The Cheesecake Factory Inc. has maintained a good share of off-premises sales as it sees opportunities to increase casual-dining market share amid pandemic closures, executives said Tuesday.
David Gordon, president of the Calabasas Hills, Calif.-based company, and Matthew Clark, the chief financial officer, presented at the Raymond James 43rd Annual Institutional Investors Conference in Orlando, Fla.
With figures from the National Restaurant Association indicating as much as 15% of the U.S. restaurant remain closed because of COVID and other impacts, Clark told the group, “We believe this industry rationalization provides a unique opportunity to gain market share.”
That opportunity is a correction of supply, Clark indicated. “Pre-COVID, the restaurant industry has been over saturated with unit growth, outpacing population growth,” he said.
He also said The Cheesecake Factory, which also owns North Italia and concepts in the Fox Restaurant Concepts portfolio, can capitalize on the increased use of off-premises channels. The company has an exclusive deal with DoorDash for third-party delivery and has enhanced its online ordering capabilities for pickup options, he said.
“We believe a meaningful increase in off-premises sales could be a longer term sales driver for The Cheesecake Factory,” he said, adding that the 29-unit North Italia brand was increasing same-store sales into this year.
North Italia’s sales in the fourth quarter increased 14% from the 2019 period, Clark said. “That trend carried into 2022 with quarter-to-date, through Feb 15, comparable sales up approximately 38% versus 2021 and average weekly sales remaining near fourth-quarter 2021 levels despite January historically being one of the slower months of the year,” Clark said.
Gordon said the Cheesecake brands had worked during the pandemic to improve convenience for guests, and that was paying off in off-premise sales.
“Total off-premises sales have grown significantly since the start of the pandemic and are currently trending at 27% of sales,” Gordon said. “This reflects the contribution from delivery as well as continued growth of our takeout business. To put this in perspective, that equates to about $3.1 million per restaurant per year, on average, nearly double pre-pandemic levels.”
Clark said The Cheesecake Factory was expecting to generate long-term annual unit growth of 7%, “which we believe will be one of the highest growth rates in the casual-dining industry.” That translates to 17 to 19 new restaurant openings this year, he noted.
For the fourth quarter ended Dec. 28, Cheesecake Factory’s net income was $2.1 million, or 4 cents per share, compared with a loss of $32.3 million, or loss of 85 cents per share, in the prior-year period. Total revenues were $776.7 million for the quarter, compared with $554.6 million a year ago.
The Cheesecake Factory Inc. owns and operates 308 restaurants under the Cheesecake Factory, North Italia brands and a collection within Fox Restaurant Concepts, including the fast-casual Flower Child. The company acquired FRC in 2019. Internationally, 29 units operate under licensing agreements. Cheesecake Factory’s bakery division has two U.S. facilities that produce the chain’s cheesecakes and other baked products.
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