Brand plans to avoid promotional deals after 2Q sales slip
The Cheesecake Factory Inc. plans to avoid promotional deals and focus on its value offerings after reporting a same-store sales decline in the second quarter, executives said last week.
The Calabasas Hills, Calif.-based casual-dining company said same-store sales slid 0.5 percent in the quarter ended July 4, reflecting softness in the market that it had warned of in June.
“We saw volatility in week-to-week sales trends indicative of uncertainty on the part of many consumers,” said David Overton, Cheesecake Factory CEO and chairman, in an earnings call Wednesday. “We were also impacted by unfavorable weather in the East and the Midwest.”
Matt Clark, Cheesecake Factory chief financial officer, said sales remained positive in half the company’s regions in the quarter.
Given the challenging sales environment and an “economic-focused consumer,” Clark said Cheesecake Factory would highlight its value and portion sizes.
“I don’t know that we need to do deals or promotions,” Clark said. “I think effectively communicating some of the price points that we have on our new special card or the value that’s in our happy hour would be competitive enough.”
Clark said most of the communication will be through social media, the brand’s website and email.
“I think those are the communications vehicles that are effective today,” he said.
“People may not realize the true value of The Cheesecake Factory,” Clark added, which he said could be mitigated by better use of social media.
For the second quarter, Cheesecake Factory’s net income fell 1.1 percent, to $38.2 million from $38.6 million in the same period last year. Earnings per share were flat at 78 cents. Revenues increased 2 percent to $569.9 million, up from $558.9 million in the prior-year quarter.
Cheesecake Factory has 207 full-service restaurants in the United States and Puerto Rico. Thirteen of those operated as Grand Lux Cafés and one as RockSugar Pan Asian Kitchen. The company licenses The Cheesecake Factory in 16 international units.
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