost.

Margins are subject to fluctuations in commodity costs, labor, restaurant-level occupancy expenses, general and administrative (“G&A”) expenses and preopening expenses.

Our objective is to drive margin expansion by leveraging incremental sales to increase restaurant-level margins at The Cheesecake Factory concept, leveraging our bakery operations, international and consumer packaged goods royalty revenue streams and G&A expense over time and optimizing our restaurant portfolio.

We plan to employ a balanced capital allocation strategy comprised of investing in new restaurants that are expected to meet our targeted returns, managing our aggregate debt levels and returning capital to shareholders through our dividend and share repurchase programs, the latter of which offsets dilution from our equity compensation program and supports our earnings per share growth.

Future decisions to pay or to increase or decrease dividends or to repurchase shares are at the discretion of the Board and will be dependent on a number of factors, including limitations pursuant to the terms and conditions of the Loan Agreement and applicable law.

Our objective is to drive margin expansion over time by leveraging incremental sales to increase restaurant-level margins at The Cheesecake Factory concept, leveraging our bakery operations, international and consumer packaged goods royalty revenue streams and G&A expense, and optimizing our restaurant portfolio.

We plan to employ a balanced capital allocation strategy, comprised of investing in new restaurants that are expected to meet our targeted returns, managing our aggregate debt levels and returning capital to shareholders through our dividend and share repurchase programs.

Future decisions to pay, increase or decrease dividends or to repurchase shares are at the discretion of the Board and will be dependent on a number of factors, including limitations pursuant to the terms and conditions of our Loan Agreement and applicable law.

Results of Operations

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The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any other interim period or for the full fiscal year.

September 30, 2025

October 1, 2024

September 30, 2025

October 1, 2024

March 31, 2026

April 1, 2025

Costs and expenses:

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Depreciation and amortization expenses

Impairment of assets and lease termination (income)/expenses

Impairment of assets and lease termination expenses

Acquisition-related contingent consideration, compensation and amortization expenses

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Income tax provision

Thirteen Weeks Ended September 30, 2025 Compared to Thirteen Weeks Ended October 1, 2024

Revenues increased 4.8% to $907.2 million for the fiscal quarter ended September 30, 2025 compared to $865.5 million for the comparable prior year period, primarily due to additional revenue related to new restaurant openings and an increase in comparable restaurant sales.

The Cheesecake Factory Restaurants sales increased 0.6% to $651.4 million for the third quarter of fiscal 2025, compared to $647.8 million for the third quarter of fiscal 2024.

Average sales per restaurant operating week increased 0.4% to $231,971 in the third quarter of fiscal 2025 from $231,011 in the third quarter of fiscal 2024.

Total operating weeks at The Cheesecake Factory Restaurants increased 0.1% to 2,808 in the third quarter of fiscal 2025 compared to 2,804 in the prior year.

The Cheesecake Factory comparable sales increased by 0.3%, or $2.1 million, from the third quarter of fiscal 2024 primarily driven by an increase in average check of 2.8% (based on an increase of 4.5% in menu pricing, partially offset by a 1.7% negative change from menu mix), partially offset by decreased customer traffic of 2.5%.

We implemented menu price increases of approximately 2.4% and 1.5% in the first and third quarters of fiscal 2025, respectively.

Sales through the off-premise channel comprised approximately 21% of our restaurant sales during both the third quarter of fiscal 2025 and fiscal 2024.

We account for each off-premise order as one customer for traffic measurement purposes.

Therefore, average check is generally higher for off-premise orders as most are for more than one customer.

North Italia sales increased 16.1% to $83.5 million for the third quarter of fiscal 2025, compared to $71.9 million for the third quarter of fiscal 2024.

Average sales per restaurant operating week decreased 1.5% to $139,601 in the third quarter of fiscal 2025 from $141,771 in the third quarter of fiscal 2024.

Total operating weeks at North Italia increased 17.9% to 598 in the third quarter of fiscal 2025 compared to 507 in the prior year.

North Italia comparable sales decreased approximately 3% from the third quarter of fiscal 2024.

