Stacy Feit - Cheesecake Factory, Inc. David M.

Overton - Cheesecake Factory, Inc. W.

Douglas Benn - Cheesecake Factory, Inc. David M.

Gordon – Cheesecake Factory, Inc.

Nicole Miller Regan - Piper Jaffray & Co. John William Ivankoe - JPMorgan Securities LLC Sam J.

Beres - Robert W. Baird & Co., Inc.

(Broker) Joseph Terrence Buckley - Bank of America Merrill Lynch Gregory Lum - Goldman Sachs & Co. Matthew Kirschner - Guggenheim Securities LLC Billy Sherrill - Stephens, Inc.

Courtney Yakavonis - Morgan Stanley & Co. LLC Andrew Marc Barish - Jefferies LLC Stephen Anderson - Maxim Group LLC Peter Saleh - BTIG LLC Sharon Zackfia - William Blair & Co.

LLC Jon Tower - Wells Fargo Securities LLC

Thank you. Good afternoon and welcome to our third quarter fiscal 2016 earnings call.

I'm Stacy Feit, Senior Director 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 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. David Overton will begin today's call with some opening remarks.

Doug will then take you through our operating results in detail and provide our outlook for the fourth quarter and the balance of 2016, as well as our initial thoughts on 2017. Following that, we'll open the call to questions.

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

Thank you, Stacy. We delivered our 27th consecutive quarter of positive comparable sales as we continued to create unique dining experiences for our guests.

We also meaningfully outpaced casual dining industry during the third quarter, underscoring our differentiated positioning as we remain a destination of choice, and we had strong bottom line performance as well. In addition to continuing to provide something for everyone with our innovative menu, we are encouraged by the results of our technology-enabled initiatives.

We are seeing some incremental sales in many locations from the delivery service we have been piloting with a third-party partner. We began a phased national roll-out at the end of the third quarter which has continued throughout October.

At present we have 78 restaurants in 16 states being served, and we plan to continue to introduce delivery to additional locations as our partner expands their market coverage. Feedback on our mobile payment app, CakePay, continues to be positive.

As we discussed on our second quarter call, we were chosen by MasterCard to be featured in the national advertising campaign for their Masterpass digital wallet solution. National TV spots ran in September, with the largest portion of the ad buy slated for November and December.

We believe this campaign is creating awareness for both CakePay and our restaurants. Execution within the four walls was excellent during the quarter.

Our best-in-class operators hit our labor productivity and food efficiency targets while delivering the Cheesecake Factory experience. We continue to invest in training, development and retention, as well as productivity tools to ensure that we maintain the infrastructure necessary to support continued high caliber performance.

On the development front for 2016, we still expect to open as many as eight company-owned restaurants, including one Grand Lux Cafe. Three Cheesecake Factory restaurants opened in October: one in Greensboro, North Carolina, one in Stamford, Connecticut, and our first New York City location in Queens, which just opened yesterday.

We have three domestic openings scheduled for the remainder of the fourth quarter. On the international front, we now expect as many as four restaurants to open this year under licensing agreements based on the information we currently have.

This includes the Cheesecake Factory at Dubai Festival City Mall that opened in August. For the first time each of our three licensees is planning to open at least one international restaurant this year.

Looking forward to 2017, we expect to open as many as eight to nine company-owned restaurants. This includes one Cheesecake Factory relocation and our second RockSugar Pan Asian Kitchen.

Internationally, we expect as many as four to five restaurants to open under licensing agreements in 2017. In closing, we continue to deliver consistent and predictable performance, a hallmark of our company.

We are executing at a high level operationally, positioning us well for a strong finish to 2016, as well as we look ahead to 2017. With that, I will now turn the call over to Doug for our financial review.

Thank you, David. Total revenues at The Cheesecake Factory for the third quarter of 2016 were $560 million.

Revenues reflect the comparable sales increase of 1.7% at The Cheesecake Factory restaurants. External bakery sales were $13.3 million in the third quarter.

Cost of sales decreased approximately 90 basis points year-over-year in the third quarter of 2016 to 23% of revenues. Key ingredients driving the favorability included seafood, groceries, dairy and poultry.

Labor was 33.3% of revenues, an increase of about 60 basis points from the third quarter of last year. A majority of the increase is attributable to higher hourly wages.

