Americans may be tightening their belts, but they’re leaving a little room for cheesecake.
Despite a pullback from restaurants generally, consumers are visiting The Cheesecake Factory about as often as they were a year ago. Traffic at the chain was virtually flat (negative 0.2%) year over year in the second quarter. That was nearly 3 percentage points better than the industry average, as measured by Black Box Intelligence.
Same-store sales rose 1.4% year over year, driven mainly by prices that were 4.5% higher. It continued a long streak of stability for the 217-unit casual-dining chain.
“The year has been very consistent for us,” said CFO Matt Clark. “Whether you're looking at a one-year stack, a two-year stack or a five-year stack, it just hasn't moved that much.”
Notably, The Cheesecake Factory has not participated in the blitz of discounts and meal deals that other chains are offering in an effort to boost traffic.
Executives instead credited a focus on execution and staffing for the solid results. They noted that retention among managers and hourly employees continues to improve. And that is showing up in customer feedback: The chain’s guest satisfaction scores were at all-time highs.
On the bottom line, Cheesecake reported restaurant-level margins of 17.7%, the highest level in six years. That was due in part to menu pricing that outpaced food and labor inflation, as well as more productive workers.
The chain plans to keep menu pricing about 4% higher through the end of the year and then move back into the normal range of 2.5% to 3% next year.
“We believe we've done a good job [with pricing] and we’re not seeing pressure, as evidenced by the flat traffic over the last three quarters,” Clark said. “At the same time, we'd like to head back down to normal levels.”
The company saw similar success at its two other core concepts in the quarter. Same-store sales at 39-unit North Italia rose 2%, bringing average unit volumes to nearly $8 million. Total sales at 34-unit Flower Child increased 7%.
Cheesecake did not break out sales for its smaller brands under the Fox Restaurant Concepts umbrella, such as Doughbird and Culinary Dropout, but said their performance was more in line with the industry.
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