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Cheesecake Factory Inc. is doing what a lot of tenants would like to do come April 1: withholding their rent.
The restaurant chain said that the “unprecedented times” we are living in has prompted it to take a closer look at its economic situation.
“[T]here are many factors that are changing on a daily basis given governmental regulations and landlord decisions to close properties,” said Matthew Clark, chief financial officer of Cheesecake Factory CAKE, +4.19%, in a statement.
“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.”
The company has also furloughed 41,000 employees. These staff members will receive a daily free meal and retain benefits and insurance until June 1.
Executives and the board will also see a pay cut.
Cheesecake Factory said Monday that it was drawing down $90 million of its revolving credit facility, and 27 of its restaurants, including two namesake locations, are closed.
Cheesecake Factory’s portfolio includes North Italia and restaurants included under the Fox Restaurant Concepts subsidiary. The company operates 294 restaurants across the U.S. and Canada, and has 26 Cheesecake Factory locations operating internationally under licensing agreements.
Cheesecake Factory stock was up 4.2% in Thursday trading, and has sunk 58.3% over the past year. The S&P 500 index SPX, +6.24% is down 6.3% for the period.
“We have very strong, longstanding relationships with our landlords,” said Cheesecake Factory’s Clark. “We are certain that with their partnership, we will be able to work together to weather this storm in the appropriate manner.”
A number of chains, including Olive Garden parent Darden Restaurants Inc. DRI, +3.61% and Wendy’s Co. WEN, -3.26% have also drawn down on a portion or all of their credit as dining rooms close and restaurants turn to delivery and takeout.
Read: Darden Restaurants says same-restaurant sales sank 60% for the current week due to coronavirus
Still, a Coresight Research poll finds that restaurants, bars and coffee shops are the second most avoided places amid the coronavirus outbreak. (Movie theaters are No. 1)
UBS analysts say that a discussion with a large restaurant franchisee found that casual dining sales are down 70% to 80%, even though off-premise dining is up 50% to 100%.
“For casual dining, a continued down ~70-to-80% sales environment would provide insufficient cash flow to be viable for more than one-to-two months,” the report said.
Don’t miss: Restaurants can’t survive on delivery along, says Grubhub CEO Matt Maloney
Walmart Inc. WMT, +0.38% said late Wednesday that it would waive rent for a variety of businesses, including restaurant franchisees, that operate in Sam’s Club and Walmart Supercenter locations, an effort to help small businesses that are struggling amid the coronavirus pandemic.
