Cheesecake Factory Inc (CAKE) 2018 Q3 法說會逐字稿

Good afternoon.

My name is Rob, and I will be your conference operator today.

At this time, I would like to welcome everyone to The Cheesecake Factory Third Quarter Fiscal 2018 Earnings Conference Call.

(Operator Instructions) Thank you.

Ms. Stacy Feit, Senior Director of Investor Relations, you may begin your conference.

Thanks, Rob.

Good afternoon, and welcome to our third quarter fiscal 2018 earnings call.

On the call 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 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 call, we will be discussing earnings per share on an adjusted basis, which excludes impairment of assets and lease terminations.

David Overton will begin today's call with some opening remarks, and David Gordon will provide an update on our off-premise business and marketing initiatives.

Matt will then take you through our financial results in detail and provide our outlook for the fourth quarter and the full year 2018 as well as some initial assumptions for 2019.

Following that, we'll open the call to questions.

And with that, I'll turn the call over to David.

Thank you, Stacy.

Third quarter comparable sales of 1.5% at The Cheesecake Factory were within our expectations.

Importantly, our operators executed on our objectives, wage inflation moderated from second quarter, and group medical insurance costs normalized.

These factors generated solid profitability during the quarter.

Within the 4 walls, our operators drove year-over-year improvements in food efficiency and labor productivity.

We ended the quarter with lower overtime year-over-year as we continue to focus on ensuring that our restaurants are fully staffed.

We have also seen a measurable improvement recently in both dine-in and take-out guest satisfaction scores.

There is a strong correlation between these metrics and comparable sales performance.

In turn, we reinforced our mission of absolute guest satisfaction daily in our restaurants and look to maintain this momentum.

With regard to development, we now expect to open 5 restaurants in fiscal 2018.

This includes The Cheesecake Factory in Lynnwood, Washington, a suburb of Seattle; and Grand Lux Cafe in Atlanta, which both opened during the third quarter.

We expect to open 3 additional Cheesecake Factory restaurants during the remainder of the year.

Due to delays with permitting, we now expect our new fast-casual concept, Social Monk Asian Kitchen, to open in the first quarter of 2019.

Internationally, we expect the licensed location in Monterrey, Mexico to open in the first quarter of 2019 given the shift in the center's opening date.

Including this restaurant, we expect as many as 5 to 6 locations to open under licensing agreements in 2019.

Domestically, we continue to believe there is potential for 300 Cheesecake Factory locations, and I feel good about the real estate opportunities lining up for 2019.

In turn, we expect to drive at least 3% unit growth next year, which is consistent with our long-term objective.

With that, I'll now turn the call over to David Gordon for an update on our off-premise business and marketing initiatives.

Thank you, David.

We continue to be pleased with the contribution of our off-premise business, which comprised 13.5% of sales during the third quarter.

With regard to our guests that opt to pick up their order, we're seeing good initial traction with our online ordering platform available through our website for all Cheesecake Factory restaurants nationwide.

We will continue to focus on raising awareness of this new channel via in-restaurant and to-go marketing, supported by some local search advertising.

During the third quarter, we transitioned to an exclusive national delivery partnership with DoorDash.

With our shared focus on quality and operational excellence, this partnership is enhancing the guest delivery experience by enabling us to maximize profits from our growing delivery business.

This agreement also augments our collaborative marketing opportunities throughout the year.

To this end, in collaboration with DoorDash and Hershey's, we're in the midst of our Halloween Treat or Treat offer.

For every $30 order placed through DoorDash yesterday through Halloween, guests will receive a complimentary slice of Reese's Peanut Butter Chocolate Cake Cheesecake or Hershey's Chocolate Bar Cheesecake, underscoring the strength of our brand partnerships.

Our marketing team secured great publicity for this occasion, including outlets like people.com and PEOPLE magazine's Facebook page, POPSUGAR and Thrillist.

We've also seen fantastic social media engagement.

