Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the Cheesecake Factory Incorporated Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw that question, simply press star one again.

Thank you.

I would now like to turn the conference over to Etienne Marcus, Vice President, Investor Relations and Finance. Etienne, please go ahead.

Good afternoon, and welcome to our fourth quarter fiscal 2025 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer, David Gordon, our President, and Matt Clark, our Executive Vice President and Chief. Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical facts and are considered forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995. Actual results will be materially different from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is a available on our website at Investors.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. In addition, during this conference call, we will be presenting results on an adjusted basis which exclude acquisition-related items, impairment of assets and lease termination expenses, Explanations of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously. David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our fourth quarter financial results and provide commentary on our financial outlook before opening the call up to questions. With that, I'll turn the call over to David Overton.

Thank you, Etienne. done, we closed out the year with a solid fourth quarter, delivering stable top line performance and profitability. While the restaurant industry continued to face a more challenging operating environment, including weather-related impacts, our business remained steady with revenue for the quarter finishing within our expected range. I'm very proud of how our teams navigated through the environment and continue to deliver delicious, memorable experiences for our guests. Our operators managed the factors within their control exceptionally well, driving year-over-year improvements in labor productivity, wage management, retention, and guest satisfaction. This strong operational execution supported margins and adjusted diluted net income per share, finishing toward the higher end of our expectations. This performance reflects the resilience of our high-quality concepts and the strength of our operators. Reflecting on 2025, it was a year of meaningful progress for our company. Despite a dynamic macro backdrop and a highly competitive restaurant landscape, we delivered strong results. Sales growth across our core concepts and the most new restaurant openings in a single year supported record annual revenue and adjusted diluted earnings per share. And our operators consistent execution throughout the year drove meaningful profitability growth. Adjusted restaurant level profit margins at the Chiefscape Factory increased 60 basis points year over year to 17.6 percent, with margin expansion also realized at North Italia and Flower Child. Culinary innovation remains a core strength and an important differentiator for our business. The new menu items we introduced across a wide range of categories and price points continue to resonate well with guests and support our broad appeal. These offerings reinforce the breadth and the value of our menu while keeping it relevant and competitively positioned without relying on discounting. Turning to development, during the fourth quarter, we opened two Cheesecake Factory restaurants, two North Italia locations, and three FRC restaurants. Subsequent to quarter end, we opened one Flour Child and closed four restaurants, including two Cheesecake Factory restaurants, one Grand Lux Cafe, and one FRC restaurant. With seven new restaurants opened in the fourth quarter, we finished the year with 25 new openings, delivering approximately 7% unit growth for 2025. Looking ahead, we expect to open as many as 26 restaurants in 2026 with a strong development pipeline in place, we remain confident in our ability to achieve our development goals. We also anticipate one to two Chiefscake Factory restaurants to open internationally under licensing agreements. Finally, underscoring our confidence in the strength and consistency of the business, we announced an increase to our share repurchase authorization and raised our quarterly dividend for the first quarter. These decisions reflect our disciplined approach to capital allocation and our ongoing commitment to returning capital to shareholders while continuing to invest thoughtfully in the long-term growth of our company. With that, I will now turn the call over to David Gordon to provide an operational update.

