Jill S. Peters - Vice President of Investor Relations David M. Overton - Chairman, Chief Executive Officer and Chairman of Enterprise Risk Management Advisory Committee W. Douglas Benn - Chief Financial Officer and Executive Vice President

Jeffrey Andrew Bernstein - Barclays Capital, Research Division John S. Glass - Morgan Stanley, Research Division Joseph T. Buckley - BofA Merrill Lynch, Research Division Michael Kelter - Goldman Sachs Group Inc., Research Division Matthew J. DiFrisco - Lazard Capital Markets LLC, Research Division Sharon Zackfia - William Blair & Company L.L.C., Research Division David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division Brian J. Bittner - Oppenheimer & Co. Inc., Research Division Will Slabaugh - Stephens Inc., Research Division Bryan C. Elliott - Raymond James & Associates, Inc., Research Division John W. Ivankoe - JP Morgan Chase & Co, Research Division Andrew M. Barish - Jefferies LLC, Research Division Nicole Miller Regan - Piper Jaffray Companies, Research Division Amitabh Kapoor - Gabelli & Company, Inc. Mitchell J. Speiser - The Buckingham Research Group Incorporated

Good day, ladies and gentlemen, and welcome to the Third Quarter 2013 The Cheesecake Factory Earnings Conference Call. My name is Crystal, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host today, Ms. Jill Peters. Please proceed.

Good afternoon, and welcome to our third quarter fiscal 2013 earnings call. I'm Jill Peters, Vice President of Investor Relations. On the call today are David Overton, our Chairman and Chief Executive Officer; 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 the forward-looking statements as a result of the factors and 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 statement. David 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 fourth quarter of 2013, as well as our initial thoughts on 2014. And then we'll open the call to questions. With that, I'll turn the call over to David.

Thank you, Jill. The third quarter marks our 15th consecutive quarter of positive comparable sales, lapping our most difficult comparison of the year. We continue to outperform the industry and widen the gap this quarter. Importantly, we continue to increase our market share through full margin sales, not through discounting. Utilizing menu innovation and high-service standards to attract guests are fundamental sales drivers at The Cheesecake Factory and we remain true to that. We had 2 very successful openings during the third quarter, in Novi, Michigan and San Juan, Puerto Rico, that set company sales records. Both restaurants generated over $400,000 in their respective first week sales, which is incredibly strong performance. The extent to which consumers are willing to wait in line to experience The Cheesecake Factory speaks to the affinity and awareness people have for our brand. It also validates that we are building our restaurants in the right sites. To that point, we expect to open as many as 9 company-owned restaurants this year with opening dates about evenly split between November and December. We expect to end the year with 168 Cheesecake Factory restaurants and we still have ample runway toward our ultimate target of 300. Internationally, sales at the 3 Cheesecake Factory restaurants in the Middle East continue at a very strong rate. The next opening in the Middle East is currently planned for Saudi Arabia, which is scheduled to open December of this year. Looking ahead to 2014, we currently expect to open as many as 10 to 12 company-owned restaurants including 1 relocation. In addition, we expect as many as 3 to 5 restaurants to open in the Middle East and Mexico under licensing agreements based on the information we have at this time. As we have said in the past, we do not control the timing of international openings and opening dates may move for a number of reasons. Ultimately, we are focused on the quality and success of these openings rather than the pace, which has been crucial to our success with company-owned restaurants. We remain confident in our ability to execute and drive consistent financial performance. Our cash flow generation is both predictable and strong and we remain committed to returning excess cash to shareholders. As such, we are allocating an additional $300 million in capital for repurchases in the fourth quarter, contributing to full year repurchases of up to $200 million. With that, I'll turn the call over to Doug.

Thank you, David. Total revenues of The Cheesecake Factory for the third quarter of 2013 were $469.7 million. Revenues reflect an overall comparable sales increase of 0.8%. Comparable sales increased 1% at The Cheesecake Factory and declined to 2.6% at Grand Lux Cafe. We've said for some time now that The Cheesecake Factory is outperforming the industry and Grand Lux Cafe is performing more in line with the industry and this continued to be the case in the third quarter. External bakery sales were $12.2 million for the quarter. Cost of sales was down 60 basis points in the third quarter of 2013 at 24% of revenue versus 24.6% in the prior-year quarter. The favorability stemmed primarily from general grocery costs with lower wheat and corn prices continuing to benefit items, such as pastas and oils. In addition, we experienced favorable dairy cost, as well as a benefit from a bakery mix shift. Labor was 32.1% of revenue in the quarter, flat relative to the third quarter of the prior year. Other operating costs and expenses were 24.3% of revenues for the third quarter, down 80 basis points from the third quarter of the prior year. There were a number of factors that impacted this line item including: timing of certain expenses, such as marketing and other operating costs; higher production in our bakery facilities; and leverage on rent expense. G&A was 6.1% of revenues for the third quarter, up 120 basis points from the prior year as expected and considered in our third quarter guidance. The biggest driver was lapping a $2.3 million benefit from recouping legal costs in the third quarter of last year. In addition, we made some investments in our G&A infrastructure as we previously discussed and also experienced some timing shifts with respect to relocation…

