Financing

The best-performing malls have this restaurant in common

Malls with a Cheesecake Factory are more likely to be current on their loans, according to a Moody’s analysis. But the chain may not be retail's white knight.
At least 80 of Cheesecake's 240 global locations are in malls. | Photo: Shutterstock

Want to know how your local mall is doing? See if it has a Cheesecake Factory.

Malls that count the casual dining chain as a tenant tend to be healthier than those that don’t, according to an analysis this month by Moody’s Analytics. The researcher looked at malls with and without Cheesecakes and found that the have-nots are four times more likely to be behind on their loans.

The Cheesecake Factory has been one of the best-performing casual dining concepts in recent years. Its U.S. sales rose nearly 23% from 2017 to 2022, while unit count increased 5.5%, according to Technomic Ignite data. Its elaborate restaurants and massive menu have made it a consistent favorite among consumers. 

That said, it’s probably not solely responsible for lifting the fortunes of slumping malls, which have struggled for years to compete with the growth of online shopping.

Instead, said Moody’s, the correlation between Cheesecake and mall performance is a testament to the chain’s site selection strategy. In other words, it likes to open restaurants at malls that are doing well because it can count on a steady stream of customers in those locations.

According to company documents, at least 80 of Cheesecake’s 240 global locations are in malls, which has given it a reputation as a mall chain. But that’s not necessarily on purpose.

“I think that a little misnomer about the malls and Cheesecake Factory, that we always wanted to be in a mall,” President David Gordon said during the Baird Global Consumer, Services and Technology conference in June. “I think in reality, the malls were in the geography that we wanted to be in, right? There was 250,000 people within a 5-mile radius of those malls. They gave us all the parking access that we wanted. They gave us our own hours, our own doors. So, it wasn't that we specifically looked to be in malls. The malls just happen to be in the best places.

“So our strategy today is that if it's an A site and it's in a mall, we'll take it. If it's an A site and it's not in the mall, we'll take it as well,” he said, according to a transcript on financial services site Sentieo/AphaSense.

In general, many malls have begun to favor non-traditional tenants like restaurants and bowling alleys amid the decline in retail traffic. According to Moody’s, that strategy has not necessarily been a slam dunk: Malls with two or more non-traditional tenants are just slightly better at repaying their loans than those with fewer than two.

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