The Cheesecake Factory Inc Essay Example
The Cheesecake Factory Inc Essay Example

The Cheesecake Factory Inc Essay Example

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  • Pages: 12 (3269 words)
  • Published: July 12, 2018
  • Type: Case Study
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The Cheesecake Factory Inc. is a renowned Atlanta-based company in the hospitality industry, encompassing bakeries, bar services, and restaurants all branded as Cheesecake Factory. They offer customers an extensive menu of over 200 items, ranging from appetizers and sandwiches to seafood and salads, ensuring diverse options. As mentioned in their 2009 annual report, the Cheesecake Factory takes pride in offering an average of 40 distinct varieties of cheesecake and other baked desserts.

The Cheesecake Factory, founded by the Overton family, has seen steady growth and gained a great reputation. Originally focused on creating a unique cheesecake, the company invested in research and development to expand their cheesecake business. In 1978, David M. Overton opened the first Cheesecake Factory restaurant in Beverly Hills, California (Davey, 2009). His wife specialized in making high-quality cakes to meet the growing demand. Their son later joined the busines

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s and used the success of their cheesecake business to establish a restaurant with excellent hospitality services (Cheesecake, 2009). Operating as Cheesecake Factory, they expanded into cake shops, restaurants, and bars. The brand now has over 150 outlets in Atlanta. This remarkable growth not only exceeded stakeholder expectations but also contributed to ongoing success for the owners.

The business owners are dedicated to improving group business performance by using proven business and financial models that deliver results. Simultaneously, they focus on realistic company objectives. The company continuously innovates and adapts to changing business environments to enhance all of its services and products. The board of directors enforces corporate governance using ethical practices (Cheesecake, 2009). The Cheesecake Factory Inc. utilizes various resources in its business processes. Currently, the company requires additional resources such as human resources,

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raw materials, and capital improvement to advance its business agenda. While these resources are available, their availability only supports regular business operations, necessitating their increase. The company also faces inadequate service rental facilities for its daily operations. Additionally, the company's expansion opportunities are limited due to landlords' failure to provide larger premises (Ireland, Hoskisson & Hitt, 2005).

The Cheesecake Factory strategically positions its outlets to ensure easy accessibility for staff and improved availability of services to the public. According to Ireland, Hoskisson & Hitt (2005), the company's strategy focuses on innovating and making necessary services and facilities affordable for clients. This approach has led to a positive impact on customers, resulting in brand loyalty. Additionally, in Atlanta, favorable demographic, social, economic, political, and cultural conditions have not disrupted normal business processes for the company's thriving operations (Pride, 2006).

Over time, the Cheesecake Factory has developed strengths that allow it to effectively compete in the hospitality industry. By maintaining high standards of innovation, development, and creativity (Mardirossian, 2003), the company stays attuned to customer requirements and special needs through biannual menu changes. These efforts have enabled the introduction of new products and modifications to existing ones that align with customer value and affordability.

The company's innovation drives their commitment to providing innovative decorations and designs, which aim to enhance customer satisfaction and offer value for their money (Cheesecake, 2009; George, 2009). Moreover, the company carefully selects high-quality restaurant locations in prominent areas with great potential. Wrobel (2008) stresses the importance of choosing business locations that align with the company's objectives. By doing so, the company ensures that the location meets its quality standards and attracts a larger customer base.

As a result of their commitment to excellence, the company has gained a strong corporate brand name within America. The strategic placement of their restaurants in densely populated areas, surrounded by businesses, entertainment outlets, and shopping malls, allows the company to attract high-profile customers who appreciate the quality of their establishments (Cheesecake, 2009). Additionally, the company has diversified its operations extensively by incorporating bakeries, restaurants, and bars. This diversification strategy helps minimize risk by spreading it across multiple lines of business.

The company offers over 200 diverse products in its menu, taking into consideration the special requirements of vegetarians (Cheesecake, 2009). This allows the company to attract customers with different food preferences and meet their demands. Other companies only offer selective products to customers. The company is financially strong, maintaining high revenues of up to $1.6 billion (Calif, 2009). It also keeps its operation costs low and has the highest profit in Atlanta. Other companies like Zara Restaurant and Lounge benchmark their operations based on this (Berry, 2010).

Strong financial position allows the company to diversify its business projects and open other outlets. The company's sound financial policies give it a competitive advantage over its competitors. Additionally, the company has a strong workforce of committed employees who carry out the business objectives. With over 30,000 dedicated employees, the company has been able to surpass targets and set goals. The 2009 Annual Report highlights the CEO's belief that employee commitment is crucial to the company's success. This underscores the strength of the company through its dedicated employees (Miller, 2008). However, there are also weaknesses within the company's framework.

