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r e s t a u r a n t s
i n o p e r a t i o n
a n d r e v e n u e s
Restaurants in Operation
Revenues (in millions)
'92
5
'94
10
'96
17
'98
27
'00
41
'02
62
'04
92
'06
131
'08
159
'10
163
'12
177
'14
189
'15
200
$52
$86
$160
$265
$438
$652
$969 $1,315 $1,606 $1,659 $1,809 $1,977 $2,101
f i n a n c i a l h i g h l i g h t s
Revenues (in millions)
Comparable restaurant sales (1)
Adjusted operating income margin (2)
Adjusted diluted net income per share (3)
Cash flow from operations (in millions)
Restaurants open at fiscal year-end (4)
(1) The Cheesecake Factory restaurants.
2015
$2,101
2.6%
8.2%
$2.37
$235
200
2014
$1,977
1.5%
7.3%
$1.97
$240
189
2013
2012
$1,878
$1,809
1.1%
8.6%
$2.10
$205
180
2.2%
8.2%
$1.88
$195
177
2011
$1,758
2.0%
7.7%
$1.64
$196
170
(2) Operating income margin in fiscal 2015, 2014, 2013, 2012 and 2011 excludes $6,011, $696, ($561), $9,536 and $1,547,
respectively (in thousands), related to a number of items that we do not consider indicative of our ongoing operations.
Please refer to the section entitled “Non-GAAP Measures” included in Item 6, “Selected Financial Data,” of the Form 10-K
in this Annual Report and the 2012 Annual Report for more information on these items.
(3) Diluted net income per share in fiscal 2015, 2014, 2013, 2012 and 2011 and excludes $0.07, $0.01, ($0.01), $0.10 and ($0.01),
respectively, related to a number of items that we do not consider indicative of our ongoing operations. Please refer to the
section entitled “Non-GAAP Measures” included in Item 6, “Selected Financial Data,” of the Form 10-K
in this Annual Report and the 2012 Annual Report for more information on these items.
(4) Full-service The Cheesecake Factory restaurants, Grand Lux Cafe and RockSugar Pan Asian Kitchen.
d i r e c t o r s a n d o f f i c e r s
Board of Directors
Executive Officers
Operating and Staff Officers
David Overton
Chairman of the Board and
Chief Executive Officer
The Cheesecake Factory
Incorporated
Alexander L. Cappello
Chairman and
Chief Executive Officer
Cappello Group, Inc.
Jerome I. Kransdorf
President Emeritus
JaK Direct
Laurence B. Mindel
Managing Partner
Poggio Trattoria
David B. Pittaway
Senior Managing Director,
Senior Vice President and
Secretary
Castle Harlan, Inc.
Douglas L. Schmick
Co-Founder
McCormick & Schmick’s
Seafood Restaurants
Herbert Simon
Chairman Emeritus
Simon Property Group, Inc.
David Overton
Chairman of the Board and
Chief Executive Officer
Donald C. Moore
Executive Vice President and
Chief Culinary Officer
David M. Gordon
President
W. Douglas Benn
Executive Vice President and
Chief Financial Officer
Debby R. Zurzolo
Executive Vice President,
General Counsel and
Secretary
Max S. Byfuglin
President – Bakery Division
Spero G. Alex
Senior Vice President –
Operations, The Cheesecake
Factory Restaurants
Dina R. Barmasse-Gray
Senior Vice President –
Human Resources
Keith T. Carango
Senior Vice President and
Chief Operating Officer –
Bakery Operations
Matthew E. Clark
Senior Vice President –
Finance and Strategy
Donald C. Evans
Senior Vice President and
Chief Marketing Officer
Stan D. Harvey
Senior Vice President –
Purchasing
Brian MacKellar
Senior Vice President –
Development
Lisa A. McDowell
Senior Vice President –
Global Development
James D. Rasmussen
Senior Vice President and
Chief Information Officer
Cheryl M. Slomann
Senior Vice President –
Finance and Corporate
Controller
Charles G. Wensing
Senior Vice President –
Operations Services,
Performance Development and
New Restaurant Operations
Jack K. Belk
Senior Regional
Vice President –
Restaurant Operations
Jeffrey Nemet
Regional Vice President –
Restaurant Operations
Joseph T. Phillips
Regional Vice President –
Restaurant Operations
Steve M. Polce
Regional Vice President –
Restaurant Operations
Atallah A. Baroudi, Ph.D.
Vice President –
Food Safety and
Quality Assurance
Heather M. Berry
Vice President –
Beverage and
Bakery Operations
Gregory A. Breland
Vice President –
Development
Linda J. Candioty
Vice President –
Guest Experience
Richard J. Frings
Vice President –
Compensation and Benefits
Sidney M. Greathouse
Vice President and Senior
Counsel – Legal Services
Anthony R. Gressak, Jr.
Vice President –
Bakery Distributor Sales
Ronald Isack
Vice President –
Bakery Supply Chain
Etienne Marcus
Vice President –
Strategy and Finance
Philip Mardirossian
Vice President –
Bakery Marketing
Kix McGinnis Nystrom
Vice President –
Kitchen Operations
Robert Okura
Vice President –
Culinary Development and
Corporate Executive Chef
Alan B. Phillips
Vice President –
Internal Audit
Claire M. Prager
Vice President –
Talent Selection
Chris M. Radovan
Vice President –
Bakery Research and
Development
J. Suzanne Reed
Vice President –
Bakery Sales and Marketing
Richard H. Reinach
Vice President –
Facilities Management
John Scott
Vice President –
Bakery Food Safety and
Quality Assurance
Jeffery Stepler
Vice President –
Organizational Engagement
Roman L. Wasylyn
Vice President –
Tax
Laurie A. Lambert-Gaffney
Vice President –
Staff Relations
Robert T. West
Vice President –
Information Technology
Kurt E. Leisure
Vice President –
Risk Services
s h a r e h o l d e r i n f o r m a t i o n
Corporate Counsel
Sheppard Mullen Richter & Hampton
Los Angeles, California
Independent Accountants
PricewaterhouseCoopers LLP
Los Angeles, California
Transfer Agent, Registrar and
Dividend Payments
Computershare Investor Services
250 Royall Street
Canton, MA 02021
(800) 962-4284
Inquiries
Communications regarding lost certificates, and name and
address changes should be directed to our Transfer Agent.
Other investor inquiries should be directed to:
W. Douglas Benn
Executive Vice President and Chief Financial Officer
The Cheesecake Factory Incorporated
26901 Malibu Hills Road
Calabasas Hills, CA 91301
(818) 871-3000
Common Stock Trading
Our stock began trading on The NASDAQ Stock Market
on September 18, 1992 under the symbol CAKE at the
initial public offering price of $2.63 (adjusted for five
three-for-two stock splits in March 1994, April 1998,
June 2000, June 2001 and December 2004). We com-
pleted follow-on public offerings of common stock in
January 1994 and November 1997. The market price of
our common stock has not closed below $2.63 and has
closed as high as $58.17 through December 29, 2015,
our last fiscal year-end.
Website
To learn more about our Company, please visit www.
thecheesecakefactory.com and our related websites at
www.grandluxcafe.com and www.rocksugarpanasiankitch-
en.com. To learn about our sustainability initiatives,
please visit www.thecheesecakefactory.com/corporate-so-
cial-responsibility/sustainability.
th e chees eca ke factory
t o o u r s h a r e h o l d e r s
We felt honored to begin 2015 being
named to Fortune magazine’s list of the
100 Best Companies to Work For®. We are
gratified to receive this prestigious award,
and it set the tone for the year, as we fo-
cused on continuing to strive for excellence
and progress, while not losing sight of our
rich, 38-year history.
2015 In Review
In many ways, our performance in 2015 was the culmination
of the investments we made in our business over the past
few years. We completed the year with 200 restaurants in
operation in the United States across three concepts. We
achieved our target of opening 11 Company-owned restau-
rants domestically, expanding into new markets and filling
in underserved existing markets. We continued to see the
benefit of our disciplined site selection process, selecting
only those locations that we are confident can achieve our
targeted returns.
Internationally, our licensees opened three restaurants in
2015 in Mexico and the Middle East. The Cheesecake
Factory’s presence expanded into new markets with the entry
into Mexico City and Beirut. Response to our brand contin-
ues to be very strong, positioning us well to capitalize on our
global opportunity.
Our financial performance in 2015 was strong, as we
completed our sixth consecutive year of delivering positive
quarterly comparable sales growth. We achieved $2 billion
in revenues last year for the first time while significantly
improving our operating margin – one of our long-standing
goals. In all, we delivered 20% adjusted earnings per share
growth, exceeding our goal for total return to shareholders.
2015 ann ual report
page 1
t he chees eca k e factory
We generated extensive free cash flow and returned approx-
imately $141 million in cash to our shareholders last year
through share repurchases and dividends. Our weighted
average shares outstanding were again reduced significantly in
2015 helping to drive our earnings per share growth, and we
increased our dividend by 21%, delivering on our commit-
ment to meaningfully increase our dividend over time.
Technology was an important theme for us in 2015, as we
continued to strengthen our information technology infra-
structure to enhance the overall guest experience, increase
our cyber security and improve our internal systems. We
introduced a branded mobile payment app, CakePay™, in
a group of test restaurants. We believe offering this option
will enhance our guests’ experiences by adding flexibility and
convenience to our guests who wish to pay using their mo-
bile devices. We also implemented a comprehensive cyber
security initiative to protect our guests through end-to-end
encryption and tokenization of credit card data. And, to
enhance our talent recruitment capabilities, we rolled out a
mobile app allowing candidates to complete employment
applications from their mobile devices.
Our sustainability initiative gained momentum in 2015 as
well, as we completed installation of solar panels at our cor-
porate support center. Additionally, our new training center
is Leadership in Energy & Environmental Design (LEED)
certified by the U.S. Green Building Council. We also
completed tests of new energy management technologies at a
sampling of our restaurants with the aim of reducing overall
energy consumption. We are excited to expand these practic-
es to our restaurants across the country. And, we continued
pa ge 2
2015 annual report
th e chees eca ke factory
to make significant progress with our supply chain, with the
adoption of animal welfare guidelines.
The Year Ahead
This year is off to a wonderful start as we were named to For-
tune magazine’s 2016 list of the “100 Best Companies to Work
For®” for the third consecutive year. We continue to be honored
by this prestigious recognition and believe it is a testament to
our managers’ and staff members’ dedication to making The
Cheesecake Factory unlike any other place to work.
On the development front, we expect to continue our growth
in 2016 with the planned opening of as many as eight restau-
rants domestically. We anticipate entering into a number of
new markets this year, including Albuquerque, New Mexico
and Greenville, South Carolina. We operate in a variety of
restaurant sizes that we customize to specific markets and sites,
and this flexibility bodes well for us in maximizing premier
real estate opportunities. Our international expansion will
take a substantial step forward this year, with as many as four
to five openings planned by our licensees. This growth rep-
resents a 36% to 45% increase in the number of The Cheese-
cake Factory locations outside the United States, and 2016
will mark the entry of our brand into China at Disneytown
within the Shanghai Disneyland Resort.
We plan to utilize our free cash flow for share repurchases
and dividends in 2016, as we have done in the past several
years. Our flexible capital structure allows us to strategically
allocate capital to both invest in our future and support our
shareholder return goals.
As We Look to the Future
Beyond 2016, we see multiple avenues for increasing our
topline revenue from continued comparable sales growth
at our current base of restaurants and from the opening of
additional restaurants in new and existing markets. We also
are actively seeking opportunities to grow our revenue stream
by investing in other restaurant concepts, whether external
brands or internally created ones, as well as continually seek-
ing additional ways to leverage the power of The Cheesecake
Factory brand.
2015 ann ual report
page 3
t he chees eca k e factory
We also see a solid opportunity to recapture our peak
operating margins. We will continually use our tools and
systems to improve labor productivity, increase food efficien-
cies and support our sustainability efforts by saving energy.
In addition, significant margin expansion over the next few
years will come from the flow-through created by our inter-
national royalty stream, as the number of locations opened
by our licensee partners increases.
Revenue growth and margin expansion along with our plan
to continue to return a significant amount of capital to
shareholders through share repurchases will generate depend-
able and sustainable earnings per share growth. Taking our
dividend into account, our longer-term objective is to deliver
mid-teens returns to shareholders.
In Conclusion
The Cheesecake Factory is a highly differentiated brand and
one that is competitively well positioned. We are excited about
continuing to grow, as we work towards operating 300 restau-
rant locations in the United States, accelerating our growth in
international markets and creating value for our shareholders.
In closing, I extend my sincere gratitude to our management
team and all of our staff members for the incredible work
they do every day taking care of our guests and fostering our
commitment to quality and excellence.
And to our community of shareholders, restaurant guests,
bakery customers, suppliers and international licensees, thank
you for your ongoing support and spirit of partnership.
Best regards,
David Overton
Founder, Chairman and Chief Executive Officer
FORTUNE and 100 Best Companies to Work For® are registered
trademarks of Time Inc. and are used under license. From FORTUNE
Magazine, March 3, 2016 © 2016 Time Inc. FORTUNE and Time
Inc. are not affiliated with, and do not endorse products or services of
The Cheesecake Factory Incorporated.
pa ge 4
2015 annual report
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 2015
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-20574
THE CHEESECAKE FACTORY INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
26901 Malibu Hills Road
Calabasas Hills, California
(Address of principal executive offices)
51-0340466
(I.R.S. Employer
Identification No.)
91301
(Zip Code)
Registrant’s telephone number, including area code: (818) 871-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, par value $.01 per share
Name of each exchange on which registered
The NASDAQ Stock Market LLC (NASDAQ Global Select Market)
Preferred Stock Purchase Rights
(Currently attached to and trading with the Common Stock)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
(Do not check if a smaller reporting company)
Accelerated filer
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the second fiscal quarter, June 30,
2015, was $2,482,053,715 (based on the last reported sales on The NASDAQ Stock Market on that date).
As of February 16, 2016, 48,485,571 shares of the registrant’s Common Stock, $.01 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Form 10-K incorporates by reference information from the registrant’s proxy statement for the annual meeting of stockholders to be held on
June 23, 2016.
Table of Contents
PART I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
PART IV
Item 15. Exhibits, Financial Statement Schedules
Page
1
14
26
27
28
28
Page
29
31
32
42
43
43
43
43
Page
44
44
44
44
44
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45
2015 annual report
the cheesecake factory
Part I
Forward-Looking Statements
Certain information included in this Form 10-K and other materials filed or to be filed by us with the Securities and
Exchange Commission (“SEC”), as well as information included in oral or written statements made by us or on our behalf,
may contain forward-looking statements about our current and presently expected performance trends, growth plans,
business goals and other matters. These statements may be contained in our filings with the SEC, in our press releases,
in other written communications, and in oral statements made by or with the approval of one of our authorized officers.
Statements set forth in or incorporated into this report regarding our expectations for growth in company-owned and
licensed locations, comparable sales, diluted net earnings per share, and operating margins, our intention to repurchase
stock and pay dividends, and all other statements that are not historical facts, including without limitation statements with
respect to future financial condition, results of operations, plans, objectives, performance and business of The Cheesecake
Factory Incorporated and its subsidiaries, as well as statements that are preceded by, followed by or that include words
or phrases such as “believe,” “plan,” “will likely result,” “expect,” “intend,” “will continue,” “is anticipated,” “estimate,”
“project,” “may,” “could,” “would,” “should” and similar expressions, are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”). These statements are based on our
current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in
such statements.
In connection with the “safe harbor” provisions of the Acts, we have identified and are disclosing important factors, risks
and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements
made by us, or on our behalf. (See Item 1A — Risk Factors). These cautionary statements are to be used as a reference
in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary
statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or
otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with
the SEC. Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking
statements. Although we believe that the assumptions underlying forward-looking statements are currently reasonable, any
of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will
prove to be accurate. Forward-looking statements speak only as of the date on which they are made. Except as may be
required by law, we do not undertake any obligation to modify or revise any forward-looking statement to take into account
or otherwise reflect subsequent events, corrections in underlying assumptions, or changes in circumstances arising after
the date that the forward-looking statement was made.
ITEM 1. Business
General
Our business operations originated in 1972 when Oscar and Evelyn Overton founded a small bakery in the Los Angeles
area. In 1978, their son, David Overton, our Chairman of the Board and Chief Executive Officer, led the creation and opening
of the first The Cheesecake Factory restaurant in Beverly Hills, California. In 1992, the Company was incorporated in
Delaware as The Cheesecake Factory Incorporated (referred to herein as the “Company” or as “we,” “us” and “our”) to
consolidate the restaurant and bakery businesses of its predecessors operating under The Cheesecake Factory® mark.
Our executive offices are located at 26901 Malibu Hills Road, Calabasas Hills, California 91301, and our telephone number
is (818) 871-3000.
As of February 25, 2016, we operated 201 Company-owned restaurants: 188 under The Cheesecake Factory® mark, 12 under
the Grand Lux Cafe® mark and one under the RockSugar Pan Asian Kitchen® mark. Internationally, 11 The Cheesecake
Factory branded restaurants operated in the Middle East and Mexico under licensing agreements. We also operated two
bakery production facilities. We plan to selectively consider other means to leverage our competitive strengths, including
development or acquisition of new restaurant concepts and expansion of our brand to other retail opportunities.
In contrast to many chain restaurant operations, substantially all of our menu items, except those desserts manufactured
at our bakery production facilities, are prepared daily at our restaurants with high quality, fresh ingredients using innovative
and proprietary recipes. One of our competitive strengths is our ability to anticipate consumer dining and taste preferences
and adapt our expansive menu to the latest trends in eating and dining out. We regularly update our ingredients and
cooking methods, as well as create new menu items, to improve the variety, quality and consistency of our food and keep
2015 an nual report
page 1
the cheesecake factory
our menu relevant to consumers. We review and selectively update our entire menu twice a year for customer appeal and
pricing. All new menu items are selected based on uniqueness, anticipated sales popularity, preparation technique and
profitability.
We place significant emphasis on the distinctive, contemporary interior design and decor of our restaurants, which create
a high energy ambiance in a casual setting. Our restaurants require a higher investment per square foot than is typical for
the casual dining industry. However, our restaurants have historically generated annual sales per square foot that are also
typically higher than our competitors. Our stylish restaurant design and decor contribute to the distinctive dining expe-
rience enjoyed by our customers. Our restaurants feature large, open dining areas, a contemporary kitchen design and
where feasible, both exterior and interior patios.
We maintain a general website at www.thecheesecakefactory.com. Our annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, all amendments to those reports, and our proxy statements are available on our
website at no charge, as soon as reasonably practicable after these materials are filed with or furnished to the SEC. Our
filings are also available on the SEC’s website at www.sec.gov. The content of our website is not incorporated by reference
into this Form 10-K.
Throughout this report, we use the term “restaurants” to include The Cheesecake Factory, Grand Lux Cafe and RockSugar
Pan Asian Kitchen, unless otherwise noted. For segment information, see Note 15 of Notes to Consolidated Financial
Statements in Part IV, Item 15. We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for
financial reporting purposes. Fiscal years 2015, 2014 and 2013 each consisted of 52 weeks. Fiscal year 2016 will
consist of 53 weeks.
The Cheesecake Factory Restaurant Concept
The Cheesecake Factory restaurants provide a distinctive, high quality dining experience at moderate prices by offering
an extensive, innovative and evolving menu in an upscale casual, high energy setting with attentive, efficient and friendly
service. As a result, The Cheesecake Factory restaurants appeal to a diverse consumer base across a broad demographic
range. Our extensive menu enables us to compete for substantially all dining preferences and occasions, from the key
lunch and dinner day parts to the mid-afternoon and late-night day parts, which are traditionally weaker times for most
casual dining restaurants, as well as special occasion dining. The Cheesecake Factory restaurants are open seven days
a week for lunch and dinner, as well as Sunday brunch. All items on our menu are available for take-out, which represent-
ed approximately 9% of our restaurant sales for each of fiscal years 2015, 2014 and 2013. All of our restaurants offer
a full-service bar where our entire menu is served. Our alcoholic beverage sales represented approximately 13% of The
Cheesecake Factory restaurant sales for each of fiscal years 2015, 2014 and 2013.
The Cheesecake Factory menu features more than 200 items in addition to items presented on supplemental menus,
such as our SkinnyLicious® menu, which offers approximately 50 innovative items at 590 calories or less. Our core menu
offerings include appetizers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches, omelettes
and desserts, including “Super” food choices, items that are considered “gluten-free” under current regulations and
approximately 50 varieties of cheesecake and other quality baked desserts. Examples of menu offerings include Chicken
Madeira, Cajun Jambalaya Pasta, Thai Lettuce Wraps, Avocado Eggrolls, California Guacamole Salad and our Bacon-Bacon
Cheeseburger.
Our ability to create, promote and attractively display our unique line of desserts is also important to the competitive posi-
tioning and financial success of our restaurants. Our brand identity and reputation for offering high quality desserts results
in a significant level of dessert sales, approximately 16%, of The Cheesecake Factory restaurant sales for each of fiscal
years 2015, 2014 and 2013.
Grand Lux Cafe Concept
Grand Lux Cafe is an upscale casual dining concept that offers globally-inspired, artisan cuisine with an ambiance of mod-
ern sophistication. Using fresh ingredients prepared with advanced cooking techniques, the approximately 150 item menu
at Grand Lux Cafe offers classic American dishes and international favorites, including appetizers, pasta, seafood, steaks,
chicken, burgers, salads, specialty items and desserts. Examples of menu offerings include our Crispy Caramel Chicken,
Buffalo Chicken Rolls and Shrimp Scampi. Each Grand Lux Cafe features an onsite bakery which produces a selection of
signature made-to-order desserts, and a full-service bar. Our alcoholic beverage sales represented approximately 17% of
Grand Lux Cafe sales for each of fiscal years 2015, 2014 and 2013. Our Grand Lux Cafe restaurants are open seven days
a week for lunch and dinner, as well as weekend brunch. Our location in the Venetian Resort-Hotel-Casino in Las Vegas,
pa ge 2
2015 annual report
the cheesecake factory
Nevada is open 24 hours a day and its sister location in the Palazzo Resort-Hotel-Casino is open 20 hours a day. During
fiscal 2013, we closed three of our Grand Lux Cafe restaurants, each of which had previously been fully impaired, because
they were not delivering the necessary sales volumes to generate our required returns.
RockSugar Pan Asian Kitchen Restaurant Concept
RockSugar Pan Asian Kitchen features a Southeast Asian menu in an upscale casual dining setting. The unique décor
of this restaurant features design elements true to the restaurant’s Southeast Asian branding. RockSugar Pan Asian
Kitchen showcases the cuisines of Thailand, Vietnam, Malaysia, Singapore, Indonesia and India with approximately 75
dishes served Asian “family-style” to create an atmosphere that encourages sharing and conversation. Examples of menu
offerings include Lacquered BBQ Ribs, Thai Basil Cashew Chicken, Ginger Fried Rice and Crispy Samosas. RockSugar Pan
Asian Kitchen also features a full-service bar with an extensive wine list and exotic cocktails. We also offer freshly-made
desserts that infuse traditional French flair into nearly a dozen Asian-influenced items.
We currently operate one RockSugar Pan Asian Kitchen restaurant in Los Angeles, California. In fiscal 2015, we recorded
a $6.0 million impairment charge against the carrying value of this restaurant’s assets. The restaurant remains open, and
we have no plans to close it at this time. (See Item 1A — Risk Factors — “Our inability to successfully operate or expand
our Grand Lux Cafe and RockSugar Pan Asian Kitchen brands could materially adversely affect our financial performance.”)
Competitive Positioning
The restaurant industry is comprised of multiple segments, including fine dining, casual dining and quick-service. Casu-
al dining can be sub-divided further into upscale casual, core casual and fast casual dining. Our restaurants operate in
the upscale casual dining segment, which is differentiated by freshly prepared and innovative food, flavorful recipes with
creative presentations, unique restaurant layouts, eye-catching design elements and more personalized service. Upscale
casual dining is positioned above core casual dining, with standards that are closer to fine dining. We believe that we are
a leader in upscale casual dining given the high average sales per square foot of our restaurants as compared to others in
this segment.
The restaurant industry is highly competitive with respect to menu and food quality, service, access to qualified operations
personnel, location, décor and value. We compete directly and indirectly with national and regional restaurant casual
dining chains, as well as independently-owned restaurants, for customer traffic. We also compete with other restaurants
and retail establishments for quality site locations and qualified personnel to operate our restaurants. In addition, we face
competition from quick-service restaurants, mobile catering and grocery stores that increasingly offer higher quality and
greater variety of prepared food products in response to consumer demand. (See Item 1A — Risk Factors — “Failure to
effectively compete for customer traffic may materially adversely affect our financial performance.”)
The key elements that drive our total customer experience and position us favorably from a competitive standpoint include
the following:
Extensive and Innovative Menu. Our restaurants offer one of the broadest menus in casual dining and feature a wide array
of flavors with portions designed for sharing. Substantially all of our menu items, except desserts manufactured at our
bakery production facilities, are prepared daily at each restaurant using high quality, fresh ingredients based on innovative
and proprietary recipes. We generally update our menus twice each year to respond to evolving consumer dining prefer-
ences and food trends, as well as to update pricing. We continue to innovate new menu items and new categories of food
offerings at our restaurants, such as the addition of our SkinnyLicious® menu, “Super” food selections, and gluten-free
choices, further enhancing the variety and price point offerings to our customers.
Our bakery production facilities produce approximately 70 varieties of cheesecakes and other baked desserts for our
restaurants, international licensees and third-party bakery customers using high quality dairy and other ingredients. We
regularly introduce new and innovative cheesecakes and other baked desserts as part of our menu enhancements and for
our external customers. In conjunction with National Cheesecake Day, each year we introduce a special cheesecake which
is sold at our The Cheesecake Factory restaurants, including the introduction of Salted Caramel in 2015, Lemon Meringue
in 2014 and Toasted Marshmallow S’mores GaloreTM in 2013. Offering our proprietary 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 restaurant footprint.
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Commitment to Excellent Service and Hospitality through the Selection, Training and Retention of High Quality Staff Members.
Our mission is to “create an environment where absolute guest satisfaction is our highest priority.” We strive to consistent-
ly exceed the expectations of our customers in all aspects of their experience in our restaurants. One of the most import-
ant aspects of delivering a consistent and dependable level of service is having a team of experienced managers who can
execute our high volume, highly complex restaurants. Our recruitment, selection, training, retention and internal promotion
programs are among the most comprehensive in the restaurant industry, enabling us to attract and retain qualified staff
members who are motivated to consistently provide excellence in customer hospitality. 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 in restauranteuring and customer hospitality. (See “Restaurant Operations, Management and Staffing” below.)
Our focus on the development and engagement of our staff and managers contributed to The Cheesecake Factory being
named in 2015 for the second year in a row to Fortune magazine’s “100 Best Companies to Work For” list.
High Quality, High Profile Restaurant Locations and Flexible Site Layouts. We target restaurant sites in high quality, high
profile locations with a balanced mix of retail shopping, entertainment, residences, tourism and businesses. We have the
flexibility to design our restaurants to accommodate a wide array of urban and suburban site layouts, including multi-
level locations. Our restaurants feature large, open dining areas, high ceilings where available and a contemporary kitchen
design. The layouts are flexible, permitting tables and seats to be easily rearranged to accommodate both small and large
parties, thus permitting more effective utilization of seating capacity. Both interior and exterior patio seating, available
at approximately 90% of our restaurants, allow for additional customer capacity at a comparatively low occupancy cost
per seat. Exterior patio seating is available as weather permits. (See “New Restaurant Site Selection and Development”
below.)
Distinctive Restaurant Design and Decor. Our restaurants’ distinctive contemporary design and decor create a high energy,
upscale ambiance in a casual setting. We have evolved The Cheesecake Factory restaurant design over time to remain
current while retaining a similar look and feel to our earlier restaurants. We apply high standards to the maintenance of
our restaurants to keep them in “like new” condition.
Value Proposition. We believe The Cheesecake Factory and Grand Lux Cafe restaurants are recognized by consumers for
offering value with a large variety of freshly prepared menu items across a broad array of price points and generous food
portions at moderate prices. The average check for each The Cheesecake Factory restaurant customer, including bever-
ages and desserts, was approximately $20.80, $20.20 and $19.70 for fiscal 2015, 2014 and 2013, respectively. The
average check per restaurant customer at Grand Lux Cafe was approximately $21.10, $20.40 and $20.10 for fiscal 2015,
2014 and 2013, respectively.
Vertical Integration of our Bakery Operations. The primary role of our bakery operations is to produce innovative, high qual-
ity cheesecakes and other baked desserts for sale at our restaurants and those of our international licensees, which is
important to our competitive positioning. Vertical integration of this vital part of our brand gives us control over the creativ-
ity and quality of our desserts and is also more profitable than buying from a third party.
Expansion of Company-Owned Locations
The Cheesecake Factory concept has demonstrated success in a variety of layouts (i.e., single or multi-level, from 5,000
to 21,000 interior square feet), site locations (i.e., urban or suburban shopping malls, lifestyle centers, retail strip centers,
office complexes and entertainment centers — either freestanding or in-line) and trade areas. Accordingly, we intend to
continue developing The Cheesecake Factory restaurants in high quality, high profile locations that meet our rigorous site
standards. We have the flexibility in our restaurant designs to penetrate a wide variety of markets across varying popula-
tion densities in both existing and new markets. We continue to expect that there is potential to grow the concept to 300
Company-owned and operated restaurants over time. (See “New Restaurant Site Selection and Development” below.)
We opened eleven, ten and nine new restaurants in fiscal 2015, 2014 and 2013, respectively, including one Grand Lux
Cafe in 2015. The average interior square footage for these restaurants was 10,100, 8,700 and 9,300, respectively. We
plan to open as many locations in any given year that are available and meet our site selection criteria. In fiscal 2016, we
expect to open as many as eight restaurants domestically, including one Grand Lux Cafe.
The number of restaurants opened domestically in fiscal 2014 and 2013 includes the relocation of one and three The
Cheesecake Factory restaurants, respectively. We may periodically relocate certain restaurants as lease terms expire and/
or to optimize our presence in certain trade areas. (See Item 1A — Risk Factors — “We may incur additional costs if we
are unable to renew our restaurant leases on similar terms and conditions, or at all, or to relocate our restaurants in cer-
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tain trade areas, which could materially adversely affect our financial performance.”) In fiscal 2013, we closed three Grand
Lux Cafe locations because they were not delivering the necessary sales volumes to generate our required returns.
It is difficult for us to precisely predict the timing of our new restaurant openings due to many factors that are outside of
our control (see “New Restaurant Site Selection and Development” below). We continually look for additional sites that
meet our standards and are negotiating leases for potential future locations. (See Item 1A — Risk Factors — “If we are
unable to secure an adequate number of high quality sites for future restaurant openings, the growth of our concepts may
be adversely impacted, which could materially adversely affect our financial performance.”)
