Why Cheesecake Factory Shares Fell 41% in the First Half of 2020
Shares of Cheesecake Factory (NASDAQ: CAKE) fell 41% in the first half of 2020, according to data from S&P Global Market Intelligence. The restaurant chain entered the year in a precarious position, and the COVID-19 pandemic undermined the business plan even further.
The company spent roughly $440 million on a pair of acquisitions in 2019, adding several new dining concepts and several dozen new locations. The deals were financed with debt papers, a risky decision that gave Cheesecake Factory fewer options when the health crisis upended the restaurant sector.
Restaurant closings hit the company hard because a lot of Cheesecake Factory's charm comes from its bistro-like ambiance and close proximity to busy shopping malls. Takeout and delivery options delivered disappointing results in the first quarter. The company suspended its dividend plan, asked its landlords for "understanding" when April's rent payments didn't come in, and watched its share prices plunge.
Source Fool.com