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2017 Golden Chain Award winner: David Overton

Cheesecake Factory CEO’s recipe for success: ‘Break all the rules’

Before founding The Cheesecake Factory in 1978, David Overton was on a path to becoming a professional rock ’n’ roll drummer.

In the 1970s, the erstwhile percussionist dropped out of school to march to his own beat. And Overton was having measured success; his band appeared with legend Janis Joplin at the long-demolished but always venerated Straight Theater in San Francisco.

“I went to law school in San Francisco, but I dropped out because I wanted to pursue music,” Overton recalled in an interview. “I played until I was 27. That’s when I joined my parents in L.A. to build their cheesecake business.”

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And The Cheesecake Factory Inc. remains, 40 years later, a solid hit with longevity that has far eclipsed anything on the Billboard Hot 100.

Despite a slight 0.5 percent decline in same-store sales in the second quarter ended July 4, The Cheesecake Factory had posted 45 quarters of positive sales with its tome-sized menu, a corporate culture featured in the Forbes 2017 “100 Best Companies to Work For” and, of course, the family-recipe cheesecakes. The company has 40,000 employees systemwide.

The first Cheesecake Factory opened in Beverly Hills in 1978, and the company has grown to 207 upscale casual-dining restaurants, including 193 Cheesecake Factory restaurants, 13 Grand Lux Cafes and one RockSugar Southeast Asian Kitchen. The company also has 16 Cheesecake Factory units internationally, is creating its own fast-casual concept and has taken a minority investment in the growing North Italia and Flower Child brands with Scottsdale, Ariz.-based Fox Restaurant Concepts.

“After spending a good amount of time with David and his team,” said Sam Fox, founder of Fox Restaurants Concepts, in the wake of last November’s investment, “it became very clear to me that we share the same values in terms of our commitment to delivering amazing food and hospitality to our guests, while also recognizing that our team members are our greatest asset.”

Overton said culture remains a strong part of The Cheesecake Factory brand — “We believe treating people right and giving to people everyday,” he says — along with a good amount of rule flouting.

“We break all the rules and kind of do the impossible,” said Overton, who has served as CEO since the company went public with five restaurants in September 1992. “Everybody would say, ‘You have to have a small menu.’ We have a large menu. We make every single thing from scratch every day in every restaurant — we commissary nothing.

“It’s that dedication and hard work with great service in a casual environment that made us a success,” Overton said.

Overton joined Alshaya executives during a Cheesecake Factory opening in Dubai in 2012. (Photos: The Cheesecake Factory)

After his fledgling drumming career in San Francisco, Overton returned to Los Angeles to help his parents in their cheesecake business, creating The Cheesecake Factory on Feb. 25, 1978, as a way to showcase his parents’ signature desserts.

“We just struck a chord with people for good, simple, straightforward fresh food,” Overton recalled. “The menu was so simple. We had a few burgers, a few omelets, a few salads. The one thing that always stood out was the fresh strawberry cheesecake. Cheesecake is America’s favorite dessert in restaurants.”

To this day, Overton says, his favorite food is the Factory’s fresh strawberry cheesecake, which uses his mom’s recipe as its base.

The best-selling Cheesecake Factory menu item, including at international units, is the avocado egg rolls. That’s followed by the chicken Madeira and the fresh strawberry cheesecake. “Those things have become our standard items,” Overton said.

Overton said The Cheesecake Factory works hard to keep the menu appealing to generations of customers.

“We’ve changed the menu twice a year, every year, for 40 years,” he said. “That’s what keeps people interested. And it keeps us current. We don’t rest on our laurels. There’s nothing that America wants to eat that can’t go on the Cheesecake Factory menu. And I think we’ve improved it.”

The units range in size from 7,200 square feet in Midwestern cities to 20,000 square feet in the Honolulu location, which remains the highest volume restaurant in the company, Overton said. Sales average $10.7 million per restaurant.

The company introduced Grand Lux Café in 1999 to complement The Cheese Factory.

“They are both high-end casual dining,” Overton explained. “All the recipes are different. Cheesecake Factory has radius restrictions depending on the landlord and leases we sign, and Grand Lux allows us to dot in restaurants in great real estate locations.”

Ernst & Young named David Overton an E&Y Entrepreneur of the Year in 2012.

The company this year will be expanding its Los Angeles RockSugar, opened in 2008, to a second unit, locating it next to The Cheesecake Factory in Oak Brook, Ill. The company is also shopping for Los Angeles real estate to debut the fast-casual concept it has been developing in-house, Overton said.

Since the recession of 2008, Overton said casual dining is struggling even with high employment numbers and a strong stock market.

“We’re trying to figure out what’s happening out there. Right now, we are trying to understand the forces at play economically,” he said, adding that he regrets not acting faster during the 2008 downturn and its effect on sales.

“I think the failure is that I thought it still wouldn’t have affected us so much,” he said, in answering a question about what he considers a failure. “I think I waited too long to take action. I thought it would come back, and it didn’t. And once I took action we started to do the right things and it came back. That was a very trying time, and I would say it because I was too complacent with our previous success.

“I’ve learned my lesson, trust me,” Overton added quickly. “I don’t wait any longer.”

He says he has no regrets about not pursuing a musical career, and he still avidly listens to music with his wife, Sheila, sons Adam, Kevin and Darren, and grandchildren Sofia, Everleigh, Gabriel and Hugh.

Overton was raised in Detroit, so he says he has a fondness for music rooted there, especially rhythm and blues and Motown hits.

In 2001, Overton established The Cheesecake Factory Oscar & Evelyn Overton Charitable Foundation to honor his parents. The foundation’s beneficiaries range from the City of Hope to the Salvation Army.

“I’m much happier,” he said, looking back on his decision to enter foodservice. “I didn’t know I would like it. I actually like sweeping outside the door. I love the people. I love the age group. At the heart, I’m a bit of teacher. It’s remarkable how much I loved the restaurant business, and I still do.”

As for the success of The Cheesecake Factory for nearly 40 years, Overton said he’s not sure it could be, in recording terms, be covered again.

“It’s like the cake you bake, and you ask, ‘Can you ever bake it again?’” he said. “I’m not sure.”

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @ronruggless

 

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