Expansion of Licensed Locations
In fiscal 2011, we entered into an exclusive licensing agreement with a restaurant and retail operator based in Kuwait to
develop The Cheesecake Factory restaurants in the Middle East. This agreement, as amended in fiscal 2013, provides for
the development of up to 24 restaurants in the United Arab Emirates, Kuwait, Bahrain, Qatar, the Kingdom of Saudi Arabia
and Lebanon, with the opportunity to expand the agreement to include other markets in the Middle East, North Africa,
Central and Eastern Europe, Russia and Turkey. As of the end of fiscal 2015, this licensee operated nine locations, four in
the United Arab Emirates, three in Kuwait and one each in the Kingdom of Saudi Arabia and Lebanon.
In fiscal 2013, we entered into an exclusive licensing agreement with a restaurant operator based in Mexico to develop up
to 12 The Cheesecake Factory restaurants in Mexico and Chile, with the potential to expand the agreement to Argentina,
Brazil, Colombia and Peru. This licensee currently operates two locations in Mexico.
In fiscal 2014, we entered into an exclusive licensing agreement with a restaurant operator based in Hong Kong to develop
up to 14 The Cheesecake Factory restaurants in Hong Kong, Macao, Taiwan and the People’s Republic of China, with the
opportunity to expand the agreement to include Japan, South Korea, Malaysia, Singapore and Thailand. The first restau-
rant is expected to open in fiscal 2016 at Disneytown, adjacent to the Shanghai Disney Resort.
These licensing agreements include initial development fees, site and design fees and ongoing royalties based on our
licensees’ restaurant sales. In addition, our licensees purchase bakery products branded under The Cheesecake Factory®
trademark from us. We do not invest capital to build the restaurants for our licensed locations. We currently anticipate our
licensees will open as many as four to five restaurants in the Middle East, Mexico and Asia in 2016. However, because of
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’ employees,
approval of supply sources and exportation of our bakery products to new countries, the number and timing of new open-
ings in foreign countries may differ from this number.
In 2013, we expanded our corporate infrastructure to include 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. As we evaluate other international markets, we will consider opportunities to directly operate
certain locations ourselves and/or enter into licensing, joint venture or partnership arrangements with other established
companies over time covering other international areas. We are very 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 associ-
ate with companies who will protect our brands and operate our concept in a high quality, consistent manner.
For a discussion of certain risks related to our international expansion efforts, see Item 1A — Risk Factors — “We face a
variety of risks related to our international expansion and global brand development efforts that could negatively affect our
brand, require additional infrastructure to support such efforts, and expose us to additional liabilities under foreign laws,
any of which could materially adversely affect our financial performance.”
New Restaurant Site Selection and Development
Where we locate our restaurants is critical to our long-term success, and we devote significant time and resources to
analyzing each prospective site. We consider many factors when assessing the suitability of a site, including demographics
of the trade area such as average household income, and historical and anticipated population growth. Since our restau-
rant concepts can be successfully executed within a variety of site locations and layouts, we are highly flexible in choosing
suitable locations. We focus on high quality, high profile sites and scale the appropriate restaurant size to each location.
While there are common decor elements within each of our The Cheesecake Factory restaurant sites, the designs are
customized for the specifics of each location, including the building type, square footage and layout of available space. Our
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existing restaurants range from 5,000 to 21,000 interior square feet, and we expect the majority of our new restaurants to
vary between 8,000 and 12,000 interior square feet, generally with additional exterior and/or interior patio seating, select-
ed appropriately for each market and specific site.
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 availability of
the leased space we intend to occupy, and can be subject to delays either due to factors outside of our control or to our
selective timing of restaurant openings. (See Item 1A — Risk Factors — “If we are unable to secure an adequate number
of high quality sites for future restaurant openings, the growth of our concepts may be adversely impacted, which could
materially adversely affect our financial performance.”)
Unit Economics
The operation of high quality restaurants and the selection of premier locations that fit our criteria contribute to the con-
tinuing appeal of The Cheesecake Factory to consumers. 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.
Average sales per location for The Cheesecake Factory restaurants open for the full year were approximately $10.6 million,
$10.5 million and $10.3 million for fiscal 2015, 2014 and 2013, respectively. 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.
Average sales per productive square foot (defined as all interior square footage plus seasonally adjusted exterior patio
square footage) for The Cheesecake Factory restaurants open for the full year were approximately $967, $942 and $921
for fiscal 2015, 2014 and 2013, respectively.
We currently lease all of our restaurants and utilize capital for leasehold improvements and furnishings, fixtures and equip-
ment (“FF&E”) to build out our restaurant premises. Total costs are targeted at approximately $800 per interior square
foot for The Cheesecake Factory restaurants. The construction costs to build our restaurant premises vary from restaurant
to restaurant, 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.
In selecting sites for our restaurants, an important objective is to earn an appropriate return on investment. We measure
returns using a fully capitalized cash return on investment calculated by dividing EBITDAR (earnings before interest, taxes,
depreciation and amortization, and rent expense) by our cash investment plus capitalized rent (computed as eight times
annual rent). We target an average return of approximately 20% for new restaurants. Average fully capitalized cash return
on investment for The Cheesecake Factory restaurants in our comparable sales base was 24% in fiscal 2015, and 23% in
both fiscal 2014 and 2013. Investing in new restaurant development that meets our return on investment criteria sup-
ports achieving a Company-level return on invested capital (“ROIC”) of approximately 15%. Average ROIC was 15%, 14%
and 15% in fiscal 2015, 2014 and 2013, respectively.
Our new restaurants typically open with initial sales volumes well in excess of their sustainable run-rate levels. This initial
“honeymoon” effect usually results from grand opening publicity and other consumer awareness activities that generate
higher than usual customer traffic for our concepts, 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 sustainable run-rate level. Additionally, our new restaurants usually require a period
of time after reaching sustainable traffic levels to achieve their targeted restaurant-level operating margins due to cost of
sales and labor inefficiencies commonly associated with new, highly complex casual dining restaurants such as ours.
Restaurant Operations, Management and Staffing
Our ability to consistently and properly 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 accom-
modate our extensive menu and to drive sales productivity. However, the successful day-to-day operation of our restaurants
remains critically dependent on the ability, dedication and engagement of our General Managers (“GM”), Executive Kitchen
Managers (“EKM”) and all other management and hourly staff members working at our restaurants. Competition among
restaurant companies for qualified personnel remains high. (See Item 1A — Risk Factors — “If we are unable to success-
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fully recruit and retain qualified restaurant management and operating personnel in an increasingly competitive market, we
may be unable to effectively operate and grow our business and revenues, including executing on our plans for domestic
and international expansion, which could materially adversely affect our financial performance.”)
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 staffed with one GM, one
EKM and an average of six to ten additional kitchen and front-of-the-house managers, depending on the size and sales volume
of each restaurant. Our GMs possess an average of more than ten years of experience with the Company. This tenure
and knowledge drives our high productivity and helps us operationally in executing an exceptional guest 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 and cost controls,
staff relations and liquor liability avoidance. Managers continue their development by participating in and completing a
variety of training and development activities to assess their skills and knowledge necessary for continued upward progres-
sion through our management levels. Our GMs regularly meet together to receive hands on training, share best practices
and celebrate Company successes, which in turn, assists in maintaining the unique culture of our brand.
Each restaurant GM reports to an Area Director of Operations (“ADO”) who supervises the operations of six to eight restau-
rants in a region. In turn, each ADO reports to one of four Regional Vice Presidents of Restaurant Operations. Our EKMs
report to their GMs, but are also supervised by an Area Kitchen Operations Manager responsible for between eight and
ten restaurants. Our restaurant field supervision organization also includes our Senior Vice President of Operations, Chief
Culinary Officer, an operations services team and a performance development department who are collectively responsible
for day-to-day operations, managing new restaurant openings and training for all operational managers and staff.
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. Each participant receives a compet-
itive base salary and has the opportunity to earn a cash bonus based on quantitative restaurant performance metrics. GMs
are also eligible to use a Company-leased vehicle. In addition, we provide a longer-term, equity incentive program to our GMs
and EKMs based on their extended service with us in their respective positions and their achievement of certain established
performance objectives during that period. We believe that these awards encourage our GMs and EKMs to think and act as
business owners, assist in retention of restaurant management, and align our managers’ interests with those of our stock-
holders. (See Item 1A — Risk Factors — “Our inability to offer long-term equity incentive compensation may harm our ability
to retain key employees, which could materially adversely affect our operations and financial performance.”)
Our restaurant GMs are responsible for selecting and training hourly staff members for their respective restaurants. Each
restaurant is staffed, on average, with approximately 170 hourly staff members. We require each hourly staff member to
participate in a formal training program for his or her respective position in the restaurant, under the supervision of other
experienced staff members and restaurant management. We strive to foster enthusiasm and commitment in our staff
members through daily staff meetings and dedicated time for training. We solicit suggestions concerning restaurant opera-
tions and other aspects of our business through an annual engagement survey, general manager and workgroup meetings,
a website dedicated to receiving staff member input and other means.
Our focus on development, engagement and retention of our staff and managers led to our being named for the second
year in a row in 2015 to Fortune magazine’s “100 Best Companies to Work For” list, which is published annually based
on a culture review and surveys of current employees to identify and recognize companies that create positive work
environments with high employee morale and fulfillment. In 2015, we were also named to the Fortune “50 Best Workplaces
for Diversity”. In addition, we were awarded the Best Practices Award in both January 2015 and January 2016 recogniz-
ing best overall performance among the Transforming Data into Knowledge (TDn2K)/People Report consortium based on
restaurant management retention, hourly employee retention, composite diversity, year-over-year improvement and commu-
nity involvement.
Preopening Costs for New Restaurants
Due to the highly customized and operationally complex nature of our upscale, high volume concepts and the investment
we make in properly training our staff to operate our restaurants, our preopening process is more extensive, time consuming
and costly than that of most chain restaurant operations. Preopening costs for a typical The Cheesecake Factory restau-
rant in an established market average approximately $1.4 million to $1.5 million and include all costs to relocate and
compensate restaurant management employees during the preopening period, costs to recruit and train hourly restaurant
employees, and wages, travel and lodging costs for our opening training team and other support staff members. Also
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included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary hous-
ing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and
corporate travel and support activities. 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 preopening costs within the two months immediately preceding and the month of a restaurant’s opening.
Preopening costs can fluctuate significantly from period to period, based on the number and timing of restaurant openings
and the specific preopening costs incurred for each restaurant. Preopening costs vary by location depending on a number
of factors, including the proximity of our existing restaurants, the size and physical layout of each location, the number of
management and hourly employees required to operate each restaurant, the availability of qualified restaurant staff mem-
bers, the cost of travel and lodging for different metropolitan areas, the timing of the restaurant opening, and the extent
of unexpected delays, if any, in obtaining final licenses and permits to open the restaurant, which may also depend on our
landlords obtaining their licenses and permits and completing their construction activities.
Bakery Operations
We own and operate two bakery production facilities, one in Calabasas Hills, California, and one in Rocky Mount, North
Carolina. 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 fiscal 2013, we exercised an option to
vest our ownership in land adjacent to our North Carolina facility which, along with additional space on our existing proper-
ty, can accommodate further expansion.
We produce approximately 70 varieties of cheesecakes and other baked desserts for our restaurants and external custom-
ers based on proprietary recipes. Some of our most popular cheesecakes include the Original Cheesecake, Ultimate Red
Velvet Cake CheesecakeTM, Reese’s® Peanut Butter Cup Chocolate Cake CheesecakeTM, Godiva® Chocolate Cheesecake,
Oreo® Dream Extreme Cheesecake, Fresh Strawberry and Salted Caramel. Other popular baked desserts include Choco-
late Tower Truffle CakeTM, Carrot Cake, Black-Out Cake and Lemoncello Cream Torte.
The primary role of our bakery operations is to produce innovative, high quality cheesecakes and other baked desserts
for sale at our restaurants and those of our international licensees. Dessert sales represented approximately 16% of our
restaurant sales in fiscal 2015, 2014 and 2013 and are important to restaurant-level profitability. Vertical integration of
this vital part of our brand gives us control over the creativity and quality of our desserts and is also more profitable than
buying from a third party.
We also leverage our brand identity and profitably utilize our bakery production capacity by selling cheesecakes and other
baked products to external foodservice operators, retailers and distributors. Items produced for outside accounts are mar-
keted under The Cheesecake Factory® trademark, The Dream Factory® trademark, The Cheesecake Factory Bakery® mark
and other private labels. Current large-account customers include the leading national warehouse club operators, food-
service distributors, supermarkets and other restaurants, a national retail bookstore cafe and foodservice operators. We
sell baked goods internationally under both The Cheesecake Factory® and The Dream Factory® trademarks in 27 countries,
including to all licensed The Cheesecake Factory® restaurants. We currently sell a selection of our The Cheesecake Factory
branded cakes online and in catalogs through an agreement with an upscale retailer.
Purchasing and Distribution
We strive to obtain quality menu ingredients, bakery raw materials and other supplies and services for our operations from
reliable sources at competitive prices and consistent with our sustainability goals. We continually research and evaluate
various ingredients and products in an effort to maintain high quality levels, to be responsive to changing consumer tastes
and to manage our costs.
In order to maximize purchasing efficiencies and to provide the freshest ingredients for our menu items while obtaining
competitive prices for the required quality and consistency, each restaurant’s management determines the quantities of
food and supplies required and orders the items from local, regional and national suppliers based upon specifications
established by our corporate office and on terms negotiated by our central purchasing staff. We strive to maintain restau-
rant-level inventories at a minimum dollar level in relation to sales due to the high concentration and relatively rapid turn-
over of the perishable produce, poultry, meat, fish and dairy commodities that we use in our operations, coupled with the
limited storage space at our restaurants. Independent foodservice distributors, including the largest foodservice distribu-
tor in North America, deliver most items multiple times per week to our restaurants.
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Substantially all of our food and supplies are available from multiple qualified suppliers, which helps to mitigate our risk
of commodity availability and obtain competitive prices. We negotiate short-term and long-term agreements for some of
our principal commodity, supply and equipment requirements, such as cream cheese, depending on market conditions and
expected demand. Historically, we were unable to contract directly for extended periods of time for certain of our com-
modities such as some produce, wild-caught fresh fish and certain dairy items. We recently entered into longer-term fixed
pricing agreements for additional dairy items and continue to evaluate the possibility of entering into similar agreements
for other commodities. We also periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in
managing our risk and variability in these categories. Although these vehicles and markets may be available to us, we may
choose not to enter into contracts due to pricing volatility, excessive risk premiums, hedge inefficiencies or other factors.
Where we have not contracted, commodities can be subject to unforeseen supply and cost fluctuations, which at times can
be significant. Additionally, the cost of commodities subject to governmental regulation, such as dairy and corn, can be
even more susceptible to price fluctuation than other products. (See Item 1A — Risk Factors — “Our inability to anticipate
and react effectively to changes in the costs of key operating resources, including food, utilities, other supplies and ser-
vices and labor, may increase our cost of doing business, which may materially adversely affect our financial performance.”)
Sustainability
At the heart of our business model is a set of guiding principles based on excellence and quality in everything we do. As a
part of this commitment, we are continuing to develop a sustainability program that is aligned with our culture and values,
is feasible given the complexity of our restaurant operations and is financially responsible. We are examining all aspects
of our business in an effort to identify, create and implement meaningful and sustained change.
Because much of our environmental impact comes from the ingredients we use in our menu items and bakery products, we
are initially focusing our efforts on our suppliers. We are working with our direct suppliers to source not only the highest
quality ingredients, but also to help us identify ingredients that are more sustainably grown, harvested and raised. We also
strive to purchase products that are produced, grown, manufactured and transported in a manner that addresses the risk
of slavery and human trafficking in our supply chain.
We are working on reducing our environmental footprint by building and maintaining more energy-efficient restaurants, con-
serving water and reducing waste. This includes installing low wattage light bulbs, energy-efficient heating, ventilation and
air conditioning units and water flow control valves. During 2015, we tested an energy management system in two restau-
rants to help us use electricity and natural gas more efficiently. We plan to extend this technology to additional locations
in 2016. Approximately one-third of our restaurants now utilize variable-speed fan hoods that automatically adjust velocity
in accordance with the temperature on the cook line. We plan to install these fans in the remaining restaurants where
we expect to gain measurable energy efficiencies from this technology. We utilize highly recyclable resins in our takeout
packaging and recycled material in our paper napkins and towels. In addition, we maintain a best practices guide to edu-
cate our restaurant operators on ways to minimize energy consumption in their restaurants. We continue to explore green
construction techniques and materials, and during 2015, installed solar panels at the corporate office and built our new
training center to Leadership in Energy & Environmental Design (LEED) specifications.
To learn more about our sustainability and supply chain practices, please visit the “Sustainability” page and the “Supply
Chain” page on our website at www.thecheesecakefactory.com. The contents of our website are not incorporated by refer-
ence into this Form 10-K.
Information Technology
Our technology-enabled business solutions are designed to provide effective financial controls, cost management,
improved efficiencies and to enhance the customer experience. Our business intelligence solution and data ware-
house architecture provide corporate and restaurant management with information and insights into key operational
metrics and performance indicators. This framework delivers enterprise reporting, dashboards and analytics, and
allows access to metrics such as quote and wait time accuracy, employee retention trends, and restaurant quality
and service analyses. Our restaurant point of sale and back-office systems provide information regarding daily sales,
cash receipts, inventory, food and beverage costs, labor costs and other controllable operating expenses. Our kitchen
management system provides automated routing and cook line balancing, and synchronizes order completion, ticket
time and cook time data, promoting more efficient levels of labor and productivity without sacrificing quality. We
leverage our recipe viewer system to ensure timely and accurate recipe updates, and to provide instructional media content
and detailed procedures enabling our staff to consistently prepare our highly complex, diverse menu across all loca-
tions. We utilize a web-based labor scheduling solution to enhance scheduling precision and staff satisfaction. We
also employ a web-based notification and tracking solution to contact our restaurants and monitor our progress in the
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event of a needed product withdrawal or recall. In 2015, we began testing our mobile payment application to enable
our guests to complete the payment process at any time during their dining experience using their mobile phone and
plan to expand mobile pay to our other restaurants in 2016.
Restaurant hardware and software support for all of our concepts is provided by both our internal support services team
at our corporate center as well as third-party vendors for remote and on-site restaurant support. Each restaurant has a
private T1 line integrated with our high-speed wide area network to send and receive critical business data as well as to
access web-based applications securely. We recently implemented a failover capability whereby the secondary public
circuit is automatically invoked and securely transmits data if the T1 line goes down. We employ modern restaurant switch-
ing and routing technology that provides agility in leveraging and supporting contemporary security standards and practices.
Most of our core and critical applications are now housed in an external tier III data center. To mitigate business inter-
ruptions, we implemented a disk-based data backup and replication infrastructure between our onsite and external data
centers so all data is replicated nightly between the two sites.
We employ a multi-disciplined security incident response plan to recognize, manage and resolve cyber security breaches,
and we maintain cyber risk insurance coverage to further reduce our risk profile. Security of our financial data and other
personal information remains a high priority for us, led by our information technology department in conjunction with an
interdepartmental information security council representing all of our key functional areas. Enhancements to our cyber
security profile continued in fiscal 2015, including continued testing of our Cyber Incident Response Plan and cybersecurity
awareness training for our staff members with access to our cyber systems, migrating additional key applications to secure
cloud environments, securing our assets through a PKI infrastructure ensuring only trusted devices can access our network
and encrypt data flowing between users and applications, enhancing our security event logging and monitoring, and further
securing our elevated privileged account access. Also, in an effort to further secure our customers’ credit card informa-
tion, we implemented a robust encryption and tokenization platform for all credit card transactions in our restaurants,
ensuring that no credit card data is stored in our internal systems.
For a discussion of the risks related to our use of computer networks and technology in the operation of our business, see
Item 1A — Risk Factors — “Information technology system failures or breaches of our network security could interrupt our
operations and subject us to increased operating costs, as well as to litigation and other liabilities, all of which could mate-
rially adversely affect our financial performance.”
Marketing and Advertising
We rely on our reputation, as well as our high profile locations, media interest and positive “word of mouth,” to retain and
grow market share rather than using traditional paid advertising through television, radio or print, or using significant
discounting to attract consumers. We utilize a social media and digital marketing strategy that allows us to interact
regularly with our customers outside of our restaurants, including communication on Facebook®, Twitter®, Pinterest®,
Instagram® and other social media platforms, as well as direct email to customers. Public relations is another important
aspect of our marketing approach, and we frequently appear on local and national television for cooking demonstrations
and other brand-building exposure, such as National Cheesecake Day. We generated over two billion media impressions
in fiscal 2015 at little or no cost to us. We partner with several premiere third-party gift card retailers, contributing to our
brand awareness and building gift card sales. We also attempt to build awareness and relationships with retailers located
in the same developments, shopping center operators, local hotel concierges, neighborhood groups and others in the
community. In addition, for restaurants opening in new markets, we strive to obtain local television, radio station and
newspaper coverage in order to benefit from publicity at low or no cost. At times, we also engage in marketing and
advertising opportunities in selective local markets.
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 licensee’s marketing campaigns
to promote consistency in the look and feel of marketing efforts including our brand, domestically and abroad. We also
work with a global intelligence consultant to, among other things, better understand local perceptions and news reporting
of food, generally, and our brand, in particular, in international markets. (See Item 1A — Risk Factors — “If we are unable
to protect the value of our brands and our reputation, sales at our restaurants may be negatively impacted, which may
materially adversely affect our financial performance.”)
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Seasonality and Quarterly Results
While seasonal fluctuations generally do not have a material impact on our quarterly results, the year-over-year comparison
of our quarterly results can be significantly impacted by the number and timing of new restaurant openings and associated
preopening costs, the calendar days of the week on which holidays occur, the impact from inclement weather and other
climatic conditions, and other variations in revenues and expenses. As a result of these factors, our financial results for
any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
Food Safety and Quality Assurance
Our risk, food safety and quality assurance teams oversee food safety, nutritional and regulatory compliance in direct support
of our restaurants and bakeries to ensure that safe, high quality foods are produced in a clean and safe environment.
Our food safety systems are focused on preventing contamination and illness and executing to all regulatory requirements
as well as industry standards. Our work and management processes are verified by routine internal and third party health
inspection audits and regulatory agency inspections. In addition, our manufacturing plants conduct daily food safety and
quality inspections and our plants operate under certified food safety and quality systems.
In selecting suppliers, we look for key performance indicators relating to sanitation, operations and facility management,
good manufacturing and agricultural practices, product protection, recovery and food security. In addition to measuring
and testing food safety and security practices, we strive to ensure that all our food suppliers have annual food safety and
quality system audits. Our restaurants and bakery facilities also follow regulatory guidelines required for conducting and
managing ingredient and product traceability. We utilize a web-based notification and tracking solution to efficiently contact
our restaurants and monitor our progress in the event of a voluntary or mandatory product withdrawal or recall. We utilize
ozone cleaning systems for certain ingredients in approximately one-half of our prep kitchens, and plan to further roll out
this program in order to provide an effective “green” sanitizing method that is consistent with our sustainability goals.
(See Item 1A — Risk Factors — “Concerns relating to food safety, food-borne illness, pandemics and other diseases could
reduce customer traffic to our restaurants, or cause us to be the target of litigation, which could materially adversely affect
our financial performance.”)
Government Regulation
As a restaurant company, we are subject to numerous federal, state and local laws affecting our business. Each of our
restaurants is subject to licensing and regulation by a number of government authorities, which may include alcoholic
beverage control, health, sanitation, environmental, labor, zoning and public safety agencies in the state or municipality in
which the restaurant is located. We are also subject to federal and state environmental regulations, including water usage,
sanitation disposal and transportation mitigation. During fiscal 2015, there were no material capital expenditures for
environmental control facilities and no material expenditures for this purpose are anticipated.
In addition to domestic regulations, our international business exposes us to additional regulations, including antitrust and
tax requirements, anti-boycott legislation, import/export and customs regulations and other international trade regulations,
the USA Patriot Act and the Foreign Corrupt Practices Act. For a discussion of the potential impact on our business of a
failure by us to comply with applicable laws and regulations, see Item 1A — Risk Factors — “Changes in, or any failure to
comply with, applicable laws or regulations could materially adversely affect our ability to operate our restaurants and/or
increase our cost to do so, which could materially adversely affect our financial performance.”
As a manufacturer and distributor of food products, we are subject to a number of food safety laws, including the Federal
Food, Drug and Cosmetic Act, the Public Health Security and Bioterrorism Preparedness Response Act of 2002, the Federal
Food Safety Modernization Act and regulations concerning nutritional labeling under the Patient Protection and Affordable
Care Act of 2010 (“PPACA”). This comprehensive regulatory framework governs the manufacture (including composition
and ingredients), labeling, packaging and safety of food in the United States. In addition, several states and local jurisdic-
tions have adopted or are considering various food and menu nutritional labeling requirements, many of which are inconsis-
tent or are interpreted differently from one jurisdiction to another and many of which may be superseded by the new federal
regulations under the PPACA.
In order to serve alcoholic beverages in our restaurants, we must comply with alcoholic beverage control regulations which
require each of our restaurants to apply to a state authority and, in certain locations, county and municipal authorities,
for licenses and permits to sell alcoholic beverages on the premises. Typically, licenses must be renewed annually and
may be subject to penalties, temporary suspension or revocation for cause at any time. Alcoholic beverage control regu-
lations impact many aspects of the daily operations of our restaurants, including the minimum ages of our patrons who
consume and our staff members who serve these beverages, staff member alcoholic beverage training and certification
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requirements, hours of operation, advertising, wholesale purchasing and inventory control of these beverages, the seating
of minors and the serving of food within our bar areas, special menus and events, such as happy hours, and the storage
and dispensing of alcoholic beverages. State and local authorities in many jurisdictions routinely monitor compliance with
alcoholic beverage laws.
In addition, we are subject to dram shop statutes in most of the states in which we operate, which generally provide a
person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alco-
holic beverages to the intoxicated person. We carry liquor liability coverage as part of our existing comprehensive general
liability insurance. For a discussion of the potential impact of a settlement or judgment in excess of our liability insurance
coverage, see Item 1A — Risk Factors — “If we are unable to manage our business risks, costs associated with litigation
and insurance could increase, which could materially adversely affect our financial performance.”
Various federal, state and local laws govern our operations and our relationships with our staff members, including such
matters as minimum wages, breaks, exempt classifications, overtime, tip credits, fringe benefits, leaves, safety, working
conditions, provision of health insurance and citizenship or work authorization requirements. We are also subject to the
regulations of the Department of Homeland Security, the U.S. Citizenship and Immigration Services and U.S. Immigration
and Customs Enforcement.
Our facilities must comply with the applicable requirements of the Americans with Disabilities Act of 1990 (“ADA”) and
related federal and state statutes which prohibit discrimination on the basis of disability with respect to public accommo-
dations and employment. Under the ADA and related state and local laws, we take steps to make our new or significantly
remodeled restaurants, our corporate and bakery facilities and our websites readily accessible to disabled persons. We
make reasonable accommodations for the employment of disabled persons as required by applicable laws.
A significant number of our hourly restaurant staff members receive income from gratuities. We participate voluntarily in
a Tip Reporting Alternative Commitment (“TRAC”) agreement with the Internal Revenue Service (“IRS”). By complying with
the educational and other requirements of the TRAC agreement, we reduce the likelihood of potential employer-only FICA
tax assessments for unreported or underreported tips. However, we do not require tip pooling. We rely on our staff mem-
bers to accurately disclose the full amount of their tip income and base our reporting on the disclosures provided to us by
such tipped staff members.
We are subject to laws relating to information security, privacy, cashless payments and consumer credit, protection and
fraud. An increasing number of governments and industry groups worldwide have established data privacy laws and stan-
dards for the protection of personal information (including social security numbers), financial information (including credit
card numbers) and health information. We must continually update our information technology systems and staff member
training in order to comply with these laws. (See Item 1A — Risk Factors — “Information technology system failures or
breaches of our network security could interrupt our operations and subject us to increased operating costs, as well as to
litigation and other liabilities, all of which could materially adversely affect our financial performance.”)
Trade Names, Trademarks and Other Intellectual Property
We own and have applied to register trade names, logos, service marks, trademarks, copyrights and other intellectual prop-
erty (collectively, “Intellectual Property”) in the United States and in additional countries throughout the world in restaurant
and bakery goods categories, among others. We regard our Intellectual Property, including “The Cheesecake Factory,”
“Grand Lux Cafe,” “RockSugar Pan Asian Kitchen,” “The Cheesecake Factory Bakery,” and “The Dream Factory,” 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 infringements
of our Intellectual Property. The duration of Intellectual Property registrations varies from country to country. However, reg-
istrations of Intellectual Property are generally valid and may be renewed indefinitely as long as they are in use and/or their
registrations are properly maintained. We have also registered various Internet domain names, including “www.thecheese-
cakefactory.com,” “www.grandluxcafe.com,” “www.rocksugarpanasiankitchen.com,” and “www.thecheesecakefactorybakery.
com” and derivations of these and other domain names to include international country codes.
Charitable Giving
In 2001, we sponsored the formation of The Cheesecake Factory Oscar and Evelyn Overton Charitable Foundation (“Foun-
dation”), a 501(c)(3) qualified, non-profit charitable organization. Our Foundation was created as a means to give back to
the communities our restaurants serve, as well as to unite our staff members in charitable causes. Since the inception
of its annual Invitational Charity Golf Tournament, the Foundation has raised $2.7 million, including $0.2 million in fiscal
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2015, for the City of Hope Comprehensive Cancer Center, a leading research and treatment center for cancer, diabetes and
other life-threatening diseases in Southern California. In fiscal 2015, over 3,000 of our staff members volunteered their
time to the Foundation to serve more than 6,000 holiday meals to low-income individuals and families in 13 Salvation Army
centers across the country at our annual Thanksgiving Day Feast. Additionally, the Foundation provides sponsorships for
teams comprised of our staff members who work directly with non-profit organizations in their communities to support a
variety of local and national initiatives selected by our staff members.
In addition to the efforts of the Foundation, the Company directly participates in the Harvest Food Donation Program by
donating surplus food from our restaurants to local food rescue operations for distribution to soup kitchens and shelters to
aid those in need. In fiscal 2015, we donated approximately 500,000 pounds of food through this program. Additionally,
in fiscal 2015, we donated $0.1 million to the 2015 Special Olympics World Games and $0.4 million to Feeding America®,
the nation’s largest domestic hunger-relief organization through sales of our Salted Caramel and Lemon Meringue cheese-
cakes, bringing our total contributions to Feeding America® to $3.6 million over the past eight years. Our staff members
also collected more than 180,000 pounds of peanut butter nationwide in 2015 to support Feeding America’s annual cam-
paign to bring awareness to and help fight domestic hunger by donating peanut butter to local food banks. We also part-
nered with the California Community Foundation to provide a method for our staff members to assist other staff members
in need through our The Cheesecake Factory “HELP” fund.