[Operator Instructions] Our first question is going to come from the line of Jeffrey Bernstein with Barclays.

Just I guess, 2 questions. First is a --, doing my math quickly here, the guidance you just gave for fiscal '14, would seem to imply earnings at the midpoint roughly I guess, 10%, 11% growth, which seems below kind of that mid-teens target you guys targeting. I'm just wondering whether the shrimp and salmon would be the biggest driver or are there any other unusuals that might be in there, and I would think maybe, to have more pricing power to offset more of that, are you -- would you contemplate taking more price to offset what would seem to be a pretty large hit to earnings?

Okay. So let's talk about that, that represents some of -- the range I gave somewhere between 8% and 14% earnings per share growth, so you might be right about the midpoint of the range. And that obviously includes the pressure from the shrimp and the -- we also talked about salmon, of between $0.04 and $0.07 per share. So otherwise, it would be, without that, somewhere between 11% and 16% earnings per share growth. Let me say this about the shrimp and salmon pricing expectation and where that is for 2014. This is an early estimate and the estimate is that shrimp cost could rise next year by as much as between 30% and 60%. But I should reemphasize that this is a very early estimate and we will know more by the time we report our fourth quarter of 2013 results in February. So our guidance today is based on the best information that we have available as of today. The limited cost and availability of shrimp, I think, has been well-publicized but we're focused on the long-term health of our business. And as we always do, Jeff, balancing our need to improve guest traffic with our desire to protect our margins. And we view the shrimp and salmon issue as a short-term issue and we're really not looking to fully price for it. We believe that too much pricing might impair our ability to grow guest traffic, particularly in what we see as a lackluster consumer spending environment.

Understood. And then just a follow-up being on the unit guidance you guys offered for next year. I know last quarter you mentioned getting into the double-digits, so it seems like you're targeting that 10 to 12, I'm just wondering if you can kind of qualitatively talk about the environment we're hearing that perhaps real estate availability, opening up a little bit, maybe more development picking up, I would think you guys are better experts than most others. Any kind of insight you can provide in terms of that for '14 and '15 would be great.

I'll let David speak to that.

I think that there are more -- there is some more construction going on and their portfolios seem to be more open to the kinds of sites that we had. So we feel that the 10% to 12% is a nice tick up, and again, that's just as of today. Hopefully there could be some other things we're interested in. So although it's certainly not the floodgates are opening, but I think it certainly is better this year and in '15 than it was last year.

Got it. And just last question, you mentioned the highly promotional environment in your press releases and we've heard from some of your peers. I'm just wondering whether you've seen any kind of change in terms of that picking up a little bit with perhaps less commodity cost inflation or have you seen anything rational, irrational more recently in terms of the trends from a comp perspective?

Not really. We try to kind of look at the promotion and discounting as something that's been going on for a number of years now. There have been a lot of deals that have been out there, limited time offers, bundled offers that are available to consumers pretty consistently. And in spite of this, we've been comping positive and we're taking market share, if you think it's a 0-some gain. So we've focused on driving full margin sales at a full range of price points and offering the guest options to spend less as opposed to discounting. And by so doing, we haven't sacrificed our margin at the expense of sales, and we're protecting our brand for the long-term. So I don't know that we've seen really any significant change or impact from promotions that are different today than they were for the last couple of years.

So your comps were stable, it seems like more so through the quarter, then?

The -- yes. Well, our sales throughout the quarter?.

Yes, just from that comp perspective. I don't know if that pickup is...

Yes. Our comps throughout the quarter were flat to positive throughout months of the quarter. As you know, the industry was negative during the quarter, but there's always things that happen that affect things to change between months in the quarter, for instance, last year, we did the Dallas promotion during the third quarter last year. So that was -- there was a shift of Labor Day out of 1 quarter into another. So some of those things. But if you take all that into account, the trends were pretty consistent for the quarter adjusting for known events.

