Hello, my name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 2022 The Cheesecake Factory Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Etienne Marcus, Vice President of Finance and Investor Relations. Please go ahead. Good afternoon, and welcome to our third quarter fiscal 2022 earnings call. On the call with me today are David Overton, our Chairman and Chief Executive Officer, David Gordon, our President, and Matt Clark, our Executive Vice President and Chief Financial Officer. Before we begin, let me quickly remind you that during this call, items will be discussed that are not based on historical fact and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could be materially different from those stated or implied in forward-looking statements as a result of the factors detailed on today's press release, which is available on our website at investors.thecheesecakefactory.com and in our filings with the Securities and Exchange Commission. All forward-looking statements made on this call speak only as of today's date, and the company undertakes no duty to update any forward-looking statements. In addition, during this conference call, we will be presenting results on an adjusted basis, which exclude impairment of assets and lease terminations and acquisition-related expenses. An explanation of our use of non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures appear in our press release on our website as previously described. David Overton will begin today's call with some opening remarks, and David Gordon will provide an operational update. Matt will then review our third quarter results and provide a financial update. Following that, we'll open the call to questions. With that, I'll turn the call over to David Overton. Thank you, Etienne. We were pleased with our overall sales performance, with third quarter revenues finishing within our expected range despite consumer headwinds and an uncertain macroeconomic backdrop. We are navigating the challenging landscape by continuing our relentless focus on menu innovation, service, hospitality, and operational excellence. These are hallmarks that have made The Cheesecake Factory brand one of the most differentiated restaurant concepts in the casual dining industry for over four and a half decades and through numerous economic cycles. Comparable sales at The Cheesecake Factory restaurants for the third quarter of 2022 increased 1.1% and 9.5% from the third quarters of 2021 and 2019, respectively. Sales trends strengthened throughout the quarter and into the fourth quarter. To this point, through October 25, fourth quarter to date comparable sales for The Cheesecake Factory restaurants increased approximately 2.8% year-over-year and 14% as compared to the same period in fiscal 2019. Average unit volumes at The Cheesecake Factory continue to track to $12 million for the year, and our newest location in Katy, Texas opened to tremendous demand, underscoring the strong affinity for The Cheesecake Factory brand and the unique dining experiences we provide for our guests. Our execution within the four walls was solid during the quarter, with the best-in-class operators focused on delivering delicious and memorable guest experiences and effectively managing what is in their control. In fact, labor productivity and food efficiency results for the quarter exceeded our expectations and pre-pandemic levels. On the development front, we opened three new restaurants during the third quarter, including The Cheesecake Factory in Katy, Texas, a suburb of Houston, North Italia in Dunwoody, Georgia, a suburb of Atlanta, and the first brick-and-mortar location of Fly Bye in Phoenix. Fly Bye is FRC's newest fast casual dining concept, offering Detroit and hand-stretched style pizza and crispy chicken. Subsequent to quarter end, The Cheesecake Factory, Opry Mills in Nashville, Tennessee, and the North Italia in The Woodlands, Texas, a suburb of Houston, both opened to impressive demand. Today, we opened our third Flower Child in Austin, Texas market. All of the sites we have been working on remain active in our pipeline. However, consistent with the trends seen throughout the industry, opening dates continue to be impacted by supply chain challenges and permit approval delays. As such, we now expect to open as many as 13 new restaurants in fiscal year 2022, including three Cheesecake Factory restaurants, four North Italias, and six other FRC restaurants, including three Flower Child locations. Additionally, we still expect one Cheesecake Factory restaurant to open internationally under a licensing agreement. We also recently announced the expansion of one of our international development agreements to include Thailand. Continuation of our global growth strategy, we're exploring potential opportunities to expand in Europe. Looking ahead to next year, our pipeline continues to build in addition to the carryover sites from this year. Thus, we remain confident in our ability to achieve our unit growth goal of 7% annually. While our operational performance has been solid, we continue to face a dynamic and challenging inflationary environment, which was reflected in our third quarter profit margins. We remain highly focused on returning restaurant margins to pre-pandemic levels in the near term. To this point, we're rolling out an additional menu price increase at the start of December, which Matt will provide more details on shortly. In addition, the board approved a quarterly dividend of $0.27 per share and expanded our share repurchase authorization by five million shares. We remain committed to our capital allocation priorities of investing in the growth of our business to achieve our targeted returns and returning value to our shareholders. With that, I'll now return the call over to David Gordon. Thank you, David. Building on what David said about our solid operational execution, not only did we see improvement in labor productivity and food efficiency results, but we also delivered year-over-year improvements across our dine-in guest satisfaction metrics, including pace of experience, staff service, and food quality. On the staffing front, applicant flow remains strong. In fact, we had over 350,000 applicants during the quarter. We're also starting to see our best-in-class attrition rates fall below prior year levels. As we've said before, we believe our staffing success is a key contributor to the