What changed in this filing

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Item 1. Business

2025-02-24 compared with 2024-02-26 · 82 added, 137 removed, 244 unchanged (47% of the section changed)

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We are culinary forward and relentlessly focused on hospitality.

We currently own and operate 334 restaurants throughout the United States and Canada under brands including The Cheesecake Factory ® (216 locations), North Italia ® (37 locations), Flower Child ® (32 locations) and additional brands within our Fox Restaurant Concepts (“FRC”) portfolio (41 locations).

We currently own and operate 352 restaurants throughout the United States and Canada under brands including The Cheesecake Factory ® (215 locations), North Italia ® (43 locations), Flower Child ® (38 locations) and additional brands within our Fox Restaurant Concepts (“Other FRC”) portfolio (49 locations).

Internationally, 34 The Cheesecake Factory ® restaurants operate under licensing agreements.

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Geopolitical and Other Macroeconomic Impacts to our Operating Environment

During fiscal 2021 and 2022, the COVID-19 pandemic continued to affect our business during periods of accelerated case counts in which we experienced increased restaurant staff absenteeism and temporary shifts in consumer behavior, such as changes in customer traffic or the mix between on-premise and off-premise channels.

Along with the COVID-19 pandemic, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

Some of these factors continued to impact our operating results in fiscal 2023, contributing to significantly increased commodity and other costs.

We also encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges.

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

In recent years, our operating results were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

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.

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

Any of these factors may have an adverse impact on our business and materially adversely affect our financial performance.

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The Cheesecake Factory menu features approximately 225 items, exclusive of beverage and dessert items and including items presented on supplemental menus, such as our SkinnyLicious ® menu that offers innovative items at 590 calories or less.

Our menu offerings include appetizers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches and omelettes, including a selection of vegan and gluten-free items.

offerings include appetizers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches and omelettes, including a selection of vegan and gluten-free items.

Our ability to create, promote and attractively display our unique line of desserts is also important to the competitive positioning and financial success of our restaurants.

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Extensive and Innovative Menu, Made Fresh from Scratch.

Our restaurants offer one of the broadest menus in casual dining and feature a wide array of flavors with portions designed for sharing.

Our restaurants offer one of the broadest menus in upscale casual dining and feature a wide array of flavors with portions designed for sharing.

In contrast to many restaurant chains, substantially all of our menu items, except those desserts produced at our bakery facilities, are prepared from scratch daily at our restaurants with high-quality, fresh ingredients using innovative and proprietary recipes.

One of our competitive strengths is our ability to anticipate customer preferences and adapt our expansive menu to the latest trends.

We believe one of our competitive strengths is our ability to anticipate customer preferences and adapt our expansive menu to the latest trends.

We regularly update our ingredients and cooking methods, as well as create new menu items and new categories of food offerings at our restaurants, further enhancing the variety, quality and price points offered and keeping our menu relevant to our customers.

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We also regularly introduce new and innovative cheesecakes and other baked desserts.

In 2023, we launched the Cookie Dough Lover’s Cheesecake with Pecans in conjunction with National Cheesecake Day.

In 2024, we launched the Triple Berry Bliss Cheesecake in conjunction with National Cheesecake Day.

We generally update The Cheesecake Factory menus twice each year, and our philosophy is to use price increases to help offset key operating cost increases in a manner that balances supporting both our margin objectives and customer traffic levels.

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 2022 and 2023, we implemented price increases above our historical levels, including an incremental price increase in the fourth quarter of fiscal 2022, to help offset significant inflationary cost pressures.

Current and future near-term pricing actions may also be at levels above historical norms to keep pace with any significant cost increases.

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

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By providing extensive training, our goal is to encourage our staff members to develop a sense of personal commitment to our core values and culture of excellence.

(See “Restaurant Operations, Development and Training” below.) Our commitment to people-focused programs and creating a great workplace for all of our staff and managers contributed to The Cheesecake Factory being named to Fortune magazine’s list of “100 Best Companies to Work For ® ” in 2023, for the tenth consecutive year.

High-Quality, High-Profile Restaurant Locations and Flexible Site Layouts.

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We consider many factors when assessing the suitability of a site, including the demographics of the trade area such as average household income and population density, as well as site-specific characteristics such as visibility, accessibility and proximity to activity centers such as shopping centers and competitive influences.

Since our restaurants can be successfully executed within a variety of site locations and layouts, we are highly flexible in choosing suitable locations.

Because our restaurants can be successfully executed within a variety of site locations and layouts, we are highly flexible in choosing suitable locations.

While there are common decor elements within each of our restaurant sites, the designs are customized for the specifics of each location, including the building type, square footage and layout of available space.

