Casual-dining company aims to accelerate restaurant growth despite conditions that have not yet normalized, CEO David Overton says in Q4 call
The Cheesecake Factory Inc. is getting back to its development pace, which was hampered by construction headwinds during and since the pandemic’s height, executives say.
“While the development conditions have not been fully normalized, we are aiming to further accelerate our unit growth,” said David Overton, chairman and CEO of the Calabasas Hills, Calif.-based company, on an analyst call after releasing earnings for the fourth quarter ended. Jan. 2.
“We successfully opened nine new restaurants during the fourth quarter, including three Cheesecake Factories, three North Italia's and three FRC [Fox Restaurant Concepts] restaurants,” Overton said in prepared remakrs. “Additionally, two Cheesecake Factory restaurants open internationally under licensing agreements, one in China and our first location in Thailand.”
In the first quarter, he added, the company has opened a North Italia restaurant in Houston, a Flower Child in the Dallas market, a Culinary Dropout in Atlanta and a Cheesecake Factory restaurant internationally under a licensing agreement in Mexico. Flower Child and Culinary Dropout are Fox Restaurant Concepts.
“We're planning to open as many as 22 new restaurants in 2024, including as many as three to four Cheesecake Factories, six to seven North Italia's, six to seven Flower Childs and six FRC restaurants,” Overton added.
Matt Clark, the Cheesecake Factory’s chief financial officer, said three quarters of the 22 restaurants will occur in the second half of the year.
“We would anticipate approximately $180 million to $200 million in CapEx [capital expenditures] to support this year's and some of next year's unit development, as well as required maintenance on our restaurants,” Clark said.
Clark said the company made the strategic move to push openings into the first quarter.
“We have a much bigger pipeline than we're committing to, to give ourselves even more breathing room,” he said.
During the fourth quarter, The Cheesecake Factory’s concepts saw about 22% of sales — in line with the full year — in off-premises and pushed some marketing dollars behind those as well, Clark said.
For the fourth quarter ended Jan. 2, The Cheesecake Factory reported net income swung to a profit of $12.7 million, or 26 cents a share, from a loss of $3.3 million, or xeven cents a share in the same period a year ago.
Revenues, which included one less operating week, were $877 million compared to $892.8 million in the prior-year quarter. Excluding the impact of the additional week in fiscal 2022, which contributed about $78.4 million in sales, total revenues for the fourth quarter of fiscal 2023 increased 7.7% over the prior year period.
Same-store sales at The Cheesecake Factory restaurants increased 2.5% year-over-year in the fourth quarter of fiscal 2023, the company said.
The Cheesecake Factory owns and operates 334 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, 33 The Cheesecake Factory restaurants operate under licensing agreements.
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