improvement of our dine-in guest satisfaction scores. After all, our people are our greatest resource and enable us to deliver delicious, memorable experiences for our guests every day. Our ability to attract and retain dedicated and experienced employees in a competitive industry amidst a tight labor market is a testament to the strong culture, industry-leading training, and tangible career advancement opportunities we provide for our staff members and our managers. Speaking of our greatest resource, our talent, in September, we held our first general managers conference since the start of the pandemic. It was an inspiring and productive week of learning and development through informative programs, panels, speaker-led trainings, and leadership seminars. Importantly, we were able to recognize our outstanding field leadership for their unwavering dedication and hard work amid unprecedented challenges while continuing to uphold our deepest values along the way. The events and activities serve to re-energize and motivate our General Managers who are crucial to our success and provide them with additional insights and tools to take back to their restaurants to improve operations, celebrate wins, and develop their people. Now, turning to North Italia. Third quarter comparable sales grew a robust 10% versus 2021 and 18% versus 2019, with improvements across all day parts and all geographies. These positive sales trends have continued into the fourth quarter. In fact, through October 25th, fourth quarter to date comparable sales increased approximately 9% year over year and 25% as compared to the same period in fiscal 2019. Additionally, our most recent North Italia opening in The Woodlands, Texas, had one of our strongest North Italia opening week sales. Four-wall margin for the adjusted mature locations declined from 16% in the second quarter to 12.9% for the third quarter, predominantly driven by inflation. We are in the process of implementing a 4.3% menu price increase in accordance with our overall margin strategy to offset inflation and recapture pre-pandemic restaurant level margins. FRC drove similarly strong top-line results. The continued sales performance we've seen across our concept reinforces our belief that we are well positioned for the future. Given the strength of our brands, best-in-class operators, and breadth of high-quality growth vehicles, we believe our long-term outlook continues to be bright. With that, I will now turn the call over to Matt for our financial review. Thank you, David. Despite the many unprecedented challenges encountered this year, we are still progressing towards our primary financial objectives for 2022, including total revenue expectations of about three and 1/3 billion dollars. The Cheesecake Factory AUVs continue to track towards $12 million. With the additional menu price increase David Overton mentioned earlier, we continue to plan to exit the year at pre-pandemic four-wall margins. We continue to leverage G&A, depreciation, and pre-opening to support total enterprise margins, and we restarted returning capital to our shareholders through our dividend and stock repurchase programs. For the third quarter, along with the broader restaurant industry, we continued to face higher inflationary headwinds than we had anticipated. Specifically, higher utilities and building maintenance, approximately $5 million or $0.10 of EPS in the quarter, accounted for the majority of the variance to expectations in other operating costs. Turning to some more specific details around the quarter. Third quarter comparable sales versus prior year increased 1.1% at The Cheesecake Factory restaurants and increased 10% at North Italia. Revenue contribution from North Italia and FRC totaled $135.4 million. Sales per operating week at FRC, including Flower Child, were approximately $103,000, and including $14.2 million in external bakery sales, total revenues were $784 million during the third quarter of fiscal 2022. Moving to expenses. Cost of sales increased 270 basis points versus Q3 of the prior year, principally driven by significantly higher commodity inflation than menu pricing. Labor increased 30 basis points over 2021, primarily driven by higher wages and increased training costs and partially offset by lower medical insurance expenses. Other operating expenses increased 100 basis points, largely driven by higher utilities and building costs noted, which are mostly inflation-related. G&A as a percentage of sales increased 30 basis points, reflecting travel returning to a more normalized level, including holding our first in-person general manager conference since the pandemic began. Pre-opening costs were $4.3 million in the quarter, compared to $3.2 million in the prior year period. We opened three restaurants during the third quarter versus four openings in the third quarter last year. However, third quarter 2022 pre-opening costs are higher year over year, primarily due to costs related to two additional early fourth quarter openings. In the third quarter, we recorded an after-tax $0.8 million charge, primarily associated with FRC acquisition related items. Third quarter GAAP diluted net loss per common share was $0.05. Adjusted net loss per share was $0.03. Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $372 million, including a cash balance of about $133 million and over $239 million available on a revolving credit facility. Total debt outstanding was unchanged at $475 million. Subsequent to the end of the third quarter, we renewed our credit facility agreement to extend the maturity to October 2027 at comparable pricing and favorable terms to provide financial flexibility and ample liquidity to support our long-term growth objectives. CapEx totaled approximately $32 million during the third quarter for new unit development and maintenance. We completed approximately $27 million in share repurchases and returned just over $14 million to shareholders via our dividend during the quarter. While we will not be providing specific comparable sales and earnings guidance, given the operating environment continues to be very dynamic, we will provide our up-to-date thoughts on our underlying assumptions for the fourth quarter of 2022 and full year 2023. Based on our year-to-date performance and more recent trends, we anticipate total revenues for the year to be about $3 and 1/3 billion, which includes the impact of the 53rd