Employees
As of December 29, 2015, we employed approximately 37,600 people, of which approximately 36,500 worked in our
restaurants, approximately 700 worked in our bakery operations and approximately 400 worked in our corporate center and
restaurant field supervision organization. Our staff members are not covered by any collective bargaining agreements, and
we consider our relations with our staff members to be favorable. Our focus on the development, engagement and reten-
tion of our staff and managers contributed to The Cheesecake Factory being named in 2015 for the second year in a row
to Fortune magazine’s “100 Best Companies to Work For” list, among other human resources awards. (See Restaurant
Operations, Management and Staffing.)
Executive Officers of the Registrant
David Overton, age 69, serves as our Chairman of the Board and Chief Executive Officer. Mr. Overton co-founded our
predecessor company in 1972 with his parents, Oscar and Evelyn Overton. He is also a founding member and director of
our Foundation.
David M. Gordon, age 51, was appointed President of the Company in February 2013. Mr. Gordon joined our Company in
1993 as a Manager and held operational positions, including General Manager, Area Director of Operations, Regional Vice
president and Chief Operating Officer prior to his appointment as President. He is also a director of our Foundation.
W. Douglas Benn, age 61, was appointed Executive Vice President and Chief Financial Officer in 2009. Mr. Benn is a
veteran of the restaurant industry having spent more than 20 years in management roles with restaurant companies. Prior
to joining the Company, he served as Executive Vice President and Chief Financial Officer of RARE Hospitality International,
owner of the LongHorn Steakhouse and The Capital Grille concepts, prior to that company’s sale to another multi-concept,
public restaurant company in 2007. He is also an advisory director of our Foundation.
Max S. Byfuglin, age 70, serves as President of The Cheesecake Factory Bakery Incorporated, our bakery subsidiary. Mr.
Byfuglin joined our bakery operations in 1982 and worked closely with our founders, serving in nearly every capacity in our
bakery operations over the past 33 years.
Debby R. Zurzolo, age 59, serves as our Executive Vice President, Secretary and General Counsel. Ms. Zurzolo joined
our Company as Senior Vice President and General Counsel in 1999 and was appointed to her current positions in 2003.
From 1982 until joining the Company, she practiced law at Greenberg Glusker Fields Claman & Machtinger LLP in Los
Angeles, California. As a partner with that firm, Ms. Zurzolo represented us on various real estate and other business
matters. She is also a founding member and director of our Foundation.
Cheryl M. Slomann, age 50, serves as our Senior Vice President, Corporate Controller and Chief Accounting Officer since
March 2014. Ms. Slomann joined our Company in April 2004 as Vice President, Corporate Controller and was appointed
as our Chief Accounting Officer in February 2005.
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ITEM 1A. Risk Factors
An investment in our common stock involves risks and uncertainties. In addition to the information contained elsewhere in
this Annual Report on Form 10-K and other filings that we make with the SEC, you should carefully read and consider the
risks described below before making an investment decision. The occurrence of any of the following risks could materially
harm our business, operating results, earnings per share (EPS), financial position, cash flows and/or trading price of our
common stock (individually and collectively referred to as our “financial performance”). In addition, our actual results could
vary materially from any results expressed or implied by forward-looking statements contained in this report, in any of our
other filings with the SEC and other communications by us, both written and oral, depending on a variety of factors, includ-
ing the risks and uncertainties described below. It is not possible for us to predict all possible risks or the impact these
factors could have on us or the extent to which any one factor, or combination of factors, may materially adversely affect
our financial performance.
Risks Related to Our Financial Performance
The impact global and domestic economic conditions have on consumer discretionary spending could negatively impact
our business and financial performance.
Dining out is a discretionary expenditure that historically has been influenced by overall domestic and global economic
conditions, and to varying degrees by specific factors such as but not limited to: unemployment, general and food-specific
inflation, consumer confidence, consumer purchasing and saving habits, credit conditions, population growth and wage
rates. Material changes with respect to governmental policy related to domestic and international fiscal concerns, and/or
changes in major central bank policies with respect to monetary policy also could affect consumer discretionary spending,
which could affect our guest traffic and average check per guest, thus potentially having a material impact on our financial
performance. While domestic economic indicators have generally improved since recessionary 2008, there remains a good
level of uncertainty, which may be exacerbated as interest rates have started to rise from historically low levels and fore-
casts for increased future GDP growth are frequently revised downward. These characteristics and uncertainties also ap-
pear to be consistent with international markets. If the economic conditions do not meaningfully improve, the slow-paced
U.S. economic recovery may continue and possibly deteriorate, and our financial performance could be materially affected
in either scenario depending on consumer response to such economic conditions and evolving dining out patterns.
Our financial performance may be materially adversely affected if we are unable to grow comparable restaurant sales,
control costs and/or increase guest traffic.
Changes in comparable restaurant sales occur because of (i) customer traffic increases or decreases, (ii) menu price
increases, and (iii) menu mix shifts. If we are unable to grow comparable restaurant sales and our costs increase, or if
comparable restaurant sales decrease and costs remain flat or increase, the effect, over time, is to spread costs across a
lower level of sales, which could materially adversely affect our financial performance.
If we are unable to increase customer traffic in our restaurants, our ability to grow our comparable restaurant sales could be hin-
dered. Changes in customer traffic are impacted by a variety of factors, including macroeconomic conditions that impact custom-
er discretionary spending, competition from other restaurants (both in the upscale casual dining segment and in other segments
of the restaurant industry, such as fast casual), consumer perception of our concepts’ offerings in terms of quality, price, value
and service, changes in consumer eating habits, including substituting other dining options (such as grocery prepared meals,
fast casual dining, or mobile catering) for full service, restaurant dining experiences, irregular and increasingly volatile weather,
demographic, economic and other adverse changes in the trade areas in which our restaurants are located and changes in the
regulatory environment. We can provide no assurance that we will be successful in achieving increased customer traffic.
We utilize menu price increases to help offset inflation of key operating costs. However, our menu price increases may
be insufficient to absorb or offset increased costs and, if not accepted by customers, menu price increases could result
in reduced customer traffic, which could reduce our growth in comparable restaurant sales and materially adversely affect
our financial performance. We are also considering regional pricing to offset operating cost pressures that may be specif-
ic to certain geographic areas, such as minimum wage and minimum tip credit wage increases. Should we proceed with
regional pricing, our financial performance could suffer if we fail to appropriately identify regions for differentiated pricing or
to effectively differentiate pricing by and between such regions. We may also incur additional costs to print various menu
versions to accommodate our regional pricing strategy.
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Our menu mix could be materially adversely affected if our customers purchase fewer menu items or lower cost menu
items to reduce the amount of their check. Unfavorable menu mix shifts could reduce our average check even if customer
traffic increases, negatively impacting our ability to grow comparable restaurant sales, which could materially adversely
affect our financial performance.
Failure to effectively compete for customer traffic may materially adversely affect our financial performance.
We operate in an industry that is highly competitive with respect to menu and food quality, service, access to qualified
operations personnel, location, décor and value. There are a number of other restaurant operators that compete with
us for customer traffic, some of which have significantly greater resources to market aggressively to consumers, which
could result in our concepts losing market share. We believe that many consumers remain focused on value, and if other
restaurant operators are able to promote and deliver a higher degree of perceived value through heavy discounting or other
methods, our customer traffic levels may decline, which could materially adversely affect our financial performance. In ad-
dition, with the increased variety of fresh and local product offerings at fast casual restaurants, quick-service restaurants,
mobile catering and grocery stores, consumers may choose to trade down to these alternatives, which could also materially
adversely affect our financial performance.
If we are unable to protect the value of our brands and our reputation, sales at our restaurants may be negatively
impacted, which may materially adversely affect our financial performance.
The Cheesecake Factory’s reputation for quality and breadth of menu items and bakery products significantly contributes to
the total experience that customers enjoy in our restaurants. We must protect and grow the value of our brands domesti-
cally and globally to continue to be successful in the future.
If we experience negative publicity, regardless of any factual basis, relating to food quality, restaurant facilities, customer
complaints or litigation alleging injury or food-borne illnesses, food tampering or contamination or poor health inspection
scores, sanitary or other issues with respect to food processing by us or our suppliers, labor relations or any failure to
comply with applicable regulations or standards or other negative publicity, sales at our restaurants may be adversely im-
pacted, which could materially adversely affect our financial performance. Additionally, with the importance and impact of
social media, any negative publicity by a customer who perceives or experiences a failure by us to provide a positive dining
experience, including in restaurants operated by our international licensees, may be magnified and reach a large portion of
our customer base in a very short period of time, which could harm the value of our brand and materially adversely affect
our financial performance.
Our inability to anticipate and react effectively to changes in the costs of key operating resources, including food,
utilities, other supplies and services and labor, may increase our cost of doing business, which may materially adversely
affect our financial performance.
We negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment require-
ments, such as cream cheese, depending on market conditions and expected demand. Historically, we were unable to
contract directly for extended periods of time for certain of our commodities such as some produce, wild-caught fresh fish
and certain dairy items. We recently entered into longer-term fixed pricing agreements for additional dairy items and con-
tinue to evaluate the possibility of entering into similar arrangements for other commodities. We also periodically evaluate
hedging vehicles, such as direct financial instruments, to assist us in managing our risk and variability in these categories.
Although these vehicles and markets may be available to us, we may choose not to enter into contracts due to pricing
volatility, excessive risk premiums, hedge inefficiencies or other factors. Additionally, the cost of commodities subject to
government regulation, such as dairy and corn, can be even more susceptible to price fluctuation. Our financial perfor-
mance could be materially adversely affected if we are unable to effectively manage the cost of our principal commodity,
supply and equipment requirements.
In de-regulated markets, we engage in a competitive bidding process for our gas and electric requirements. If this process
yields favorable bid results, we may enter into utility supply agreements for certain of our restaurants. Although such sup-
ply agreements can vary in length, historically the majority have been for one-year terms. Resources that we may purchase
on the international market are subject to fluctuations in both the value of the U.S. dollar and increases in global demand.
Also, our suppliers may be impacted by increased input costs to produce and transport resources that we use in our
restaurants and bakery manufacturing facilities, which could eventually increase our cost for such commodities.
Health care costs, in particular, continue to rise and are especially difficult to project. Material increases in costs asso-
ciated with medical claims or an unusually high number of severe medical claims or other unfavorable fluctuations in the
severity or frequency of such claims may cause health care costs to vary substantially from quarter-to-quarter and year-
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over-year. We act as a self-insurer under our health and dental plans and mitigate losses by carrying stop loss coverage.
However, given the unpredictable nature of actual claims trends, including the severity or frequency of claims, in any given
year our health care costs could significantly exceed our estimates, which could materially adversely affect our financial
performance. The Patient Protection and Affordable Care Act as amended by the Health Care and Education Affordability
Reconciliation Act of 2010 (“PPACA”) was enacted in 2010. While PPACA has not had a significant impact on our health
care benefit costs, we cannot be certain that this will continue in the future. Until the uncertainty surrounding PPACA is
finally resolved and the implementation and administration of PPACA is more fully matured, there remains a risk that PPACA
may cause our health care costs to rise in the near and long-term future. Material increases in health care costs could
materially adversely affect our financial performance.
While we try to partially offset increases in the costs of key operating resources by gradually raising prices for our menu
items and bakery products, coupled with more efficient purchasing practices, productivity improvements and greater econ-
omies of scale, there can be no assurance that we will be able to continue to do so in the future. (See Risk Factor “Our
financial performance may be materially adversely affected if we are unable to grow comparable restaurant sales, control
costs and/or increase guest traffic.”) Our financial performance could be materially adversely affected if we are unable to
anticipate and effectively respond to increases in our operating costs.
We are experiencing significant wage rate inflation. If we are unable to offset higher wage costs, we will experience an
increase in our cost of doing business, which will adversely impact our financial performance.
Increases in minimum wages and minimum tip credit wages could materially adversely affect our financial performance.
We operate in many states and localities where the minimum wage is significantly higher than the federal minimum wage
and in such areas our staff members receive minimum compensation equal to the state or locality’s minimum wage. In
other geographic areas, some of our staff members may be paid a tip credit wage that is supplemented by gratuities
received from our customers. Many states and localities have begun to significantly increase their minimum wage and tip
credit wage while others and the Federal government also are contemplating similar increases. In addition to increasing
the wages paid to our minimum wage and tip credit wage earners, these increases create pressure to increase wages paid
to other staff who, in recognition of their tenure, performance, job responsibilities and other similar considerations, histor-
ically received a rate of pay exceeding the applicable minimum wage or minimum tip credit wage. Because we employ a
large workforce, minimum wage and tip credit wage increases have a particularly significant impact on our labor costs. Our
vendors and business partners are similarly impacted by wage inflation and have already begun to increase our cost for
goods and services in order to offset their increasing labor costs. We expect these trends will continue as minimum wages
and minimum tip credit wages continue to rise.
While we try to partially offset increases in the costs of key operating resources by gradually raising prices for our menu
items and bakery products, coupled with more efficient purchasing practices, productivity improvements and greater econ-
omies of scale, there can be no assurance that we will be able to continue to do so in the future. (See Risk Factor “Our
financial performance may be materially adversely affected if we are unable to grow comparable restaurant sales, control
costs and/or increase guest traffic.”) If we are unable to anticipate and respond to increases in our operating costs, our
financial performance could be materially adversely affected.
If we are unable to secure an adequate number of high quality sites for future restaurant openings, the growth of our
concepts may be adversely impacted, which could materially adversely affect our financial performance.
Our future revenue and EPS growth depend on the availability and selection of high quality sites that meet our criteria. The
number and timing of new restaurants opened during any given period, and their associated contribution to financial growth
for the period, will depend on a number of factors including, but not limited to:
• unforeseen delays due to market conditions, the highly customized nature of our restaurant concepts, and the
complex design, construction, and preopening process for each new location;
• the identification and availability of high quality locations;
• an increase in competition for available premier locations;
• the influence consumer shopping trends has on the availability of sites in traditional locations, such as premier
shopping centers;
• acceptable lease terms and the lease negotiation process;
• the availability of suitable financing for our landlords;
• the financial viability of our landlords;
• the timing of the delivery of the leased premises to us from our landlords in order to perform build-out construction
activities;
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• the ability of our landlords and us to obtain all necessary governmental licenses and permits, and consents of third
parties, on a timely basis to construct and operate our restaurants;
• our ability to successfully manage the complex design, construction and preopening processes for each of our highly
customized restaurants, and the availability and/or cost of raw materials and labor;
• any unforeseen engineering or environmental problems with the leased premises;
• adverse weather during the construction period;
• political uncertainty; and
• the availability of qualified operating personnel in the local market.
Inability to obtain an adequate number of suitable sites could materially adversely affect our financial performance.
We may incur additional costs if we are unable to renew our restaurant leases on similar terms and conditions, or at all,
or to relocate our restaurants in certain trade areas, which could materially adversely affect our financial performance.
We currently lease all of our restaurant premises and, although we remain flexible to other arrangements, we currently plan
to continue to lease our restaurant locations in the future. Some of our leases have terms that will expire in the next cou-
ple of years and beyond. Many of these leases include renewal options; however, several do not. Lease expirations allow
us to opportunistically evaluate the possibility of relocating certain restaurants to higher quality sites and trade areas over
time. However, doing so may involve additional costs, such as increased rent and other expenses related to renegotiating
the terms of occupancy of an existing lease, and the costs to relocate and develop a replacement restaurant, if we choose
not to renew a lease, or are unable to do so, on favorable terms in a desirable location. In addition, we may elect to termi-
nate certain leases prior to their expiration dates in order to improve financial performance in certain trade areas over the
long term. However, we may be unable to negotiate favorable terms for such early terminations. Additional costs related
to expiring restaurant lease terms or our inability to terminate certain restaurant leases under favorable terms could mate-
rially adversely affect our financial performance.
Our financial performance could be materially adversely affected if we fail to retain, or effectively respond to a loss of,
key executives.
The success of our business continues to depend in critical respects on the contributions of David Overton, our founder,
Chairman of the Board and Chief Executive Officer, and other senior executives of the Company. The departure of Mr. Overton
or other senior executives could have a material adverse effect on our business and long-term strategic plan. We have a
succession plan that includes short-term and long-term planning elements intended to allow us to successfully continue
operations should any of our senior management become unavailable to serve in their respective roles. However, there is
a risk that we may not be able to implement the succession plan successfully or in a timely manner or that the succession
plan will not result in the same financial performance we currently achieve under the guidance of our existing executive
team.
If we are unable to successfully recruit and retain qualified restaurant management and operating personnel in an
increasingly competitive market, we may be unable to effectively operate and grow our business and revenues, including
executing on our plans for domestic and international expansion, which could materially adversely affect our financial
performance.
We must continue to attract, retain and motivate a sufficient number of qualified management and operating personnel to
maintain consistency in the service, hospitality, quality and atmosphere of our restaurants, both domestically and interna-
tionally. Qualified management and operating personnel are typically in high demand. Our ability to operate and expand
our concepts effectively could be limited if we are unable to attract and retain high caliber people. In addition, we con-
tinue to require the services of our senior management and operating personnel to support our international expansion
efforts. If we are unable to recruit and train managers to work at restaurants operated by our licensees while adequately
maintaining sufficient numbers of managers for our Company-owned locations, the quality of our operations may suffer, the
reputation of our brand may be harmed and our ability to effectively grow our business may be hindered, any of which could
materially adversely affect our financial performance.
Our inability to offer long-term equity incentive compensation may harm our ability to retain key employees, which could
materially adversely affect our operations and financial performance.
As part of a competitive compensation package, we grant equity awards to key staff members, including our executives
and our General Managers and Executive Kitchen Managers who run our restaurants. From time to time, we may ask our
stockholders to approve additional shares in our equity compensation plan to allow us to continue to grant equity awards
as part of our compensation packages. Stockholder advisory groups utilize guidelines to issue voting recommendations
intended to influence stockholder votes regarding approval of proxy proposals. If we are unable to meet the formulae re-
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quired to obtain favorable recommendations or otherwise are unable to receive stockholder support for our share increase
proposals, our ability to use equity compensation to incentivize our staff will be materially adversely affected. If we are
unable to grant equity compensation awards at a competitive level, we would need to offer equally compelling alternatives
to supplement our compensation, including long-term cash compensation plans, or to significantly increase short-term cash
compensation, in order to continue to attract and retain key personnel. If we are required to use these alternatives, our
compensation costs could increase significantly, which would materially adversely affect our financial performance.
Our inability to effectively use and monitor social media could harm our marketing efforts as well as our reputation,
which could materially adversely affect our restaurant sales and financial performance.
Our marketing efforts include an emphasis on social media. Many of our competitors are expanding their use of social media
and new social media platforms are rapidly being developed, potentially making traditional media platforms obsolete. As a
result, we need to continuously innovate and develop our social media strategies in order to maintain broad appeal. Social
media can be challenging because it reaches a broad audience with an ability to respond or react, in near real time, with
comments that are often not filtered or checked for accuracy. Social media’s reach may magnify any negative publicity and
messages can “go viral” necessitating effective crisis response in real time. As a result, if we do not appropriately manage
our social media strategies and respond effectively to negative social media, our marketing efforts in this area may not
be successful and any failure (or perceived failure) to effectively respond to negative or potentially damaging social media
chatter, whether accurate or not, could damage our reputation, which could materially adversely affect our restaurant sales
and financial performance.
Concerns relating to food safety, food-borne illness, pandemics and other diseases could reduce customer traffic to our
restaurants, or cause us to be the target of litigation, which could materially adversely affect our financial performance.
We dedicate substantial resources and provide training to ensure the safety and quality of the food we serve. Neverthe-
less, we face food safety risks, including the risk of food-borne illness and food contamination, which are common both in
the restaurant industry and the food supply chain and cannot be completely eliminated. We rely on our network of suppliers
to properly handle, store and transport our ingredients, until delivery to our restaurants. Any failure by our suppliers, or
their suppliers, could cause our ingredients to be contaminated, which could be difficult to detect and put the safety of our
food in jeopardy. We freshly prepare our menu items at our restaurants, which may put us at greater risk for food-borne
illness outbreaks than some of our competitors who use processed foods or commissaries to prepare their food. The risk
of food-borne illness may also increase whenever our menu items are served outside of our control, such as by third party
food delivery services, customer take out or at catered events.
Adverse publicity or news reports, regardless of accuracy, regarding food quality or safety issues, illness, injury, recalls, health
concerns, government or industry findings concerning food products served by us or our licensees, or issues stemming from
the operation of our restaurants or bakery, restaurants operated by our licensees or other foodservice providers, third parties
with whom we may co-brand products or who sell or distribute our products, or third parties we may use to procure materials
used in our business, or generally in the food supply chain, could be damaging to the restaurant industry overall and specifi-
cally harm our brand and reputation, which in turn could materially adversely affect our financial performance.
If a pathogen, such as Ebola, “mad cow disease,” “SARS,” “swine flu,” avian influenza, norovirus or other virus or bacteria,
such as salmonella or e.coli, or if parasites or other toxins infect the food supply (or are believed to have infected the food
supply), the demand, availability and price of certain food items may be adversely impacted. Additionally, if our customers
or employees become infected with a pathogen that is transmittable by human-to-human, food-to-human or human-to-food
contact, customers may avoid our restaurants or it may become difficult to adequately staff our restaurants, the occurrence
of either or both of which may materially adversely affect our financial performance. Any adverse food safety occurrence
may result in litigation against us by consumers, governmental authorities and others. Although we carry liability and other
insurance coverage to mitigate against these risks, not all risks of this nature are fully insurable and, even if insured, the
negative publicity associated with such an event may cause a decrease in customer patronage which may materially
adversely affect our financial performance.
In addition to selling products throughout the world through various distribution channels, including, without limitation,
supermarkets, mass market retailers, club stores and various other food service and retail channels, our two bakery facilities
are the only sources of most of our baked desserts to our restaurants. If any of our bakery products becomes subject to
a product recall or market withdrawal, whether voluntary or involuntary, our costs to conduct such recall or market withdrawal
could be significant, restaurant sales as well as third party sales of bakery product may be reduced and our reputation
could be harmed, which could materially adversely affect our financial performance.
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In addition, any adverse food safety event could result in mandatory or voluntary product withdrawals or recalls and reg-
ulatory and other investigations, any of which could disrupt our operations, increase our costs, require us to respond to
findings from regulatory agencies that may divert resources and assets, and result in potential civil fines and penalties as
well as other legal action. In extreme cases, adverse findings could lead to criminal fines and penalties.
Information technology system failures or breaches of our network security could interrupt our operations and subject
us to increased operating costs, as well as to litigation and other liabilities, all of which could materially adversely
affect our financial performance.
We rely heavily on our in-restaurant and enterprise-wide computer systems and network infrastructure across our opera-
tions (“Cyber Environment”), which could be vulnerable to various risks. The efficient management of our operations
depends upon our ability to protect our Cyber Environment against damage from physical theft, casualties such as fire,
power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches,
denial of service attacks, viruses, worms, malware, breaches of the algorithms we and our third-party service providers use
to encrypt and protect data, including consumer transaction and credit card data, and other disruptive problems caused by
hackers or others who intentionally target Cyber Environment vulnerabilities of companies such as ours (collectively,
“security incidents”). We employ both internal resources and external consultants to conduct auditing and testing for
weaknesses in our Cyber Environment to reduce the likelihood of any security incident and we have developed a multi-
disciplined security incident response plan to help ensure that our executives are fully and accurately informed and
managing, with the help of content experts, the discovery, investigation, auditing and recovery stages of any security incidents.
However, we can provide no assurance that these measures will be successful in preventing losses in the event of a security
incident. Also, our international licensees have access to certain elements of our intellectual property within their Cyber
Environment and may not have developed processes to secure their systems and equipment against a security incident or
maintain auditing, testing, investigation or recovery protocols that are as robust as our own, or have the ability to respond
to a security incident to the same extent as we may be able to. Although we maintain a cyber-risk insurance program,
available coverage and policy limits may not adequately cover or compensate us in the event of a security incident. Our
financial performance may be materially adversely affected if:
• our operations are interrupted because of a security incident;
• we are not able to promptly recover from a security incident;
• our Cyber Risk insurance program is unable to fully address our losses; or
• we are subjected to litigation or regulatory action because of a security incident.
However, we can provide no assurance that these measures will be successful and any damage to or failure of our Cyber
Environment to operate effectively because of such events could cause significant delays in customer service, reduce
efficiency in our operations, and require significant capital investments to remediate these issues, any of which could
materially adversely affect our financial performance.
Our inability to maintain a secure environment for customers’ and staff members’ personal data could harm our
reputation and result in litigation against us, which could materially adversely affect our financial performance.
We receive and maintain certain personal information about our customers and staff members. For example, we transmit
confidential credit card information in connection with credit card transactions, and we are required to collect and maintain
certain personal information in connection with our employment practices, including the administration of our benefit plans.
The collection and use of this information by us is regulated at the federal and state levels, and the regulatory environment
related to information security and privacy is increasingly demanding. If a security incident occurs involving loss or inappro-
priate access to or dissemination of such personal information, we could be in breach of applicable laws, incur penalties
and other costs to remedy such incident, and such event could harm our reputation and result in litigation against us, any
of which could materially adversely affect our financial performance.
Our ability to accept credit cards as payment in our restaurants and for on-line gift card orders depends on us remaining
compliant with standards set by the PCI Security Standards Council (PCI). These standards require certain levels of Cyber
Environment security and procedures to protect our customers’ credit card and other personal information. We continue
to evaluate additional security enhancements and have implemented end-to-end encryption and tokenization technology.
However, we can provide no assurance that our security measures will be successful in the event of an attempted or actual
security incident. If these security measures are not successful, we may become subject to litigation or the imposition
of regulatory penalties, which could result in negative publicity and significantly harm our reputation, either of which could
materially adversely affect our financial performance.
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Our failure to adequately protect our intellectual property could limit our ability to globally expand our brand, which
could materially adversely affect our financial performance.
We own and have applied to register trade names, logos, service marks, trademarks, copyrights and other intellectual
property (collectively, “Intellectual Property”), including The Cheesecake Factory®, The Cheesecake Factory Bakery®, Grand
Lux Cafe® and Rocksugar Pan Asian Kitchen® in the United States and in additional countries throughout the world. Our
Intellectual Property is valuable to our business and requires continuous monitoring to protect. We protect our Intellectual
Property in a variety of ways, including by contract and by registration in the United States and in various countries through-
out the world. We regularly and systemically search for misappropriations of our Intellectual Property and seek to enforce
our rights whenever appropriate to do so; however, we cannot be assured of success in every case and cannot possibly find
all infringing uses of our Intellectual Property. Furthermore, we have not registered all of our Intellectual Property through-
out the world, as doing so may not be feasible because of associated costs or various foreign trademark law prohibitions.
Our inability to effectively protect our Intellectual Property domestically or internationally could limit our ability to globally
expand our brand thereby materially adversely affecting our financial performance.
We face a variety of risks related to our international expansion and global brand development efforts that could
negatively affect our brand, require additional infrastructure to support such efforts, and expose us to additional
liabilities under foreign laws, any of which could materially adversely affect our financial performance.
International operations have a unique set of risks that differ from country to country, and can include, among other risks,
political instability, governmental corruption, social, religious and ethnic unrest, anti-American sentiment, loss of senior
executives while traveling to foreign destinations, delayed and potentially less effective ability to respond to a crisis
occurring internationally, changes in economic conditions (such as currency valuation, disposable income, climate change,
unemployment levels and increases in the prices of commodities and labor), the regulatory environment, labor and pension
laws, income and other taxes, consumer preferences and practices, as well as changes in the laws and regulations govern-
ing foreign investment, joint ventures or licensing arrangements in countries where our licensees are located, the financial
stability and wherewithal of our licensees, and local import controls.
Our international licensees are authorized to operate The Cheesecake Factory restaurant concept using our Intellectual
Property and systems, and to provide our branded food and bakery products directly to consumers in The Cheesecake
Factory restaurants opened in the licensed areas. We provide extensive and detailed training to our licensees so their
employees may be able to effectively execute our operating processes and procedures. However, since we do not operate
these restaurants directly, we can provide no assurance that our licensees will adhere to our operating standards in the
same manner as we would were such restaurants operated directly by us. The products and services our licensees deliver
in our branded restaurants may be negatively affected by factors outside of our control, including, but not limited to:
• difficulties in achieving the consistency of product quality and service as compared to restaurants we operate in the
United States;
• changes to our recipes required by cultural norms;
• inability to obtain adequate and reliable supplies of ingredients and products necessary to execute our diverse menu;
• availability of experienced management to operate their restaurants according to our standards;
• changes in economic conditions of our licensees, whether or not related to the operation of our restaurants; and
• differences, changes or uncertainties in economic, regulatory, legal, social, climatic, and political conditions, including
the possibility of terrorism and social unrest, which may delay our international expansion, result in periodic or
permanent closure of foreign restaurants and affect international perception of our brand.
If our licensees have difficulty operating our concept effectively, or receiving an adequate return on their investments, and
these difficulties are attributed to us or our brand, our reputation and brand value could be harmed, our revenue from these
restaurants could be diminished, and our international growth may be slowed, any of which could materially adversely affect
our financial performance.
In order to support our international expansion, our bakeries supply certain of our branded bakery products to our brand-
ed restaurants operated by our international licensees. In order to supply bakery products to these restaurants, we must
adapt certain recipes to eliminate locally prohibited ingredients, comply with labeling requirements that differ from those
in the United States, and maintain certifications required to export to such countries. In addition, unexpected events
outside of our control, such as trade restrictions, import and export embargos, governmental shutdowns and disruptions
in shipping, may affect our ability to transport adequate levels of bakery products to our licensees, for whom we are a sole
source of supply for our branded desserts. A failure to adequately supply bakery products to our internationally branded
restaurants could affect the customer experience at those restaurants, resulting in decreased sales, and could, depending
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upon the reason for the failure, trigger contractual defaults on our part, any of which could materially adversely affect our
financial performance.
As we continue the international expansion of our brand, we must comply with regulations and legal requirements,
including those related to the protection of our Intellectual Property. Additionally, we must comply with domestic laws
affecting United States businesses that operate internationally, including the Foreign Corrupt Practices Act and anti-
boycott laws, and with foreign laws in the countries in which we expand our restaurants. (See Risk Factor “Changes in,
or any failure to comply with, applicable laws or regulations could materially adversely affect our ability to operate our
restaurants and/or increase our cost to do so, which could materially adversely affect our financial performance.”) Our
financial performance may also be materially adversely affected by liabilities, costs and expenses we may incur in the
event we become subject to lawsuits or other legal actions resulting from the acts or omissions of our licensees. This
is true even though we have taken reasonable steps to protect against such liabilities, including by obtaining contractual
indemnifications and insurance coverage.