Our next question comes from the line of John Glass.

First, Doug, just what percentages of your cost of goods is shrimp and salmon? And I never thought it was that big a deal but obviously I was misinformed?

I -- it's not a huge percentage but we do sell a lot of shrimp and we do sell a lot of salmon. We -- but when you have a shrimp cost is going up by 50%. That's not 10% or 5%, it's 50% or 30% to 60%, that can have an impact. I don't know if I know the exact -- now 10%, maybe.

Okay. And then as you think about your capital spending next year it's going to be up 14% at the midpoint of the range you just gave I think, and 14% at the high end of your earnings range, right? So do you expect all that's equal less buyback activity next year, or given that you mentioned that in fact that you've expanded your credit line, do you expect to use the credit line to kind of smooth out year-over-year kind of your ability to buy stock back regardless of, kind of, maybe whether it's a temporary depressed earnings because of shrimp or higher CapEx, because of some pull forward or whatnot?

Yes. I -- that's a good question. We're going to do $200 million worth of share repurchases this year. I don't know that we'll be at $200 million next year but we're going to -- our earnings sensitivity range assumes that we're going to use substantially all of our free cash flow for dividends and share repurchases. And that free cash flow would also include any cash we receive from stock option exercises, which, this year, were pretty material, over $70 million related to cash that we received from stock option exercises. So we're executing on a substantial share repurchase program today without taking on debt to do it. And we expect to, again, to repurchase up to $200 million this year alone. And looking forward, we don't really see the need to take on permanent debt to execute to the level of the share repurchases that we need over the longer term to drive our commitment for mid-teens earnings per share growth. So I would say, not permanent debt.

Our next question comes from the line of Joseph Buckley with Bank of America Merrill Lynch.

I guess I will start by the fish comments, so if you strip shrimp and salmon out, what would that 4% to 5% inflation rate for your basket look like, I -- or maybe another way to ask you is, what are you thinking about some of the other major commodities?

I would say with that shrimp it's 2%. Shrimp and salmon, about 2%.

Okay. And then I think you've completed your first relocation and you mentioned 3 relocations with the charges, are there 2 more to be done this year or is that the 1 you're planning for next year?

There's 2 more to be done this year and then next year, we will look at 1 additional.

Okay, and can you talk about your experience with the first one?

The first one was a restaurant here in the L.A. area that we basically just moved to a more vibrant trade area in the mall, less than a mile down the street and it's -- we're not -- we not -- not including relocated restaurants in the comp base, but in this case, this restaurant from a sales standpoint is doing significantly higher volume than the one that we....

In the smaller box, it's doing better. So we're very happy with the outcome of the move.

Okay. I know it's very recent so you may want -- may not want to share the specifics. But can you say how much more sales you're doing at the new location versus the old?

Well, it is pretty early. But I don't know if honeymoon periods apply in this case like this but over 20% more.

Our next question comes from Michael Kelter with Goldman Sachs.

First off, if you could just give the transactions versus check, that would be great.

Yes, sure. So comps for the quarter were 0.8%, traffic was negative 0.9%, pricing that was in the menu was 1.8%, which makes the mix roughly flat or about 0.1% down.

And that was in a part of where I was going what it is, your same store sales have been positive for a while and you -- as you said, you're outperforming the industry. But traffic's been modestly negative now for I think, 3 or 4 quarters in a row, and I'm curious if it's something that you guys are looking at internally and concerned about or if you feel like it's just the environment, it'll pass, nothing for us to do?

Well, we're always concerned about that. I would say that if you look at the gap between us and the industry, the gap between us and industry for comp store sales is widening and the traffic piece of that gap is probably -- is widening even more. So on a 2-year basis, if I look at guest traffic, we are at 0.6% on a 2-year stack basis and I think the industry in my computation is minus 5.8%. So that's a pretty significant gap. And so our strategy, we are -- we would like to get obviously back to positive guest traffic and our strategy remains focused on where we're best in class, and that's on food, and on service, and on providing a spectacular ambience for our guests and we're building the brand for the long-term and we believe that we can retain and continue to increase our market share by differentiating ourselves in the way that we always have, through menu innovation, through food quality and through service. And these are the things that are our sales levers to drive full margin sales. So we know we're making guests happy, we know we have to even do a better job of that, particularly in an environment like this, if we want to get back to positive guest counts. But the environment is not a great environment to grow traffic again.

