Cheesecake Factory leverages Fox deal for better delivery terms

The company also said a TV test proved better than expected.
Photograph: Shutterstock

The Cheesecake Factory said it has improved its delivery margins by leveraging the addition of restaurants from the Fox Restaurant Concepts acquisition to renegotiate the company’s contract with DoorDash. 

The casual-dining operator did not reveal the particulars of the revised arrangement, but CFO Matt Clark told financial analysts that “this gets us pretty darn close” to the margins for dine-in business. 

Executives said the renegotiation and extension of Cheesecake’s exclusive deal with DoorDash will be particularly beneficial to North Italia and the other concepts that were part of Fox. All will now use DoorDash as their delivery partner, under terms Cheesecake President David Gordon described as “just one example of the benefits that our scale brings to these brands.” He added, “We will continue to pursue more of these opportunities over time.”

Yet Cheesecake will be careful not to rush the integration, stressed Clark. “The businesses are performing well, and you have to watch out for disruption,” he said.  

Cheesecake CEO David Overton noted that off-premise business now generates about 16% of the company’s sales, with about a third of the orders coming from delivery. About 50% of the off-premise business still comes from phoned-in orders, he added.

During the third quarter, the Cheesecake brand tested TV advertising in 12 markets. The results were better than expected, said Gordon. “We did not expect to see an immediate significant sales lift,” given the commercial’s focus on the brand rather than a specific dish or offer, he explained. “Our messaging resonated and purchase intent increased. We are considering additional targeted media buys in the future.”

Cheesecake posted a 0.4% increase in same-store sales for its namesake brand during the third quarter. It did not reveal comps for brands that were added through the Fox acquisition.

Net income totaled $16.1 million, a 43.5% decline from the figure of a year ago, on revenues of $586.5 million, up 2%. 

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