Thank you, David. Through strong operational leadership and disciplined execution, our teams drove meaningful performance improvements this quarter, including continued gains in overall guest satisfaction, underpinned by our strong staffing position and further advancements in our industry-leading retention across both hourly staff and management. This stability enables our operators to reinforce the core operational standards that define the Cheesecake Factory, so our guests consistently experience the exceptional hospitality that we're known for. As David noted earlier, our recent menu additions have been well received, and we are building on that momentum by refreshing our bites and expanding our bowl options as part of our current menu rollout. Results have been encouraging, with year-over-year growth and appetizer attachment rates and improved entree ordering patterns. Moving on to Cheesecake Rewards, we have made meaningful progress during the past 12 months, highlighted by strong membership growth and improved engagement. We've continued to enhance the guest experience while strengthening our technology and team capabilities, giving us better insight into member behavior. As we look ahead, we remain confident in the program's trajectory and we will use our expanded capabilities to further refine offers and deepen member engagement. To support this evolution, we expect to launch a dedicated rewards app in the coming months with the objective of creating a more seamless and connected experience for our guests. I'll now turn to sales trends. Industry sales decelerated in the fourth quarter as reflected by the black box casual dining index declining sequentially by 410 basis points from the third quarter. The Cheesecake Factory's comparable sales were negative 2.2% in the fourth quarter, down from 0.3% in the third quarter, demonstrating relative stability in comparison to the industry's sequential declines. Adjusted annualized AUVs were $12.2 million for the quarter, supported by an off-premise sales mix of 22%, a slight improvement from recent quarters. North Italia fourth quarter annualized AUVs totaled $7.6 million. Comparable sales declined 4%, reflecting broader industry sales trends, continued pressure from sales transfer related to recently opened restaurants, as well as the lingering impact of the Los Angeles fires. We remain focused on disciplined operational execution and investing in our people. With manager and hourly staff retention remaining near historical highs, we are confident in our ability to compete effectively in a more challenging and competitive environment. In the fourth quarter, we opened two new North Italia restaurants to strong demand, with aggregate average weekly sales exceeding $182,000 for an annualized AUV of over $9 million. These results reinforce our confidence in the significant demand for an on-trend, contemporary Italian concept like North Italia. Restaurant-level profit margin for the adjusted mature North Italian locations was a solid 17.5% for the quarter, bringing the full-year average to 17%, right at the midpoint of our long-term objective of 16% to 18%. Flower Child continued to perform exceptionally well and meaningfully outpaced the fast casual segment. Fourth quarter comparable sales increased 4% for a two-year comp sales increase of 15%. This strong sales performance translated into annualized AUBs of $4.3 million for the quarter and $4.6 million for the full year. Restaurant-level profit margin for the adjusted mature flower child locations was 17.5% for the fourth quarter, bringing the full-year average to an impressive 18.5%. And lastly, we expanded our FRC portfolio with the opening of three new restaurants in existing markets, including a Culinary Dropout and a Henry. All three restaurants opened a strong demand, with average weekly sales equating to an annualized AUV of over $8.7 million. And with that, let me turn the call over to Matt for our financial review. Thank you, David.