operating week in fiscal 2022. For the fourth quarter, we would anticipate total revenue to be between $900 million and $930 million. Next, we now expect commodity inflation of about 15% on an annual basis as well as for the fourth quarter, which represents about a 2% increase over our prior fourth quarter outlook and which is directionally in line with headline CPI increases we observed during the quarter and is about flat to Q3 levels. We continue to model net total labor inflation of about 5% when factoring latest trends in wage rates, channel mix, as well as other components of labor. Given the inflationary outlook for energy and services and assuming they remain similar to Q3, we now expect other operating expenses to be approximately 25.5% of sales in the fourth quarter. As David mentioned, we remain committed to protecting our longer-term four-wall margins while managing through the risks associated with cost fluctuations driven by the current environment. Given the additional inflationary pressures we are experiencing, we are in the process of implementing about a 2.8% incremental menu price increase, which, as anticipated, is above our current level and is supportive of our margin objectives. Turning to margins, let me walk through some of the math to bridge our Q3 margin results to our stated goal of exiting the year at pre-pandemic level restaurant margins. The Cheesecake Factory restaurants' four-wall margin was 10.1% in Q3. If we add one half of the Q3 price increase of 4.25% to adjust for the timing of the pricing rollout, plus the 2.8% incremental Q4 price increase, this brings us to an approximately 15% four-wall margin. In Q3, our training and recruiting expenses were higher than anticipated by approximately 0.5% of sales due to the strong hiring results David Gordon mentioned, which we would expect to normalize if the labor market continues to stabilize. This would put us about 25 basis points away from the Q3 2019 The Cheesecake Factory restaurant level margin, which we are focused on recovering through operational efficiencies. Keep in mind that the third quarter sales were about 2% below this year's year-to-date sales performance of 2019 sales plus menu pricing. Using the Q3 sales trend as our baseline positions us to achieve our margin targets even with the volatility we have seen this year or a slight pullback in consumer spending in the future. On a positive note, as David mentioned earlier, fourth quarter to date sales trends have improved to be in line with 2019 sales plus menu pricing and are our best seasonally adjusted average weekly sales since April. I would also note that this margin bridge includes our higher expectations for cost of sales, utilities, and building maintenance expenses, which we are carrying into our fourth quarter and beyond expectations. Importantly, based on our latest information, input costs appear to have stabilized at these levels. Given we are rolling out the incremental price increase at the start of December, the fourth quarter will only receive about one-third of the benefit. As such, we do not expect to fully close the margin gap for the entire fourth quarter. However, we do expect this pricing action to be sufficient to close the gap going into 2023 based on current levels of inflation. Going forward, our goal is to offset inflation with menu pricing, as has been our long-standing stated strategy. Of course, there can always be timing differences depending on market movements and lapping of extreme variability as we have experienced this year. Lastly, it is noteworthy that in September, food away from home spending increased to an all-time high of 55.1% as a percentage of total food spending, exhibiting consumer staple-like attributes. Additionally, food at home inflation outpaced restaurant inflation nationally by over 400 basis points, affirming our belief that there continues to be sufficient demand even in the current environment, to support pricing power as a means to offset inflation and recapture four-wall margins, as is our strategy. Now, moving on, we still anticipate G&A to be approximately $55 million-$56 million for the fourth quarter, which as a reminder, includes an extra week this year. Our pre-opening assumption remains unchanged at $7 million in the fourth quarter. Finally, we expect about $25 million in depreciation for the fourth quarter. For modeling purposes, we're using a tax rate of about 8%. With regard to development, we plan to open as many as 13 new restaurants this year, and we would now anticipate approximately $130 million in CapEx to support this level of unit development, as well as required maintenance on our restaurants. Note that this includes some CapEx for locations that have shifted into 2023. In addition, keep in mind that we have reinstated our stock buyback program and have now declared three dividends this year. Looking ahead to fiscal 2023, as previously mentioned, the macroeconomic backdrop continues to be uncertain. However, we want to provide some initial perspective for next year. Based on our year-to-date performance, more recent trends, and assuming no material operating or consumer disruptions, we anticipate total revenues for fiscal 2023 to be between approximately $3.5 billion-$3.6 billion. Total inflation across our commodity baskets and total labor is currently estimated to be in the mid-single digit range. As I said earlier, our goal is to offset inflation with menu pricing. With regard to development, we plan to open as many as 21-24 new restaurants next year, spread across our portfolio of concepts. For modeling purposes, at this point, we would expect four to five Cheesecake Factory restaurants, seven to eight North Italia, three to four Flower Child locations, and seven other FRC restaurants. We anticipate approximately $150 million-$170 million in CapEx to support this level of unit development as well as required maintenance on our restaurants. In closing, as I noted in the beginning of my prepared remarks, despite the persistence of unprecedented headwinds in our industry, our company is still on track to accomplish the majority of our key financial objectives for 2022. We attribute this primarily to the strength of our brands, our belief that we have the best operators in the business, and our strategic approach to effectively balancing the short term with the long term. Taking all these considerations together, we believe we're