The Cheesecake Factory Inc. had a strong third quarter (ending Sept. 29), with revenue of $517.7 million versus the consensus estimate of $490 million. Comparable store sales were down 23%, but better than analyst expectations of a decrease of 28% and second quarter’s 57% drop. The results were bolstered by strong off-premise sales and a recovery in business at its indoor dining rooms.
While its latest results were impressive and Cheesecake Factory is executing well, there are risks from increased pandemic-related restrictions being placed on restaurants globally. Here’s a more detailed look at whether it’s a good time to buy shares of Cheesecake Factory.
Success with off-premise dining
Like most other restaurants, Cheesecake Factory had to concentrate on off-premise dining during the second quarter of this year because of COVID-19 restrictions. Most dining rooms in the U.S. and worldwide had to close, with only take-out and delivery permitted. Impressively, during the third quarter, Cheesecake Factory was able to keep most of its off-premise sales from the second quarter even as its dining rooms reopened.
The restaurant company believes that much of its elevated off-premise sales can be maintained even after dining rooms return to normal operations post-pandemic. President David Gordon said on the third-quarter earnings call, “Even with a meaningful increase in in-person dining capacity, quarter-to-date, we continue to maintain nearly 90% of elevated COVID off-premise sales at Cheesecake Factory restaurants with reopened dining rooms.
