The Cheesecake Factory: Reports Fiscal Q4-2020 Results

Calabas Hills / CA. (cf) The Cheesecake Factory Incorporated reported financial results for the fourth quarter of fiscal 2020, which ended on December 29, 2020. Total revenues were USD 554.6 million in the fourth quarter of fiscal 2020 compared to USD 694.0 million in the fourth quarter of fiscal 2019. Net loss available to common stockholders and diluted net loss per common share were USD 37.3 million and USD 0.85, respectively, in the fourth quarter of fiscal 2020, reflecting the impact of Covid-19. The results in this press release include the acquisition of North Italia and the remaining business of Fox Restaurant Concepts LLC («FRC») on October 2, 2019.

During the fourth quarter of fiscal 2020, the Company recorded pre-tax impairment of assets and lease termination expense of USD 14.6 million, primarily comprised of non-cash impairment charges for two Grand Lux Cafe locations where the leases are expected to terminate in the next year. The Company also recorded Covid-19 related charges of USD 5.4 million, for costs such as sick pay, healthcare and meal benefits for furloughed staff members, additional sanitation and personal protective equipment.

Excluding the after-tax impact of these and certain other items, and reflecting the potential impact of the conversion of the Company’s convertible preferred stock into common stock, adjusted net loss and adjusted net loss per share for the fourth quarter of fiscal 2020 were USD 17.2 million and USD 0.32, respectively. Please see the Company’s reconciliation of non-GAAP financial measures at the end of this press release.

Comparable restaurant sales at The Cheesecake Factory restaurants decreased 19.5 percent in the fourth quarter of fiscal 2020, reflecting the impact of Covid-19.

Fiscal 2021 first quarter-to-date through February 16, 2021, comparable sales for The Cheesecake Factory restaurants with reopened indoor dining rooms are down approximately 9 percent, supported by approximately 40 percent off-premise sales mix and reflecting the impact of lapping full capacity holidays last year, including this past Valentine’s Day and Presidents’ Day weekend, as well as restaurant closures associated with the winter storms this week. In aggregate, across restaurant operating models, fiscal 2021 first quarter to-date through February 16, 2021 comparable sales at The Cheesecake Factory restaurants are down approximately 18 percent.

As of today, approximately 80 percent of the Company’s restaurants across its concepts, including 166 Cheesecake Factory locations, are operating with reopened indoor dining rooms with limited capacity in accordance with local mandates and social distancing protocols. On average, Cheesecake Factory restaurants with reopened dining rooms are operating at 50 percent capacity. Approximately 17 percent of the Company’s restaurants across its concepts, including 39 Cheesecake Factory locations, are operating with reopened patios, one Cheesecake Factory location is operating an off-premise only model and three locations across the Company’s concepts are currently closed.

«We had a good start to the fourth quarter with comparable sales at The Cheesecake Factory restaurants down just high single digits in October despite mandated capacity restrictions,» said David Overton, Chairman and Chief Executive Officer. «Through the balance of the fourth quarter, the sales trend softened given the impact of additional dining room closures and capacity restrictions in response to rising Covid-19 cases in a number of our markets. However, our strong position in the off-premise channel helped support the business during this period, with sales at The Cheesecake Factory restaurants that were operating an off-premise only model far exceeding prior peak off-premise sales volumes seen earlier in the Covid-19 pandemic, while restaurants with reopened dining rooms continued to sustain strong performance in the off-premise channel as well.»

Overton continued, «I’m proud of how our teams across our concepts continue to manage through the latest round of operating restrictions, enabling delicious, memorable experiences for our guests and solid performance in spite of the challenges they face. Looking ahead, given our sales results so far in the first quarter, we believe that our concepts are well-positioned for a recovery as dining restrictions ease, and we are excited about the long-term growth opportunities that lie ahead as well.»

Development

During the fourth quarter of fiscal 2020, The Cheesecake Factory opened in Clearwater, Florida, and Culinary Dropout and Blanco opened additional locations in Arizona. One restaurant opened internationally in Mexico under a licensing agreement during the fourth quarter of fiscal 2020.

Balance Sheet and Cash Flow

During the fourth quarter, the Company generated USD 35.6 million in cash flow from operating activities. As of December 29, 2020, the Company had total available liquidity of approximately USD 250 million, including a cash balance of approximately USD 154.1 million and availability on its revolving credit facility of USD 96.6 million. Total debt outstanding was USD 280.0 million. A USD 5.0 million dividend for the fourth quarter of fiscal 2020 was paid in-kind to holders of the Company’s convertible preferred stock.