well-positioned going into 2023 to take advantage of our increased scale to deliver meaningful earnings growth, generate robust cash flows, and drive significant shareholder value going forward. With that said, we'll take your questions. Operator, over to you. Sounds great. At this time, I would like to remind everyone if you would like to ask a question, please press star, then the number one on your telephone keypad. Your first question comes from the line of Nicole Miller with Piper Sandler. Thank you for the update and good afternoon. Just one question. Can you talk about average check in terms of value proposition and affordability? The question being, at Cheesecake Factory and also the North Italia brands, what is average check or average transaction today? And then what opportunities does the guest have to come in and spend, I mean, really the least amount available so they can still access you in terms of affordability? Sure. Nicole, this is Matt. Thank you for that question. I think it's pretty relevant in today's environment. I think the hallmark of The Cheesecake Factory is the breadth of the menu. We still have items that are $8 and $9 going up to the low 30s if you want to get a filet, which I would note probably compares to about $50 even at the most value-focused steakhouses today. Guests can certainly come in. Don't forget the portion sizes. You can still get a full-size Cheesecake Factory portion on a chicken or pasta dish for the high teens dollars. You can split that and still get out an average check in the low teens with a drink per person if you want to. I don't think we're not focused on that. We're always focused on the value, but also believing that we are maintaining, if not expanding, our value proposition relative to the rest of the dining industry. If you look at the compounded pricing that the industry has now taken, because it's starting to get a little interesting as we lap around early summer and fall pricing from last year, which we didn't take, and others did. It's probably about 14% based on the latest consensus, and that's probably going to go higher going into the fourth quarter. We remain 3%-4% below that level. I think overall, we have a great value proposition. I think the average I would have to look up the specifics for The Cheesecake Factory is probably in the high 20s. Remember, there's a split between off-premise and on-premise. It's probably around $27 or $28 for the on-premise guest, which is most likely what we would be benchmarking against. You know, in general, I think that North Italia follows a very similar approach, although the menu obviously not being as broad, but having somewhat of a barbell strategy. You can get a pizza or a pasta still at a very affordable price at North Italia. If you want to go in for a high-end dinner, you can also get a filet or a branzino that might be in the mid-30s to close to $40. It's really looking for that experience, that you might want. I think that, you know, if you can deliver on that experience, which our operators can, you know, that the value proposition remains extremely strong. Thank you. Just one additional note to that. As everybody asks, and this may come up in terms of incidence rates, we continue to see very strong attachment across dessert, across alcohol, you know, between entrees and appetizers. That would also tell me that when guests are coming in, they're not managing their check or that they don't have any sticker shock because they're actually continuing to order a little bit more than they used to. Your next question comes from the line of Sharon Zackfia with William Blair. Hi, how are you? Sorry, I didn't recognize my name there at first. I guess it would be helpful as we talk about price to hear about kind of what you're seeing in terms of the mid-summer price increase. Did you see any resistance there or management of check? How comfortable are you that the additional 2.8% will be passed along easily, I guess? If you could give us kinda where transactions versus ticket kinda fell out in the quarter and how much price you'll be carrying for the full fourth quarter, that would be helpful. Sure, Sharon, this is Matt, I think. The first thing is when we look at our sales trends today in October, which obviously is about six weeks to eight weeks into having taken the summer menu pricing, they're the best that we've seen. Pretty much all year, equal to April. I would say we've been successful capturing our price. Obviously, there's been ups and downs in sales trends this year, but we don't really think that has anything to do with the different pricing as much as it has to do with external factors such as COVID or gas prices. But certainly the consumer has accepted the pricing. As I just mentioned, the attachment rates actually continue to run above last year and above 2019 actually. You know, they are coming in for the full experience. Just as a technical response for the quarter, pricing was 6%. Traffic was essentially flat at 0.1%, and the mix was a negative 4.8%. But just for everyone to remember, that's really driven by how we count the on-premise, off-premise, right? The off-premise is one guest, but obviously the check average is about 2x that, so it's a little bit funky. For the weighted average for Q4, we would anticipate the menu pricing to be around 8%-8.5%, on a weighted basis, obviously depending on the sales trends throughout the quarter. And you know, when we think about capturing all of that, it would be not until December as noted. It's about 1/3 of the incremental 2.8% pricing that would be in the fourth quarter. Okay. I just wanted to clarify, you were giving a lot of kind of triangulation around The Cheesecake Factory margins. I just wanna, I guess, quantify, are you basically saying that given the price you're taking this quarter and assuming no further kind of kick-up in inflation, you think you'll be in that 15+% kind of unit level margin in 2024? Is that? I'm sorry, 2023. I just skipped a year. Is that kind of the takeaway that you're leaving us with? 100%, right. I think, just to be crystal clear, the expectation on the commodities is essentially flat from Q3 to Q4. We're also carrying in what I consider to be pretty heightened other operating expenses considering what we've seen and what many others have seen in the utilities and building maintenance. And frankly, at a slightly lower sales level than what we're