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Is Cheesecake Factory making it?

Per-unit sales are running at about a third of the volume of pre-COVID-19 days, but that's still $3 million in annual per-store revenues. And costs have been aggressively cut.
Photograph: Shutterstock

Much of the restaurant industry is second-guessing whether delivery and takeout will generate enough revenue to keep full-service places afloat until social distancing eases and dining rooms can reopen. But that may no longer be a quandary for The Cheesecake Factory.

The multiconcept operation alerted investors last week that its off-premise business had recently jumped 85% above the sales volumes generated from takeout, delivery and catering at the end of 2019. It projected the intake at $3 million on an annual basis—or more than a typical Chili’s Grill & Bar or Applebee’s Neighborhood Grill generated in the good ol’ days of 2019.

That’s still less than a third of Cheesecake’s 2019 average unit volume of $10.7 million. But the company has aggressively flattened its costs. It alerted landlords several weeks ago that none of its restaurants will pay their April rent, and left open the possibility of further deferrals.

The company hasn’t said how many employees were retained at each of the 265 or so restaurants that have remained in operation during the pandemic, but other casual-dining operators have pegged their staffing needs for takeout and delivery at six to 10 employees per store. Cheesecake has revealed that it furloughed 41,000 hourlies and lowered the base compensation of salaried employees by 20%.

In short, it has also hammered down its labor costs.

Even assuming greater food waste because of diminished sales volumes and inventory turnover, Cheesecake’s situation may be less bleak than what many peers have reported.

That’s borne out by analyst reports. With the increased off-premise business, the company has likely halved its weekly burn rate, to $7.2 million, according to Raymond James. With the revision, Cheesecake will have liquidity for the next 21 weeks, or at least into August.

Cheesecake said its same-store sales for March fell 46%, but the company has yet to provide preliminary details of its operating income.

The company also has the advantage of selling cheesecakes wholesale. It has yet to reveal preliminary sales figures for that portion of its business.

Cheesecake also opened up a new revenue stream by licensing its name to a retail line of ice creams right before the crisis hit.

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