The primary challenge for the company is retaining its team of

highly committed and dedicated employees. There is a risk that employees who are unhappy at Cheesecake Factory may leave for a competitor. Therefore, the company must implement measures to attract and retain employees, including competitive compensation packages and good working schedules. This weakness requires the human resource department to continuously implement policies for employee satisfaction and conduct internal surveys. Additionally, the company has a weakness in meeting its marketing strategies despite investing a significant amount of money. The marketing team's aggressive campaigns can have a negative impact and result in substantial financial loss. To address this weakness, the company should conduct thorough market research before launching any marketing campaign to assess its potential benefits and impact. While some campaigns may fail the research test, the company can adapt and achieve favorable results with others.

The company has a weakness in that its new restaurant developments have a negative impact on existing businesses. This is because the company focuses on local expansion rather than international expansion. Consequently, when a new restaurant is constructed near an existing outlet, customers tend to shift from the old restaurant to the new one, negatively affecting the existing outlets in that location (Cheesecake, 2009). Despite the potential for global expansion to mitigate this problem, the company's website states that there are no intentions for international expansion. Furthermore, franchise or joint venture opportunities are not offered by the company, causing them to miss out on the advantages of operating successful franchises for international marketing and brand development. The management confirms that there are currently no immediate plans for such services (Cheesecake, 2009).

The company is unable to benefit from owning a franchise or tapping

into the large markets enjoyed by existing franchises. Additionally, the company struggles to fully develop and follow through on product development, as seen in the termination of their wedding cake making services. Although the reasons behind this termination are uncertain, it is likely to negatively impact customers who relied on the company for their wedding cakes. The company should address this weakness by outsourcing poorly performing products to maintain customer satisfaction. On the other hand, the company has the opportunity to grow by developing new outlets through its local network. With ample resources, the company can conduct thorough market research to take advantage of this opportunity.

The company is known for its careful selection of outlet locations. It invests in areas with a high population and people who can afford its products, including shopping malls, schools, offices, and entertainment outlets (Cheesecake, 2009). Additionally, there is an opportunity for the company to support local community programs (Cheesecake, 2009). This includes partnering with other stakeholders to improve the living standards for its customers. The company also engages in food distribution to those in need, which enhances its image. These corporate social responsibilities foster long-term customer loyalty as people want to be associated with companies that care about their well-being. This gives the company an opportunity to expand its market presence and establish dominance in the region.

Moreover, the company has the chance to invest in the latest technologies to enhance its network and management policies (Icon, 2008). The use of technology allows the business to meet its customer needs more effectively by using databases that contain information on each and every customer. Technology improves work efficiency and aids management

in making informed decisions about the company. For example, software technologies can allocate specific tasks to be implemented in project management at specific times and in a given sequence. These technological advancements promote innovation within the company, increasing its competitiveness.

In addition, the company can improve its sales by fully utilizing online selling of its products, which can be delivered to customers' homes, offices, or events through e-commerce (Cheesecake, 2009). This expands the customer base of the company, as the internet is accessible to many people. Although this service is currently limited to local areas, there may be future opportunities for international expansion.

With an expanding customer base, the company has the chance to increase event hosting as there are available expansion spaces. This will attract more individuals, corporate groups, families, and informal groups, thus enhancing growth by adding to the customer base. Moreover, the company is presented with additional opportunities in restaurant operations and management. The ability to develop a complex menu in an upscale environment from scratch is a critical opportunity for the company. Additionally, the purchasing department can take advantage of the opportunity to source reliable raw materials at competitive prices. This ensures that the company obtains the best quality products at negotiated prices and ultimately saves money.
In the hospitality industry, competition is always a major threat.

In order to maintain its competitive advantage in the food industry, the company must constantly develop strategies and goals. The competition from local and international franchises poses a threat to the Cheesecake Factory's market share. However, the management is continuously implementing market strategies and seizing new opportunities to mitigate this impact (Bill & Lynn, 2006). Moreover, online

systems pose a threat as fraudsters posing as genuine Cheesecake Factory entities deceive customers on the internet and scam them out of money (Cheesecake, 2009). In response to these cases, the company has issued warnings through its website. This poses a risk to the company's reputation as customer trust in its integrity may be damaged.

The Cheesecake Factory is taking measures to address security threats from hackers by investing in anti-fraud software. The economic recession has adversely affected the company's financial performance, posing additional challenges. To overcome these difficulties, it is crucial to implement strategies that improve performance during tough economic times. The company's prosperity is closely linked to the employment rate of the general population. High unemployment rates result in a decline in customer numbers and a decrease in revenues. To mitigate the impact of the recession, one approach is to adjust menu sizes and offer smaller portions at discounted prices.

