Cheesecake Factory (CAKE) Stock Forecast & Price Target

The Cheesecake Factory Inc. has demonstrated a noteworthy improvement in its financial performance, highlighted by an adjusted net income margin increase to 3.7%, showing a year-over-year growth of approximately 40 basis points. Additionally, the company's adjusted EBITDA surged by 14.5% year-over-year, reaching around $66 million, which indicates strong operational leverage despite a challenging sales environment. The anticipated expansion of restaurant-level margins from approximately 15.9% in FY25 to 16.1% in FY26 further reflects the effectiveness of productivity initiatives in countering wage and inflationary pressures, contributing positively to the overall outlook for the company's financial health.

The Cheesecake Factory Inc. is currently facing headwinds, as indicated by its guidance for 4Q25, projecting revenues of $940–$955 million and comparable sales for The Cheesecake Factory segment anticipated to decline by up to 1%. Performance metrics show that North Italia's comparable sales decreased by 3%, highlighting broader challenges in consumer traffic and demand, particularly during midweek lunch hours, which could be exacerbated by ongoing volatility in foot traffic to malls. Additionally, the company is grappling with negative trends, such as a 6% decline in traffic and a mix drag, alongside cannibalization effects from new unit openings, further complicating its growth outlook amid a weak overall sales environment.