Let me first provide a high-level recap of our fourth quarter results versus our expectations I outlined last quarter. Total revenues were $961.6 million, inclusive of $17.3 million of gift card breakage revenue as a result of a change in historical redemption patterns. Excluding this benefit, fourth quarter revenues of $944.3 million finished within the range we provided. Adjusted net income margin was 5.1%, and adjusted diluted earnings per share was $1, both finishing toward the higher end of our expectations. That's $24 million to our shareholders in the form of dividends and stock repurchases. In the fiscal year, we delivered total revenues of $3.75 billion, up 5% from the prior year. Adjusted diluted earnings per share increased 10% year-over-year to $3.77. An adjusted EBITDA totaled $354 million. We returned more than $206 million in the form of dividends and stock repurchases in 2025. Now turning to some more specific details around the quarter. Fourth quarter, total sales at the Cheesecake Factory restaurants were $681.4 million, up 2% from the prior year. Excluding the gift card breakage benefit, total sales at the Cheesecake Factory restaurants were $664.2 million. Comparable sales, which is not impacted by the gift card breakage adjustment, declined 2.2% versus the prior year. Total sales for North Italia were $88.2 million, up 8% from the prior year period. FRC sales totaled $99.4 million, up 17% from the prior year, and sales for operating week were $139,100. Salad sales totaled $45.5 million, up 19% from the prior year, and sales per operating week were $83,400, and external bakery sales were $17.2 million. Year-over-year expense, specifically, cost of sales decreased 70 basis points, with 40 basis points attributable to the gift card breakage benefit-to-revenue, with the remainder primarily driven by favorable commodity costs and makeshift, partially offset by higher beef costs. Labor as a percent of sales declined 40 basis points, with 60 basis points attributable to the gift card breakage benefit. The remaining difference was primarily driven by higher group medical expenses, partially offset by the continued improvement and retention, supporting labor productivity gains and wage leverage, as well as lower payroll taxes. Operating expenses declined to 20 basis points, with 50 basis points attributable to the gift card breakage benefit, partially offset by timing of marketing spend, as the percent of sales increased 70 basis points, primarily driven by the write-down of gift card inventory. Depreciation increased 10 basis points from the prior year. Pre-opening costs were $9.4 million in the quarter compared to $7.6 million in the prior year period. We opened seven restaurants during the fourth quarter versus nine restaurants in the fourth quarter of 2024. The year-over-year variance reflects differences in the mix of concepts opened during the respective quarters. And in the fourth quarter, we recorded a pre-tax net expense of $24.6 million related to impairment of assets and lease termination expenses, FRC acquisition related items, gift card breakage, and gift card inventory adjustments. Fourth quarter GAAP diluted net income per share was $0.60. Adjusted diluted net income per share was $1.00. Now turning to our balance sheet and capital allocation. End of the quarter with total available liquidity of approximately $582.2 million, including a cash balance of $215.7 million and approximately $366.5 million available on a revolving credit The total principal amount of debt outstanding was $644 million, including $69 million in principal amount of convertible notes due June 2026, and $575 million in principal amount of convertible notes due 2030, totaled approximately $25 million during the fourth quarter for new unit development and maintenance. During the quarter, we completed approximately $11.2 million in share repurchases and returned $12.8 million to shareholders via our dividend. Now let me turn to our outlook. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for Q1 and full year 2026. Our assumptions factor in everything we know as of today, including net restaurant counts, quarter-to-date trends, our expectations for the weeks ahead, anticipated impacts associated with holiday shifts, and the recent softness in industry sales trends and the current consumer environment. Specifically, for Q1, we anticipate total revenues to be between $955 and $970 million. This includes the estimated impact of inclement weather experienced so far in the quarter, and four restaurant closures that occurred toward the end of January. These closures included two Cheesecake Factories, one Grand Luxe Café, and one Blanco. Next, at this time, we expect effective commodity inflation of low single digits for Q1 as our broad market basket remains very stable. We are modeling net total labor inflation of low to mid single digits when factoring in the latest trends in wage rates and minimum wage increases, as well as other components of labor. G&A is estimated to be approximately $63 million to $64 million. Depreciation is estimated to be approximately $28 million. We are estimating pre-opening expenses to be approximately $4 million. Based on these assumptions, we would anticipate adjusted net income margin to be about 5% at the midpoint of the sales range for modeling purposes, we are assuming a tax rate of approximately 5% to 6% due to the timing of certain discrete items in the quarter, and weighted average shares outstanding of approximately $48.5 million. Turning to fiscal 2026, based on similar assumptions and no material operating or consumer disruptions, we anticipate total revenues for fiscal 2026 to be approximately $3.9 billion at the midpoint of our sensitivity modeling. For sensitivity purposes, we are using a range of plus or minus 1%. We currently estimate total inflation across our commodity basket, labor, and other operating expenses to be in a low to mid-single-digit range and fairly consistent across the quarters. We are estimating G&A to be about 6.5% of sales, partially driven by our sales growth outlook impacted by the timing of restaurant openings and closures, as well as periodic true-ups related to stock-based compensation. Depreciation is expected to be about $115 million for the year. And given our unit growth expectations, we are estimating pre-opening expenses to be approximately 35 million to 36 million dollars based on these assumptions we would expect full-year net income margin to be approximately five percent at the sales estimate provided for modeling purposes we are assuming a tax rate of approximately 10% and weighted average shares outstanding relatively flat to 2025 regards the development as David stated earlier we plan to continue accelerating unit growth this year. At this time, we expect to open as many as 26 new restaurants in 2026, with roughly three-quarters of those openings planned for the second half of the year. This includes as many as six Cheesecake Factories, six to seven North Italia's, six to seven Flower Child's, and seven FRC restaurants. Participate approximately $210 million in cash CapEx to support unit development, as well as required maintenance on a regular basis. Note, this CapEx range includes some new restaurant construction expenses, which may be classified as operating lease assets instead of additions to property and equipment in the statement of cash flows. In closing, we deliver solid financial and operational performance for both the fourth quarter and full year. reflecting stable top line performance and strong execution. We also generated a record adjusted EBITDA of $354 million, reinforcing the consistency of the business and supporting disciplined growth and increased capital returns to our shareholders. Our portfolio of high quality concepts, seasoned operators, and financial position provide a solid foundation as we look ahead. As we move forward into 2026, we remain focused on comparable sales growth, margin expansion, and long-term shareholder value creation. With that said, we'll take your questions.

Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. We ask that you limit yourself to one question and one follow-up. For any additional questions, please recue. And your first question comes from the line of Andy Barish with Jeffries. Please go ahead. Hey, guys.

Just wondering if you can kind of update us on sort of the go-forward structure with FRC and, you know, kind of changes you've made there and, you know, what's going on with management team and such.

I have a question. Appreciate it. I work with the team there in a senior operations role, and that continues to go. We'll continue to look at – at the same time, we'll continue to look at that team to innovate and incubate. I think we're really pleased with where things are at, and we'll continue to try to create value.

Thanks. Thank you very much. Your next question comes from the line of Sarah Senator with Bank of America. Please go ahead.

Thank you. So the first question is, you know, you mentioned strong execution that supported margins. You know, I guess given the restaurant-level margin was quite healthy and also that you've seen, I think, a positive response to some of your maybe more accessible price point additions to menus, is there an opportunity to invest in value or at least to sort of market value more centrally as you communicate with your consumers? Is this something we've seen is, you know, other casual diners kind of emphasizing abundant value or, you know, quality value, you know, just given it looks like you have a little bit of room on the margin. And then I do have a quick follow-up.

Hi, Sarah. This is David Gordon. Thank you for the question. Certainly we're very pleased with the reception the Bites and Bowls have gotten across all of the restaurants. And when we rolled those out, we did roll them out with a little heightened sense. We put them on, see them right away. we marketed them a little more clearly in all of our social factory value, and that value comes to attach the bites to their check. As we look to continue to roll out the menu, which we're doing right now, we have some new bites and bowls that are happening. So we're going to lead into that value wherever we can and maybe move some of those items into the main menu and create another menu card so that we have that heightened sense of awareness for guests that are dining in or through our social channels.

Great. Thank you. And then just to confirm the North Italia same-store sales, I guess it's more of a housekeeping. I think last quarter you said sales transfer was maybe two percentage points and the fires were one. Are those roughly the same magnitude and similarly, you know, the day part mixed, more weakness in the lunch? Are all those factors kind of consistent in the fourth quarter as well?

I would say yes, that's very true, and I think the positive news there, though, is that as we're, you know, midway through, that it was truly the cannibalization on menu innovation. We said we would see some negative mix. We did, but in both December and now again in January, it means the guests are coming in and seeing tremendous.

Thank you. Your next question comes from the line of Brian Harbour with Morgan Stanley. Please go ahead.

Yeah, Hank, good afternoon, guys. Matt, just a quick one. Do you have a rough estimate for kind of how much the weather impact was in this current Q1, Brian, just to confirm. Like how much you factored into your guide?

What we did is to really look at it on a net basis, because clearly there, you know, every year there is about a 1% net impact on the entire quarter. So that assumes, you know, no more weather impact. We did see, you know, some record closures. I think we probably had 120 restaurants closed on a peak day. So it was pretty profound.

And so, yeah, so that's – What – you know, you talked about kind of evolving the Bites and Bowls. What's done best on that menu? How are you sort of, you know, shifting that? Or, you know, what are you seeing customers gravitate to?

I think everything has been very, very popular, to be honest. So it's not one particular item, but a couple of the bowls have done very, very well. All the bites have done well. So, you know, that large menu variety is what people love about Cheesecake Factory, and they're soon to be enjoying the bites and the bowls the exact same way.

I really think the truffle fries are the best, Brian.

Your next question comes from the line of Drew North with Baird. Please go ahead.

Great. Thanks for taking the question. I wanted to circle back to your comments on the broader consumer environment. You highlighted the slowdown in industry trends from Q3 and volatility in Q1 to date, particularly due to weather. So at this point, when you look at the business from an underlying perspective, do you believe you've seen any fundamental change in the consumer spending backdrop at this point? And maybe what do you believe has caused some of the softer industry trends in recent months? And then maybe just what does your current outlook for the balance of the year contemplate as it relates to the external environment, given all the puts and takes out there? Thank you.

