One of America’s most popular restaurant chains says it will be unable to pay its rent for any of its storefronts on April 1st due to a massive loss in income amid the current Coronavirus crisis.
The Cheesecake Factory, which was founded in 1972 and based in Calabasas Hills, informed all of its landlords, which are mostly malls, in a letter dated March 18th. Due to the sharp decline in restaurant traffic, the restaurant said the lack of income has “inflicted a tremendous financial blow” to business. Cheesecake Factory’s affiliated restaurants, Rock Sugar and North Italia will also not make April 1st rent payments.
The chain currently has 39 locations in California and a total of 294 restaurants in 39 states, plus the District of Columbia, Puerto Rico, and Toronto, Canada. With 38,000 employees currently, the Cheesecake Factory is one of the nation’s largest restaurant employers. The company also acquired Phoenix-based Fox Restaurants in 2019, which included North Italia, Flower Child, and The Henry.
In the letter, CEO and Company chairman David Overton wrote, “Due to these extraordinary events, I am asking for your patience, and frankly, your help.” He continued, “We appreciate our landlords’ understanding given the exigency of the current situation.” The letter said that the company hopes to resume paying its rent as soon as possible.
On March 23rd, in a statement to investors, the restaurant chain announced that it would curtail the development of restaurants still in the works and tap into a $90 million credit line to increase its available cash for the time being.
Since the Coronavirus outbreak, the Cheesecake Factory has been forced to close 27 locations across the country and switched other locations to takeout and delivery only.
The Cheesecake Factory representatives said the following in a statement, “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.”