Cheesecake Factory Gets $200 Million Cash Injection From Roark Capital

Cheesecake Factory Inc. (CAKE) said it received a much needed investment of $200 million from Roark Capital as it grapples with coronavirus-related restrictions and closures of its restaurants.

Cheesecake Factory has been forced to close restaurants throughout the United States and Canada. Internationally, the company has 26 Cheesecake Factory restaurants under licensing agreements. In March comparable sales plunged about 46%, due to the coronavirus impact, according to preliminary figures released earlier this month. The company drew an additional $90 million on its revolving credit facility to increase its cash position and withdrew its first quarter and 2020 financial guidance, it said in March.

“This transaction not only meaningfully enhances our liquidity position to navigate the near-term COVID-19 landscape and get 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,” said David Overton, Cheesecake’s Chairman and Chief Executive Officer.

Cheesecake Factory shares have more than halved this year, adding 1.2% on Monday to close at $18.93.

Turning now to Wall Street, TipRanks data shows that analysts have a Hold consensus rating on the stock split into 8 Holds, 3 Buys and 2 Sells. The $23.64 average price target implies a 25% potential gain in the shares, should it be met in the coming 12 months. (See Cheesecake stock analysis on TipRanks).

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