Sure. It's a great question. This is Matt. I think it's a dial back to our last call. I think we gave some color on why we think the consumer sentiment would be soft for the fourth quarter. You know, and if you kind of think about, you know, we said we thought it would be about 50 basis points. Again, many factors are performances, and I think the environment. And so it feels like what we felt maybe was two points in time where we sit today. And so that's what our full-year guidance also expects, is that where we kind of are seeing it in Q1, which is, you know, pretty steady and pretty good across all of our concepts, will continue through the balance of the year.

Your next question comes from the line of Jim Solera with Stephen. Please go ahead.

Guys, good afternoon. Thanks for taking our question. To circle back on the bulls and bites, you mentioned that you're seeing, you know, attachment with those, and I was hoping maybe you could help us break out on Cheesecake, the traffic and transaction in the quarter, but particularly with an eye to the mix component. Should we expect to see mix as kind of a continued headwind as we roll into FY26 as we kind of balance, you know, maybe some greater attachment, put the lower check size from the bulls and bites and maybe that drives some transactions as well.

Sure, Tim, this is Matt. Q4 pricing was about three and a half to four percent and mix was a negative 1.8. The new menu items really ending in subtraction. And now again in January is an actual improvement year over year in incident rates for the year. Importantly too, as we look at January, when you look at alcohol plus non-alcoholic beverages, it was almost a break-even on incident rate. So I think it's really guests are coming in and getting that full cheesecake experience. So I don't know, we're kind of saying, if you think about the guys, probably a negative one for the year on a mixed perspective based on continuing to roll out the bulls and the bites, but getting some positive on the order rate.

All right, good, that's very helpful. And then just to follow up, as we think about some demand drivers in 26, I know there's been a lot of conversations around incremental demand from people getting tax refunds, you know, larger than expected tax refunds. Do you have any kind of historical, you know, data that you can look at from when there were big refund seasons in the past? Is that something that actually tends to show up in the restaurants, or is that maybe just more the talking point than a reality from what you guys see on the ground?

Yeah, I mean, I think, you know, great companies control their destiny, Jim. And so we don't really ever count on getting any benefits from the tax refunds. I think what we're seeing in our performance, given also that in the income cohort, I just don't think it's as pronounced.

Okay, good. I appreciate the thoughts. I hope I can agree.

Your next question comes from the line of Jeffrey Bernstein with Barclays. Please go ahead.

Great. Thank you. My first question is just on the restaurant margin, specifically around what your assumptions are for the quarter and the year. It does seem like now all the three brands that you're reporting are comfortably sitting in that 17% to 18% range. I'm just wondering how we should think about that as the portfolio and by brand. And he puts some takes in terms of how that should play out as we look through 26. And then I had one follow-up.

Thanks for the question. Let's just start with the full year on this retention at corporate. And so there's this thing called a forfeiture rate with the equity comp that will true up a little bit, but it's really sort of non-operating, but it is the P&L. And then all the other pieces kind of net out. So a very, very clean outlook for us. You know, the caveat comes on quarter-to-quarter basis. Obviously, other OPEX can be a little bit bumpier. In the first quarter, again, the 25 basis points coming in cost of sales, a little bit of the pressure on labor and lapping group medical, but really the difference there is about 50 basis points and other op-ex, which is timing of marketing spend and some utilities. And then, you know, you can do the math on the pre-opening and other pieces. So pretty much a flattish year-over-year net income guide and then that slight improvement for the full year.

Got it. And my follow-up is just on the menu pricing, obviously the flip side to the greater emphasis on value, but I think you mentioned that the Cheesecake was running price in the 3.5% to 4% range. Maybe just quantitatively, what are you expecting as we run through this year and qualitatively your confidence in being able to take whatever particular lever you're targeting, or maybe that's a gross amount you expected on a net basis. You won't necessarily pass all that through. But just conceptually, how are you thinking about that pricing, and actually what will that pricing be?

