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Comparable-store sales fell 56.9% in the second quarter.
Photograph by Patrick T. Fallon/Bloomberg
It hasn’t been a cakewalk, but the
Cheesecake Factory
managed to lose less than expected in its second-quarter earnings, even as the coronavirus pandemic continued to hammer sales.
The Cheesecake Factory (ticker: CAKE) said it lost $56.5 million, or $1.61 a share. On an adjusted basis, it lost 87 cents a share. That compares with an 81-cent profit in the year ago period, but is better than the $1.11 per share loss analysts were expecting, according to data from FactSet. Revenue was $295.9 million, compared with $602.6 million a year earlier, and below the $324.1 million consensus estimate.
Comparable-store sales fell 56.9% in the period, although that was also not as bad as the 58.6% decline analysts had predicted.
The Cheesecake Factory said 71% of its locations—including 146 of its flagship brand—have reopened with limited-capacity indoor dining; 22 Cheesecake Factories are doing off-premise dining only, and 16 are still closed.
The company said its restaurants that have resumed indoor dining have recaptured an average of 80% of last years’ sales quarter-to-date, although that also reflects demand for delivery and takeout. For those offering only takeout service, weekly sales are about $4.2 million per unit on an average annualized basis. In the third quarter through July 26, comparable sales are off 32%.
Restaurants as a whole have struggled throughout the Covid-19 pandemic. While many got an initial boost when states and locales started to reopen this spring, that pent-up demand withered in places where big jumps in virus cases caused delays or rollbacks of indoor dining. Remote working and high unemployment are also headwinds for the industry, as well as people who are learning to like cooking for themselves.
That has been somewhat less of a burden for fast food, which has low price points and a clientele more accustomed to eating their food away from restaurants. Fast-casual chains like Cheesecake Factory have traditionally catered to on-premise dining.
Nonetheless, investors were likely heartened to see that the Cheesecake Factory lost less than expected, and same-restaurant sales declines are have improved markedly in July. Olive Garden parent
Darden Restaurants
(DRI) showed a similar pattern when it reported earnings last month, with the stock rising on a smaller-than-expected loss and the company’s adoption of takeout and delivery options.
That said, the company and the sector aren’t out of the woods. Cheesecake Factory stock is off nearly 32% this year, so a small relief rally right after earnings wasn’t surprising. But it was also short lived. After popping more than 2.5% initially, the shares were off 2.1% to $26 in after-hours trading, just ahead of the 5 p.m. Eastern time conference call.
Write to Teresa Rivas at [email protected]
