Cheesecake Factory Is the Restaurant Slump's Latest VictimBy and
Same-store sales forecast to drop 1 percent in second quarter
Bad weather hurt patio usage in Eastern, Midwest locations
Cheesecake Factory Inc.’s status as a bright spot in the gloomy casual-dining industry is beginning to fade.
Shares of the restaurant chain slumped as much as 11 percent to $52.06 in New York after it cut its forecast for earnings and margins. That marked the biggest intraday decline in more than two years.
The outlook cast doubt on Cheesecake Factory’s ability to endure a broader slump in the restaurant industry. The company blamed weakness at its U.S. restaurants in the East and Midwest, saying bad weather reduced patio usage -- a big draw for the chain. That offset positive comparable sales in California, Texas and Florida.
“We have seen heightened volatility in week-to-week sales trends, indicative of uncertainty on the part of many consumers,” Chief Executive Officer David Overton said in the statement.
Same-store sales will decline about 1 percent in the current quarter, the Calabasas Hills, California-based company said. It had previously forecast an increase of as much as 2 percent.
Despite the slowdown, the company still sees the potential for 300 U.S. locations, executives said during an investor conference on Tuesday. The company also is expanding its Rock Sugar Pan Asian Kitchen concept and looking for a site for its first fast-casual restaurant.
Cheesecake Factory shares had gained 17 percent in the past year through Monday’s close.