Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to The Cheesecake Factory third quarter 2023 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, followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. Thank youAs we have Marcus, Vice President of Finance and Investor Relations, you may begin your conference. Good afternoon, and welcome to our third quarter fiscal 2023 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 facts 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 in 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, when discussing comparable sales, we will be referring to comparable sales on an operating week basis unless specifically stated otherwise. We will also be presenting results on an adjusted basis, which exclude impairment of assets, 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, As we have. Third quarter consolidated revenues increased 5.9% over the prior year to $830 million, led by comparable sales growth at the Cheesecake Factory restaurants of 2.4% versus the prior year and 12.6% versus 2019, exceeding the Knapp-Track and Black Box casual dining indices for both time periods. Our strategy will always revolve around what we do best, delivering exceptional service and hospitality and delicious, memorable experiences for our valued guests. We believe our position as an experiential dining leader will continue to differentiate us in the industry and drive profitable sales growth over the long term. And with improved restaurant staffing levels, our best-in-class operators have been able to increase their focus on consistently executing our strategy. We believe this contributed to third quarter comparable sales at the Cheesecake Factory, increasing sequentially despite the softening sales environment, and importantly, traffic at the Cheesecake Factory meaningfully outperformed the broader casual dining industry. On the development front, we opened two Cheesecake Factory restaurants to strong demand during the third quarter and subsequent to quarter end, two FRC locations. We continue to make progress against our pipeline, and construction is ongoing on all of our restaurants we had previously planned to open this year. However, consistent with the trend seen throughout the industry, we continue to experience challenges beyond our control, particularly with permitting delays, pushing some of our opening dates to late December. In order to adhere to our proven development process and ensure new restaurants open well positioned to succeed, we have strategically decided to move some of our openings into the first quarter of next year. As such, we now expect to open as many as 16 new restaurants in 2023 and four to six new restaurants in the first quarter of 2024. Thus, between 16 openings for this year and four-six for next quarter, we are effectively at the 20-22 new restaurant openings we had previously anticipated earlier this year. The new restaurant openings for 2023 include as many as five Cheesecake Factories, four North Italia, and seven FRC restaurants, including one Flower Child location. Last week, our fifth location in mainland China opened. Including this location, we now expect two Cheesecake Factory restaurants to open internationally under licensing agreements in 2023. Despite the ongoing permitting challenges, we continue to accelerate our development activity and build our pipeline. At this time, our expectations for 2024 are to take another measurable step towards achieving our objective of 7% annual unit growth. I'm also excited to share that last week we announced plans to develop our third bakery production facility in Charlestown, Indiana. Upon completion, the facility will produce The Cheesecake Factory's cheesecakes and signature bakery products for our restaurants and other retailers. In addition to providing anticipated distribution efficiencies. Our vertically integrated bakery is a distinct competitive advantage, with our desserts driving the strong affinity for The Cheesecake Factory brand, as illustrated by our industry-leading dessert sales. Looking ahead, we will continue to leverage our competitive strengths, including the scale of our business, our differentiated brands, best-in-class operators, and balance sheet to drive shareholder value and market share gains. With that, I will now turn the call over to David Gordon to provide some additional details on our operations and marketing. Thank you, David. Since the start of the year, our operating teams' training and development have been firmly centered on the fundamentals of the restaurant industry: great food, great service, and great ambiance, as well as on reinforcing the operational standards The Cheesecake Factory has been built on. We believe these to be foundational for running successful restaurants and delivering consistent performance. This year's General Managers Conference content was designed with these same principles and focus in mind. The theme was Cultivating Excellence, and we held several informative programs, panels, speaker-led trainings, and leadership seminars focused on hospitality, leadership, executing, and performance management, with the intent that our general managers take these insights and learnings back to their restaurants to improve operational execution, celebrate wins, and further develop their people. As David alluded to earlier, we believe our increased focus on consistent execution and operational excellence is yielding positive results across multiple key areas. Let me just share a couple. First, we have seen measurable improvements in guest satisfaction. Our internally measured Net Promoter Score metrics across both the dine-in and off-premise are consistently exceeding pre-pandemic levels. In addition, our volume of reviews on third-party sites has not only increased since the start of the year, but the aggregate rating of these reviews has meaningfully improved and continued to trend incrementally more positive. Second, our enviable staffing position continues to improve. Our industry-leading retention rates are now running above pre-pandemic levels. Furthermore, our already high staff engagement scores improved significantly from a year ago. These improvements have supported the continued moderation in wage inflation, which is now trending below pre-pandemic levels. As David mentioned earlier, we believe these operational improvements contributed to both comparable sales and traffic, outperforming the industry in the latest quarter. Now, turning to sales