Clark described the staffing situation as “good, but it’s not perfect.” There are pockets of opportunities where the chain could use a few more staff members. In March, the restaurant industry employed 11.54 million workers, which is roughly 750,000 people shy of where it was in February 2020, calling into question whether employment at food and drink places will truly ever return to normal.
But the full-service chain finds itself in a better position than most, with roughly 1 percent more staff members than it had just prior to the pandemic—an increase of more than 3 percent compared to the end of 2021. In Q1, The Cheesecake Factory drove sequential improvement in manager and hourly retention rates and experienced momentum in its hourly application flow.
The chain was recently named to Fortune’s 100 Best Companies to Work For” for the ninth straight year.
The Cheesecake Factory projects 6 percent labor inflation in 2022, which is up slightly from previous guidance. CEO David Overton attributed that bump to continued increases in pay across the industry.
“I think we are happy that our staffing levels are roughly 1 percent better than pre-pandemic,” Overton said. “Obviously, with the sales levels where they are, we want that to continue. … Most importantly, we want to stay competitive. And wages certainly across the industry have gone up and not just our industry, but whether that's retail or others, they continue to pay competently as well.”
“So we're not going to fall behind,” he added. “We want to make sure that all of our operators know what the competitive market looks like. We provide them with information on a monthly basis so they can see what the pay rates are and the geographies around them, and proactively taking care of people and the way that we have historically.”
Commodity inflation is projected to be in the low-to-mid double digits, a 1-1.5 percent increase over the company’s prior outlook because of geopolitical turmoil. The Cheesecake Factory plans to take another menu price increase toward the middle of Q3.
The chain is evaluating the level of pricing needed to regain 2019 four-wall margins in the latter half of 2022, and right now, the chain assumes that would be 1.5-2 percent.
“While current inflation in our industry is unprecedented, we continue to believe the strategic pricing plan we're implementing remains appropriate and can deliver solid earnings per share and help recover profit margins in 2022, while importantly, protecting our brands to enable long-term market share gains,” Clark said.
Total revenues were $793.7 million in the first quarter compared to $627.4 million last year. Net income was $23.2 million.