Will Cheesecake Factory comment on obesity drugs in call?
The Cheesecake Factory (CAKE) missed on both the top and bottom line in its third-quarter earnings, with adjusted EPS of 39 cents missing on Wall Street estimates of 43 cents. Shares of the restaurant chain started to dip in after-hours trading on Wednesday. Investors will listen in closely to the earnings call, waiting to see if leadership will comment on any changes in consumer demand and the rising popularity of Novo Nordisk's Ozempic (NVO) and other obesity drugs, which have taken over many earnings calls.
Yahoo Finance reporters Josh Schafer, Alexandra Canal, and Pras Subramanian break down the latest on these numbers and what to expect with the company's call.
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Video Transcript
JOSH SCHAFER: I've got another earnings story for us that I want to check out if we can take a look at Cheesecake Factory shares after hours, sliding a bit on two key numbers here. So adjusted EPS for the quarter coming in at $0.39. The Street had been hoping for $0.43, so a slight miss there.
And then another big callout here would be comparable restaurant sales. That's obviously one of those key numbers we always think about in terms of restaurant. So sales were up 2.4% on those comparable restaurants, but the Street had wanted 3.7%. So a little bit of a miss there.
I think the overall thing you probably want to hear on this Cheesecake Factory earnings call is just consumer demand, are people still continuing to come in, are they trading down on that menu at all. We heard that a little bit from some of the food companies. And then Ozempic, right? It's the number one mentioned thing on earnings calls this quarter as far as things that are coming up now that weren't coming up before.
How does that impact someone like Cheesecake Factory? I was reading through some Wall Street research today, and it was interesting to think about this menu as a whole. Because Cheesecake Factory has an expansive menu. They have a lot of gluttonous food that we all enjoy. Like--
ALLIE CANAL: Their salads are literally 2,000 calories.
JOSH SCHAFER: But they also do have healthy sides of the menu. So it'll be interesting to see if management brings up that. When you think about the big menu, you can make healthy choices on a bigger menu, too.
ALLIE CANAL: That's true, and I do think we could possibly see shares reverse, depending on what the commentary is in the earnings call. Because at the end of the day, we still saw positive same store sales growth, both year over year and compared to 2019 as well. So that's encouraging. But any sign on what the consumer is doing, those consumer behavior shifts, patterns, anything like that, I think will be important on the call.
PRAS SUBRAMANIAN: Yeah, I'm kind of curious about how-- are we seeing-- you said shifting down in sort of things that they're ordering. Are we seeing not just shift down, but people not going to Cheesecake Factory? It's a bit pricey compared to the [INAUDIBLE]
ALLIE CANAL: It is. It's more elevated, yeah.
PRAS SUBRAMANIAN: Are they going to like the Applebee's of the world, the Brinker restaurants, whatever those are. [LAUGHS] You know, I might go to [INAUDIBLE].
ALLIE CANAL: Chili's.
PRAS SUBRAMANIAN: Chili's, yes, exactly. Are we seeing those restaurants, are they seeing the Cheesecake Factory sort of people go down a little bit down market to those areas? Because cheesecake is a little bit pricey.
ALLIE CANAL: Yeah, cheesecake ain't cheap.