Yeah, Jeff, so it's Matt. So this year, Cheesecake will be about 3%. time. So we're bringing that down, which I think, you know, number one, we saw the inflation numbers were well below in that endeavor. And I think we feel like that's a, you know, definitely an achievable level. And we have that pricing power based on where we're seeing the sales trends today, the attachment rates today, you know, the guests are perceiving value there.

Thank you. Your next question comes from the line of Lauren Silberman with Deutsche Bank. please go ahead.

Thanks a lot. You got, you called out the four closures to date. Were these all anticipated and any other closures that are anticipated for the balance of 26?

Yeah, this is David Gordon. Yeah, they were all anticipated.

Just on the comp side, are there any call outs in terms of differences across regions or day parts? And I guess in the markets that haven't been impacted by weather, are you seeing trends hold up with, you know, pretty stable?

Well, and this is Matt, it's a little complicated because different points in time, I think, are doing well.

And then just final one, going back to the north, how are you thinking about comps for that business into 26? I know there's a capitalization dynamic. Do those continue? Any differences in where new units are expected to open?

So the new units specifically are about 50-50 in new and existing markets. So we continually evaluate where any potential cannibalization might be as we look at any new sites and would anticipate for this year probably a little bit less than we had with the openings that were a little more impactful in 12 months that we've seen. And, you know, our goal is to get North a little bit more stabilized than it has been, probably a little more impacted versus Cheesecake and more in line with the rest of the industry. So, at North, we continue to be working also on menu innovation, working a little bit on that lunch day part, because that was where we felt a little bit of the pressure over the past few quarters, and continued bar innovation as well. We've seen a nice little comeback in bar incident rates at North, which is good, it's an important part of the concept, and bar mix is about 23 percent, it's been very, very stable, so we're working on innovation in that area as well, as we believe it will continue to be very relevant to the concept just for for modeling I think like I said you know we've seen the impacts of the fire and the the cannibalization rolling off and you know it kind of assumes sort of like more like first half of last year's performance thank you very much appreciate it your next question comes from the line of Christine Cho with Goldman Sachs please go ahead yes thank

Thank you for the question. So David, you mentioned your plans to launch the Dedicated Rewards app in a few months. Could you elaborate a little bit more on the timeline and if you have any planned marketing investments around the launch?

Sure, Christine. Our goal would be to get it launched in the second quarter. I think that we're feeling pretty confident that that's going to be the case. And we will launch it with a strong social media presence, what we think will be a nice, strong offer for people to download the app onto their phone from marketing as well.

Great. And then in the last quarter, I think you've called out some regional trends coming from the government shutdowns. Has that normalized as you exited the quarter? Thank you.

Yeah, I think we've seen pretty stable performance across the portfolio. Again, ex the weather, which, you know, everybody is seeing at different times at different places.

Your next question comes from the line of Jeff Farmer from Gold. Gordon Haskett. Please go ahead.

Thank you. Matt, just as a follow-up, I think you referenced that Q2 25 Samshare sales were roughly plus 1%. Were you saying that plus 1% is the implied 2026 Samshare sales number? Did I get that right or wrong? That's right.

If you do the math, that's about where you're going to come into.

Okay. And then just following up on the rewards app launch, tougher question, But in terms of setting an expectation level for us, how impactful could this be to visit frequency, average check, whatever metric you want to point to, just how meaningful could this be from what you guys have understood?

Sure, Jeff. I think that our goal is to continue to make members' experience as seamless as possible and give them as much value as they can as members. so I wouldn't anticipate we're going to share any of those finer details in the near future just like we have it in the recent past but we're going to be very focused on the app making the guest experience easier so easier access to reservations for them being able to see things like their order history repeat their order history from we're excited to get it going in Q2 and if and when we start sharing any of those numbers we'll be sure to share them on one of these calls thank you your next question comes from the line of Brian Mullen with

Piper Sandler please go ahead thank you a question on flower child wonder if you could just talk about the vision here over the next several years you know what have you learned about the formats and locations that work best for this brand you know how much can you standardize that versus kind of needing to customize based on the location and just as a part all that you know what What would you need to see to really start to ramp that development pace above the six or seven for this year?