trends. The Cheesecake Factory off-premise sales for the third quarter totaled 21% of sales, just below second quarter levels, consistent with historical seasonality of lower off-premise mix during the summer months, potentially indicating a return to more normal seasonal patterns. On-premise incident rates remained above 2019 levels, with no material change to daypart mix. However, incident rates continued to normalize on a year-over-year basis as we lapped the heightened spending from the prior year. North Italia third quarter comparable sales increased a solid 8% from the prior year and 28% versus 2019. four-wall margin for the adjusted mature North Italia locations was 12.5%, down from 15.4% in the previous quarter. North Italia margins were impacted by seasonally lower sales and higher utility costs, which were exacerbated by record high temperatures in the Southwest, where North Italia has a higher level of concentration. We just rolled out a 3.7% menu price increase in October, in part to support our margin objectives for this concept. We remain excited about the potential growth trajectory of various concepts within FRC's portfolio, including Culinary Dropout. We just opened our newest Culinary Dropout in Charlotte, North Carolina, to strong demand, with average sales of $175,000 over the first couple of weeks. We now have nine locations open, averaging over $200,000 per week so far this year. Culinary Dropout's strong cash-on-cash returns positions this concept as one of the more promising experiential concepts within FRC's portfolio, given the attractive unit economics. We are testing the geographic portability and currently have plans to open another location this year in Atlanta, as well as another two -three locations a year over the next two years across the Southeast, Texas, and Southern California. Before I turn the call over to Matt, let me provide a brief update on our rewards program. As a reminder, our overarching objective is to leverage data analytics and insights to engage more effectively with our guests and drive incremental sales while maintaining our restaurant level margins. While we are just now entering our fifth month of the program following the national launch of Cheesecake Rewards on June first, we continue to be encouraged by the level of member activity and engagement we are seeing. As we have previously stated, we're taking a very deliberate approach as we expand the program and therefore do not anticipate seeing a measurable impact to sales for the first year or so... That being said, early demand continues to exceed our internal expectations, and member satisfaction scores are over-indexing, reinforcing our belief that we are on the right path. During the fourth quarter, we will be testing additional acquisition tactics and activation campaigns to better understand the key elements of our various strategies that resonate well with rewards members and are the most effective in increasing membership, enrollment, and engagement, and driving frequency. With that, let me turn the call over to Matt for our financial review. Thank you, David. Let me first provide a high-level recap of our third quarter results versus our expectations I outlined last quarter. Total revenues of $830.2 million increased 5.9% over last year, despite finishing just under the low end of the range. Adjusted net income margin of 2.3% was also just short of the guidance we provided, predominantly driven by the lower sales. G&A and depreciation combined as a percent of sales were slightly better than expectations, and we returned $27.7 million to our shareholders in the form of dividends and stock repurchases. Over the past twelve months, our financial results have substantially stabilized, forming a foundation we believe we can build from. Over that period, our total revenues were $3.46 billion, with Adjusted Net Income Margin of 3.5% and adjusted EPS of $2.44. Now turning to some more specific details around the quarter. Third quarter sales at The Cheesecake Factory restaurants were $628.1 million. Comparable Sales increased 2.4% versus the prior year, and 12.6% versus 2019. Sales for North Italia were $62.4 million, a 15% increase over prior year, supported by Comparable Sales growth of 8% versus prior year. Comparable Sales versus 2019 increased 28%. Other FRC sales totaled $58.6 million, up 12% from the prior year, and sales per operating week were $121,900. Flower Child sales totaled $32.2 million, up 11% from the prior year, and sales per operating week were $80,000. External bakery sales were $17.4 million during the third quarter of fiscal 2023. Now, moving to year-over-year expense variance commentary. With the cumulative menu pricing we have implemented over the past 12 months to help offset inflation, we continue to realize measurable year-over-year improvement across several key line items in the P&L. Specifically, cost of sales decreased 170 basis points, primarily driven by higher menu pricing than commodity inflation. Labor decreased 110 basis points, predominantly driven by pricing leverage, improved staffing levels, and slightly lower medical insurance expenses. Other operating expenses decreased 10 basis points, mostly driven by pricing leverage, lapping some elevated utilities and to-go costs, and partially offset by marketing costs, including the rewards program launch. G&A increased 10 basis points, and depreciation decreased 10 basis points as a percent of sales. Pre-opening costs were $6.7 million in the quarter, compared to $4.3 million in the prior year period. We opened two Cheesecake Factory restaurants during the third quarter versus three restaurants in the third quarter of 2022. Higher pre-opening costs for the quarter were mostly driven by delays in opening dates and the mix of concepts. In the third quarter, we recorded a net expense of $1.5 million, primarily related to FRC acquisition-related expenses. Third quarter GAAP diluted net income per share was $0.37. Adjusted diluted net income per share was $0.39. Now turning to our balance sheet and capital allocation. The company ended the quarter with total available liquidity of approximately $300.5 million, including a cash balance of about $64 million and approximately $236.5 million available on a revolving credit facility. Total debt outstanding was unchanged at $475 million in principal. CapEx totaled approximately $37 million during the quarter for new unit development and maintenance. During the quarter, we completed approximately $14.6 