The Cheesecake Factory Inc. is developing its own fast-casual restaurant concept and will add a second RockSugar Pan Asian Kitchen unit in 2017, the company’s CFO said Tuesday.
Calabasas Hills, Calif.-based The Cheesecake Factory predicts incremental growth with those efforts, along with investments last month in the North Italia and Flower Child concepts, according to Doug Benn, CFO of The Cheesecake Factory. The company has 198 Cheesecake Factory restaurants in the U.S.
On Tuesday, The Cheesecake Factory gave a presentation at the “Eat, Sleep Play — It’s Not All Discretionary Conference,” sponsored by the financial services firm Barclays, in New York City. Benn revealed few details about the fast-casual concept in creation.
“The fast-casual concept is being developed internally,” he said.
The company sees “measured growth” for the casual-dining RockSugar concept, which Cheesecake opened in 2008 in Los Angeles, and the 13-unit Grand Lux Café, Benn said.
He said RockSugar is “a unique concept with high consumer appeal and particularly on-trend with increasing consumer interest in ethnic cuisines.”
“We have a real estate opportunity that we believe is a great site for us to expand the concept beyond Southern California, which we have included in our development plans for next year,” Benn said.
The company plans to open eight or nine new restaurants in the coming year, he said, including the second RockSugar unit and the relocation of a Cheesecake Factory location.
Last month, the company opened its 13th Grand Lux location in Austin, Texas, featuring a smaller size and “a more relaxed contemporary feel,” Benn said.
The incremental opportunities are expected to increase earnings 1 percent to 2 percent a year, Benn said, including recent minority investments in the North Italia casual-dining brand and Flower Child fast-casual concepts.
Those two concepts, founded by Phoenix-based Fox Restaurants Concepts LLC, fit well into Cheesecake’s culture, Benn said.
“We believe this is a great opportunity to extend our operational and development expertise to help fuel the growth of two established but young concepts that share a number of parallels with us in terms of culture and philosophy and that we believe have significant runway for growth,” he said.
North Italia, a nine-unit modern Italian casual-dining concept, offers Cheesecake “a number of synergistic attributes, including operations and real estate development, as well as significant white space for an on-trend Italian offering,” Benn said. And five-unit Flower Child gives the company “a great potential opportunity for us to diversify our portfolio in a strong and growing niche,” he said.
Benn said Cheesecake will provide ongoing growth capital for both concepts. North Italia was founded in 2002, and Flower Child debuted in 2014.
“If they meet certain performance criteria, we will potentially acquire a majority or full ownership interest in either or both concepts, which would provide us with an incremental revenue stream,” he said.
For the third quarter ended Sept. 27, The Cheesecake Factory reported net income of $34.6 million, or 70 cents per share, rising 32.1 percent from $26.2 million, or 52 cents per share, in the same quarter last year.
Revenue was $560 million, rising from $526.7 million in the prior-year quarter. Same-store sales at Cheesecake units increased 1.7 percent in third quarter over the previous year.
In the Nation’s Restaurant News Top 100 report, The Cheesecake Factory ranked No. 36 among chains in terms of U.S. systemwide sales, reporting $1.9 billion in the fiscal year ended December 2015.
The company has 194 full-service Cheesecake Factory units in the United States and Puerto Rico. It also has 13 Grand Lux Café units and one RockSugar Pan Asian Kitchen. Internationally, Cheesecake licenses 13 restaurants in the Middle East, Latin America and Asia.
Photos courtesy of Flower Child