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Behind the Line: Let them eat cake

New value menu items support The Cheesecake Factory's bottom line

By Lauren Kramer
February 01, 2009

It's a rainy Friday night in downtown Seattle and The Cheesecake Factory lobby is crammed with pager-holding, hungry diners waiting between 30 and 40 minutes for a table. Cheesecake samples are passed around and children snack on baguettes as they wait. Yet even this busy scene is testament to the 
economic recession and the affect it is having on one of the busiest and most successful U.S. restaurant chains.

"Waits on a Friday night are normally 45 minutes to an hour," says Robert Okura, VP of culinary development for the Calabasas Hills, Calif.-based restaurant chain. "We're still busier than most restaurants, but our figures are definitely down."

The Cheesecake Factory launched an eight-item value-focused menu in November, adding to its 200-item regular menu with a series of new dishes priced between $11.95 and $14.95.

"We came up with great recipes that don't sacrifice quality or creativity, but are just priced somewhat lower than our other menu items," says Okura.

The most expensive item on the value-focused menu is 
barbecued salmon at $14.95. Other items include chicken bellagio, cashew chicken salad, chicken potpie and tomato basil pasta for $12.95 each.

At the Morgan Stanley Global Consumer & Retail Conference held last November in New York City, Matthew Clark, The Cheesecake Factory's VP of strategic planning, said that several of the value-focused menu items are No. 1 in their respective categories already.

The Cheesecake Factory has also introduced new marketing efforts to boost sales at its 145 restaurants. For its 30th anniversary this year the company handed out close to 2 million guest cards in October, inviting past diners to return and earn a complimentary slice of cheesecake with every $30 purchase. "We're also featuring a $10 guest card instead of cheesecake in three test markets," says Mark Mears, chief marketing officer. The programs have had a 5 percent redemption rate since their introduction.

The average check per person at The Cheese Factory is approximately $18, with average unit volumes reaching almost $10 million for the 144-restaurant casual-dining chain. But with the continuing decline in the economy, Okura joins most other restaurateurs in his expectation that this holiday season will be slower than in the past.

"We're doing our best to ride this recession out, and that includes continuing to look into the possibilities of developing new items at attractive price points," says Okura. "Nothing will change quickly with this recession and I think it's a good thing we can come up with these good dishes at a good price range."

At the RockSugar Pan Asian Kitchen, a new concept that The Cheesecake Factory opened in Los Angeles last June, the reception has been "unbelievably strong," according to Okura. "Zagat just listed it as one of America's top restaurants," he says.

RockSugar focuses on Southeast Asian food that is less familiar to mainstream diners, particularly from Singapore, Thailand and Vietnam. "It's a different, new and exciting upscale casual-dining concept that took us three years to put together," says Okura. "It's piquing customers' interest, and people are loving it, so it's done remarkably well."

The Cheesecake Factory is hoping to expand its 13-unit Grand Luxe Café concept in the near future. But the key to success for all of its restaurants in these economic times will be maintaining a commitment to quality food and service, Okura says.

His advice to restaurateurs is not to take their eyes off the guest. "Don't forget the fact that the guest is No. 1," he cautions. "You can't just speak of guest service, you have to make it your priority and not just focus on your bottom line. The restaurants that stay true to providing exceptional dining experiences for guests will be able to hit the street running and get back to business when this economic storm has been ridden out."


Contributing Editor Lauren Kramer lives in British Columbia


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