The decrease from fiscal 2024 was primarily driven by decreased customer traffic of 6%, partially offset by an increase in average check of 3% (based on an increase of 4% in menu pricing, partially offset by a 1% negative impact from mix).

implemented menu price increases of approximately 2.0% and 2.3% in the second quarter of fiscal 2025 and the fourth quarter of fiscal 2024, respectively.

We are in the process of implementing approximately a 1.5% price increase in the fourth quarter of fiscal 2025.

Flower Child sales increased 31.4% to $48.1 million for the third quarter of fiscal 2025, compared to $36.6 million for the third quarter of fiscal 2024.

Flower Child sales per restaurant operating week increased 3.4% to $88,159 in the third quarter of fiscal 2025 from $85,225 in the third quarter of fiscal 2024.

Total operating weeks at Flower Child increased 27.0% to 546 in the third quarter of fiscal 2025 compared to 430 in the prior year.

Flower Child comparable sales increased approximately 7% from the third quarter of fiscal 2024.

The increase from the third quarter of fiscal 2024 includes an increase of 3% in menu pricing.

Other FRC sales increased 16.5% to $78.0 million for the third quarter of fiscal 2025, compared to $67.0 million for the third quarter of fiscal 2024.

Other FRC average sales per restaurant operating week decreased 0.8% to $115,581 in the third quarter of fiscal 2025 from $116,493 in the third quarter of fiscal 2024.

Average sales per restaurant operating week were impacted by new restaurant openings, as well as the concept mix and a decrease in comparable sales.

Total operating weeks at Other FRC increased 17.4% to 675 in the third quarter of fiscal 2025 compared to 575 in the prior year.

Thirteen Weeks Ended March 31, 2026 Compared to Thirteen Weeks Ended April 1, 2025

Revenues increased 5.6% to $978.8 million for the fiscal quarter ended March 31, 2026 compared to $927.2 million for the comparable prior year period, primarily due to additional revenue related to new restaurant openings and an increase in comparable restaurant sales.

The Cheesecake Factory Restaurants sales increased 2.6% to $690.5 million for the first quarter of fiscal 2026, compared to $672.7 million for the first quarter of fiscal 2025.

Average sales per restaurant operating week increased 1.9% to $245,196 in the first quarter of fiscal 2026 from $240,692 in the first quarter of fiscal 2025.

Total operating weeks at The Cheesecake Factory Restaurants increased 0.8% to 2,816 in the first quarter of fiscal 2026 compared to 2,795 in the prior year.

The Cheesecake Factory comparable sales increased by 1.6%, or $10.3 million, from the first quarter of fiscal 2025.

The increase from first quarter fiscal 2025 was primarily driven by an increase in average check of 3.0% (based on an increase of 3.3% in menu pricing, partially offset by a 0.3% negative change from menu mix), partially offset by decreased customer traffic of 1.4%.

We implemented effective menu price increases of approximately 1.5% in both the first quarter of fiscal 2026 and the third quarter of fiscal 2025, respectively.

Sales through the off-premise channel comprised approximately 22% of our restaurant sales during both the first quarter of fiscal 2026 and fiscal 2025.

North Italia sales increased 7.3% to $89.5 million for the first quarter of fiscal 2026, compared to $83.4 million for the first quarter of fiscal 2025.

Average sales per restaurant operating week decreased 3.9% to $143,167 in the first quarter of fiscal 2026 from $148,947 in the first quarter of fiscal 2025.

Total operating weeks at North Italia increased 11.6% to 625 in the first quarter of fiscal 2026 compared to 560 in the prior year.

North Italia comparable sales decreased approximately 2% from the first quarter of fiscal 2025.

The decrease from fiscal 2025 was primarily driven by decreased customer traffic of 6%, partially offset by an increase in average check of 4% (based on an increase of 3% in menu pricing and a 1% positive impact from mix).

We implemented effective

menu price increases of approximately 2.0% and 1.5% in the second and fourth quarters of fiscal 2025, respectively.

We are in the process of implementing a 1.0% menu price increase in the second quarter of fiscal 2026.

Flower Child sales increased 21.1% to $52.6 million for the first quarter of fiscal 2026, compared to $43.5 million for the first quarter of fiscal 2025.

