Company Looking to Grow Locations 7% Annually, Focused on Sun Belt
Cheesecake Factory is looking to turn rising foot traffic into 7% annual location growth, with up to 24 restaurant openings planned for 2023 following at least 13 expected to debut by the end of this year.
The Calabasas, California-based operator of more than 300 mostly full-service restaurants in the U.S. and Canada is targeting suburban areas of cities such as Houston, Atlanta, Phoenix and Nashville, Tennessee. It is looking to expand its flagship brand and others it acquired in 2019 from Fox Restaurant Concepts, including North Italia and Flower Child, the latter featuring vegetarian and other health-oriented items.
During a third-quarter earnings call with analysts Tuesday, CEO David Overton said the company is seeing challenges that slowed restaurant development and openings during the past two years slowly subside. Those included delays in obtaining building and operating permits, as well as procuring supplies and equipment for new locations.
Overton said on-site dining business is now at 90% or more of pre-pandemic levels at most locations, though the company, like others, is dealing with rising labor, supply and other costs. The company posted a net loss of $2.4 million in its third quarter ended Sept. 27, compared with net income of $32.7 million in the year-earlier period, and Overton cited “higher than anticipated operating expenses particularly in utilities and building maintenance.”
Executives said the company has raised menu prices to counteract some of those increases, helping the company increase revenue 4% from the year-earlier quarter to $784 million.
The company is seeking to capitalize on the return of loyal customers and attract new ones by investing in otherwise untapped markets. More suburban locations are in the works after the company during the third quarter opened a new Cheesecake Factory in suburban Houston, a North Italia in an Atlanta suburb and a Fly Bye, featuring pizza and chicken, in northern Phoenix.
Other openings completed or planned for the current fourth quarter are in cities including Nashville and the Texas cities of Austin and The Woodlands near Houston. For 2023, the company is planning between 21 and 24 openings across all of its brands, targeting similar-sized suburban regions nationwide that are still seeing population growth.
To fund the expansion and ongoing maintenance of current locations, Chief Financial Officer Matthew Clark said the company has a planned capital expenditures budget of approximately $150 million to $170 million for the coming year.
Company executives told analysts that several of the openings planned for 2023 will be for locations that were originally slated for 2022 debuts but got pushed back by pandemic-related challenges.