We expect the majority of our new restaurants to vary between 7,000 and 10,000 interior square feet, generally with additional exterior and/or interior patio seating, selected appropriately for each market and specific site.

The relatively high sales productivity of our restaurants provides opportunities to obtain competitive leasing terms from landlords.

We believe the relatively high sales productivity of our restaurants provides opportunities to obtain competitive leasing terms from landlords.

Due to the flexible and customized nature of our restaurant operations and the complex design, construction and preopening processes for each new location, our lease negotiation and restaurant development time frames vary.

The development and opening process usually ranges from six to eighteen months, depending largely on the type and availability of the leased space we intend to occupy, as well as our ability to obtain goods, materials, permits and adequate staffing, and is subject to delays either due to factors outside of our control or to our selective timing of restaurant openings.

In recent years, we have encountered delays in opening new restaurants primarily due to delays in permitting and landlord readiness, as well as supply chain challenges.

The development and opening process usually ranges from six to eighteen months, depending largely on the type and availability of the leased space we intend to occupy, our preferred opening date, as well as our ability to obtain goods, materials, permits and adequate staffing, and a variety of other circumstances beyond our control.

Unit Economics

The operation of high-quality restaurants in premier locations fitting our criteria contributes to the continuing customer appeal of The Cheesecake Factory.

This popularity is reflected in our average sales per restaurant and per square foot, which are among the highest of any publicly-held restaurant company.

We believe the operation of high-quality restaurants in premier locations fitting our criteria contributes to the continuing customer appeal of The Cheesecake Factory.

This popularity is reflected in our average sales per restaurant and per square foot, which are among the highest of any publicly-held full service restaurant company.

Average sales per location for The Cheesecake Factory restaurants open for the full year were approximately $12.4 million for fiscal 2024.

Since each of our restaurants has a customized layout and differs in size, an effective method to measure the unit economics of our sites is by square foot.

Because each of our restaurants has a customized layout and differs in size, an effective method to measure the unit economics of our sites is by square foot.

Average sales per productive square foot (defined as all interior square footage plus seasonally adjusted exterior patio square footage) for restaurants open for the full year were approximately $1,152 for fiscal 2024.

Fluctuations in both average sales per location and average sales per productive square foot generally track with comparable restaurant sales trends.

Fluctuations in both average sales per location and average sales per productive square foot for fiscal 2024 generally tracked with comparable restaurant sales trends.

We currently lease all of our restaurant locations and utilize capital for leasehold improvements and furnishings, fixtures and equipment to build out our restaurant premises.

Our distinctive design and decor require a higher investment per square foot than is typical for the casual dining industry.

Our distinctive design and decor require a higher investment per square foot than is typical for the upscale casual dining industry.

However, our restaurants have historically generated annual sales per square foot that are also typically higher than our competitors.

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However, these costs vary depending on a number of factors, including geography, the complexity of our build-out, site characteristics, governmental fees and permits, labor and material conditions in the local market, weather and the amount, if any, of construction contributions obtained from our landlords for structural additions and other leasehold improvements.

Our new restaurants typically open with initial sales volumes well in excess of their future run-rate levels.

Our new restaurants have typically opened with initial sales volumes well in excess of their future run-rate levels.

This initial “honeymoon” effect usually results from grand opening publicity and other customer awareness activities that generate higher than usual customer traffic, particularly in new markets.

During the three to six months following the opening of new restaurants, customer traffic generally settles into its normal pattern, resulting in sales volumes that gradually adjust downward to their post-opening run-rate level.

Additionally, our new restaurants usually require a period of time after reaching normal traffic levels to achieve their targeted restaurant-level margins due to actual-to-theoretical food cost inefficiencies and labor productivity inefficiencies commonly associated with new, highly complex restaurants such as ours.

During the three to six months following the opening of new restaurants, customer traffic has generally settled into its normal pattern, resulting in sales volumes that gradually adjust downward to their post-opening run-rate level.

Additionally, our new restaurants have typically required a period of time after reaching normal traffic levels to achieve their targeted restaurant-level margins due to actual-to-theoretical food cost inefficiencies and labor productivity inefficiencies commonly associated with new, highly complex restaurants such as ours.

Restaurant Operations

Our ability to consistently execute a complex menu offering items prepared daily with high-quality, fresh ingredients in an upscale casual, high-volume dining environment is critical to our overall success.

We employ detailed operating procedures, standards, controls, food line management systems and cooking methods and processes to accommodate our extensive menu and to drive sales productivity.

We employ detailed operating procedures, standards, controls, food line management systems and cooking methods and processes designed to accommodate our extensive menu and to drive sales productivity.