And then one other quick one, you mentioned a shift around the timing of marketing that benefited the other operating expenses, is that -- first of all, what was it? And second, is it marketing that already happened earlier in the year or is this marketing that got shifted into the fourth quarter and there might be some sales driver coming that we should be thinking about?

Yes. That's -- the marketing happened in the second quarter so there's not a sales driver in the fourth quarter but there's not an expense in the fourth quarter either. So the timing of marketing shifted out of the third quarter into the second quarter.

Our next question comes from the line of Matthew DiFrisco with Lazard.

Doug, my question is with respect to guidance. A couple of things. First, on the seafood side and the shrimp in particular in 2014. I just want to understand, do you have that locked in or is there an ability for it as we see it come down in the spot market, you might be proving conservative. I don't know how you purchase and if you're locking in shrimp, and you know visibility that will be that 3% to 4% head towards $0.07 -- $0.04 or so of EPS hit as you predicted. How locked in...?

What I said earlier was that, and I'll re-emphasize that this is a very early estimate. So that would seem to imply, at least, I'll tell you, that it implies, that we don't have a lock in. So it's very early and we are going to know more. But we know what we know today and we'll know more in -- as the weeks and months pass. But right now, we don't have that locked in.

Okay, excellent. I appreciate your conservativeness. With respect to the comp, I think, I'm dialing in remote here so I apologize for that, but it looks like from your annual guidance, you're still implying a little bit of a pickup on a 1-year and a 2-year basis in the fourth quarter. Can you describe a little bit of what might be the pushes and pulls on that as far as unique to the fourth quarter that you might have that optimism for that acceleration?

Sure. I guess the -- our thinking again with regard to the fourth quarter and our comp store sales expectations really hasn't changed from what we said in July. The biggest thing is that in the fourth quarter, our comparison is easier. We had our easiest comparison of the year, this is our easiest comparison of the year, we had our lowest comp store sales quarter of 0.9% in the fourth quarter last year. So we're lapping our easiest comparison, we're lapping presidential debates last year. We're lapping election day. We're lapping Hurricane Sandy. So that's the primary reason. Economic indicators, are they moving in the right direction? I think maybe slightly. The housing market continues to recover. The stock market is up, there really don't appear to be any negative calendar issues or holiday shifts that are impacting the fourth quarter. And I think that Thanksgiving and Christmas, there's 1 less week between Thanksgiving and Christmas, we don't really think that's going to impact us. So it's primarily because of the easier comparison.

Our next question comes from the line of Sharon Zackfia with William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: Just 2 questions, I guess. On the commentary about the price for next year, I think you implied you might take a little bit more than normal price given the shrimp and salmon but not fully offsetting it, so can you give us kind of your initial thought process on price for 2014 and whether you do that in the first menu change of the year? And then secondarily, I know it's a small, but Grand Lux was pretty weak in the quarter, so any commentary what happened with Grand Lux.

Okay. Okay, sure. With respect to the pricing we'll take next year. In the fourth quarter of this year, there's about 2% in pricing and somewhere, 2% or a little less has been what we've been taking at least over the last number of quarters. I would say next year we will be somewhere in the 2% to 2.25% range. So a little more pricing, not a lot more but a little more, enough to offset about $0.03 of what is really -- not totally known pressure from shrimp but we know there's going to be some pressure and that's enough to offset maybe about $0.03 of that pressure. So where else was I going with that? Okay. So let's go to Grand Lux, maybe I'll think of something else to say about that. But with respect to Grand Lux, my main comment about that is going to be, there are only 10 units in the comp base and that means there's greater variability quarter-to-quarter. We have 3 very high-volume locations in the Grand Lux, 2 of them are in Las Vegas and the softer sales in Las Vegas was the primary driver of Grand Lux comps in the third quarter. But remember, that if you take what Grand Lux's comps for the quarter and compare them to the industry, you'll find a not any worse in the industry, in fact, I think they're slightly better than in the industry.

Our next question comes from the line of David Tarantino with Robert W. Baird. David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division: Doug, I think you mentioned that part of your guidance for this year assumes lower bakery sales and it sounds like bakery sales were pretty negative during the most recent quarter. So could you give us some context on what's going on there and whether that's a trend that you think is going to continue throughout the rest of this year and into next?