million in share repurchases and returned just over $13.1 million to shareholders via our dividend. While we will not be providing specific comparable sales and earnings guidance, we will provide our updated thoughts on our underlying assumptions for fourth quarter 2023 and full year 2024 revenue and net income margin. For fourth quarter, based on our quarter to date performance, most recent trends, and assuming no material operating or consumer disruptions, we anticipate total revenues to be between $870 million and $890 million. This essentially assumes a continuation of the trends since the end of September, which notably reflect a meaningful improvement versus 2019 sales levels as compared to our third quarter results. Next, at this time, we expect effective commodity inflation of low single digits for fourth quarter as our broad market basket continues to stabilize. We are modeling net total labor inflation of about mid single digits when factoring in the latest trends in wage rates, which, similar to our commodities, continue to normalize, as well as channel mix and other components of labor. Based on these assumptions, we anticipate net income margin to be about 4.25% at the midpoint of the sales range. This reflects higher pre-opening expense to support our planned restaurant openings, which we expect to be approximately $10 million in the quarter. With regard to development, as David Overton highlighted earlier, we plan to open as many as 16 new restaurants this year across our portfolio of concepts, with as many as nine openings in the fourth quater. We now anticipate approximately $150 million-$160 million in CapEx to support this year's and some of next year's unit development, as well as required maintenance on our restaurants. Note, the initial cash outlay for the third bakery production facility will be negligible in 2023. Looking ahead to fiscal 2024, 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 2024 to be between approximately $3.6 billion-$3.7 billion. Total inflation across our commodity baskets and total labor is currently estimated to be in the low-to-mid single-digit range. Based on these assumptions, we anticipate net income margin to be approximately 4%-4.5%. With regard to development, as David stated earlier, our expectations for 2024 are to take another measurable step towards our objective of 7% annual unit growth. Given the dynamic environment we continue to face, we are planning to provide additional details on our next earnings call in February, and we would anticipate approximately $175 million-$200 million in CapEx, including required maintenance on our restaurants. This assumes an evenly distributed mix of restaurant openings across the Cheesecake Factory, North Italia, Flower Child, and FRC concepts. Additionally, the range includes our preliminary estimate for the initial phase of development for the third bakery production facility. As we are still in the early stages of this development, I will discuss our initial thoughts and we will provide additional detail in the coming quarters as the project plans materialize. At this time, we do not expect to incur significant outlays for this project in 2023 or 2024, as we anticipate most of the CapEx to come in 2025 and 2026, in preparation of opening the facility in early 2027. To reiterate David's earlier remarks, we are pleased to be moving forward with this differentiated capital investment, which we believe will support the future growth of the bakery and enhance our long-term profitability. In closing, we have made significant financial and operational progress over the past four quarters, coming out of not only the pandemic, but unprecedented supply chain and labor challenges and the highest level of inflation in 50 years. Our efforts have resulted in a solid position from which we can continue our trajectory of sales growth and margin expansion moving forward. Specifically, the return of predictability to the core operating model and stabilizing guest traffic, even inclusive of the macro headwinds and some degree of consumers returning to 2019 behaviors off the lofty spending patterns of the past couple of years, gives us confidence in our ability to make meaningful additional steps in 2024 towards our longer term goals in the key areas of value creation, growing comparable restaurant sales, expanding restaurant operating margins and accelerating accretive unit growth. And with that said, we'll take your questions. As a reminder, if you would like to ask a question, press star, then the number 1 on your telephone keypad. We ask today that you limit yourself to one question and one follow-up. Thank you. Your first question comes from the line of Andy Barish with Jefferies. Your line is open. Hey, guys. Good afternoon. Just wanted to clarify some of the commentary on the same-store sales improving sequentially. Was that referring to during the quarter, the monthly progress, or, you know, as you looked at the full three Q versus two Q? I was just a little confused there. And then continuing, you know, kind of into October, as you mentioned, with the quarter-to-date assumptions driving your four Q estimate. Sure, Andy, this is Matt. To be hopefully clear, the third quarter followed roughly the industry trends, albeit better in every period than the indices that most people track, both in terms of comp and I think meaningfully in terms of traffic. The traffic was pretty darn stable, but it was sequentially down slightly, right, from July to August to September. And then what we're referring to is really from sort of the end of September through the current time period. Those trends have seen a measurable improvement relatively. So I think that's also relatively consistent with what you may have heard in the industry as well, but again, I think outpacing. Got you. Helpful. And then, just one other on, on, wage inflation. I think, again, just some clarification on noting it's, it's moving below pre, pre-pandemic levels, and then your, you know, your, your guide, I think, incorporates kinda low to mid-single digits. How, how does, you know, the move to $20 in California next spring, you know, kind of factor into that thinking? And, and, is, is, is that right that, you know, that, that, that number is below kind of the 2018, 2019 levels, I guess? Yeah, Andy, this is Matt again. That is correct. Like, the actual inflation in average wages is running below sort of that whole time period, you know, three years-four years leading up to the pandemic. Obviously, a