We believe that the high average sales volumes and popularity of our restaurants allow us to attract and retain high-quality, experienced restaurant-level management and other operational personnel.

Each restaurant is generally staffed with one General Manager (“GM”), one Executive Kitchen Manager (“EKM”), and an average of six to eleven additional kitchen and front-of-the-house managers and approximately 150 hourly staff members, both depending on the size and sales volume of each restaurant.

Our GMs and EKMs possess an average of more than ten years of experience with the Company.

This tenure and knowledge drive our high productivity and contribute to our ability to deliver an exceptional customer experience.

All newly-recruited restaurant managers complete an extensive training program during which they receive both classroom and on-the-job instruction in areas such as food quality and safety, customer service, financial management, staff relations and safely serving alcohol.

Managers continue their development by participating in and completing a variety of training and development activities to assess and further develop their skills and knowledge necessary for upward progression through our management levels.

Our GMs regularly meet to receive hands-on training, share best practices and celebrate Company successes, all of which help to foster the unique culture of our brand.

Each restaurant GM reports to an Area Director of Operations (“ADO”), who in turn reports to a Regional Vice President of Restaurant Operations.

Our EKMs report to their GMs but are also supervised by an Area Kitchen Operations Manager.

Our restaurant field supervision organization also includes our Senior Vice President of Restaurant Operations, Senior Vice President of Kitchen Operations, an operations services team and our performance development department who are collectively responsible for day-to-day operations, managing new restaurant openings and training for all operational managers and staff.

Each restaurant is generally staffed with a General Manager (“GM”) and an Executive Kitchen Manager (“EKM”), who possess an average of more than ten years of experience with the Company.

We believe this tenure and knowledge drive our high productivity and contribute to our ability to deliver an exceptional customer experience.

To enable us to more effectively compete for, and retain, the highest quality restaurant management personnel, we offer an innovative and comprehensive compensation program for our restaurant GMs and EKMs.

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Restaurant-level preopening costs are generally higher for larger restaurants and initial entry into new markets and lower when we relocate a restaurant within its local market.

We usually incur the most significant portion of restaurant-level preopening costs within the two months immediately preceding and the month of a restaurant’s opening.

We have typically incurred the most significant portion of restaurant-level preopening costs within the two months immediately preceding and the month of a restaurant’s opening.

Licensed Locations

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(2) This licensee, or its affiliates, also has the right to develop restaurants in Chile, with the opportunity to expand the agreement to include Argentina, Brazil, Colombia and Peru.

(3) This licensee, or its affiliates, also has the right to develop restaurants in Taiwan, with the opportunity to expand the agreement to include Japan, South Korea, Malaysia and Singapore.

We are actively working to extend and expand the agreements with our current licensees in their primary geographies and are also exploring potential opportunities to expand our licensing business.

(3) This licensee, or its affiliates, also has the right to develop restaurants in Taiwan, with the opportunity to expand the agreement to include Japan, Malaysia, Singapore and South Korea.

Our corporate infrastructure includes a dedicated global development team that works with our international licensees and coordinates the initial training, ongoing quality control, product specifications and brand oversight at our licensed locations.

Our internal audit department also performs periodic reviews of our international licensees’ compliance with our licensing agreements.

As we evaluate other international markets, we will consider opportunities to directly operate certain locations and/or enter into licensing, joint venture or partnership arrangements with established third-party companies.

We are selective in our assessment of potential partners and licensees, focusing on well-capitalized companies that have established business infrastructures, expertise in multiple countries, experience in operating upscale casual dining restaurants and sound governance practices.

We look to associate with companies who will protect The Cheesecake Factory ® brand and operate the concept in a high-quality, consistent manner.

As we evaluate other international markets, we may consider opportunities to directly operate certain locations and/or enter into licensing, joint venture or partnership arrangements with established third-party companies.

Due to the complexities of opening The Cheesecake Factory restaurants in other countries, including, but not limited to, the selection and design of appropriate sites, construction of our complex restaurant designs, training of licensees’ staff members, approval of supply sources and exportation of our bakery products to new countries, the number and timing of new openings in foreign countries may vary from expectations.

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Given the strong affinity for The Cheesecake Factory ® brand, we leverage opportunities in the consumer packaged goods channel by partnering with various third-party manufacturers to offer a variety of products marketed under The Cheesecake Factory At Home ® mark, including our Famous “Brown Bread,” which is available in select retail stores nationwide.

We continue to evaluate other synergistic, on-brand licensing opportunities to add incremental revenue streams to our business.

North Italia is a modern interpretation of Italian cooking in the upscale casual dining segment.