Yes. Well we've seen lower external bakery sales, David, for some time now. We believe the warehouse club customer is more sensitive to the current economic environment, and as a result, it's prudent for us to plan around reduced external bakery sales. So the $0.01 reduction in the fourth quarter reflects that. Any expectation regarding possibly lower third-party bakery sales for 2014 is incorporated into our guidance range. But with that said, our bakeries are very busy and they are having to increase their production of desserts for internal bakery sales to our restaurants. Dessert incident rates in our restaurants are up, dessert sales as a percentage of our total sales are up. So our vertical integration of the bakery is resulting in producing very high-quality desserts that our customers love and that's really their primary mission. And external sales are just expected to be somewhat lower in the near-term. David E. Tarantino - Robert W. Baird & Co. Incorporated, Research Division: Okay, that's helpful. And then I guess one modeling question, I think the tax rate came down for this year. I was just wondering if you could clarify the driver of the tax rate being lower, and I think you lowered it by a point. And then for next year, it seems like it's going to stay at that low level. So I'm just curious to know what's driving that.

No. I think the tax rate that we -- is within the range of what we thought it would be. And at most -- I think we gave a 1 point range. So it's within that range. I don't even know with that kind of preciseness, what really drove that.

Our next question comes from the line of a Brian Bittner with Oppenheimher. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: With the 2014 guidance, is there anything else holding guidance back a little bit. It seems like when I add back the $0.04 to $0.07 from the shrimp and salmon inflation, I'm still getting a number that's a bit below kind of what you guys talk about on a long-term basis in that mid-double-digit range. So is there anything else to point out about the year?

There's -- as always, there's so many more things to point about the year. Let me bring up a couple of other sort of pressure points that are factored into that guidance. There are some pretty significant minimum wage increases later for the year especially in California where the minimum wage is going up from $8 an hour to $9 an hour in the middle of the year. So right now, with respect to minimum wage and incorporated into that the guidance we gave is between $2 million and $3 million of pressure for minimum wage increases and that's factored into that earnings sensitivity range. And the other thing is, we've had a couple of very good years of health care costs in our company and they've come down over the last couple of years, which is a little unusual to go back a full 7 or 8 years, but we've had a couple of good years. This next year, the Affordable Care Act is going to be in full force. We're still working through our benefits, open enrollment right now, and don't know yet what percentage of our employees will sign up for the healthcare coverage with us. But one of the biggest uncertainties is our ability to estimate what choices our staff members are going to make. And we worked with an outside consultant who provided us with actuarial assumptions about the potential impact of -- on next year, which is factored in to our earnings sensitivity as well and it's higher than healthcare costs were this year. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: Okay. Thanks, Doug. And just 2 quick questions on G&A. There's a huge bump up in the quarter. I know you talked about some things on the operating expense line in the restaurant. P&L, that shifted. Was there anything on the G&A that shifted for the quarter? And then the second part of G&A is, how are we supposed to think about G&A for 2014? And the investments behind it.

Yes. G&A for the quarter, the biggest piece representing about 50 basis points of the increase was the fact that we had this great benefit of this legal settlement last year. So that was timing. We've also, as we talked about before, made G&A investments this year, primarily to accommodate international expansion, and that represented some of the increase year-over-year. And then we did have some timing shifts. We had higher-than-typical relocation expenses in the third quarter, for some reason. But they were higher and that was significant, about 35 basis points of shifting. And our GM conference. The shift in the timing and the expense of the GM conference was also a timing item. So there's a good bit of timing in the G&A number and when you look at next year from a G&A standpoint, we don't think we'll be able to lever G&A next year in 2014. We're still going to continue to be making appropriate investments in our infrastructure in order to support our growth. With that said, when you look at next year and overall operating margins, we expect them to be flat to slightly positive. And that's despite a significant increase in cost of sales that we've been talking about. So that's kind of what I would say. Brian J. Bittner - Oppenheimer & Co. Inc., Research Division: And just that $0.04 the $0.07 of shrimp/salmon headwind, what's the inflate -- I know, I guess you talked about 4% inflation or whatever, but what, you said, 30% to 60% inflation, is that what that low and high end of that $0.04 to $0.07 is based on 30% to 60% inflation for shrimp and salmon?

I couldn't say it's that precise necessarily. I would just say that we -- again, I'll say it again, our estimates on what we're going to pay for shrimp are very preliminary and early. We know we're going to be paying more for shrimp. We don't know exactly how much more and so I would just say to hold tight on exactly where all of that settles out.

