Restaurant Chain Plans To Increase Its Number of Locations by at Least 7% Annually
Pent-up demand for its signature dessert pushed quarterly revenue at The Cheesecake Factory to a company record high, and the restaurant chain is looking for that loyalty to fuel nationwide growth in the coming year and beyond.
Executives of the company, based in the Los Angeles suburb of Calabasas Hills, California, told analysts they are standing by pre-pandemic plans to grow the location count, currently at 301 in the U.S. and Canada, by 7% annually, with at least 14 total openings planned for full-year 2021.
“The good news is our real estate strategy continues to be looking for great A [level] sites,” company President David Gordon told analysts during a second-quarter earnings call. “We see some good availability out there.”
For its second quarter ended June 29, Cheesecake Factory reported total revenue of $769 million, a jump of nearly 160% from a year earlier as same-store sales saw a 150% bump. Net income for the quarter was $17.1 million, compared with a $70.5 million net loss in the year-earlier period when the pandemic had restaurant dining rooms closed nationwide.
During the second quarter, the company opened two locations of its North Italia brand, which serves Italian fare, in Miami and San Antonio, Texas. It opened a new location of Flower Child, which serves organic and vegetarian items, in Atlanta, and a licensed location of its flagship Cheesecake Factory brand opened in Shanghai, China.
Earlier this month, a North Italia opened in Franklin, Tennessee, the company’s second location in the Nashville region.
In coming months, the company will be scouting sites for its full-service casual eateries where other restaurants closed up shop under the tough 2020 conditions of the pandemic. The business climate forced the permanent shutdown of more than 110,000 U.S. restaurants, according to the National Restaurant Association trade group.
Gordon said the company is scouting traditional mall locations for its main Cheesecake Factory brand, but other types of “lifestyle” properties and smaller regional and neighborhood centers could fit the bill for the North Italia and Flower Child brands.
Chief Financial Officer Matthew Clark said the company’s pace of new location openings is now running ahead of where it stood at the same point of 2019, and “more opportunities are coming up.”
Executives said they are watching for potential effects on dine-in traffic if California and other states re-impose indoor mask mandates amid rising coronavirus infections and hospitalizations, primarily among the unvaccinated. But so far, overall nationwide sales for 2021 through July 26 are pacing about 10% ahead of sales for the same period of 2019, with dining rooms now fully open in all of its markets except Toronto.
Overall sales are being bolstered in part by off-premise purchases, through digitally-ordered pickups and deliveries, now doubling levels seen in 2019 and accounting for nearly one-third of current total sales, executives said.