Jill Peters - VP of Investor Relations David Overton - Chairman and CEO David Gordon - President Douglas Benn - EVP and CFO.

Jeffrey Bernstein - Barclays John Glass - Morgan Stanley Joe Buckley - Bank of America David Tarantino - Robert Baird Matthew DiFrisco - Buckingham Research Will Slabaugh - Stephens Brian Bittner - Oppenheimer Jeff Farmer - Wells Fargo Sharon Zackfia - William Blair Andy Barish - Jefferies Brian Vaccaro - Raymond James Steve Anderson - Miller Tabak Karen Holthaus - Credit Suisse.

Good day, ladies and gentlemen, and welcome to the Q1 2014 The Cheesecake Factory earnings conference call. My name is Kim, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we'll conduct a question-and-answer session.

(Operator Instructions) As a remainder, this conference is being recorded for replay purposes. I'll now like to turn the conference over to your host for today, Ms. Jill Peters. Please proceed..

Good afternoon, and welcome to our first quarter fiscal 2014 earnings call. I'm Jill Peters, Vice President of Investor Relations. On the call today are David Overton, our Chairman and Chief Executive Officer; David Gordon, our President; and Doug Benn, our Executive Vice President and Chief Financial Officer.

Before we begin, let me quickly remind you that during this call, items may 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 differ materially from those stated or implied in forward-looking statements as a result of the factors detailed in today's press release, which is available in the Investors section of our website at 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. David Overton will start-off the call today with some opening remarks.

Doug will then take you through our operating results in detail and provide our outlook for both the second quarter of 2014, as well as the full year. Following that, we will open the call for questions. And with that, I'll turn the call over to David..

Thank you, Jill. We are off to a solid start in 2014 in comparable sales in the first quarter that were considerably stronger than the industry overall.

We're into our fifth consecutive year of achieving positive quarterly comparable sales, and we're continuing to attract guests based on the strength of our brand, not through promotions or discounting..

As to development, we opened one new restaurant in the first quarter in Syracuse, New York, which is performing quite well. Our newer restaurants that have opened over the past three years continue to exceed the performance of our existing base of restaurants, which speaks to our selection of high quality site.

This year, we now expect to open as many as ten company-owned restaurants in the mix of new and existing markets, including one relocation. Internationally, not much has changed since our update in February, and we now expect three to four restaurants to open in the Middle East and Mexico under licensing agreement.

As we've said in the past, the number of international openings is subject to change for a variety of reason, and we saw little movement in timing.

In closing, we, again, honor to remain the most preferred casual dining restaurant for a third consecutive year by Nation's Restaurant News Consumers Picks Report, a comprehensive study that rates restaurant chain based on customer preferences. The results from the survey highlighted many variety as one of our key strengths.

Relevance drives us success, and the evolution and innovation in our menu for more than 35 years has been and will remain a critical competitive advantage for us. With that, I'll turn the call over to Doug..

Thank you, David. Total revenues at the Cheesecake Factory for the first quarter of 2014 were $481.4 million. Revenues reflect an overall comparable sales increase of 0.9%, which was negatively impacted by severe winter storms affecting our restaurants in the Mid Atlantic, Northeast, Southeast and Midwest.

And by a shift of the Easter holiday and the surrounding spring breaks in April of this year versus March of last year. These impacts reduced comparable sales by approximately 200 basis points.

The magnitude was greater than we expected as the storms continued beyond our last reporting date in February, and the affect to the spring break shift was more pronounced. Comparable sales increased 1.2% at The Cheesecake Factory and declined 2.9% at Grand Lux Cafe.

We've said for some time that The Cheesecake Factory is outperforming the industry, while Grand Lux Cafe's performance is more in line with the industry, and this trend continued in the first quarter. Cost of sales is up 10 basis points in the first quarter of 2014 at 24.8% of revenues versus 24.7% in the prior year quarter, as expected.

Labor was 33.1% of revenues in the quarter, as compared to 32.6% in the first quarter of the prior year. Labor productivity was impacted by reduced efficiencies in part due to the winter storms and the sales fluctuations resulting from the holiday shift as well.

In addition, we experienced some pressure from group medical costs as a result of higher claims activity. Other operating costs and expenses were 24% of revenues for the first quarter, although this line was flat relative to the first quarter of the prior year.