We believe online ordering and delivery are great channels to increase guest frequency and awareness of The Cheesecake Factory as an everyday occasion.

Further on this front, we're proud to be partnering with American Express on the new gold card.

With an enhanced dining focus, The Cheesecake Factory was selected as one of the 4 exclusive partners to participate in their new statement credit opportunity.

The gold card relaunch and the associated dining benefits also generated great media coverage for us in outlets like Forbes, Condé Nast and Eater, just to name a few.

Finally, our consumer packaged goods business continues to maintain momentum with the recent announcement of our new branded refrigerated puddings in partnership with Lakeview Farms.

Four flavors are slated to launch in grocery stores nationwide in January of 2019.

These partnerships, along with another consumer research study we recently completed, confirm that affinity for The Cheesecake Factory brand is as strong as ever.

We will continue to leverage the brand power and our operator's execution to drive performance moving forward.

With that, I will now turn the call over to Matt for our financial review.

Thank you, David.

Total revenues for the third quarter of 2018 were $580.9 million, reflecting a 1.5% increase in comparable sales at The Cheesecake Factory restaurants and $13.6 million in external bakery sales.

This compares to total revenues of $555.4 million in the prior year period.

Cost of sales was 23% of revenues, an increase of about 10 basis points from the third quarter of last year.

Labor was 35.2% of revenues, an increase of about 30 basis points from the same period last year.

This is primarily attributable to hourly labor, specifically higher wages.

Other operating costs were 24.8% of revenues, down 10 basis points from the same period last year.

G&A was 6.5% of revenues in the third quarter of fiscal 2018, up 10 basis points from the same quarter of the prior year.

Preopening expense was approximately $3.3 million in the third quarter of 2018, about in line with the same period last year.

And our tax rate this quarter was approximately 5.7%, which was below our anticipated range.

This was primarily due to a higher proportion of FICA tip credit as well as some discrete items.

With this tax rate, adjusted earnings per share of $0.62 exceeded our expectations.

However, even with this tax favorability -- even without this tax favorability, adjusted earnings per share would have been at the midpoint of our guidance range, underscoring our solid core operating performance.

Cash flow from operations was approximately $41 million during the third quarter and $181 million year-to-date.

In the quarter, net of roughly $14 million of cash used for capital expenditures and $11 million in growth capital investments in the 2 Fox restaurant concepts, we generated over $15 million in free cash flow, and we completed approximately $19 million in share repurchases and returned $15 million to shareholders via the dividend during the quarter.

That wraps up our financial review for the third quarter.

Now I'll spend a few minutes on our outlook for the fourth quarter and full year 2018 as well as some initial assumptions for 2019.

As we've done in the past, we continue to provide our best estimate for earnings per share ranges based on realistic comparable sales assumptions and the most current cost information we have at this time.

These assumptions factor in everything we know as of today, which includes quarter-to-date trends, what we think will happen in the weeks ahead, and the effect of any impacts associated with holidays or weather.

For the fourth quarter of 2018, we now expect comparable sales in a range of 0.5% to 1.5% at The Cheesecake Factory restaurants, with adjusted diluted earnings per share between $0.60 and $0.64.

This is based on an assumed tax rate of approximately 10%.

Turning to full year 2018, we now anticipate comparable sales of approximately 1.5%.

We are now estimating adjusted diluted earnings per share between $2.42 and $2.46.

And we are now forecasting a tax rate of approximately 10%.

With regard to capital allocation, we now expect our cash CapEx in 2018 to be between $80 million and $85 million, including the 5 planned openings.

And we have completed our $25 million in planned 2018 growth capital contributions to the 2 Fox Restaurant Concepts.

Looking further ahead, we continue to target 1% to 2% comparable sales growth within our long-term framework.

On the cost side, based on the visibility we have today, we expect food inflation for our 2019 market basket to be approximately 1% to 2%.

As David mentioned, wage rate inflation moderated from the second quarter to the third quarter and is now running around 6%.

We expect this trend to continue into 2019.

With our history of continuous improvement, we will seek additional efficiencies in our restaurants to help offset pressure on the labor line, and we will also further enhance our market-based pricing strategy in higher wage geographies to support our objective of maintaining flat restaurant level margins.

And for modeling purposes, we estimate a 2019 tax rate of approximately 12%.

We expect our cash CapEx in 2019 to be between $100 million and $110 million to support our anticipated unit growth.

We expect growth capital contributions to the 2 Fox Restaurant Concepts prior to the potential acquisition of North Italia to be approximately $20 million to $25 million.

To that end, as we begin to prepare for the potential North Italia acquisition in the second half of 2019 and ensuing increase in future unit growth rates with an expanded portfolio, we will be completing reviews of Grand Lux Cafe and RockSugar to ensure that we have the best levers in place to drive company-wide ROIC and earnings growth in the future.

In addition, with The Cheesecake Factory pipeline well positioned for next year, as David referenced, supported by the enduring strength of the brand and operational excellence, our focus on the core long-term success drivers has never been greater.

At the same time, we will continue to execute a balanced capital allocation strategy, complementing growth investments with continued return of capital to shareholders via our dividend and share repurchase program in 2019 to generate the best returns for our shareholders.

In closing, we are leveraging The Cheesecake Factory's broad consumer appeal and high degree of relevance to drive sales while managing through the industry cost pressures.

At the same time, we believe we are making the right long-term decisions and investments to continue to provide our guests with great dining experiences, offer growth opportunities for our staff members and maximize long-term value for our shareholders.

With that said, we'll take your questions.

(Operator Instructions)

(Operator Instructions) And your first question comes from the line of John Glass from Morgan Stanley.

First, if I could just ask on the labor line this quarter, I think you said inflation was still -- I'm not sure if it was this quarter or just a forward comment, 6%; but your labor dollars per store were substantially lower than they've been in the past.

So what was the labor inflation this quarter specifically?

And what drove the better efficiency?

Was it just lower overtime hours?

And how do you think about that -- the sustainability of that in the fourth quarter, for example?

John, this is Matt.

And so for our third quarter, the inflation rate was about 6%.

And we're also expecting that for the fourth quarter, so just to clarify on the specific percentage.

And there are a variety of factors that go into the labor dollars per line item.

For example, we did see the group medical moderate back to normal levels compared to where it was earlier in this year.

And so all of those factors go into what you're looking at in terms of the total labor dollars per operating week.

But we would expect at a 6% inflation rate on a like-for-like basis, you would see similar performance going forward.

And would you just mind just breaking down the comp, the 1.5, into the components of traffic and ticket?

Sure.

Pricing was 2.9%, mix was a positive 0.6%, and traffic was down 2%.

But we did have a shift in one of our programs for National Cheesecake Day.

It just had to do with the calendar shift.

And that was basically a trade-off between traffic and mix.

It was about 1%.

And so when we look at kind of on a run-rate basis, traffic was probably closer to down 1%.

Absent that shift in the mix, it was close to break even, if that makes sense.

And your next question comes from the line of Jeffrey Bernstein from Barclays.

Two questions.

One, just on the comp, the 1.5% was at the lower end, I guess, of your 1.5% to 2.5% range.

We had assumed that was going to prove more conservative because I guess July was already known at the time, and it seemed like the broader industry improved in August and sustained in September.

So I wonder if you could provide some color on the sequential trends through the quarter.

And it seems like you're guiding the fourth quarter to be 50 bps to 150 bps, so maybe this is just a slower run rate in your business that you've seen over the past couple of months.

Just looking for any color there.

Yes.

Jeff, this is Matt.

I think that the biggest driver probably to that was really the industry and some of the enhanced and accelerated promotional activity.

I mean, so we're 50 bps below the midpoint.

And I don't think it was a big difference for us and not any real driver of that.

I think importantly, though, to the second half of your question, we saw a very stable run rate from August into September.

I think a lot of the industry started to see that tail off a little bit.