Flower Child sales per restaurant operating week increased 7.0% to $94,524 in the first quarter of fiscal 2026 from $88,335 in the first quarter of fiscal 2025.

Total operating weeks at Flower Child increased 13.2% to 557 in the first quarter of fiscal 2026 compared to 492 in the prior year.

Flower Child comparable sales increased approximately 10% from the first quarter of fiscal 2025.

The increase from the first quarter of fiscal 2025 includes an increase of 2% in menu pricing.

Other FRC sales increased 19.6% to $104.5 million for the first quarter of fiscal 2026, compared to $87.4 million for the first quarter of fiscal 2025.

Other FRC average sales per restaurant operating week increased 3.9% to $145,169 in the first quarter of fiscal 2026 from $139,655 in the first quarter of fiscal 2025.

Total operating weeks at Other FRC increased 15.0% to 720 in the first quarter of fiscal 2026 compared to 626 in the prior year.

Restaurants become eligible to enter the comparable sales base in their 19 th month of operation.

As of September 30, 2025, there were five The Cheesecake Factory Restaurants, eight North Italia restaurants and 11 Flower Child locations not yet in their respective comparable sales bases.

As of March 31, 2026, there were six The Cheesecake Factory Restaurants, 10 North Italia restaurants and 10 Flower Child locations not yet in their respective comparable sales bases.

International licensed locations and restaurants that are no longer in operation, including those which we have relocated, are excluded from comparable sales calculations.

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Food and beverage costs consist of raw materials and ingredients used in the food and beverage products sold in our restaurants and to our third-party bakery customers.

As a percentage of revenues cost of sales was 21.8% and 22.6% in the third quarters of fiscal 2025 and 2024, respectively, primarily due to favorable commodity inflation across most categories (0.5%).

As a percentage of revenues cost of sales were 21.7% and 21.8% in the first quarters of fiscal 2026 and 2025, respectively, primarily due to favorable commodity inflation particularly in lower dairy pricing (0.7%) partially offset by higher meat and seafood costs (0.6%).

Labor Expenses

As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery production labor, including associated fringe benefits, were 35.6% and 35.9% in the third quarters of fiscal 2025 and 2024, respectively.

This decrease was primarily due to menu price increases in excess of wage rate inflation and improved staffing levels and productivity (0.3%).

As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery production labor, including associated fringe benefits, were 35.5% and 35.7% in the first quarters of fiscal 2026 and 2025, respectively.

This decrease was primarily due to menu price increases in excess of wage rate inflation and productivity (0.4%), partially offset by higher group medical cost due to increased claim activity (0.3%).

Other Operating Costs and Expenses

Other operating costs and expenses consist of all other restaurant-level operating costs, the major components of which are occupancy expenses (rent, common area expenses, insurance, licenses, taxes and utilities), dining room and to-go supplies, repairs and maintenance, janitorial expenses, credit card processing fees, marketing including delivery commissions, and incentive compensation, as well as bakery production overhead.

As a percentage of revenues, other operating costs and expenses were 28.2% and 27.7% in the third quarter of fiscal 2025 and 2024, respectively.

This variance was primarily driven by higher facility - related costs (0.4%).

Impairment of Assets and Lease Termination (Income)/ Expenses

During the third quarter of fiscal 2025, we recorded impairment of assets and lease termination income of $0.1 million primarily related to a lease termination accrual for one Other FRC location.

During the third quarter of fiscal 2024, we recorded impairment of assets and lease terminations income of $3.5 million primarily related to lease termination income, net for two The Cheesecake Factory restaurants and our Social Monk location.

As a percentage of revenues, other operating costs and expenses were 27.0% and 26.6% in the first quarter of fiscal 2026 and 2025, respectively.

This variance was primarily driven by higher utility costs due to higher rates (0.2%) and higher bakery production overhead expense (0.2%).

G&A expenses consist of the restaurant management recruiting and training program, restaurant field supervision, corporate support and bakery administrative organizations, as well as gift card commissions to third - party distributors.

As a percentage of revenues, G&A expenses were 6.5% in both the first quarter of fiscal 2026 and 2025, primarily reflecting higher legal fees (0.2%), partially offset by lower stock-based compensation expense (0.1%).

