The Cheesecake Factory expects $12M AUVs in 2022

Strong sales paired with higher prices have the chain set up for a big year, executives said.
The Cheesecake Factory exterior
Photograph: Shutterstock

The Cheesecake Factory has an ambitious outlook on 2022.

As its restaurants continue to generate strong sales, executives believe the chain can reach average unit volumes of more than $12 million this year, an increase of about 13% over 2019 levels.

That estimate is based on current sales trends as well as plans to raise menu prices by about 5% for the year—and excludes any major disruption from the ongoing pandemic.

In the quarter ended Dec. 28, the chain’s same-store sales were up 7.7% compared to 2019. But halfway through December, comps were running even higher, at 10.6%, only to be slowed by the omicron wave of COVID-19.

The growth has come as customers return to Cheesecake dining rooms while also continuing to order takeout at a high rate. Off-premise made up 27% of sales in the fourth quarter, and executives expect it to remain in the mid- to high-20s going forward.

“The dine-in business is what obviously has regrown with the off-premise kind of remaining stable,” said CFO Matthew Clark on the company’s earnings call Wednesday. “So we haven't lost that, but we continue to recapture over time the dine-in to support that level of business.”

The chain in July said it was on track to hit the $12 million AUV mark last year, with sales running 10% above pre-COVID levels at the time. Two-year comps for the final two quarters of the year were 8.3% and 7.7%, and executives did not say where the chain’s 2021 AUVs ultimately ended up. 

The 208-unit Cheesecake Factory has long been in a league of its own in terms of average unit volumes for a chain of its size. The newfound off-premise business has provided yet another boost.

But higher prices will also help this year. Eyeing commodity inflation of low double digits as well as labor inflation of about 5%, the chain will raise menu prices 4.75%, and will take another 2% later on if its inflation forecasts are accurate, executives said.

Those higher prices will also help Cheesecake protect its restaurant-level operating margins from 2019, a number it’s aiming to improve upon even as costs rise.

Executives were confident that the higher prices won’t scare off customers.

“Frankly, we're targeting … pricing slightly below both grocery and our competitive set,” Clark said. “So if anything, we're going to be in a better position relative to coming out of this than most companies in our space.”

In January, food-away-from-home prices were up 6.4% year over year, while grocery prices were up 7.4%, according to the U.S. Bureau of Labor Statistics.

Executives also brushed off concerns that Cheesecake will be lapping a year in which many Americans received federal stimulus checks that helped fuel spending. Rather, they said, it was the easing of pandemic restrictions that drove people back into its restaurants last year.

“I don't think stimulus made much of a difference to us,” Clark said.

Another factor playing in Cheesecake’s favor: Many neighboring restaurants that shut their doors in 2020 have yet to reopen. 

“There's more people that want to go out to eat than restaurant capacity, and it's not coming back quickly,” Clark said, noting the high costs associated with running a restaurant these days.

“If you don't have the scale and the capabilities that The Cheesecake Factory has, well, good luck to you,” he said.

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