With its huge menu, which offers everything from crispy chicken sandwiches to coconut cream cakes, the Cheesecake Factory Inc. was already one of the most complicated establishments in the hospitality industry. It emerges from the pandemic with a model that is even wider and more complex.
When Covid-related closings deeply restricted seating in the cavernous, lavish dining rooms of the Cheesecake Factory, the 208 restaurant chain emphasized to-go orders to aid sales. It worked: the chain averages more than $ 3 million in to-go orders per location this year, more than double its typical pre-crisis volume.
Cheesecake in particular is on the move, and people order it around the clock. The company said it sold more cheesecakes as a percentage of sales last year than it did before the pandemic. “There are a few more people who have windows delivered to their homes at nine o’clock in the morning,” said David Gordon, the chain’s president.
Now more customers are returning to the Cheesecake Factory’s 10,000-square-foot dining rooms. And the combination has overwhelmed the company and its employees, some of whom say they are at a breaking point.
Cheesecake Factory has built its brand on extensive choice and precise service, detailed in a nearly 500-page operations manual that includes roughly a full page of rules for using strawberries for its cakes and a 12-step breakdown for the hot tea -Service includes, according to a copy viewed by the Wall Street Journal. Unlike many of its competitors last year, the Cheesecake Factory hasn’t trimmed its menu, which is more than a dozen pages. Instead, it added more after the pandemic hit, debuting a “Chocolate Caramelicious Cheesecake Made With Snickers,” and bringing back its club with grilled shrimp and bacon, among other things.
“Anyone today would be crazy to start something this complex, but we’ll find out,” Gordon said in an interview.
Some chain workers said the volume of new to-go orders could be stifling. In a California restaurant, cheesecake boxes are stacked floor-to-ceiling in its freezer in preparation for sale. Making the cakes by the chain’s standards becomes more difficult with so many orders, some workers said.
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“The sheer amount of what you’re supposed to produce isn’t sustainable,” said Sophia Um, a baker at a cheesecake factory outside of Los Angeles. “I let colleagues run into the break room because of a nervous breakdown.” Workers said servers, managers, and coworkers went elsewhere because of the load or simpler options.
Mr Gordon said he is aware that it can be difficult for workers to meet demand, especially during peak hours. He said the company improved its systems during the pandemic to help with to-go sales as they grew and incorporated worker feedback with the changes. Last year, the company added access to mental health professionals through virtual visits as a benefit for employees, he said.
What he worries about at night, said Mr. Gordon, is having enough top quality workers. “Is it harder today?” he said. “It is.”
Humble beginnings
The Cheesecake Factory goes back to Evelyn Overton, a mother of two from Detroit who started making cheesecake in the 1940s after cutting out a recipe from a newspaper. She and her husband moved west to open The Cheesecake Factory bakery in 1972 and successfully sold their creations to restaurants in the Los Angeles area. In 1978, her son David Overton opened a Cheesecake Factory restaurant in Beverly Hills, California to showcase his mother’s baking. Mr. Overton kept adding menu items and expanding the chain to include malls in the United States, the Las Vegas Strip, and international outposts such as Beijing and Bahrain. Mr. Overton remains CEO of the now $ 2.15 billion company.
Everywhere it expanded, the company has pushed pages of choices and servings that guarantee a doggie bag.
“The Cheesecake Factory is as American as you can get when it comes to choice,” said Gordon.
After going public under the symbol “CAKE” in 1993, the Calabasas Hills, California-based company continued to grow sales in the same store and garner higher ratings than many casual restaurants. Its growth got a boost in 2017 when sales in the same store fell and the company told investors it would do more to grow. The company, which often had to wait for hours at its locations, began to advertise more widely. It acquired another full-service restaurant company, Fox Restaurant Concepts, based in Phoenix, for $ 353 million in 2019 to fuel its growth. Fox, run by restaurateur Sam Fox, operates brands such as North Italia and Flower Child.
| ticker | safety | Last | Change | Change % |
|---|---|---|---|---|
| CAKE | CHEESECAKE FACTORY, INC. | 43.49 | +0.84 | + 1.97% |
The pandemic struck less than five months after the deal was closed. The Cheesecake Factory put 41,000 of its hourly workers on leave in March 2020, one of the first striking signs of the rubble the pandemic would bring to restaurants. It closed dining rooms. She asked her landlord for rental breaks. It temporarily cut salaries for its top managers and board members by 20%.