Impairment of Assets and Lease Termination Expenses

During the first quarter of fiscal 2026, we recorded impairment of assets and lease termination expenses of $0.8 million primarily related to lease termination costs for two The Cheesecake Factory, one Grand Lux Cafe and one Other FRC location.

During the first quarter of fiscal 2025, we recorded impairment of assets and lease termination expenses of $0.4 million primarily related to lease termination costs for one Other FRC location.

Preopening Costs

Preopening costs were $6.6 million and $7.0 million in the third quarter of fiscal 2025 and 2024, respectively.

We opened two Other FRC locations in the third quarter of fiscal 2025 compared to one Flower Child and three Other FRC locations in the third quarter of fiscal 2024.

Preopening costs were $5.5 million and $8.1 million in the first quarter of fiscal 2026 and 2025, respectively.

We opened one North Italia, one Flower Child and one Other FRC location in the first quarter of fiscal 2026 compared to three North Italia, three Flower Child and two Other FRC locations in the first quarter of fiscal 2025.

Restaurant-level preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members.

Also included in preopening costs are expenses for maintaining a roster of trained managers for pending openings and the associated temporary housing and other costs necessary to relocate managers

in alignment with future restaurant opening and operating needs.

Preopening costs also include expenses for maintaining a roster of trained managers for pending opening and the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs.

Preopening costs can fluctuate significantly from period to period based on the number, mix and timing of restaurant openings and the specific preopening costs incurred for each restaurant.

Income Tax Provision

Our effective income tax rate was 10.1% and 5.8% for the third quarter of fiscal 2025 and 2024, respectively.

The increase was primarily due to leverage on higher annual forecasted income before taxes, predominantly related to employment credits (1.4%), non-deductible costs in fiscal 2025 associated with the repurchase of our 2026 Notes (1.6%), an increase in non-deductible executive compensation (1.5%) and a change to our reserve for uncertain tax positions (2.7%).

These factors were offset by higher employment credits in the third quarter of fiscal 2025 (3.0%).

Thirty-Nine Weeks Ended September 30, 2025 Compared to Thirty-Nine Weeks Ended October 1, 2024

Revenues increased 4.9% to $2,790.2 million for the first nine months ended September 1, 2025 compared to $2,660.7 million for the comparable prior year period, primarily due to additional revenue related to new restaurant openings and an increase in comparable restaurant sales.

The Cheesecake Factory Restaurants sales increased 0.8% to $2,007.4 million for the first nine months of fiscal 2025, compared to $1,992.2 million for the first nine months of fiscal 2024.

Average sales per restaurant operating week increased 1.1% to $239,314 in the first nine months of fiscal 2025 from $236,637 in the first nine months of fiscal 2024.

Total operating weeks at The Cheesecake Factory restaurants decreased 0.4% to 8,388 in the first nine months of fiscal 2025 compared to 8,419 in the prior year.

The Cheesecake Factory comparable sales increased by 0.9%, or $16.6 million, from the first nine months of fiscal 2024 primarily driven by an increase in average check of 2.5% (based on an increase of 4.5% in menu pricing, partially offset by a 2.0% negative change from menu mix), partially offset by decreased customer traffic of 1.6%.

Sales through the off-premise channel comprised approximately 21% of our restaurant sales during both the first nine months of fiscal 2025 and fiscal 2024.

North Italia sales increased 18.1% to $257.7 million for the first nine months of fiscal 2025, compared to $218.3 million for the first nine months of fiscal 2024.

Average sales per restaurant operating week increased 0.3% to $147,354 in the first nine months of fiscal 2025 from $146,881 in the first nine months of fiscal 2024.

Total operating weeks at North Italia increased 17.7% to 1,749 in the first nine months of fiscal 2025 compared to 1,486 in the prior year.

North Italia comparable sales decreased approximately 1% from the first nine months of fiscal 2024.

The decrease from fiscal 2024 was primarily driven by decreased customer traffic of 4%, partially offset by an increase in average check of 3% (based on an increase of 4% in menu pricing, partially offset by a 1% negative impact from mix).