Sure, Brian, that's a great question. Certainly we are enthusiastic, and that continues to. In new and existing, as we've moved into new markets, even when there has been no flower child within miles or states, the reception has been very, very strong. So it's resonating with consumers, I think, for a few reasons. One, it's very healthy, on-trend, and delicious, transactional, and today we continually say that we believe all of our guests are looking for experiences versus transactions. And then the operations team really has put in place a lot of systems 24 months. There's probably a little bit more of that to go, but up to this point, we look at the type of reviews we're getting in social media or even just through our own channels are very, very positive, and that's because of the consistent execution. So we feel good that the concept is certainly in a place where it can accelerate. The only thing that's holding us back from going a little bit faster than maybe a 20% growth, we have the right people, we need the right leadership at the GM and executive chef level to open up those. If we're able to ramp that up over time, could it be a little faster than 20% eventually? Perhaps, but for now in the near term, we feel confident in that 20% number, and that's what we're most focused on. thank you.

Your next question comes from the line of Dennis Geiger with UBS. Please go ahead.

Great. Thanks, guys. I appreciate the commentary on mix. Matt, I just wanted to confirm, did you say how much of the mix pressure was bowls and bites versus group order versus maybe alcohol and dessert in the quarter? And they spoke to alcohol for January, but just in the fourth quarter um is there a breakdown by by bucket as far as the mixed impacts go hey i didn't we saw got it very helpful and then i guess just i assume it's a similar answer but just on the on the 26 as you think about maybe you know a best guess of that down one mix is that the same largely from the new product on the bites and bowls more so than like a group order dynamic etc as you think about that that estimate for for 26. yes that's right exactly so i mean I mean, you know, there's no pricing, but as you start to – Very helpful. Thanks, Matt.

Your next question comes from the line of Raul Crow with J.P. Morgan. Please go ahead.

Good afternoon, guys. You guys are very early on DoorDash, and I believe with the exclusivity, there has been a lot of discussion in the industry and also across some of your peers on how you want to rethink fees, menu pricing, and whatnot. Can you give some detail on how you guys are thinking about this and also remind us on where the delivery mix is today?

Sure, Raul. This is David Gordon. Great question. You're right. We certainly have been in a longstanding relationship with DoorDash. It's been a – so then we take today, which is only about two to three menu. When we look at total off-premise, 2% of sales, up about 1% from – And that mix of that 22%, 10% is delivery, and the rest is split relatively evenly through online ordering and phone pickup. So that's been very consistent. Those numbers have been very consistent, and that mix has been consistent over time.

Is there any possibility that you can extend this partnership across all your other brands down the line?

I believe only Cake and Grand Lex were on the initial agreement just any updated thoughts there sure well actually all the concepts are covered in the agreement today so everything we own is part of the DoorDash agreement thank you your next question comes from the line of Brian Vaccario with Raymond James please go ahead hi thanks and good evening I wanted to ask about the 26 unit growth and I thought it was interesting to see Cheesecake Factory's unit growth stepping up a bit. Maybe you just could give a little bit more on the opportunity you see there and maybe level set the size of units that you're opening and kind of the AUV or unit economic targets on these units. I know there's been some successful unit openings over the years in pockets that open up but maybe just kind of what you're seeing in terms of that outlook for 26.

Sure, Brian. So we're excited to be open because of the flexibility and size, everything from we can build the Cheesecake Factory at any great site. For this coming year, most of these are in that 77,000 to 7,500 square foot range perspective.

This is Matt. We've been super happy with the sales level. They've been able to generate effect.

That's helpful. Appreciate that. And then on the margin outlook, Matt, could you comment specifically on just your expectation for commodity inflation specifically, and any quarterly variability to keep in mind on the commodity front year on year?

Sure. Commodities would be about two and a half per- Knock on wood.

Knock on wood. And then last one for me. I'm sorry if I missed it, but could you also provide the comp components for North Italia in the fourth quarter? Thanks again.

Hey, Brian. This is Etienne. Yeah, I'll give you the components here. So traffic was negative 6% and the mix was negative 2%.

Thank you.

And ladies and gentlemen, that concludes our question and answer session, and that concludes today's call. Thank you for your participation, and you may now disconnect.