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The average check for each customer, including beverages and desserts, for fiscal 2024 averaged approximately $34.60 for lunch and approximately $44.40 for dinner.

Our North Italia restaurants are generally open seven days a week for lunch, dinner and weekend brunch.

Our North Italia restaurants are generally open seven days a week for lunch, dinner and offer weekend brunch.

Currently, we operate 43 North Italia restaurants.

With Italian cuisine the number one ethnic food category in the United States, coupled with strong national reception of the North Italia concept to-date, we believe there is potential for 200 domestic locations over time, which supports our plan for approximately 20% average annual unit growth.

With Italian cuisine being one of the most popular ethnic food categories in the United States, coupled with strong national reception of the North Italia concept to-date, we believe there is potential for approximately 200 domestic locations over time, which supports our plan for approximately 20% average annual unit growth.

Average sales per location open for the full year for North Italia restaurants were approximately $7.7 million for fiscal 2024, or approximately $1,100 per productive square foot.

We target an average North Italia unit size of 6,000 to 7,000 square feet, and total construction costs average approximately $800 per interior square foot.

We target an average North Italia unit size of 6,000 to 7,000 interior square feet and average total construction costs of approximately $800 per interior square foot.

In fiscal years 2023 and 2024, we incurred higher construction costs, however we anticipate future costs to return to our targeted levels.

Restaurant-level preopening costs for a typical location in an established market average approximately $0.6 million to $0.8 million and 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.

Flower Child and Fox Restaurant Concepts

Flower Child operates in the fast casual dining segment, offering a customizable menu, made fresh from scratch, featuring locally-sourced, all-natural and organic ingredients.

Flower Child provides us an opportunity to diversify our portfolio in a strong and growing niche.

Currently, we operate 32 Flower Child locations and target approximately 15% to 20% average annual unit growth for this concept.

We believe Flower Child provides us an opportunity to diversify our portfolio in a strong and growing niche.

Currently, we operate 38 Flower Child locations and believe there is potential for approximately 700 domestic locations over time, which supports our plan for approximately 20% average annual unit growth for this concept.

Average sales per location open for the full year for the Flower Child restaurants were approximately $4.3 million for fiscal 2024, or approximately $1,200 per interior square foot.

We target an average Flower Child unit size of 3,000 to 4,000 square feet, and total construction costs average approximately $700 per interior square foot.

FRC operates as an independent subsidiary in Phoenix, Arizona and serves as an incubation engine, innovating new food, dining and hospitality experiences to create fresh, exciting concepts.

We target an average Flower Child unit size of 3,000 to 4,000 interior square feet and average total construction costs of approximately $750 per interior square foot.

Fox Restaurant Concepts (“FRC”)

FRC operates as an independent subsidiary based in Phoenix, Arizona and serves as an incubator, innovating new food, dining and hospitality experiences to create fresh, exciting concepts.

With over a dozen evolving restaurant brands launched to-date, its concepts are diverse in industry segment, occasions, square footage and geography.

Other FRC potential growth concepts include Culinary Dropout and Blanco, which together with the other FRC brands, serve as an ecosystem for talent, menu and design development.

Other FRC potential growth concepts include Culinary Dropout, The Henry and Blanco, which together with the other FRC brands, serve as an ecosystem for talent, menu and design development.

Currently, we operate 49 Other FRC locations.

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Average sales per location open for the full year for the Other FRC restaurants were approximately $6.4 million for fiscal 2024, or approximately $1,100 per interior square foot.

We target an average FRC unit size of 3,500 to 15,000 square feet, and total construction costs average approximately $650 per interior square foot, depending on the concept.

We target an average FRC unit size of 3,500 to 15,000 interior square feet and average total construction costs of approximately $700 per interior square foot, depending on the concept.

Bakery Operations

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Our facility in California accommodates both production operations and corporate support personnel, while our facility in North Carolina houses production operations and a distribution center.

In October 2023, we announced plans for a third bakery production facility in Charleston, Indiana.

We are evaluating beginning construction on a third bakery production facility in Charlestown, Indiana in fiscal 2025 or fiscal 2026.

We produce approximately 60 varieties of proprietary cheesecakes and other baked desserts using high-quality ingredients for The Cheesecake Factory restaurants and for international licensees and third-party customers.

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Current large-account customers include retail and supermarkets, foodservice distributors and operators, a national retail bookstore, other restaurants and national warehouse clubs.

Additionally, we currently sell a selection of our cakes online and in catalogs domestically through an agreement with an upscale retailer.

Items produced for outside

accounts are marketed under The Cheesecake Factory At Home ® and The Cheesecake Factory Bakery ® marks, as well as private labels.