From time to time we may evaluate acquisitions, joint ventures or other initiatives that could distract management from
our business and may create other risks to our business, which may materially adversely affect our financial performance.
We continue to evaluate emerging brands and review the feasibility and likely long-term success of acquiring or developing
new brands or expanding potential brand licensing to non-restaurant areas, such as retail products. As part of this evalua-
tion, we may be presented with opportunities to buy or develop businesses that provide growth opportunities. Any involve-
ment in any such acquisition, merger, joint venture, alliance or divestiture, and any expansion of our brand to non-restaurant
areas, may create inherent risks, including without limitation:
• inaccurate assessment of value, growth potential, weaknesses, liabilities, contingent or otherwise, and expected
profitability of such ventures;
• inability to achieve any anticipated operating synergies or economies of scale;
• potential loss of key personnel of any acquired business;
• challenges in successfully integrating, operating and managing acquired businesses and workforce and instilling our
company culture in new management and staff;
• difficulties in aligning enterprise management systems, compensation and benefit plans and policies and procedures;
• unforeseen changes in the market and economic condition affecting the acquired business or venture;
• possibility of impairment charges if an acquired business does not meet the performance expectations upon which
the acquisition price was based; and
• diversion of management’s attention and focus from existing operations to the integration of the acquired or merged
business and its personnel or to the expansion of the brand to non-restaurant items.
If we do not appropriately scale our infrastructure in a timely manner we may be unable to respond to and support our
domestic or international opportunities for growth, which could materially adversely affect our financial performance.
We continually evaluate the appropriate level of infrastructure necessary to support our operational and development
plans, including our domestic and international expansion. If market conditions improve and we are able to identify enough
high quality sites to significantly increase the planned number of new restaurant openings in the future, we may be unable
to scale or manage the growth of our corporate and field supervision infrastructure in the short term to appropriately
support our expansion. Likewise, if sales decline, we may be unable to reduce our infrastructure quickly enough to prevent
sales deleveraging which would materially adversely affect our financial performance.
Our international license agreements require us to provide training and support to our licensees for their development
and operation of The Cheesecake Factory restaurants. We have dedicated certain corporate personnel to international
development and continue to utilize the talents of existing management, as we grow our international licensing and
operations infrastructure. In addition, one of the most important aspects of our restaurant operations is our ability to
deliver dependable, quality service by experienced staff members who can execute our concepts according to our high
standards. This may require training our licensees’ management in the United States and our licensees’ employees in the
licensed territories, as well as providing support in the selection and development of restaurant sites, product sourcing
logistics, technological systems, and menu modification. If we are unable to provide the appropriate level of infrastructure
support to our international licensees, including due to the lack of available personnel or due to foreign or domestic restric-
tions on the ability of our employees to provide training in licensed countries or our licensees’ employees to receive training
domestically, or due to self-imposed restrictions on travel of our employees as a result of terrorism or other political unrest
in areas in which our licensees operate, our contractual relationships and future international expansion opportunities may
be harmed resulting in an adverse effect on our financial performance.
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Our inability to successfully operate or expand our Grand Lux Cafe and RockSugar Pan Asian Kitchen brands could
materially adversely affect our financial performance.
All of our restaurants are subject to the risks and uncertainties described in this filing. However, there is an enhanced
level of risk and uncertainty related to the operation and potential expansion of our less-established brands, Grand Lux
Cafe and RockSugar Pan Asian Kitchen. We discuss potential Grand Lux Cafe and RockSugar Pan Asian Kitchen sites with
landlords and currently plan to open as many as one additional Grand Lux Cafe in fiscal 2016. However, we can provide no
assurance that new units will be accepted in the markets targeted for the expansion of this concept or that we will be able
to achieve our targeted returns when opening new locations. Any such event could materially adversely affect our financial
performance.
Changes in, or any failure to comply with, applicable laws or regulations could materially adversely affect our ability to
operate our restaurants and/or increase our cost to do so, which could materially adversely affect our financial performance.
We are required to comply with various Federal, State and local laws and regulations, including, without limitation, those
relating to alcoholic beverage control, public health and safety, access and use by the disabled, environmental hazards,
labor and employment laws, including without limitation, equal wage laws and exempt versus non-exempt employee classifi-
cations, and food safety and labeling laws. Changes to these laws and regulations may create challenges for us, and while
we subscribe to certain services and have established procedures to identify changes in the laws and regulations, there
can be no assurance that we will identify every change and comply therewith on a timely basis. We may incur penalties
and other costs, sanctions and adverse publicity by failing to comply with applicable laws, any of which could materially
adversely affect our financial performance.
The failure to obtain and/or retain licenses, permits or other regulatory approvals required to operate our business could
delay or prevent the opening and/or continued operation of a restaurant or operation of our baking establishments, materially
adversely affecting that facility’s operations and profitability and could materially adversely affect our ability to obtain these
licenses elsewhere. In addition, the failure to comply with governmental regulations could subject us to penalties and
interruptions in operations. In certain states, we may be subject to “dram shop” statutes that generally allow a person
injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic
beverages to the intoxicated person. Dram shop litigation may result in significant judgments, including punitive damages.
A settlement or judgment against us under a dram shop statute in excess of our general liability insurance coverage
could materially adversely affect our financial performance.
We avail ourselves of provisions in current federal and state tax laws that are favorable to our industry. Significant
changes to those laws as a result of comprehensive federal tax reform, changes in the landscape of taxation of multi-state
companies like ours, or changes to existing tax laws in countries where our licensees operate, could materially adversely
affect our financial performance. Significant increases in minimum wages, including the tip credit wage in certain states,
paid or unpaid leaves of absence, equal wage legislation, mandatory sick pay and paid time off regulations in a growing
number of states and localities, mandated health and/or COBRA benefits, or increased tax reporting, assessment or
payment requirements related to our staff members who receive gratuities, or changes in interpretations of existing
employment law, including with respect to classification of exempt versus non-exempt employees, could also materially
adversely affect our financial performance.
We are subject to federal and state laws that prohibit discrimination in the workplace and that set standards for the de-
sign, accessibility and operation of public facilities, such as the Americans with Disabilities Act. Compliance with these
laws and regulations can be costly and failure to comply could create exposure to government proceedings and litiga-
tion. Even a perceived failure to comply could result in negative publicity that could damage our reputation and materially
adversely affect our financial performance. In addition, various federal, state and local labor laws and regulations govern
our operations and relationships with our staff members, including, but not limited to, minimum wages, breaks, overtime,
deductions, certain benefits (including health care benefits), safety, working conditions and citizenship and legal residency
requirements. Changes in, or any failure to comply with, these laws and regulations could subject us to fines or other legal
actions. Settlements or judgments in connection therewith that are not insured against or are in excess of our coverage
limitations could materially adversely affect our business and financial performance.
Despite our efforts to maintain compliance with legal requirements, including implementation of electronic verification of
legal work status, some of our staff members may not meet state and federal citizenship or residency requirements. This
could result in a disruption in our work force, sanctions against us and adverse publicity. In addition, immigration-related
employment regulations, on both the state and federal level, may make it more difficult for us to identify and hire qualified
staff members. (See Risk Factor “We face a variety of risks related to our international expansion and global brand
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development efforts that could negatively affect our brand, require additional infrastructure to support such efforts, and
expose us to additional liabilities under foreign laws, any of which could materially adversely affect our financial performance”
for a discussion of regulatory risks related to our international expansion.)
Our inability to respond appropriately to changes in consumer health and disclosure regulations could negatively impact
our operations and competitive position, which could materially adversely affect our financial performance.
PPACA requires restaurant operators with twenty or more locations to make certain nutritional information available to cus-
tomers. The nutritional disclosure requirements under PPACA are intended to preempt a patchwork of state and local laws
regarding nutritional content disclosures that became prevalent over the past several years. Establishments covered by
the nutritional disclosure requirements under PPACA have until December 1, 2016 to comply with the new rules. Until the
new rules are implemented and enforced, uncertainty with respect to certain details of the new rules and how they will be
enforced will continue. Additionally, until the new rules take effect in December 2016, many states, counties and cities are
expected to continue to enforce their own nutritional content disclosure requirements. The continued uncertainty relating
to nutritional content disclosure and ongoing need to comply with a patchwork of various state and local disclosure require-
ments continues to be a challenge for us, raising our compliance cost and exposing us to risk of non-compliance. Also,
since our menus are printed on a periodic basis, the timing of implementation of new requirements can affect our ability to
timely and accurately comply with such legislation, especially when it is subject to continuous changes in interpretation and
delays in implementation.
Some states and local and foreign governments also have enacted legislation regulating or prohibiting the sales or dis-
closure of certain types and/or levels of ingredients in food served in restaurants, such as trans fats, sodium, GMOs and
gluten, and are considering taxing and/or otherwise regulating high fat, high sugar and high sodium foods. The success of
our restaurant and bakery operations and that of our international licensees depends, in part, upon our ability to respond
effectively to changes in consumer health and disclosure regulations and to adapt our menu offerings and bakery selec-
tions to changes in governmental requirements. If consumer health regulations change significantly, we may be required
to modify or discontinue certain menu items. In addition, dietary restrictions in some international locations where our
licensees plan to operate may require us to modify or discontinue serving certain menu items in those locations. Our
inability to respond with appropriate changes to our bakery and menu offerings in response to regulations governing the
sale or disclosure of certain ingredients could result in us being unable to sell certain bakery products or menu items in
certain jurisdictions and could also lead to negative publicity about our bakery products or menu items, which, in turn,
could materially affect customer demand for our concepts and could materially adversely affect our financial performance.
Labor organizing could harm our operations and competitive position in the restaurant industry, which could materially
adversely affect our financial performance.
Our staff members and others may attempt to unionize our workforce, establish boycotts or picket lines or interrupt our
supply chains which could limit our ability to manage our workforce effectively and cause disruptions to our operations,
which could materially adversely affect our financial performance. A loss of our ability to effectively manage our workforce
and the compensation and benefits we offer to our staff members could significantly increase our labor costs, which could
materially adversely affect our financial performance.
If we are unable to manage our business risks, costs associated with litigation and insurance could increase, which
could materially adversely affect our financial performance.
We are subject to lawsuits, administrative proceedings and claims that arise in the ordinary course of business. These
matters typically involve claims by customers, staff members and others regarding issues such as food-borne illness, food
safety, premises liability, compliance with wage and hour requirements, work-related injuries, discrimination, harassment,
disability and other operational issues common to the foodservice industry. In states with “dram shop” statutes, we may
become subject to dram shop litigation that could result in significant judgments, including punitive damages. We could be
materially adversely affected by negative publicity and litigation costs resulting from these claims, regardless of their valid-
ity. Employment-related litigation, particularly with respect to claims styled as class action lawsuits, are especially costly
to defend. Also, some employment-related claims in the area of wage and hour disputes are not insurable risks and many
employment-related disputes involve uncertainty in judicial interpretation from state to state and from federal to state court
with respect to the effectiveness of arbitration agreements with our employees, particular those which provide for class
waivers. Significant legal fees and costs in complex class action litigation or an adverse judgment or settlement that are
not insured or are in excess of insurance coverage can materially adversely affect our financial performance.
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We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’
compensation, general liability, employment practices, staff health benefits and certain other insurable risks. A number of
factors may significantly increase our self-insurance costs, such as, conditions of the insurance market, the availability of
insurance, or changes in local, state and/or federal regulations. The accrued liabilities associated with these programs
are based on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to
us (“IBNR”) as of each balance sheet date. Significant judgment is required to estimate IBNR amounts as parties have yet
to assert such claims. Our financial performance may be materially adversely affected if our actual claims costs signifi-
cantly exceed our estimates.
If we are unable to effectively grow sales or reduce costs over time at certain of our restaurants, we may be required
to record impairment charges, be unable to fully recoup landlord improvement allowances and/or decide to discontinue
operations at these restaurants, any of which could materially adversely affect our financial performance.
We assess the potential impairment of our long-lived assets whenever events or changes in circumstances indicate the
carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to,
significant underperformance relative to historical or projected future operating results, significant changes in the manner
in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previ-
ously estimated useful life and significant negative industry or economic trends. We regularly review restaurants that are
cash flow negative for the previous four quarters and those that are being considered for closure or relocation to deter-
mine if impairment testing is warranted. (See “Impairment of Long-Lived Assets and Lease Terminations” in Note 1 to our
Consolidated Financial Statements for additional information on our impairment assessments.) At any given time, we may
be monitoring certain locations, and future impairment charges and/or closures may occur if individual restaurant perfor-
mance does not improve, which could materially adversely affect our financial performance. A portion of our tenant allow-
ances at certain premises may be subject to recoupment against percentage rent otherwise payable for such sites. When
we are unable to achieve sales in a sufficient amount to generate percentage rent obligations, we are not able to fully
recoup available allowances at affected sites, which also could materially adversely affect our financial performance.
If any of our third party vendors experiences a failure that affects an essential business process of ours, we may be
subject to certain risks and may experience data loss, increased costs or other harm, any of which could materially
adversely affect our financial performance.
In order to leverage our internal resources and information technology infrastructure, and to support our business conti-
nuity and disaster recovery planning efforts in the event of a physical loss or damage to our corporate facilities, we utilize
third-party vendors to assist us with some of our essential business processes. For example, we rely on a network of
third-party distribution warehouses to deliver ingredients and other materials to our restaurants. In some instances, these
processes rely on technology and may be outsourced to the vendor in their entirety and in other instances we utilize these
vendors’ externally-hosted business applications. Some of the technological processes for which we utilize third parties
include, but are not limited to, gift card tracking and authorization, labor scheduling, email hosting, web site hosting, file
collaboration, restaurant back office, benefits administration and staff recruiting. We continue to review options to expand
the use of third party providers in other areas, such as mobile payment and on-line ordering and delivery. Our practice is
to work with service providers that are leading performers in their industries and with technology vendors that employ up
to date and appropriate data security practices and internal control practices, such as redundant processing facilities.
However, we cannot guarantee that failures will not occur. The failure of third-party vendors to provide adequate services,
including protection of sensitive data, could significantly harm our operations and reputation, and could materially adversely
affect our financial performance.
Our inability or failure to execute on comprehensive business continuity and disaster recovery plans following a major
natural or manmade disaster, including terrorism, at our corporate or bakery facilities could result in delayed recovery,
loss of data, an inability to perform vital corporate functions, reduced capacity to produce bakery products, and other
harm, which could materially adversely affect our financial performance.
Most of our core and critical applications are housed in an external tier III data center, and we plan to move additional appli-
cations to this environment in 2016. To mitigate business interruptions, we employ a disk-based data backup and replica-
tion infrastructure between our onsite and external data centers so all data is replicated nightly between the two sites. We
provide support for our restaurant operations, with the exception of design and construction, from our corporate headquarters
in Calabasas, California, an area that is prone to natural disasters such as earthquakes and wildfires. In addition, corporate
support for our bakery operations is also at this centralized location, with the exception of our East Coast bakery production
and fulfillment facility. If we are unable to execute our disaster recovery procedures in whole or in part, we may experience
delays in recovery and losses of data, inability to perform vital corporate functions, tardiness in required reporting and compli-
ance, failures to adequately support field operations and other breakdowns in normal operating procedures that could expose
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2015 annual report
the cheesecake factory
us to administrative and other legal claims and could materially adversely affect our financial performance. A closure or
material damage to one or both of our bakery facilities may result in an inability to fulfill or a slowdown in fulfillment of our
bakery products, both to our own and our international licensees’ restaurants as well as to third parties, and losses of data
regarding our bakery operations, and could materially adversely affect our financial performance.
Adverse weather conditions, seasonal fluctuations, natural disasters, effects of climate change, active shooter situa-
tions, terrorism, terrorist threats and health epidemics (or fears about them) could unfavorably impact our restaurant
sales, which could materially adversely affect our financial performance.
Adverse weather conditions and natural disasters can impact customer traffic at our restaurants, cause the temporary
underutilization of outdoor patio seating, and, in more severe cases, such as hurricanes, earthquakes, tornadoes, blizzards
or other natural disasters, cause a temporary inability to obtain supplies, increase commodity costs and cause closures
of our affected restaurants, sometimes for prolonged periods, which could materially adversely affect our financial perfor-
mance. Seasonal fluctuations may result from the calendar days of the week on which holidays occur, which may impact
consumer spending patterns. Increasing frequency and unpredictability of adverse weather conditions due to climate
changes may result in decreased overall customer traffic, less accurate year-to-year comparisons in sales and other factors
affecting financial performance. Active shooter situations, terrorist activities, health epidemics or fear of such events
occurring may have a similarly adverse impact. Our cash flows may be negatively impacted by delay in the receipt of
proceeds under any insurance policies or programs we maintain against certain of these risks or the proceeds may not
fully offset any such losses. Any or all of these situations could materially adversely affect our financial performance.
New restaurant openings may negatively impact sales at our existing restaurants, which could materially adversely
affect our financial performance.
The opening of a new restaurant could negatively impact sales at one or more of our existing restaurants nearby, which
could materially adversely affect our financial performance. It is not our intention to open new restaurants that materially
cannibalize the sales of our existing restaurants. However, there can be no assurance that such sales impact will not
occur or become more significant in the future as we gradually increase our presence in existing markets to maximize our
competitive position and financial performance in each market.
Our failure to establish, maintain and apply adequate internal control over our financial reporting and comply with
changes in financial accounting standards or interpretations of existing standards could limit our ability to report our
financial results accurately and timely or to detect and prevent fraud, any of which could materially adversely affect our
financial performance.
We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002. These
provisions provide for the identification of material weaknesses in internal control over financial reporting — a process
to provide reasonable assurance regarding the reliability of financial reporting for external purposes in accordance with
accounting principles generally accepted in the United States of America. If we experience a material weakness in internal
controls, there can be no assurance that we will be able to remediate such material weakness in a timely manner or main-
tain all of the controls necessary to remain in compliance. Any failure to maintain an effective system of internal control
over financial reporting could limit our ability to report our financial results accurately and timely or to detect and prevent
fraud, which could materially adversely affect our financial performance. Additionally, changes in accounting standards or
new accounting pronouncements and interpretations may occur that could materially adversely affect our previously reported
or future financial results, which could materially adversely affect our financial performance.
Failure to satisfy financial covenants and/or repayment requirements under our credit facility could harm our financial
condition, which could materially adversely affect our financial performance.
We have an unsecured revolving credit facility (“Facility”) with an available borrowing commitment of $200 million and
with a conditional increase feature that could provide for an additional $100 million in available credit, subject to lenders’
willingness to commit thereto and satisfaction of certain conditions. The Facility requires us to maintain certain financial
covenants. At December 29, 2015, we were in compliance with these covenants and had no outstanding debt balance
under the Facility. However, any failure to maintain these debt covenants or have sufficient liquidity to either repay or
refinance the then outstanding balance at expiration of the Facility, or upon violation of the covenants, would materially
adversely affect our financial performance. (See Note 7 of Notes to Consolidated Financial Statements in Part IV, Item 15
for additional information concerning our long-term debt.)
2015 an nual report
page 25
the cheesecake factory
Risks Related to Owning Our Stock
The market price of our common stock is subject to volatility.
During fiscal 2015, the price of our common stock fluctuated between $45.17 and $58.86 per share. The market price of
our common stock may be significantly affected by a number of factors, including, but not limited to, actual or anticipated
variations in our operating results or those of our competitors as compared to analyst expectations, changes in financial
estimates by research analysts with respect to us or others in the restaurant industry, and announcements of significant
transactions (including mergers or acquisitions, divestitures, joint ventures or other strategic initiatives) by us or others
in the restaurant industry. In addition, the equity markets have experienced price and volume fluctuations that affect the
stock price of companies in ways that have been unrelated to an individual company’s operating performance. The price of
our common stock may continue to be volatile, based on factors specific to our company and industry, as well as factors
related to the equity markets overall.
We may not be able to achieve our target of average mid-teens growth in total return to shareholders.
We define our total returns as earnings per share growth plus our dividend yield. Comparable restaurant sales that are
below our target, slowing growth of our concepts domestically, a decline in growth of our international business or any
event that causes our operating costs to substantially increase or an inability to repurchase our stock as expected could
slow EPS growth and reduce total returns. Any of these occurrences on a multi-year basis, or a decline in our dividend
yield, could bring about lower than targeted average mid-teens growth in total returns, which could negatively affect our
stock price.
If we are unable to continue to pay, or if we are unable to increase dividends, our stock price may be harmed.
Our dividend program requires the use of a substantial amount of our free cash flow. Our ability to pay and increase our
dividends over time will depend on our ability to generate sufficient cash flows from operations and capacity to borrow
funds, which may be subject to economic, financial, competitive and other factors that are beyond our control. Any failure
to pay or increase our dividends over time may negatively impact investor confidence in us, and may negatively impact our
stock price.
We have a stockholder rights plan, or “poison pill,” which could affect the price of our common stock and make it more
difficult for a potential acquirer to purchase a large portion of our securities, to initiate a tender offer or a proxy contest,
or to acquire us.
In August 2008, our Board of Directors extended our stockholder rights plan, commonly known as a “poison pill,” until
August 2018. The poison pill may discourage, delay, or prevent a third party from acquiring a large portion of our securities,
initiating a tender offer or proxy contest, or acquiring us through an acquisition, merger or similar transaction even if our
stockholders might receive a premium for their shares over the then-current market price in the event of such transaction.
There may be future sales or other dilution of our equity that may materially adversely affect the market price of our
common stock.
We are not restricted from issuing additional common stock or preferred stock, including any securities that are convertible
into or exchangeable for, or that represent the right to receive, common stock or preferred stock or any substantially similar
securities. Our Board of Directors is authorized to issue additional shares of common stock and additional classes or series
of preferred stock without any action on the part of the stockholders. The Board of Directors also has the discretion, with-
out stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including
voting rights, dividend rights and preferences over the common stock with respect to dividends or upon the liquidation or
winding up of our business and other terms. If we issue preferred shares that have a preference over our common stock
with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue preferred shares with
voting rights that dilute the voting power of our common stock, the rights of our common stockholders or the market price
of our common stock could be materially adversely affected.
ITEM 1B. Unresolved Staff Comments
Not applicable.
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2015 annual report
the cheesecake factory
ITEM 2. Properties
Our corporate support center and one of our bakery production facilities are located in Calabasas Hills, California. The corporate
support center is an 88,000 square foot facility on an approximately five acre parcel of land, and we recently opened a
19,000 square foot training facility on this property. The bakery production facility is a 60,000 square foot facility on an
approximately three acre parcel of land. Our second bakery facility located in Rocky Mount, North Carolina is a 100,000
square foot facility on an approximately 31 acre parcel of land. Our development and design department is in a 29,000
square-foot facility on approximately one acre of land in Irvine, California. All of these properties are owned by the Company.
As of February 25, 2016, we operated 201 Company-owned upscale casual dining restaurants: 188 under The Cheesecake
Factory® mark in 38 states, the District of Columbia and Puerto Rico; 12 under the Grand Lux Cafe® mark in seven states;
and one RockSugar Pan Asian Kitchen® in California. All of our Company-owned restaurants are located on leased proper-
ties, and although we would evaluate the economic benefit of fee ownership if the opportunity presented itself, we have no
current plans to own the real estate underlying our restaurants.
Company-Owned Restaurant Locations
State
Alabama
Arizona
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
Oklahoma
Ohio
Oregon
Pennsylvania
Puerto Rico*
Rhode Island
Tennessee
Texas
Utah
Virginia
Washington
Wisconsin
Total
*Commonwealth
The
Cheesecake
Factory
Grand Lux
Cafe
RockSugar
Pan Asian
Kitchen
1
6
36
4
3
1
1
17
5
1
1
6
2
1
1
2
1
6
7
1
1
3
1
5
9
1
11
3
2
7
1
5
1
1
4
15
2
7
3
3
188
1
3
1
2
2
1
1
2
12
1
Total
1
6
37
4
3
1
1
20
5
1
1
7
2
1
1
2
1
6
7
1
1
3
1
7
11
1
12
3
2
7
1
6
1
1
4
17
2
7
3
3
201
2015 an nual report
page 27
the cheesecake factory
ITEM 3. Legal Proceedings
See Note 9 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for a summary of legal proceedings.
ITEM 4. Mine Safety Disclosures
Not applicable.
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2015 annual report
the cheesecake factory
Part II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Our common stock is traded on the NASDAQ Global Select Market under the symbol CAKE. There were approximately
1,000 holders of record of our common stock at February 16, 2016, and we estimate there were approximately 28,000
beneficial stockholders on that date. On February 16, 2016, the closing price of our common stock was $49.37 per share.
The following table sets forth, for the periods indicated, the range of prices and cash dividends declared per share for each
quarter during fiscal 2015 and 2014:
Fiscal 2015
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
Fiscal 2014
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
$
$
High
Low
Cash
Dividends
Declared
55.53 $
58.86
55.48
55.13
45.17 $
50.02
47.91
46.52
0.20
0.20
0.165
0.165
51.45 $
47.09
49.10
49.21
42.00 $
42.54
43.58
42.73
0.165
0.165
0.14
0.14
Future decisions to pay, increase or decrease dividends are at the discretion of the Board and will be dependent on our
operating performance, financial condition, capital expenditure requirements and other such factors that the Board
considers relevant. (See Note 10 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for
further discussion of our stockholders’ equity.)
The following table sets forth our purchases of our common stock during the thirteen weeks ended December 29, 2015 (in
thousands, except per share amounts):
Period
Total Number
of Shares
Purchased (1)
Average
Price Paid
per Share
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum Number of
Shares that May Yet
Be Purchased Under the
Plans or Programs
September 30 — November 3, 2015
November 4 — December 1, 2015
December 2 — December 29, 2015
Total
153 $
191
6
350
52.67
47.10
47.17
153
191
—
344
4,630
4,438
4,432
(1) The total number of shares purchased includes shares withheld upon vesting of restricted share awards to satisfy
minimum tax withholding obligations.
In July 2013, our Board increased the authorization to repurchase our common stock by 7.5 million shares to 48.5 million
shares. Under this and all previous authorizations, we have cumulatively repurchased 44.1 million shares at a total cost of
$1,263.4 million through December 29, 2015, including 2.1 million shares of our common stock at a cost of $104.8 million
during fiscal year 2015. Our share repurchase authorization does not have an expiration date, does not require us to purchase
a specific number of shares and may be modified, suspended or terminated at any time. (See Note 10 of Notes to Consolidated
Financial Statements in Part IV, Item 15 of this report for further discussion of our repurchase authorization and methods.)
Our credit facility limits cash distributions with respect to our equity interests, such as cash dividends and share repurchas-
es, based on a defined ratio. (See Note 7 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report
for further discussion of our long-term debt.)
2015 an nual report
page 29
the cheesecake factory
Price Performance Graph
The following graph compares the cumulative five-year total return provided to stockholders on the Company’s common
stock relative to the S&P 400 Midcap Index, the NASDAQ US Benchmark TR Index and the Nation’s Restaurant News Index.
The graph assumes a $100 initial investment and the reinvestment of dividends in each of the indices. The measurement
points utilized in the graph consist of the last trading day in each calendar year, which closely approximates the last day of
the respective fiscal year of the Company. The historical stock performance presented below is not intended to and may
not be indicative of future stock performance. NASDAQ OMX, which supplies the total return data for the NASDAQ Compos-
ite® (US) Index, has historically used total return data prepared by the Center for Research in Security Prices (CRSP). Effec-
tive January 1, 2014, NASDAQ OMX replaced total return values prepared by CRSP with comparable NASDAQ OMX Global
Index data. As a result of this change, the NASDAQ US Benchmark TR Index replaces the NASDAQ Composite® (US) Index.
The Cheesecake Factory Incorporated
S&P 400 Midcap Index
NASDAQ US Benchmark TR Index (1)
Nation’s Restaurant News Stock Index (3)
NASDAQ Composite® (US) Index (2)
$200
$150
$100
$ 50
$ 0
12/31/10
12/31/11
12/31/12
12/30/13
12/31/14
12/31/15
12/31/10
12/31/11
12/31/12
12/30/13
12/31/14
12/31/15
The Cheesecake Factory Incorporated
S&P 400 Midcap Index
NASDAQ US Benchmark TR Index (1)
NASDAQ Composite® (US) Index (2)
Nation’s Restaurant News Index (3)
$
$
$
$
$
100 $
100 $
100 $
100 $
100 $
96 $
97 $
100 $
101 $
127 $
107 $
112 $
117 $
119 $
128 $
164 $
160 $
175 $
157 $
150
148 $
154
176
156 $
166 $ unavailable $ unavailable
191
164 $
168 $
(1) Underlying data provided by NASDAQ OMX Global Indexes.
(2) Underlying data provided by The Center for Research in Security Prices. As discussed above, data is no longer available
from NASDAQ OMX after December 31, 2013.
(3) The Nation’s Restaurant News Index (“Index”) is a comprehensive restaurant industry index. In addition to fine and
casual dining, the index includes fast casual and quick-serve.
This graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual
Report on Form 10-K into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
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2015 annual report
the cheesecake factory
ITEM 6. Selected Financial Data
The following selected financial data should be read in conjunction with our consolidated financial statements and related notes
thereto, and with Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Fiscal Year (1) (2)
(In thousands, except per share data)
2015
2014
2013
2012
2011
Statements of Income Data:
Revenues
$ 2,100,609 $ 1,976,624 $ 1,877,910 $ 1,809,017 $ 1,757,624
Costs and expenses:
Cost of sales
Labor expenses
Other operating costs and expenses
General and administrative expenses
Depreciation and amortization expenses
504,031
684,818
500,640
137,402
85,563
490,306
646,102
478,504
119,094
82,835
455,685
603,069
452,571
114,728
78,558
450,153
580,192
439,559
104,156
74,433
448,468
567,358
428,442
96,263
71,958
Impairment of assets and
lease terminations
Preopening costs
Total costs and expenses
6,011
16,898
1,935,363
696
14,356
1,831,893
(561)
12,906
1,716,956
9,536
12,289
1,670,318
1,547
10,138
1,624,174
Income from operations
Interest and other expense, net
Income before income taxes
Income tax provision
Net income
165,246
144,731
160,954
(5,894)
(6,187)
(4,504)
159,352
42,829
138,544
37,268
156,450
42,094
$
116,523 $
101,276 $
114,356 $
138,699
(4,725)
133,974
35,551
98,423 $
133,450
(4,307)
129,143
33,423
95,720
Net income per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Cash dividends declared
per common share
Balance Sheet Data (at end of period):
Cash and cash equivalents
Total assets
Total long-term debt and deemed
landlord financing liability,
including current portion
Total stockholders’ equity
Restaurant Data
The Cheesecake Factory
comparable restaurant sales
The Cheesecake Factory
restaurants open at year end
$
$
2.39 $
2.30 $
2.04 $
1.96 $
2.19 $
2.10 $
1.85 $
1.78 $
1.70
1.64
48,833
50,605
49,567
51,584
52,229
54,377
53,185
55,211
56,378
58,190
$
0.73 $
0.61 $
0.52 $
0.24 $
—
43,854 $
$
1,233,346
58,018 $
61,751 $
83,569 $
1,161,376
1,108,106
1,076,910
48,211
1,007,996
91,343
588,539
80,195
556,510
68,701
577,353
57,172
579,726
56,961
542,753
2.6%
1.5%
1.1%
2.2%
187
177
168
162
2.0%
156
(1) Fiscal 2011 consisted of 53 weeks. All other fiscal years presented consisted of 52 weeks.