Wage rate inflation was in line with our expectations. Other operating costs were 24.1% of revenues, down 30 basis points from the prior year, due primarily to favorability in our workers' comp insurance comparison.

G&A was 6.4% of revenues in the third quarter of fiscal 2016, up 10 basis points from the same quarter of the prior year. Pre-opening expense was $2 million in the third quarter of 2016 versus $4.3 million in the same period last year.

We did not have any openings in the third quarter of 2016 compared to two openings in the same quarter of the prior year. Overall, sales leverage and effective cost management enabled us to offset wage inflation, driving strong adjusted margins which were up 100 basis points versus the prior year.

As a reminder, we recorded a $6 million pre-tax non-cash charge during the third quarter of 2015. Our tax rate this quarter was approximately 27%, within our expected range.

And adjusted earnings per share increased 19%. Cash flow from operations for the first nine months of 2016 was approximately $217 million.

Net of roughly $71 million of cash used for capital expenditures, we generated about $146 million in free cash flow through the third quarter of 2016. That wraps up our business and financial review for the third quarter.

Now I'll spend a few minutes on our outlook for the fourth quarter and the balance of 2016, as well as our initial thoughts on 2017. 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. As a reminder, 2016 is a 53-week year for us, with the extra week falling in the fourth quarter.

This is reflected in our assumptions. For the fourth quarter of 2016 we are estimating diluted earnings per share between $0.65 and $0.68 based on an assumed range of comparable sales of between 1% and 2% at The Cheesecake Factory restaurants.

With respect to the full year of 2016, we now expect comparable sales to be between 1% and 1.5%, and we are increasing our diluted earnings per share sensitivity to a range of $2.81 to $2.84, representing 19% to 20% year-over-year growth. This guidance is up $0.08 at the high end from the prior range, reflecting our strong bottom line performance in the third quarter.

We are expecting our overall operating margins to expand nicely for the full year. Regarding our corporate tax rate, we expect it to be about 27% for 2016.

We now expect total capital expenditures this year to be between $100 million and $105 million for as many as eight planned 2016 domestic openings, as well as potential openings in early 2017. We now anticipate completing up to $150 million in share repurchases this year.

Together with our dividend, we plan to return capital of roughly $190 million to shareholders in 2016. Turning to fiscal 2017, we are currently estimating diluted earnings per share in a range of $2.95 to $3.11 based on an assumed comparable sales range of between 1% and 2%.

On the cost side, we expect commodity inflation of about 1.5% to 2% in 2017. This assumption reflects notably higher seafood costs primarily attributable to salmon, whereas we currently expect meat, poultry and dairy costs to be favorable.

The guidance range assumes wage rate inflation of approximately 5% in 2017, consistent with the level we have seen in 2016. While we anticipate slightly less impact from government regulated wage increases in 2017, we are seeing upward pressure on discretionary wages in this tight labor environment.

As we have done in the past, we will seek efficiencies and cost savings to help offset some of the labor pressure, but this is not factored into our guidance at this point. Regarding our corporate tax rate, we expect it to be approximately 23% to 24% for 2017.

This lower tax rate reflects our estimate of the impacts of the adoption of the new accounting rules regarding stock-based compensation. Our total capital expenditures in 2017 are expected to be between $125 million and $140 million, including as many as eight to nine planned domestic openings as well as potential openings in early 2018.

Our restaurants generate a substantial amount of cash, and we continue to effectively allocate our capital to achieve our targeted returns and maximize shareholder value. In keeping with our practice of consistently returning our free cash flow to shareholders, we plan to continue to do so in 2017 in the form of dividends and share repurchases, which is reflected in our guidance.

With that said, we'll 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.

Thank you. Good afternoon.

I was wondering if you could talk a little bit about experiential dining and if you think your results signal that that's important in the current environment? And maybe just how can we think about what that means?

Like what are the characteristics of experiential operators of dining for consumers? Thanks.

I would think that the experiential dining is important. I think it's one of the reasons why when people ask us the question about whether the gap between grocery store pricing and restaurant pricing, whether that widening gap has impacted our sales results.

And we answer that question, we don't think it has. We think it has very little impact on our sales results because people are coming to us for exactly what you're talking about, Nicole, experiential dining.

