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Item 2. Management’s Discussion and Analysis

2026-08-03 compared with 2026-05-04 · 116 added, 72 removed, 212 unchanged (47% 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, 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:

This includes, without limitation, statements regarding corporate social responsibility (“CSR”), including 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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Such forward-looking statements include all other statements that are not historical facts, as well as statements that are preceded by, followed by or that include words or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,” “project,” “may,” “could,” “would,” “should” and similar expressions.

These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements.

These statements are based on our current expectations and involve risks and uncertainties that may cause results to differ materially from those set forth in such statements.

In connection with the “safe harbor” provisions of the Acts, we have identified and are disclosing important factors, risks and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements made by us, or on our behalf.

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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, 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.

The impact of ongoing geopolitical and macroeconomic events, including evolving government policies and global trade and tariff dynamics, could lead to issues such as 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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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.

March 31, 2026

April 1, 2025

June 30, 2026

Costs and expenses:

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Income tax provision

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%.

Thirteen Weeks Ended June 30, 2026 Compared to Thirteen Weeks Ended July 1, 2025

Revenues increased 7.7% to $1,029.6 million for the fiscal quarter ended June 30, 2026 compared to $955.8 million for the comparable prior year period, primarily due to an increase in comparable restaurant sales and additional revenue related to new restaurant openings.

The Cheesecake Factory Restaurants sales increased 6.8% to $729.5 million for the second quarter of fiscal 2026, compared to $683.3 million for the second quarter of fiscal 2025.

Average sales per restaurant operating week increased 6.2% to $259,785 in the second quarter of fiscal 2026 from $244,544 in the second quarter of fiscal 2025.

Total operating weeks at The Cheesecake Factory Restaurants increased 0.5% to 2,808 in the second quarter of fiscal 2026 compared to 2,794 in the prior year.

The Cheesecake Factory comparable sales increased by 5.8%, or $38.9 million, from the second quarter of fiscal 2025.

The increase from the second quarter of fiscal 2025 was primarily driven by an increase in average check of 3.1% (based on an increase of 3.0% in menu pricing and a 0.1% positive change from menu mix) and higher customer traffic of 2.7%.

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.

We are in the process of implementing approximately a 1.5% menu price increase in the third quarter of fiscal 2026.

Sales through the off-premise channel comprised approximately 21% of our restaurant sales during both the second quarter of fiscal 2026 and fiscal 2025.

North Italia sales increased 8.4% to $98.4 million for the second quarter of fiscal 2026, compared to $90.8 million for the second quarter of fiscal 2025.

Average sales per restaurant operating week decreased 1.6% to $151,446 in the second quarter of fiscal 2026 from $153,949 in the second quarter of fiscal 2025.

Total operating weeks at North Italia increased 10.2% to 650 in the second quarter of fiscal 2026 compared to 590 in the prior year.

North Italia comparable sales decreased approximately 3% from the second quarter of fiscal 2025.

The decrease from fiscal 2025 was primarily driven by decreased customer traffic of 5%, partially offset by an increase in average check of 2% (based on an increase of 3% in menu pricing and a 1% negative impact from mix).

We implemented effective menu price increases of approximately 1.0% and 1.5% in the second quarter of fiscal 2026 and fourth quarter of fiscal 2025, respectively.

Flower Child sales increased 17.5% to $56.6 million for the second quarter of fiscal 2026, compared to $48.2 million for the second quarter of fiscal 2025.

Flower Child sales per restaurant operating week increased 10.8% to $101,252 in the second quarter of fiscal 2026 from $91,400 in the second quarter of fiscal 2025.

Total operating weeks at Flower Child increased 6.1% to 559 in the second quarter of fiscal 2026 compared to 527 in the prior year.

Flower Child comparable sales increased approximately 13% from the second quarter of fiscal 2025.

The increase from the second quarter of fiscal 2025 includes an increase of 3% in menu pricing.

Other FRC sales increased 15.4% to $104.0 million for the second quarter of fiscal 2026, compared to $90.2 million for the second quarter of fiscal 2025.

