A Cheesecake Factory restaurant in Louisville, Kentucky.
Andy Lyons | Getty Images
The Cheesecake Factory swung to a loss in its first quarter as the coronavirus pandemic forced the company to close its dining rooms and furlough thousands of its workers.
Shares of the company fell less than 1% in extended trading.
Here’s what the company reported for the quarter ended March 31:
- Earnings per share: 4 cents, adjusted
- Revenue: $615.1 million
The company reported a first-quarter net loss of $3.93 million, or 9 cents per share, compared with net income of $27.0 million, or 61 cents per share, a year earlier. Health care and free meals for its furloughed workers resulted in a $4 million charge for the quarter.
Excluding this expense and other items, Cheesecake Factory earned 4 cents per share.
Net sales rose 2.6% to $615.1 million.
Wall Street anticipated a loss per share of 38 cents on revenue of $611.4 million, based on a survey of analysts by Refinitiv. However, it’s difficult to compare reported earnings to analyst estimates for Cheesecake Factory’s quarter, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.
The company said that its quarterly regulatory filing will be delayed because of the need to record asset impairment charges and due to the acquisition of Fox Restaurant Concepts, which could result in an even bigger hit to its profits. Cheesecake Factory said the potential impact on its reported results is expected to be “material.”
Cheesecake Factory said that its same-store sales plunged 12.9% during the quarter as states across the country mandated that restaurants close their dining rooms and pivot to delivery and takeout only. The company said that it was outperforming the broader casual dining industry with strong same-store sales before shelter-in-place orders upended the quarter.
Executives said that social distancing measures are expected to affect its on-premise dining sales “for some time.” The company is gearing up to reopen its dining rooms, with several to expected to open as soon as next week with the full menu and half of the capacity. The company is forecasting that 15% of its dining rooms will reopen by the end of May.
In mid-April, after telling landlords it would not pay rent, the company announced a $200 million investment from Roark Capital, the private equity firm that has also backed Arby’s owner Inspire Brands.
The company’s cash balance is $260 million, as of April 30. To preserve liquidity, it has suspended its dividend and stopped buying back stock. On Friday, Cheesecake Factory amended its revolving credit facility for relief on some terms, including its leverage ratio, through the first three months of 2021.
At the end of the quarter, the company’s long-term debt was $380,000.