Cheesecake Factory inches closer to world domination
FORTUNE — The Cheesecake Factory moved closer to transforming itself into a global brand this week with its announcement of plans to enter the Latin American market through a licensing agreement.
The deal allows for regional operator Alsea to open a minimum of 12 restaurants over eight years in Mexico and Chile, with the possibility of expanding into Argentina, Brazil, Colombia, and Peru.
Earlier this month, Fortune detailed the California-based restaurant chain’s entrance into the Middle East, its first international market, with its Kuwaiti partner Alshaya. Cheesecake Factory CEO David Overton said that once the company signed a deal with Alshaya, it felt committed to going global. The company has said that each individual licensed international restaurant should eventually contribute more than a penny to earnings per share.
The Middle Eastern market posed a unique set of challenges to the Cheesecake Factory (CAKE) because it had to make sure the menu complied with Islamic dietary laws. Moving into Mexico should be easier, with its proximity to the U.S. easing supply chain issues. But there’s one caveat: “I think we’ll have to look at our Mexican food and make sure it’s authentic enough,” Overton told Fortune.
Before signing its new deal, Overton and his team toured the region to see Alsea’s operations, which include Domino’s (DPZ), P.F. Chang’s, and Starbucks (SBUX). In Latin America, just as in the Middle East, Overton was impressed by the number of U.S. concepts, along with the tremendous growth of quality malls. “We certainly weren’t the first in, but we don’t want to be the last in either,” he said. “Great sites in these shopping centers are not easy to get.”
The Cheesecake Factory’s first restaurant with Alsea is slated to open in Mexico City in 2014, but Latin America won’t be the end of the expansion. Overton said the company is “quite far down the road in our Asia negotiations,” with a possible opening in the region in 2014. At this point he’s not saying who the operator will be.
The Asian market will require major menu changes to appeal to local tastes. “That’s why we’re going slowly,” Overton said, “because we know they’ll be a lot more work if we get going in Asia.”
Overton is hopeful new sites in Kuwait and Dubai will be ready to open next year or in early 2015 and added that Alshaya is very serious about taking the Cheesecake to Istanbul, Moscow, and Saudi Arabia.
After Asia, don’t expect any new partnerships in the immediate future. “Because Alshaya is so far reaching to so many countries and they’re moving so quickly,” Overton said, “we’ll probably wait a little bit and then make sure we have the right infrastructure and everything is going well before we seek out anyone else.”