(2) Fiscal 2015, 2014, 2013, 2012 and 2011 included $20.1 million, $16.8 million, $14.1 million, $10.8 million and $9.6
million, respectively, of stock-based compensation expense.
2015 an nual report
page 31
the cheesecake factory
Non-GAAP Measures
Adjusted net income and adjusted diluted net income per share are supplemental measures of our performance that are
not required by or presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled
measures used by other companies and should not be considered in isolation or as a substitute for measures of perfor-
mance prepared in accordance with GAAP. We calculate these non-GAAP measures by eliminating from net income and
diluted net income per share the impact of items we do not consider indicative of our ongoing operations. We believe
these adjusted measures provide additional information to facilitate the comparison of our past and present financial
results. We utilize results that both include and exclude the identified items in evaluating business performance. However,
our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected
by unusual or infrequent items. In the future, we may incur expenses or generate income similar to the adjusted items.
Following is a reconciliation from net income and diluted net income per share to the corresponding adjusted measures:
(In thousands, except per share data)
2015
2014
2013
Fiscal Year
Net income
After-tax impact from:
Impairment of assets and lease terminations (1)
Adjusted net income
Diluted net income per share
After-tax impact from:
Impairment of assets and lease terminations (1)
Adjusted diluted net income per share (2)
$
116,523 $
101,276 $
114,356
3,607
120,130 $
418
101,694 $
(337)
114,019
2.30 $
1.96 $
2.10
0.07
2.37 $
0.01
1.97 $
(0.01)
2.10
$
$
$
(1) Represents impairment and lease termination expenses and income related to four The Cheesecake Factory
restaurants, three Grand Lux Cafe restaurants and our RockSugar Pan Asian Kitchen restaurant. The pre-tax amounts
associated with these items were $6,011, $696 and ($561) in fiscal years 2015, 2014 and 2013, respectively. These
amounts were recorded in impairment of assets and lease terminations in the consolidated statements of income.
(See Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for further discussion of
these charges.)
(2) Adjusted diluted net income per share may not add due to rounding.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes
in Part IV, Item 15 of this report, the “Risk Factors” included in Part I, Item 1A of this report and the cautionary statements
included throughout this report. The inclusion of supplementary analytical and related information herein may require us to
make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expec-
tations with respect to our results of operations and financial position.
As of February 25, 2016, we operated 201 Company-owned restaurants: 188 under The Cheesecake Factory® mark, 12
under the Grand Lux Cafe® mark and one under the RockSugar Pan Asian Kitchen® mark. Internationally, 11 The Cheese-
cake Factory branded restaurants operated in the Middle East and Mexico under licensing agreements. We also operated
two bakery production facilities.
The Cheesecake Factory is an upscale casual dining concept that features more than 200 menu items including appetiz-
ers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches, omelettes and desserts, including
approximately 50 varieties of cheesecake and other quality baked desserts. Grand Lux Cafe and RockSugar Pan Asian
Kitchen are also upscale, casual dining concepts offering approximately 150 and 75 menu items, respectively. In contrast
to many chain restaurant operations, substantially all of our menu items, except those desserts manufactured at our bak-
ery production facilities, are prepared daily at each restaurant using high quality, fresh ingredients using innovative and pro-
prietary recipes. We believe our The Cheesecake Factory and Grand Lux Cafe restaurants are recognized by consumers for
offering value with a large variety of freshly prepared menu items across a broad array of price points and generous food
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2015 annual report
the cheesecake factory
portions at moderate prices. Our restaurants’ distinctive, contemporary design and decor create a high energy ambiance
in a casual setting. Our restaurants typically range in size from 8,000 to 12,000 interior square feet, provide full liquor
service and are open seven days a week for lunch and dinner, as well as Sunday brunch.
Overview
Our strategy is driven by our commitment to customer satisfaction and is focused primarily on menu innovation, service
and operational execution to continue to differentiate ourselves from other restaurant concepts, as well as to drive compet-
itively strong performance that is sustainable. Financially, we are focused on prudently managing expenses at our restau-
rants, bakery facilities and corporate support center, and leveraging our size to make the best use of our purchasing power.
We are committed to allocating capital in a manner that we project will produce targeted returns at the unit level, in the
form of fully capitalized cash return on investment, of approximately 20%. Returns are affected by the cost to build restau-
rants, the level of revenues that each restaurant can deliver and our ability to maximize the profitability of restaurants.
Investing in new restaurant development that meets our return on investment criteria is expected to create value for our
Company and supports achieving a Company-level return on invested capital of approximately 15%. It is our top capital al-
location priority with a focus on opening our restaurant concepts in premier locations within both new and existing markets
in the United States, and potentially new markets internationally.
Going forward, our domestic revenue growth (comprised of our annual unit growth and comparable sales growth), combined
with international growth, a robust share repurchase program and our dividend provide a framework with high visibility and
one that supports our financial objective of mid-teens growth in total return to shareholders. We define our total returns as
earnings per share growth plus our dividend yield. The following are the key performance levers that we believe will contrib-
ute to achieving these goals:
• Growing Overall Revenue. Our overall revenue growth is primarily driven by revenue from new restaurant openings,
increases in comparable restaurant sales, and royalties and bakery sales from additional licensed international
locations. Changes in comparable restaurant sales come from variations in customer traffic, as well as in check
average. Our strategy is to grow customer traffic by (1) continuing to offer innovative, high quality menu items that offer
customers a wide range of options in terms of flavor, price and value and (2) focusing on service and hospitality with the
goal of delivering an exceptional customer experience. We are continuing our efforts on a number of initiatives intended
to help us make incremental progress towards growing customer traffic, including a greater focus on increasing through
put in our restaurants, redesigning our server training, building on the success of our gift card program and
implementing a technology for mobile payment in our restaurants. Check average is impacted by menu price increases
and/or changes in menu mix. Our philosophy with regard to menu pricing is to use price increases to help offset key
operating cost increases in a manner that balances protecting both our margins and customer traffic levels.
• Increasing Our Operating Margins (Income from Operations Expressed as a Percentage of Revenues). Operating margins
are subject to fluctuations in commodity costs, labor, restaurant-level occupancy expenses, general and administrative
expenses (“G&A”) and preopening expenses. Our objective is to gradually increase our operating margins and return to
peak levels by capturing fixed cost leverage primarily from growth in international royalties, as well as increases in
comparable restaurant sales. Maximizing our purchasing power as our business grows and operating our restaurants as
productively as possible should help offset cost inflation, thereby supporting our margin expansion goal.
By efficiently scaling our restaurant and bakery support infrastructure and improving our internal processes, we work
toward growing G&A expenses at a slower rate than revenue growth over the long term, which also should contribute
to operating margin expansion. However, G&A as a percentage of revenues may vary from quarter to quarter and may
increase on a year-over-year comparative basis in the near term.
• Dividends and Share Repurchases. We have historically generated a significant amount of free cash flow, which we
define as cash flow from operations less capital expenditures. We utilize substantially all of our free cash flow plus
proceeds received from employee stock option exercises for dividends and share repurchases, the latter of which off
sets dilution from our equity compensation program and supports our earnings per share growth.
(See Risk Factor “We may not be able to achieve our target of average mid-teens growth in total return to shareholders” in
Part I, Item 1A of this report.)
2015 an nual report
page 33
the cheesecake factory
Results of Operations
The following table sets forth, for the periods indicated, information from our consolidated statements of income expressed
as percentages of revenues.
Revenues
Costs and expenses:
Cost of sales
Labor expenses
Other operating costs and expenses
General and administrative expenses
Depreciation and amortization expenses
Impairment of assets and lease terminations
Preopening costs
Total costs and expenses
Income from operations
Interest and other expense, net
Income before income taxes
Income tax provision
Net income
Fiscal 2015 Compared to Fiscal 2014
2015
Fiscal Year
2014
2013
100.0%
100.0%
100.0%
24.0
32.6
23.8
6.5
4.1
0.3
0.8
92.1
7.9
(0.3)
7.6
2.1
5.5%
24.9
32.7
24.2
6.0
4.2
—
0.7
92.7
7.3
(0.3)
7.0
1.9
5.1%
24.2
32.1
24.1
6.1
4.2
—
0.7
91.4
8.6
(0.3)
8.3
2.2
6.1%
Revenues
Revenues increased 6.3% to $2,100.6 million for fiscal 2015 compared to $1,976.6 million for fiscal 2014.
Comparable sales at The Cheesecake Factory restaurants increased by 2.6%, or $44.2 million, from the prior fiscal year
driven by average check growth of 3.0% (based on an increase of 2.2% in menu pricing and a 0.8% positive change in mix),
partially offset by a decrease in customer traffic of 0.4%. We implemented effective menu price increases of approximate-
ly 1.0% and 1.5% during the first and third quarters of fiscal 2015, respectively. We plan to target menu price increases
of approximately 2% annually. Total operating weeks at The Cheesecake Factory restaurants increased 5.1% to 9,341 in
fiscal 2015 compared to the prior year. The Cheesecake Factory average sales per restaurant operating week increased
1.5% to $204,877 in fiscal 2015 compared to fiscal 2014.
Comparable sales at our Grand Lux Cafe restaurants decreased by 2.3% from the prior fiscal year driven by a decrease in
customer traffic, partially offset by average check growth. We implemented effective menu price increases of approximate-
ly 1.5% and 1.1% during the second and fourth quarters of fiscal 2015, respectively. We plan to target menu price increas-
es of approximately 2% annually.
Restaurants become eligible to enter our comparable sales base in their 19th month of operation. At December 29,
2015, there were 17 The Cheesecake Factory restaurants and one Grand Lux Cafe not yet in our comparable sales base.
International licensed locations and restaurants that are no longer in operation, including those which we have relocated,
are excluded from our comparable sales calculations. Factors outside of our control, such as macroeconomic conditions,
weather patterns, timing of holidays, competition and other factors, including those referenced in Part I, Item lA, “Risk
Factors,” can impact comparable sales.
We generally update and reprint our menus twice a year. As part of these menu updates, we evaluate the need for price
increases based on those operating cost increases of which we are aware or that we can reasonably expect. While menu
price increases can contribute to higher comparable restaurant sales in addition to offsetting margin pressure, we carefully
consider all potential price increases in light of the extent to which we believe they will impact customer traffic.
External bakery sales were $52.8 million for fiscal 2015 compared to $53.2 million in fiscal 2014.
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Cost of Sales
Cost of sales consists of food, beverage, retail and bakery production supply costs incurred in conjunction with our restau-
rant and bakery revenues, and excludes depreciation, which is captured separately in depreciation and amortization
expenses. As a percentage of revenues, cost of sales was 24.0% for fiscal 2015 compared to 24.9% for fiscal 2014.
Higher meat costs were more than offset by lower dairy and seafood costs.
Our restaurant menus are among the most diversified in the foodservice industry and, accordingly, are not overly depen-
dent on a few select commodities. Changes in costs for one commodity sometimes can be offset by cost changes in
other commodity categories. The principal commodity categories for our restaurants include general grocery items, dairy,
produce, fish and seafood, poultry, meat and bread. See the discussion of our contracting activities in Liquidity and Capital
Resources below.
We negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment require-
ments, such as cream cheese, depending on market conditions and expected demand. Historically, we were unable to
contract directly for extended periods of time for certain of our commodities such as some produce, wild-caught fresh fish
and certain dairy items. We recently entered into longer-term fixed pricing agreements for additional dairy items and continue
to evaluate the possibility of entering into similar arrangements for other commodities. We also periodically evaluate
hedging vehicles, such as direct financial instruments, to assist us in managing our risk and variability in these categories.
Although these vehicles and markets may be available to us, we may choose not to enter into contracts due to pricing
volatility, excessive risk premiums, hedge inefficiencies or other factors. Additionally, the cost of commodities subject to
government regulation, such as dairy and corn, can be even more susceptible to price fluctuation.
As has been our past practice, we will carefully consider opportunities to introduce new menu items and implement select-
ed menu price increases to help offset any expected cost increases for key commodities and other goods and services
utilized by our operations. For new restaurants, cost of sales will typically be higher for a period of time after opening until
our management team becomes more accustomed to predicting, managing and servicing the sales volumes at the new
restaurants.
Labor Expenses
As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery direct production labor,
including associated fringe benefits, were 32.6% and 32.7% in fiscal 2015 and fiscal 2014, respectively. Decreased group
medical costs due to lower large claims activity and enrollment were partially offset by higher hourly labor rates. For new
restaurants, labor expenses will typically be higher for a period of time after opening until our management team becomes
more accustomed to predicting, managing and servicing the sales volumes at the new restaurants.
Other Operating Costs and Expenses
Other operating costs and expenses consist of restaurant-level occupancy expenses (rent, common area expenses, insurance,
licenses, taxes and utilities), other operating expenses (excluding food costs and labor expenses, which are reported
separately) and bakery production overhead and distribution expenses. As a percentage of revenues, other operating costs
and expenses decreased to 23.8% for fiscal 2015 from 24.2% for fiscal 2014 primarily due to lower natural gas prices and
some favorability across other categories.
General and Administrative Expenses
General and administrative (“G&A”) expenses consist of the restaurant management recruiting and training program, as
well as the restaurant field supervision, corporate support and bakery administrative organizations. As a percentage of
revenues, G&A expenses increased to 6.5% for fiscal 2015 versus 6.0% for fiscal 2014 primarily due to a higher fiscal
2015 accrual for corporate performance bonuses and an increase in stock-based compensation expense.
Depreciation and Amortization Expenses
As a percentage of revenues, depreciation and amortization expenses were 4.1% and 4.2% in fiscal 2015 and fiscal 2014,
respectively.
Impairment of Assets and Lease Terminations
During fiscal 2015, we recorded a $6.0 million impairment charge against the carrying value of our RockSugar Pan Asian
Kitchen restaurant assets. During fiscal 2014, we incurred $0.7 million of accelerated depreciation, future rent and other
closing costs related to the relocation of one The Cheesecake Factory restaurant.
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the cheesecake factory
Preopening Costs
Preopening costs were $16.9 million for fiscal 2015 compared to $14.4 million in fiscal 2014. We opened ten The
Cheesecake Factory restaurants and one Grand Lux Cafe in fiscal 2015 compared to ten The Cheesecake Factory restau-
rants in fiscal 2014. Preopening costs include all costs to relocate and compensate restaurant management employees
during the preopening period, costs to recruit and train hourly restaurant employees, and wages, travel and lodging costs
for our opening training team and other support staff members. Also included are expenses for maintaining a roster of
trained managers for pending openings, the associated temporary housing and other costs necessary to relocate manag-
ers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. Preopen-
ing costs can fluctuate significantly from period to period based on the number and timing of restaurant openings and the
specific preopening costs incurred for each restaurant.
Interest and Other Expense, Net
Interest and other expense, net was $5.9 million in fiscal 2015 compared to $6.2 million in fiscal 2014. Higher expense
on asset disposals was more than offset by income from an insurance claim and lower interest expense associated with
landlord construction allowances. Interest expense included $3.5 million in fiscal 2015 compared to $3.8 million in fiscal
2014 associated with landlord construction allowances deemed to be financing in accordance with accounting guidance.
Income Tax Provision
Our effective income tax rate was 26.9% in both fiscal 2015 and fiscal 2014. A higher proportion of enterprise zone
credits in relation to pre-tax income was offset by non-deductible losses in fiscal 2015 as compared to non-taxable gains in
fiscal 2014 on our investments in variable life insurance contracts used to support our Executive Savings Plan (“ESP”), a
non-qualified deferred compensation plan. See Note 13 of Notes to Consolidated Financial Statements in Part IV, Item 15
of this report for further information on our income tax provision.
Fiscal 2014 Compared to Fiscal 2013
Revenues
Revenues increased 5.2% to $1,976.6 million for fiscal 2014 compared to $1,877.9 million for fiscal 2013.
Comparable sales at The Cheesecake Factory restaurants increased by 1.5%, or $24.8 million, from the prior fiscal year
driven by average check growth of 2.5% (based on an increase of 2.0% in pricing and a 0.5% change in mix), partially offset
by a decrease in customer traffic of 1.0%. We implemented effective menu price increases of approximately 1.0% during
both the first and third quarters of fiscal 2014. Total restaurant operating weeks at The Cheesecake Factory increased
4.5% to 8,886 in fiscal 2014 compared to the prior year. The Cheesecake Factory average sales per restaurant operating
week increased 1.6% to $201,755 in fiscal 2014 compared to fiscal 2013.
Comparable sales at our Grand Lux Cafe restaurants decreased by 3.1% from the prior fiscal year driven by a decrease in
customer traffic, partially offset by average check growth. We implemented effective menu price increases of approximate-
ly 1.2% and 1.0% during the second and fourth quarters of fiscal 2014, respectively. On a weighted average basis, based
on the timing of our menu roll outs within each quarter, the Grand Lux Cafe menu included a 2.2% increase in pricing for
fiscal 2014.
External bakery sales were $53.2 million for fiscal 2014 compared to $55.3 million in fiscal 2013, primarily due to lower
sales to warehouse club customers, partially offset by higher sales to international and retail customers.
Cost of Sales
As a percentage of revenues, cost of sales was 24.9% for fiscal 2014 compared to 24.2% for fiscal 2013. This variance
was driven primarily by a significant increase in dairy costs with butter prices reaching a record high in September 2014.
Labor Expenses
As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery direct production labor,
including associated fringe benefits, were 32.7% and 32.1% in fiscal 2014 and fiscal 2013, respectively. This variance
was primarily driven by higher group medical costs due to greater large claims activity and, to a lesser extent, higher partici-
pation in our medical plans. We also experienced pressure from higher wage rates in the second half of fiscal 2014.
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Other Operating Costs and Expenses
As a percentage of revenues, other operating costs and expenses increased to 24.2% for fiscal 2014 from 24.1% for fiscal
2013. Higher utilities costs were partially offset by leverage on rent expense.
General and Administrative Expenses
As a percentage of revenues, G&A expenses decreased to 6.0% for fiscal 2014 versus 6.1% for fiscal 2013 due to a
lower fiscal 2014 accrual for corporate performance bonuses, partially offset by an increase in stock-based compensation
expense.
Depreciation and Amortization Expenses
As a percentage of revenues, depreciation and amortization expenses were 4.2% for fiscal 2014 and fiscal 2013.
Impairment of Assets and Lease Terminations
During fiscal 2014, we incurred $0.7 million of accelerated depreciation, future rent and other closing costs related to the
relocation of one The Cheesecake Factory restaurant. In fiscal 2013, we incurred expenses of $0.6 million for future rent
and other closing costs associated with the closure of three Grand Lux Cafe restaurants and $3.7 million of impairment,
accelerated depreciation and closing costs related to the relocation of four The Cheesecake Factory restaurants. We also
recorded $4.9 million in income from a landlord in connection with the early termination of one of these leases and for
waiving our right to exercise renewal options.
Preopening Costs
Preopening costs were $14.4 million for fiscal 2014 compared to $12.9 million in fiscal 2013. We opened ten The
Cheesecake Factory restaurants in fiscal 2014 compared to nine in fiscal 2013.
Interest and Other Expense, Net
Interest and other expense, net increased to $6.2 million in fiscal 2014 compared to $4.5 million in fiscal 2013. This
increase was driven primarily by higher expense on asset disposals, increased interest expense associated with landlord
construction allowances, and a benefit in fiscal 2013 related to the exercise of an option to vest our ownership in land
adjacent to our North Carolina bakery facility. Interest expense included $3.8 million in fiscal 2014 compared to $3.3
million in fiscal 2013 associated with landlord construction allowances deemed to be financing in accordance with
accounting guidance.
Income Tax Provision
Our effective income tax rate was 26.9% in both fiscal 2014 and 2013. A higher proportion of Federal Insurance Contribu-
tions Act (“FICA”) tip credit in relation to pre-tax income in fiscal 2014 was offset by lower non-taxable gains on our invest-
ments in variable life insurance used to support our ESP .
Fiscal 2016 Outlook
This discussion contains forward-looking statements and should be read in conjunction with our consolidated financial
statements and related notes in Part IV, Item 15 of this report, the “Risk Factors” included in Part I, Item 1A of this report
and the cautionary statements included throughout this report.
We estimate diluted net income per share for fiscal 2016 will be between $2.56 and $2.68 based on an assumed compa-
rable sales increase of between 1.5% and 2.5% at The Cheesecake Factory restaurants. Fiscal 2016 is a 53-week year,
and our estimates include an approximate impact from the additional week of between $0.05 and $0.08 in diluted net
income per share. We currently expect food costs to be flat as a percentage of revenues to fiscal 2015 as we anticipate
higher prices in some areas such as produce and dairy to be offset by lower seafood and poultry costs. We also expect
wage inflation of approximately 5% in fiscal 2016. At the high end of our sensitivity range, we expect operating margins to
be positive relative to fiscal 2015. We anticipate a fiscal 2016 effective income tax rate of approximately 28%.
In fiscal 2016, we plan to open as many as eight new restaurants, including one Grand Lux Cafe. In addition to these
Company-owned locations, we expect as many as four to five restaurants to open internationally under licensing agreements.
We expect fiscal 2016 cash capital expenditures to range between $100 million and $110 million and anticipate utilizing
substantially all of our free cash flow, plus proceeds received from employee stock option exercises, for dividends and
share repurchases.
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the cheesecake factory
Liquidity and Capital Resources
Our corporate financial objectives are to maintain a sufficiently strong and conservative balance sheet to support our
operating initiatives and unit growth while maintaining financial flexibility to provide the financial resources necessary to
protect and enhance the competitiveness of our restaurant and bakery brands and to provide a prudent level of financial
capacity to manage the risks and uncertainties of conducting our business operations in the current economic environment
and through future economic and industry cycles. Our ongoing capital requirements are principally related to our restaurant
expansion plan and ongoing maintenance of our restaurants and bakery facilities, as well as investment in our corporate
and information technology infrastructures.
Similar to many restaurant and retail chain store operations, we utilize operating lease arrangements for all of our restau-
rant locations. We believe that our operating lease arrangements continue to provide appropriate leverage for our capital
structure in a financially efficient manner. However, we are not limited to the use of lease arrangements as our only method
of opening new restaurants. While most of our operating lease obligations are not required to be reflected as indebtedness
on our consolidated balance sheet, the minimum base rents and related fixed obligations under our lease agreements
must be satisfied by cash flows from our ongoing operations. Accordingly, our lease arrangements reduce, to some extent,
our capacity to utilize funded indebtedness in our capital structure.
Historically, we have obtained capital from our ongoing operations, public stock offerings, lines of credit, employee stock
option exercises and construction contributions from our landlords. Our requirement for working capital is not significant,
since our restaurant customers pay for their food and beverage purchases in cash or cash equivalents at the time of sale,
and we are able to sell many of our food inventory items before payment is due to the suppliers of such items.
The following table presents, for the periods indicated, a summary of our key cash flows from operating, investing and
financing activities:
(In millions)
Cash provided by operating activities
Capital expenditures
Deemed landlord financing proceeds
Proceeds from exercise of stock options
Borrowings on credit facility
Repayments on credit facility
Purchase of treasury stock
Cash dividends paid
Fiscal Year
2015
2014
2013
$
$
$
$
$
$
$
$
235.4 $
(153.9) $
14.3 $
28.0 $
60.0 $
(60.0) $
(109.4) $
(36.0) $
239.6 $
(114.0) $
14.1 $
22.9 $
25.0 $
(25.0) $
(140.5) $
(30.3) $
204.8
(106.3)
13.7
72.9
—
—
(183.7)
(27.2)
During fiscal 2015, our cash and cash equivalents decreased by $14.2 million to $43.9 million at December 29, 2015.
This decrease was primarily attributable to capital expenditures, treasury stock purchases and dividend payments, partially
offset by cash provided by operating activities, proceeds from exercises of employee stock options and deemed landlord
financing proceeds. See Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for further
discussion of cash and cash equivalents.
Capital expenditures have increased over the last three fiscal years due primarily to the number of restaurants opened
(eleven, ten and nine in fiscal 2015, 2014 and 2013, respectively) and construction of a training center at our corporate
site in fiscal 2015. Capital expenditures for new restaurants, including locations under development as of each fiscal
year end were $104.5 million, $80.5 million and $75.8 million for fiscal 2015, 2014 and 2013, respectively. Fiscal 2015
capital expenditures also included $28.5 million for our existing restaurants and $20.9 million for bakery and corporate
capacity and infrastructure investments, including construction of a training center that was completed in January 2016.
For fiscal 2016, we currently estimate our cash outlays for capital expenditures to range between $100 million and $110
million, net of agreed-upon up-front cash landlord construction contributions and excluding $13.6 million of expected
non-capitalizable preopening costs for new restaurants. The amount reflected as additions to property and equipment in
the consolidated statements of cash flows may vary from this estimate based on the accounting treatment of each lease.
(See Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report.) Our estimate for capital
expenditures for fiscal 2016 contemplates a net outlay of $60 million to $65 million for as many as eight restaurants
expected to be opened during fiscal 2016 and estimated construction-in-progress disbursements for anticipated early
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fiscal 2017 openings. Expected fiscal 2016 capital expenditures also include $30 million to $32 million for maintenance,
enhancements and capacity additions to our existing restaurants and $10 million to $13 million for bakery and corporate
infrastructure investments.
On December 22, 2015, we entered into a new loan agreement (“Facility”) which amended and restated in its entirety our
prior loan agreement dated October 16, 2013. This Facility, which matures on December 22, 2020, provides us with revolving
loan commitments totaling $200 million, of which $50 million may be used for issuances of letters of credit. Availability
under the Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. The
Facility contains a commitment increase feature that could provide for an additional $100 million in available credit upon
our request and subject to the lenders electing to increase their commitments or by means of the addition of new lenders.
At December 29, 2015, we had net availability for borrowings of $180.0 million, based on a zero outstanding debt balance
and $20.0 million in standby letters of credit. The Facility also limits cash distributions with respect to our equity inter-
ests, such as cash dividends and share repurchases, based on a defined ratio. We were in compliance with the financial
covenants in effect at December 29, 2015. We borrowed on these credit facilities during both fiscal 2015 and 2014 to
fund a portion of our stock repurchases and repaid the respective balances within each fiscal year. (See Note 7 of Notes
to Consolidated Financial Statements in Part IV, Item 15 of this report for further discussion of our long-term debt.)
In July 2013, our Board increased the authorization to repurchase our common stock by 7.5 million shares to 48.5 million
shares. Under this and all previous authorizations, we have cumulatively repurchased 44.1 million shares at a total cost
of $1,263.4 million through December 29, 2015. During fiscal 2015, 2014 and 2013, we repurchased 2.1 million, 3.1
million and 4.5 million shares of our common stock at a cost of $104.8 million, $143.2 million and $183.7 million,
respectively. Our share repurchase authorization does not have an expiration date, does not require us to purchase a
specific number of shares and may be modified, suspended or terminated at any time. We make the determination to
repurchase shares based on several factors, including an evaluation of current and future capital needs associated with
new restaurant development, current and forecasted cash flows, including dividend payments, a review of our capital
structure and cost of capital, our share price and current market conditions. Our objectives with regard to share repurchases
are to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our
earnings per share growth. (See Note 10 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report
for further discussion of our repurchase authorization and methods.)
In July 2012, our Board approved the initiation of a cash dividend to our stockholders, which is subject to quarterly Board
approval. Cash dividends have been declared during every quarter since initiation. Future decisions to pay, increase or
decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial
condition, capital expenditure requirements and other such factors that the Board considers relevant.
Based on our current expansion objectives, we believe that during the upcoming 12 months our cash and cash equivalents,
combined with expected cash flows provided by operations, available borrowings under our Facility and expected landlord
construction contributions should be sufficient in the aggregate to finance our capital allocation strategy, including capital
expenditures, share repurchases, repayment of borrowings on our Facility and cash dividends, and allow us to consider
additional possible capital allocation strategies, such as the acquisition of other growth vehicles. We continue to plan to
return substantially all of our free cash flow plus proceeds received from employee stock option exercises to stockholders
in the form of dividends and share repurchases.
As of December 29, 2015, we had no financing transactions, arrangements or other relationships with any unconsolidated
entities or related parties. Additionally, we had no financing arrangements involving synthetic leases or trading activities
involving commodity contracts.
2015 an nual report
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the cheesecake factory
Contractual Obligations and Commercial Commitments
The following table summarizes our contractual obligations and commercial commitments as of December 29, 2015:
(In millions)
Contractual obligations
Leases (1)
Long-term debt
Purchase obligations (2)
Uncertain tax positions (3)
Total
Other commercial commitments
Standby letters of credit
$
$
$
Payment Due by Period
Total
Less than
1 Year
1-3 Years
4-5 Years
1,014.3 $
—
151.0
1.1
1,166.4 $
81.9 $
—
90.0
—
171.9 $
167.6 $
—
36.5
1.1
205.2 $
165.8 $
—
10.9
—
176.7 $
More than
5 Years
599.0
—
13.6
—
612.6
20.0 $
— $
— $
20.0 $
—
(1) Represents aggregate minimum lease payments for our restaurant operations, automobiles and certain equipment,
including amounts characterized as deemed landlord financing payments in accordance with accounting guidance. (See
Note 1 in Notes to Consolidated Financial Statements in Part IV, Item 15 of this report.) Most of our leases also require
contingent rent in addition to the minimum base rent based on a percentage of sales ranging from 3% to 10% and
require various expenses incidental to the use of the property.
(2) Purchase obligations represent commitments for the purchase of goods and estimated construction commitments, net
of agreed-upon up-front landlord construction contributions. Amounts exclude agreements that are cancelable without
significant penalty.
(3) Represents liability for uncertain tax positions. (See Note 13 of Notes to Consolidated Financial Statements in Part IV,
Item 15 of this report for further discussion of income taxes.)
We expect to fund our contractual obligations primarily with operating cash flows generated in the normal course of business.
Critical Accounting Policies
Critical accounting policies are those we believe are most important to portraying our financial condition and results of op-
erations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncer-
tainties regarding the application of these policies may result in materially different amounts being reported under various
conditions or using different assumptions. We consider the following policies to be the most critical in understanding the
judgment that is involved in preparing our consolidated financial statements.