Items produced for outside accounts are marketed under The Cheesecake Factory At Home ® and The Cheesecake Factory Bakery ® marks, as well as private labels.

We sell baked goods internationally in approximately 15 countries under The Cheesecake Factory At Home ® mark.

Offering our cheesecakes and other baked desserts internationally is important to our branding, creating awareness and driving demand, not only for bakery products but for the international expansion of our restaurants.

Offering our cheesecakes and other baked desserts internationally is important to our branding, creating awareness and driving demand for both our bakery products and the international expansion of our restaurants.

Human Capital

At the heart of our culture is the belief that our people are the foundation of our success.

We depend on our staff members to effectively execute all aspects of our day-to-day operations that differentiate our concepts.

Our ability to attract highly motivated staff members and retain an engaged, experienced team is key to successful execution of our strategy.

While we continue to operate in a competitive labor environment, we believe our people practices contribute significantly to our ability to attract talent and to The Cheesecake Factory restaurants’ historically industry-leading retention rates.

Retention and engagement of our staff members is fostered by our investment and support particularly in the following areas:

Retention and engagement of our staff members is fostered by our investment particularly in the following areas:

Cultivating and maintaining our culture is a key strategic focus.

Our core values and purpose reflect who we are and how our staff members interact with one another, as well as with our customers and other external stakeholders.

Our purpose – to nurture bodies, minds, hearts and spirits – and our values – quality in everything we do;

passion for excellence;

integrity, respect and responsibility;

people – our greatest resource;

service-mindedness;

dynamic leadership;

high performance and create a sustainable future – are the foundation of our company culture.

We seek to embed our purpose in everything we do by cultivating a sense of pride and belonging to the Company and our brands.

We are proud of the way our people nurture one another and extend that nurturing to our customers and communities.

We believe our efforts to build and maintain a strong culture have contributed to three notable recognitions in 2023.

We were named to the FORTUNE 100 Best Companies to Work For ® list for a tenth consecutive year, the PEOPLE Companies that Care ® list for a third consecutive year and the Fortune Best Workplaces for Millennials List for a seventh year.

Our core values and purpose reflect who we are and how our staff members interact with one another, as well as with our customers.

We believe our efforts to build and maintain a strong culture have contributed to two notable recognitions in 2024.

We were named to the FORTUNE 100 Best Companies to Work For ® list for an eleventh consecutive year and the PEOPLE Companies that Care ® list for a fourth consecutive year.

Development and Training

We invest significant resources to ensure our people receive, what we believe is industry-leading training in order to maximize their potential.

We strive to provide our staff with career advancement opportunities, and our fiscal 2023 internal management promotion rate at The Cheesecake Factory and North Italia concepts was 41%.

We provide our staff with career advancement opportunities, and our fiscal 2024 combined internal management promotion rate at The Cheesecake Factory and North Italia concepts was 45%.

Our hourly staff members and managers receive a considerable amount of training through a combination of in-person learning and development and online coursework.

In addition to company-provided job training, we encourage the pursuit of educational opportunities at The Cheesecake Factory and North Italia restaurants for all hourly staff members through free high school equivalency and associate degree programs.

In addition to company-provided job training, we offer hourly staff members of The Cheesecake Factory and North Italia restaurants free high school equivalency and associate degree programs.

We also offer a limited education reimbursement to our staff seeking post-secondary education.

Diversity, Equity, Inclusion and Belonging

We strive to offer an atmosphere of inclusion and belonging for all.

We believe the cultural alignment we seek to cultivate around respect and inclusion builds trust and promotes teamwork to achieve our common goals.

Furthermore, when our people feel valued and respected for their worth as individuals, they are better able to maximize their potential at work and more likely to share their perspectives, opinions and ideas, which contributes to our ability to innovate.

We created our Diversity, Equity, Inclusion and Belonging working group to help provide focus, feedback and ideas in this important area.

We conduct inclusive leadership training for above-restaurant leadership and restaurant managers and regularly review our interview processes for key above-restaurant leadership to enhance opportunity and development for candidates at The Cheesecake Factory and North Italia concepts.

We also offer support groups such as The Cheesecake Factory Women’s Network Group and the Female Kitchen Leader’s Program, that provides qualified high potential managers with programing and events to spend time with each other to network and also meet organizational leaders.

Another example is the Diverse Leaders Program, which provides networking and development opportunities for managers from diverse racial or ethnic groups.

As of January 2, 2024, approximately

47% of The Cheesecake Factory and North Italia staff members were women and approximately 73% of The Cheesecake Factory and North Italia staff members were racially or ethnically diverse.

