The Cheesecake Factory Inc. has added purchasing at the fast-casual Flower Child into its supply chain, bringing yet another Fox Restaurant Concepts brand into its corporate system, executives said Wednesday.
The Calabasas Hills, Calif.-based casual-dining concept, which released earning for the first quarter ended April 2, bought the Phoenix, Ariz.-based Fox brands in 2019, adding such concepts as Flower Child, North Italia, and Culinary Dropout to its portfolio.
“We remain as enthusiastic as ever about Flower Child's potential, with sales continuing to grow nicely across the concept,” said David Gordon, Cheesecake president, said on an earnings call with analysts. “In fact, Q1 comparable sales for Flower Child were the highest of any of our core concepts and sales demand and the newer locations continue to trend well.
“Over the past 18 months, we have successfully implemented several operational and supply chain improvements to enhance the guest experience and drive cost efficiencies,” Gordon continued. “For example, we implemented a kitchen display system across all restaurants resulting in improved order throughput and operational efficiencies. The loyalty platform was replaced with a more robust and scalable solution.”
Gordon said the company is leveraging The Cheesecake Factory operational reporting platform and deploying dashboards to provide improved planning and performance visibility.
“The Flower Child's purchasing is now integrated into the broader Cheesecake supply chain operation to take advantage of our scale and purchasing capabilities,” he said. “With strong consumer demand, a robust operations team and support infrastructure now in place and an attractive unit economic profile, we believe Flower Child is well positioned for accelerated growth.”
Matt Clark, Cheesecake chief financial officer, said the Flower Child has benefited by working on costs for protein items as well as from the kitchen display system.
“We have had a kitchen display system at Cheesecake Factory for numerous years,” Gordon said. “The full rollout was probably done at the beginning of the quarter at Flower Child, and we're not sharing any of the data at this point.”
Gordon said the KDS “made some good strides and benefits for the guest experience with throughput, the dine-in experience being faster than it was previously and really allowing them to manage the throughput of off-premises and dine-in because at Flower Child, you're talking about a 55% off-premises mix.”
The company opened one Flower Child in the first quarter.
“We believe that it can be a national concept,” Gordon said. “Part of the reason that we've taken it more fully under our umbrella and leveraged things like the supply chain team is because we have a very strong belief in the concept. You know, Q1 AUVs, the run rate of those are $4.4 million, average unit volume.”
Cheesecake Factory opened five restaurants in the first quarter, including two North Italia restaurants.
“Subsequent to quarter end, another Cheesecake Factory opened in Asia. With the five restaurant openings in the first quarter, we remain on-track to open as many as 22 new restaurants in 2024, including as many as three to four Cheesecake Factories, six to seven North Italia restaurants, six to seven Flower Childs and six to seven FRC restaurants,” Gordon said.
North Italia, which plans to open its 39th unit at the end of the month in Ballantyne, N.C., south of Charlotte,
The lunch-dinner mix at North Italia remains at about 35%-65%, Gordon said, but the concept has potential for growth in off-premises sales.
“Off-premises sales at North were 14% in the quarter, which I think is the highest quarter that we've had,” Gordon said. “We're pretty excited to see that.”
Cheesecake Factory off-premises sales remained steady in the first quarter at 22% of sales, which the company said was in line with the 2023 average percentage of sales. North Italia posted annualized average unit volumes of $7.7 million, executive said.
“Whether it's North Italia, Flower Child or Cheesecake Factory, the demand for those concepts from landlords remains very, very high,” Gordon said. “We're still getting site real estate opportunities, and we have enough brands, including Culinary Dropout, to be able to fit the needs of those landlords everywhere from 3,500 square feet all the way up to 10,000 square feet.” The company continues to target 7% annual unit growth.
For the first quarter ended April 2, The Cheesecake Factory’s net income rose to $33.2 million, or 68 cents a share, from $28 million, or 56 cents a share, in the year-ago period. Revenues increased to $891.2 million from $866.1 million in the same quarter a year ago.
The Cheesecake Factory restaurants saw same-store sales slip 0.6%. in the first quarter. North Italia same-store sales were up 3% in the quarter.
The Cheesecake Factory owns and operates 335 restaurants throughout the United States and Canada under brands including The Cheesecake Factory, North Italia, Flower Child and a collection of other FRC brands. Internationally, 34 Cheesecake Factory restaurants operate under licensing agreements.
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