In September, I think we were a little bit more consistent.

I think with respect to the guidance, it's just more a reflection of that promotional activity that's out there.

And we continue to drive full margin sales, and we just think that's a prudent range to be providing at this point.

Got you.

And then my other question was just on the unit growth side of things.

I think, David, you mentioned 3% growth next year, which on a base of [200] units, I'm guessing we're talking about 6 units is kind of the ballpark.

So I'm wondering if you can just confirm that and maybe share if you're seeing any benefits you may be getting from significant retail closures, whether it's better terms, or location, or tenant allowances.

Just trying to get a feel for what benefit you might be seeing from a real estate perspective.

I think we're talking about maybe 6 to 8 or so sites.

And we're -- we think we're getting excellent deals.

I can't say we're getting better deals.

More things are being rolled by us, but they're either the wrong size or whatever, they're small, too small to take on a basic street site.

But there are a lot of empty stores.

I just noticed that the other day myself how many there were, but so many of them can't really support a Cheesecake Factory.

So we're doing fine with our deals, but nothing really great has been offered to us.

Your next question comes from the line of Sharon Zackfia from William Blair.

I guess a question on the commentary around Grand Lux and RockSugar.

Is the idea when you review the portfolio that, potentially, you would convert those to North Italias?

Or you're thinking of closing sites?

No.

Sharon, this is Matt.

I think the first one, really, we're not looking at closing sites, we're just doing a review.

It's mostly about capital allocation.

I don't think that it's a conversion either.

As we have a broader portfolio to choose from and we look to drive long-term returns, we just want to make sure that we use that lens to evaluate future opportunities with each of our brands.

Yes, that's helpful.

And then secondarily, as we start to focus more on 2019, can you remind us how much group medical will have penalized you in 2018 relative to 2017, either on a dollar basis point level.

And how are we thinking about that for 2019?

Is that similar year-over-year?

Is it favorable?

Or any kind of color there would be helpful.

Sure.

I think, really, what we've called out in the other group medical, particularly around the second quarter, if I remember, was around $4.5 million.

What I would say though is it's maybe a little bit early to call out for 2019.

We still have 1 quarter to go, and so I think it would be prudent if we can give perspective on that in February to help everybody out.

And you really don't know until the end of the year how much you think you're going to crossover really for the next year.

But that was the gap in the second quarter at least.

And your next question comes from the line of David Tarantino from Baird.

Matt, just a question on the guidance for next year.

I think this quarter is the typical quarter you usually give an EPS framework, and I don't think you mentioned that on this call.

So just wondering, is that a change in philosophy on how you're guiding going forward?

And maybe a second follow-up question, if I can give it a shot, is could you maybe give us a framework for the EPS growth for next year?

Is it likely to be an above-average growth year or below-average growth year relative to your targets?

Or more in line with your longer-run targets?

David, I'm so glad that you asked that question so we could clarify that for everybody.

Really, there's a couple of moving parts going into 2019, particularly around the North acquisition.

We're still firming up our plan with our board around the financing alternatives which could impact some of those pieces.

So we're planning to provide that particular guidance with respect to the earnings framework on our fourth quarter earnings call in February.

And also to be honest, I think it lines up a little bit more with the industry best practices.

It's kind of what we are seeing everybody doing at this point.

So we're not going to give too many specifics.

We hope that all of the assumptions that we provided with respect to cost of sales inflation and wage rate, et cetera, will help people at least with the initial modeling.

Fair enough.

And then if I could ask about one of the assumptions.

I think you mentioned that your goal was to hold restaurant margin roughly flat next year.

And with all this inflation, I just was wondering how -- how do you plan to do that?

Is it mostly through pricing?

Or do you have some sort of combination of pricing and efficiencies that will help that line hold flat in this inflationary environment?

I think it always has to be a combination when the wage inflation is around 6%.

But though when you look at the -- some of the math, we do expect cost of sales inflation to be slightly more benign than it was this year, and so that will support it.