lot of that was also driven by government-mandated pressures, as you allude to the California coming legislation. And, you know, even inclusive of that, I would say the expectations for wages remains relatively stable and probably at or below pandemic. You know, and I think we'll evaluate the market dynamics that play out. Obviously, none of our restaurants will be included in that wage mandate, but obviously, there could be some ripple effect. You know, today, in the urban areas, we tend to see that many of the QSR locations are already paying in that range, and people are, you know, making choices based on that. Certainly more in the deep suburbs, there's probably going to be some increases, but we have fewer restaurants there. So I think we'll look at it holistically and then see what makes sense. And, you know, if we have to address that as part of our overall inflation basket, you know, we'll certainly have to consider that with respect to pricing decisions. Great. Thank you very much. Your next question comes from the line of Sharon Zackfia with William Blair. Your line is open. Hi. Hi, good afternoon. I guess two questions. Just, quickly, if you could give us kind of price, mix, you know, traffic for the quarter, that would be helpful. And then secondarily, on development, I mean, can you give us a... It sounds like you want to defer giving us a number of what's kind of embedded in that initial look at 2024, and I know it's a wide range. But can you talk about kind of what you're doing internally to kind of, I guess, better buffer the, the outlook on development that, that is given versus what you can achieve in kind of this, difficult-to-execute environment where, you know, permitting and so many other things seem to be, much more challenging than 2019? Sure, sure. Good, good questions, both of them. This is Matt. I'll take the first, and then David Gordon can touch on the development side. So specifically, pricing was at 9.5, mix was a -6.1, and then traffic was a -1.0. So the traffic piece represented a pretty good improvement over last quarter, and I think about 200 basis points better than what we saw in the industry, and pretty stable. As I noted in my response to Andy, it was very, very stable throughout the quarter. So, you know, that gives us a good baseline. And David Gordon will touch base on the development. Hi, Sharon, this is David. I think as we talked about previously, a lot of the earlier COVID issues on development were more around supply chain and getting heavy, large pieces of equipment into the restaurants, et cetera. That really has abated, and as you said, most of the issues today are more around permitting and dealing with local municipalities, and their pace is not what it once was. A lot of new people and new positions. So what we've tried to do is increase our funnel and have more sites in the pipeline to be able to maneuver around that and hit the targets that we are planning to set for next year. I think we feel good about what we said to continue towards that path to the 7% unit growth, and we have a good funnel for next year. Hopefully, the municipalities will get a little bit better, and we'll see permitting start to increase at a little bit faster pace, because at this point, that's really the only thing that's slowing us down. I think this was a good business decision for us to decide to push some of these to first quarter, to ensure that we hit the timeline, but also that operationally, they're able to open at a good cadence, don't put too much negative pressure on the business, and that we're really opening at a cadence that's best for the operators. Thank you. Your next question comes from the line of Joshua Long with Stephens. Your line is open. Great. Thank you for taking the question. Matt, curious, as a follow-up on that, pricing comment, with 9.5% price in the quarter, and then what appears to be some stabilization on the food cost and labor cost side of the equation. Curious if you could talk about your forward pricing plans and kinda how you think about maybe the comp construct from a pricing perspective as we go forward into 4Q and in 1Q. Sure, Josh. I think it is relevant, and certainly as we see inflation stabilizing, our objective is to return to a more normal sort of level and cadence of the pricing that we take, which is typically two times a year, or 1.5%-2%, each time. So notably in the third quarter, for Cheesecake Factory, we took 2%, but that was lapping over, as in, I believe, 4.25%. And so, on a run rate basis, you know, we dropped off 2.25 points. And then keep in mind, for the fourth quarter, we're going to lap the incremental catch-up that we did at the beginning of December. So the weighted average for the fourth quarter, Jen, what is- 7%-7.5% Okay, 7%-7.5%. And then going into next year, it's gonna be more in the range of, like, 4%, right? And so that. And then we'll see how all the pieces come together, but it feels like that's gonna be in a more normal range at that point. And again, our objective is really only to take enough pricing to offset inflation. Got it. That's helpful. I appreciate that. And as a follow-up, can appreciate the volatility in the underlying industry trends. It seems like that's normalized to your point and from what we're hearing from peers, which is encouraging. But curious, as you think about just the operational muscles and, you know, execution capabilities you and your team have, can you talk a little bit more about just how the volatility plays out through the quarter in terms of, or played out through the quarter in terms of restaurant level margins? I mean, that's been an overarching goal of yours as you execute against it. But just curious, what can you adjust or make, you know, make a point at improving upon despite the volatile operating environment that maybe just gets captured in this consolidated number that we see? I mean, you mentioned traffic was- Yeah ... relatively steady. Is that a piece that, that helps out at all? Just looking for some additional color there. Yeah, that's an interesting question, and I think it's actually really helpful to understand kind of the consistency of the business. I mean, I think I may have alluded to this before, but week to week, the P&L, the pro forma from the Cheesecake Factory and all of our concepts looks like it's supposed to, right? All of the elements of that are much more predictable. You know, whether the revenue lines are up or down, the level of flow-through from the