Other FRC average sales per restaurant operating week increased 3.9% to $142,120 in the second quarter of fiscal 2026 from $136,841 in the second quarter of fiscal 2025.

Total operating weeks at Other FRC increased 11.1% to 732 in the second quarter of fiscal 2026 compared to 659 in the prior year.

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

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.

As of June 30, 2026, there were six The Cheesecake Factory Restaurants, nine North Italia restaurants and eight 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 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%).

As a percentage of revenues cost of sales were 21.8% and 21.6% in the second quarters of fiscal 2026 and 2025, respectively, primarily due to higher meat, produce and seafood costs (0.7%), partially offset by lower dairy pricing (0.4%)

Labor Expenses

As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery production labor, including associated fringe benefits, were 35.5% 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%).

As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery production labor, including associated fringe benefits, were 34.1% and 34.9% in the second quarters of fiscal 2026 and 2025, respectively.

This decrease was primarily due to sales leverage and associated productivity gains (0.6%).

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 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%).

As a percentage of revenues, other operating costs and expenses were 26.5% and 26.8% in the second quarter of fiscal 2026 and 2025, respectively.

This variance was primarily driven by sales leverage (0.3%) and lower insurance costs (0.3%), partially offset by higher marketing costs (0.3%)

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%).

As a percentage of revenues, G&A expenses were 6.4% and 6.1% in the second quarter of fiscal 2026 and 2025, respectively.

This variance was primarily driven by higher legal fees (0.1%) and higher 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.

During the second quarter of fiscal 2026, we recorded impairment of assets and lease termination expenses of $0.1 million primarily related to lease termination costs for one Grand Lux Cafe location.

During the second quarter of fiscal 2025, we recorded impairment of assets and lease termination expenses of $0.2 million primarily related to lease termination costs for one The Cheesecake Factory location.

Preopening Costs

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.

Preopening costs were $7.0 million and $9.0 million in the second quarter of fiscal 2026 and 2025, respectively.

We opened two North Italia, one Flower Child and one Other FRC locations in the second quarter of fiscal 2026 compared to two The Cheesecake Factory, one North Italia, three Flower Child and two Other FRC locations in the second 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.

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 11.1% and 11.9% for the second quarter of fiscal 2026 and 2025, respectively.

The decrease was primarily due to non-deductible costs in fiscal 2025 associated with the repurchase of our 2026 Notes (1.2%), higher non-taxable gains in the current fiscal quarter as compared to the comparable prior period on our investments in variable life insurance contracts used to support our non-qualified deferred compensation plan (0.6%), a greater tax benefit in the current fiscal quarter from foreign intangibles income (0.4%) and a greater tax windfall in the current fiscal quarter related to equity compensation (0.3%).

The decrease was also impacted by the effect of applying a lower estimated annual effective tax rate in the second quarter of fiscal 2026 compared to the first quarter of fiscal 2026, whereas the estimated annual effective tax rate increased from the first quarter to the second quarter of fiscal 2025, resulting in an unfavorable impact in the comparable prior year period (0.9%).

These factors were partially offset by leverage on higher annual forecasted income before taxes, predominantly related to employment credits (1.8%) and a change to our reserve for uncertain tax positions (0.8%).

Twenty-Six Weeks Ended June 30, 2026 Compared to Twenty-Six Weeks Ended July 1, 2025

Revenues increased 6.7% to $2,008.5 million for the first six months ended June 30, 2026 compared to $1,883.0 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 4.7% to $1,419.9 million for the first six months of fiscal 2026, compared to $1,356.0 million for the first six months of fiscal 2025.

Average sales per restaurant operating week increased 4.1% to $252,480 in the first six months of fiscal 2026 from $242,618 in the first six months of fiscal 2025.

Total operating weeks at The Cheesecake Factory Restaurants increased 0.6% to 5,624 in the first six months of fiscal 2026 compared to 5,589 in the prior year.

The Cheesecake Factory comparable sales increased by 3.7%, or $49.2 million, from the first six months of fiscal 2025.

