Importance of marketing
The Cheesecake Factory (CAKE) is competing in a highly competitive restaurant business, where innovation is absolutely necessary to keep up with the changing needs of customers.
Marketing and advertising play crucial roles in showcasing innovations to customers. Also, promotions help to increase a company’s traffic, where traffic is defined as the number of customers that make transactions at its restaurants.
CAKE’s advertising strategy
CAKE relies on its reputation, location, word of mouth, and media interest to retain and increase its market share. The company utilizes social media and digital marketing to stay in touch with its customers.
CAKE’s management believes that public relations is an important aspect of marketing. For this reason, the company appears for cooking demonstrations in local as well as national media. It also conducts several brand-building programs and partners with third-party gift card retailers for promotional programs.
To cut advertising costs, the company strives to obtain coverage of its new restaurant openings via local media. CAKE, which forms 0.15% of the holdings of the iShares Russell 2000 ETF (IWM), also engages in marketing and advertising in selective local markets.
Through all these exercises, CAKE maintained advertising expenses at 0.2% of total sales in 2015. Texas Roadhouse’s (TXRH), Brinker International’s (EAT), and Darden Restaurants’ (DRI) advertising expenses were 0.7%, 3.2%, and 3.8% of their total sales, respectively, in 2015.
To maintain consistency in the marketing efforts of its brands, CAKE has the final approval on the marketing campaigns of its international licensees. Its marketing mediums include print, billboards, digital media, and radio.
The company also utilizes the services of global intelligence consultants to better understand local perceptions, choices, and news related to food.
Now let’s take a closer look at CAKE’s management.