The Cheesecake Factory ( NASDAQ: CAKE ) wavered on Thursday after the company missed Q4 earnings expectations and highlighted persistent margin pressures.
For the fourth quarter, the company reported a miss on top and bottom lines . Comparable restaurant sales at The Cheesecake Factory restaurants increased 4% in the quarter, below the 4.88% consensus expectation. Additionally, food and beverage costs increased 170 basis points year over year, which pressured margins.
“2022 was undeniably an extremely challenging year with respect to our margin performance. And clearly, the cost environment remains heightened relative to historical standards, and there can be no guarantees it will abate in 2023,” CFO Matt Clark told analysts. “That said, in December, our pricing actions appear to have caught up with our costs, and while some degree of volatility and uncertainty should still be expected quarter-to-quarter, it is our goal to keep a tighter correlation between pricing and the inflation we experience going forward.”
Moving forward, management forecast total revenues for fiscal 2023 to be between approximately $3.5B and $3.6B, suggesting upside to the $3.51B consensus. Total inflation for the chain is expected to rise in the mid-single-digit range for the full-year, with inflationary trends easing as the year progresses.
CEO Dave Overton said that the company will enact a menu price increase of approximately 3.5% in the middle of Q1 to keep pace with inflation. He added that the company has not seen traffic trends falter in the face of price increases as of yet.
Shares of the California-based restaurant operator fell nearly 3% at the market open on Thursday before rebounding into positive territory for a short time. The stock wavered between slightly positive and negative as the trading day progressed.
Read the earnings call transcript .
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Cheesecake Factory projects further price increases to protect margins