The Cheesecake Factory Isn't Paying Next Month's Rent
However, CEO David Overton also said the delivery- and takeout-only model has been sustainable for the chain.
The Cheesecake Factory has announced that it will be unable to pay next month's rent for any of its restaurants due to a combination of temporary store closures, takeout-only dining restrictions, and loss of income due to the ongoing coronavirus crisis. On March 18, its founder and CEO David Overton sent a letter to all of its landlords, explaining that these factors had dealt a "tremendous financial blow" to the chain.
"Due to these extraordinary events, I am asking for your patience and, frankly, your help. Unfortunately, I must let you know that The Cheesecake Factory and its affiliated restaurant concepts will not make any of their rent payments for the month of April 2020," Overton wrote, according to a copy of the letter acquired by Eater. "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 are continuing to evaluate the implications of this situation on our business and we realize the impact this action will have on our landlords. We appreciate our landlords understanding given the exigency of the current situation."
On Monday—several days after it sent that letter to its landlords—The Cheesecake Factory told investors that takeout and delivery options were allowing it to "operate sustainably at present," but it did confirm that it had temporarily closed 27 of its 294 restaurants. The chain employs more than 38,000 people at its locations throughout the United States.
According to Restaurant Business, The Cheesecake Factory also told investors that it would be pausing the planning and development of future restaurants, and pulling $90 million from a line of credit in order to have cash on hand. (If only smaller, locally-owned restaurants had that kind of eight-figure safety net right now).
“With 42 years of history as a guide, we believe we will overcome these challenging near-term operating conditions and be even better positioned for the long term,” Overton said.
In the United Kingdom, Burger King chief executive Alasdair Murdoch said that the fast food chain won't be paying its quarterly rent either, as it would prefer to use that money to compensate its workers. "Most landlords have been reasonable about this. I do think there are a number of creative solutions as well," Murdoch told BBC Radio 4 Today. "We could add three months on to the end of the lease for those people who are unable to pay in the short-term at the end of these three months."
On Tuesday, Burger King announced that it was temporarily closing all 500-plus locations in the U.K. "It's not something we want to do, but it is the right thing to do right now," it said in a statement. "We also want to take this moment to thank everyone who is working hard through this challenging time, we're incredibly grateful. We have exciting things coming in the future, so we'll see you on the other side."