Despite the inflationary headwinds impacting restaurant traffic, some dining concepts are thriving – in large part thanks to price increases that are offsetting rising costs and traffic dips. To better understand this strategy, we dove into traffic and revenue data for The Cheesecake Factory to see how some restaurants are finding success amidst the current economic climate.
Inflationary Pressures Driving Traffic Dips?
The Cheesecake Factory is known for its diverse menu, generous portions, and, of course, its iconic cheesecakes. Like many of its peers, the company is feeling the reduction in dining traffic, with year-over-year (YoY) visits down almost every week of 2023.
A Recipe for Success
Still, when looking at revenue, the company is seeing success despite inflationary challenges. The Cheesecake Factory ended 2022 with over $3 billion in annual sales for the first time in the company’s history, with the record-breaking sales numbers driven largely by price increases. And while these were partially intended to offset rising costs, the higher prices have also helped The Cheesecake Factory make up for some of the traffic dips seen in the full-service restaurant category over the past three years.
Visit Frequency Falls, Average Check Size Increases
According to the company, the average check per customer grew from $23.50 in 2019 to $29.40 in 2022 – a 25.1% increase. In that same period, visits to The Cheesecake Factory declined by 4.8% while visits per venue fell 7.1% – but the number of unique visitors to the chain increased slightly, by 2.5%.
The increase in the number of unique visitors combined with the decline in overall visits means that more people visited the Cheesecake Factory in 2022 than in 2019, but they visited less frequently. This might indicate that patrons are now treating a meal at The Cheesecake Factory as more of a special-occasion outing – perhaps due to economic headwinds and general downturn in discretionary spending. But thanks to the company’s price increases, The Cheesecake Factory was still able to break sales records in 2022 despite the traffic dips.
What’s Next for The Cheesecake Factory?
Still, there may be a limit to consumers’ willingness to accept additional price increases. As mentioned earlier, location intelligence indicates that visit frequency declined by 5.8% between 2019 and 2022 – which seems to indicate that the price increases are already holding some patrons from visiting the chain as often as they’d like. Meanwhile, the median household income in The Cheesecake Factory's trade area has declined slightly, from $68,220 in 2019 to $66,539 in 2022, which means that the price increases are being absorbed by a more budget-conscious audience.
For now, it seems that the chain’s positioning as a concept with something for everyone still makes it attractive to customers looking for a special occasion destination that won’t break the bank. But as restaurant inflation begins outpacing grocery price hikes, the increase in Food-Away-From-Home prices may brush up against consumers’ spending limits – and The Cheesecake Factory and other dining concepts may return their focus to driving traffic growth.
The Final Table
The Cheesecake Factory is thriving in the face of challenges that have caused other restaurants to falter, pulling in impressive sales despite lower foot traffic. But is this success sustainable, or is it an outlier in an industry facing significant headwinds? As inflation takes hold, will the restaurant be able to continue its winning streak, or will sales and foot traffic become more closely aligned?
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