The only thing that stopped people from visiting The Cheesecake Factory in the first quarter was the weather.
Bad weather in January was solely responsible for a 1.5% traffic decline at the 216-unit casual-dining chain in the period ended April 2, executives said Wednesday. For the rest of the quarter, traffic was flat compared to a year ago.
“We see the consumer that’s coming into our restaurants being very steady,” CFO Matt Clark told analysts. “From week to week, it’s been predictable. … It’s not a bad place at all for us.”
Same-store sales fell 0.6%, but bounced back into the positive low single digits in the second half of the quarter, a trend that has continued into the current period. Menu prices were 5.2% higher, and mix was down 4.3%.
The results contrasted with reports from other casual-dining chains that traffic is declining because lower-income consumers can’t afford to dine out as much. Cheesecake executives hypothesized that those consumers have simply become more discerning.
“The reality is that if you execute really well with a really great product, people are going to pick you over your competition,” Clark said. “That’s what you tend to see is a flight to quality. If you’re going out a little less, you want that to be a really great experience. I think that’s what we deliver.”
By all accounts, Cheesecake is operating well. Retention levels for both hourly employees and managers reached their highest point in five years. That combined with steady sales helped the chain expand its restaurant-level margins to 15% for the quarter, better than the chain was expecting.
“Our operators just did a fantastic job delivering flow through on the sales,” Clark said.
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