The Cheesecake Factory activated $19.85 million of gift cards in its fiscal third quarter, down 5.7% from a year earlier. The restaurant group reported the figure in its November 2 Form 10-Q. Its October 27 earnings release gave investors the overall results but did not break out gift card activations or the outstanding liability. [S1] [S2] [S3]
Activations fell while cards continued to be redeemed
The company recorded $26.91 million of redemptions and breakage combined during the 13 weeks ended September 29. Together they exceeded new activations by $7.07 million, taking the gift card liability from $183.45 million at the start of the quarter to $176.39 million at the end. The comparable 2025 quarter ended at $189.35 million. [S1]
Cheesecake Factory gift card activity in the third quarter
The filing reports new activations and a separate combined reduction for redemptions and breakage.
USD millions
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Source
Redemptions and breakage are shown as the magnitude of a decrease in the liability. The filing does not split the two in this table.
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| Category | Q3 2025 | Q3 2026 |
|---|---|---|
| Activations | 21.042 USD millions | 19.845 USD millions |
| Redemptions and breakage | 27.983 USD millions | 26.910 USD millions |
Activations add to the amount the company owes in meals or other eligible purchases when customers use their cards. The company recognizes some unredeemed balances as breakage based on redemption patterns. Its consumer terms say purchased gift cards do not expire. [S1] [S4] [S5]
Distribution costs sit separately from customer balances
The filing also tracks a separate asset for costs the company defers when selling gift cards, such as eligible commissions and credit card fees. The company deferred $2.35 million in the quarter and amortized $3.59 million of previously deferred costs, leaving $14.67 million in gift card contract assets. The year-earlier ending balance was $15.10 million. [S1] [S4]
Cheesecake Factory deferred gift card cost activity in the third quarter
Deferred costs added and amortized in each 13-week period.
USD millions
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Amortization is shown as a positive magnitude. These are costs of selling cards, separate from the card balances owed to customers.
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| Category | Q3 2025 | Q3 2026 |
|---|---|---|
| New cost deferrals | 2.472 USD millions | 2.347 USD millions |
| Amortization | 3.659 USD millions | 3.594 USD millions |
The company says it recognizes those costs over the same pattern as related gift card revenue. It also identifies third-party distributor commissions as a component of corporate expenses. The filing provides no channel-by-channel split of activations, redemptions or the deferred costs. [S1] [S4]
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Oliver Reed
Oliver Reed covers industry acquisitions, investment and market research for Gift Card News.