concept is at or better than we would have expected it to be. As noted, the wage inflation continues to run slightly better than planned. The commodities that we've been able to secure with our supply chain continue to run slightly better than planned. We monitor all of that week to week, and that volatility is significantly decreased, right? All of those trends point to the ability to manage the business better. We are seeing overtime and training return back to pre-pandemic levels or slightly better, so those are underpinnings of financial progress, and improvements. I think sort of notably, if you think about the third quarter and the revenue piece, it was probably 1%-2% of mix that, you know, was the gap. We had anticipated a return to normalization. It was slightly more than anticipated, but not material. Really, the difference in the profitability is just a flow-through on that. We've adjusted our fourth quarter outlook for that appropriately, and yet, if you do the math, we're probably right in line with where we thought we would be from a profitability standpoint. So I think that really speaks to the levers that we're pulling and the ability to execute at these sales levels and still get to the profit margin targets that we're expecting. fourth quarter, we're expecting that our profit margins relative to year-over-year are gonna expand. We would expect first quarter to expand on top of that. So the trajectory reflects that underlying consistency and operational execution quarter-over-quarter. Helpful. Thank you so much. Your next question comes from the line of Jon Tower with Citi. Your line is open. Great. Thanks for taking the question and maybe just following up on the mixed conversation. Be curious if you can elaborate a little bit more on what's going on there. I believe it might have to do a little bit with the delivery business relative to the on-premise business shifting around a little bit, but you know, if you could elaborate, then I've got a follow-up as well. Sure, Jon, it's Matt. About 2%, I mean, give or take, is associated with the to-go business, which, you know, continues to be stable, but down slightly on a mixed percentage compared to last year. And the other thing that we're seeing, I think is very consistent with the others in the industry, you know, compared to last year, just slightly less alcohol attachment, maybe a little bit less appetizer attachment, but compared to 2019, it's still at or above every one of the categories we look at. And I think, you know, also from a day part perspective and a mix of check, it's very consistent, right? So those attributes are sort of the guest performance, looks and feels a lot like 2019 to us. Got it. Okay. And then just, going back to the discussion earlier regarding loyalty and the plans for, you know, I believe there's some plans you have to increase customer acquisition strategies in the fourth quarter here. Just curious if you could delve a little bit deeper into that. You know, are you anticipating perhaps getting a little bit more promotional or, or, you know, giving away more slices of cheesecake to incent people to jump into the program? I'm just curious to hear how you're thinking about going about getting folks into the program. Sure, Jon. Hi, this is David, this is David Gordon. Well, the good news is, when it comes to acquisition, we really have seen a high level of activity, and guests are very encouraged to join the program to begin with. Just as a reminder, it's made up of published offers, which everybody gets when they, when they join, and that would be access to reservations, a slice, as you mentioned, a complimentary slice on their birthday, and originally there was a complimentary slice upon signing up. We ended that part of the promotion at Labor Day. And then there's unpublished offers, and that's a little bit more about what you're talking about, was we look at the fourth quarter and doing some segmentation and trying to understand if we can drive guest behaviors to certain day parts, certain days of the week, with potential promotion. And that might be a slice of cheesecake on a potential order basket of a certain size, or it could be a small discount for a lunch offering. Those are all the things we're gonna test in fourth quarter and measure their effectiveness to ensure that as we work towards next year, that we're spending our marketing dollars in a very targeted way and getting the best ROI in each one of those promotions. I know it's early in the program, but can you comment on any sort of changes in frequency for the customers that have jumped into the program so far? We haven't talked about any of those numbers yet. I think that, you know, we feel good on continuing to expand the program. I think that says something. We're also very happy. We're able to measure NPS sentiment for rewards members versus non-reward members, and we see between a 10%-20% higher score in overall NPS on rewards members. So that would lead to promising results of guests wanting to come back, feeling good about the hospitality and the service they're getting as a rewards member to hopefully drive incrementality there as well. Got it. Thanks for taking the questions. Your next question comes from the line of Lauren Silberman with Deutsche Bank. Your line is open. Thank you very much. I wanted to follow up on the commentary regarding the improvement in trend exiting September and into October relative to 2019. What do you think is driving the improvement? Lauren, this is, this is Matt. You know, I know, I think some of it has to do with seasonality. You know, we touched on that in the script. Others have commented on that. You know, I do think that the, sort of the mix of on-premise, off-premises shifted slightly, right? So you see seasonally, the summer is a little bit lower in off-prem. That comes back in the fall, so I think you get a little bit of a pickup there. I think school calendars have shifted, right? I mean, we actually saw this trend starting to develop pre-pandemic, you know. I mean, this sounds cliché, but everybody, you know, my age remembers going back to school the day after Labor Day, and today, I think half the country goes back August first. So I really think a lot of what you're seeing now is with schools back to normal, whatever their schedules are, with the off-premise, on-premise, all of those factors. And you know, frankly, I think too, you know, we're executing at a high level. I mean, I think some of it is just our performance. As