We did experience about 30 basis points of pressure from a spike in natural gas cost, which was primarily offset by lower rent expense. G&A was 6.5% of revenues for the first quarter, up 30 basis points from the prior year. The increase is primarily due to cost associated with an accrual for the pending settlement of a legal claim.

As noted in our press release, we recorded $186,000 in pre-tax charge during the first quarter, related to the planned relocation of one Cheesecake Factory restaurant. Pre-opening expense was $2.2 million in the first quarter 2014, versus 1.3 million in the same period last year.

We have one restaurant opening in the first quarter of 2014, and none in the same period of the prior year. Our tax rate this quarter was 28.9%, within our expected range. Cash flow from operations for the first quarter of 2014 was approximately $77 million, net of roughly 30 million of cash used for capital expenditures.

We generated about $47 million in free cash flow for the first quarter of 2014. During the first quarter, we repurchased approximately 2.1 million shares of our common stock at a cost of $99 million; the majority of which was executed under our previously announced accelerated share repurchase program.

We utilized our revolving credit facility to fund the portion of the share repurchases during the quarter. As a result, we now have a debt balance of $25 million on our balance sheet, which we expect to repay by the end of the third quarter of 2014. That wraps up our business and financial review for the first quarter of 2014.

Now, I'll spend a few minutes on our outlook for the second quarter, and an update on the full year. 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.

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, the effect of any impacts associated with holidays and non-weather influences.

For the second quarter of 2014, we estimate diluted earnings per share of between $0.59 and $0.62 based on an assumed range of comparable sales between 1.5% and 2.5%. For the full year 2014, we estimate diluted earnings per share in the range of $2.24 to $2.33, based on an assumed comparable sales range of between 1% and 2%.

Our comparable sales assumption for the full year is unchanged from our last update in February.

We expect that our trend of comparable sales outperformance relative to the industry will continue, and while the high-end of our range assumes that comparable sales accelerate relative to 2013, we believe it is reasonable and achievable based on our recent trends.

The change to our annual earnings per share estimate reflects the shortfall in earnings that we experienced in the first quarter, as compared to the high-end of the sensitivity range that we had provided. Our earnings per share outlook for the balance of the year have not changed since February.

Our outlook for food cost inflation in 2014 remains between 3% and 4% for the year, driven by the higher shrimp and salmon cost that we previously discussed.

While our overall expectations have not changed since February, the make up of our outlook ha shifted slightly, as we now expect higher meat and dairy costs offset by lower cost in a couple of other areas. And to our corporate tax rate, we continue to expect it to be about 29% for 2014.

Our total capital expenditures are now expected to be between $105 million and $115 million for planned 2014 openings as well as expected openings in early 2015.

With respect to capital allocation, our earnings per share sensitivity range for 2014 assumes that we will continue to use substantially all of our free cash flow for dividends and share repurchases. With that said, we will take your questions.

In order to accommodate as many questions as possible, please limit yourself to one question and then re-queue with any additional questions..

(Operator Instructions) Your first question comes from the line of Jeffrey Bernstein from Barclays. Please proceed..

Great, thank you. Doug, one clarification from what you just said and then a question, the legal settlement that I believe you mentioned was in the G&A, I'm wondering if you can quantify that because we had assumed just based on our estimates that it was probably in the labor line, because labor line seemed a lot heavier than we were expecting.

So, I'm just wondering if you can clarify that legal settlement and the elevated labor, whether or not that's sustainable therefore, and then I have a follow up..

We accrued those costs. It's an employment-related legal claim, and we do have other legal claims as we always do. There is still one going. So, we are not going to disclose what the exact dollar amount of that pending settlement is.

However, Jeff, one way to think about the impact is to look at the G&A line which ramped up 30 basis points higher than last year and a simple math then is that the higher or broad G&A year-over-year cost is about $0.02 per share in earnings for this quarter..

Okay, got it. And the labor line then was elevated versus at least our expectation; I mean, we said group medical and productivity are those things that -- in the productivity, I guess it's due to weather, but the group medical is that something unusual for the quarter or ….

Yeah, let's talk about that first. Group medical was higher year-over-year. Since we are self-insured, our actual costs that we record in any given quarter based on claims activity and the higher cost then weren't based on higher than expected benefit enrollment for 2014, for instance, under the Affordable Care Act.

That turned out to be pretty much what we expected to be, but we did see higher claims activity in November, in December, in January last year. These claims are recorded on a lag basis, so that's what impacted the first quarter.

