This Just In ...
Kevin Fischer is a veteran broadcaster, the recipient of over 150 major journalism awards from the Milwaukee Press Club, the Wisconsin Associated Press, the Northwest Broadcast News Association, the Wisconsin Bar Association, and others. He has been seen and heard on Milwaukee TV and radio stations for over three decades. A longtime aide to state Senate Republicans in the Wisconsin Legislature, Kevin can be seen offering his views on the news on the public affairs program, "InterCHANGE," on Milwaukee Public Television Channel 10, and heard filling in on Newstalk 1130 WISN. He lives with his wife, Jennifer, and their lovely baby daughter, Kyla Audrey, in Franklin.
A Cheesecake Factory in Franklin?
I want to explore the following two questions:1) Should Franklin recruit and open a Cheesecake Factory restaurant?
2) Could Franklin recruit and open a Cheesecake Factory restaurant?
I will get into the specifics of those questions, but first….
Just a few years ago, my wife and I were walking down the main drag of downtown Honolulu, Kalakaua Avenue.
We were headed to Duke’s Canoe Club in Waikiki for dinner when we passed it. A Cheesecake Factory.
Right there, pressed up against the sidewalk appeared to be 50 times the outdoor seating you’d see at a typical Cheesecake Factory. What my wife and I saw was one of two outdoor seating areas. After all, this was Hawaii.
And how many Cheesecake Factory restaurants do you see adorned with one tiki torch after another. Needless to say, the restaurant was jammed, buzzing with lively activity.
The Honolulu Cheesecake Factory, located on the ground level of the Royal Hawaiian Shopping Center, has only been open a few years, but is going gangbusters. In October of 2003, the Honolulu daily newspaper, the Honolulu Advertiser, wrote about the coming of the Cheesecake Factory:
For a company that doesn't advertise, advises customers they may have to wait up to an hour or three for service, and gets complaints about putting too much food on a plate, The Cheesecake Factory does well.
The California chain of casual-dining restaurants with industry-leading sales is about to enter the Hawai'i market with its biggest restaurant yet, expecting the operation to be among its top five doing more than $1 million in monthly sales.
With room to seat almost as many people as the old Cinerama Theater, the nearly 600-seat Cheesecake Factory scheduled to open in early December at Waikiki's Royal Hawaiian Shopping Center also expects a lot of Hawai'i residents to visit a part of O'ahu that many kama'aina prefer to avoid.
But if there's any doubt that the 33-year-old debt-free company can succeed here, you don't hear it from analysts who study the business or from shopping center owners who compete fiercely for the restaurant as an anchor tenant.
"They have yet to open a bad restaurant," said Sharon Zackfia, a restaurant industry analyst for investment banking firm William Blair & Co. in Chicago.
According to analysts and consumers, there's a simple formula to what makes the Cheesecake Factory work: value and volume.
Customers find generous portions of quality food at good prices in a casual setting with decor that's more upscale than usual. Howard Gordon, company vice president for business development and marketing, said 70 percent of customers have leftovers wrapped up to take home.The average restaurant serves 3,000 people a day, and brings in $1,000 per square foot in sales, or $11 million a year.
The average Cheesecake Factory customer check is $16.
The busiest Cheesecake Factory, in Chicago, does $18 million a year in sales.
"They do enormous volume," said Malcolm M. Knapp, a restaurant industry consultant in New York who said the average Cheesecake Factory restaurant revenue is higher than any competitor's.
One of the keys to the restaurant's being able to draw so much business is a huge menu, which lists some 200 items, including 36 varieties of cheesecake.
Zackfia said such a wide selection would hurt cost efficiencies of most restaurants, but Cheesecake Factory uses it to draw a big enough mass of customers that makes the menu manageable.
In Hawai'i, the restaurant will be among the largest — bigger than the roughly 300-seat Palomino or Ryan's, the 420-seat Todai or 550-seat Sam Choy's Breakfast Lunch & Crab.
Waits at other Cheesecake Factory restaurants, none of which take reservations, can be as short as 10 minutes or as long as three hours.
