Roark Capital Invests $200 Million in The Cheesecake Factory Amid Pandemic-Related Closures

Atlanta and Calabasas Hills, Calif. — Roark Capital Group, a private equity firm based in Atlanta, has invested $200 million in The Cheesecake Factory Inc., owner and operator of the chain of restaurants of the same name. The Calabasas Hills-based company also owns and operates the North Italia chain, as well as a collection of restaurants within the Fox Restaurant Concepts subsidiary.

The funds will be used to immediately help The Cheesecake Factory navigate the COVID-19 pandemic, in which its dine-in service has been closed. The company, which has been handling takeout orders and deliveries through the DoorDash app, recently projected its off-premise sales would be up 85 percent in first-quarter 2020 compared to fourth-quarter 2019.

Specific details of Roark Capital’s capital infusion were not disclosed, but David Overton, chairman and CEO of The Cheesecake Factory, says the investment will improve the company’s liquidity.

“This transaction not only gets our affected staff members back to work as soon as practicable, but also importantly solidifies our ability to manage the business for the long-term for all of our stakeholders once we emerge on the other side of this crisis,” says Overton. “Moreover, Roark’s investment underscores the strength of our brands, market positioning and long-term growth prospects.”

According to an April 2 press release, the company temporarily closed 30 restaurants, including three Cheesecake Factory restaurants, and the company indicated that its comparable sales in March were down 46 percent from March 2019. The company reportedly also sent letters in March to its landlords and property managers informing them it would not pay its April rent due to hardships from COVID-19.

As part of the investment, The Cheesecake Factory will expand its board of directors from eight to nine members, with Roark Capital’s president Paul Ginsberg serving as an independent board member.

Wells Fargo Securities LLC and J.P. Morgan Securities LLC served as financial advisors to The Cheesecake Factory, and Latham & Watkins LLP served as its legal advisor. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal advisor to Roark Capital Group.

Roark Capital’s portfolio of investments includes 76 franchise and multi-unit brands, including Arby’s, Buffalo Wild Wings, Cinnabon, Corner Bakery Café, Jamba Juice, Jim ‘N Nick’s Bar-B-Q, Jimmy John’s, Massage Envy, Moe’s Southwest Grill, Orangetheory Fitness, Pet Supermarket, Primrose Schools, Schlotzsky’s, Seattle’s Best and Sonic.

The company launched a $1.4 billion fund in early April to invest in restaurants, though it has not revealed if the fund was used in the Cheesecake Factory transaction.

The Cheesecake Factory owns and operates 294 restaurants in the United States and Canada. The company also operates two bakeries to fulfill orders for its restaurants, as well as international licensees and third-party bakery customers. There are 26 Cheesecake Factory restaurants operating under licensing agreements internationally.

— John Nelson

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