They're getting something more out of their dining occasion when they come to the Cheesecake Factory than simply food. They're getting the environment, the service, and everything else that comes with a personalized experience.

So I think experiential dining, in addition to many other things, operational excellence, the environment that we serve our food in, our server train, all those things are what's helping to drive our results.

Yeah. And I would just add, Nicole, I think that our brand lends itself to shareable type of experiences where you're coming into a social environment.

And our food is not just large variety, but the portion size creates an environment where people want to come and share with each other and experience with each other. And we see that in just the amount of Instagram pictures that are taken of our food.

I think other than Starbucks we are the most popular Instagrammed brand out there. And that's part of that experience.

They want to share that experience with other people. And I think that does differentiate us from other brands.

Thank you.

Hi. Thank you.

Doug, just a quick clarification, then a question. You mentioned lower insurance costs.

I think that helped your other OpEx this quarter. How much was that in basis points, if you can quantify it?

That was probably about, most of the amount of the difference. It wasn't lower really insurance costs; it was lower comparative costs.

So the costs were unusually high last year and they were more in line with what is normal this year.

Okay. Fair enough.

And in your prepared remarks when you're setting up guidance for fiscal 2017, you mentioned something very quickly that you may try to offset some of the wage pressure from some things that you may be doing. I'm sorry, I'm not quoting you correctly at all.

But what did you mean and what could that mean? How significant could it be?

And I guess why wouldn't your guidance contemplate something that you may do structurally or tactically or what have you?

Well, our guidance does include the important things that are going to help offset wage rate pressure, such as what kind of menu pricing we're taking, and it incorporates the fact that we have this lower tax rate and all of those things that are helping to offset the wage rate pressure. Anything that we identify from a cost saving standpoint is not going to be a huge bucket.

It's going to be a little bit here, a little bit there. So we did a little bit of those things this year, and we've really just not specifically identified what items those might be yet, and that's why we didn't include them in our guidance.

What do you think menu price is for 2017? I'm sorry if I missed.

Well, pricing, John, as you know from us, always depends, at least for us, on the commodity environment and the traffic trends at the time that we're making decisions about our menu change. While we've really not firmed up exactly what 2017 pricing will be yet, we believe we have pricing power, given that differentiated positioning that we talked about earlier, maybe in contrast to what some of our competitors are doing who are discounting, which we're not doing.

So we could take pricing at levels similar to 2016 should we feel the environment necessitates that. So I would say the exact decision on that has not been made.

Thanks.

Hi. Good afternoon.

There's been a lot of focus on the industry demand environment lately. So I was wondering if you could just maybe provide any perspective on how Q3 comps trended throughout the quarter.

Then obviously you came in a little bit above the high end of your comp guidance. So really kind of what factors you think drove the upside versus how you were thinking about it with the last report?

Okay. Yeah.

Month-to-month our sales trends improved each month during the quarter in contrast perhaps to the performance of the broader industry. So our best comp store sales month was actually in September.

And I would just say that I think we've returned to our normal sales pattern of 1% to 2% that we've seen for a number of years now. There was a period of six to eight or maybe 10 weeks or so in the second quarter where we said that sales were a little bit soft.

They were off of what our average was by about 1%. But we thought that that was cyclical.

And we'd seen it before a number of times going in both directions; sometimes a little higher than normal, sometimes a little lower than normal. And we said we certainly didn't see the slowdown in the second quarter as a harbinger of anything really bad that we thought was going on in the restaurant business.

So I think we're simply back to where we've always been from a sales standpoint at about 2%.

That's helpful. Thanks.

And in terms of Q4 comp outlook, any perspective to provide on some of maybe the pushes and pulls for the comps? I know you have had Hurricane Matthew hit the nation here in October, and then you do have a Halloween shift and some Christmas holiday shifts.

So how should we be thinking about those impacts in Q4 comps here?

Yeah, we've factored all those things in. Certainly the fact that we have an easier comparison gives us confidence to say the 1% to 2% for the fourth quarter, but as you mentioned, we also factored in a somewhat negative impact on a year-over-year basis related to the shift in Christmas from Thursday and Friday last year to Saturday and Sunday this year that we're not going to enjoy the long weekend benefit that we saw from Christmas holidays last year.

And that is roughly a 50 basis-point impact, and we've factored that into our guidance. Halloween is a positive for us that we've factored in.

It's on a Monday this year, which is nice. And then we have modestly negative impacts from Hurricane Matthew, Presidential debate, New Year's Eve falling on a Saturday.

And none of those factors are really worth quantifying on their own, and our best estimate of their collective impact is reflected in the guidance we've provided.

Thanks.

You're welcome.

Thank you. (20:42) if you didn't give it during the call – I may have missed it.

Could you give us the breakdown for the third quarter comp in terms of traffic, price, and mix?

Sure. We had obviously.

The comp was 1.7%. Pricing in the quarter was about 2.6%.

We had a positive mix of about 0.5%, so traffic was minus 1.4%, which was an improvement over where we were in the second quarter. So we made some progress on the traffic front.

Okay. And David mentioned delivery and you mentioned number of stores in different markets – different markets I guess in other states where you're executing that.

Was that in effect for the full quarter or did that get layered in as the quarter progressed? And was it a significant factor in the same-store sales performance?

Joe, it was layered in as the quarters went. We didn't roll out all those 79 restaurants at one time.

Some of them just hit as frequently as a week-and-a-half or two weeks ago.

Okay. And the initial response to that, is it meaningful from a sales standpoint?

Or, I realize it's only 73 stores and (21:55) quarter, but any individual stores, can you talk about what kind of reaction you've had?

We've had positive reaction. I think that we're pleased thus far, and that's why we'd want to continue to roll out.

We've seen some sales incrementality in some locations. And we've seen great feedback from guests in regards to the experience, the quality of the food, the times that we're actually getting the food to them and their experience using the app, and their experience with our partner as well.

So we feel great about it. And that's why we're continuing to march forward.

And who are you partnering with?

Our partner today is DoorDash.

Got it. Okay.

That's helpful. Thank you.

Hi. Good afternoon.

This is actually Greg Lum on for Karen today. I was just wondering if you could provide any color on the retail traffic trends that you guys are seeing at the malls that you're located in.

Well, as you know, we're in a lot of malls. And the malls that we're in are all of the higher A to A-plus malls.

So we like being in malls, and we bring traffic to the malls. And so when we choose a site, we look at many factors: parking, exterior, door, we look at all the demographics, and malls are great places for us to be.

So the amount of money maybe that's being spent at some of the big-box department stores and some of the lower malls, or maybe even some of the malls that we're in, that might be down some. But the specialty retailers are doing well and we're doing well in malls.

Thank you.

I'm sorry. This is Matt Kirschner on for Matt DiFrisco.

I was just hoping you could go a little bit further into the third quarter comp, the 1.7%, the components of that. And also what was the Grand Lux same-store sales number for the quarter?

Yeah. The components, I said that earlier, but the comps were 1.7%, price was 2.6%, our mix was positive 0.5%, and traffic was down 1.4%.

And Grand Lux, Grand Lux comps for the quarter were up 3.4%. In the third quarter our Las Vegas restaurants, which are our highest volume Grand Lux restaurants, continue to perform well.

And we also saw improvements in our Florida locations. And Grand Lux traffic was also positive in the quarter.

Great. Thanks.

And last quarter you talked about some of the weakness in Houston. Have you noticed any other regional variances?

Well, geographically I think it's good news that we continue to see fairly consistent performance across geographies. There's about a 4% gap on the average between our best-performing and worst-performing geographies.

California and the Northwest and the Northeast, those are all our strongest markets. Our weakest markets are the Mountain Region and the Southeast.

And in fact those are the only two geographies with negative comps. With respect to Texas and Florida, both of those were slightly positive as we started to see signs of stabilization and growth in those markets.

Great. Thank you.

You're welcome.

Hey. Good afternoon, guys.

This is actually Billy on for Will. I wanted to ask real quick on the 2017 guidance a little more.

Is there a cadence to that EPS guidance that we should be aware of beyond just the regular seasonality that we usually see?

I don't think so.

Okay. And then on the same-store sales guidance, does that at least assume flat traffic?

Or is that something you guys see as achievable?

The comp store sales guidance for 2017?

Yes.

Well, certainly we see it as achievable. That's why we said it.

But 1% to 2% would assume traffic somewhere in the neighborhood of negative 1%.

Got it. And then real quick if I could, sorry if I missed this, what do you project pre-opening to be for the fourth quarter?

We can get with you offline on that.

Great. Thanks, guys.

Hi. This is Courtney on for John.

Two quick ones, just on the labor line, I know it sounded like hourly wage inflation was in line with your expectations and it's going to be similar in 2017 as it is in 2016, but this quarter it seemed like at least the pressure on the margin side was a little bit less. Was that mostly the result of the higher comp versus last quarter?

Or was that more of the productivity initiatives? And then secondly, if you can just comment on the tax rate.

Should we expect that also to be lower in the out years beyond 2017?

Okay. So let me see if I've got this.

So from a labor standpoint, in the third quarter the increase, as I mentioned, was largely driven by hourly wages. It was also partially driven by a group medical expense being higher year-over-year.

And certainly the fact that our comp store sales were over and above our range that we gave of 1.7% that helped with some leverage on the comp line. Also we had during the quarter some timing of expenses that benefited the third quarter and are moving into the fourth quarter that we've incorporated into our guidance that also helped us with the earnings per share beat over and above the high-end of the guidance we gave.

We also I think frankly, effectively managed our costs very well during the quarter. G&A and management labor came in somewhat below plan.

And that helped earnings per share in the quarter as well. And then your other question; I forgot it already.

Oh, it was just on you gave the tax rate guidance for 2017. Should we expect that lower tax rate to (28:47)?

Well, that isn't the way that it works. The tax rate guidance is going to be dependent on what our stock price really is, because it's a tax benefit that we're now able to run through the income statement that before had to go on the balance sheet.

So the tax benefit that we get from a tax deduction when restricted shares lapse or stock options are exercised, it's going to be dependent on what the share price is at the time we do it. So that's our estimate for what the tax rate will be for 2017 based on just an assumed stock price that we've assumed throughout the year.

We have to do the same thing. We have to assume stock prices for share repurchase as well.

So we've done it with respect to this, too.

Okay. Thanks.

You're welcome.

Hey, guys. Nice quarter.

Any, just on the shifting of openings, any margin pressures and some of the expense timing you talked about. Any particular lines we should look at in the 4Q at this point?

No. I mean they only shifted a few weeks.

So the year or the month that you open restaurants, they're not positive obviously for a couple of months anyway because of the pre-opening that's involved. So no, I don't think there's a material change.

Thank you.

You're welcome.

Yes, good afternoon. Actually, you haven't been mentioning RockSugar in quite some time and I just wanted to see what your motivation is to start up unit growth there rather than continuing some of the momentum at Grand Lux.

Well, it's a unique concept that has a high customer appeal. It's been voted in several surveys as a very good restaurant and it's frequented by high profile people.

It's on trend, we think, with the increasing consumer interest in ethnic cuisines. And we just think that we're interested in trying a second site to initially expand the concept beyond the Southern California market, and we believe we've identified a good candidate for 2017.

Do you want to add anything to that, David or?

We had property that we could expand on and we wouldn't put a Grand Lux there, and so we decided that this would be a perfect time to have RockSugar grow. So we had the property, it was there, we kind of controlled it, and we decided this would be a perfect site.

So that's why we're doing it.

Okay. Thank you.

Great. Thank you, and congrats on the quarter.

I just wanted to circle back on delivery; I know you said it's in like 78 or 79 stores today. Do you anticipate that delivery will be rolled out to all your Cheesecake Factory stores or is there a certain number of stores that you don't think it will be appropriate for?

We'd like for it to be in every location. So as our partner continues to expand into new markets, we will expand with them.

There needs to be a density of population for them to expand. But we should be close to 100 restaurants by the end of the year and we'll continue moving forward next year as well.

Do you think you'll get to all the restaurants by the end of 2017 or is that too optimistic?

Our hope would be that we could get to all of the restaurants by the end of the year.

Okay. And then just lastly on delivery.

I guess what gives you guys confidence that, as you roll this out, this is mostly incremental and not cannibalizing some of your in-store business?

Well, we can look at the current restaurants today and monitor whether or not we feel like there's cannibalization. We could look at our percentage of To-Go sales in general and see if they're growing in those restaurants.

So we have seen some To-Go sale. We have about 10% of To-Go sales on average that we've had for a long time.

We've seen some incrementality to that. And we haven't seen cannibalization in the restaurants that have seen those increases.

So that gives us insight into understanding exactly what's happening with those guests and whether or not they're trading up one experience for the other.

Great. Thank you very much.

Hi. Thanks for taking this.

Doug, just a point of education if I may. The lower tax rate that we're going to see in 2017, is that met with any higher expenses elsewhere on the income statement in G&A as it relates to the incentive comp, the stock-based comp that you're planning on running through?

No. No.

It's purely something that now impacts the tax line, the tax expense line, when previously that tax benefit we put it – went through paid in capital, it went on the balance sheet. So the new accounting rule says you can't put it on the balance sheet anymore.

You've got to take that tax benefit on the income statement. And it's not necessarily always going to be a positive.

I mean, it's a positive for us for next year in that the tax rate is going to be a lot lower because of the fact that our stock price has increased since these equity awards have been made, so that we're recording actually in the income statement the tax benefit on that difference in what the options or the restricted shares were issued at and what they're ultimately redeemed for, if you will.

Yeah. So that's from what I've read, it is going to add volatility, which obviously is going to be fun for everybody.

Yeah.

But does it influence your – is there a cash flow impact to this or is it just the pure GAAP impact?

It's pure GAAP impact.

Okay. Thanks for that.

Hi. Good afternoon.

Sorry if I missed this. I had to join a little bit late.

But the guidance for next year with the tax benefit, Doug, if you take that out, the kind of underlying earnings growth is a little bit less than I would have expected with a 1% to 2% comp. So can you walk through, in addition to labor, kind of where you're seeing the pressure?

Well, labor's a big part of it. We're at 5% wage rate inflation is – we expect that the comp store sales for the year at 1% to 2%, as we've talked about, we've been managing through the industry labor pressure and continue to believe, as I said earlier, that we have pricing power in 2017.

And we have a 53-week year is one of the big things this year, comparing to a 52-week year next year. So if you look at that, that represents probably 3% or so.

So instead of say 5% to 10% growth over 2016 at the midpoint, that'd make it like 8% to 13% because we have, again, a 52-week year. And the labor wage rate inflation is – you can look at it as being largely offset by the tax accounting change.

And then did you talk about what kind of price you're expecting for next year? Will it be less than this year, more or are you still deciding on that?

We're still deciding on it. I did talk about it.

And it's going to depend on what is the commodity environment and the traffic trends and other costs actually doing at the time we make the decision about that. We talked about believing we did have pricing power in this market given our differentiated positioning.

And we could take pricing similar to the pricing levels we took this year if we felt the need to do that.

And my last question is, I know there were a few markets where you took kind of above average pricing this year because of labor. I'm just curious if you're seeing any kind of pushback on that in those markets.

We're not really. One of the markets that we've had the most government-regulated wage rate increases has been California.

And then when I talked about geographies, California is actually our best-performing market. So I don't think we're seeing a lot of impact from that more regionalized type of pricing.

Okay. Great.

Thank you.

Hey. Good afternoon.

Just quick questions on Masterpass and CakePay. First on Masterpass, given how September trends were much better than the category and best in the quarter for you guys, can you talk about how maybe the Masterpass advertising contributed to comp growth?

I know you mentioned that it's going to continue in November, December. Maybe plans for 2017 as well.

Could you talk about that? And then on CakePay, can you just discuss the usage, customer usage in stores, and perhaps any other benefits you're seeing on your side from that?

Sure. Well, as far as Masterpass goes, the campaign was very limited in the period.

And it was probably a handful of ads that ran during that time. The majority of them are going to be running in November and December.

So it'd be hard to attribute the benefit of the sales to anything that had to do with Masterpass thus far. We look forward to seeing what's going to happen in November and December.

And the early adoption of CakePay is promising. It's still early, however.

And as mobile payments become more popular, I think CakePay will continue to be used more frequently by our guests. We do now have a full page ad that's running in our menu to increase awareness within the restaurant once guests do arrive.

So it's still early, as it is I think with mobile payments in general. But we feel good about it thus far.

And we think that the Masterpass will give us all some more awareness of CakePay because the ad itself does show the phone and a mobile payment process.

Thank you.