running today also, right, to accommodate for any of the ups and downs. That would mean we would exit the year at our targeted level, and we would have to assess what the pricing would need to be to offset next year's inflation, right? One of the things that we'll continue to try to be transparent about is on a quarter-to-quarter basis, you've gotten a lot of, you know, interesting noise this year in the way that commodities have moved. We're really positioning ourselves to make the whole year 2023 margins at the restaurant level. Okay. Thank you. Your next question comes from the line of Andy Barish with Jefferies. Hey, guys. Good afternoon. Just a couple of things on what the variances were to the downside, you know, on the food cost area. You said, you know, you had been about 75% locked kind of going into 3Q. What kind of, you know, went off there? Secondly, just on the productivity and food efficiency measures that you follow, can you give us a little bit of, you know, kind of background on what that looks like given, you know, it's not exactly tying to near-term restaurant level margins? Is there something, you know, maybe that you're looking at to adjust, you know, on the productivity or efficiency side as we look out to, you know, kind of 2023 and get through this, you know, obviously volatile sort of environment? Yeah, Andy. This is Matt. Just on the commodities, the primary variance was in the dairy category. If you go back and look at the third quarter butter chart, it ballooned from, I'm thinking $2.40 to north of $3 over a span of like two weeks. That was one area that we did have exposure and did experience some incremental inflation in the quarter beyond where we were sitting when we had the call. I think as noted on the other OpEx, it was predominantly around the utilities and maintenance. Then just a slight bit on the labor was really from the hiring and training. As you noted from a productivity standpoint, you know, we measure predominantly sales per labor hour. I think it's the sort of the truest financial measure in terms of productivity. Then on the cost of sales, it's really actual to theoretical. Historically on that, it's run, you know, in the 95% range for us. We're probably closer to 96% today. I think the main component for us is that we're executing at a high level, and that's important for financial discipline. It's important for us to ensure that we're going to get 100% of the pricing flow through. At the same time, as David Gordon mentioned, maintain extremely high and improving guest satisfaction, right. You've got to make sure that you're not over-productive, but that you are, you know, producing at a level that is commensurate with providing excellent guest service too. Okay. Very, very helpful color. Then, just following up on Sharon's question on the margin targets for next year. Should we assume that the comment on menu pricing, you know, offsetting the mid-single digit inflation means that that's kind of where things will shape up in sort of that mid-single digit range as we look at, you know, menu price rolling off and not fully replaced and all those kind of things as we move through 2023? Yeah. I mean, right now, you know, one of the things that's happened certainly in the last two years with COVID is that the contracting cycle for commodities has moved a little bit later. I mean, 10 years ago, we might have had some significant clarity by now, I think, but similar to most, it's moved into really December quite a bit. You know, if we're looking at sort of the current spot in conjunction with the forward curves based on our costs this year, that looks like mid-single digits. In the labor side, you know, we're running about a net 5%. So I mean, if we carry that forward for the year, you know, those add up to be mid-single digits. Again, our objective would be to take enough pricing that would be equal to that inflation on the annualized basis. Thanks, Matt. Your next question comes from the line of Jared Garber with Goldman Sachs. Hi. Great. Thank you for taking my question. You talked about trends improving throughout the quarter, and here into the fourth quarter if we think about October. Can you help frame for us what those trends might look like on a three-year basis, if we think about sort of removing some of the Delta variant lapse last year? And then just wanted to get a sense of if you're seeing any differential in trends in your higher penetrated California market versus some of the rest of your state exposures, given some of the stimulus benefits that have hit consumers' pockets out there. Thank you. Sure, Jared. It's Matt. You know, I think that the 2019 baseline has proven to be the most consistent. Obviously, you kind of nailed it there. There's been some significant waves of both COVID as well as reopening, and both of those have proved to be relatively transitory and both too high and too low for kind of when the averaging sets out. If we think about the versus 2019, it was mid-single digits in July, and then it moved to be almost double digits in August. Then basically the September run rate was pretty similar to the October run rate. You know, kind of for the past two months, we've been right back on that 2019 post-pricing track. In terms of geography, it's been pretty balanced. You know, I think we're all trying to figure out seasonality a little bit and whether it's gonna be exactly like 2019 or prior. But I think, you know, when we look at the sort of bigger picture, you know, the Southeast and the Southwest and the Northeast, they are all starting to migrate to a tighter, narrower band as we progress through the year. As we noted on our last call, you know, in July, we did see some separation. We attributed that to being some of the COVID movement and potentially some of the gas prices or other options. I think as we kind of take that average and we see it progress, particularly in September and October, in order to get to the sales levels that we're at, you've really got to have all geographies contributing. I think we feel good about the balance today. Great. Thanks for all that color. Your next question comes from the line of Brian Harbour with Morgan Stanley. Yes. Hi, thank you. Maybe just first, when you think about kind of the same-store sales performance of North Italia, and you benchmark that against kind of Cheesecake. I recognize that one brand is much newer and there's younger