Further details on representation can be found in our most recent CSR Report (see “Corporate Social Responsibility” below).

We are committed to conducting pay analyses among our The Cheesecake Factory and North Italia restaurants, as well as our bakery and corporate teams, to help evaluate that we are paying fairly and equitably.

We are committed to conducting both internal reviews and external third-party audits and verification to inform this evaluation.

We have also trained our recruiters to help enable them to identify and address pay equity issues during the hiring process utilizing internal reporting and partnership with the compensation team.

Benefits and Wellness

We believe access to healthcare is a compelling benefit for many staff members, and we offer healthcare benefits to our hourly staff members who work a minimum of 25 hours per week, on average.

We provide a robust suite of benefits and wellness offerings, including free mental health resources, free tutoring to support our staff and managers, and access to chronic disease care management, substance abuse treatment, a maternal health program, financial wellness resources and adoption assistance.

Total Rewards

We offer healthcare benefits to our hourly staff members who work a minimum of 25 hours per week, on average.

We provide a competitive suite of benefits and wellness offerings.

The Cheesecake Factory and North Italia staff, as well as our bakery and corporate teams, have paid sick time available to them starting at hire and are eligible to earn vacation time.

Employee Engagement

As of January 2, 2024, we employed approximately 47,900 people, with approximately 46,250 in our restaurants and the remainder in our corporate support center, FRC headquarters and bakery operations.

We believe that engaging our workforce is a key factor in our business success and in turn, have developed programs to promote enthusiasm and commitment, while providing a sense of belonging.

As of December 31, 2024, we employed approximately 47,900 people, with approximately 46,350 in our restaurants and the remainder in our corporate support center, FRC headquarters and bakery operations.

We believe that engaging our workforce is a key factor in our business success and in turn, have developed programs to promote enthusiasm and commitment.

We measure our performance in this area through an annual engagement survey and pulse surveys throughout the year.

These surveys give staff company-wide the opportunity to share honest feedback about their work experience.

Based on survey results, leaders across the Company are tasked with responsibility for creating action plans to address and respond to staff feedback.

Listening to our staff members is an essential part of building an engaged workforce, and we provide additional avenues for staff to share their ideas and concerns, including our internal crowdsourcing innovation website and our Careline, which staff can use to confidentially express their concerns, as well as restaurant townhalls where our staff can bring their ideas and concerns forward.

Our staff members are not covered by any collective bargaining agreements, and we consider our staff member relations to be good.

A significant part of our employee engagement strategy involves staff appreciation and recognition efforts.We hold key cultural events such as our week-long team appreciation celebrations, manager recognitions, Commitment to Excellence staff member awards and new menu rollout all-staff meetings.

A significant part of our employee engagement strategy involves staff appreciation and recognition efforts.

We hold key company cultural events such as our week-long team appreciation celebrations, manager recognitions, Commitment to Excellence staff member awards and new menu rollout all-staff meetings.

Our staff members are not covered by any collective bargaining agreements.

Another key aspect of our culture is giving back to the communities where our staff live and work, as well as uniting our staff members around charitable causes personal to them.

We provide donations to Feeding America and participate in their annual campaign as an opportunity to engage our teams in a culturally-aligning company-wide service program.

We have similarly promoted our teams’ participation in community volunteer events, and through our gift card program, we contribute to local fundraising events for community non-profit organizations.

We donate to Feeding America and participate in their annual campaign as an opportunity to engage our teams in a company-wide service program.

We promote our teams’ participation in community volunteer events, and through our gift card program, we contribute to local fundraising events for community non-profit organizations.

We also participate in a nationwide food donation program which redirects surplus food away from landfills to local food banks and non-profit organizations.

Additionally, we provide a method for our staff members to assist other staff members in need through our The Cheesecake Factory “HELP” fund.

We also participate in a nationwide food donation program which redirects surplus food away from landfills to local food banks and non-profit organizations, and believe our sustainability programs and initiatives like restaurant-based composting and recycling and replacing our off-premise packaging with materials that reduce the use of plastics and improve recyclability serve to foster pride in our staff.

Corporate Social Responsibility

For us, the term “Corporate Social Responsibility” or “CSR” informs how we operate in relation to our people and communities, natural environment and our supply chain.

We evaluate our business and how we operate our corporate-owned restaurants in an effort to identify, create and implement meaningful and sustained change.

The Corporate Governance and Nominating Committee of our Board is responsible for reviewing the Company’s sustainability and CSR policies.

For more information, please review our most recent CSR report on the Corporate Social Responsibility page on our website at www.thecheesecakefactory.com .

