The Cheesecake Factory Inc. warned Tuesday that same-store sales in the second quarter could be down about 1 percent. This announcement led to declines in its stock price.
The Calabasas Hills, Calif.-based casual-dining brand was seeing “heightened volatility in week to week sales trends, indicative of uncertainty on the part of many consumers,” said David Overton, chairman and CEO, in a statement before executives gave a presentation at the William Blair Growth Stock Conference in Chicago.
For the first quarter ended April 4, Cheesecake had reported same store sales up 0.3 percent. The new sales guidance led to a selloff of the company stock; at midday, the share price was down more than 9 percent.
Matthew Clark, who succeeded W. Douglas Benn as chief financial officer on June 7, told the William Blair conference that the brand’s sales remained strong relative to the rest of the casual-dining industry despite the lowered outlook for second quarter sales.
Clark said half of The Cheesecake Factory’s regions posted “positive comparable sales for the period, including key markets of California, Texas and Florida.”
He added that “specifically we’ve seen pockets of softness as we’ve moved through the quarter, notably in the East and Midwest.” Much of that was because of weather, which reduced patio use, Clark said.
Benn told the conference that casual-dining consumers increasingly are looking for convenience, so the company is working on delivery.
“Utilizing a third-party partner, at present more than half of our restaurants feature delivery service,” Benn said. “Many locations are experiencing incremental sales, and we plan to continue to expand delivery throughout the country.”
Off-premise sales grew to about 11 percent of Cheesecake’s revenue last year, he said, up from the company’s historical average of 8 to 10 percent. He credited delivery and take-out growth for that increase.
Cheesecake’s growth opportunities, Clark said, include the minority investments in casual-dining North Italia and fast-casual Flower Child, two brands created by Phoenix, Ariz.-based Fox Restaurants Concepts, and the development of company-owned Cheesecake Factory units in Canada, for which an announcement has been made for a shopping mall in Toronto. Clark said the company sees the potential for eight Cheesecake Factory units in Canada.
The company anticipates “measured growth” for its Grand Lux Café and RockSugar Pan Asian Kitchen concepts, he said. The company opened the 13th Grand Lux in Austin, Texas, last year, with that 13th unit a smaller version of earlier stores with a “more relaxed feel.”
Clark also said Cheesecake has signed a lease in suburban Chicago for the second RockSugar restaurant, the first of which opened in Los Angeles in 2007. That location is expected to open later this year, he said.
The company is looking for real estate so it can debut a fast-casual concept that has developed in house, including menu, Clark said.
In the Nation’s Restaurant News Top 100 report, The Cheesecake Factory ranked No. 36 among chains in terms of U.S. systemwide sales, reporting $1.9 billion in the fiscal year ended December 2015.
The company owns and operates 207 full-service restaurants, including 193 Cheesecake Factory restaurants, 13 Grand Lux Café units and one RockSugar. It licenses 16 Cheesecake Factory restaurants abroad.
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