stores in the base, but what else do you think might explain some of the differences in kind of current performance of those two brands? Brian, that's interesting. I mean, they are different, right? I think it's you know, I'm not sure that we would make a direct comparison. Certainly, the newness of the brand, you know, would particularly signify that it's still accelerating. I mean, prior to COVID, we were comping up positive traffic in North Italia. I think part of that is due to the capacity constraints that Cheesecake Factory typically finds itself in. You know, we open up that capacity with Cheesecake, we kind of never leave that. As we've talked about in the past, you know, North Italia begins at a much lower level and ramps up over time and still has some capacity. I think you put that opportunity on the plate with, you know, excellent execution and we're driving incremental results. There are fewer also to. You know, you're not looking at the degree of penetration that Cheesecake has. That's probably part of it. It's a little bit more unique in those marketplaces. It's probably a combination of those predominantly. Okay, great. Thanks. When you think about just kind of cost inflation next year. You'll look to offset that with pricing. Is there anything else that you think can offset some of that? Is there anything on the labor side that you think can help fight some of that inflation or more that you can do on kind of productivity on the food side? I think we're always looking to offset as many costs as we can without passing it along to the guests. I mean, historically, you know, the opportunity to offset a component of inflation by improving the performance of your bottom quartile restaurants, for example, was pretty meaningful. I think in a 2% inflationary environment or a 3% inflationary environment where you're taking 2% or 2.5% pricing and you're offsetting 0.5%-1% is meaningful. I think in an environment like today, if we're talking 5%-6%, of course, we're going to try to do that, but you've got to get menu pricing pretty close, right? That's the lesson learned from this year for sure. There's just only so much you're going to do at that point in time. We will always look to do that to pass the least amount of pricing on. I think in this environment, you're still talking about 90% of it being menu pricing. Great. Thank you. Your next question comes from the line of Jeff Farmer with Gordon Haskett. Great. Thanks. Good afternoon. You guys indicated a couple times that October saw the strongest, I think you said seasonally adjusted, average weekly sales performance since April. I'm just curious if there's anything concept specific, that you guys were doing to drive that improved performance at The Cheesecake Factory? Jeff, you know, I think consistent execution over time just returns that trend to the norm. I mean, I attribute it a little bit more to the abnormal summer seasonality. Certainly, we're keeping a good percentage of the to-go. From a seasonal perspective, you know, September and October, absolute to-go sales are higher than they used to be seasonally, and maybe that creates a little bit more of a stabilizer compared to the summertime. Nothing more than or less than what we always do. I think it's really reverting to the mean that we've seen for the year. Okay. Jeff, this is David. I guess I would just add, you know, perhaps a little bit more of an ease in the staffing market has helped a bit, which has helped improve attrition overall, which has helped improve operations overall. As that continues, we continue to follow that trend, we would anticipate. You know, we already have great operators and consistent operations, but the more stable the staff level environment is in the restaurant, the easier it is for us to be able to execute consistently and drive sales, which is the hallmark of The Cheesecake Factory. All right. That's helpful. Just one more follow-up on elasticity of demand. All of your peers have said something largely similar, which is that you haven't seen too much demand pushback on the menu price increases. The question I have is that given the casual dining segment's relatively low frequency, do management teams, including yourself, truly sort of have a fully informed read on elasticity with all the pricing that's been taken? You know, that's a really interesting angle, Jeff. It doesn't matter. I do think that we get enough frequency from our high visitation guests that we're going to see that by now. I mean, they're coming in at least once a month, right? You know, I think that's a pretty good percentage of the total visits. So I think statistically, I would say yes, we have enough in population to measure that elasticity against. The other thing that I mean, I just find interesting and I think is kind of an indicator of where our value proposition sits relative to where other places that people are going, because even if those guests aren't coming in to us, maybe they're the moderates that come in once a quarter. They're going other places. When they do come in, they're ordering more than they used to. To me, that says that our you know our large portion pastas and our great desserts relatively must look like they're well-priced compared to where everybody else is going because they're ordering more than they used to. All right. Thank you. Appreciate it. Your next question comes from the line of Jeffrey Bernstein with Barclays. Great. Thank you very much. Two questions. The first one just on unit growth. Matt, I think you said, you know, you wanna get back to the prior 7% growth target in 2023. I know in 2022, you started the year with plans for 20, which I guess would have been that 7%. Ultimately, it was only the, I guess, 13 you're targeting now. I'm just wondering if you can size up maybe what the greatest challenges were in 2022. Just trying to get a read on the confidence in reaccelerating it back to now you're talking about upwards of 25 next year. I think you mentioned the seven of them that are rolling into 2023 are part of that, but just trying to get a sense for what you think were the greatest challenges in 2022 that you think maybe have abated to allow you to assume there's gonna be such a big reacceleration next year. One follow-up. Hey, Jeff. This is David. You know, a lot of the challenges were and continue as a much slighter extent around permitting, getting through permits in local