The Cheesecake Factory may be quietly building the next American restaurant empire.
The 215-unit casual-dining chain, known for its thick menu, eclectic interiors and eye-popping average unit volumes, is one of the biggest restaurant companies in the U.S.
But its collection of smaller brands, such as North Italia, Flower Child and Culinary Dropout, could eventually be even bigger, at least in terms of total unit count.
Executives said this week at the Morgan Stanley Global Consumer and Retail Conference that the company believes it can open as many as 200 North Italias, more than 200 Flower Childs and up to 100 Culinary Dropouts in the U.S. It also expects to open another 85 Cheesecake Factory locations for a total of 300 nationwide.
That would more than double the company's current footprint of about 341 restaurants across all brands.
Cheesecake’s smaller brands, which were acquired when the company bought Phoenix-based Fox Restaurant Concepts in 2019, have been in the spotlight recently after a shareholder encouraged Cheesecake to spin them off. Management said in October that the company has no plans to do that. Instead, it intends to continue nurturing them and testing which ones might work at a larger scale.
Here’s a look at where some of Cheesecake’s younger siblings stand today and where the company believes they could go in the future.
Cheesecake has deemed North Italia ready for prime time. | Photo: Shutterstock
North Italia
Known for its scratch-made pasta and pizza, North Italia is an upscale, contemporary take on the Italian restaurant. At the end of last quarter, it had 39 locations in 13 states and the District of Columbia.
Last year, North Italia generated average unit volumes of $7.8 million. Average check was $43.25 for dinner and $33.60 for lunch, and alcohol accounted for nearly a quarter of sales.
It was the fourth-largest Italian casual-dining chain in 2023 in terms of systemwide sales, behind Maggiano’s, Carrabba’s and Olive Garden, according to Technomic. And it was one of the fastest growing, with sales up 13.2% compared to 2022.
Cheesecake expects to open eight North Italias next year and is targeting an annual unit growth rate of 20%.
Flower Child
The lone fast casual of the bunch, Flower Child holds a lot of promise for The Cheesecake Factory. It specializes in organic, locally sourced fare and offers salads, bowls, entrees and sides. But it is more complex to operate than the average assembly-line fast-casual concept, executives said.
The chain has 36 locations in 12 states, with a concentration in Arizona and Texas. Executives said it has worked well in every new market it has entered. They plan to open new locations at a 15% to 20% annual clip.
Last year, Flower Child’s average unit volumes were $4.1 million. For comparison, the AUVs of competitors such as Chipotle, Sweetgreen and Cava are under $3 million.
In the third quarter, Flower Child’s same-store sales were in the mid-single digits, which was the best mark of any Cheesecake brand.
Culinary Dropout
After North Italia and Flower Child, Cheesecake is looking for the next Fox brand that could work at the national level.
Culinary Dropout, an irreverent, elevated sports bar concept, could be one of them.
The chain currently has 13 locations in six states, and will soon debut in California--an “important test” for the brand, said President David Gordon, according to a transcript from financial services site AlphaSense.
Though it has all the trappings of the typical sports bar, like TVs, a large alcohol menu and lawn games, Culinary Dropout’s food menu is more imaginative than just burgers and wings. Its bar snacks include smoked salmon dip, prosciutto deviled eggs and meat and cheese platters, while Mongolian short rib, pasta bolognese and steak frites top the entree section.
It boasts impressive average unit volumes of $10 million.
The Henry could be in line for a bigger role. | Photo courtesy of Fox Restaurant Concepts
The Henry
The neighborhood cafe/bar/restaurant is the other Fox concept Cheesecake plans to take for a test drive next year. It currently has six locations in five states. It and Culinary Dropout will make up the bulk of the new Fox openings next year, Gordon said.
“We really want to test them out, decide which one we think could be a national concept before we say we're ready to launch those the way that we said we're ready to launch North and Flower Child,” he said.
Executives had previously highlighted a third Fox concept, Blanco, as one that might have legs. But they did not mention the 12-unit taco and tequila brand during Tuesday’s event.
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