Our next question comes from the line of Will Slabaugh with Stephens, Inc.

I wanted to ask you about your new restaurant openings that you mentioned that were so strong. Number one, if there's anything in particular there that made those resonate so well. And secondly, does that tell you anything else about the potential for Cheesecake Factories out there in the U.S., maybe in different types of markets that you haven't thought about before or not?

Well, I think that there's a lot of pent-up demand in Michigan because it's been so long and that's where I'm from. But it was incredible with hours and hours booked to wait to take Cheesecake home and to dine with us. And as we said, there was -- it's just a normal 8,000-foot restaurant, doing over $400,000 for its first week. So -- but I do think there's a lot of demand in that size city. And we are moving into those. So that's -- about a number of those that we'll be doing next year and after that. And that really opens us up to the 300 potential restaurants that we can -- we have a guesstimate as of this time. So those are exactly the kind. In terms of Puerto Rico, I think it goes right to the international brand that we have. It was even busier than our Novi, Michigan opening and it still remains extremely busy. So that's just goes to, again, our reputation. the International demand that we have, that's why we're doing well in the Middle East. It's why I think we'll do very well in Mexico and so on, is people know us, they know us from either Orlando, or they know us from New York, and they know us from Miami and they know us from Houston and it's all those cities that have given us the impact -- our reputation in the Latin America and really the Caribbean, too. So, I think that's what it goes to.

And David mentioned Novi and Puerto Rico. We've had the other 2 openings. We talked about the 1 relocation that's up, say 20% better than the other restaurant. And the fourth one that we've opened so far is in Knoxville, Tennessee, and it was extremely successful. Went $400,000 initially week, but it was a lot. So there's pent-up demand and people waiting line before we open the restaurant, to eat lunch there.

Great to hear. And just a quick international follow-up, if I could. You gave us an update, there you said that the stores are still performing very well, sounds like those remain well above your prior expectations. Any update on additional talks of current or future potential franchisees around development that maybe wasn't reflected in that 3 to 5 number for next year primarily around any new sort of territories that we might see either in 2014 or beyond.

Those discussions are going on all the time is what the way I'd answer to that. Alshaya, if you remember, operates their concepts in I think 19 different countries.

Yes, 18, 19.

18 or 19 different countries and we have license agreements to like on 5 or 6 of those, so they are constantly, we're constantly in discussions about where else Alshaya just as -- as our current licensee partner of ours, can take our brand. Same thing with Alsea in Mexico and Latin America. There's -- they haven't opened the first restaurant yet but they do business in countries that aren't named to Mexico and Chile, which is where -- the 2 that we have the agreements with, including Brazil, which they -- we're always in discussions about where else we can go with them. And then we're in discussions with other potential licensee partners in other parts of the world that can bring The Cheesecake Factory there. It just takes the long time to put these deals together because obviously, we want them to be done right with the right partner.

The next question comes from the line of Brian Elliott with Raymond James. Bryan C. Elliott - Raymond James & Associates, Inc., Research Division: Just a couple clarifications, I guess. One, you mentioned, Doug, the stock option exercise is pretty high this year as you look at the Grant dates and the like. Is it going to be materially down from the $70 million or so this year? What should we think about that as a source of cash next year, maybe something...

I would say, if I were estimating it and looked at our models, I would say, well, don't use 70 million because I think that probably was an all time high for us or close to it, so I would use something closer to 40 or 45. It's a guess. If you tell me the stocks is going to be a lot higher, then it will be more than that. Bryan C. Elliott - Raymond James & Associates, Inc., Research Division: Understood, appreciate that help. Also, as we -- are we accelerating growth here? Can you give us some sense of what the timing by quarter might look like? On the opening schedule for '14?

Well the -- I think that we're going to have more of them in the first half of the year than we did this year.

It's typical.

Yes. So we typically are opening our restaurants as you've seen over the last few years in the last half of the year. So I would still say that I bet more than half of moving in the last half of the year but we'll get some open in the first half of the year, too. So maybe if you're saying 10 to 12, you might go 4 and 8 for the first half of the year and the second half.

It's just a guess, right?

It's just a guess. Bryan C. Elliott - Raymond James & Associates, Inc., Research Division: Okay. All right. And then back to the food cost discussion a bit. So the rest of the basket at shrimp and salmon, have you yet locked much of that?

