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In a letter on March 18, Cheesecake Factory CEO David Overton informed its landlords it would not be able to make its rent payments for the month of April, citing a severe decline in restaurant traffic that has “inflicted a tremendous financial blow” to business. The restaurant chain has been forced to close 27 stores across the country and others have been restricted to only take-out and delivery orders, which it said just days ago was enabling the company to “operate sustainably at present."
Overton writes, "Due to these extraordinary events, I am asking for your patience, and frankly, your help.”
He continued, "Please understand that we do not take this action or make this decision lightly, and while we hope to resume our rent payments as soon as reasonably possible, we simply cannot predict the extent or the duration of the current crisis...We appreciate our landlords’ understanding given the exigency of the current situation.” (Eater obtained the letter)
Asked for comment regarding its rent payment for April, Cheesecake Factory CFO Matthew Clark said.
“In these unprecedented times, there are many factors that are changing on a daily basis given governmental regulations and landlord decisions to close properties.
"We have to take both into consideration in terms of understanding the nature of our rent obligations and with respect to managing our financial position. We have very strong, longstanding relationships with our landlords. We are certain that with their partnership, we will be able to work together to weather this storm in the appropriate manner.”
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The Cheesecake Factory’s partnering restaurants, such as Rock Sugar and North Italia, are also impacted and will not make their April rent payments.
The same day the letter was issued to landlords, the restaurant rolled out a promotion on its social media stating customers can get free delivery on orders over $15 ordered through its partnering delivery app, DoorDash.
In a statement to investors on March 23, The Cheesecake Factory announced that it would pump the brakes on the development of unopened restaurants and reach for a $90 million credit line to increase its cash on hand. Its stock has fallen by 50 percent in the last month.
According to the reservation app OpenTable, reservations in Seattle were down 31 percent from Feb. 24 to March 3 compared to that same time last year. San Francisco saw a 24 percent decline during that time period, and in the following week, reservations continued to plummet in Seattle and the Bay Area by 49 percent and 43 percent, respectively.