I also think if you look at some of our margin cadence in this year, in the third quarter, it definitely started to stabilize.

As we look at the guidance for fourth quarter, it's fairly stable.

So I think what we're doing to be efficient in the 4 walls, whether that's driving cost of sales efficiencies or managing over time, is helping to support that going into next year as well.

Great.

What level of pricing are you thinking you'll maintain next year or have in the menu?

I think it's around the same of where we're at today.

Obviously, we would continue to have more region-specific focus given the continued separation in minimum wage, really, between the geographies.

But the average would probably be somewhere in the ballpark of where it is this year.

And your next question comes from the line of Gregory Francfort from Bank of America.

I have 2 questions.

The first is, and I think you touched on it, but in terms of funding North Italia, I think -- what's the initial thought there?

Is it to take on debt?

Is it to -- I can't tell if the message is to potentially maybe sell Grand Lux or something like that?

But any help there would be appreciated.

And my second question is just -- I think you touched on guest satisfaction scores recently improving.

And I'm curious what time period you're referring to and what scores you're seeing an improvement in?

Is that the last month or 2?

Is it the last 6 to 9 months?

I guess I'm just curious what that message was.

Sure, Greg.

I'll -- this is Matt.

I'll take the first one.

And so just to clarify, I think we got the question, but when we're thinking about Grand Lux and RockSugar, it's not about monetizing those assets.

It's about looking forward in terms of capital allocation.

So we're still working with the board on the best way to support the financing at this point in time.

We do want to continue with the share repurchase program.

The dividend is obviously an important part.

So continuing to be able to do it all is important to us.

And so I think there's just a variety of alternatives that are open, and we'll provide more clarity on that when we get to the February call.

And Greg, this is David Gordon.

Just on the guest satisfaction scores, we have seen an uptick in our Net Promoter Scores really towards the end of summer and moving into September.

I think I touched on before that we really try to look at it at a very high corporate level around those scores.

We pushed that down more to the restaurants to make sure that they understand where exactly they stand on their net promoter and then some of the service drivers below that, whether that's case of experience, quality of food, overall guest satisfaction, et cetera.

So we put some heightened focus and awareness really starting at the end of summer, and we think that's paying off now.

And maybe if I sneak one last one in here.

Just I think you touched on pricing by region in response to the last question.

Do you have different value scores across regions on the coast?

Are they different in the middle of the country?

And I guess the question is, do you have permission from the guests to price more on the coast, and how do you measure that?

I think we have seen different Net Promoter Scores by region but it's not really related to the pricing.

I think you can even get down into specific cities that have slightly different approaches to how they rate the experience itself.

When we look at the elasticity of pricing, I think that we definitely have pricing power on the coast.

The disposable income is much higher there.

Continues -- California continues to be one of our strongest markets.

And certainly, we're taking more pricing in California with the minimum wage here than we are in some other places.

So -- and I don't think we see a correlation between the scores that we're talking about and the pricing, at least not today.

And your next question comes from the line of John Ivankoe from JPMorgan.

First, a clarification on some labor comments that you made.

On a 6% wage inflation, did you say that we would expect something like a 2.5% labor dollar per operating week increase, at least for the next several quarters as you have some initiatives in place?

Or that the increase on a labor dollar per operating week basis be closer to 6%?

I think, John, to clarify -- this is Matt -- we would just expect to see similar performance relative to the wage inflation rate.

I wouldn't go so far as to say I expect 2.5% dollars per operating week because there are other factors that can play into that like equity compensation for our general managers and the group medical.

So I think we've been effective over time in being able to manage our labor below the inflation rate, but I just don't think it necessarily has to be 2.5%, but some are below 6%.

Okay.

And that is what we calculated for the third quarter, just in case you need to change that for the transcript.

But -- and second question is on G&A.

You did show a little deleverage in the third quarter, and I do think showing leverage over time is part of the shareholder return algorithm that you've talked about.