For more information, please review our most recent Corporate Social Responsibility “CSR” report on the Corporate Social Responsibility page on our website at www.thecheesecakefactory.com .

The contents of the CSR report and our website are expressly not incorporated by reference into this Form 10-K.

Purchasing and Distribution

Our purchasing philosophy is designed to procure quality ingredients, supplies and services for our operations from reliable sources at competitive prices and consistent with our sustainability goals.

We research and evaluate various ingredients and products in an effort to maintain high quality, be responsive to changing consumer tastes and manage costs.

Should any items from a particular supply source become unavailable, we generally believe that these items could be obtained, or alternative products substituted, in sufficient quantities from other sources to allow us to avoid any long-term material adverse effects that could be caused by such unavailability.

In order to maximize purchasing efficiencies and to obtain the freshest ingredients that meet our required standards, each restaurant’s management determines the quantities of food and supplies needed for their location and orders the items from qualified local, regional, national and international suppliers based upon specifications determined and terms negotiated at a corporate level.

We strive to maintain restaurant-level inventories at a minimum dollar level in relation to sales due to the relatively rapid turnover of the perishable commodities we use in our operations, coupled with the limited storage space at our restaurants.

Independent foodservice distributors, including the largest foodservice distributor in North America, deliver most items multiple times per week to our restaurants.

The cost of products and services used in our operations are subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as pandemics, geopolitical events, economic conditions or other unforeseen circumstances.

Climate change may further exacerbate a number of these factors.

During fiscal 2021, we began to experience certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic.

These shortages continued in fiscal 2022 and were exacerbated by geopolitical unrest.

The aggregate impact of these and other factors contributed to significant cost inflation.

While we have seen improvements in many of these areas, the absolute level of commodity costs has remained elevated contributing to ongoing inflation above historic levels.

Our purchasing philosophy is designed to procure quality ingredients, supplies and services for our operations from reliable sources consistent with our sustainability goals.

In order to maximize purchasing efficiencies and to obtain the freshest ingredients that meet our required standards, each restaurant’s management determines the quantities of food and supplies needed for their location and orders the items from local, regional, national and international suppliers based upon specifications determined and terms negotiated at a corporate level.

We strive to maintain restaurant-level inventories at a minimum dollar level in relation to sales due to

the relatively rapid turnover of the perishable commodities we use in our operations, coupled with the limited storage space at our restaurants.

The cost of products and services used in our operations are subject to volatility due to the relative availability of labor and distribution, weather, natural disasters, inventory levels and other supply and/or demand impacting events such as geopolitical events, economic conditions, public health emergencies or other unforeseen circumstances.

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

In recent years, we were impacted by geopolitical and macroeconomic events, causing supply chain challenges and significantly increased commodity prices.

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

We attempt to negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment requirements, such as certain dairy products and poultry, depending on market conditions and expected demand.

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Our labor management tool delivers optimized scheduling based on business demands and staff availability coupled with web and app-based access delivering flexibility to our staff.

Guest payment data is of the utmost importance, and we employ measures to help ensure every payment is secured and encrypted.

Information and cybersecurity is a priority for us and is led by a multi-disciplinary security team, overseen by our interdepartmental Information Security Council representing our key functional areas.

Our information security and cybersecurity efforts are led by a multi-disciplinary security team, overseen by our interdepartmental Information Security Council representing our key functional areas.

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information.

We continue to invest and innovate around the areas of protection of systems, sensitive data, technology, and processes using third-party and in-house tools and resources.

We remain focused on protecting against new and emerging risks utilizing our tools and security teams and continue to review and make strategic investments in our systems intended to help keep the Company’s, our guests’, and our team members’ data secure.

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Historically, we have not used significant paid national advertising through television, radio or print, nor significant discounting for on-premise dining occasions.

We utilize a social media and digital marketing strategy that allows us to engage regularly with our customers outside of our restaurants, including communication and paid advertising on social media platforms such as Instagram ® and TikTok ® and other, influencer marketing, Google search advertising and direct email to customers.

We refreshed our website in 2022, including our online ordering capabilities.

We launched our Cheesecake Rewards TM program nationally in 2023 with the objective to leverage data analytics and insights to engage more effectively with our guests and drive incremental sales while maintaining our restaurant level margins.

We utilize a social media and digital marketing strategy that allows us to engage regularly with our customers outside of our restaurants, including communication and paid advertising on social media platforms such as Instagram ® and Facebook ® , influencer marketing, Google advertising and direct email to customers.

We launched our Cheesecake Rewards ® program nationally in mid-2023 with the objective to leverage data analytics and insights to engage more effectively with our guests and drive incremental sales while maintaining our restaurant level margins.