Property and Equipment
We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and
maintenance costs are expensed as incurred. The useful life of property and equipment and the determination as to what
constitutes a capitalized cost versus a repair and maintenance expense involve judgment by management, which may pro-
duce materially different amounts of repairs and maintenance or depreciation expense than if different assumptions were
used.
Impairment of Long-Lived Assets
We assess the potential impairment of our long-lived assets whenever events or changes in circumstances indicate that
the carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to,
significant underperformance relative to historical or projected future operating results, significant changes in the manner
in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previ-
ously estimated useful life, and significant negative industry or economic trends. We regularly review restaurants that are
cash flow negative for the previous four quarters and those that are being considered for closure or relocation to determine
if impairment testing is warranted.
Assessing whether impairment testing is warranted and, if so, determining the amount of expense require the use of
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estimates and assumptions regarding future cash flows and estimated useful lives, which are subject to a significant
degree of judgment based on our experience and knowledge. These estimates can be significantly impacted by changes
in the economic environment, real estate market conditions and capital spending decisions.
Gift Card Revenue Recognition
We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our
restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which
redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to
historical redemption trends and is classified as revenues in our consolidated statements of income. Utilizing this method,
we estimate both the amount of breakage and the time period of redemption. If actual redemption amounts or patterns
vary from our estimates, actual gift card breakage income may differ from the amounts recorded.
Leases
We currently lease all of our restaurant locations. We evaluate each lease to determine its appropriate classification as an
operating or capital lease for financial reporting purposes. All of our restaurant leases are classified as operating leas-
es. Minimum base rent, which generally escalates over the term of the lease, is recorded on a straight-line basis over the
lease term. The initial lease term includes the build-out, or rent holiday, period for our leases, where no rent payments are
typically due under the terms of the lease. Contingent rent expense, which is based on a percentage of revenue, is record-
ed as incurred to the extent it exceeds minimum base rent per the lease agreement.
We expend cash for leasehold improvements and FF&E to build out and equip our leased premises. We may also expend
cash for structural additions that we make to leased premises. Generally a portion of the leasehold improvements and
building costs are reimbursed to us by our landlords as construction contributions. If obtained, landlord construction
contributions usually take the form of up-front cash, full or partial credits against our future minimum or percentage rents,
or a combination thereof. Depending on the specifics of the leased space and the lease agreement, amounts paid for
structural components are recorded during the construction period as either prepaid rent or property and equipment and the
landlord construction contributions are recorded as either an offset to prepaid rent or as a deemed landlord financing liability.
For those leases for which we are deemed the owner of the property during construction, upon completion, we perform an
analysis to determine if they qualify for sale-leaseback treatment. For those qualifying leases, the deemed landlord financ-
ing liability and the associated property and equipment are removed and the difference is reclassified to either prepaid or
deferred rent and amortized over the lease term as an increase or decrease to rent expense. If the lease does not qualify
for sale-leaseback treatment, the deemed landlord financing liability is amortized over the lease term based on the rent
payments designated in the lease agreement.
Self-Insurance Liabilities
We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’
compensation, general liability, employee health benefits, employment practices and other insurable risks. The accrued
liabilities associated with our self-insured programs are based on our estimate of the ultimate costs to settle known claims
as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. Our estimated liabilities are
based on information provided by our insurance brokers and insurers, combined with our judgment regarding a number
of assumptions and factors, including the frequency and severity of claims, claims development history, case jurisdiction,
applicable legislation and our claims settlement practices. We maintain stop-loss coverage with third-party insurers to limit
our individual claim exposure for many of our programs. Significant judgment is required to estimate IBNR amounts as
parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims, differ from our
estimates, our financial results could be impacted.
Stock-Based Compensation
We apply the Black-Scholes valuation model in determining the fair value of stock option grants, which requires the use of
assumptions, including the volatility of our common stock price and the length of time staff members will retain their
vested stock options prior to exercise. Additionally, we estimate the expected forfeiture rate related to stock options,
restricted shares and restricted share units in determining the amount of stock-based compensation expense for each
period. Changes in these assumptions can materially affect our results of operations.
Income Taxes
We provide for income taxes based on our estimate of federal, state and foreign tax liabilities. Our estimates include,
but are not limited to, effective state and local income tax rates, allowable tax credits for items such as FICA taxes paid
2015 an nual report
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the cheesecake factory
on reported tip income and depreciation expense allowable for tax purposes. Our estimates are made based on the best
available information at the time we prepare our income tax provision. In making our estimates, we consider the impact of
legislative and judicial developments. As these developments evolve, we update our estimates, which, in turn, may result
in adjustments to our effective tax rate. We generally file our income tax returns within ten months after our fiscal year-
end. All tax returns are subject to audit by the applicable taxing authorities, usually years after the returns are filed, and
could be subject to differing interpretations of the tax laws.
We account for uncertain tax positions under Financial Accounting Standards Board guidance, which requires that a position
taken or expected to be taken in a tax return be recognized (or derecognized) in the financial statements when it is more
likely than not (i.e., a likelihood of more than 50%) that the position would be sustained on its technical merits upon exam-
ination by tax authorities, taking into account available administrative remedies and litigation. A recognized tax position is
then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate resolution.
Assessment of uncertain tax positions requires significant judgments relating to the amounts, timing and likelihood of
resolution. Our actual results could differ materially from these estimates.
Recent Accounting Pronouncements
See Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for a summary of new
accounting standards.
Impact of Inflation
The impact of inflation on food costs, labor, and other supplies and services can adversely impact our financial results.
While we attempt to at least partially offset increases in the costs of key operating resources by gradually raising prices
for our menu items and bakery products, coupled with more efficient purchasing practices, productivity improvements and
greater economies of scale, there can be no assurance that we will be effective in doing so.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
The following discussion of market risks contains forward-looking statements. Actual results may differ materially from the
following discussion based on general conditions in the commodity and financial markets.
We purchase food and other commodities for use in our operations, based on market prices established with our suppliers.
Many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of
our control. We negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment
requirements, depending on market conditions and expected demand. While we have historically been unable to contract
directly for extended periods of time for certain of our commodities such as some produce, wild-caught fish and certain
dairy items, including fluid milk and manufacturing cream, we are actively evaluating suppliers who may be able to provide
longer-term fixed pricing agreements and also new hedging vehicles, such as direct financial instruments, to assist us in
managing our risk and variability in these categories. However, at times we may still choose not to enter into contracts
using the vehicles and markets that are available to us due to pricing volatility, excessive risk premiums, hedge inefficien-
cies or other factors. Where we have not contracted, commodities can be subject to unforeseen supply and cost fluctua-
tions, which at times can be significant. We may have the ability to increase menu prices, or vary menu items, in response
to food commodity price increases. We do not currently use financial instruments to hedge commodity prices, since our
purchase arrangements with suppliers, to the extent that we can enter into such arrangements, help control the ultimate
cost that we pay.
We are exposed to market risk from interest rate changes on our funded debt. This exposure relates to the component of
the interest rate on our $200 million revolving credit facility that is indexed to market rates. As of December 29, 2015 and
December 30, 2014, we had no debt outstanding under our credit facility. Therefore, we had no exposure to interest rate
fluctuations on funded debt at those dates. (See Note 7 of Notes to Consolidated Financial Statements in Part IV, Item 15
of this report for further discussion of our long-term debt.)
We are also subject to market risk related to our investments in variable life insurance contracts used to support our ESP,
to the extent these investments are not equivalent to the related liability. In addition, because changes in these invest-
ments are not taxable, the full impact of gains or losses affects net income. Based on balances at December 29, 2015
and December 30, 2014, a hypothetical 10% decline in the market value of our deferred compensation asset and related
liability would not have impacted income before income taxes. However, net income would have declined by $1.6 million at
December 29, 2015 and $1.6 million at December 30, 2014.
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the cheesecake factory
ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements required to be filed hereunder are set forth in Part IV, Item 15 of this report.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established and maintain disclosure controls and procedures that are designed to ensure that material informa-
tion relating to the Company and our subsidiaries required to be disclosed by us in the reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclo-
sure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only a reasonable assurance of achieving the desired
control objectives, and management was necessarily required to apply its judgment in evaluating the cost-benefit relation-
ship of possible controls and procedures. We carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that eval-
uation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective at the reasonable assurance level as of December 29, 2015.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined
in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of,
our principal executive and principal financial officers and effected by our Board of Directors, management and other person-
nel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures
that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispo-
sitions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expen-
ditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we carried out an evaluation of the effectiveness of our internal control over financial reporting as of December 29,
2015 on the criteria in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). Based on this evaluation, our management concluded that our
internal control over financial reporting was effective as of December 29, 2015.
The effectiveness of our internal control over financial reporting as of December 29, 2015 has been audited by Pricewaterhouse-
Coopers LLP, an independent registered public accounting firm, as stated in their report which appears in Part IV, Item 15 of this
report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934) during our most recent fiscal quarter ended December 29, 2015 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
None.
2015 an nual report
page 43
the cheesecake factory
ITEM 10. Directors, Executive Officers and Corporate Governance
Part III
We have adopted a code of ethics which applies to our Chief Executive Officer, Chief Financial Officer and Chief Accounting
Officer, who are the Company’s principal executive, financial and accounting officers, respectively, and the Company’s other
executive officers and members of the Board of Directors, entitled “Code of Ethics for Executive Officers, Senior Financial
Officers and Directors.” The Code of Ethics is available on our corporate website at www.thecheesecakefactory.com in the
“Corporate Governance” section of our “Investors” page. The contents of our website are not incorporated by reference
into this Form 10-K. We intend to satisfy disclosure requirements under Item 5.05 of Form 8-K regarding an amendment
to, or waiver from, a provision of the Code of Ethics by posting such information on our website, at the address and
location specified above, or as otherwise required by the NASDAQ Global Market.
Information with respect to our executive officers is included in Part I, Item 1 of this report. Other information required by
this item is hereby incorporated by reference from the sections entitled “Election of Directors,” “Board of Directors and
Corporate Governance,” “Designation of Audit Committee Financial Experts,” “Committees of the Board of Directors,” and
“Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 23, 2016 (the “Proxy Statement”).
ITEM 11. Executive Compensation
The information required by this item is hereby incorporated by reference to the sections entitled “Board of Directors
Compensation” and “Executive Compensation” in the Proxy Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The information required by this item is hereby incorporated by reference to the section entitled “Beneficial Ownership of
Principal Stockholders and Management” in the Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is hereby incorporated by reference to the sections entitled “Policies Regarding
Review, Approval or Ratification of Transactions with Related Persons” and “Board of Directors and Corporate Governance”
in the Proxy Statement.
ITEM 14. Principal Accounting Fees and Services
The information required by this item is hereby incorporated by reference to the section entitled “Independent Registered
Public Accounting Firm Fees and Services” (in the proposal entitled “Ratification of Selection of Independent Registered
Public Accounting Firm”) in the Proxy Statement.
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2015 annual report
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Part IV
ITEM 15. Exhibits, Financial Statement Schedules
The following documents are filed as a part of this Report:
(a) 1. Financial statements:
The consolidated financial statements required to be filed hereunder are listed in the Index to Consolidated
Financial Statements on page 46 of this report.
2. Financial statement schedules:
All schedules have been omitted because they are not applicable, not required or the information has been
otherwise supplied in the financial statements or notes to the financial statements.
3. Exhibits:
The Exhibits required to be filed hereunder are listed in the exhibit index included herein at page 69.
2015 an nual report
page 45
the cheesecake factory
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
47
48
49
50
51
52
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2015 annual report
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of The Cheesecake Factory Incorporated
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, of
stockholders’ equity and of cash flows present fairly, in all material respects, the financial position of The Cheesecake
Factory Incorporated and its subsidiaries at December 29, 2015 and December 30, 2014, and the results of their operations
and their cash flows for each of the three years in the period ended December 29, 2015 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all mate-
rial respects, effective internal control over financial reporting as of December 29, 2015, based on criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective
internal control over financial reporting and for its assessment of the effectiveness of internal control over financial report-
ing, included in Management’s Report on Internal Control over Financial Reporting under Item 9A. Our responsibility is to
express opinions on these financial statements and on the Company’s internal control over financial reporting based on our
integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining an understanding of internal control over financial report-
ing, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audits also included performing such other procedures as we consid-
ered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the trans-
actions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
February 25, 2016
2015 an nual report
page 47
the cheesecake factory
The Cheesecake Factory Incorporated
Consolidated Balance Sheets
(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable
Income tax receivable
Other receivables
Inventories
Prepaid expenses
Total current assets
Property and equipment, net
Other assets:
Intangible assets, net
Prepaid rent
Other
Total other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Other accrued expenses
Total current liabilities
Deferred income taxes
Deferred rent
Deemed landlord financing liability
Other noncurrent liabilities
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $.01 par value,
December 29, 2015
December 30, 2014
$
43,854
14,159
18,739
72,658
34,010
41,976
225,396
892,191
21,972
46,881
46,906
115,759
$
58,018
15,170
17,383
62,327
33,255
38,233
224,386
828,305
20,781
46,212
41,692
108,685
$ 1,233,346
$ 1,161,376
$
47,770
302,456
$
350,226
82,524
72,911
87,841
51,305
57,325
264,686
322,011
81,433
73,857
77,165
50,400
5,000,000 shares authorized; none issued
Common stock, $.01 par value, 250,000,000 shares authorized;
93,126,667 and 91,790,499 shares issued at
December 29, 2015 and December 30, 2014, respectively
Additional paid-in capital
Retained earnings
Treasury stock 44,064,322 and 41,919,312 shares at cost
—
—
931
710,242
1,140,788
918
654,033
1,060,211
at December 29, 2015 and December 30, 2014, respectively
(1,263,422)
(1,158,652)
Total stockholders’ equity
588,539
556,510
Total liabilities and stockholders’ equity
$ 1,233,346
$ 1,161,376
See the accompanying notes to the consolidated financial statements.
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2015 annual report
the cheesecake factory
The Cheesecake Factory Incorporated
Consolidated Statements of Income
Fiscal Year
(In thousands, except per share data)
2015
2014
2013
Revenues
Costs and expenses:
Cost of sales
Labor expenses
Other operating costs and expenses
General and administrative expenses
Depreciation and amortization expenses
Impairment of assets and lease terminations
Preopening costs
Total costs and expenses
Income from operations
Interest and other expense, net
Income before income taxes
Income tax provision
Net income
Net income per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
$ 2,100,609 $ 1,976,624 $ 1,877,910
504,031
684,818
500,640
137,402
85,563
6,011
16,898
1,935,363
165,246
490,306
646,102
478,504
119,094
82,835
696
14,356
1,831,893
144,731
(5,894)
159,352
42,829
116,523 $
(6,187)
138,544
37,268
101,276 $
455,685
603,069
452,571
114,728
78,558
(561)
12,906
1,716,956
160,954
(4,504)
156,450
42,094
114,356
2.39 $
2.30 $
2.04 $
1.96 $
2.19
2.10
48,833
50,605
49,567
51,584
52,229
54,377
$
$
$
Cash dividends declared per common share
$
0.73 $
0.61 $
0.52
See the accompanying notes to the consolidated financial statements.
2015 an nual report
page 49
the cheesecake factory
The Cheesecake Factory Incorporated
Consolidated Statements of Stockholders’ Equity
(In thousands)
Balance, January 1, 2013
Net income
Cash dividends declared
Tax impact of stock options exercised,
net of cancellations
Stock-based compensation
Common stock issued under
stock-based compensation plans
Treasury stock purchases
Balance, December 31, 2013
Net income
Cash dividends declared
Tax impact of stock options exercised,
net of cancellations
Stock-based compensation
Common stock issued under
stock-based compensation plans
Treasury stock purchases
Balance, December 30, 2014
Net income
Cash dividends declared
Tax impact of stock options exercised,
net of cancellations
Stock-based compensation
Common stock issued under
stock-based compensation plans
Treasury stock purchases
Balance, December 29, 2015
Shares of
Common
Stock
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Total
87,812 $
878 $
508,130 $
902,532 $
(831,814) $
579,726
—
—
—
—
2,820
—
90,632
—
—
—
—
1,158
—
91,790
—
—
—
—
1,337
—
—
—
—
—
28
—
906
—
—
—
—
12
—
918
—
—
—
—
13
—
—
—
114,356
(27,437)
7,159
14,312
72,868
—
—
—
—
—
—
—
—
—
—
114,356
(27,437)
7,159
14,312
72,896
(183,659)
(183,659)
602,469
989,451
(1,015,473)
654,033
1,060,211
(1,158,652)
(143,179)
(140,483)
—
—
101,276
(30,516)
8,906
17,033
22,929
2,696
—
—
—
—
—
—
116,523
(35,946)
12,501
20,325
27,984
(4,601)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
577,353
101,276
(30,516)
8,906
17,033
22,941
556,510
116,523
(35,946)
12,501
20,325
27,997
93,127 $
931 $
710,242 $ 1,140,788 $ (1,263,422) $
588,539
(104,770)
(109,371)
See the accompanying notes to the consolidated financial statements.
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2015 annual report
the cheesecake factory
The Cheesecake Factory Incorporated
Consolidated Statements of Cash Flows
(In thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization
Deferred income taxes
Impairment of assets and lease terminations
Stock-based compensation
Tax impact of stock options exercised, net of cancellations
Excess tax benefit related to stock options exercised
Other
Changes in assets and liabilities:
Accounts receivable
Other receivables
Inventories
Prepaid expenses
Other assets
Accounts payable
Income taxes receivable/payable
Other accrued expenses
Cash provided by operating activities
Cash flows from investing activities:
Additions to property and equipment
Additions to intangible assets
Cash used in investing activities
Cash flows from financing activities:
Deemed landlord financing proceeds
Deemed landlord financing payments
Borrowings on credit facility
Repayments on credit facility
Proceeds from exercise of stock options
Excess tax benefit related to stock options exercised
Cash dividends paid
Treasury stock purchases
Cash used in financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosures:
Interest paid
Income taxes paid
Construction payable
See the accompanying notes to the consolidated financial statements.
Fiscal Year
2015
2014
2013
$
116,523 $
101,276 $
114,356
85,563
1,184
6,011
20,053
12,501
(12,309)
2,615
1,011
(10,331)
(755)
(3,743)
(5,799)
(12,931)
(1,356)
37,186
235,423
82,835
204
245
16,817
8,906
(8,861)
2,059
(5,079)
(6,867)
2,223
4,362
(3,645)
18,180
(12,854)
39,848
239,649
78,558
4,633
3,294
14,135
7,159
(7,765)
(464)
4,477
(6,486)
(6,642)
(2,708)
(3,997)
(11,580)
(5,742)
23,557
204,785
(153,941)
(1,760)
(155,701)
(113,982)
(1,879)
(115,861)
(106,289)
(1,654)
(107,943)
14,266
(3,118)
60,000
(60,000)
27,997
12,309
(35,969)
(109,371)
(93,886)
14,143
(2,650)
25,000
(25,000)
22,940
8,861
(30,332)
(140,483)
(127,521)
13,672
(2,143)
—
—
72,896
7,765
(27,191)
(183,659)
(118,660)
(14,164)
58,018
43,854 $
(3,733)
61,751
58,018 $
(21,818)
83,569
61,751
6,057 $
30,410 $
13,500 $
5,430 $
41,074 $
10,124 $
4,602
37,259
6,397
$
$
$
$
2015 an nual report
page 51
the cheesecake factory
The Cheesecake Factory Incorporated
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Description of Business
As of February 25, 2016, The Cheesecake Factory Incorporated (referred to herein as the “Company,” “we,” “us” and
“our”) operated 201 Company-owned upscale casual dining restaurants under The Cheesecake Factory®, Grand Lux Cafe®
and RockSugar Pan Asian Kitchen® marks. Internationally, 11 The Cheesecake Factory branded restaurants operated
under licensing agreements. We also operated two bakery production facilities that produce desserts for our restaurants,
international licensees and third-party bakery customers.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of The Cheesecake Factory Incorporated and
its wholly owned subsidiaries prepared in accordance with accounting principles generally accepted in the United States of
America (“GAAP”). All intercompany accounts and transactions for the periods presented have been eliminated in consoli-
dation.
We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes. Fiscal
years 2015, 2014 and 2013 each consisted of 52 weeks. Fiscal year 2016 will consist of 53 weeks.
To conform to the current year presentation, we reclassified prior year deferred income taxes from current to noncurrent.
See Recent Accounting Pronouncements for further discussion.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the
reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts
of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from
those estimates.
Cash and Cash Equivalents
Amounts receivable from credit card processors, totaling $10.3 million and $9.9 million at December 29, 2015 and
December 30, 2014, respectively, are considered cash equivalents because they are both short-term and highly liquid in
nature and are typically converted to cash within three days of the sales transaction. Checks issued, but not yet presented
for payment to our bank, are reflected as a reduction of cash and cash equivalents.
Accounts and Other Receivables
Our accounts receivable principally result from credit sales to bakery customers. Other receivables consist of various
amounts due from our gift card resellers, insurance providers, landlords and others in the ordinary course of business.
Concentration of Credit Risk
Financial instruments that potentially subject us to a concentration of credit risk are cash and cash equivalents and receiv-
ables. We maintain our day-to-day operating cash balances in non-interest-bearing transaction accounts, which are insured
by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. We invest our excess cash in a money market
deposit account, which is insured by the FDIC up to $250,000. Although we maintain balances that exceed the federally
insured limit, we have not experienced any losses related to this balance, and we believe credit risk to be minimal.
We consider the concentration of credit risk for accounts receivable to be minimal due to the payment histories and general
financial condition of our larger outside bakery customers. Concentration of credit risk related to other receivables is
limited as this balance is comprised primarily of amounts due from our gift card resellers, insurance providers and
landlords for the reimbursement of tenant improvements.
Fair Value of Financial Instruments
For cash and cash equivalents, the carrying amount approximates fair value because of the short maturity of these
instruments. The fair value of deemed landlord financing liabilities is determined using current applicable rates for similar
instruments as of the balance sheet date in accordance with Level 2 of a three level hierarchy established by accounting
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2015 annual report
the cheesecake factory
standards. Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices in
active markets for similar assets or liabilities. At December 29, 2015, the fair value of our deemed landlord financing
liabilities is $90.2 million versus a carrying value of $91.3 million.
Inventories
Inventories consist of restaurant food and other supplies, bakery raw materials, and bakery finished goods and are stated
at the lower of cost or market on an average cost basis at the restaurants and on a first-in, first-out basis at the bakeries.
Property and Equipment
We record property and equipment at cost less accumulated depreciation. Improvements are capitalized while repairs and
maintenance costs are expensed as incurred. Depreciation and amortization are calculated using the straight-line method
over the estimated useful life of the assets or the lease term, whichever is shorter. Leasehold improvements include the
cost of our internal development and construction department. Depreciation and amortization periods are as follows:
Buildings and land improvements
Leasehold improvements
Furnishings, fixtures and equipment
Computer software and equipment
25 to 30 years
10 to 30 years
3 to 15 years
3 to 5 years
Gains and losses related to property and equipment disposals are recorded in interest and other expenses, net.
Indefinite-Lived Assets
Our trademarks and transferable alcoholic beverage licenses have indefinite lives and, therefore, are not subject to amor-
tization. At December 29, 2015 and December 30, 2014, the amounts included in intangibles, net for these items were
$13.8 million and $12.9 million, respectively. We test these assets for impairment at least annually by comparing the fair
value of each asset with its carrying amount.
Impairment of Long-Lived Assets and Lease Terminations
We assess the potential impairment of our long-lived assets whenever events or changes in circumstances indicate the
carrying value of the assets or asset group may not be recoverable. Factors considered include, but are not limited to,
significant underperformance relative to historical or projected future operating results, significant changes in the manner
in which an asset is being used, an expectation that an asset will be disposed of significantly before the end of its previously
estimated useful life and significant negative industry or economic trends. We regularly review restaurants that are cash
flow negative for the previous four quarters and those that are being considered for closure or relocation to determine if
impairment testing is warranted. At any given time, we may be monitoring a small number of locations, and future
impairment charges could be required if individual restaurant performance does not improve.
We have determined that our asset group for impairment testing is comprised of the assets and liabilities of each of our
individual restaurants, as this is the lowest level of identifiable cash flows. We have identified leasehold improvements
as the primary asset because it is the most significant component of our restaurant assets, it is the principal asset from
which our restaurants derive their cash flow generating capacity and it has the longest remaining useful life. The recover-
ability is assessed in most cases by comparing the carrying value of the assets to the undiscounted cash flows expected
to be generated by these assets. Impairment losses are measured as the amount by which the carrying values of the
assets exceed their fair values.
During fiscal 2015, we incurred $6.0 million of impairment expense against the carrying value of our RockSugar Pan Asian
Kitchen restaurant assets. In fiscal 2014, we incurred $0.7 million of accelerated depreciation, future rent and other
closing costs related to the relocation of one The Cheesecake Factory restaurant. In fiscal 2013, we incurred expenses
of $0.6 million for future rent and other closing costs associated with the closure of three Grand Lux Cafe restaurants and
$3.7 million of impairment, accelerated depreciation and closing costs related to the relocation of four The Cheesecake
Factory restaurants. In fiscal 2013, we also recorded $4.9 million in income from a landlord in connection with the early
termination of one of these leases and for waiving our right to exercise renewal options. These amounts were recorded in
impairment of assets and lease terminations.
Revenue Recognition
Our revenues consist of sales from our restaurant operations, sales from our bakery operations to our licensees and other
third-party customers, and royalties on our licensees’ restaurant sales. Revenues from restaurant sales are recognized
2015 an nual report
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the cheesecake factory
when payment is tendered at the point of sale. Revenues from bakery sales are recognized upon transfer of title and risk
to customers. Royalties from international licensees are accrued as revenue when earned. Revenues are presented net
of sales taxes. Sales tax collected is included in other accrued expenses until the taxes are remitted to the appropriate
taxing authorities.
We recognize a liability upon the sale of our gift cards and recognize revenue when these gift cards are redeemed in our
restaurants. Based on our historical redemption patterns, we can reasonably estimate the amount of gift cards for which
redemption is remote, which is referred to as “breakage.” Breakage is recognized over a three-year period in proportion to
historical redemption trends and is classified as revenues in our consolidated statements of income. We recognized $6.6
million, $5.4 million and $4.4 million of gift card breakage in fiscal years 2015, 2014 and 2013, respectively. Incremental
direct costs related to gift card sales, including commissions and credit card fees, are deferred and recognized in earnings
in the same pattern as the related gift card revenue.
Certain of our promotional programs include multiple element arrangements that incorporate both delivered and undeliv-
ered components. We allocate revenue using the relative selling price of each deliverable and recognize it upon delivery of
each component.
Leases
We currently lease all of our restaurant locations. We evaluate each lease to determine its appropriate classification as an
operating or capital lease for financial reporting purposes. All of our restaurant leases are classified as operating leases.
Minimum base rent, which generally escalates over the term of the lease, is recorded on a straight-line basis over the
lease term. The initial lease term includes the build-out, or rent holiday, period for our leases, where no rent payments are
typically due under the terms of the lease. Contingent rent expense, which is based on a percentage of revenue, is record-
ed to the extent it exceeds minimum base rent per the lease agreement.
We expend cash for leasehold improvements furnishings, fixtures and equipment to build out and equip our leased premises.
We may also expend cash for structural additions that we make to leased premises. Generally a portion of the leasehold
improvements and building costs are reimbursed to us by our landlords as construction contributions. If obtained, land-
lord construction contributions usually take the form of up-front cash, full or partial credits against our future minimum or
percentage rents, or a combination thereof. Depending on the specifics of the leased space and the lease agreement,
amounts paid for structural components are recorded during the construction period as either prepaid rent or property and
equipment and the landlord construction contributions are recorded as either an offset to prepaid rent or as a deemed
landlord financing liability.
For those leases for which we are deemed the owner of the property during construction, upon completion, we perform an
analysis on the leases to determine if they qualify for sale-leaseback treatment. For those qualifying leases, the deemed
landlord financing liability and the associated property and equipment are removed and the difference is reclassified to
either prepaid or deferred rent and amortized over the lease term as an increase or decrease to rent expense. If the lease
does not qualify for sale-leaseback treatment, the deemed landlord financing liability is amortized over the lease term
based on the rent payments designated in the lease agreement.
Self-Insurance Liabilities
We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’
compensation, general liability, employee health benefits, employment practices and other insurable risks. The accrued
liabilities associated with our self-insured programs are based on our estimate of the ultimate costs to settle known claims
as well as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date and are recorded in other accrued
expenses. Our estimated liabilities are not discounted and are based on information provided by our insurance brokers and
insurers, combined with our judgment regarding a number of assumptions and factors, including the frequency and severity of
claims, claims development history, case jurisdiction, applicable legislation and our claims settlement practices. We maintain
stop-loss coverage with third-party insurers to limit our individual claim exposure for many of our programs. The estimated
amounts receivable from our third-party insurers under this coverage are recorded in other receivables.
Stock-Based Compensation
We maintain stock-based incentive plans under which equity awards may be granted to employees and consultants. We account for
the awards based on fair value measurement guidance and amortize to expense over the vesting period. We reclassify the excess
tax benefit resulting from the exercise of stock options out of cash flows from operating activities and into cash flows from financing
activities on the consolidated statements of cash flows. See Note 11 for further discussion of our stock-based compensation.
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Advertising Costs
We expense advertising production costs at the time the advertising first takes place; all other advertising costs are
expensed as incurred. Most of our advertising costs are included in other operating costs and expenses and were $5.0
million, $6.2 million and $5.9 million in fiscal 2015, 2014 and 2013, respectively.
Preopening Costs
Preopening costs include all costs to relocate and compensate restaurant management employees during the preopening
period, costs to recruit and train hourly restaurant employees, and wages, travel and lodging costs for our opening training
team and other support staff members. Also included in preopening costs are expenses for maintaining a roster of trained
managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in
alignment with future restaurant opening and operating needs, and corporate travel and support activities. We expense
preopening costs as incurred.
Income Taxes
We provide for federal, state and foreign income taxes currently payable and for deferred taxes that result from differences
between financial accounting rules and tax laws governing the timing of recognition of various income and expense items.
We recognize deferred income tax assets and liabilities for the future tax effects of such temporary differences based on
the difference between the financial statement and tax bases of existing assets and liabilities using the statutory rates
expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted
change in tax rates is recognized in income in the period that includes the enactment date. Income tax credits are
recorded as a reduction of tax expense.
We account for uncertain tax positions under Financial Accounting Standards Board guidance, which requires that a
position taken or expected to be taken in a tax return be recognized (or derecognized) in the financial statements when
it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained on its technical merits
upon examination by tax authorities, taking into account available administrative remedies and litigation. A recognized tax
position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate
resolution. We recognize interest related to uncertain tax positions in income tax expense. Penalties related to uncertain
tax positions are recorded in general and administrative expenses.
