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Cheesecake Factory finds outdoor service nearly matches dine-in volumes

It's also held onto 90% of to-go sales at locations that have re-opened dining rooms.
Photograph: Shutterstock

Quick-service chains aren’t the only operations doing fine without dine-in service. The Cheesecake Factory revealed Wednesday that its branches in jurisdictions where indoor seating remains banned are generating 90% of reopened units’ sales by adding outdoor tables and chairs.

Those restaurants that have resumed on-premise service—currently 146 Cheesecakes—have raised their sales to 80% of pre-COVID levels, or about $8 million on an annualized basis, with $4.2 million of that total coming from off-premise. Those restaurants typically have only 50% of their dining rooms in use, a result of government-mandated capacity caps, according to Cheesecake President David Gordon.

Many of those locations now have customers queuing up for an indoor table, with the waits stretching to as long as an hour on weekends, he added.

Gordon noted that reopened stores have held onto about 90% of their to-go business after on-premise service resumed, leading the chain to conclude that average unit intakes will likely surpass pre-pandemic levels once all indoor seating can be put back into use. The concept’s average unit volumes in 2019 hovered around $10 million.

Thirty-six Cheesecakes offering to-go service now sport outdoor tables and chairs, according to Gordon. Many of those are presumably in the chain’s home state of California, which ordered restaurants to re-shut their dining rooms on July 13. Eating and drinking in the restaurants’ outdoor areas was allowed to continue. 

“We are fortunate to have sizable patios in many locations to continue to serve guests in accordance with outdoor-only dining restrictions,” Gordon said. “In some cases, given the strength of our relationship with many of our landlords, we have also been able to access additional space to augment our outdoor seating capacity. Concurrently, we have seen off-premise sales accelerate in most of these locations.”

Only 22 Cheesecakes are still limited to takeout and delivery service. With those stores blended into the mix, Cheesecake’s same-store sales are down 32% systemwide thus far in July, said CFO Matt Clark.

Cheesecake’s results from outdoor dining, which the chain categorizes as off-premise business, is the latest indication of how important patios and tented seating areas have become while dining rooms are fully or partially closed. Outdoor dining has added roughly $26,000 in weekly sales at BJ’s restaurants that offer those accommodations.

In the company’s quarterly call with financial analysts, executives cited outdoor dining and strong to-go sales as the primary reasons Cheesecake has fared better during the pandemic than many of its competitors have. But they said those bright spots are unlikely to alter the company’s strategy of building sizeable units with book-like menus. Stores currently range from 5,500 to 10,000 square feet. “It is a possibility that we would want a little bit smaller dining rooms, but that remains to be seen,” said CEO David Overton.

Menus are unlikely to shrink, according to Clark, who attributed Cheesecake’s high sales volume to the breadth of products that are offered. “We are able to flex in a way that many of our competitors just aren't able to do,” he said. “I think that they are in a position where they have to still look at reducing guest options, which is what that amounts to.”

 

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