Public relations is another important aspect of our marketing approach, and we frequently appear on local and national television in connection with a variety of promotional opportunities, such as National Cheesecake Day, to perform cooking demonstrations and other brand-building exposure.

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To raise awareness in the off-premise channel, we execute marketing campaigns with our third-party delivery provider and through our online ordering platform.

In addition, we work with several premiere third-party gift card distributors, contributing to our brand awareness and gift card sales, as well as our consumer packaged goods licensees on co-branded marketing campaigns.

Our international licensees are committed to opening each new restaurant with marketing that can be comprised of a mix of elements including print, billboards, digital and radio.

We maintain final approval of our licensees’ marketing campaigns and social media posts to promote consistency in the look and feel of marketing efforts including our brand, domestically and abroad.

North Italia and FRC

North Italia and FRC execute localized marketing programs focused on awareness, frequency and brand engagement through a variety of channels, including store-level marketing, public relations, in-store events, digital advertising, email programs and social media.

In addition, we work with several premiere third-party gift card distributors,

contributing to our brand awareness and gift card sales, as well as our consumer packaged goods licensees on co-branded marketing campaigns.

North Italia, Flower Child and Other FRC

North Italia, Flower Child and Other FRC execute localized marketing programs focused on awareness, frequency and brand engagement through a variety of channels, including store-level marketing, public relations, in-store events, digital advertising, email programs and social media.

Each restaurant is positioned as an individual brand with a neighborhood connection.

Additionally, the restaurant interiors and exteriors are utilized for brand engagement and messaging through art and graphics, creating an important part of a brand experience for the customer.

We believe minimal discounts ensure compelling brand proposition for experience and value.

Seasonality and Quarterly Results

While seasonal fluctuations generally do not have a material impact on our quarterly results, year-over-year comparisons can be significantly impacted by factors such as significant differences in year-over-year inflation, the number and timing of new restaurant openings and associated preopening costs, the timing of holidays, inclement weather and the additional week in a 53-week

Therefore, our financial results for any quarter or fiscal year are not necessarily indicative of the results that may be achieved for the full fiscal year or subsequent fiscal years.

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In addition, our bakery facilities are Safe Quality Food certified in alignment with the Global Food Safety Initiative’s Global Markets Program.

Our restaurants and bakery facilities also follow regulatory guidelines required for conducting and managing ingredient and product traceability.

Our restaurants and bakery facilities are subject to regulatory guidelines required for conducting and managing ingredient and product traceability.

We utilize a web-based solution to efficiently contact our restaurants and monitor progress in the event of a product withdrawal or recall.

Web-based solutions are also used for tracking regulatory compliance and implementing corrective actions

In selecting suppliers, we utilize key performance indicators relating to sanitation, operations and facility management, good manufacturing and agricultural practices, product protection, government inspections and compliance, recovery and food security.

We perform annual food safety and quality system audits for certain suppliers, while others are audited every other year or as needed.

A web-based solution is utilized for incident management, reporting and compliance of our suppliers.

Government Laws and Regulations

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In the United States, many of our locations currently participate in a Tip Reporting Alternative Commitment (“TRAC”) agreement with the Internal Revenue Service (“IRS”), and we intend to apply to participate in any successor program to TRAC.

By complying with the educational and

other requirements of the TRAC agreement (or its successor), we reduce the likelihood of potential employer-only FICA tax assessments for unreported tips.

We are subject to laws and regulations relating to information security, privacy, cashless payments and consumer credit protection and fraud.

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We own and have applied to register trade names, logos, service marks, trademarks, copyrights and other intellectual property (collectively, “Intellectual Property”) in the United States, Canada and in additional countries throughout the world in various categories, including without limitation, restaurant services and bakery goods.

We regard our Intellectual Property, including “The Cheesecake Factory,” “North Italia,” and a collection with the Fox Restaurant Concepts subsidiary, as well as our trade dress, as having substantial value and as being important to our marketing efforts.

Our policy is to pursue registration of our important Intellectual Property whenever commercially feasible and to vigorously oppose any infringement of it.

Generally, with appropriate renewal and use, the registration of our Intellectual Property will continue indefinitely.

We regard our Intellectual Property, including “The Cheesecake Factory,” “North Italia,” and a collection within the Fox Restaurant Concepts subsidiary, as well as our trade dress, as having substantial value and as being important to our marketing efforts.

Our policy is to pursue registration of our important Intellectual Property when commercially feasible, and to enforce our intellectual property rights.

We have also registered various internet domain names, including, “www.thecheesecakefactory.com,” “www.northitalia.com,” and “www.foxrc.com”.

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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-K

Item 1. Business