Flower Child sales increased 30.9% to $139.8 million for the first nine months of fiscal 2025, compared to $106.8 million for the first nine months of fiscal 2024.

Flower Child sales per restaurant operating week increased 5.0% to $89,191 in the first nine months of fiscal 2025 from $84,929 in the first nine months of fiscal 2024.

Total operating weeks at Flower Child increased 24.6% to 1,567 in the first nine months of fiscal 2025 compared to 1,258 in the prior year.

Flower Child comparable sales increased approximately 5% from fiscal 2024.

The increase from fiscal 2024 includes an increase of 2% in menu pricing.

Other FRC sales increased 19.0% to $255.6 million for the first nine months of fiscal 2025, compared to $214.9 million for the first nine months of fiscal 2024.

Other FRC average sales per restaurant operating week increased 0.4% to $130,418 in the first nine months of fiscal 2025 from $129,897 in the first nine months of fiscal 2024.

Average sales per restaurant operating week were impacted by new restaurant openings, as well as the concept mix and a decrease in comparable sales.

Total operating weeks at Other FRC increased 18.5% to 1,960 in the first nine months of fiscal 2025 compared to 1,654 in the prior year.

Food and Beverage Costs

As a percentage of revenues cost of sales was 21.7% and 22.6% in the first nine months of fiscal 2025 and 2024, respectively, primarily due to favorable commodity inflation across most categories (0.6%).

Labor Expenses

As a percentage of revenues, labor expenses were 35.4% and 35.7% in the first nine months of fiscal 2025 and 2024, respectively.

This decrease was primarily due to menu price increases in excess of wage rate inflation and improved staffing levels and productivity (0.6%), partially offset by higher group medical costs due to larger claim activity (0.3%).

Other Operating Costs and Expenses

As a percentage of revenues, other operating costs and expenses were 27.2% and 26.9% in the first nine months of fiscal 2025 and 2024, respectively.

This variance was primarily driven by higher facility - related costs (0.3%).

Impairment of Assets and Lease Termination (Income)/Expenses

During the first nine months of fiscal 2025, we recorded impairment of assets and lease termination expenses of $0.5 million primarily related to lease termination costs for one The Cheesecake Factory and one Other FRC location.

During the first nine months of fiscal 2024, we recorded impairment of assets and lease terminations income of $1.6 million primarily related to lease termination income, net for two The Cheesecake Factory restaurants, one Grand Lux Cafe location, one Flower Child location and our Social Monk location.

Preopening Costs

Preopening costs were $23.8 million and $19.9 million in the first nine months of fiscal 2025 and 2024, respectively.

We opened two The Cheesecake Factory, four North Italia, six Flower Child and six Other FRC locations in the first nine months of fiscal 2025 compared to one The Cheesecake Factory, three North Italia, four Flower Child and six Other FRC locations in the first nine months of fiscal 2024.

Loss on Extinguishment of Debt

We recorded a $15.9 million loss on early debt extinguishment in the first quarter of fiscal 2025.

On February 28, 2025, we repurchased approximately $276.0 million aggregate principal amount of the 2026 Notes (as defined below) for aggregate consideration of $289.8 million, which included a premium of $13.8 million.

On February 28, 2025, we repurchased approximately $276.0 million aggregate principal amount of the 2026 Notes for aggregate consideration of $289.8 million, which included a premium of $13.8 million.

The repurchase was accounted for as a debt extinguishment.

In addition, we recorded $2.1 million of unamortized issuance costs.

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our debt.)

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our long-term debt.)

Income Tax Provision

Our effective income tax rate was 9.5% and 8.0% for the first nine months of fiscal 2025 and 2024, respectively.

The increase was primarily due to leverage on higher annual forecasted income before taxes, predominantly related to employment credits (1.4%), non-deductible costs in fiscal 2025 associated with the repurchase of our 2026 Notes (1.5%), a change to our reserve for uncertain tax positions (1.1%) and an increase in non-deductible executive compensation (0.6%).

These factors were partially offset by a tax windfall in the first nine months of fiscal 2025 as compared to a tax shortfall in the comparable prior period related to equity compensation (2.5%) and higher employment credits in the first nine months of fiscal 2025 (1.1%).

