What’s New at The Cheesecake Factory?

We’re not talking menu items (although that ahi tuna salad looks pretty amazing).  The company had a great first quarter ($891.2 million compared to $866.1 million in the first quarter of fiscal 2023). Fortune also named the Cheesecake Factory a “best company to work for” for the 11th year running.

Cheesecake Factory’s performance is especially notable because the company made a major ($350M) purchase in 2019, acquiring Fox Restaurant Concepts. The company had previously invested in experiential brands, including North Italia and Flower Child.

One initiative on Cheesecake Factory’s radar is the national expansion of Culinary Dropout. A casual sit-down eatery concept with its roots in Arizona, the brand is now expanding to other markets, starting with North Carolina, and has already delivered strong financial results.

What can other MULO (multi-location) food and beverage brands learn from this story?

• Diversification can be key for restaurant companies. The restaurants under the “cheesecake umbrella” serve a wide range of food in different atmospheres, and the individual menus reflect the changing tastes of today’s diners. Like many food brands, the Cheesecake Factory also operates manufacturing facilities and sells branded products to other types of companies, including retail and grocery.
• People matter. During acquisitions, ensure that team members remain committed and loyal. Corporate acquisitions often have a trickle-down impact on staff, which can result in service and satisfaction declines. The brand has consistently received strong positive ratings on many factors. As we know, the restaurant world can easily chew up and spit out employees. However, poor treatment of team members ultimately impacts service delivery and consistency.
• Pacing matters. Cheesecake factory appears to be taking a slow and steady approach to growth. Considering the purchase occurred right before the pandemic, the company’s financial performance has been impressive. Perhaps the lockdown gave the corporate decision-makers more time and focus to map out a growth strategy.
• Keep brands separate in consumers’ eyes. Do diners ultimately care who owns their favorite restaurant? Most likely, no. In fact, consumers who frequent Flower Child (which specializes in healthy options) may even be turned off by the parent company’s name and menu. A corporate balance sheet is irrelevant as long as food quality and service are great and consistent.
• If it’s not broken, leave it alone (but maybe expand it). North Italia now has close to 40 locations nationally.

We’ll keep an eye on the brand to see what’s next.

What’s Sam Fox up to now? He recently opened a luxury hotel in Arizona, where food is a primary focus. Fox Restaurant Concepts continues to operate other brands as well. Nothing cheesy about that!