We don't really know what the underlying cause of that is, but maybe more staff members met their deductible by the end of the year, and it's not medical care, but in any event we experience higher first quarter claims activity. And I wouldn't say that since it was higher than normal that we would expect that to continue..

Got it. And then just a broader question just on the comp, I mean it's very impressive, it looks like -- and they reported the 1.2 with Cheesecake, but it does seem like 200 basis points of unusual -- you are looking at north of three, I think you mentioned that mall and non-mall, we are seeing similar trends.

I was wondering if you can comment on that. I don't see you guys doing a three comp looking back at least over this decade. I'm just wondering what you attribute that to, I know you mentioned some of that gift cards, but just wondering if you can talk a little bit about that.

And then I'm assuming the Easter shift now goes the other way in the second quarter.

So, how much is that kind of helping in the second quarter?.

Yeah, that's the main thing. There are a lot of nuances that would impact what we think we could do in the second quarter. So, if you kind of just did the pure math and added [3%] (ph), 200 basis points to the comp that we achieved in the first quarter, you get almost the 3% that you got.

So, while we feel our sales trends are very solid, we don't think that they have changed from where they have been at all. So, when we look at the second quarter there is about 70 basis points of pressure that impacted the first quarter that will positively impact the second quarter comp store sales.

So, if you take that from the 2.9%, if you will, and sort of factor in other nuances, there are all kinds of other nuances you get, roughly the one and half to two and a half that we are saying we think we can achieve in the second quarter..

Got it. Thank you very much..

You are welcome..

Your next question comes from the line of John Glass with Morgan Stanley. Please proceed..

Thanks very much. Doug, can you just -- what if anything changed in the balance of your guidance? I know there are components that shifted. But was there anything or was the lower guidance simply a function of the first quarter [miss] (ph). And then, how does that square with -- I think the buyback was bigger than many of us thought.

Was that always the plan to accelerate it, so there is going to be much less going forward or do you think the share counts is going to be a lot lower than you initially thought when you provided guidance originally?.

Okay. Yes. I would say to the first one that -- sorry, I've forgotten what the question is ….

What change in your guidance, if anything, going forward?.

Nothing changed in our guidance. So that's the -- basically for the second, third and fourth quarter of the year, we haven't changed a thing in our guidance. Any change in the annual earnings per share guidance is only due to the first quarter..

And then buyback, what influence is that having on the share count that maybe different than what you thought initially?.

That I don't think it should be different than what you thought. It should be -- our guidance for the year assumed a strategy where we'd do a heavier buyback in the first quarter of the year, and we did that so we are on track to achieve from a WASO standpoint, the number of shares that we thought we would have outstanding.

So, nothing has really changed..

Okay, great. Thank you..

You are welcome..

Your next question comes from the line of Joe Buckley from Bank of America. Please proceed..

Joe Buckley – Bank of America:.

:.

The primary problem was labor productivity, overall. So, weather events certainly affect our ability to manage labor as tightly as we normally do, so do big fluctuations in traffic that occur with holiday shifts, for instance, such as the spring break shift into the second quarter.

I think there is an opportunity for us to manage labor tighter than we did in the first quarter. Although it can be difficult when sales and traffic fluctuations are large and are happening over a relatively short period of time. So, the primary pressure on the labor in addition to the medical expenses was the productivity..

Okay.

Was there any stress in the quarter on bakery sales or bakery profits that we should think about?.

Bakery sales were a little bit lower than what they were last year at this time.

I'd say that I'd have you think about the bakery, I think I said this last time to think about the bakery in any decline in bakery sales as we talked about before, being due to warehouse clubs, and our bakery team is working on identifying different distribution channels that have a better mix between sales volumes and profits, sort of migrating to a broader sales portfolio with less concentration and higher profit margins.

So, we would expect under that strategy that the approach that we'd stabilize our bakery sales year-over-year and some time in the second half of the year..

Okay. Thank you..

Yeah..

Your next question comes from the line of David Tarantino from Robert Baird. Please proceed..

Hi, good afternoon. Doug, I wanted to come back to the question about the comps outlook, and perhaps maybe I'm not understanding this correctly, but just to clarify, on your Q1 trends you are saying that there is the two factors, Easter and weather that hurt the trend by a couple of 100 basis points.

Is it right to think that on kind of the external factors you are in close to 3%? Is that the right way to think about it?.

That's the right -- it's just straight math. That's the right straight math. So, you added 2 and 2.9 -- 2% and 0.9, but again, there the other things that influence the first quarter. For instance, another thing to factor in is that we did have positive weather impacts that we don't factor in to any of that 200 basis points.

So, when we give you the impact of weather which was 130 of the 200 basis points. We give you the impact of weather. That's all the impact of the weather this year. There was a positive impact of weather from last year that we factored into our guidance.

So, in trying to bridge the gap, if you will, between what we achieved and what our guidance was, that's why we give you the 1.3% weather impact. Last year, there were other things; the bad weather last year that we had a positive comparison with this year and some other nuances that you can't really get 2.9% out of that..

And so, I guess my question Doug is, I guess, when you net out all the positives and negatives, what do you think the underlying trend was in Q1?.

Probably somewhere between 1% to 2% and maybe to high end of that range..

Close to 2%, and then -- so I guess the question on Q2 is you're getting an add-back for Easter, it sounds like. So, I guess why if you are running for closer to that 2% range and you get the Easter add-back.

Is there something else in Q2 that might be weighing on the trend, or are you just being conservative with that 1.5% to 2.5% range?.

There is always something else that's in there weighing on the trend whether it's a shift in a holiday or some known weather influence or something else than the previous year, but the main thing is the 70 basis point shift. So, as in that factor, you come back to roughly 1.5% to 2.5%..

Great. Okay, thank you very much..

Your next question comes from the line of Matt DiFrisco from Buckingham Research. Please proceed..

Thank you. Hi, Doug, I have a question, but I am sorry, I am going to have to beat the dead horse. So, you left me a little confused in that last comment. You said 1.5 -- we go back 1.5 and 2.5 after the 0.7. Your guidance includes the benefit of the shift of Easter or it does not include the benefit of shift of Easter when you say ….

Douglas Benn:.

:.

Okay. So, if we want to -- looking at Easter a year ago compare, looking at the 0.7, it looks as though the 1.5-2.5 is achievable if not maybe even conservative, some of us or all, I guess coming to the conclusion..

Yeah, we think that that's the right place for us to be, 1.5-2.5 for second quarter..

Okay. My questions regarding pricing, can you tell us what -- I am sorry, you gave a very brief presentation in the beginning, and I do always appreciate that.

Then you got into the Q&A quick, but did you say pricing for the quarter, if not, can you just tell us what it was?.

Yeah, pricing that we had in the menu change that we just did the February-March menu change, basically replace what was ruling off of that 1%. So, there is about 2% of pricing in the menu..

And do we expect 2% to be a good proxy for the rest of year or with the California minimum wage going up to life first? Do you expect that to have to be get a response as well, or is 2% a high number?.

I would think 2% is a goof proxy for the rest of the year..

Does your guidance -- should we look at labor maybe getting a little heavier in the back half? Or do you think the comp environment that you have assumed of 2.5 or so or 1.5 to 2.5 and then going for the full year to one to two, how should we think labor when that price increase in California, which is an important state for you guys, or the labor goes up?.

We knew the labor was going up and we know how much is going up by, and we factor that into the guidance that we gave..

Do you employ minimum wage employees that you would have to respond immediately or no?.

You have to respond immediately because it's the state minimum wage. Yes.

There are servers that are paid I think close to the minimum wage, right?.

Yes. We do have minimum wage staff members..

Okay, thank you..

Your next question comes from the line of Nicole Miller Regan from Piper Jaffray. Please proceed..

Great, thanks. This is Josh on for Nicole. Doug, I want to see if we might be able to dig into the COGS outlook and you had mentioned that is sounds like maybe the net results are same or maybe some the pieces moved around. We are just curious that we might be able to run through those different moving pieces.

It sounds like maybe higher meats and higher diary specifically..

Yeah, I mean that's about it. There is not anything else to really run-through. We were -- there are certain things that are offsetting that. Any time, we are about 55% to 60% contracted.

So anytime we give a prognostication for how much we believe the commodity costs are going to go up, 40% of that prognostication, if you will, is based on our best estimate on what is going to transpire for the rest of your -- for those items that are under contract. That's what we did again.

There is not a lot about not really to say other than there are some things in that estimate that went up and others that went down..

Great, that's helpful.

And then David, could you remind us or can we circle back to the strategy or the opportunity really around the lower -- the smaller footprint boxes? Where are we with that and is that something that's still on the table as we go forward with some of the new units on the schedule for this year? Is that something that we might see then show up in some of the smaller markets that we talked about historically?.

Yes. We don't really look at them as big and small ourselves, we just take the appropriate square footage for the appropriate city and the demographic there. In smaller cities, we are opening anywhere from 7,500, 8,000 square feet, very appropriate to that size. Again, our goal is to try to get $1000 a square foot or more. So, that's what we are doing.

And I think most of the sites at least domestically are in that range and internationally they are bigger because we are the only one in those cities and we know what we'll be busier, and so we build larger restaurants.

But really it depends on the city, the demographic and then we choose the appropriate square footage, and that's just the way it is now. I don't think of anything you should think of it separately or another thing we are doing. It's just business as usual..

Certainly that's a fair and elegant way to put it. Thank you for the update..

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

Yeah. Thanks, guys. I want to ask about development. It looks like your updated unit development target for the domestic units as at the bottom end of the 10 to 12 range you gave last quarter. I wonder if you could give us a little insight into why that maybe the case.

And then similarly internationally it looks like you are going from three to four from three to five last quarters, so if you could just comment on those moves and if there is anything to read into that beyond maybe delays into 2015 or something similar?.

Yes. I think that's really -- when we give a range, we are doing that because some of the sites although they can -- we have identified them, and we hope to get them. Then all the work starts with the landlord and construction and so on and so forth, since some times they move.

I think domestically you are going to see some sites earlier in '15, because it's just a matter of timing and moving and with all the many, many things that come up because Cheesecake is very complicated to bill. It's really the same thing for international. It just takes a little longer.

I identify the site, the landlord likes and then all of a sudden there are some problems that arise that take time to settle. So, it will move. So one of the international for share is moving, but we love the site and it's the same domestically.

So I think you will see those come up early in '15 which is good for us since most of the time most of our stuff comes at the end of the year..

Got it.

As a quick follow up there internationally; can you give us an update on how those units are performing and then any sort of payback you have been getting from your licensees regarding unit development accelerating beyond what you see for 2014?.

They are performing beautifully, much better than we thought. They are some of highest grossing restaurants in domestic that we have. They the well beyond, I think all of our hopes. That is great. It's certainly in the Middle East. We will see what happens in Mexico. In terms of -- some of the problems are the laws of the country.

So, beside them saying okay, we are going to open. All of a sudden there are new restrictions on food; you have to work on that. There are many things that we have to work on to make sure we can function in those countries. And sometimes that takes a little longer.

But they are very, very positive on us, and their offers on the table to move into other countries. We just have to see if we can function there..

I would add that a good rule of thumb if you want to think about it moving forward is that three to five that we said at the beginning of the year sort of a good rule of thumb to use at least until we have another licensee that is ramped up. So that's not anything you can get in granted. But that's what I would use if you are just modeling it out..

Got it, thank you..

Your next question comes from the line of Brian Bittner from Oppenheimer. Please proceed..

Thank you. I just want to go back to the capital allocation strategy. Just thinking about share repurchases and dividends you just talked about using all three cash flow for such this year and you guys obviously bought back a lot of stock in first quarter and get into the credit facility.

Just wondering I guess, why again was it so accelerated, why you guys just not used free cash throughout the year to buyback stock? Did this also [possibly up] (ph) your target for share repurchases for the year, or are you going to do more than the free cash flow you generate in other words?.

Well, one thing I will add is in addition to the free cash flow we generate, we also received cash from stock option exercises. That can be material. Last year I believe it was close to $70 million. I think we have in our plan this year for $30 million to $40 million of stock option exercises.

So, in addition to the free cash flow that we have, we can also use that cash and we have shown historically that we have returned that cash to our shareholders. I believe last year we were -- it was $211 million was the total of share repurchases and dividends for the year. So, with respect to the acceleration, that was planned all along.

The part of the strategy for generating the earnings per share growth that we wanted to generate for 2014 was to get the share repurchases done earlier in the year so that they could have a bigger impact on earnings per share growth for the year 2014, nothing more than that.

It's the execution of a strategy that we planned out and borrowing is temporary. And as we said in our comments we would expect just have it repaid by the end of the third quarter..

Okay, thanks..

Welcome..

Your next question comes from the line of Jeff Farmer from Wells Fargo. Please proceed..

Great. Thank you. Just hearing all these development questions, did have me rifling through my notes, so I apologize, I am going to test your memory a bit here.

But it looks like in Analyst Day, I don't know, 2004-2005, you guys are pointing out that developers were offering you something like 1,200 sites for the 15, 16, 17 units you planned to open in whatever year that was, but fast forwarding it to today recognizing retail landscapes dramatically changed.

I am going to assume that you are being offered more sites than anyone. But the question is this, how is this working out? Are you essentially picking the best sites available, or is there a bigger picture portfolio strategy.

So again, to just sort of boil that down, where does the development strategy stand today? I understand the [backfill] (ph), but is there more to it than that?.

Hi, Jeff, this is David Gordon. Our strategy really hasn't changed. Our strategy is to select eight site locations that we know will drive the traffic that we need for the returns that we need. That was our strategy in 2004 as you mentioned. And that's still our strategy here 10 years later.

We really are very careful and we are not going to compromise on site location. We are going to pick the best site that we know are going to get the returns that we need. So, that strategy really hasn't changed over time..

We used to say that there was 150 or 200 Cheesecake factories in that size. Once we went to the small unit, now we are saying there is at least 300 Cheesecake factories given to smaller units. So, we have actually increased the number of potential Cheesecake factories since that time.

I am not exactly sure of some of the other things that were in your notes, but that's pretty much been our story the whole time..

But you are absolutely right, we do get offers a lot more sites than we end up selecting, so I don't know exactly what the ratio is, but virtually any landlord that wants to put a restaurant there is contacting us to see if we would consider putting a restaurant there.

So, we are evaluating all of those, and we are only trying to pick the best sites that we're highly selective as David said and only picking A plus locations..

And then, just as a quick follow up, and as you look forward 2015, 16, 17, I know we've come off the trough point of '08-'09.

Has -- have you seen an acceleration in be at lifestyle centers sort of remodeled A malls? Does this continue to accelerate? Or do you think we're just sort of hum along at this level for the next few years?.

I think they're accelerating right now. I know that some of the larger groups out there are remodeling at least 20% of their spaces. They are adding on, there are lots of things happening, they are adding condos, they are adding businesses, they are adding offices.

So, a lot of these centers are going to be multi-used and they are going to be perfect for a restaurant like ours. So, the B and C malls are another story, and I -- because we are not in them, thank goodness, that's not our problem.

The A centers, I think are going to change with the times, redo what they are doing, and so we feel it's picking up nicely..

Thank you..

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

Hi, good afternoon. A couple of questions, most of my questions were answered, but the few locations that are slipping this year, should we expect more of an acceleration and development in 2015? And I apologize if somebody already asked that.

And then, the pre-opening center, I think originally, Doug, you're expecting 13 million to 14 million this year, is that a bit different given we're at up to 10 locations versus originally 10 to 12?.

I'd think that it would be. We might have to give you that number offline, Sharon. As far as the location slipping into next year, we would hope that those will be, as David said earlier, locations we could get open in the front half of the year versus the second half of the year..

And next year is looking quite good. I don't have numbers yet, but I don't think I ever felt so good about the number of deals that look positive. I mean obviously later in the year, we will give you a better number, but I'm pretty happy with the development for 2015 right at this moment..

Okay.

And I know you mentioned the unit productivity was better than the overall base, but it looked really, really good if you factor in this quarter, particularly good in the Easter shift, and is there anything going on with the units are opened particularly in the back half of last year? I don't know; a little bit more California and that helps, given the drier weather there or what you're seeing in the new units, but they looked really, really strong?.

Yeah.

You're talking about -- when you say productivity, you mean the sales volumes, right?.

Correct..

Yeah. So, our newer units are continuing to perform very well, and if you go back through the last three years worth of openings, certainly including those last year, the restaurants where we relocated, all three of those are doing significantly higher volume than the restaurant they replaced in for different reasons.

So, there has been very good -- the sales metrics are about 10% better in sales per square foot and sales per seat in the newer restaurants opened over the last three years than they are for the average as a whole, and it's been that way for a while, and it continues to be that way..

And even those that we opened outside of California where they even had inclement weather, opened very strong..

Okay, great. Thank you..

Your next question comes from the line of Andy Barish from Jefferies. Please proceed..

Hi, guys; two quick questions.

Just can you quantify or kind of give us what exceptional strength meant in a couple of the big markets, obviously not weather-impacted or maybe even benefiting from the season, strong season in Florida? And then on the technology side, I think you're doing some online ordering testing with your fairly sizable to-go business; can you give us an update as to where that might stand for 2014?.

I'll let David Gordon talk about what we are doing from a technology standpoint, but with respect to the markets we had, we talked about our three largest markets, Florida, California and Texas. With that said, there is still not a great big difference between the lowest performing markets and the highest performing markets.

That's like a 5% about the difference between the best performing market and the worst performing market. So, those markets were up in the neighborhood of 3%, and our worst markets that were slammed the hardest by weather are down in the neighborhood of 2%..

And to follow up on technology, we have been looking at the appropriate online ordering partner for the time that we do enter the market for online ordering. We have to be careful because of the complexity of the menu.

It's important that the technology which you use can really handle the type of volume and the complexity of guest preference etcetera with the menu. So, we're being careful there. We haven't selected a partner yet, and we are not moving forward immediately with online ordering, however, it's the strategy that we're looking to in the future.

Our technology strategy continues to be focused on enhancing the overall guest experience. I think on the last call we talked a little bit about not moving forward with something like tablets on the table. It's really not right for our brand and not particularly right for our guest and the guest experience that we are looking for.

However, that doesn't exclude us from evaluating and testing other initiatives over the next couple of years, that maybe able to benefit the guest experience in different ways, whether that's mobile payments, mobile greeting etcetera. We're not starting any of those immediately; however, we are starting to explore some of them..

Thank you..

Your next question comes from the line of Brian Vaccaro from Raymond James. Please proceed..

Good evening, guys, just a couple of nitpicks for me, most of mine have been answered, but I wanted to ask you about the back to the '14 development outlook, can you remind us how many relocations are there going to be this year? I think the one in Atlanta is going to open here in the next couple of weeks, but any beyond that?.

No, that's the one..

Okay, so just that one. Okay, great.

And then, Doug, real quick, I didn't get down fast enough, but you mentioned cash flow from ops in the quarter, was that 70 million you said?.

I think I said it was 77..

Seventy seven, okay.

I'm just wondering anything that stood out on the -- I mean we will see it in the queue, but was there a big swing in net working capital or something there that I'm just having trouble getting to the 77 based on where net income, D&A etcetera were?.

We'll get back to you on that.

How is that?.

Yeah, that's fine..

We'll talk to you later on, and give you some more details about the cash flow statement..

Okay.

And then just one last quick one for me, I think we've gotten it on past conference calls, the bakery dollar sales, do you happen to have that handy?.

Well, what we decided to do was we decided not to -- last year when we changed our segment reporting, frankly, the bakery external sales were not a material amount for us. So, we used to just have the one liner, where we reported what they were, we're not going to do that anymore, but basically they were down around $2 million from last year..

Okay, that's helpful. I appreciate it..

Yeah..

Your next question comes from the line of Steve Anderson from Miller Tabak. Please proceed..

Yes, good afternoon, just a quick question on Grand Lux and looking at the deviation from the rest of The Cheesecake Factory, and that decline really reflect the weather in some of the locations in northeast, where we had inclement weather, also in Chicago was another case where weather certainly had an impact.

Was it reflective of that, or you think there are locations like you did in last couple of years ago, where you think you may have to impair those locations?.

First of all, it's only 11 units in the Grand Lux system. And three of the units are very high volume location, Chicago and the two in Las Vegas, and then you mentioned it, the Chicago restaurant was greatly impacted by weather.

They were slammed pretty hard with weather, and when there is only 11 restaurants and one of your highest volume restaurant is one that's greatly impacted by weather. That can be a big swing in the comp store sales report for the entire system..

Understood. Thank you..

Our last question comes from the line of Karen Holthaus from Credit Suisse. Please proceed..

Hi, one of the things that came up when it came to weather issues in the second quarter last year was not being able to use patio space because of a cold start to the spring and the early part of April.

How does that compare year-over-year this year?.

Are you talking about any specific geography, or is it ….

Well, one of the things that you -- well, last year just that because it was a pretty universally cold start to the spring, that it was headwind at least the beginning of the second quarter for not being able to use patio space at the same sort of utilizations of prior year, and how this year has been trending?.

I would say that -- the way I would answer that is that we know exactly what our sales are through yesterday, and we factored that into the guidance that we gave. So, anything that was good or bad about patios or weather, we took that into account..

All right, thank you..

You are welcome..

And this concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day..