As you think about '19 G&A, maybe even going a little bit longer either with or without North Italia, what's the current thinking in terms of the organizational structure?

Yes.

For the third quarter, John, the -- they're really -- it's just really a comparison.

So last year, if you remember going back third quarter, it was pretty tough in the industry.

And so that's really the incentive comp comparison on a year-over-year basis that was adjusted.

So I think our long-term outlook of attaining 10 basis points a year in leverage in the G&A line is still where we feel good.

And your next question comes from the line of Brian Bittner from Oppenheimer.

This is Mike Tamas on for Brian.

Just wondering about the same-store sales performance versus the industry.

It kind of seems like your outperformance gap has narrowed and I think it was actually a little bit negative in this quarter.

And I'm just wondering, how do you think about that?

And then how do you think about getting back to a sort the historical outperformance when you position that against your comments around the competitive discounting going on out there.

Sure, Mike.

This is Matt.

I think as we've said before, we look at the industry gap more on a rolling 6-quarter basis.

I think any given quarter, there can be a lot of noise.

I think we saw a lot of noise in the third quarter around 2 factors.

Obviously, the promotional activity, but as well as the year-over-year hurricane activity, it was just a little bit noisy in terms of that comparison.

So when we look at the rolling 6-quarter average, we're still pretty close to where we have been historically.

And certainly, with the labor pressure that is out there and you're now hearing it across the industry, the degree of promotional activity, will ebb and flow as it always has been.

And I think we'll continue to keep the same course that we have and continue to drive whole margin sales.

And our long-term outlook of 1% to 2% is still where we're performing.

Great.

And then within the guidance for the fourth quarter, is there any holiday shift either good or bad that we can...

Not meaningful.

No, there's not a meaningful movement.

Your next question comes from the line of Karen Holthouse from Goldman Sachs.

Just a couple of clarifications.

On the guidance for 6 to 8 unit openings next year, is that specific to Cheesecake Factory?

And if not, could you give us any idea of how to think about sort of allocation of Cheesecake Factory versus other concepts?

Karen, this is Matt.

Yes, it's all Cheesecake Factory.

Okay.

And then what were bakery sales in the quarter?

Bakery sales, I think, were $13.7 million.

And then -- going back to the sort of gap to the industry, if you look at -- in the past, you've really anchored us to the -- a rolling 6-quarter average, which does, at this point, I think, show a multiyear decline.

Given -- and pretty steady multiyear decline.

Was there any insight you gleaned from the consumer research that you just completed that would help explain that or sort of give you a path to how to reverse that trend?

Karen, this is Matt again.

Again, I would say that in the quarter that we just ended with some of the discounting noise, it does impact even on a rolling basis.

Now I think it's hard to say for sure.

The thing that really stood out to us with the consumer research is just the ongoing solid brand positioning that we have.

The guests that are coming to The Cheesecake Factory really love all aspects about it.

They love the experience, the food.

So I think that we resonate as much as we ever have with consumers.

That being said, we're just not going to be in the game of limited time offers and the TV advertising that tends to move the averages.

And yes, I think when we look at that, our average of being about 1% to 1.5% above KNAPP-TRACK, it's pretty consistent even after -- over the past couple of years.

Your next question comes from the line of Will Slabaugh from Stephens Inc.

This is actually Hugh on for Will this afternoon.

I just wanted to start with a question on the delivery piece that I don't think has been touched on yet.

Are you all still seeing the similar level of kind of 70% incrementality in that -- in third-party delivery?

And did you break out kind of a mix of delivery in off-premise as a percentage of sales, and could you do so, if possible?

Hugh, yes, this is David Gordon.

Thanks for the question.

We continue to see growth -- total growth in off-premise.

Year-to-date in Q3 of this year, we're about 13.5%.

Last year at this time, we were sitting at about 12%.

And moving into Q4, we're seeing an even higher rate.

So the growth in overall off-premise continues to be strong.

We still believe that 60% to 70% incrementality is what we're looking at from the delivery business.