Our effective income tax rate was 7.1% and 4.5% for the first quarter of fiscal 2026 and 2025, respectively.

The increase was primarily due to leverage on higher annual forecasted income before taxes, predominantly related to employment credits and tax windfall related to equity compensation (3.3%) and an increase in non-deductible executive compensation (1.4%), partially offset by a higher tax windfall related to equity compensation in the first quarter of fiscal 2026 (2.3%).

Non-GAAP Measures

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Following is a reconciliation from net income and diluted net income per share to the corresponding adjusted measures (in thousands, except per share data):

September 30, 2025

October 1, 2024

September 30, 2025

October 1, 2024

Impairment of assets and lease termination (income)/expenses

March 31, 2026

April 1, 2025

Impairment of assets and lease termination expenses

Acquisition-related contingent consideration, compensation and amortization expenses

Loss on extinguishment of debt (1)

Uncertain tax position related to tenant improvement allowance (2)

Tax effect of adjustments (2)

Adjusted net income

Diluted net income per share

Impairment of assets and lease termination (income)/expenses

Diluted net income per common share

Impairment of assets and lease termination expenses

Acquisition-related contingent consideration, compensation and amortization expenses

Loss on extinguishment of debt (1)

Uncertain tax position related to tenant improvement allowance (2)

Tax effect of adjustments (2)

Adjusted diluted net income per share (4)

Adjusted diluted net income per common share (3)

(1) See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our debt.

(2) Represents an update to the reserve for an uncertain tax position related to tenant improvement allowances.

Uncertain tax positions taken in a tax return are recognized in the financial statements when it is more likely than not that the position will be sustained upon examination by tax authorities based on technical merits, taking into account available administrative remedies and litigation.

Based on the federal statutory rate and an estimated blended state tax rate, the tax effect on all adjustments assumes a 26% tax rate.

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Following is a reconciliation from net income to EBITDA and adjusted EBITDA measures (in thousands):

September 30, 2025

October 1, 2024

September 30, 2025

October 1, 2024

March 31, 2026

April 1, 2025

Depreciation and amortization expenses

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Income tax provision

Impairment of assets and lease termination (income)/expenses

Impairment of assets and lease termination expenses

Acquisition-related contingent consideration, compensation and amortization expenses

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However, we believe our operating lease arrangements continue to provide appropriate leverage for our capital structure in a financially efficient manner.

During the first nine months of fiscal 2025, our cash and cash equivalents increased by $105.8 million to $190.0 million.

During the first quarter of fiscal 2026, our cash and cash equivalents increased by $19.4 million to $235.1 million.

The following table presents, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities (in millions):

September 30, 2025

October 1, 2024

March 31, 2026

April 1, 2025

Cash provided by operating activities

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Cash Provided by Operating Activities

Cash flows from operations increased by $52.1 million from the first nine months of fiscal 2024 primarily due to net income after excluding the non-cash activity, higher accrued expenses, timing of operating lease commencements, inventory movement and income tax payments, partially offset by lower payable balances and higher accounts and other receivable balance.

Cash flows from operations increased by $17.8 million from the first quarter of fiscal 2025 primarily due to net income after excluding the non-cash activity, timing of operating lease commencements, higher payables, inventory movement, lower accounts and other receivable balances, partially offset by higher prepaid expenses related to the timing of April 2026 rent payments.

Typically, our requirement for working capital has not been significant since our restaurant customers pay for their food and beverage purchases in cash or cash equivalents at the time of sale, and we are able to sell many of our restaurant inventory items before payment is due to the suppliers of such items.

Property and Equipment

Capital expenditures for new restaurants, including locations under development, were $62.7 million and $76.1 million for the first nine months of fiscal 2025 and 2024, respectively.

Capital expenditures also included $48.6 million and $38.1 million for our existing restaurants and $9.8 million and $6.3 million for bakery and corporate capacity and infrastructure investments, in the first nine months of fiscal 2025 and 2024, respectively.