Net Income per Share
Basic net income per share is computed by dividing net income available to common stockholders by the weighted average
number of common shares outstanding during the period. At December 29, 2015, December 30, 2014 and December 31,
2013, 1.9 million, 1.8 million and 1.7 million shares, respectively, of restricted stock issued to employees were unvest-
ed and, therefore, excluded from the calculation of basic earnings per share for the fiscal years ended on those dates.
Diluted net income per share includes the dilutive effect of outstanding equity awards, calculated using the treasury stock
method. Assumed proceeds from the in-the-money options include the windfall tax benefits, net of shortfalls, calculated
under the “as-if” method as prescribed by FASB Accounting Standards Codification 718, “Compensation — Stock Option
Compensation.”
Fiscal Year
(In thousands, except per share data)
2015
2014
2013
Net income
$
116,523 $
101,276 $
114,356
Basic weighted average shares outstanding
Dilutive effect of equity awards
48,833
1,772
49,567
2,017
52,229
2,148
Diluted weighted average shares outstanding
50,605
51,584
54,377
Basic net income per share
Diluted net income per share
$
$
2.39 $
2.04 $
2.30 $
1.96 $
2.19
2.10
Shares of common stock equivalents of 1.3 million, 1.0 million and 1.2 million for fiscal 2015, 2014 and 2013, respective-
ly, were excluded from the diluted calculation due to their anti-dilutive effect.
2015 an nual report
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the cheesecake factory
Certain of our restricted stock awards are considered participating securities as these awards include non-forfeitable
rights to dividends with respect to unvested shares. As such, they must be included in the computation of earnings per
share pursuant to the two-class method. Under the two-class method, a portion of net income is allocated to participating
securities and, therefore, is excluded from the calculation of earnings per share allocated to common shares. The calcula-
tion of basic and diluted earnings per share pursuant to the two-class method results in an immaterial difference from the
amounts displayed in the consolidated statements of income.
Comprehensive Income
Comprehensive income includes all changes in equity during a period except those resulting from investment by and distri-
bution to owners. For fiscal years 2015, 2014 and 2013, our comprehensive income consisted solely of net income.
Recent Accounting Pronouncements
In November 2015, the Financial Accounting Standards Board (“FASB”) issued guidance which requires all deferred taxes
to be classified as noncurrent assets and liabilities on the balance sheet to simplify presentation. This guidance is effec-
tive for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. During
the fourth quarter of 2015, we implemented this change retrospectively which resulted in current deferred taxes of $15.1
million at December 30, 2014 being reclassified to long-term deferred taxes.
In July 2015, the FASB issued guidance which requires inventory within the scope of the standard to be measured at the lower of
cost and net realizable value. Previous guidance required inventory to be measured at the lower of cost or market (where market
was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin).
The updated guidance is effective for interim and annual reporting periods beginning after December 15, 2016, with early adoption
permitted. We expect the adoption of this guidance to have no material impact on our consolidated financial statements.
In April 2015, the FASB issued guidance regarding a customer’s accounting for fees paid in a cloud computing arrange-
ment. If a cloud computing arrangement includes a software license, the customer should account for the software license
element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement
does not include a software license, the customer should account for the arrangement as a service contract. This guid-
ance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We are evaluating the
potential impact of this adoption on our consolidated financial statements.
In April 2015, the FASB issued updated guidance intended to simplify, and provide consistency to, the presentation of
debt issuance costs. The new standard requires that debt issuance costs be presented in the balance sheet as a direct
deduction from the carrying amount of the debt liability, consistent with debt discounts. In August 2015, the FASB provided
additional guidance for presentation of debt issuance costs related to line-of-credit arrangements. The updated guidance
is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. We
expect the adoption of this guidance to have no material impact on our consolidated financial statements.
In February 2015, the FASB issued updated guidance which changes the analysis that a reporting entity must perform to
determine whether it should consolidate certain types of legal entities. The updated guidance is effective for interim and
annual reporting periods beginning after December 15, 2015, with early adoption permitted. We expect the adoption of
this guidance to have no material impact on our consolidated financial statements.
In June 2014, the FASB issued updated guidance intended to eliminate the diversity in practice regarding share-based
payment awards that include terms which provide for a performance target that affects vesting being achieved after the
requisite service period. The new standard requires that a performance target which affects vesting and could be achieved
after the requisite service period be treated as a performance condition that affects vesting and should not be reflected in
estimating the grant-date fair value. The updated guidance is effective for interim and annual reporting periods beginning
after December 15, 2015, with early adoption permitted. We expect the adoption of this guidance to have no material
impact on our consolidated financial statements.
In May 2014, the FASB issued accounting guidance that provides a comprehensive new revenue recognition model. This
will supersede most of the existing revenue recognition requirements and will require entities to recognize revenue at an
amount that reflects the consideration to which a company expects to be entitled in exchange for transferring goods or
services to a customer. In August 2015, the FASB deferred the effective date of this standard by one year with early
adoption permitted no earlier than the original effective date. The guidance is now effective for us beginning in the first
quarter of fiscal 2018 and is not expected to have a material impact on our consolidated financial statements.
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the cheesecake factory
2. Other Receivables
Other receivables consisted of (in thousands):
Receivable from gift card resellers
Landlord construction contributions
Other
Total
3. Inventories
Inventories consisted of (in thousands):
Restaurant food and supplies
Bakery finished goods and work in progress
Bakery raw materials and supplies
Total
4. Prepaid Expenses
Prepaid expenses consisted of (in thousands):
Gift card costs
Rent
Other
Total
5. Property and Equipment
Property and equipment consisted of (in thousands):
Land and related improvements
Buildings
Leasehold improvements
Furnishings, fixtures and equipment
Computer software and equipment
Restaurant smallwares
Construction in progress
Property and equipment, total
Less: Accumulated depreciation
Property and equipment, net
December 29, 2015
December 30, 2014
$
$
40,245
13,619
18,794
72,658
$
$
35,261
8,538
18,528
62,327
December 29, 2015
December 30, 2014
$
$
16,127
12,104
5,779
34,010
$
$
14,936
13,236
5,083
33,255
December 29, 2015
December 30, 2014
$
$
23,362
5,236
13,378
41,976
$
$
20,863
5,030
12,340
38,233
December 29, 2015
December 30, 2014
$
15,852
20,610
1,126,529
387,779
49,917
47,363
28,732
1,676,782
(784,591)
892,191
$
$
15,852
20,610
1,037,912
360,063
46,257
27,579
26,941
1,535,214
(706,909)
828,305
$
Depreciation expenses related to property and equipment for fiscal 2015, 2014 and 2013 were $85.6 million, $82.4
million and $78.1 million, respectively. Repair and maintenance expenses for fiscal 2015, 2014 and 2013 were $44.9
million, $42.7 million and $40.8 million, respectively. Net expense on property and equipment disposals of $2.1 million,
$2.0 million and $1.5 million in fiscal 2015, 2014 and 2013, respectively, is recorded in interest and other expense, net in
our consolidated statements of income.
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the cheesecake factory
6. Other Accrued Expenses
Other accrued expenses consisted of (in thousands):
Gift cards
Self-insurance
Salaries and wages
Employee benefits
Payroll and sales taxes
Other
Total
December 29, 2015
December 30, 2014
$
$
144,194
60,033
31,570
19,980
14,633
32,046
302,456
$
$
123,619
55,156
22,967
17,441
14,799
30,704
264,686
7. Long-Term Debt
On December 22, 2015, we entered into a new loan agreement (“Facility”) which amended and restated in its entirety our
prior loan agreement dated October 16, 2013. This Facility, which matures on December 22, 2020, provides us with revolv-
ing loan commitments totaling $200 million, of which $50 million may be used for issuances of letters of credit. Availabili-
ty under the Facility is reduced by outstanding letters of credit, which are used to support our self-insurance programs. The
Facility contains a commitment increase feature that could provide for an additional $100 million in available credit upon
our request and subject to the lenders electing to increase their commitments or by means of the addition of new lenders.
At December 29, 2015, we had net availability for borrowings of $180.0 million, based on a zero outstanding debt balance
and $20.0 million in standby letters of credit. We borrowed on these credit facilities during both fiscal 2015 and 2014 to
fund a portion of our stock repurchases and repaid the respective balances within each fiscal year.
We are subject to certain financial covenants under the Facility requiring us to maintain (i) a maximum “Net Adjusted Leverage
Ratio” of 4.0, comprised of debt plus eight times rent minus unrestricted cash and cash equivalents in excess of $25
million divided by “EBITDAR” (trailing 12-month earnings before interest, taxes, depreciation, amortization, noncash stock
option expense, rent and permitted acquisition costs) and (ii) a trailing 12-month minimum EBITDAR to interest and rental
expense ratio (“EBITDAR Ratio”) of 1.9. Our Net Adjusted Leverage and EBITDAR Ratios were 2.5 and 3.0, respectively, at
December 29, 2015, and we were in compliance with the financial covenants in effect at that date. The Facility also limits
cash distributions with respect to our equity interests, such as cash dividends and share repurchases, based on the Net
Adjusted Leverage Ratio.
Borrowings under the Facility bear interest, at our option, at a rate equal to either (i) the Adjusted LIBO Rate plus a margin
ranging from 1.00% to 1.75% based on our Net Adjusted Leverage Ratio or (ii) the sum of (a) the highest of (1) the rate of
interest publicly announced by JP Morgan Chase Bank as its prime rate in effect, (2) the greater of the Federal Funds
Effective Rate or the Overnight Bank Funding Rate, in either case plus 0.5%, and (3) the one-month Adjusted LIBO Rate
plus 1.0%, plus (b) a margin ranging from 0.00% to 0.75% based on our Net Adjusted Leverage Ratio. Under the Facility,
we paid certain customary loan origination fees and will pay a fee on the unused portion of the Facility ranging from
0.125% to 0.25% also based on our Net Adjusted Leverage Ratio.
We capitalized interest expense related to new restaurant openings and major remodels totaling $1.6 million, $0.8 million
and $0.7 million in fiscal years 2015, 2014 and 2013, respectively.
8. Other Noncurrent Liabilities
Other noncurrent liabilities consisted of (in thousands):
Executive Savings Plan
Other
Total
See Note 12 for further discussion of our Executive Savings Plan.
December 29, 2015
December 30, 2014
$
$
41,281
10,024
51,305
$
$
40,842
9,558
50,400
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9. Commitments and Contingencies
We currently lease all of our restaurant locations under operating leases, with remaining terms ranging from less than one
year to 20 years, excluding unexercised renewal options. The restaurant leases typically include land and building shells,
require contingent rent above the minimum base rent payments based on a percentage of sales ranging from 3% to 10%,
have escalating minimum rent requirements over the term of the lease and require various expenses incidental to the use
of the property. A majority of our leases provide for a reduced level of overall rent obligation should specified co-tenancy
requirements not be satisfied. Most leases have renewal options. Many of our leases also provide early termination rights
permitting us to terminate the lease prior to expiration in the event our sales are below a stated level for a period of time,
generally conditioned upon repayment of the unamortized allowances contributed by landlords to the build-out of the leased
premises. We also lease automobiles and certain equipment under operating lease agreements. Rent expense is included
in other operating costs and expenses in the consolidated statements of income.
As of December 29, 2015, the aggregate minimum annual lease payments under operating leases, including amounts
characterized as deemed landlord financing payments are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Total
$
81,890
83,836
83,797
84,002
81,762
599,026
$ 1,014,313
Rent expense on all operating leases was as follows:
(In thousands)
Straight-lined minimum base rent
Contingent rent
Common area maintenance and taxes
Total
Fiscal Year
2015
2014
2013
$
$
74,981 $
21,160
34,602
130,743 $
71,828 $
19,895
31,074
122,797 $
69,427
20,698
29,552
119,677
We enter into various obligations for the purchase of goods and for the construction of restaurants. At December 29,
2015, our purchase obligations approximated $151.0 million, $90.0 million of which is due in fiscal 2016. (See Contrac-
tual Obligations and Commercial Commitments in Part II, Item 7 — Management’s Discussion and Analysis of Financial
Condition and Results of Operations for more information on our purchase obligations.)
As credit guarantees to insurers, we have $20.0 million in standby letters of credit related to our self-insurance liabilities.
All standby letters of credit are renewable annually.
We retain the financial responsibility for a significant portion of our risks and associated liabilities with respect to workers’
compensation, general liability, employee health benefits, employment practices and other insurable risks. The accrued
liabilities associated with these programs are based on our estimate of the ultimate costs to settle known claims as well
as claims incurred but not yet reported to us (“IBNR”) as of the balance sheet date. Our estimated liabilities are not dis-
counted and are based on information provided by our insurance brokers and insurers, combined with our judgment regarding
a number of assumptions and factors, including the frequency and severity of claims, claims development history, case
jurisdiction, applicable legislation and our claims settlement practices. We maintain stop-loss coverage with third-party
insurers to limit our individual claim exposure for many of our programs. Significant judgment is required to estimate IBNR
amounts as parties have yet to assert such claims. If actual claims trends, including the severity or frequency of claims,
differ from our estimates, our financial results could be impacted. At December 29, 2015, the total accrued liability for our
self-insured plans was $60.0 million.
On April 11, 2013, a former restaurant hourly employee filed a class action lawsuit in the California Superior Court, Placer
County, alleging that the Company violated the California Labor Code and California Business and Professions Code, by
requiring employees to purchase uniforms for work (Sikora v. The Cheesecake Factory Restaurants, Inc., et al; Case No
SCV0032820). A similar lawsuit covering a different time period was also filed in Placer County (Reed v. The Cheesecake
2015 an nual report
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the cheesecake factory
Factory Restaurants, Inc. et al; Case No. SCV27073). By stipulation the parties agreed to transfer the Reed and Sikora
cases to Los Angeles County. Both cases (Case Nos. SCV0032820 and SCV27073) were subsequently coordinated
together in Los Angeles County by order of the Judicial Council. On November 15, 2013, the Company filed a motion to
enforce judgment and to preclude the prosecution of certain claims under the California Private Attorney General Act and
California Business and Professions Code Section 17200. On March 11, 2015, the Court granted the Company’s motion
in Case No. SCV0032820. The parties participated in voluntary mediation on June 25, 2015 and have executed a memo-
randum of understanding with respect to the terms of settlement, which is subject to Court approval and is intended to be
a full and final resolution of the actions. On January 29, 2016, the court granted the parties’ Motion for Preliminary
Approval of Class Action Settlement. The final approval hearing is scheduled for June 3, 2016. Based on the current
status of this matter, we have reserved an immaterial amount in anticipation of settlement.
On November 26, 2014, a former restaurant hourly employee filed a class action lawsuit in the San Diego County Supe-
rior Court, alleging that the Company violated the California Labor Code and California Business and Professions Code,
by failing to pay overtime, to permit required rest breaks and to provide accurate wage statements, among other claims.
(Masters v. The Cheesecake Factory Restaurants, Inc., et al; Case No 37-2014-00040278). By stipulation, the parties
agreed to transfer Case No. 37-2014-00040278 to the Orange County Superior Court. On March 2, 2015, Case No.
37-2014-00040278 was officially transferred and assigned a new Case No. 30-2015-00775529 in the Orange County
Superior Court. The lawsuit seeks unspecified amounts of fees, penalties and other monetary payments on behalf of the
Plaintiff and other purported class members. We intend to vigorously defend this action. Based on the current status of
this matter, we have not reserved for any potential future payments.
On January 14, 2015, a former restaurant hourly employee filed a class action lawsuit in the San Diego County Superior
Court, alleging that the Company violated the California Labor Code and California Business and Professions Code, by failing
to permit required meal and rest breaks, and to provide accurate wage statements, among other claims. (Garcia v. The
Cheesecake Factory Incorporated, et al; Case No 37-2015-00001408). On February 19, 2015, the Company filed an ex
parte application to stay the litigation pending a hearing on the Company’s motion to compel arbitration. The Court granted
the Company’s application, stayed the litigation, and held a hearing on the motion to compel arbitration in July 2015. On
August 12, 2015, the Court granted the Company’s motion to compel individual arbitration. On October 9, 2015, the Plaintiff
filed a Petition for a Writ of Mandamus with the California Court of Appeal seeking a review and stay of the Court’s decision
to compel arbitration on an individual basis. On October 15, 2015 the Court of Appeal denied the Plaintiff’s Petition. We
intend to vigorously defend this action. On February 4, 2016, the parties reached a tentative settlement agreement for an
immaterial amount.
On May 28, 2015, a group of current and former restaurant hourly employees filed a class action lawsuit in the U.S.
District Court for the Eastern District of New York, alleging that the Company violated the Fair Labor Standards Act and New
York Labor Code, by requiring employees to purchase uniforms for work and violated the State of New York’s minimum wage
and overtime provisions. (Guglielmo v. The Cheesecake Factory Restaurants, Inc., et al; Case No 2:15-CV-03117). On
September 8, 2015, the Company filed its response to the Complaint, requesting the Court to compel arbitration against
opt-in Plaintiffs with valid arbitration agreements. The Plaintiffs are seeking unspecified amounts of penalties and other
monetary payments. We intend to vigorously defend this action. Based upon the current status of this matter, we have
not reserved for any potential future payments.
On November 10, 2015, a current restaurant hourly employee filed a class action lawsuit in the Marin County Superior
Court alleging that the Company failed to provide complete and accurate wage statements as set forth in the California
Labor Code. On January 26, 2016, the Plaintiff filed a First Amended Complaint. The lawsuit seeks unspecified penalties
under the California Private Attorneys General Act in addition to other monetary payments. (Brown v. The Cheesecake Factory
Restaurants, Inc.; Case No. CIV1504091). We intend to vigorously defend against this action. Based upon the current
status of this matter, we have not reserved for any potential future payments.
On December 10, 2015 a former restaurant management employee filed a class action lawsuit in the Los Angeles County
Superior Court alleging that the Company improperly classified its managerial employees, failed to pay overtime, and failed
to provide accurate wage statements, in addition to other claims. The lawsuit seeks unspecified penalties under the
California Private Attorneys General Act in addition to other monetary payments. (Tagalogon v. The Cheesecake Factory
Restaurants, Inc., Case No. BC603620). We intend to vigorously defend against this action. Based upon the current
status of this matter, we have not reserved for any potential future payments.
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Within the ordinary course of our business, we are subject to private lawsuits, government audits, administrative proceedings
and other claims. These matters typically involve claims from customers, staff members and others related to operational
and employment issues common to the foodservice industry. A number of these claims may exist at any given time, and
some of the claims may be pled as class actions. From time to time, we are also involved in lawsuits with respect to
infringements of, or challenges to, our registered trademarks and other intellectual property, both domestically and abroad.
We could be affected by adverse publicity and litigation costs resulting from such allegations, regardless of whether they
are valid or whether we are legally determined to be liable. At this time, we believe that the final disposition of any pending
lawsuits, audits, proceedings and claims will not have a material adverse effect individually or in the aggregate on our financial
position, results of operations or liquidity. It is possible, however, that our future results of operations for a particular quarter
or fiscal year could be impacted by changes in circumstances relating to lawsuits, audits, proceedings or claims.
We have employment agreements with certain of our executive officers that provide for payments to those officers in the
event of an actual or constructive termination of their employment, including in the event of a termination without cause,
an acquirer failure to assume or continue equity awards following a change in control of the Company or, otherwise, in
the event of death or disability as defined in those agreements. Aggregate payments totaling approximately $2.2 million,
excluding accrued potential bonuses of $2.6 million, which are subject to approval by the Compensation Committee, would
have been required by those agreements had all such officers terminated their employment for reasons requiring such
payments as of December 29, 2015. In addition, the employment agreement with our Chief Executive Officer, which is in
effect through April 1, 2017, specifies an annual founder’s retirement benefit of $650,000 for ten years after termination
of his full time employment.
10. Stockholders’ Equity
Cash dividends of $0.73 and $0.61 were declared during fiscal years 2015 and 2014, respectively. Future decisions to
pay, increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance,
financial condition, capital expenditure requirements and other such factors that the Board considers relevant.
In July 2013, our Board increased the authorization to repurchase our common stock by 7.5 million shares to 48.5 mil-
lion shares. Under this and all previous authorizations, we have cumulatively repurchased 44.1 million shares at a total
cost of $1,263.4 million through December 29, 2015. During fiscal 2015, 2014 and 2013, we repurchased 2.1 million,
3.1 million and 4.5 million shares of our common stock at a cost of $104.8 million, $143.2 million and $183.7 million,
respectively. Repurchased common stock is reflected as a reduction of stockholders’ equity. Our share repurchases have
included repurchases under Rule 10b5-1 plans adopted from time to time by our Board in furtherance of its repurchase
authorization, and the most recent Rule 10b5-1 plan, adopted by our Board on November 3, 2015, is effective from January
4, 2016 through June 30, 2016.
Our share repurchase authorization does not have an expiration date, does not require us to purchase a specific number
of shares and may be modified, suspended or terminated at any time. Shares may be repurchased in the open market or
through privately negotiated transactions at times and prices considered appropriate by us. Purchases in the open market
are made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 (the “Act”). We make the determina-
tion to repurchase shares based on several factors, including an evaluation of current and future capital needs associated
with new restaurant development, current and forecasted cash flows, including dividend payments, a review of our capital
structure and cost of capital, our share price and current market conditions. The timing and number of shares repurchased
are also subject to legal constraints and financial covenants under our Facility that limit share repurchases based on a
defined ratio. (See Note 7 for further discussion of our long-term debt.) Our objectives with regard to share repurchases
are to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our
earnings per share growth.
On February 27, 2015, we entered into an accelerated stock repurchase (“ASR”) program with a financial institution to
repurchase $75 million of our common stock. The minimum number of shares to be repurchased, 1.5 million, was
delivered during March 2015. The program concluded on July 27, 2015 with no additional shares delivered. On February
27, 2014, we entered into an ASR agreement with a financial institution to repurchase $75 million of our common stock.
The minimum number of shares to be repurchased, 1.4 million, was delivered in March 2014. Upon settlement of the
2014 ASR program, we received an additional 0.2 million shares on July 21, 2014.
2015 an nual report
page 61
the cheesecake factory
11. Stock-Based Compensation
We maintain stock-based incentive plans under which stock options, non-qualified stock options, stock appreciation rights,
restricted shares, restricted share units and deferred shares may be granted to employees and consultants. Our current
practice is to issue new shares, rather than treasury shares, upon stock option exercises and for restricted share grants.
To date, we have only granted non-qualified stock options, restricted shares and restricted share units of common stock
under these plans. Non-employee directors have received only non-qualified stock options under a non-employee director
equity plan, which expired in May 2007. Currently, we do not have a plan under which non-employee directors may be
granted stock options or other equity interests in the Company.
On April 2, 2015, our Board approved an amendment to our 2010 Stock Incentive Plan to increase the number of shares
of common stock available for grant under the plan to 9.2 million shares from 6.8 million shares. This amendment was
approved by our stockholders at our annual meeting held on May 28, 2015. This is our only active stock-based incentive
plan, and approximately 2.4 million of these shares were available for grant as of December 29, 2015.
Stock options generally vest at 20% per year and expire eight to ten years from the date of grant. Restricted shares and
restricted share units generally vest between three to five years from the date of grant and require that the staff member
remains employed in good standing with the Company as of the vesting date. Equity awards for certain executive officers
may vest earlier in the event of a change of control in which the acquirer fails to assume or continue such awards, as
defined in the plan, or under certain circumstances described in such executive officers’ respective employment agreements.
Since restricted shares and restricted share units provide strong retention power through economic value to our staff
members even when our stock price remains flat or declines, and they also reduce our total share usage, we have general-
ly increased the proportion of restricted shares and restricted share units versus stock option grants over the past several
years.
The following table presents information related to stock-based compensation:
(In thousands)
Labor expenses
Other operating costs and expenses
General and administrative expenses
Total stock-based compensation
Income tax benefit
Total stock-based compensation, net of taxes
Capitalized stock-based compensation (1)
Fiscal Year
2015
2014
2013
$
$
$
5,748 $
268
14,037
20,053
7,670
12,383 $
5,245 $
216
11,356
16,817
6,433
10,384 $
4,478
195
9,462
14,135
5,407
8,728
272 $
216 $
177
(1) It is our policy to capitalize the portion of stock-based compensation costs for our internal development and
construction, legal, and facilities departments that relates to capitalizable activities such as the design and construction
of new restaurants, remodeling existing locations, lease, intellectual property and liquor license acquisition activities and
equipment installation. Capitalized stock-based compensation is included in property and equipment, net and other
assets on the consolidated balance sheets.
Stock Options
The weighted average fair value at the grant date for options issued during fiscal 2015, 2014 and 2013 was $14.17,
$15.48 and $10.83 per option, respectively. The fair value of options at the grant date was estimated utilizing the Black-
Scholes valuation model with the following weighted average assumptions for fiscal 2015, 2014 and 2013, respectively:
(a) an expected option term of 6.6 years, 6.5 years and 6.4 years, (b) expected stock price volatility of 31.3%, 32.9% and
33.5%, (c) a risk-free interest rate of 1.9%, 2.2% and 1.4%, and (d) a dividend yield on our stock of 1.4%, 1.2% and 1.3%.
The expected option term represents the estimated period of time until exercise and is based on historical experience
of similar options, giving consideration to the contractual terms, vesting schedules and expectations of future employee
behavior. Expected stock price volatility is based on a combination of the historical volatility of our stock and the implied
volatility of actively traded options on our common stock. The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the time of grant with an equivalent remaining term. The dividend yield is based on anticipated cash
pa ge 6 2
2015 annual report
the cheesecake factory
dividend payouts. Compensation expense is recognized only for those options expected to vest, with forfeitures estimated
based on our historical experience and future expectations.
Stock option activity during fiscal 2015 was as follows:
Outstanding at beginning of year
Granted
Exercised
Forfeited or cancelled
Outstanding at end of year
Shares
(In thousands)
Weighted
Average
Exercise Price
(Per share)
4,023 $
311 $
(1,230) $
(38) $
3,066 $
26.34
48.01
22.77
24.08
30.00
Weighted
Average
Remaining
Contractual
Term
(In years)
Aggregate
Intrinsic Value(1)
(In thousands)
3.7 $
97,406
3.6 $
52,416
Exercisable at end of year
1,798 $
23.91
2.5 $
41,311
(1) Aggregate intrinsic value is calculated as the difference between our closing stock price at fiscal year end and the
exercise price, multiplied by the number of in-the-money options and represents the pretax amount that would have been
received by the option holders, had they all exercised their options on the fiscal year end date.
The total intrinsic value of options exercised during fiscal 2015, 2014 and 2013 was $37.0 million, $28.2 million and
$40.1 million, respectively. As of December 29, 2015, total unrecognized stock-based compensation expense related to
nonvested stock options was $10.0 million, which we expect to recognize over a weighted average period of approximately
2.3 years.
Restricted Shares and Restricted Share Units
Restricted share and restricted share unit activity during fiscal 2015 was as follows:
Outstanding at beginning of year
Granted
Vested
Forfeited
Outstanding at end of year
Shares
(In thousands)
1,820
445
(268)
(106)
1,891
Weighted
Average
Fair
Value
(Per share)
37.12
49.70
27.88
38.45
41.31
$
$
$
$
$
Fair value of our restricted shares and restricted share units is based on our closing stock price on the date of grant. The
weighted average fair value at the grant date for restricted shares and restricted share units issued during fiscal 2015,
2014 and 2013 was $49.70, $47.16 and $39.42, respectively. The fair value of shares that vested during fiscal 2015,
2014 and 2013 was $7.5 million, $4.5 million and $2.6 million, respectively. As of December 29, 2015, total unrecog-
nized stock-based compensation expense related to unvested restricted shares and restricted share units was $44.6
million, which we expect to recognize over a weighted average period of approximately 2.8 years.
12. Employee Benefit Plans
We have a defined contribution benefit plan in accordance with section 401(k) of the Internal Revenue Code (“401(k)
Plan”) that is open to our staff members who meet certain compensation and eligibility requirements. Participation in the
401(k) Plan is currently open to staff members from our three restaurant concepts, our bakery facilities and our corporate
offices. The 401(k) Plan allows participating staff members to defer the receipt of a portion of their compensation and
contribute such amount to one or more investment options. Our executive officers and a select group of management
and/or highly compensated staff members are not eligible to participate in the 401(k) Plan. We currently match in cash
a certain percentage of the employee contributions to the 401(k) Plan and also pay a portion of the administrative costs.
Expense recognized in fiscal 2015, 2014 and 2013 was $0.7 million, $0.6 million and $0.6 million, respectively.
2015 an nual report
page 63
the cheesecake factory
We have also established The Cheesecake Factory Incorporated Executive Savings Plan (“ESP”), a non-qualified deferred
compensation plan for our executive officers and a select group of management and/or highly compensated staff mem-
bers as defined in the plan document. The ESP allows participating staff members to defer the receipt of a portion of their
base compensation and up to 100% of their eligible bonuses. Non-employee directors may also participate in the ESP and
defer the receipt of their earned director fees. We currently match in cash a certain percentage of the base compensation
and bonus deferred by participating staff members and also pay for the ESP administrative costs. We do not match any
contributions made by non-employee directors. Expense recognized in fiscal 2015, 2014 and 2013 was $0.9 million, $0.8
million and $0.7 million, respectively.
ESP deferrals and matching funds are deposited into a rabbi trust, and are generally invested in individual variable life
insurance contracts owned by us that are specifically designed to informally fund savings plans of this nature. Our con-
solidated balance sheets reflect our investment in variable life insurance contracts in other assets and our obligation to
participants in the ESP in other noncurrent liabilities. All income and expenses related to the rabbi trust are reflected in
our consolidated statements of income.
We maintain a self-insured medical and dental benefit plan for our staff members and utilize stop-loss coverage to limit our
financial exposure from any individual medical claim. The accrued liabilities associated with these programs are based
on our estimate of the ultimate costs to settle known claims as well as claims incurred but not yet reported to us as of
the balance sheet date. The accrued liability for our self-insured medical benefit plan, which is included in other accrued
expenses, as of December 29, 2015 and December 30, 2014, was $7.3 million and $7.7 million, respectively. See Note 1
for further discussion of accounting for our self-insurance liabilities.
