The Cheesecake Factory's CEO stopped by (bearing his company's trademark dessert) and talked about rising sales, long waits for tables and...kale?
Here at Fortune we kicked off our Monday morning with the breakfast of champions. Well, maybe better to call it the dessert of champions (and yes, we’ve decided that breakfast can include dessert.)
In honor of the relaunch of Fortune.com and the publication of this year’s Fortune 500, Cheesecake Factory CAKE CEO David Overton hand-delivered a batch of specially made cheesecakes to our offices. The slices were appropriately rich, built on a base of flourless chocolate cake, bolstered by layers of Belgian chocolate mousse and Belgian chocolate cheesecake, and then crowned with a chocolate ganache. And of course don’t forget the specks of real gold, which conferred some regal splendor on the concoction.
Overton also took a few minutes to talk business. With 17 quarters in a row of increased same store sales, an important industry metric, the Cheesecake Factory has managed to remain above the chaos in the casual dining industry (in contrast to, say, Red Lobster, which was recently sold to a private equity firm). “You have to remember, we’re upscale casual dining,” he says of his 169-location chain, which is known for its massive menu, long lines, and large portions. The following are edited excerpts.
What are the big food trends you’re monitoring that could pop up on your menu?
I would never say, because people copy us as fast as they possibly can. But I do think we’re seeing a push toward healthier eating. Chipotle is looking at where their food is coming from. Panera is trying to get rid of antibiotics and going right to the farmers. We all want to have better food and know where it comes from. That to me is a big movement forward.
You change your menu twice a year. How do you decide what stays and what goes?
I’m taking my wife’s favorite salad off the menu—the endive salad. I don’t think I’ve heard the last of it yet. Our computer system tells us what isn’t selling, but we’ll leave it on if it’s important for a select group of guests, like vegetarians, even if they’re not going to buy as much of it.
We have a great R&D team. Every day I go down to our test kitchen and have my lunch and taste the five or 10 items that they’re working on. In the last year we put kale on. We just put quinoa on the menu, beets of course. When things become popular and people want them, we’ll find a great price point.
You’ve said your openings are better than ever. Why is that?
There still is pent up demand in the country for the Cheesecake Factory. We decided a couple of years ago that we would go into smaller cities that we never would have gone into in the past. Previously we only opened 10,000-square-foot restaurants and our goal was $1,000 a square foot, which it still is. Now we’re also trying to do that same $1,000-a-square-foot in our smaller units in smaller cities. We’re doing incredibly well with those. Those cities are hungry for the Cheesecake Factory.
Your waits can be two hours at peak times. Are you at capacity? How do you grow from there?
It’s all about the shoulder period. It’s about late night. It’s about mid-afternoon. As you get busier, people will come in early or late because they don’t want to wait. Although we’ve improved so much since the recession, we’re still not at peak customer counts as we were before 2008.
What are you seeing in your mall locations and what is that telling you about the health of the mall?
The top A and A-plus malls are up about 2%. We’re only in those. We have our own entrances, so we really function as an independent restaurant. We just happen to be in the mall because in the suburbs, sometimes it’s really the very best place to open. There’s no other real center. We bring guests to the mall. We don’t feed off the mall. We’re usually the no. 1 restaurant choice of mall owners.
There’s some discussion that you’ve become a mall anchor tenant as department stores have struggled.
For a long time we’ve been a mini-anchor because of our gross per square foot. There have been as many as seven or eight retail stores that were lined up and wouldn’t sign until we did and they wanted to be on our side of the mall because of the traffic. In that sense, landlords look at us very differently than just any restaurant amenity.
How important is a mall presence as you go international?
In Mexico we’re opening Guadalajara in July and I think next year in Mexico City, both in malls. Even though we signed up for Hong Kong and China, we haven’t located the spot. But I believe it probably will be near shopping. It gets us the mid-afternoon dessert and coffee, not just 12-1:30 p.m. and done. We like shoppers, and that’s why we end up picking a lot of malls. Of course in the Middle East all life revolves around malls.
I know you’re a foodie. What is your favorite restaurant of the moment?
I don’t know if I have a favorite restaurant. I just had a meal the other day at the uptown Il Mulino in Manhattan. It was fantastic. I love the tacos ABC Cocina. I think the meatballs at Carbone are totally great, and I did have the best chicken I’ve ever had at Nomad. In L.A., there’s the Church Key, where they have these little carts that go around, all these small plates, and a woman dressed as a Pan Am stewardess serving alcoholic drinks. We just had a really great time at Republique, the ultimate French Bistro in Los Angeles. It’s packed all the time.