The increase from the first six months of fiscal 2025 was primarily driven by an increase in average check of 3.1% (based on an increase of 3.2% in menu pricing, partially offset by a 0.1% negative change from menu mix) and higher customer traffic of 0.6%.

Sales through the off-premise channel comprised approximately 22% and 21% of our restaurant sales during the first six months of fiscal 2026 and fiscal 2025, respectively.

North Italia sales increased 7.9% to $187.9 million for the first six months of fiscal 2026, compared to $174.2 million for the first six months of fiscal 2025.

Average sales per restaurant operating week decreased 2.7% to $147,388 in the first six months of fiscal 2026 from $151,513 in the first six months of fiscal 2025.

Total operating weeks at North Italia increased 10.9% to 1,275 in the first six months of fiscal 2026 compared to 1,150 in the prior year.

North Italia comparable sales decreased approximately 3% from the first six months of fiscal 2025.

Flower Child sales increased 19.2% to $109.2 million for the first six months of fiscal 2026, compared to $91.6 million for the first six months of fiscal 2025.

Flower Child sales per restaurant operating week increased 8.9% to $97,894 in the first six months of fiscal 2026 from $89,920 in the first six months of fiscal 2025.

Total operating weeks at Flower Child increased 9.5% to 1,116 in the first six months of fiscal 2026 compared to 1,019 in the prior year.

Flower Child comparable sales increased approximately 11% from fiscal 2025.

The increase from fiscal 2025 includes an increase of 3% in menu pricing.

Other FRC sales increased 17.4% to $208.6 million for the first six months of fiscal 2026, compared to $177.6 million for the first six months of fiscal 2025.

Other FRC average sales per restaurant operating week increased 3.9% to $143,632 in the first six months of fiscal 2026 from $138,212 in the first six months of fiscal 2025.

Total operating weeks at Other FRC increased 13.0% to 1,452 in the first six months of fiscal 2026 compared to 1,285 in the prior year.

Food and Beverage Costs

As a percentage of revenues cost of sales were 21.7% in the first six months of both fiscal 2026 and 2025, primarily due to higher meat, produce and seafood costs (0.7%), partially offset by lower dairy pricing (0.6%)

Labor Expenses

As a percentage of revenues, labor expenses were 34.8% and 35.3% in the first six months of fiscal 2026 and 2025, respectively.

This decrease was primarily due to sales leverage and associated productivity gains (0.5%).

As a percentage of revenues, G&A expenses were 6.4% and 6.3% in the first six months of fiscal 2026 and 2025, respectively.

This variance was primarily driven by higher legal fees (0.1%).

Impairment of Assets and Lease Termination Expenses

During the first six months of fiscal 2026, we recorded impairment of assets and lease termination expenses of $1.0 million primarily related to lease termination costs for two The Cheesecake Factory, two Grand Lux Cafe and one Other FRC location.

During the first six months of fiscal 2025, we recorded impairment of assets and lease termination expenses of $0.6 million primarily related to lease termination costs for one The Cheesecake Factory and one Other FRC location.

Preopening Costs

Preopening costs were $12.4 million and $17.1 million in the first six months of fiscal 2026 and 2025, respectively.

We opened three North Italia, two Flower Child and two Other FRC locations in the first six months of fiscal 2026 compared to two The Cheesecake Factory, four North Italia, six Flower Child and four Other FRC locations in the first half of fiscal 2025.

Loss on Extinguishment of Debt

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Income Tax Provision

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%).

Our effective income tax rate was 9.5% and 9.3% for the first six months of fiscal 2026 and 2025, respectively.

The increase was primarily due to leverage on higher annual forecasted income before taxes, primarily due to employment credits (2.4%), a change to our reserve for uncertain tax positions (0.6%) and an increase in non-deductible executive compensation (0.5%).

These factors were partially offset by non-deductible costs in fiscal 2025 associated with the repurchase of our 2026 Notes (1.2%), a greater tax windfall in the first six months of fiscal 2026 as compared to the comparable prior period related to equity compensation (1.2%) and higher non-taxable gains in the first six months of 2026 as compared to the comparable prior period on our investments in variable life insurance contracts used to support our non-qualified deferred compensation plan (0.6%).

