Cheesecake Factory to reopen most locations by mid-June

Yahoo Finance's Brian Sozzi, Alexis Christoforous, and Heidi Chung break down the market action for Cheesecake Factory.

Video transcript

BRIAN SOZZI: Let's take a look at one of the companies we're watching on YahooFinance.com and our trusty app-- Cheesecake Factory. Its stock is on the move after the company gave a business update that it's reopening dining rooms across the country.

Heidi Chung is back with details. Heidi, I have the solution for Cheesecake Factory. Just cut the size of the menu. I mean, this thing's still-- it's still 97 pages. It takes you an hour to get through just to place an order.

HEIDI CHUNG: Brian, that's actually a really good point. I was having a conversation with my brother just about a week ago, and he said that he had visited Cheesecake to get some takeout with his girlfriend. And he said the same thing. He was overwhelmed by the options that they have. And also, I think another thing we need to think about is the portion size, because Cheesecake Factory, you're looking at 5,000, 6,000 calories per serving.

But anyways, let's get back to that really upbeat business update because shares are soaring right now, I think some 15% or so near the highs of today's session. The family restaurant chain saying that it began reopening stores in the second week of May. And so far, about 25% of its stores and dining rooms are open, but operating on limited capacity, just given the local mandates and social distancing measures that are still in place across the country.

Cheesecake Factory says that it plans to have about 65% of its stores open by mid-June, so that's just about two weeks or so from now. Sales have been doing pretty well, though, in the restaurants that have already reopened. The company saying that it has reopened stores and recaptured roughly 75% of prior year sales levels, so pretty upbeat there.

Again, I have to be very, very clear here that that's not necessarily back to pre-COVID levels, but it is getting there, and perhaps signaling that the recovery in the restaurant industry might be quicker than a lot of people have been anticipating, Brian. So far during fiscal Q2, same-store sales are down 63%, and that includes the impact of 87 full or partial closures due to the protests that are taking place across the US. A lot of Wall Street analysts recently, Brian, have been saying that in the restaurant industry fast food is really the only winner. But given the numbers that we're getting here this morning from Cheesecake Factory, I think we can start to be a little bit more optimistic about the space, in general.

ALEXIS CHRISTOFOROUS: Well, Heidi, it's certainly encouraging that they're opening up those dining rooms, but what's it going to look like? Did they say specifically? I mean, we know there's going to be social distancing happening here. What else do we know about how-- what the dining experience is going to be like?

HEIDI CHUNG: Yeah, Alexis, they didn't really outline all that in this update that they did give, but I'm sure a lot of that will be provided in commentary from management when they do announce second quarter earnings. Of course, that is likely to be in the latter half of the summer. That being said, this company's performance has not all been that great, even before COVID happened.

Full-service restaurants rely heavily on the dining rooms. And so as you can imagine, it took a very, very big hit when this pandemic did hit. I want to mention that shares are soaring today, but they're still only at the highest level in about five weeks or so, and still down nearly 40% this year. So quite an under-performance there from Cheesecake Factory, guys.

BRIAN SOZZI: They still make good lettuce wraps, though, right, Heidi?

HEIDI CHUNG: Yeah, I have to agree with you there.

BRIAN SOZZI: Yeah. All right, Heidi Chung, thanks so much.