The Securities and Exchange Commission later said the company was losing about $ 6 million in cash every week and estimated it was only about four months’ worth of cash. The regulator said the company misled investors about its business.
The Cheesecake Factory disapproved of the SEC’s findings, but agreed to a $ 125,000 fine in December. The company announced in a filing that it is fully cooperating with the SEC.
The company had added online ordering and delivery prior to the pandemic and quickly ramped up its to-go operations in the spring. The Cheesecake Factory has converted parking lots at many of its 200+ locations into pick-up stations for orders. Inside, while the dining rooms were closed, restaurants turned tables that no longer had room for guests into conveyor belts for delivery.
The company spent $ 16 million on advertising in 2020, 60% more than the previous year, to reach customers who might be ordering takeout but had never eaten inside. This year, indoor dining returned, but nearly three-quarters of the to-go business has remained.
Many other restaurants made similar revisions to their operations and staff. According to consumer research firm NPD Group, to-go orders accounted for 45% of casual dining restaurant business in the year ended September, more than double what it was in the same period before the pandemic.
The trend is weighing on employees at a time when restaurant operators in the US are struggling to find enough people to handle the workload. The rate of people leaving their jobs in the hospitality and catering industries reached 6.8% in August, the highest since the Labor Department began publishing data more than 20 years ago.
Some of the staff shortage at the Cheesecake Factory can be attributed to the vacation of hourly workers when Covid-19 first emerged. Still, the company kept some key restaurant employees as it pondered its future in the first few weeks of the pandemic. Amid the downsizing this spring, the company decided to keep its 3,000+ managers in order to get its restaurants back up and running as soon as possible. To pay their salaries, Mr. Gordon raised $ 200 million in cash through the sale of preferred stock to private equity firm Roark Capital Group. The chain knocked on these lieutenants to oversee the rapid expansion of their to-go efforts while trying to bring back hourly workers.
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“We taught waiters how to be a cashier. We taught people how to package food, ”said Rebecca Perkins, general manager of Sherman Oaks, California.
Now it is a big challenge to find and keep a workforce. To speed the hiring process, Cheesecake Factory has simplified its application process and managers are trying to be more responsive to candidates. The company said it reduced the experience requirements for servers to six months from the traditional year.
Coping with the crush
Many of their new employees are baptized by fire. Last summer, almost all of the company’s restaurants had their dining rooms – often decorated with Egyptian-style columns, dark wood paneling and limestone floors – at full capacity again. This has a complicated process as staff try to juggle the food with the to-go orders while trying to meet the company’s exacting and extensive standards for food presentation and customer service, some staff said. Orders at peak times can especially mess up operations, they said.
In the second quarter, sales in the same store increased 150% year over year and 7.8% over the same period in 2019. The Cheesecake Factory restaurants had average annual sales of nearly $ 11 million prior to the pandemic; When the company last updated that number in late July, it said it is now running at a pace of nearly $ 12 million a year per store.
Mr Gordon said the company is developing new tools to help its employees deal with the hustle and bustle. Cheesecake Factory managers now have the option to temporarily suspend delivery service if their kitchen is overloaded, a feature introduced this year before the busiest day of the year: Mother’s Day. The company also works with its grocery supplier, by Dash Inc. to distribute online to-go sales so they don’t all come in at the same time. The technology is designed to aid operations and reduce errors, the company said.
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A DoorDash spokesperson said the company is working with the Cheesecake Factory to improve their technology to manage capacity while maintaining sales.
Mr. Gordon said he was personally familiar with the increasing pressures on Cheesecake Factory employees. Early in his career with the company, while serving as a senior manager, Mr. Overton took Mr. Gordon aside to discuss a quesadilla that had stood in the restaurant’s kitchen window for too long before it was served. Mr. Overton’s message: In the Cheesecake Factory, no detail is too small.
Mr. Gordon says he often tells the story to managers.
“Everyone in this restaurant is just as fanatical about the quesadilla showing up in the window at three o’clock today as it was 27 years ago,” said Mr. Gordon.
This article originally appeared in the Wall Street Journal