Gordon said he doesn't know what to expect in Waikiki, given that the restaurant is bigger than others but will see more than normal traffic because of the tourist population.
Gordon also said the company expects a strong mix of residents visiting the restaurant. "A lot of locals want to come down here," he said. "A lot of the action is happening here."
Charlian Wright, Royal Hawaiian Shopping Center marketing director, said she expects the customer mix at the mall to change from 80 percent visitor and 20 percent kama'aina to 70 percent and 30 percent, respectively.
"A lot of the local residents told us, 'You get that (Cheesecake Factory) here, we'll be there,' " she said.
OK, I’m convinced.
The answer to question #1 is YES, Franklin should try to secure a Cheesecake Factory.
But what about question #2…..could Franklin pull it off?
According to the Motley Fool on www.fool.com, an investment and personal finance website, Cheesecake Factory “is among the best restaurant concepts for squeezing the most dollars out of each site.” Jeremy MacNealy wrote this on fool.com last December about this popular restaurant chain:
One of the qualities I find very appealing in the Cheesecake Factory concept is that it original enough to differentiate itself from other casual restaurants. O'Charley's (Nasdaq: CHUX), Chili's by Brinker (NYSE: EAT), Applebee's (Nasdaq: APPB), Ruby Tuesday (NYSE: RI), and Bennigan's all just kind of seem the same, but whether it is the restaurant decor or its monstrous menu, Cheesecake has set itself apart from the rest of the pack. Its distinctive quality will prove to be a major advantage when the company enters new markets that already have a strong presence from the aforementioned concepts.
Note what he then writes about new (Franklin?) markets:
Before addressing new markets, it is worth mentioning that Cheesecake still has plenty of opportunity for growth in existing markets. CFO Michael Dixon made it very clear in the call that filling out existing markets will be an important part of its expansion efforts, stating, "The strategy of capturing additional profitable market share in areas that we know very well and where our brand recognition is high has worked well for us and we will continue to maximize this opportunity in the future."
Look for the company to fill in existing markets with a slightly smaller version of the mammoth-sized Cheesecake Factory that most of us have become accustomed to; these newer sites average about 5% less "productive seats." The advantage of the smaller design is that the company can fit a restaurant to the size of "preferred sites" in high-traffic markets.
So, is Franklin out of the question? MacNealy continues:
As for new markets, management is very pleased with the performance in such locations as Albany, Oklahoma City, and Omaha. These cities are smaller markets than where many of the concept's first 100 sites are located, but the results have been no less impressive, with sales averaging in excess of $250,000 per week in the first four weeks of operation.
If there were any doubts as to where Cheesecake was going to find growth going forward, Dixon removed them, stating, "We remind our investors that the majority of our expected revenue growth for the next few years will continue to come from the opening of new restaurants." In the fourth quarter (of 2006) it will open 13 new locations -- a record high for the company -- adding to the 126 sites already in the portfolio. In 2007, it will open an additional 21 locations, giving it an estimated 18% increase in square footage growth. Again, the bulk of these openings will come in the fourth quarter.
That would give Cheesecake Factory an estimated (and incredible) 160 sites.
I repeat, is Franklin out of the question?
Let’s go back to MacNealy:
Management has stated all along that they believe the market can sustain 200 Cheesecake Factory operations. With 126 sites in existence today, (as of the December 2006 date of this internet column) there is still plenty room for growth. And given the recent success it has found in some of the smaller markets, my hunch is that we will eventually see that 200 target revised substantially upward.
So obviously, Franklin is not out of the question if Cheesecake Factory’s explosion of new sites continues.
I am not that close to Franklin and its efforts to woo new business. As they say in the restaurant business, that’s not my table.
But it’s clear to me that the answer to each of the two questions I have proposed is YES.
And to borrow a phrase from a famous movie, if you build it, they will come, especially given that this side of town has no Cheesecake Factory.
Sure beats a DQ Chill and Grill or Grill and Chill or whatever the hell you call it.
My only gripe with Cheesecake Factory: the wait time is part of the deal so please, build more seating space around the bar.
Should Franklin get a CF? YES!
Could Franklin get a CF? Given the proper approach and recruitment effort, I think it could!
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