The Cheesecake Factory asked its landlords for a deferral due to the COVID-19 outbreak.
This week, The Cheesecake Factory sent a letter to its landlords stating that the chain would not be paying its upcoming April 1 rent payment due to a loss of income as a result of COVID-19. The letter, which is dated March 18, noted that there's been a severe decline in restaurant foot traffic and has, in turn, decreased its cash flow and “inflicted a tremendous financial blow” to business.
“Due to these extraordinary events, I am asking for your patience, and frankly, your help,” writes company chairman and CEO David Overton. “...we appreciate our landlords’ understanding given the exigency of the current situation.”
“We have very strong, long-standing 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,” Chief Financial Officer Matthew Clark told Eater.
Five days later, the Cheesecake Factory announced that it would hold back on the development of yet-to-be-open restaurants and cling onto a $90 million credit line to increase its available cash. Since the outbreak, the chain has closed 27 of its locations and switched its remaining restaurants to takeout and delivery only.
Combine the fact that the Cheesecake Factory is one of the largest restaurant employers in the country (the company has more than 38,000 employees) and the fact that its stock price has plummeted more than 50 percent within the past month, the chain may need a bailout just to survive.