What’s Been the Main Driver of CAKE’s Same-Store Sales Growth?

In the last five years, The Cheesecake Factory’s (CAKE) same-store sales growth was in the range of 1%–3%, largely driven by rises in its menu prices.

Rajiv  Nanjapla - Author

Jun. 7 2016, Updated 9:06 a.m. ET


Same-store sales growth

Same-store sales growth and unit growth are two important revenue drivers for a restaurant business. Same-store sales growth measures the growth in revenues generated by existing stores or locations over a period.

Same-stores sales growth, represented as a percentage, doesn’t consider revenues from new stores opened during the period.

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Drivers of same-store sales growth

Same-stores sales growth is driven by ticket size and traffic. A restaurant’s average ticket size is calculated by dividing its total revenue by its number of transactions. As the average ticket size rises, so does the total average revenue collected.

Average ticket size is affected by price and product mix. Rises in traffic or transactions will also increase revenue. Location, promotions, and advertising directly affect a restaurant’s traffic.

CAKE’s same-store sales growth drivers

In the last five years, The Cheesecake Factory’s (CAKE) same-store sales growth has been in the range of 1%–3%, largely driven by rises in its menu prices. The company has stated that to offset inflation pressure, it expects to raise its menu prices by 2% every year. CAKE’s rise in menu prices has not increased its margins, which have fallen in the last two years.

In the last three years, the company’s traffic has fallen. In 2015, CAKE posted same-store sales growth of 2.6%, as its average check size rose 3% and its traffic fell by 0.4%. The increase in check size was driven by a 2.2% rise in menu pricing and an 0.8% rise due to favorable product mix.

In 2015, Brinker International’s (EAT) Chili’s Grill & Bar, Texas Roadhouse (TXRH), and Darden Restaurants’ (DRI) Olive Garden posted same-store sales growths of 0.1%, 7.8%, and 1.9%, respectively.

Grand Lux Cafe’s same-store sales growth

Over the last five years, CAKE’s Grand Lux Cafe brand has been posting negative same-store sales growth due to falls in its traffic. In 2015, the brand posted a 2.3% fall in its same-store sales growth despite menu price rises of 1.5% and 1.1% in the second and fourth quarters, respectively.

In the next article, we’ll discuss CAKE’s average check size. CAKE makes up 0.15% of the iShares Core S&P Mid-Cap ETF (IJH).


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