And if you break down the overall off-premise business: deliveries' comprising about 25% of that; take out, phone-in orderings is about 2/3; and our new online ordering platform that we launched earlier this year is in the -- right around 10% to 12% range of all of our off-premise business.

(Operator Instructions) Your next question comes from the line of Joshua Long from Piper Jaffray.

I wanted to see if you might be able to provide some context around regional trends, if there were any.

Or if -- kind of the 1.5% comp you saw during 3Q was more or less balanced across all your different geographies.

Josh, this is David Gordon again.

It was pretty balanced.

Some of our strongest areas, Florida, Texas, Southwest, really, that we didn't see a lot of weakness.

Matt already mentioned how strong California has been and continues to be.

Probably of all the geographies, the one that may have been the weakest was the southeast, but really nothing meaningful.

Great.

And then more of a housekeeping item.

Could you provide the Grand Lux comp during the quarter?

Sure.

Grand Lux was down 3.1% in Q3.

And your next question comes from the line of Robert Derrington from Telsey Advisory.

As it relates to Grand Lux, we appreciate the detail on the same-store sales trend.

Is the reason that you're looking especially pointedly at that brand, the fact that the trends have remained relatively volatile versus Cheesecake Factory?

Or is it you have more stores that are -- have a greater level of volatility versus the entire pool of Grand Lux restaurants?

Bob, this is Matt.

Really, it's around returns.

And as we've said before, The Cheesecake Factory returns are superior to those of Grand Lux Cafe.

And so we've always taken that approach with our business.

And I think we're just taking opportunity to remind the investment community as we continue to add brands to our portfolio, that prudent returns-focused growth is something that is a priority for us.

And so that's really the driver of future decision-making.

That makes sense.

Back to the unit count development target for next year, fiscal '19.

The 6 new stores, which I think you mentioned, were all Cheesecake Factory.

Don't we also have the Social Monk?

Is that falling in the 2019 now so that would be an incremental store?

It'll be first quarter '19.

It was all about the roots of trees that slowed us up.

There's oak trees on the property, and they're quite guarded over that -- here.

But it will be first quarter of '19.

Just a little delay.

And so, Bob, that will be incremental to the 6 to 8 Cheesecakes that David had talked about.

And your next question comes from the line of Jon Tower from Wells Fargo.

We've gone through a lot of questions so far, so mine are going to be focused on some of the ancillary businesses.

First on the CPG and the bakery business, it sounds like you're getting quite a bit of growth there.

And I'm just curious how you can maybe frame that over time and how we should think about that contributing to earnings and the business maybe over the next 12 to 24 months.

And then lastly, just from a rule-of-thumb standpoint, I believe, the international licenses -- the stores -- I believe, in the past, it was $1 -- excuse me, about $0.01 in EPS -- or $0.01 to annual EPS is how you kind of gave us for a rule of thumb for contribution.

Does that still hold?

John, it's Matt.

So yes, I'll just answer the second part quickly.

Yes, that still holds on average.

So we continue to be pleased with the performance internationally and continue to see about $0.01 in earnings per share for full operating year for an international unit.

On the first question, I would kind of separate.

I just want to make sure, we're talking about the CPG business and then we're talking about the bakery.

Certainly, the bakery business is paramount to the total brand Cheesecake Factory, with their production predominantly going towards the restaurants.

But we do have a third-party business that continues to grow at about 5% a year.

And then we believe it will get some incremental profitability based on the remodel of our West Coast bakery.

On the other side, the CPG business is predominantly licensing, where we're not doing the manufacturing or any of the marketing.

And it's sort of like having one more international partner that's opening maybe 1 to 2 restaurants going forward a year.

So that's about the range of magnitude.

At least for the next year or 2, and then we'll see where that goes.

But we've been very happy with the quality of the product, and also with the branding and getting more eyeballs on The Cheesecake Factory brand in the marketplace.

And this concludes today's conference call.

I would like to thank you for joining us this evening, and you may now disconnect.