We opened 18 restaurants in the first nine months of fiscal 2025 comprised of two The Cheesecake Factory, four North Italia, six Flower Child and six Other FRC locations compared to 14 restaurants in the first nine months of fiscal 2024 comprised of one The Cheesecake Factory, three North Italia, four Flower Child and six Other FRC locations.

Capital expenditures for new restaurants, including locations under development, were $24.6 million and $22.9 million for the first quarter of fiscal 2026 and 2025, respectively.

Capital expenditures also included $16.4 million and $17.1 million for our existing restaurants and $2.4 million and $2.8 million for bakery and corporate capacity and infrastructure investments, in the first quarter fiscal 2026 and 2025, respectively.

We opened three restaurants in the first quarter of fiscal 2026 comprised of one North Italia, one Flower Child and one Other FRC location compared to eight restaurants in the first quarter of fiscal 2025 comprised of three North Italia, three Flower Child and two Other FRC locations.

We expect to open as many as 26 new restaurants in fiscal 2026 across our portfolio of concepts.

We anticipate approximately $190 million to $200 million in capital expenditures to support this level of unit development, as well as required maintenance on our restaurants.

We anticipate approximately $210 million in capital expenditures to support this level of unit development, as well as required maintenance on our restaurants.

This estimate includes new restaurant construction expenses, some of which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows.

Credit Facility

On October 6, 2022, we entered into a Fourth Amended and Restated Loan Agreement (the “Loan Agreement” and the revolving credit facility provided thereunder, the “Revolver Facility”).

The Loan Agreement amends and restates in its entirety our prior credit agreement.

The Revolver Facility, which terminates on October 6, 2027, provides us with revolving loan commitments that total $400 million, of which $50 million may be used for issuances of letters of credit.

The Revolver Facility contains a commitment increase feature that, subject to certain conditions precedent, could provide for an additional $200 million in revolving loan commitments.

Revolving Credit Facility

On March 26, 2026, we entered into a Fifth Amended and Restated Loan Agreement (the “Loan Agreement” and the revolving credit facility provided thereunder, the “Revolver Facility”).

The Revolver Facility, which terminates on March 26, 2031, provides us with revolving loan commitments that total $400 million, of which $85 million may be used for issuances of letters of credit and $10 million for swingline loans.

The Revolver Facility contains (i) a commitment increase feature that, subject to certain conditions precedent, could provide for an additional $200 million in revolving loan commitments and (ii) a feature that permits the letter of credit issuers thereunder to increase their letter of credit sublimits by $25 million in the aggregate.

Our obligations under the Revolver Facility are unsecured.

Certain of our material subsidiaries have guaranteed our obligations under the Revolver Facility.

In the first quarter of fiscal 2025, we repaid $110.0 million on the Revolver Facility.

As of September 30, 2025, we had net availability for borrowings of $366.5 million, based on no outstanding debt balance and $33.5 million in standby letters of credit under the Revolver Facility.

As of March 31, 2026, we had net availability for borrowings of $366.5 million, based on no outstanding debt balance and $33.5 million in standby letters of credit under the Revolver Facility.

Under the Revolver Facility, we are subject to financial covenants, as well as to customary events of default that, if triggered, could result in acceleration of the maturity of the Revolver Facility.

Subject to certain exceptions, the Revolver Facility also limits distributions with respect to our equity interests, such as cash dividends and share repurchases, based on a defined ratio, and sets forth negative covenants that restrict indebtedness, liens, investments, sales of assets, fundamental changes and other matters.

Subject to certain exceptions, the Loan Agreement contains a number of covenants and restrictions that, among other things, restrict the Company’s and its subsidiaries’ ability to incur additional debt, pay dividends and make distributions, make certain investments and acquisitions, create liens, enter into agreements with affiliates, sell material assets, and merge or consolidate.

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our debt.)

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The net proceeds from the sale of the 2030 Notes were approximately $558.5 million after deducting issuance costs of $16.5 million.

As of September 30, 2025, the 2030 Notes had a balance of $560.4 million, net of unamortized issuance costs of $14.6 million.

As of September 30, 2025, the conversion rate for the Notes was 14.1377 shares of common stock per $1,000 principal amount of the 2030 Notes, which represents a conversion price of approximately $70.73 per share of common stock.

