The Cheesecake Factory Incorporated (CAKE)
Q2 2012 Earnings Call
July 25, 2012 5:30 pm ET
Jill S. Peters - Vice President of Investor Relations
David M. Overton - Chairman, Chief Executive Officer and Chairman of Enterprise Risk Management Advisory Committee
W. Douglas Benn - Chief Financial Officer and Executive Vice President
Matthew Eliot Clark - Senior Vice President of Finance and Strategy
Joseph T. Buckley - BofA Merrill Lynch, Research Division
John S. Glass - Morgan Stanley, Research Division
Will Slabaugh - Stephens Inc., Research Division
Jeffrey Andrew Bernstein - Barclays Capital, Research Division
Michael Kelter - Goldman Sachs Group Inc., Research Division
Matthew J. DiFrisco - Oppenheimer & Co. Inc., Research Division
Matthew J. DiFrisco - Lazard Capital Markets LLC, Research Division
Brian J. Bittner - Oppenheimer & Co. Inc., Research Division
David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division
Mitchell J. Speiser - The Buckingham Research Group Incorporated
Nicole Miller Regan - Piper Jaffray Companies, Research Division
Sharon Zackfia - William Blair & Company L.L.C., Research Division
Bryan C. Elliott - Raymond James & Associates, Inc., Research Division
Robert M. Derrington - Northcoast Research
Peter Saleh - Telsey Advisory Group LLC
Stephen Anderson - Miller Tabak + Co., LLC, Research Division
Previous Statements by CAKE
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Good day, ladies and gentlemen, and welcome to the Second Quarter 2012 Cheesecake Factory Earnings Conference Call. My names Chanel, and I'll be your operator for today. [Operator Instructions] And as a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Jill Peters.
Jill S. Peters
Good afternoon, and welcome to our second quarter fiscal 2012 earnings call. I'm Jill Peters, Vice President of Investor Relations. On the call today are David Overton, our Chairman and CEO; and Doug Benn, our Executive Vice President and Chief Financial Officer.
Before we begin, let me quickly remind you that during this call, items may be discussed that are not based on historical facts and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available in the Investors section of our website at www.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission.
All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements.
David will start off the call today with some opening remarks. Doug will then take you through our operating results in detail and provide our outlook for the rest of the year. Following that, we'll open the call to questions. And with that, I'll turn the call over to Dave.
David M. Overton
Thank you, Jill. We've now had 10 straight quarters of positive comparable sales, and this was another quarter where we experienced strength across geographies and day parts. We lost a very healthy 2.1% in comparable sales from a year ago, maintaining our 2 years trend of about 4%. Our business continues to perform at levels that are healthy, stable and predictable. Our guest traffic continues to grow as we increase our market share. In contrast, multiple industry data points show that guest traffic has been declining for almost a year. In addition, our comparable sales were pretty steady throughout the quarter in contrast to somewhat volatile industry trend. Trends. like these validate our strategy of differentiation to a menu innovation, food quality and superior service. These are the levers we use to drive sales and they're sustainable. We believe that we don't need to discount to attract guests, and our results demonstrate that discounting from others isn't negatively impacting us. The strength of our business leads us to an important step in our commitment to increasing shareholder value. Today, we announced that we will pay our first ever cash dividend. We are confident that the significant amount of cash that our restaurants generate affords us the opportunity to both a growth company and also enhance returns for our investors through dividend.
Finally as to development, we continue to expect to open as many as 7 to 8 new restaurants in the U.S. this year. I know many of you are interested in an update on Grand Lux Café, with the newest location having opened 2 weeks ago. The restaurant looks great with a completely redesigned interior and patio that makes the restaurant more approachable for guests. And at about 8,700 square feet, the restaurant is also quite a bit smaller in size than our existing locations. Based on what we've seen during the initial couple of weeks, the concept is being accepted, by guests, and we're also doing some local restaurant marketing to help build the awareness of this concept. We will continue to evaluate the results from Cherry Hill and look for sites that would be appropriate for future Grand Lux Café locations. Internationally, the first of multiple plan Middle East locations is on track for opening in mid-August in Dubai Mall. Discussions with other potential partners around the world are also progressing, so we continue to feel good about the opportunity for expansion of our brands overseas.
I am enthusiastic about The Cheesecake Factory becoming a truly global brand and the role of international expansion will play in our future growth. Now I'll turn it over to Doug.
W. Douglas Benn
Thank you, David. Now let's review our financial results for the second quarter and our thoughts about the remainder of 2012.