In the face of pressure from an activist investor, The Cheesecake Factory is holding steady on its decision to maintain its conglomerate structure. Despite suggestions from JCP Investment Management to split the business and create an independent entity for its smaller brands, Cheesecake Factory executives are defending their integrated model. According to an ABC15 report, during their earnings call on October 29, Cheesecake expressed that while open to new strategies, their current platform promotes sustainable growth.
"The results announced today demonstrate the power our larger platform provides reinforcing our competence in our strategy to drive sustainable growth and value going forward," David Overton, CEO of The Cheesecake Factory, pinpointed the benefits of their business model, pushing back against the activist's claims, in remarks reported by ABC15. JCP Investment Management, which reportedly holds about a 2% stake in The Cheesecake Factory, argued last week for a company restructure, as reported by the Wall Street Journal.
Adding to this perspective, CFO Matt Clark conveyed the company's current focus during an earnings call, emphasizing on the nurturing needed for the brands before considering further strategic options. "There could be a time or place for further strategic assessments for them. But there probably needs to be a little bit more development work that needs to go on," Clark elaborated in statements obtained by Restaurant Business. The firm's portfolio includes North Italia, Flower Child, and Culinary Dropout, in addition to the flagship Cheesecake Factory eateries.
The company showcased robust growth for its smaller brands with plans to open 24 new restaurants next year, a majority of which belong to the Fox family. Notably, the same-store sales for North Italia and Flower Child saw an upswing, with the latter achieving mid-single digit growth, the strongest in the system. On the other hand, The Cheesecake Factory's same-store sales increased by 1.6%. Clark told Restaurant Business, "Same-store sales at The Cheesecake Factory, meanwhile, were up 1.6%—a strong mark amid a challenging time for full-service dining."