As of March 31, 2026, the 2030 Notes had a balance of $562.1 million, net of unamortized issuance costs of $12.9 million.

As of March 31, 2026, the conversion rate for the 2030 Notes was 14.1444 shares of common stock per $1,000 principal amount of the 2030 Notes, which represents a conversion price of approximately $70.70 per share of common stock.

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our debt.) In connection with the cash dividend that was declared by our Board on April 23, 2026, we will, on May 13, 2026, adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the 2030 Notes in accordance with the terms.

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our debt.)

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On February 28, 2025, we used part of the net proceeds from the issuance of the 2030 Notes to repurchase approximately $276.0 million aggregate principal amount of the 2026 Notes in a privately-negotiated transaction for aggregate consideration of $289.8 million, which included a premium of $13.8 million.

As of September 30, 2025, the 2026 Notes had a gross principal balance of $69.0 million and a balance of $68.7 million, net of unamortized issuance costs of $0.3 million.

As of September 30, 2025, the conversion rate for the 2026 Notes was 14.0812 shares of common stock per $1,000 principal amount of the 2026 Notes, which represents a conversion price of approximately $71.02 per share of common stock.

In connection with the cash dividend that was declared by our Board on October 22, 2025, on November 11, 2025 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the 2026 Notes in accordance with the terms.

As of March 31, 2026, the 2026 Notes had a gross principal balance of $69.0 million and a balance of $68.9 million, net of unamortized issuance costs of $0.1 million.

As of March 31, 2026, the conversion rate for the 2026 Notes was 14.2316 shares of common stock per $1,000 principal amount of the 2026 Notes, which represents a conversion price of approximately $70.27 per share of common stock.

In connection with the cash dividend that was declared by our Board on April 23, 2026, we will, on May 13, 2026, adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the 2026 Notes in accordance with the terms.

(See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion on our debt.)

Common Stock Dividends

Common stock dividends of $39.4 million and $39.8 million were paid in the first nine months of fiscal 2025 and 2024, respectively.

As further discussed in Note 12 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report, in October 2025, our Board declared a quarterly dividend to be paid in November 2025.

Common stock dividends of $14.2 million and $12.5 million were paid in the first quarter of fiscal 2026 and 2025, respectively.

As further discussed in Note 12 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report, in April 2026, our Board declared a quarterly dividend to be paid in May 2026.

Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Loan Agreement and applicable law, and other such factors that the Board considers relevant.

Share Repurchases

Under authorization by our Board to repurchase up to 61.0 million shares of our common stock, we have cumulatively repurchased 59.7 million shares at a total cost of $1,972.4 million, excluding excise tax, through September 30, 2025.

In the first quarter of fiscal 2025, we used approximately $130.0 million of the net proceeds from the 2030 Note issuance to repurchase approximately 2.4 million shares of our common stock.

In total, we repurchased 2.6 million shares at a cost of $142.7 million, excluding excise tax, during the first nine months of fiscal 2025.

We repurchased 0.5 million shares at a cost of $17.5 million, excluding excise tax, during the first nine months of fiscal 2024.

On February 12, 2026, our Board increased the authorization to repurchase our common stock by 5.0 million shares to 66.0 million shares.

Under this authorization, we have cumulatively repurchased 60.2 million shares at a total cost of $2,002.8 million, excluding excise tax, through March 31, 2026.

We repurchased 0.3 million shares at a cost of $19.2 million, excluding excise tax, during the first quarter of fiscal 2026.

We repurchased 2.6 million shares at a cost of $141.4 million, excluding excise tax, during the first quarter of fiscal 2025.

Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth.

Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time.

Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any

Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the FRC acquisition, our share price and current market conditions.

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Cash Flow Outlook

We believe that our cash and cash equivalents, combined with expected cash flows provided by operations and available borrowings under the Revolving Facility, will provide us with adequate liquidity for the next 12 months and the foreseeable future.

As of September 30, 2025, we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties.

We believe that our cash and cash equivalents, combined with expected cash flows provided by operations and available borrowings under the Revolver Facility, will provide us with adequate liquidity for the next 12 months and the foreseeable future.

As of March 31, 2026, we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties.

Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis