THE CHEESECAKE FACTORY INCORPORATED Forward-Looking Statements
Certain information included in this Form 10-Q and other materials filed or to be filed by us with theSecurities and Exchange Commission ("SEC"), as well as information included in oral or written statements made by us or on our behalf, may contain forward-looking statements about our current and presently expected performance trends, growth plans, business goals and other matters. These statements may be contained in our filings with theSEC , in our press releases, in other written communications, and in oral statements made by or with the approval of one of our authorized officers. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as codified in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (together with the Securities Act, the "Acts"). This includes, without limitation, statements regarding corporate social responsibility ("CSR") and in our CSR report, the effects of the COVID-19 pandemic on our financial condition and our results of operations, accelerated and diversified revenue growth as a result of the acquisition ofNorth Italia andFox Restaurant Concepts LLC ("FRC"), financial guidance and projections as well as expectations of our future financial condition, results of operations, sales, target growth rates, cash flows, quarterly dividends, corporate strategy, plans, targets, goals, objectives, performance, growth potential, competitive position and business, and statements regarding our ability to: leverage our competitive strengths, including investing in or acquiring new restaurant concepts and expanding The Cheesecake Factory® brand to other retail opportunities; maintain our aggregate sales volumes; deliver comparable sales growth; provide a differentiated experience to customers; outperform the casual dining industry and increase our market share; leverage sales increases and manage flow through; manage cost pressures, including increasing wage rates, insurance costs and legal expenses, and stabilize margins; grow earnings; remain relevant to consumers; attract and retain qualified management and other staff; manage risks associated with the magnitude and complexity of regulations in the jurisdictions where our restaurants are located; increase shareholder value; find suitable sites and manage increasing construction costs; profitably expand our concepts domestically and inCanada , and work with our licensees to expand our concept internationally; support the growth of North Italia and other FRC restaurants; operateSocial Monk Asian Kitchen and other concepts; and utilize our capital effectively and continue to issue cash dividends and repurchase our shares. These forward-looking statements may be affected by various factors including: the rapidly evolving nature of the COVID-19 pandemic and related containment measures, including the potential for a complete shutdown of our restaurants, international licensee restaurants and our bakery operations; supply chain disruptions and inflation; the geopolitical environment, demonstrations, political unrest, potential damage to or closure of our restaurants and potential reputational damage to us or any of our brands; economic, public health and political conditions that impact consumer confidence and spending, including the impact of the COVID-19 pandemic and other health epidemics or pandemics on the global economy; acceptance and success ofThe Cheesecake Factory in international markets; acceptance and success of North Italia and the FRC concepts,Social Monk Asian Kitchen and other concepts; the risks of doing business abroad through Company-owned restaurants and/or licensees; foreign exchange rates, tariffs and cross border taxation; changes in unemployment rates; changes in laws impacting our business, including laws and regulations related to COVID-19 impacting restaurant operations and customer access to off- and on-premises dining; increases in minimum wages and benefit costs; the economic health of our landlords and other tenants in retail centers in which our restaurants are located, and our ability to successfully manage our lease arrangements with landlords; unanticipated costs that may arise in connection with a return to normal course of business, including potential negative impacts from furlough actions; the economic health of suppliers, licensees, vendors and other third parties providing goods or services to us; the timing of our new unit development; compliance with debt covenants; strategic capital allocation decisions including any share repurchases or dividends; the ability to achieve projected financial results; economic and political conditions that impact consumer confidence and spending; the resolution of uncertain tax positions with the Internal Revenue Service and the impact of tax reform legislation; adverse weather conditions in regions in which our restaurants are located; factors that are under the control of government agencies, landlords and other third parties; the risks, costs and uncertainties associated with opening new restaurants; and other risks and uncertainties detailed from time to time in our filings with theSEC . Such forward-looking statements include all other statements that are not historical facts, as well as statements that are preceded by, followed by or that include words or phrases such as "believe," "plan," "will likely result," "expect," "intend," "will continue," "is anticipated," "estimate," "project," "may," "could," "would," "should" and similar expressions. These statements are based on our current expectations and involve risks and uncertainties which may cause results to differ materially from those set forth in such statements. In connection with the "safe harbor" provisions of the Acts, we have identified and are disclosing important factors, risks and uncertainties that could cause our actual results to differ materially from those projected in forward-looking statements made by us, or on our behalf. (See Part II, Item 1A of this report, "Risk Factors," and Part I, Item 1A, "Risk Factors," included in our Annual
Report
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on Form 10-K for the fiscal year endedDecember 28, 2021 .) These cautionary statements are to be used as a reference in connection with any forward-looking statements. The factors, risks and uncertainties identified in these cautionary statements are in addition to those contained in any other cautionary statements, written or oral, which may be made or otherwise addressed in connection with a forward-looking statement or contained in any of our subsequent filings with theSEC . Because of these factors, risks and uncertainties, we caution against placing undue reliance on forward-looking statements. Although we believe that the assumptions underlying forward-looking statements are currently reasonable, any of the assumptions could be incorrect or incomplete, and there can be no assurance that forward-looking statements will prove to be accurate. Forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law. The below discussion and analysis, which contains forward-looking statements, should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes in Part I, Item 1 of this report and with the following items included in our Annual Report on Form 10-K for the fiscal year endedDecember 28, 2021 : the audited consolidated financial statements and related notes in Part IV, Item 15; the "Risk Factors" included in Part I, Item 1A; the "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7; and the cautionary statements included throughout this Form 10-Q. The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position.
COVID-19 Pandemic
Beginning inMarch 2020 , COVID-19 and measures to prevent its spread led to temporary closures, shifts to an off-premise only operating model or reduced dining room capacity across our portfolio. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently all of our restaurants are operating with no capacity restrictions. The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position. The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts. We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers. If, in the future, we experience significant disruptions related to COVID-19, we may again implement mitigation actions such as raising additional financing, not declaring future dividends, suspending share repurchases, suspending capital spending, implementing furloughs or modifying our operating strategies. Some of these measures may have an adverse impact on our business.
General
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. We currently own and operate 307 restaurants throughoutthe United States andCanada under brands including 208 The Cheesecake Factory®, 29 North Italia® restaurants and a collection within our FRC business. Internationally, 29 The Cheesecake Factory® restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers.
Overview
Our strategy is driven by our commitment to customer satisfaction and is focused
primarily on menu innovation, service and operational execution to continue to
differentiate ourselves from other restaurant concepts, as well as to drive
competitively strong performance that is sustainable. Financially, we are
focused on prudently managing expenses at our restaurants, bakery facilities and
corporate support center, and leveraging our size to make the best use of our
purchasing power.
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Investing in new Company-owned restaurant development is our top long-term capital deployment priority, with a focus on opening our concepts in premier locations within both new and existing markets. We expect our acquisition of North Italia and FRC to further accelerate and diversify our growth opportunities. ForThe Cheesecake Factory concept, we target an average cash-on-cash return on investment of approximately 20% to 25% at the unit level. We target an average cash-on-cash return on investment of approximately 35% for the North Italia concept and 25% to 30% for the FRC concepts. Returns are affected by the cost to build restaurants, the level of revenues that each restaurant can deliver and our ability to maximize the profitability of restaurants. Investing in new restaurant development that meets our return on investment criteria is expected to support achieving mid-teens Company-level return on invested capital. Our overall revenue growth is primarily driven by revenues from new restaurant openings and increases in comparable restaurant sales. Changes in comparable restaurant sales come from variations in customer traffic as well as in average check. ForThe Cheesecake Factory concept, our strategy is to increase comparable restaurant sales by growing average check and maintaining customer traffic through (1) continuing to offer innovative, high quality menu items that offer customers a wide range of options in terms of flavor, price and value, (2) focusing on service and hospitality with the goal of delivering an exceptional customer experience and (3) continuing to provide our customers with convenient options for off-premise dining, as we believe there is opportunity for a longer-term elevation of our off-premise mix compared to pre-COVID-19 pandemic levels. We are continuing our efforts on a number of initiatives, including menu innovation, a greater focus on increasing customer throughput in our restaurants, leveraging our gift card program, working with a third party to provide delivery services for our restaurants, increasing customer awareness of our online ordering capabilities, augmenting our marketing programs, enhancing our training programs and leveraging our customer satisfaction measurement platform. Average check is driven by menu price increases and/or changes in menu mix. We generally updateThe Cheesecake Factory menus twice each year, and our philosophy is to use price increases to help offset key operating cost increases in a manner that balances protecting both our margins and customer traffic levels. We have historically targeted menu price increases of approximately 2% to 3% annually, utilizing a market-based strategy to help mitigate cost pressure in higher-wage geographies. Due to the cost pressures we are currently experiencing, particularly in commodities, in the first quarter of fiscal 2022, we implemented price increases above our historical levels to protect margins. Future near-term pricing actions may also be at levels above historical norms. In addition, on a regular basis, we carefully consider opportunities to adjust our menu offerings or ingredients to help manage product availability and cost. Margins are subject to fluctuations in commodity costs, labor, restaurant-level occupancy expenses, general and administrative ("G&A") expenses and preopening expenses. Our objective is to recapture our pre-COVID-19 pandemic margins and longer-term to drive margin expansion, by leveraging incremental sales to increase restaurant-level margins atThe Cheesecake Factory concept, leveraging our bakery operations, international and consumer packaged goods royalty revenue streams and G&A expense over time, and optimizing our restaurant portfolio. We plan to employ a balanced capital allocation strategy, comprised of: investing in new restaurants that are expected to meet our targeted returns, repaying borrowings under our Revolving Facility and returning capital to shareholders through our dividend and share repurchase programs, the latter of which offsets dilution from our equity compensation program and supports our earnings per share growth. Future decisions to pay or to increase or decrease dividends or to repurchase shares are at the discretion of the Board and will be dependent on a number of factors, including limitations pursuant to the terms and conditions of the Amended Credit Agreement and applicable law. Longer-term, we believe our domestic revenue growth (comprised of our targeted annual unit growth of 7%, in aggregate across concepts, and comparable sales growth), combined with margin expansion, planned debt repayments and an anticipated capital return program will support our long-term financial objective of 13% to 14% total return to shareholders, on average. We define our total return as earnings per share growth plus our dividend yield. 21 Table of Contents Results of Operations The following table presents, for the periods indicated, information from our condensed consolidated statements of income/(loss) expressed as percentages of revenues. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any other interim period or for the full fiscal year. Thirteen Thirteen Weeks Ended Weeks Ended March 29, 2022 March 30, 2021 Revenues 100.0 % 100.0 % Costs and expenses: Cost of sales 23.7 21.7 Labor expenses 37.3 36.6
Other operating costs and expenses 26.2
28.9
General and administrative expenses 6.2
7.1
Depreciation and amortization expenses 2.7
3.5
Impairment of assets and lease termination expenses -
0.1
Acquisition-related contingent consideration, compensation and amortization expenses 0.1
0.1
Preopening costs 0.2 0.6
Total costs and expenses 96.4 98.6
Income from operations 3.6 1.4Interest and other expense, net (0.2)
(0.4)
Income before income taxes 3.4 1.0
Income tax provision 0.5 0.4
Net income 2.9 0.6Dividends on Series A preferred stock -
(0.8)
Net income/(loss) available to common stockholders 2.9 %
(0.2) %
Thirteen Weeks Ended
Revenues Revenues increased 24.1% to$778.4 million for the fiscal quarter endedMarch 29, 2022 compared to$627.4 million for the comparable prior year period, primarily due to an increase in comparable restaurant sales, reflecting the impact of the COVID-19 pandemic in the first quarter of fiscal 2021, as well as additional revenue related to new restaurant openings.The Cheesecake Factory comparable sales increased by 20.7%, or$102.6 million , from the first quarter of fiscal 2021. The increase from fiscal 2021 was primarily driven by increased customer traffic of 25.3% primarily due to the impact of the COVID-19 pandemic in the prior year, partially offset by a decline in average check of 4.6% (based on a 8.2% negative change in mix, partially offset by an increase of 3.6% in menu pricing). Sales through the off-premise channel comprised approximately 28% of our restaurant sales during the first quarter of fiscal 2022 as compared to 43% in the first quarter of fiscal 2021 as many customers have returned to on-premise dining, whereas consumer behavior had shifted towards the off-premise channel during the prior year period due to the pandemic. However, off-premise sales mix remains elevated versus the pre-pandemic level of 17% during the first quarter of fiscal 2019. We account for each off-premise order as one customer for traffic measurement purposes. Therefore, average check is generally higher for off-premise orders as most are for more than one customer. In turn, the lower mix of sales in the off-premise channel during the first quarter of fiscal 2022 compared to the prior year first quarter was the primary driver of the negative change in mix and also contributed to the increase in traffic. We implemented effective menu price increases of approximately 3.3% and 1.5% in the first quarter of fiscal 2022 and third quarter of fiscal 2021, respectively.The Cheesecake Factory average sales per restaurant operating week increased 20.9% to$225,523 in the first quarter of fiscal 2022 from$186,478 in the first quarter of fiscal 2021. Total operating weeks atThe Cheesecake Factory restaurants increased 1.0% to 2,704 in the first quarter of fiscal 2022 compared to 2,678 in the prior year. 22
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North Italia comparable sales increased approximately 32% from the first quarter of fiscal 2021. The increase from fiscal 2021 was primarily driven by increased customer traffic of 32% primarily due to the impact of the COVID-19 pandemic in the prior year, partially offset by a decrease in average check of 1% (based on a 5% negative change in mix, partially offset by an increase of 4% in menu pricing). North Italia average sales per restaurant operating week increased 29.2% to$139,940 in the first quarter of fiscal 2022 from$108,328 in the first quarter of fiscal 2021. Total operating weeks at North Italia increased 24.4% to 377 in the first quarter of fiscal 2022 compared to 303 in the prior year. Restaurants become eligible to enter the comparable sales base in their 19th month of operation. AtMarch 29, 2022 , there were threeThe Cheesecake Factory restaurants and six North Italia restaurants not yet in the comparable sales base. International licensed locations and restaurants that are no longer in operation, including those which we have relocated, are excluded from comparable sales calculations. Cost of Sales
Cost of sales consists of food, beverage and bakery production supply costs incurred in conjunction with our restaurant and bakery revenues, and excludes depreciation, which is captured separately in depreciation and amortization expenses. As a percentage of revenues, cost of sales was 23.7% and 21.7% in the first quarters of fiscal 2022 and 2021, respectively, primarily due to inflation in excess of pricing across most categories (2.4%), partially offset by a shift in sales mix within the restaurants and a lower proportion of third-party bakery revenues (0.4%). Labor Expenses
As a percentage of revenues, labor expenses, which include restaurant-level labor costs and bakery direct production labor, including associated fringe benefits, were 37.3% and 36.6% in the first quarters of fiscal 2022 and 2021, respectively. This increase was primarily due to wage rates and overtime (1.2%) as well as training labor (0.3%), partially offset by pricing leverage (0.8%) in the first quarter of fiscal 2022.
Other Operating Costs and Expenses
Other operating costs and expenses consist of restaurant-level occupancy expenses (rent, common area expenses, insurance, licenses, taxes and utilities), marketing, including delivery commissions, other operating expenses (excluding food costs and labor expenses, which are reported separately) and bakery production overhead and distribution expenses. As a percentage of revenues, other operating costs and expenses were 26.2% and 28.9% in the first quarters of fiscal 2022 and 2021, respectively. This variance was primarily driven by pricing leverage (1.6%), sales leverage within the occupancy and building costs (0.6%), and lower restaurant-level incentive compensation expense (0.5%), partially offset by higher general liability insurance due to lower claim activity in the prior year (0.2%).
G&A Expenses
G&A expenses consist of the restaurant management recruiting and training program, restaurant field supervision, corporate support and bakery administrative organizations, as well as gift card commissions to third-party distributors. As a percentage of revenues, G&A expenses were 6.2% and 7.1% in the first quarters of fiscal 2022 and 2021, respectively. This variance was primarily driven by sales leverage and expense management (0.6%), as well as lower corporate incentive compensation expense (0.3%).
Depreciation and Amortization Expenses
As a percentage of revenues, depreciation and amortization expenses decreased to
2.7% in the first quarter of fiscal 2022 from 3.5% in the comparable prior year
period due primarily to sales leverage.
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Impairment of Assets and Lease Terminations
During the first quarter of fiscal 2022, we recorded impairment of assets and lease terminations expense of$0.2 million related to lease termination costs and accelerated depreciation for twoGrand Lux Cafe locations that closed during the quarter. In the first quarter of fiscal 2021, we recorded impairment of assets and lease terminations expense of$0.6 million related to lease termination costs for two Other restaurants.
Acquisition-Related Contingent Consideration, Compensation and Amortization Expenses
We recorded$0.9 million and$0.6 million during the first quarter of fiscal 2022 and 2021, respectively, of acquisition-related contingent consideration, compensation and amortization.
Preopening Costs
Preopening costs were$1.8 million and$3.9 million in the first quarters of fiscal 2022 and 2021, respectively. We had no openings in the first quarter of fiscal 2022 compared to oneThe Cheesecake Factory , one North Italia and one Other FRC location in the comparable prior year period. Preopening costs include all costs to relocate and compensate restaurant management staff members during the preopening period, costs to recruit and train hourly restaurant staff members, and wages, travel and lodging costs for our opening training team and other support staff members. Also included are expenses for maintaining a roster of trained managers for pending openings, the associated temporary housing and other costs necessary to relocate managers in alignment with future restaurant opening and operating needs, and corporate travel and support activities. Preopening costs can fluctuate significantly from period to period based on the number, mix and timing of restaurant openings and the specific preopening costs incurred for each restaurant.
Interest and Other Expense, Net
Interest and other expense, net was$1.5 million and$2.7 million for the first quarters of fiscal 2022 and 2021, respectively. This decrease was primarily due to interest in the prior year related to our interest rate swap, which was terminated inJune 2021 ($0.5 million ), as well as favorability across several other categories. Income Tax Provision
Our effective income tax rate was 13.8% and 37.1% for the first quarters of fiscal 2022 and 2021, respectively. The decrease resulted primarily from a reserve for an uncertain tax position recorded in the first quarter of fiscal 2021, partially offset by a lower proportion of employment credits in relation to pre-tax income in the first quarter of fiscal 2022.
Non-GAAP Measures
Adjusted net income/(loss) and adjusted net income/(loss) per share are supplemental measures of our performance that are not required by or presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. We calculate these non-GAAP measures by eliminating from net income/(loss) and diluted net income/(loss) per common share the impact of items we do not consider indicative of our ongoing operations. To reflect the potential impact of the conversion of our Series A preferred stock into common stock for the period that it was outstanding prior to the conversion onJune 15, 2021 , we excluded the preferred dividend and assumed all convertible preferred shares have been converted into common stock. (See Note 9 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our preferred stock.) We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. In the future, we may incur expenses or generate income similar to the adjusted items. 24
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Following is a reconciliation from net income/(loss) and diluted net income/(loss) per common share to the corresponding adjusted measures (in thousands, except per share data):
Thirteen Thirteen Weeks Ended Weeks EndedMarch 29, 2022 March 30, 2021
Net income/(loss) available to common stockholders $ 23,163$ (1,202) Dividends on Series A preferred stock - 5,070 COVID-19 related costs (1) - 4,917 Impairment of assets and lease termination expenses 207 594
Acquisition-related contingent consideration, compensation and amortization expenses
891 550
Uncertain tax positions - 2,471
Tax effect of adjustments (2) (286) (1,576)
Adjusted net income/(loss) $ 23,975 $ 10,824
Diluted net income/(loss) per common share $ 0.45 $ (0.03) Dividends on Series A preferred stock - 0.09
Assumed impact of potential conversion of preferred stock into common stock (3)
- 0.00
COVID-19 related costs (1) - 0.09
Impairment of assets and lease termination expenses 0.00 0.01
Acquisition-related contingent consideration, compensation and amortization expenses
0.02 0.01
Uncertain tax position - 0.05
Tax effect of adjustments (2) (0.01) (0.03)
Adjusted if-converted net income/(loss) per share (4) $ 0.47 $ 0.20
Represents incremental costs associated with the COVID-19 pandemic such as (1) additional sanitation, personal protective equipment, sick and vaccination
pay, and healthcare benefits associated with furloughed staff members.
(2) Based on the federal statutory rate and an estimated blended state tax rate,
the tax effect on all adjustments assumes a 26% tax rate.
Represents the impact of assuming the conversion of preferred stock into (3) common stock (9,598,559 shares), resulting in an assumption of 53,787,314
weighted-average common shares outstanding for the thirteen weeks ended March
30, 2021.
(4) Adjusted net income per share may not add due to rounding.
Fiscal 2022 Outlook
Based on extrapolating recent trends and assuming no material disruptions from COVID-19 or other factors, we anticipate total revenue for the second quarter of fiscal 2022 to be approximately$830 million to$850 million and for the full fiscal year to be approximately$3.3 billion to$3.4 billion , withThe Cheesecake Factory fiscal year 2022 average sales per location reaching just over$12 million , including the impact of the 53rd operating week. We remain committed to protecting our longer-term restaurant-level margins and will take appropriate actions, including additional menu pricing to offset structural and permanent costs, as needed. However, we will likely continue to absorb short-term cost fluctuations driven by the current environment. Including theFebruary 2022 price increase, we currently have 4.75% pricing inThe Cheesecake Factory menu and anticipate taking another menu price increase that is above our historical norm in the third quarter of fiscal 2022. For fiscal year 2022, we expect commodity inflation of low to mid double digits inclusive of the recent geopolitical environment, with mid-teens inflation in the second quarter of fiscal 2022 moderating to high single digit inflation in the fourth quarter of fiscal 2022. We expect fiscal year 2022 net labor inflation of approximately 6% when factoring in wage rates and channel mix, among other components such as payroll taxes and benefits. We also anticipate other operating costs and expenses as a percentage of revenues to improve as we move through the year, with a full year average of approximately 25.5%. In addition, we expect fiscal 2022 G&A expenses of approximately$210 million , preopening costs of approximately$18 million , depreciation and amortization expenses of approximately$90 million and are utilizing a tax rate of approximately 11% to 12% for modeling purposes. 25
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We plan to open as many as 15 to 16 new restaurants in fiscal 2022, including fourThe Cheesecake Factory restaurants, four to five North Italia restaurants and as many as seven restaurants within our FRC business, which includes three to fourFlower Child locations. We anticipate approximately$150 million in cash capital expenditures to support this level of unit development, as well as required maintenance on our restaurants.
Liquidity and Capital Resources
Our corporate financial objectives are to maintain a sufficiently strong and conservative balance sheet to support our operating initiatives and unit growth while maintaining financial flexibility to provide the financial resources necessary to protect and enhance the competitiveness of our restaurant and bakery brands and to provide a prudent level of financial capacity to manage the risks and uncertainties of conducting our business operations under various economic and industry cycles. Typically, cash flows generated from operating activities are our principal source of liquidity, which we use to finance our restaurant expansion plans, ongoing maintenance of our restaurants and bakery facilities and investment in our corporate and information technology infrastructures. However, given the impact of the COVID-19 pandemic on our operations, during fiscal 2020 we increased borrowings under our credit facility and issued convertible preferred stock to increase our liquidity. During fiscal 2021, we used net proceeds from issuing convertible senior notes and additional common stock to fund the repurchase of the majority of our Series A preferred stock and the conversion of the remaining Series A preferred stock into common stock, simplifying our capital structure and eliminating future convertible preferred stock dividends. We also utilized a portion of the net proceeds to reduce borrowings under our credit facility. Similar to many restaurant and retail chain store operations, we utilize operating lease arrangements for all of our restaurant locations. Accordingly, our lease arrangements reduce, to some extent, our capacity to utilize funded indebtedness in our capital structure. We are not limited to the use of lease arrangements as our only method of opening new restaurants. However, we believe our operating lease arrangements continue to provide appropriate leverage for our capital structure in a financially efficient manner. During the first quarter of fiscal 2022, our cash and cash equivalents decreased by$6.1 million to$183.6 million . The following table presents, for the periods indicated, a summary of our key cash flows from operating, investing and financing activities (in millions):Thirteen Thirteen Weeks Ended Weeks EndedMarch 29, 2022 March 30, 2021
Cash provided by operating activities $ 33.5 $ 21.6 Additions to property and equipment (29.1) (7.2) Acquisition-related deferred consideration and compensation (7.2) -
Cash Provided by Operating Activities
Cash flows from operations increased by
Property and Equipment
Capital expenditures for new restaurants, including locations under development, were$16.5 million and($0.3) million for the first quarters of fiscal 2022 and 2021, respectively. Capital expenditures also included$12.2 million and$6.7 million for our existing restaurants and$0.4 million and$0.8 million for bakery and corporate capacity and infrastructure investments in the first quarters of fiscal 2022 and 2021, respectively. We currently anticipate fiscal 2022 capital expenditures to be approximately$150 million .
Acquisition-Related Deferred Consideration and Compensation
During the first quarter of fiscal 2022, we made a payment of
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Convertible Senior Notes
OnJune 15, 2021 , we issued$345.0 million in aggregate principal amount of convertible senior notes ("Notes"), which will mature onJune 15, 2026 , unless earlier repurchased, redeemed or converted. AtMarch 29, 2022 , the conversion rate for the Notes was 12.7551 shares of common stock per$1,000 principal amount of the Notes, which represents a conversion price of approximately$78.40 per share of common stock. In connection with the cash dividend that was declared by our Board onApril 21, 2022 , onMay 12, 2022 we will adjust the conversion rate (which is expected to increase) and the conversion price (which is expected to decrease) of the Notes in accordance with the terms. (See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of the Notes.)
Revolving Credit Facility
OnMarch 30, 2021 , we entered into an Amended Credit Agreement, which terminates onJuly 30, 2024 , and consists of a$400 million revolving loan facility (the "Revolving Facility"), including a$40 million sublimit for letters of credit. The Amended Credit Agreement also provides the ability to increase the Revolving Facility in an amount not to exceed (a) during the Covenant Relief Period$125 million and (b) thereafter,$200 million . The funding of any such increases are subject to receipt of lender commitments and satisfaction of customary conditions precedent. Certain of our material subsidiaries have guaranteed our obligations under the Amended Credit Agreement. The Amended Credit Agreement contains customary affirmative and negative covenants, including limits on cash dividends and share repurchases with respect to our equity interests, and restrictions on indebtedness, liens, investments, sales of assets, fundamental changes and other matters. The Amended Credit Agreement also contains customary events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgements, cross defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default could result in the termination of commitments under the Revolving Facility, the declaration that all outstanding loans are immediately due and payable in whole or in part and the requirement of cash collateral deposits in respect of outstanding letters of credit. As ofMarch 29, 2022 , we were in compliance with the covenants set forth in the Revolving Facility. AtMarch 29, 2022 , we had net availability for borrowings of$240.1 million , based on a$130.0 million outstanding debt balance and$29.9 million in standby letters of credit. (See Note 5 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our long-term debt.)
Common Stock Dividends
To preserve liquidity during the COVID-19 pandemic and in conjunction with the terms of the Amended Credit Agreement, our Board suspended declaring dividends on our common stock. Cash dividends of$2.2 million were paid in the first quarter of fiscal 2021, represent dividends previously accrued on restricted stock awards that vested during those quarters. InApril 2022 , our Board declared a quarterly dividend. (See Note 13 for further information on the approved dividend.) Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements, limitations on cash distributions pursuant to the terms and conditions of the Amended Credit Agreement and applicable law, and other such factors that the Board considers relevant. Share Repurchases
Under authorization by our Board to repurchase up to 56.0 million shares of our common stock, we have cumulatively repurchased 53.2 million shares at a total cost of$1,706.4 million throughMarch 29, 2022 with 97,682 shares repurchased at a cost of$3.9 million during the first quarter of fiscal 2022 to satisfy tax withholding obligations on vested restricted share awards. Our objectives with regard to share repurchases have been to offset the dilution to our shares outstanding that results from equity compensation grants and to supplement our earnings per share growth. Our share repurchase program does not have an expiration date, does not require us to purchase a specific number of shares and may be modified, suspended or terminated at any time. To preserve liquidity during the COVID-19 pandemic and in conjunction with the terms of our Amended Credit Agreement, our Board suspended our share repurchase program. InApril 2022 , our Board reinstated our share repurchase program. Future decisions to repurchase shares are at the discretion of the Board and are based on several factors, including current and forecasted operating cash flows, capital needs associated with new restaurant development and maintenance of existing locations, dividend payments, debt levels and cost of borrowing, obligations associated with the Acquisition, our share price and current market 27 Table of Contents
conditions. The timing and number of shares repurchased are also subject to legal constraints and covenants under the Amended Credit Agreement that limit share repurchases based on a defined ratio. (See Note 9 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for further discussion of our repurchase authorization and methods.)
Cash Flow Outlook
We believe that our cash and cash equivalents, combined with expected cash flows provided by operations and available borrowings under the Revolving Facility, will provide us with adequate liquidity for the next 12 months and the foreseeable future. As ofMarch 29, 2022 , we had no financing transactions, arrangements or other relationships with any unconsolidated entities or related parties. Additionally, we had no financing arrangements involving synthetic leases or trading activities involving commodity contracts.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. Actual results could differ from these estimates. Our critical accounting estimates have not changed materially from those previously reported in our Annual Report on Form 10-K for the fiscal year endedDecember 28, 2021 .
Recent Accounting Pronouncements
See Note 1 of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report for a summary of new accounting standards.
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