13. Income Taxes
The provision for income taxes consisted of the following:
(In thousands)
Income before income taxes
Income tax provision/(benefit):
Current:
Federal
State
Total current
Deferred:
Federal
State
Total deferred
Total provision
Fiscal Year
2015
2014
2013
$
159,352 $
138,544 $
156,450
$
$
32,765 $
8,880
41,645
2,659
(1,475)
1,184
42,829 $
28,687 $
8,377
37,064
480
(276)
204
37,268 $
28,754
8,707
37,461
5,342
(709)
4,633
42,094
pa ge 6 4
2015 annual report
the cheesecake factory
The following reconciles the U.S. federal statutory rate to the effective tax rate:
U.S. federal statutory rate
State and district income taxes, net of federal benefit
FICA tip credit
Other credits and incentives
Manufacturing deduction
Deferred compensation
Other
Effective tax rate
Fiscal Year
2015
2014
2013
35.0%
35.0%
35.0%
3.0
(8.0)
(1.0)
(2.8)
0.3
0.4
26.9%
3.8
(8.4)
(0.7)
(2.9)
(0.4)
0.5
26.9%
3.3
(7.0)
(0.9)
(2.4)
(1.0)
(0.1)
26.9%
Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):
December 29, 2015
December 30, 2014
Deferred tax assets:
Employee benefits
Insurance reserves
Accrued rent
Stock-based compensation
Deferred income
Tax credit carryforwards
Other
Subtotal
Less: Valuation allowance
Total
Deferred tax liabilities:
Property and equipment
Inventory
Prepaid expenses
Total
Net deferred tax liability
$
$
28,856
19,399
21,504
16,100
11,406
2,694
794
100,753
(618)
100,135
$
(160,764)
(10,154)
(11,741)
$
(182,659)
$
$
$
$
24,476
18,012
22,291
15,350
9,273
1,954
1,259
92,615
(574)
92,041
(153,362)
(9,749)
(10,363)
(173,474)
$
(82,524)
$
(81,433)
At December 29, 2015 and December 30, 2014, we had $4.1 million and $3.0 million, respectively, of state tax credit
carryforwards. These credits began to expire in 2013. Management assesses the available evidence to estimate if
sufficient future taxable income will be generated to use these carryforwards. Based on this evaluation, we recorded a
valuation allowance relating to hiring and investment tax credits in North Carolina and California to reflect the amount that
more likely than not will not be realized. The valuation allowance amounted to $0.6 million at both December 29, 2015
and December 30, 2014. We believe it is more likely than not that all other state tax credit carryforwards will be realized.
However, this assessment could change if estimates of future taxable income during the carryforward period are revised.
The earliest tax year still subject to examination by a significant taxing jurisdiction is 2010.
2015 an nual report
page 65
the cheesecake factory
At December 29, 2015, we had $1.1 million of unrecognized tax benefits. If recognized, this amount would affect our
effective income tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In thousands)
Fiscal Year
2015
2014
Balance at beginning of year
Additions related to current period tax positions
Reductions related to settlements with taxing authorities and
lapses of statutes of limitations
Balance at end of year
$
$
875 $
192
—
1,067 $
802 $
233
(160)
875 $
2013
695
254
(147)
802
At both December 29, 2015 and December 30, 2014, we had approximately $0.1 million of accrued interest and penalties
related to uncertain tax positions. None of the balance of unrecognized tax benefits at December 29, 2015 relates to tax
positions for which it is reasonably possible that the total amount could decrease during the next twelve months based on
the lapses of statutes of limitations.
14. Stockholder Rights Plan
We have a stockholder rights plan that provides for the distribution to stockholders of one right to purchase a unit equal to
1/100th of a share of junior participating cumulative preferred stock. The rights are evidenced by our common stock
certificates and automatically trade with our common stock. The rights are not exercisable unless a person or group
acquires (or commences a tender or exchange offer or announces an intention to acquire) 15% or more of our common
stock (or 20% or more if such person or group was beneficial owner of 10% or more of our common stock on August 4,
1998) without the approval of our Board. When declared exercisable, holders of the rights (other than the acquiring person
or group) would have the right to purchase units of junior participating cumulative preferred stock having a market value
equal to two times the exercise price of each right, which is $110. Additionally, if we are thereafter merged into another
entity, or if more than 50% of our consolidated assets or earnings power is sold or transferred, holders of the rights will be
entitled to buy common stock of the acquiring person or group equal to two times the exercise price of each right. These
rights expire on August 4, 2018, unless redeemed earlier by us.
pa ge 6 6
2015 annual report
the cheesecake factory
15. Segment Information
For decision-making purposes, our management reviews discrete financial information for The Cheesecake Factory, Grand
Lux Cafe and RockSugar Pan Asian Kitchen restaurants, our bakery division and our international licensing operations.
Based on quantitative thresholds set forth in ASC 280, “Segment Reporting,” The Cheesecake Factory is our only business
that meets the criteria of a reportable operating segment. Grand Lux Cafe, RockSugar Pan Asian Kitchen, bakery and inter-
national licensing are combined in Other. Unallocated corporate expenses, assets and capital expenditures are presented
below as reconciling items to the amounts presented in the consolidated financial statements.
Segment information is presented below:
(In thousands)
Revenue:
The Cheesecake Factory restaurants
Other
Income/(loss) from operations:
The Cheesecake Factory restaurants (1)
Other (2)
Corporate
Total assets:
The Cheesecake Factory restaurants
Other
Corporate
Capital expenditures:
The Cheesecake Factory restaurants
Other
Corporate
Depreciation and amortization:
The Cheesecake Factory restaurants
Other
Corporate
Fiscal Year
2015
2014
2013
$ 1,913,758 $ 1,792,796 $ 1,688,036
189,874
$ 2,100,609 $ 1,976,624 $ 1,877,910
186,851
183,828
$
$
275,686 $
18,047
(128,487)
165,246 $
240,774 $
14,983
(111,026)
144,731 $
250,230
19,985
(109,261)
160,954
$
934,606 $
152,243
146,497
813,780
155,231
139,095
$ 1,233,346 $ 1,161,376 $ 1,108,106
861,697 $
154,033
145,646
$
$
$
$
122,358 $
13,644
17,939
153,941 $
104,525 $
3,713
5,744
113,982 $
98,660
3,621
4,008
106,289
71,821 $
9,690
4,052
85,563 $
68,504 $
10,337
3,994
82,835 $
63,549
10,514
4,495
78,558
(1) Includes impairment and lease termination expenses/(income) related to four The Cheesecake Factory restaurants. The
pre-tax amounts associated with these items were $0.7 million and ($1.2) million in fiscal 2014 and 2013, respectively.
These amounts were recorded in impairment of assets and lease terminations in the consolidated statements of income.
(See Note 1 for further discussion of these charges.)
(2) Includes impairment and lease termination expenses related to our RockSugar Pan Asian Kitchen restaurant and four
Grand Lux Cafe restaurants. The pre-tax amounts associated with these items were $6.0 million and $0.6 million in
fiscal years 2015 and 2013, respectively in the consolidated statements of income. These amounts were recorded in
impairment of assets and lease terminations. (See Note 1 for further discussion of these charges.)
2015 an nual report
page 67
the cheesecake factory
16. Quarterly Financial Data (unaudited)
Summarized unaudited quarterly financial data for fiscal 2015 and 2014, is as follows (in thousands, except per share
data):
Quarter Ended:
Revenues
Income from operations
Net income
Basic net income per share (1)
Diluted net income per share (1)
Cash dividends declared per common share
Quarter Ended:
Revenues
Income from operations
Net income
Basic net income per share (1)
Diluted net income per share (1)
Cash dividends declared per common share
March 31,
2015
June 30,
2015
September 29,
2015(2)
December 29,
2015
517,973 $
41,054 $
28,423 $
0.58 $
0.56 $
0.165 $
529,107 $
49,753 $
34,724 $
0.72 $
0.69 $
0.165 $
526,688 $
35,644 $
26,176 $
0.54 $
0.52 $
0.20 $
526,841
38,795
27,200
0.56
0.54
0.20
April 1,
2014(2)
July 1,
2014(2)
September 30,
2014
December 30,
2014
481,431 $
33,073 $
22,518 $
0.44 $
0.43 $
0.14 $
496,406 $
42,691 $
30,049 $
0.61 $
0.59 $
0.14 $
499,114 $
34,175 $
24,223 $
0.49 $
0.48 $
0.165 $
499,673
34,792
24,486
0.50
0.48
0.165
$
$
$
$
$
$
$
$
$
$
$
$
(1) Net income per share calculations for each quarter are based on the weighted average diluted shares outstanding for
that quarter and may not total to the full year amount.
(2) Income from operations included impairment and lease termination expenses of $6.0 million in the third quarter of
fiscal 2015 related to our RockSugar Pan Asian Kitchen restaurant and $0.2 million and $0.5 million in the first and
second quarters of fiscal 2014, respectively, related to one The Cheesecake Factory restaurant. The impact of these
amounts on net income was $3.6 million in the third quarter of fiscal 2015 and $0.1 million and $0.3 million in the first
and second quarters of fiscal 2014, respectively. (See Note 1 for further discussion of impairment of assets and lease
terminations.)
While seasonal fluctuations generally do not have a material impact on our quarterly results, the year-over-year comparison
of our quarterly results can be significantly impacted by the number and timing of new restaurant openings and associated
preopening costs, the calendar days of the week on which holidays occur and other variations in revenues and expenses.
As a result of these factors, our financial results for any quarter are not necessarily indicative of the results that may be
achieved for the full fiscal year.
17. Subsequent Event
Dividends
On February 11, 2016, our Board of Directors approved a quarterly cash dividend of $0.20 per share to be paid on March
14, 2016 to the stockholders of record on March 1, 2016.
pa ge 6 8
2015 annual report
the cheesecake factory
Exhibit
No.
Item
2.1
Form of Reorganization Agreement
Restated Certificate of Incorporation includ-
ing Certificate of Designation of Series A
Junior Participating Cumulative Preferred
Stock
Exhibit Index
Form
File Number
Incorporated by
Reference from
Exhibit Number
Amend. No. 1 to
Form S-1
33-479336
2.1
Filed with SEC
8/17/92
10-K
000-20574
3.1
2/23/11
Amended and Restated Bylaws as of May
20, 2009
Form of Rights Agreement dated as of
August 4, 1998 between The Cheesecake
Factory Incorporated and U.S. Stock
Transfer Corporation
8-K
8-A
Amendment No. 1 to Rights Agreement
dated as of November 4, 2003 between
The Cheesecake Factory Incorporated and
U.S. Stock Transfer Corporation
Amend. No. 1 to
Form 8-A
Amendment No. 2 to Rights Agreement
dated as of August 1, 2008 between The
Cheesecake Factory Incorporated and
Computershare Trust Company
Amend. No 2 to
Form 8-A
000-20574
3.8
5/27/09
000-20574
1
8/18/98
000-20574
2
11/13/03
000-25074
3
8/1/08
David Overton Employment Agreement
effective June 30, 2009*
The Cheesecake Factory Incorporated
1992 Performance Employee Stock Option
Plan*
Amendment to The Cheesecake Factory
Incorporated 1992 Performance Employee
Stock Option Plan*
Second Amendment to The Cheesecake
Factory Incorporated 1992 Performance
Employee Stock Option Plan*
The Cheesecake Factory Incorporated
1997 Non-Employee Director Stock Option
Plan (as amended)*
8-K
S-1
S-8
000-20574
10.1
7/20/09
33-479336
10.3
5/15/92
033-88414
99.1
1/28/99
10-Q
000-25074
10.1
12/8/06
S-8
333-118757
99.3
9/2/04
3.1
3.2
4.1
4.2
4.3
10.1
10.2
10.3
10.4
10.5
2015 an nual report
page 69
the cheesecake factory
Exhibit
No.
Item
10.6
10.7
10.8
10.9
Nonqualified Stock Option Agreement
under the Company’s 1997 Non-Employee
Director Stock Option Plan*
Amended and Restated Year 2000 Omni-
bus Performance Stock Incentive Plan*
First Amendment to Amended and Restat-
ed Year 2000 Omnibus Performance Stock
Incentive Plan*
Second Amendment to Amended and
Restated Year 2000 Omnibus Performance
Stock Incentive Plan*
10.10
Third Amendment to Amended and Restat-
ed Year 2000 Omnibus Performance Stock
Incentive Plan*
10.11
Amended and Restated 2001 Omnibus
Stock Incentive Plan*
10.12
First Amendment to Amended and Restat-
ed Year 2001 Omnibus Performance Stock
Incentive Plan*
10.13
Form of Notice of Grant of Stock Option
and/or Restricted Share Award*
Form
10-Q
S-8
10-Q
File Number
Incorporated by
Reference from
Exhibit Number
Filed with SEC
000-25074
99.1
10/26/04
333-118757
99.1
9/2/04
000-25074
10.2
12/8/06
10-K
000-25074
10.10
2/22/07
8-K
S-8
8-K
8-K
000-25074
99.1
7/25/08
333-118757
99.2
9/2/04
000-25074
99.2
7/25/08
000-25074
99.1
1/5/07
10.14
Amended Form of Notice of Grant of Stock
Option and/or Restricted Share Award*
10-K
000-25074
10.17
2/27/09
10.15
Amended and Restated Annual Perfor-
mance Incentive Plan*
10.16
Form of Employment Agreements with
Debby R. Zurzolo and Max S. Byfuglin*
10.17
Form of First Amendment to Employment
Agreements with Debby R. Zurzolo and Max
S. Byfuglin*
10.18
Form of Second Amendment to Employ-
ment Agreement with Debby R. Zurzolo*
10.19
Form of Second Amendment to Employ-
ment Agreement with Max S. Byfuglin*
10.20
Amended and Restated Executive Savings
Plan*
10-K
000-25074
10.3
4/4/05
8-K
8-K
8-K
8-K
8-K
000-25074
99.1
3/28/06
000-25074
99.2
12/10/07
000-25074
99.3
1/5/09
000-25074
99.2
1/5/09
000-25074
99.3
7/25/08
pa ge 7 0
2015 annual report
the cheesecake factory
Exhibit
No.
Item
10.21
First Amendment to Amended and Restat-
ed Executive Savings Plan*
10.22
Second Amendment to Amended and Re-
stated Executive Savings Plan*
10.24
Form of Indemnification Agreement*
10.25
Real Estate Option Agreement dated April
22, 2005
10.26
First Amendment to Option Agreement
dated as of June 28, 2005
10.27
Inducement Agreement dated as of July
27, 2005
Form
10-K
10-Q
8-K
8-K
8-K
8-K
File Number
Incorporated by
Reference from
Exhibit Number
Filed with SEC
000-25074
10.34
2/27/09
000-25074
10.2
5/6/10
000-25074
99.1
12/14/07
000-25074
99.1
8/2/05
000-25074
99.2
8/2/05
000-25074
99.3
8/2/05
10.28
First Amendment to Inducement Agreement
dated as of March 1, 2010
10-K
000-25074
10.36
2/23/11
10.29
Stipulation of Settlement
10.30
Form of Employment Agreement with W.
Douglas Benn dated January 19, 2009*
10.31
Notice and Agreement of Grant of Stock
Option and/or Restricted Share Award
between the Company and David Overton
dated May 7, 2009*
10.32
2010 Stock Incentive Plan as amended
April 7, 2011*
10.33
2010 Amended and Restated Annual
Performance Incentive Plan, as amended
and restated on June 2, 2010*
8-K
8-K
8-K
000-25074
10.1
000-25074
99.1
2/28/08
1/23/09
000-20574
99.1
5/8/09
DEF 14A
000-20574
Appendix A
4/21/11
DEF 14A
000-20574
Appendix B
4/23/10
10.34
Form of Grant Agreement for Executive Offi-
cers under 2010 Stock Incentive Plan*
10-Q
10.35
Annual Management Performance Incentive
Plan effective December 31, 2010*
10-Q
000-20574
10.1
11/4/10
000-20574
10.2
11/4/10
10.36
First Amendment to Employment Agree-
ment effective as of February 29, 2012
between The Cheesecake Factory Incorpo-
rated and David M. Overton*
8-K
000-20574
10.1
3/6/12
2015 an nual report
page 71
the cheesecake factory
Exhibit
No.
Item
10.37
10.38
10.39
10.40
10.41
10.42
Second Amendment to Employment Agree-
ment dated as of November 11, 2013,
between The Cheesecake Factory Incorpo-
rated and David M. Overton*
The Cheesecake Factory 2010 Stock
Incentive Plan as amended effective as of
February 27, 2013*
Form
8-K
File Number
Incorporated by
Reference from
Exhibit Number
Filed with SEC
000-20574
99.1
11/12/13
DEF 14A
000-20574
Appendix A
04/19/13
Employment Agreement effective as of April
18, 2013, between The Cheesecake Factory
Incorporated and David M. Gordon*
8-K
000-20574
10.1
4/19/13
Form of Grant Agreement for Executive
Officers under the 2010 Stock Incentive
Plan, for equity grants made after August 2,
2012*
Master Confirmation dated as of February
27, 2014 between The Cheesecake Factory
Incorporated and Goldman, Sachs & Co.
Supplemental Confirmation dated as of
February 27, 2014 between The Cheese-
cake Factory Incorporated and Goldman,
Sachs & Co.
10-Q
000-20574
10.1
8/10/12
10-K
000-20574
10.45
2/27/14
10-K
000-20574
10.46
2/27/14
10.43
Third Amendment to Amended and Restat-
ed Executive Savings Plan*
10.44
Fourth Amendment to Amended and Re-
stated Executive Savings Plan*
10-K
10-K
10.45
Form of Grant Agreement for Executive Offi-
cers under the 2010 Stock Incentive Plan*
8-K
000-20574
10.47
2/27/14
000-20574
10.48
2/27/14
000-20574
99.1
3/7/14
10.46
The Cheesecake Factory 2010 Stock Incen-
tive Plan as amended effective as of April
3, 2014*
10.47
Fifth Amendment to Amended and Restat-
ed Executive Savings Plan*
10.48
Confirmation dated as of February 27,
2015 between The Cheesecake Factory
Incorporated and Wells Fargo Bank, National
Association relating to Fixed $$ Discounted
Share Buyback (“DSB”) Collared with Initial
Delivery
DEF 14A
000-20574
Appendix A
4/17/14
10-Q
10-K
000-20574
10.2
8/8/14
000-20574
10.52
3/2/15
pa ge 7 2
2015 annual report
the cheesecake factory
Exhibit
No.
Item
10.49
Third Amendment to Employment Agree-
ment dated as of April 2, 2015, between
The Cheesecake Factory Incorporated and
David Overton.*
10.50
2010 Stock Incentive Plan as amended
effective May 28, 2015*
10.51
10.52
10.53
10.54
10.55
2015 Amended and Restated Annual
Performance Incentive Plan, as amended
and restated May 28, 2015*
Sixth Amendment to The Amended and
Restated The Cheesecake Factory Incorpo-
rated Executive Savings Plan*
Seventh Amendment to The Amended and
Restated The Cheesecake Factory Incorpo-
rated Executive Savings Plan*
Second Amended and Restated Loan
Agreement with JPMorgan Chase Bank,
National Association dated as of December
22, 2015
Fourth Amendment to Employment Agree-
ment dated as of February 11, 2016,
between The Cheesecake Factory Incorpo-
rated and David Overton*
21.0
List of Subsidiaries
23.1
31.1
31.2
32.1
32.2
Consent of Independent Registered Public
Accounting Firm
Rule 13a-14(a)/15d-14(a) Certification of
the Principal Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of
the Principal Financial Officer
Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 for
Principal Executive Officer
Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 for
Principal Financial Officer
Form
8-K
File Number
Incorporated by
Reference from
Exhibit Number
Filed with SEC
000-20574
99.1
4/2/15
DEF 14A
000-20574
Appendix A
4/17/15
DEF 14A
000-20574
Appendix B
4/17/15
10-Q
000-20574
10.1
11/5/15
10-Q
000-20574
10.2
11/5/15
8-K
8-K
—
—
—
—
—
—
000-20574
99.1
12/24/15
000-20574
99.2
2/16/16
—
—
—
—
—
—
—
—
—
—
—
—
Filed
herewith
Filed
herewith
Filed
herewith
Filed
herewith
Filed
herewith
Filed
herewith
2015 an nual report
page 73
the cheesecake factory
Form
—
File Number
Incorporated by
Reference from
Exhibit Number
—
—
Filed with SEC
Filed
herewith
Exhibit
No.
Item
Exhibit
101
XBRL (Extensible Business Reporting
Language) The following materials from
The Cheesecake Factory Incorporated’s
Annual Report on Form 10-K for the years
ended December 29, 2015, formatted in
Extensive Business Reporting Language
(XBRL), (i) consolidated balance sheets, (ii)
consolidated statements of operations, (iii)
consolidated statement of stockholders’
equity, (iv) consolidated statements of cash
flows, and (v) the notes to the consolidated
financial statements.
* Management contract or compensatory plan or arrangement required to be filed as an exhibit.
pa ge 7 4
2015 annual report
the cheesecake factory
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 25th day of February
2016.
Signatures
THE CHEESECAKE FACTORY INCORPORATED
/s/ DAVID OVERTON
By: David Overton
Chairman of the Board and Chief Executive Officer
(principal executive officer)
/s/ W. DOUGLAS BENN
By: W. Douglas Benn
Executive Vice President and Chief Financial Officer
(principal financial officer)
/s/ CHERYL M. SLOMANN
By: Cheryl M. Slomann
Senior Vice President, Controller and Chief Accounting Officer
(principal accounting officer)
2015 an nual report
page 75
the cheesecake factory
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
David Overton and W. Douglas Benn, and each of them, as his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant in the capacities and on the dates indicated.
Name
Title
/s/ DAVID OVERTON
David Overton
/s/ W. DOUGLAS BENN
W. Douglas Benn
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ CHERYL M. SLOMANN
Cheryl M. Slomann
Senior Vice President, Controller and
Chief Accounting Officer
(Principal Accounting Officer)
/s/ ALEXANDER L. CAPPELLO
Alexander L. Cappello
Director
/s/ JEROME I. KRANSDORF
Jerome I. Kransdorf
/s/ LAURENCE B. MINDEL
Laurence B. Mindel
/s/ DAVID B. PITTAWAY
David B. Pittaway
/s/ DOUGLAS L. SCHMICK
Douglas L. Schmick
/s/ HERBERT SIMON
Herbert Simon
Director
Director
Director
Director
Director
Date
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
February 25, 2016
pa ge 7 6
2015 annual report
the cheesecake factory
t he cheesecak e factory
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 033-88414, 333-
33173, 333-34524, 333-53302, 333-64464, 333-87070, 333-101757, 333-118757, 333-167298, 333-176115, 333-
190110, 333-198042 and 333-206278) of The Cheesecake Factory Incorporated of our report dated February 25, 2016
relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this
Form 10-K.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
February 25, 2016
2015 an nual report
page 77
Exhibit 31.1
The Cheesecake Factory Incorporated
Certification of Principal Executive Officer
I, David Overton, certify that:
1. I have reviewed this annual report on Form 10-K of The Cheesecake Factory Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or
persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
February 25, 2016
/s/ DAVID OVERTON
David Overton
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
pa ge 7 8
2015 annual report
the cheesecake factory
Exhibit 31.2
The Cheesecake Factory Incorporated
Certification of Principal Financial Officer
I, W. Douglas Benn, certify that:
1. I have reviewed this annual report on Form 10-K of The Cheesecake Factory Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or
persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role
in the registrant’s internal control over financial reporting.
February 25, 2016
/s/ W. DOUGLAS BENN
W. Douglas Benn
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
2015 an nual report
page 79
the cheesecake factory
Exhibit 32.1
The Cheesecake Factory Incorporated
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Cheesecake Factory Incorporated (the “Company”) on Form 10-K for the period
ended December 29, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
David Overton, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350,
as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company as of, and for, the periods presented such report.
February 25, 2016
/s/ DAVID OVERTON
David Overton
Chairman of the Board and Chief Executive Officer
pa ge 8 0
2015 annual report
the cheesecake factory
Exhibit 32.2
The Cheesecake Factory Incorporated
Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Cheesecake Factory Incorporated (the “Company”) on Form 10-K for the period
ended December 29, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I,
W. Douglas Benn, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350,
as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company as of, and for, the periods presented such report.
February 25, 2016
/s/ W. DOUGLAS BENN
W. Douglas Benn
Executive Vice President and Chief Financial Officer
2015 an nual report
page 81
the cheesecake factory
r e s t a u r a n t s
i n o p e r a t i o n
a n d r e v e n u e s
Restaurants in Operation
Revenues (in millions)
'92
5
'94
10
'96
17
'98
27
'00
41
'02
62
'04
92
'06
131
'08
159
'10
163
'12
177
'14
189
'15
200
$52
$86
$160
$265
$438
$652
$969 $1,315 $1,606 $1,659 $1,809 $1,977 $2,101
f i n a n c i a l h i g h l i g h t s
Revenues (in millions)
Comparable restaurant sales (1)
Adjusted operating income margin (2)
Adjusted diluted net income per share (3)
Cash flow from operations (in millions)
Restaurants open at fiscal year-end (4)
(1) The Cheesecake Factory restaurants.
2015
$2,101
2.6%
8.2%
$2.37
$235
200
2014
$1,977
1.5%
7.3%
$1.97
$240
189
2013
2012
$1,878
$1,809
1.1%
8.6%
$2.10
$205
180
2.2%
8.2%
$1.88
$195
177
2011
$1,758
2.0%
7.7%
$1.64
$196
170
(2) Operating income margin in fiscal 2015, 2014, 2013, 2012 and 2011 excludes $6,011, $696, ($561), $9,536 and $1,547,
respectively (in thousands), related to a number of items that we do not consider indicative of our ongoing operations.
Please refer to the section entitled “Non-GAAP Measures” included in Item 6, “Selected Financial Data,” of the Form 10-K
in this Annual Report and the 2012 Annual Report for more information on these items.
(3) Diluted net income per share in fiscal 2015, 2014, 2013, 2012 and 2011 and excludes $0.07, $0.01, ($0.01), $0.10 and ($0.01),
respectively, related to a number of items that we do not consider indicative of our ongoing operations. Please refer to the
section entitled “Non-GAAP Measures” included in Item 6, “Selected Financial Data,” of the Form 10-K
in this Annual Report and the 2012 Annual Report for more information on these items.
(4) Full-service The Cheesecake Factory restaurants, Grand Lux Cafe and RockSugar Pan Asian Kitchen.
d i r e c t o r s a n d o f f i c e r s
Board of Directors
Executive Officers
Operating and Staff Officers
David Overton
Chairman of the Board and
Chief Executive Officer
The Cheesecake Factory
Incorporated
Alexander L. Cappello
Chairman and
Chief Executive Officer
Cappello Group, Inc.
Jerome I. Kransdorf
President Emeritus
JaK Direct
Laurence B. Mindel
Managing Partner
Poggio Trattoria
David B. Pittaway
Senior Managing Director,
Senior Vice President and
Secretary
Castle Harlan, Inc.
Douglas L. Schmick
Co-Founder
McCormick & Schmick’s
Seafood Restaurants
Herbert Simon
Chairman Emeritus
Simon Property Group, Inc.
David Overton
Chairman of the Board and
Chief Executive Officer
Donald C. Moore
Executive Vice President and
Chief Culinary Officer
David M. Gordon
President
W. Douglas Benn
Executive Vice President and
Chief Financial Officer
Debby R. Zurzolo
Executive Vice President,
General Counsel and
Secretary
Max S. Byfuglin
President – Bakery Division
Spero G. Alex
Senior Vice President –
Operations, The Cheesecake
Factory Restaurants
Dina R. Barmasse-Gray
Senior Vice President –
Human Resources
Keith T. Carango
Senior Vice President and
Chief Operating Officer –
Bakery Operations
Matthew E. Clark
Senior Vice President –
Finance and Strategy
Donald C. Evans
Senior Vice President and
Chief Marketing Officer
Stan D. Harvey
Senior Vice President –
Purchasing
Brian MacKellar
Senior Vice President –
Development
Lisa A. McDowell
Senior Vice President –
Global Development
James D. Rasmussen
Senior Vice President and
Chief Information Officer
Cheryl M. Slomann
Senior Vice President –
Finance and Corporate
Controller
Charles G. Wensing
Senior Vice President –
Operations Services,
Performance Development and
New Restaurant Operations
Jack K. Belk
Senior Regional
Vice President –
Restaurant Operations
Jeffrey Nemet
Regional Vice President –
Restaurant Operations
Joseph T. Phillips
Regional Vice President –
Restaurant Operations
Steve M. Polce
Regional Vice President –
Restaurant Operations
Atallah A. Baroudi, Ph.D.
Vice President –
Food Safety and
Quality Assurance
Heather M. Berry
Vice President –
Beverage and
Bakery Operations
Gregory A. Breland
Vice President –
Development
Linda J. Candioty
Vice President –
Guest Experience
Richard J. Frings
Vice President –
Compensation and Benefits
Sidney M. Greathouse
Vice President and Senior
Counsel – Legal Services
Anthony R. Gressak, Jr.
Vice President –
Bakery Distributor Sales
Ronald Isack
Vice President –
Bakery Supply Chain
Etienne Marcus
Vice President –
Strategy and Finance
Philip Mardirossian
Vice President –
Bakery Marketing
Kix McGinnis Nystrom
Vice President –
Kitchen Operations
Robert Okura
Vice President –
Culinary Development and
Corporate Executive Chef
Alan B. Phillips
Vice President –
Internal Audit
Claire M. Prager
Vice President –
Talent Selection
Chris M. Radovan
Vice President –
Bakery Research and
Development
J. Suzanne Reed
Vice President –
Bakery Sales and Marketing
Richard H. Reinach
Vice President –
Facilities Management
John Scott
Vice President –
Bakery Food Safety and
Quality Assurance
Jeffery Stepler
Vice President –
Organizational Engagement
Roman L. Wasylyn
Vice President –
Tax
Laurie A. Lambert-Gaffney
Vice President –
Staff Relations
Robert T. West
Vice President –
Information Technology
Kurt E. Leisure
Vice President –
Risk Services
s h a r e h o l d e r i n f o r m a t i o n
Corporate Counsel
Sheppard Mullen Richter & Hampton
Los Angeles, California
Independent Accountants
PricewaterhouseCoopers LLP
Los Angeles, California
Transfer Agent, Registrar and
Dividend Payments
Computershare Investor Services
250 Royall Street
Canton, MA 02021
(800) 962-4284
Inquiries
Communications regarding lost certificates, and name and
address changes should be directed to our Transfer Agent.
Other investor inquiries should be directed to:
W. Douglas Benn
Executive Vice President and Chief Financial Officer
The Cheesecake Factory Incorporated
26901 Malibu Hills Road
Calabasas Hills, CA 91301
(818) 871-3000
Common Stock Trading
Our stock began trading on The NASDAQ Stock Market
on September 18, 1992 under the symbol CAKE at the
initial public offering price of $2.63 (adjusted for five
three-for-two stock splits in March 1994, April 1998,
June 2000, June 2001 and December 2004). We com-
pleted follow-on public offerings of common stock in
January 1994 and November 1997. The market price of
our common stock has not closed below $2.63 and has
closed as high as $58.17 through December 29, 2015,
our last fiscal year-end.
Website
To learn more about our Company, please visit www.
thecheesecakefactory.com and our related websites at
www.grandluxcafe.com and www.rocksugarpanasiankitch-
en.com. To learn about our sustainability initiatives,
please visit www.thecheesecakefactory.com/corporate-so-
cial-responsibility/sustainability.
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