jurisdictions, and earlier in the year around some major pieces of equipment. We're trying to be a little more proactive there and doing some more proactive purchasing on the CapEx side to be able to ensure we have those big pieces of equipment that are very unique to Cheesecake Factory. To be prepared for that 7% next year. We feel confident in the 21-24, four-five of those being Cheesecake, seven-eight being North Italia, and then the rest being FRC concepts including probably three-four Flower Child. I think our teams are certainly capable of opening 21-25 restaurants. We've done it historically in the past just at Cheesecake Factory. I think we're poised to meet the supply chain challenges and some of the permitting and approval delays that we had in 2023 head on to be able to meet the targets for next year. Understood. Then just following up on the restaurant margin commentary, I think you said you're gonna exit the fourth quarter at a certain level. Just wondering if you can be more specific in terms of quantifying what you think that exit rate's gonna be. I'm assuming you're talking about like 15+%, but maybe you could talk about what that rate is because I think that's the rate you're kind of anchoring around 2023. Again, because you said it's the exit rate of the fourth quarter, any color in terms of what you think the full fourth quarter restaurant margin would be being that you already have the first month complete and you already think the exit rate's gonna be in that, whatever that defined range is. Just trying to get a sense in terms of specifics on the numbers for the margin through this quarter and into 2023. Sure. Jeff, it's Matt. The math would give us in December back to the fourth quarter of 2019 Cheesecake Factory, which was 15.7. That's kind of where we're anchoring on going into next year. Then obviously one of the things I would caveat is that that doesn't mean each quarter for 2023 would mirror the 2019 quarter because there's a lot of moving parts in the inflation and the pricing timing. That 15.7 is kind of our aggregate anchor that we're looking to trend into 2023. The fourth quarter is only going to get a third of the benefit of the 2.8% pricing. 2/3 of that will not happen, right? Roughly speaking, there's 2% below that level that we are sort of targeting for the fourth quarter. Okay. That's the margin you're saying for the full fourth quarter would be two points below that 15.7%. For The Cheesecake Factory four-wall, correct. Gotcha. Thank you very much. Your next question comes from the line of David Tarantino with Baird. Hi. Good afternoon. Matt, I just wanted to clarify how you're thinking about your pricing. Sorry to ask this for the third or fourth time here, but on your December price increase, is that a pull-forward amount from what you maybe normally would have taken in February, or would you contemplate taking more in February when at your normal cycle, to address the inflation that you're seeing next year? I just wanna make sure I understand how you're thinking about it. David, that's an excellent question. I appreciate that you brought that up for clarification. This is incremental. We will be doing in the first quarter what we always do. You know, we don't know what that level of pricing is because we're still assessing the commodities market and what we can contract for, but it will be a normal level of pricing to offset next year's inflation. This is really, this 2.8 is to catch up for this year. I think one of the things that we saw happen is that we probably had a little better protection last year in the commodities market, and our labor was a little more insulated because we were better staffed. So a lot of our competitors took pricing last year in the fourth quarter incrementally in about the 3% range. That gap, you know, we didn't feel as much in the fourth quarter and first quarter, but then it built in the second and third quarters of this year. That really is to make up for what happened this year, and then we'll move forward as normal in February. Got it. The way to think about maybe year-over-year pricing is you'll exit the year with about a 10% increase in the menu, and you might do something in February that maintains it and that's, you know, a similar ballpark or maybe up, and then that'll carry you forward till to your August price increase. Is that the right way to think about it? That's correct. Great. I guess relatedly, I know this has been asked, but because you're kinda lagging what others have done, you could end up in a situation next year where that year-over-year increase is quite a bit higher than what others are running. Are you gonna be taking a close look at that when you get to the February price increase, or is the February price increase gonna be less about your relative position in the market and more about what you need to do to invest kind of cover the inflation? Well, I think, you know, it's been such a kind of wild ride, David. I think our perspective is you've got to look a little bit on a compounded level and also the speed at which all of this has happened. I think we feel pretty good, as I've mentioned, about our value proposition. Even with the incremental pricing, we are going to be below the national average and probably pretty much in line with our peers. Don't forget, you know, the quoted pricing number for a lot of our peers excludes the lack of discounting that they're doing. They all talk about that, right? We don't discount anyway. It also excludes the reduction in marketing that they may have to pick back up, and we don't do that either. You know, I think competitively, we're actually way below the market, and so I think we have some room to run, and we know that our volumes, you know, are tracking to the $12 million this year. If we can protect the four-wall margins, even if there's, you know, a little bit of a consumer pullback, like I said, we're gonna be good. We're gonna be in good shape, and we'll grow off of that base with that level of profitability. Great. Thank you very much. Your next question comes from the line of Joshua Long with Stephens Inc. Great. Thank you for taking the question. Was curious if you could provide an update on the rewards program pilot that you started out in Houston, I think back in June, and any sort of early learnings there, and if it's at the point where you start to build that out into other pilot cities. Sure, Josh. This