Financing

Cheesecake Factory to buy Fox Restaurants

Fox will operate as a subsidiary led by CEO Sam Fox, and North Italia will shift to Cheesecake.
Photograph: Shutterstock

The Cheesecake Factory has inked a deal to buy multiconcept operator Fox Restaurant Concepts and the portion of North Italia that Cheesecake doesn’t already own for $353 million.

Cheesecake had already invested $88 million in Fox for the share in North Italia, a full-service Italian concept, and a stake in Flower Child, a fast-casual concept that Fox has developed and expanded with the backing from Cheesecake.

It said the price for the remaining stake in North Italia is $130 million, which will be paid in cash. Cheesecake noted that North Italia currently has 20 locations open in nine states and the District of Columbia, with an average unit volume of $7 million annually.

The announcement indicates that Sam Fox, the founder, CEO and assumed principal owner of Fox Restaurants, will remain active in the organization. Cheesecake CEO David Overton said Fox Restaurants will be operated as a free-standing subsidiary based in the Phoenix area and headed by Fox. 

The parties explained in announcing the deal that the intent was to complete Cheesecake’s acquisition of North Italia, a deal that was expected to close this year. But the partners said they discovered a chemistry that led to the radical change in plans.

“Since making our initial minority investments in North Italia and Flower Child in 2016, we have not only helped fuel the growth of both brands, but also developed a deep relationship with Sam Fox,” Overton said. “It became evident that the combination of two of the most experiential and entrepreneurial restaurant companies could drive greater value as one organization.”

“This partnership will be the first of its kind for the restaurant industry,” said Fox. “With our aligned cultures and philosophies, The Cheesecake Factory is the right partner to embrace our creative spirit, enabling us to innovate concepts, while providing the infrastructure and capital to scale.”

Fox’s concepts include Culinary Dropout, a multiunit brand; The Henry; and Blanco. It currently operates 45 restaurants in total across seven states. 

It was also the creator of True Food Kitchen and Zinburger.

Cheesecake operates 219 restaurants in the U.S., most under The Cheesecake Factory name. Its other ventures include Grand Lux Cafe, RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen. 

North Italia’s support services will relocate to Cheesecake’s headquarters in Calabasas, Calif., after the deals are consummated.

The announcement indicates that the transactions will proceed in stages. Cheesecake has agreed to pay $308 million upfront for Fox and the outstanding North Italia stake, with $45 million to be paid over four years. 

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