The Cheesecake Factory is a Calabasas Hills, California-based restaurant operator that runs 375 restaurants throughout the United States and Canada under the Cheesecake Factory, North Italia, Flower Child, and a collection of other Fox Restaurant Concepts brands, plus 36 international The Cheesecake Factory restaurants operating under licensing agreements, and the company is in the middle of a fiscal second quarter that demonstrates the kind of comparable-sales pivot the casual-dining restaurant cohort has been waiting for. Q2 2026 total revenues of $1,029.6 million were 7.7 percent above the prior-year quarter's $955.8 million, the Q2 2026 net income of $68.4 million was 24.8 percent above the prior-year quarter's $54.8 million, and the comparable restaurant sales at The Cheesecake Factory restaurants increased 5.8 percent year over year, meaningfully outperforming the broader casual dining industry. The combination of the 7.7 percent total revenue growth, the 5.8 percent Cheesecake Factory comparable sales growth, the $68.4 million of net income, the 4 new restaurants opened during the quarter, the $561.7 million of total available liquidity, the $0.30 per share quarterly dividend, the $9.3 million of Q2 2026 share repurchases, and the Fox Restaurant Concepts integration is the cleanest single-sentence read on what the casual-dining restaurant business model is producing, and the combination is the source of the operating-leverage spread the equity offers the buy-side.
The numbers tell the story with the kind of operational detail the casual-dining restaurant equity has been waiting for. The Q2 2026 food and beverage costs of $223.8 million were 8.7 percent above the prior-year quarter's $205.8 million, and the Q2 2026 labor expenses of $351.5 million were 5.4 percent above the prior-year quarter's $333.5 million. The cost growth was below the revenue growth, producing an operating-leverage spread that drove the net income growth. The Q2 2026 other operating costs and expenses of $272.7 million were 6.6 percent above the prior-year quarter's $255.7 million, with the cost growth reflecting the variable cost growth from the higher revenue.
The Q2 2026 general and administrative expenses of $65.6 million were 11.6 percent above the prior-year quarter's $58.8 million, with the G&A expense growth reflecting the cost discipline the company is producing. The Q2 2026 depreciation and amortization expenses of $29.1 million were 8.3 percent above the prior-year quarter's $26.9 million. The Q2 2026 net income of $68.4 million was 24.8 percent above the prior-year quarter's $54.8 million, and the Q2 2026 diluted EPS of $1.41 was 23.7 percent above the prior-year quarter's $1.14.
The Q2 2026 Adjusted net income of $69.7 million and the Adjusted diluted EPS of $1.44 reflect the operating-leverage spread the company is producing. The Q2 2026 development activity included the opening of 4 new restaurants (2 North Italia, 1 Flower Child, 1 FRC). The company continues to expect to open as many as 26 new restaurants in fiscal 2026, including as many as 5 to 6 Cheesecake Factory restaurants, 6 to 7 North Italia locations, 7 Flower Child locations, and as many as 7 FRC restaurants. The development pipeline is the cleanest single read on the long-term growth the company is positioning for.
The Q2 2026 total available liquidity of $561.7 million, including the $195.2 million cash balance and the $366.5 million of availability on the revolving credit facility with no outstanding balance, is the cleanest single read on the financial flexibility the company is producing. The $575 million of total principal amount of debt outstanding, representing the principal amount of 2.00 percent convertible senior notes due 2030, is the cleanest single read on the financial leverage the company is positioning itself around. During Q2 2026, the company repaid the remaining $69.0 million principal amount of 0.375 percent convertible senior notes due 2026.
The Q2 2026 share repurchases of approximately 158,600 shares at a cost of $9.3 million is the cleanest single read on the capital-return profile the company is producing. The Q2 2026 quarterly dividend of $0.30 per share, payable August 25, 2026, to shareholders of record at the close of business on August 11, 2026, is the cleanest single read on the dividend yield the equity offers the buy-side.
The question the next four quarters resolve is whether the company can sustain the 7.7 percent revenue growth and the 5.8 percent Cheesecake Factory comparable sales growth through the second half of fiscal 2026. A Q3 2026 print that continues the 5 to 7 percent revenue growth and the Cheesecake Factory comparable sales growth would confirm the operating profile is sustainable. A Q3 2026 print that shows revenue growth decelerating or Cheesecake Factory comparable sales declining would force the market to reprice the equity for a more modest terminal value.