The Cheesecake Factory Inc.’s year-old rewards program serves as a useful marketing tool in an increasingly promotional casual-dining environment, executives said Wednesday.
The Calabasas Hills, Calif.-based company, which includes North Italia and the fast-casual Flower Child, released earnings for the second quarter ended July 2 and noted that the loyalty program remains its chief marketing push.
“This isn't the first time that we've seen marketing out there in casual dining ramp up,” said David Gordon, Cheesecake Factory president, during an earnings call. “It's happened historically over our 45-plus years, and generally we don't see it have an impact to us and our guests – or value perception from our guests – because others are offering a lot of different type of value.”
Gordon said Cheesecake Factory and its other concepts, such as North Italia and Flower Child, “wouldn't anticipate in this cycle that we would see it have any sort of negative impact to our long-term and short-term plan.” Cheesecake Factory introduced its loyalty program in June last year.
The company has offered loyalty members perks like reservations and reduced-priced desserts.
“We're going to continue to test and learn, analyze the information and make sure that our unpublished offers, which are an important part of the program as well, where we're taking an individualized approach to drive incrementality, continue to be meaningful and get us really strong returns without any additional cost,” Gordon said.
Gordon added that membership acquisitions in the loyalty program have exceeded the company’s internal expectations.
“We remain encouraged by the level of member activity and engagement that we. are seeing,” he said. “We're going to continue to communicate to those guests and try and drive incrementality — whether that's trying to drive them to a specific day of the week or a specific daypart or introduce them to new and different products.”
Cheesecake Factory is tapping into year-round loyalty program unpublished offers as well, he said.
“We've tested numerous different offers over the past six months,” Gordon said, “not just half-off a slice of cheesecake, but a lot of different offers. We'll continue to do that, and we know what's most effective, and we want to continue to do it in a way that protects margins at the same time.”
David Overton, Cheesecake Factory CEO and chairman, said the company opened five restaurants in the second quarter, including one Cheesecake Factory, one North Italia, one Fox Restaurant Concepts, and two Flower Child locations.
One Cheesecake Factory restaurant also opened in Asia. After the quarter ended, the company opened one Blanco, an FRC brand, in Southern California.
“With 11 restaurant openings so far this year, we are well-positioned to meet our objective of opening as many as 22 new restaurants in 2024, including as many as three Cheesecake Factories, six to seven North Italias, six to seven Flower Childs, and seven to eight FRC restaurants,” Overton said.
For the second quarter ended July 2, The Cheesecake Factory’s net income was $52.4 million, or $1.08 per share, compared to $42.7 million, or 87 cents a share, in the same quarter a year ago. Revenues were $904 million compared to $866.2 million in the prior-year period.
Second quarter same-store sales were up 1.4% at the Cheesecake Factory and up 2% at North Italia, executives said.
The company has 340 restaurants in the United States and Canada under the brands that include The Cheesecake Factory, North Italia, Flower Child and a collection of other Fox Restaurant Concepts restaurants. Internationally, 34 Cheesecake Factory restaurants operate under licensing agreements.
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