is David. Great question. We did launch the pilot in Houston in June, and our acquisition rate continues to be significantly ahead of where we had originally forecasted. In about, I think two days, on Thursday, we'll be launching a beta in the Chicago market. We have some new things that we wanna test out, not just from an acquisition standpoint, but also from a redemption standpoint, and some more operational and training opportunities that we wanna learn from. We feel good about where we are today and are hopeful that we'll be launching something nationally at some point next year. Great. Thank you. On that point, I feel like, and correct me if I'm wrong, but I feel like the kind of scaling up and the training piece, as you just mentioned, was kind of something that was initially a focus point for the Houston pilot. As you think about that going forward, can you talk a little bit more about, you know, maybe the consumer-facing pieces or some of those items that you'd expect to see or how the guests might experience that a little differently? I think we wanna learn a little bit more about the redemption rates. We'd like to see the redemption rates be a little bit higher than they are today, and what are the ways that we can remind people once they're in the building, that they are members of the program and they may have something sitting in their account that they've forgotten about. We'll test a few different ways to remind them and see if we can make an impact on redemption. Got it. That's helpful. One follow-up. It's a smaller piece, but just curious if you could provide some context around what's happening with the bakery sales, the third party or external bakery sales and kind of where we're at with that as we start to lap over some of the kind of moderation in growth from the second half of last year. Sure, Josh. I think, you know, similar to some other components of COVID, we saw the bakery sales be a little bit spiked and maybe a little bit lumpy in 2021. I think, you know, we're generally tracking back to our historical levels. I think our, you know, our focus also had been to ensure that we had enough for the restaurants. Our restaurant sales and bakery sales have been much higher than pre-pandemic, so we've been covering some of that. I think there is a lot of opportunity we're looking at going forward, again, off of a base that I would say is kind of normalized at this point in time. Got it. Thank you. Your next question comes from the line of Brian Mullan with Deutsche Bank. Hey, thank you. Just a question on the delivery sales channel. Just looking for a sense of consumer demand for that delivery occasion right now. Have you seen any degradation on a year-over-year basis? You know, I know delivery sales per week are probably much higher than 2019, but just trying to get a sense of consumer sensitivity to pricing right now or demand as we've moved further away from COVID. Thanks, Brian. This is David. The total off-premise was roughly 23% for the quarter, only down a couple percent from Q2, and delivery remains pretty stable. Even if I go back and look a full year ago, Q3, it, delivery of that was around roughly 12%, and it's, you know, 10% today, so continues to be strong demand. We continue to not take as much pricing in the delivery channel as many of our competitors, so the value proposition from a menu perspective continues to remain really strong. We're happy with the continued total off-premise performance and the delivery as well. As noted. Okay. We're actually running, Brian, about 24% in October off-prem. You know, we don't feel like there's been any real movement, you know, either up or down. It's kind of sideways. Thank you. Just to follow up, just on G&A, when you look out to 2023, assuming just a normalized year, normalized environment, is leveraging it at 10 bps a year still kind of the goal? You used to talk about that pre-COVID. Is there enough in there where maybe there's an opportunity to go a little faster than that, even if it's just for a short period of time? Any early thoughts on G&A for next year? Yeah. I mean, I feel good with the 10 basis points a year off of this year at this point in time. We haven't gone through our budgeting process yet, so I think I'll stick with that until further notice. Thank you. Your next question comes from the line of Lauren Silberman with Credit Suisse. Thank you very much. I actually wanted to ask on just on-premise, what you're seeing there, what you saw throughout the quarter, and then where on-premise traffic is running relative to historical levels? Thank you. Hi, Lauren. It's Matt. Yeah. We're right around 90% of the historical on-premise. That's pretty darn consistent today as it was sort of in April, as noted. You know, that's been pretty stable, too. I mean, obviously, in July, when we did see a little bit of a dip up, you know, correlated to both on and off in total. We continue to track for the year to about 90% of the historical levels, which you know, I think gives us an opportunity. I think as we've noted before, when we did our research in the middle of the year, there was a good percentage. I think it was 25%-30% of our guests who said that they had not yet become comfortable enough to dine in a restaurant. I mean, I would attribute most of that to that 10% delta from pre-pandemic offset by some new guests that we picked up, right? We know we've picked up a good number of cohorts, but that's been a pretty steady number in addition to the off-premise being steady as well. Great. Thanks. Just a follow-up on the margins. I understand the focus on returning to Cheesecake Factory four walls. If we include North Italia and FRC, what does that translate to, I guess, on a consolidated basis? Or how do we think about that, whether it's 2023 and just going forward? Thank you. I think on a weighted average basis on the P&L, like if you took our entire P&L, if we could get that optimal four-wall, and granted, that includes all the brands in the bakery, but just think about it holistically, you know, above G&A, depreciation, pre-opening. You know, if we could get that number to be the same as what the Cheesecake Factory target is, I think we'd all be happy. You know, that may not happen, all at once, but that would be an aggregate goal. Thank you very much. We have reached the allotted time for questions. This concludes our conference for today. You may now disconnect.