The Cheesecake Factory, an American restaurant company and distributor of cheesecakes informed their landlords that they are not going to pay their bills anymore, since they are BROKE.
According to LA Eater, Cheesecake CEO David Overton wrote to landlords: “Due to these extraordinary events, I am asking for your patience, and frankly, your help.” and he continues with, “we appreciate our landlords’ understanding given the exigency of the current situation.” The letter says that the company hopes to resume paying rent as soon as possible.
But this is a far cry from last month’s report in The Conservative Income Investor. Just one month ago they reported that “Cheesecake Factory has no pension obligations, issues no preferred stock, and only carries $25 million in total debt. That is only 5% of the company’s capital, and could be paid off with three months of profits if management desired it.”
Furthermore they noted that Cheesecake Factory’s competitive business model is that it does not have to deal with many suppliers and other middlemen, in return they are able to take advantage of their centralized production in two bakeries. Which earns them almsot 20% returns on total capital that it employs.
And just 3 days ago, Cheesecake factory boasted in ther press release that “The Cheesecake Factory restaurants have a long-standing business in the off-premise channel, with historical sales volumes approaching the size of many stand-alone restaurants” but added that “the Company drew an additional $90 million on its revolving credit facility to increase its cash position“
According to one of their employees, they stopped paying them as well.
Hi, I work for Cheesecake Factory and they 100% are not paying us— stepherzzz (@dubstephh808) March 26, 2020
Like so many other U.S. restaurants CAKE can survive this but only for a very short period of time. Gotta give it to the apocalypse preppers, it seems like they were the only ones prepared for this pandemic. Every company’s board of directors should have one prepper that can VETO majority votes.
The company was founded in 1972 and operates 220 full-service restaurants: 206 under The Cheesecake Factory brand.