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):

March 31, 2026

April 1, 2025

June 30, 2026

Impairment of assets and lease termination expenses

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Loss on extinguishment of debt (1)

Uncertain tax positions (2)

Tax effect of adjustments (3)

Adjusted net income

Diluted net income per common share

Diluted net income per share

Impairment of assets and lease termination expenses

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Loss on extinguishment of debt (1)

Uncertain tax positions (2)

Tax effect of adjustments (3)

Adjusted diluted net income per common share (3)

Adjusted diluted net income per share (4)

(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.

Represents a change to a reserve for uncertain tax positions taken in prior years related to tenant improvement allowances and Section 199 deductions.

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):

March 31, 2026

April 1, 2025

June 30, 2026

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

During the first six months of fiscal 2026, our cash and cash equivalents decreased by $20.5 million to $195.2 million.

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

March 31, 2026

April 1, 2025

June 30, 2026

Cash provided by operating activities

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Cash Provided by Operating Activities

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.

Cash flows from operations increased by $53.1 million from the first six months of fiscal 2025 primarily due to net income after excluding the non-cash activity, lower accounts and other receivable balances, timing of operating lease commencements, higher payables and inventory movement, partially offset by increased payment of deferred consideration and compensation related to the FRC acquisition in excess of acquisition-date fair value and higher income taxes paid.

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 $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.

Capital expenditures for new restaurants, including locations under development, were $46.7 million and $44.0 million for the first six months of fiscal 2026 and 2025, respectively.

Capital expenditures also included $35.1 million and $33.6 million for our existing restaurants and $4.5 million and $6.8 million for bakery and corporate capacity and infrastructure investments, in the first six months of fiscal 2026 and 2025, respectively.

We opened seven restaurants in the first six months of fiscal 2026 comprised of three North Italia, two Flower Child and two Other FRC locations compared to 16 restaurants in the first six months of fiscal 2025 comprised of two The Cheesecake Factory, four North Italia, six Flower Child and four Other FRC locations.

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

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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, which matures 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.

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Certain of our material subsidiaries have guaranteed our obligations 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.

As of June 30, 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.

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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 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.

As of June 30, 2026, the 2030 Notes had a balance of $562.9 million, net of unamortized issuance costs of $12.1 million.

As of June 30, 2026, the conversion rate for the 2030 Notes was 14.1514 shares of common stock per $1,000 principal amount of the 2030 Notes, which represents a conversion price of approximately $70.66 per share of common stock.

In connection with the cash dividend that was declared by our Board on July 23, 2026, we will, on August 11, 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.)

2026 Convertible Senior Notes

On June 15, 2021, we issued $345.0 million in aggregate principal amount of convertible senior notes (“2026 Notes”), which will mature on June 15, 2026, unless earlier repurchased, redeemed or converted.

On June 15, 2021, we issued $345.0 million in aggregate principal amount of convertible senior notes (“2026 Notes”).

The net proceeds from the sale of the 2026 Notes were approximately $334.9 million after deducting issuance costs of $10.1 million.

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 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.

During the second quarter of fiscal 2026, noteholders converted $0.1 million aggregate principal amount of the 2026 Notes which we settled in cash, including payment of accrued interest.

The 2026 Notes matured on June 15, 2026 and we repaid in cash the remaining outstanding principal balance of $69.0 million, together with all accrued interest.

(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 $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.

Common stock dividends of $29.9 million and $26.8 million were paid in the six months 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 July 2026, our Board declared a quarterly dividend to be paid in August 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.

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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.

Under this authorization, we have cumulatively repurchased 60.4 million shares at a total cost of $2,012.1 million,

excluding excise tax, through June 30, 2026.

We repurchased 0.5 million shares at a cost of $28.5 million, excluding excise tax, during the first six months of fiscal 2026.

We repurchased 2.6 million shares at a cost of $141.5 million, excluding excise tax, during the first six months 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

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.

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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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.

As of June 30, 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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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis