Cheesecake Factory (CAKE) Stock Forecast & Price Target

The Cheesecake Factory Inc. has demonstrated an encouraging financial trajectory, with an adjusted net income margin of 3.7%, reflecting a year-over-year increase of approximately 40 basis points. The company's adjusted EBITDA rose by 14.5% year-over-year, reaching around $66 million, showcasing strong operational leverage despite challenging sales conditions. Additionally, the core Cheesecake Factory brand experienced significant restaurant-level margin expansion, increasing from 12.5% in 4Q22 to 17.5% by 2Q25, indicative of successful productivity initiatives and enhanced efficiency.

The Cheesecake Factory Inc is facing significant challenges, as evidenced by projected revenue guidance for 4Q25 of $940–$955 million, which reflects same-store sales at the Cheesecake Factory segment flat to down by 1%, while North Italia is struggling with a 3% decline in comparable sales. The company has pointed to external disruptions such as Los Angeles-area fires and reduced consumer foot traffic, particularly during midweek lunch periods, which have impacted overall sales and contributed to a decline in traffic by 6%. Additionally, while the pricing increased by approximately 4%, this was not sufficient to offset revenue losses from diminished traffic and a negative mix effect, further complicating the company's growth prospects.