After discussing same-store sales growth in the previous article, let’s discuss another important revenue driver: unit growth.
By the end of 2015, The Cheesecake Factory (CAKE) was operating 188 The Cheesecake Factory restaurants, 12 Grand Lux Cafes, and one RockSugar Pan Asian Kitchen restaurant.
From 2011 to 2015, the overall unit count of The Cheesecake Factory rose from 170 restaurants to 201, representing a CAGR (compound annual growth rate) of 3.4%.
The Cheesecake Factory brand increased its unit count from 156 to 188, which included 11 internationally licensed restaurants in the Middle East and Mexico. CAKE, which forms 0.15% of the holdings of SPDR S&P MIDCAP 400 ETF (MDY), began licensing its restaurants in 2011.
Due to their lower-than-expected sales, CAKE opted to close three of its Grand Lux Cafe restaurants in 2013, reducing the brand’s restaurant count to 11. However, in 2015, the company opened a new Grand Lux Cafe in Pennsylvania, taking the count up to 12. The company operates one RockSugar Pan Asian Kitchen in California.
Over the last five years, the company’s expansion has mainly been focused on The Cheesecake Factory brand. The rate of addition of new units has been on the rise. In 2011, the unit growth of the brand was at 3.8% compared to 6.2% in 2015.
In 2011, CAKE signed an agreement with Alshaya to develop 22 restaurants in the Middle East. We can expect the growth rate to continue to improve in 2016.
From 2011 to 2015, Darden Restaurants’ (DRI) Olive Garden, Texas Roadhouse (TXRH), and Brinker International’s (EAT) Chili’s Grill & Bar increased their unit counts at CAGRs of 2%, 5.7%, and 0.8%, respectively.
Having discussed CAKE’s main revenue driver, let’s explore some of its other revenue drivers in the next article.