Well, we're -- our contract is on a calendar year basis. Our purchasing team is always working on that. They're in the middle of contracting right now. At this point we -- we're where we think we should be with respect to contracting, which is kind of a convoluted way of saying that we're contracted on some things but not on others but where we're always are in October.

Our next question comes from the line of John Ivankoe with JPMorgan. John W. Ivankoe - JP Morgan Chase & Co, Research Division: As you guys kind of see development opportunities opening up and you obviously know a lot of new markets, very intimately, as you've been in many of them for 20-plus years. I mean, how does a potentially, either developed in-house or potentially bought your new concept enter your thinking over the next couple of years that's from a development perspective and also that you have the free cash flow generation where you could easily justify it?

I -- what we -- it's a great question and it's something that we think about a lot. Our drivers of mid-teens earnings per share growth that we've outlined, there's 5 of them and there's not a fixed one today that says that we would acquire or do another concept. However, I think that, that's something that we do look at. We do talk about internally. It's not -- it's something that at least today, we're more reactive on than proactive. But that's not something that I would entirely rule out because it's a -- as the years go by, they'll probably need to be another driver to be able to keep our earnings per share growth where we would like it to be. We just have to make sure that we do that in the right way.

Our next question comes from the line of Andy Barish with Jefferies.

One clarification and then question. Just on the fourth quarter openings, I want to make sure it's 5 openings but 2 of those are relos. So it's 3 net additions, am I right on that?

There's a total of 6 openings. One, which already opened. So 1 opened like the first or second day of the -- which was one of the relocations of the quarter. And then there'll be 5 more, so it's 6 minus 3. And you really can't net it out like that, you certainly can't net it out that way from a profitability standpoint because there -- so it's not really 6 minus 3 but if you want to just look at total number of units, it's 6 minus 3.

Okay. And then where have you guys have been doing marketing tests this year? Has there been anything additional on that front, any thoughts or costs behind looking at and testing some things in 2014?

Well we've -- we kept it marketing, we continue to use marketing for to strengthen our brand, protect our brand, retain our market share. And our marketing team, I think does a great job with that using social media, using -- getting us good publicity with respect to being on TV, using occasions, such as National Cheesecake Day, to promote a big presence, both digitally and within restaurant. With that said, we have done and we've talked about before some other campaigns that are more traditional advertising and we did that this year. So we used billboards and in-mall advertising for a couple of months this spring in one market and we also returned to the same market we used last fall for a follow-up campaign, just to see how customers responded to it and the takeaways where that we saw sales lift in both markets, even though there was no offer, no called action, no copy on ads, we saw a sales lift in those markets. We believe the brands help drive brand awareness and the advertising helped drive brand awareness, so we achieved our objectives. We continue though, Andy, to evaluate the overall effectiveness of this type of marketing spend from an ROI standpoint. So it's possible we would reallocate future marketing dollars to more of this type of campaign but not necessarily increase our total marketing spend to do it.

Our next question comes from the line of Nicole Miller with Piper Jaffray.

Coming at you with a very boring one, but tell us about comps, anything by geography, dayparts even food segment, alcohol versus food, anything you can share with us that we should know?

Geographically, we didn't see any material change, Nicole, in most regions were positive. The areas of the strength included California, Southwest, the Southeast. Obviously, we had some markets that were a little negative and below average but nothing that was materially negative. From a daypart perspective, we saw growth again across all of our dayparts, 4 dayparts, lunch and dinner, and then midafternoon and late night and we called them midafternoon and late night the shoulder periods, and those periods to continue to be up more than the lunch and dinner shoulder periods so we know that's kind of where our business is growing the most, however the percentages are pretty small. So if that's up by a couple percent more, the sales at midafternoon and late night are already pretty small. So it's not a big number but they are up more on a percentage basis. What else?

Just one more quick one. The series of announcements you've had so far for the third quarter, there's been a lot of talk about remodels and it could be QSR, fast casual, casual dining, high end. But given the major investment you made from the get go in your concepts and the degree of discipline around, I guess an annual maintenance. Can you talk to us about then why you don't have to go into a major remodel every 5 to 7 years like your peers?

Well we do it occasionally, right? We do it on an "as needed basis" and we have done a few major remodels but we -- I think we -- yes, for older restaurants that were 20 years old. We spend probably more than most of the people you're talking about. I'm sure we do in building these restaurants and they're built up to last and then the expectation and the allocation of our capital on an annual basis and the expectation is that they look like new. This restaurant that we just relocated that was in Southern California, it didn't -- it doesn't have the high ceilings and all the grandeur of some of the newer locations because it has been around for a very long period of time, but as far as just the look of the interior, it was kept up very well and it looked good to the guests. So that's our expectation and that's what we do and we allocate a lot of capital to doing that. So I think that's why and then if we need a major remodel, which we've done a few of them over the last few years, we'll allocate capital to do that.

Our next question comes from the line of Amit Kapoor with Gabelli & Company. Amitabh Kapoor - Gabelli & Company, Inc.: Can you guys talk in more detail about the strength in international of the 3 locations opened in the Middle East? And what that might potentially mean for other partners as they view that success overseas?

Yes. The 3 restaurants that we have opened are doing tremendously high sales volumes, I think as we talked about. It never hurts when you open up international locations and you're talking to other potential licensee partners that the initial international locations are doing well. So that doesn't hurt us. But we entered -- and David talked about it, we enter these negotiations even without having opened a restaurants in the Middle East, say 1.5 years ago. We have already having a very high demand for wanting to partner with us because our brands -- our brand is already very well known, and they already -- potential licensee partners already feel that they can do very high volume with this, The Cheesecake Factory brand. So I would say that the openings we've had so far are only adding more fuel to that buyer and -- but there are many -- we have to be very careful about who we pick obviously as our partners but there are many people that want to partner with us and there are only a select few that really can. Amitabh Kapoor - Gabelli & Company, Inc.: Okay. And can you just refresh for us the potential geographic footprints that you might be looking at, that is in been ongoing conversation that would be sort of right for international?

For international? Amitabh Kapoor - Gabelli & Company, Inc.: Correct.

Okay. Yes. So the agreement we have in place now with Alshaya, they have agreed to build 22 restaurants but their potential is far in excess of 22 restaurants but that's the agreement we have in place today. The agreement we have with Alsea is to build at least 12 restaurants. And but again, they -- that doesn't even count, if they one day want to go to Brazil and we agreed to that. So the way we look at international expansion is, we go back to the premise that we're trying to drive mid-teens earnings per share growth. And that international is one of the levers that we have the pull to drive mid-teens earnings per share growth and it doesn't take 20 of this a year to do this. So if we can -- if we do the 3 to 5 next year and we keep somewhere between that range as we give more territory doubt or sign up additional licensee partners, we're going to be fine with respect to international growth contributing to our expectation for mid-teens earnings per share growth. That's kind of how we look at it as opposed to how many restaurants can there be -- how many Cheesecake Factories could there be in China if we licensed China to a very highly confident licensee. It could be more than United States theoretically, right?

And our last question comes from the line of Mitch Speiser with Buckingham Research.

Just another question on the international development. Doug, did you mention that 1 should open in the fourth quarter?

Yes.

Okay. In December? Okay. And you mentioned I think, 3 to 5 in 2014. Any thoughts on the calendarization of that and maybe just the confidence level that you'll be in that range, because obviously there's always delays and extraneous factors and the fact that I think you did have some delays versus your beginning of the 2013 guidance that set that number down.

Yes. It's awful hard to give guidance with respect to international, we're not opening these restaurants, this is our international partner. But the degree of confidence that we'll have at least 3 is extremely high. Could we get to 5? That's obviously less high than 3 but we -- our degree of confidence in having 3 to 5 is very high. So that's how I'd answer that and then as far as the cadence or when they're going to open, I don't know. I would say that I would maybe.

We could have a few in the first half of the year.

We could have 2 -- 1 or 2 or 3 in the first half of the year.

Okay. Got it. And a separate question. You mentioned, I think there was a week between Thanksgiving and New Year's, there's 1 less week, you've mentioned that it probably is not a factor for you guys. Maybe if you could just comment on the reasoning why it may not be a factor. And just to get into calendar shifts, I believe Christmas and New Year's are on a Wednesday. Does that -- is that a positive or negative, if you can just go through some of those shifts, that would be great.

Yes. Thanksgiving -- we don't think it's material for us because our big "holiday season" is really the weeks right before Christmas, during and after Christmas. So the fact that there's more or less weeks between Thanksgiving and Christmas, we really don't think that impacts us very much, that's how I'd answer that. New Year's Day is shifting out of the fourth quarter of '13 and into the first quarter of '14 for us. But we don't believe that, that's material either. So we've kind of gone through that thought process and that's where we land.

Ladies and gentlemen, that conclude today's conference. Thank you for your participation. You may now disconnect. Have a great day.