David Gordon touched on, you know, we have very strong NPS. Our operators are fully staffed, so I think we're able to turn tables. I think we're able to do the things that we need to do. And, you know, if it's incrementally, a couple percent makes a difference, but I think those are the two things that I would call out. Thank you. That's helpful. Then just shifting to margins, I want to revisit how you're thinking about recapturing restaurant margins. As we think to 2024, what are you embedding for restaurant margin relative to pre-COVID and any puts and takes we should consider? Yeah, as we've said, our objective is to get Cheesecake Factory back to 2019 to begin with. We obviously have had some headwinds in that journey outside of our four walls, and I think we've made very good, pragmatic, long-term decisions to recapture it over time rather than all at once. I feel like the journey that we're on will get us there, right? And, you know, our objective is to continue to expand the four-wall margins. As I said, I think fourth quarter-over-Q4 is gonna be better. I think first quarter-over-Q1 is better, and so continuing that progression will get us there. You know, it's hard to put a specific time frame on it. Obviously, we gave a range of net income, so it implies there's potentially a range of f our-wall margin performance, but that remains, I think, a very achievable near-term goal for Cheesecake Factory. ... Thank you very much. Your next question comes from the line of Brian Mullan with Piper Sandler. Your line is open. Hey, thank you. Just another one on restaurant margins, but just at North Italia, you know, on the last call, you had talked about plans to drive, seeing an opportunity to drive improvements there. Can you just remind us what some of those initiatives are and where you are in that process? You know, I know in the prepared remarks, I think you just referenced taking price, but anything on the operation side to consider as well? Sure, Brian, this is Matt. I think a couple of things that we're really focused on, I mean, you did note price. For us, that is part of that plan. And, you know, we look at being about one cycle behind Cheesecake, right? So this would probably be the last notable price increase. And certainly, we think that's actually going to close the gap in totality. But aside from that, we remain focused on a couple of key areas operationally. One of those being food efficiencies, so that's an area that Cheesecake Factory best practices and systems have been deployed over time to North Italia, and we see a really good opportunity to lower food costs over time by bringing those standards up to where the Cheesecake Factory is and implementing the systems that we have there. The second one that we're focused on is really bringing new restaurants up to speed over time, a little bit more faster, right? So the mature margin is one thing, but if you can bring the early stages of the restaurants up faster, it sets up for success in the longer term as well. And the third one is really doing a lot of side-by-side restaurant comparisons. You know, now that the portfolio or the fleet, if you will, is in the low 30s for North, we have a much better idea of looking at sales volumes and geographies and understanding what the appropriate operating metrics can be and comparing those, and our field leadership team is really laser-focused on the ability to do that. And I think actually a fourth one that I'd mention, it's not direct, but it's an indirect margin driver, which is sales. If you look at the North comp store sales, they remain exceptionally strong. We're growing traffic, we're growing our off-premise business, so there's really no better way to improve margins than to grow sales. And, you know, that may go without saying, but I just wanted to add it on. Brian, this is David. I would just add two things to Matt's terrific answer there. One is that we continue to leverage our scalable supply chain and look for opportunities to purchase products that perhaps are in our broader basket that we can also use at North Italia, while still keeping it unique and special, and we've had some good gains there. And just back to the sales point, I think the team's done a terrific job in understanding and maximizing reservations for sales. And part of that has been the expertise that Cheesecake has brought over the past four years to North, and our ability to ensure that we're not just turning tables fast, but we're maximizing the tables that are in the restaurants as much as we can to get the most productivity out of them. I guess, Brian, the answer is we're doing a lot, and we have high expectations for the concept going forward. Thank you. Thank you both. And maybe a good segue, just Flower Child. Is the plan still to bring this brand under the Cheesecake Factory umbrella by the end of the year? And if yes, can you talk about some of the benefits of doing that? And do you expect that to, you know, impact the growth trajectory and maybe over what time period would we start to see that accelerate? Sure, Brian. We are on track with Flower Child, bringing it fully under our umbrella for this year. We're looking forward to accelerating the pace of openings next year. We would anticipate over time that it too would be a 20% grower year-over-year. The portability of the concept continues to be very promising. It's doing well in new markets, very strong infrastructure in the teams there that very focused on developing management to enable that growth. And I think we anticipate some of the same scale advantages that we have with the other concepts with Flower Child, whether that's supply chain, some of our HR infrastructure, et cetera. But thus far, we've seen good availability of sites. Landlords are excited about the concept. We continue to feel it's differentiated in its space, and certainly the guest demand and the traffic has been fantastic. Brian, just one piece on that. This is Matt. In addition to a key initiative for us for this year, although we don't carve out the segment yet for Flower Child, you know, we are on track to get to the margin target that we need to be at to make it a growth vehicle, which is, you know, in that mid-teens level. So we feel really good overall about the trajectory of Flower Child. Thank you. Your next question comes from the line of Jeff Farmer with Gordon Haskett. Your line is open. Thank you. You guys did touch on it, but when it comes to menu price increases in 2024 and what you guys are contemplating, how are you looking at the trade-off between either protecting or, or growing margin and any potential traffic headwinds that could come with that pricing? Jeff, it's Matt. It's always the art and science, right? I mean, I think we're looking at what the industry is doing. We tend to want to be in the middle of the pack with pricing. That's been our historical perspective. Typically, we only price to protect against inflation. If you take the average in the industry, their inflation is similar to ours, so that's going to kind of mean the same answer, right? So we're not going to be way off path either way. I think we've seen better than industry traffic. It feels like a relatively normal year. We have great operational execution, right? NPS is typically a leading indicator in our industry of where we're going. And I think that's why we launched rewards, right? As a means to drive incremental visitation. So it's always gonna be a balancing act. Certainly, it feels like next year could be more normal with respect to pricing, though, as we commented before. All right. Thank you for that. And just a quick bookkeeping. I think you qualitatively called it out or mentioned it, but could you just provide the commodity and wage inflation levels you saw in third quarter? Hey, Jim, what was the specific commodity? I think, I think wages were around 4%-5%. four -five. And then we saw 2%-3% on commodities. All right. Thank you. Your next question comes from the line of Jim Sanderson with North Coast Research. Your line is open. Hey, thanks for the question. Wanted to talk about unit growth and, if you could provide some more feedback on how to look at store closures to net against the new unit openings for the, 7% growth rate you mentioned for 2024, and then the, 16 new units, for 2023. Thank you. Jim, this is Matt. Typically, you know, we evaluate restaurants on an annual basis for where their cash flow is, the life of the lease, you know, all of the normal attributes. And I think, you know, we've probably averaged about one closure a year. So I just don't think that's a significant driver of where we think, you know, aggregate unit growth will be. And if we are closing a location, it's gonna be net, you know, accretive to us in any event. And so I think I would just kind of say 7% is going to be gross and net, roughly the same, you know, give or take a unit a year kind of thing. All right, thank you. Just a quick follow-up. Could you provide a little bit more detail on the same-store sales trend for North Italia, breaking it out by traffic and mix, and pricing going into fourth quarter? We haven't done the mix versus traffic versus anything, but we do provide the price hit, Jim. We're sitting on about 8%. Okay, so about 8% and about 8% comp. Excellent. Thank you very much. Your next question comes from the line of Brian Vaccaro with Raymond James. Your line is open. Hi, thanks. So just two quick ones for me. Sorry if I missed it, but what was the off-premise sales mix at Cheesecake Factory in the quarter? Brian, this is David Gordon. It was 21%, same as it was last quarter. 21%. Okay, great. Thank you, David. And then, Matt, can you just on the menu pricing comment at Cheesecake Factory, did I hear correctly, you plan to take around 2% in February, so you'd be settling into the 4% range, basically moving into the early part of 2024? Just wanted to clarify. Yeah, Brian, this is Matt. We haven't finalized that number, but we do feel like 1.5 regular basis- two on a regular basis is kind of where it's heading back to. And, you know, the only thing I would say is it depends on geography, right? As we noted, I just to carve out, I think some others have done this. You know, we're gonna look at California and what the FAST Act impact is, right? So it may not be the same everywhere, and it may not add up exactly that way, but we feel like, you know, those are some guardrails for use today. All right, great. I'll pass it along. Thank you. Your next question comes from the line of David Tarantino with Baird. Your line is open. Hi. Hi, good afternoon. Matt, I think your guidance for next year, as you gave it, assumes margin expansion, and maybe I missed this, but could you maybe explain how you're gonna deliver that margin expansion? And you know, I think your comments suggested pricing and inflation should be roughly matched. So I guess, what is the key driver of the margin expansion in that scenario? Yeah, so a couple of things. One, I think that it does, you know, imply that we think we'll be in, in positive territory for comps, and we think there could be some leverage opportunity. I think the... in the first quarter specific scenario, certainly we're lapping really heightened commodity inflation there too as well. So I think that there's just some natural progression. You know, right now, on a sequential basis, just from a pure operational standpoint, we're driving some incremental profitability in the range of 25 basis points to 50 basis points. So, so there's some of that's the four wall. You know, we, we target getting a little bit of leverage off of, of G&A as well. So, I think within that range, David, as particularly at the high end of the sales range, you know, you're gonna get a little bit more from the four-wall piece of it than at the low end, which is relatively close to where we are today. So, it's a combination of those factors. Great. And what sort of traffic assumption are you making for next year when you set either the revenue or the margin targets? Well, I think we're kind of looking at a combination of traffic and mix, right? Because they sort of, they've been going a little bit hand in hand, and I, I think it's important to, to accommodate for both of that. You know, looking at some of the industry outlooks that we've, that we've gotten from, from some of our advisors as well as some of the other guidance, you know, I think it feels prudent today to expect that those two combined are, are negative, probably in the low single-digit range. Got it. Thank you very much. Your next question comes from the line of Brian Bittner with Oppenheimer. Your line is open. ... Thanks. I wanted to ask about net income margin guidance, specifically for the fourth quarter. I think you said net income margin's in a 4.25% range. And I'm just wondering the path to get there, 'cause I think if you assume a normalized tax rate, it would suggest, like, 200 basis points of operating margin improvement, and that would be against a comp that I think is implied to be, like, 2%-2% at the midpoint of your revenue range. So is that the right way you're thinking about 4Q? Is there- or is there a big tax benefit coming in 4Q that we should be modeling? No, I, I think this is where we, Brian, this is Matt. It, it, this is where the sequential modeling with the year-over-year pricing, I think, always gets a little bit hung up in the modeling, right? Because think about the components we're talking about. As we have noted, the pricing for the quarter is going to be 7%-7.5%, and yet, the inflation for wages are gonna be low to mid-single digits, and the inflation for commodities are low single digits, right? So effective pricing over effective inflation in our key categories creates a pretty significant margin pickup for four-wall. Okay. Remember that because we were really behind on pricing last year, so we ended up taking that 3% roughly on December first. So we're, we're lapping that benefit that we didn't get in the fourth quarter of last year. I, I think that's the big difference. When we think about next year, the 4%-4.5% net income guidance, as David Tarantino said, implies margin expansion, you know. But But can you shed some light on what the tax rate assumption is in that range, so we can think about how to think about- Yeah, yeah - Core operating margin expansion? It'd be low double digits. 10-12 would be what we would expect. Okay. That's what's in our model right now. Perfect. Thanks. You're welcome. Your next question comes from the line of Katherine Griffin with Bank of America. Your line is open. Hi, thank you. I wanted to just follow up on some of the commentary about kind of normalizing spending patterns, normalizing seasonality. Are you seeing anything discernible among higher income cohorts? Just since I think we've heard from a couple players that, you know, you're seeing higher income and maybe a little bit more sensitive on alcohol mix and expressing check management that way. So just curious, sort of how you can contextualize anything on income cohorts, you know, as it relates to your comments on normalizing patterns. Hi, Katherine, this is Matt, and welcome to the call. Thank you. We, you know, we don't track, like, on a week to week or month to month in terms of the research that we're doing. We, you know, we do see on an annualized basis that our relative cohort distribution and spending patterns are pretty stable. I mean, we have such a broad demographic appeal that I don't think we have the sort of same approach or thought pattern as I think maybe some other segments that are more narrow in our industry. So, you know, we don't look at it quite the same way as the others do in that regard. Okay, thank you. And then I wanted to ask a little bit just about some of the other concepts. Given your comments on Culinary Dropout, I guess I'm curious if you can add a little bit more color on, you know, the components of the unit economics that are attractive enough to, you know, give you confidence to move forward with growing that brand, and if there's anything unique about, you know, customer profile, just given your comments on sort of where you see geographic portability. Sure, Katherine. This is Matt. I'll give you a little bit on the numbers, and then David Gordon can touch on sort of the attributes of the concept. You know, we think it can deliver roughly 2 to 1 to sales to CapEx. I mean, that's been the historical performance and continues to be close to what we're achieving today. The margin profile has been in the mid to upper teens today coming out of the pandemic. You know, putting those together, you're definitely gonna be above 30%, and hopefully much better than that on a sort of four-wall margin returns. We feel good about the overall economics, and it's been pretty consistent also across the portfolio so far. So as he noted, we'll test that portability. But very strong sales and very solid margins, right? Which is exactly what you look for. Yeah, I don't know that much to add. I think the sales are really make it the most promising, and as we have moved into new geographies, we've seen those same consistent high levels of sales. And again, it's a made from scratch concept. It has a bit of a higher bar mix than we would traditionally have at Cheesecake Factory. Maybe skews to a little bit younger demographic, not as broad as Cheesecake Factory, but we think it has great appeal and is a terrific concept. And thus far, we'll continue to monitor closely as we move into some of those new markets next year. Great. Thank you so much. Your last question today comes from the line of Brian Harbour with Morgan Stanley. Your line is open. Thanks, good afternoon. Just in your comments about inflation next year, do you think, do you think that labor inflation is sort of, like, higher end of that, maybe commodities a bit lower? How would you handicap, you know, the prospects for combined inflation to be low single digit if it were in fact to be more favorable within your range? Brian, this is Matt. I think there's still some work to be done on the commodity front. I mean, as you know, beef remains a little bit challenging, some ups and downs recently, but, you know, definitely a pressured headwind going into next year. So I think we wanna see where we can get with that before being too specific. Certainly, the labor environment is promising today, and I think our brand reputation helps quite a bit with that in our ability to attract and retain employees. They're getting their hours and their tips and all of those kinds of things. So, but, you know, I think we put them together on purpose because there are moving parts, and, you know, there's still some time before we get there. So, you know, we feel good about that low to mid-range, and we'll see where it plays out in the next three months-four months. Okay. Thanks. And just North Italia, was your comment that the pricing you just took, you think that... Were you behind on pricing there? And so essentially, you were saying that that will put margins at a level that's somewhat comparable to Cheesecake as we get into 4Q and beyond? That's right, Brian. I mean, basically, they're one cycle behind Cheesecake Factory. And so when we just look at sort of cumulative pricing versus cumulative inflation, we were just two points-2.5 points behind what, what we needed to do to, to catch up. That's correct. Okay, thank you. This concludes our Q&A and today's conference call. Thank you for attending. You may now disconnect.