As The Cheesecake Factory breaks into new markets, off-premises will remain a major part of the brand’s growth strategy.
For 2019, the company expects to open six new restaurants domestically and another five internationally.
Last month, a new location featuring a smaller footprint opened in Oxnard, California. The company is testing the smaller prototype, which is about 5,500 square feet, for international growth opportunities.
“We opted to build a smaller restaurant to determine if this business model can capture sufficient productivity and efficiencies in a smaller footprint,” Overton said. “If we are successful, we would look to export the model to our international partners as it could support additional real estate opportunities, particularly in Asia, where larger locations are difficult to find.”
If the smaller restaurants could operate as fluidly as a normal restaurant, which tend to be between 7,200-7,500 square feet, then it would be a viable idea to grow with global partners. The testing is ongoing as the new location only opened a couple of days ago, but so far is beating sales expectations, Gordon said.
“We wanted to be able to prove out that we can execute the menu in a little bit of a smaller kitchen design,” Gordon said. “We want to prove out the feel of a Cheesecake Factory when you walk in, everything at the guest experience is still there in 5,500 square feet.”
Gordon noted that the smaller footprint is only being developed for international restaurants and they don’t have any plans to open them domestically for the time being. The growing popularity of off-premises and ghost kitchens also are of no interest for The Cheesecake Factory.
“We can execute what we need to do off-premises and even grow those sales in the kitchen designs that we have today due to their size,” Gordon said. “So we would look to continue to do that and not add any additional costs or any other additional complexity.”
The Cheesecake Factory dipped its foot in the fast-casual sector during Q1 with the opening of Social Monk Asian Kitchen in California. So far customers are responding well to the concept, but the company is working to balance food and labor costs to make it successful, Overton said. A second location could come soon if the kinks are worked out.
The deal to acquire North Italia and Flower Child should be completed in Q3. Clark confirmed the transaction will cost the company about $150 million. North Italia continues to open locations and grow its footprint. The brand now has 18 locations. Clark said the company is allocating between $90–100 million for anticipated growth and maintenance needs across both brands.
“Everything that's going on at North [Italia] today is why guests love it so much,” Gordon said. “We will look to leverage our supply chain scale, our IT infrastructure, some of our HR practices, whatever we can do to add more value in the concept, we will.”