In 2009, the Cheesecake Factory successfully implemented a strategy to overcome the recession and maintain its sales revenue of $1.6 billion (Cheesecake, 2009). However, the ongoing recession poses a significant threat to the company's current and future operations as it faces challenges such as an increase in operating costs that could impact performance. To protect its profit margin, the company has implemented measures to counterbalance these rising costs. Although certain basic requirements can be contracted, perishable goods that cannot be stored for more than 30 days are vulnerable to market changes (Cheesecake, 2009). Therefore, the increased cost of operations negatively affects the overall success of Cheesecake Factory Inc.

The company faces multiple risks that could harm its business. One specific risk involves legal matters such as

lawsuits, administrative proceedings, and claims related to day-to-day operations including foodborne illness or work-related injuries. Dealing with litigation can lead to negative publicity and high costs, putting the company at risk (Cheesecake, 2009). In addition, the company may encounter difficulties due to new legislation that could hinder its ability to implement policies and impact business performance. Lastly, there is a potential threat to the company's expansion plans because of limited financial credit available from Cheesecake Factory landlords. As a result, future contracts with landlords for expansion purposes may not be successful, thereby affecting the efficient execution of these strategies (Cheesecake, 2009).

The failure of financial institutions to provide funding for construction project partners has a detrimental effect on the company's business. To mitigate this risk, it is recommended that the company explores various expansion options. These alternatives will decrease the likelihood of the company's plan failing due to external factors.

Cheesecake Factory Inc. has four primary stakeholders: stockholders, employees, suppliers, and customers. Each stakeholder group possesses distinct interests and expectations, which will be further examined in the subsequent analysis. Meeting all stakeholders' needs and fulfilling their responsibilities ensures their satisfaction.

Stockholders are the owners of the company who have invested resources with the expectation of earning returns through earnings per share. While some stockholders like David Overton may also serve as Chief Executive Officer, they may not actively manage the company.

The stockholders, who aim to maximize investment returns and minimize unnecessary expenses, have various responsibilities. These include approving financial reports, appointing board members and auditors, and making decisions about major investments. They also address any other matters that require attention. To resolve conflicts between stockholders and employees regarding

expenses, productive discussions are held. The stockholders actively participate in the company's daily operations to ensure its success and adequate compensation for their services. While some stockholders may be part of this group, their primary focus is on providing service in exchange for remuneration. An example of such an employee is the Chief Executive of Cheesecake Factory who also happens to be the company's founder; he acts in the best interest of the stockholders.

The relationship between employees and stockholders is similar to a principal-agent dynamic. In this dynamic, the stockholder acts as the principal while the employee serves as their agent. The employee carries out tasks on behalf of the stockholder and receives compensation for their efforts.

At The Cheesecake Factory, various suppliers provide food products from different regions. These suppliers have a business-oriented relationship with the company and are rewarded for their goods. Suppliers play a crucial role in ensuring the success of the company by maintaining a consistent market and receiving reliable payments from financially stable Cheesecake Factory Inc.

Conflicts that arise with suppliers typically revolve around contract failures, such as payment or supply issues. Ultimately, these stakeholders hold significant importance in sustaining the overall existence of the company.

The users of the company products are also the consumers of the food products and cakes. They pay for these services and products in order to receive the required service. The consumer's main interest is to receive high-quality products and services that match the value they paid. If a customer is not satisfied with the Cheesecake food products or customer service, they have the option to go to another restaurant. Therefore, it is important for other stakeholders

to ensure customer satisfaction in order to sustain their business.

One of the main strategic objectives for the company is to achieve absolute guest satisfaction. This objective ensures that customers will return and even refer others. It aligns with the goal of achieving excellent quality.

The Cheesecake Factory is committed to providing excellent service (Cheesecake, 2009) and ensuring customer satisfaction. It also focuses on maximizing revenue and minimizing costs, which align with the goal of maximizing revenue. Prioritizing this objective is crucial for the company (Cheesecake, 2009). Another strategic aim is to ensure employee satisfaction as it plays a vital role in attracting and retaining talented employees. Happy employees are more likely to achieve other objectives and contribute to the overall success of the company.

Strategies for Achieving Objectives and GoalsThe use of innovation is the best strategy that leads to achievement of absolute customer satisfaction. One example is that given by the company in the times of regression where the company changed the menu by reducing to quantities that were affordable to many people. Moreover, the innovation of new menu items and ways of service is bound to generate customer satisfaction. The classic designs also works to attract customers (Yee, 2007)The improvement of efficiency by the employees is a sure way of satisfying the customer. The efficiency is the ability to offer the required product and service at the required outlet within the acceptable time. This will include the time a customer enters the restaurant and the time they are served plus the way of service. Thus a lot of investment on employee trainings and workshops will result in efficiency and quality. When it comes to employee

trainings, it is important that all employees are trained too so that each business process meets the required quality.

The restaurant aims to achieve teamwork and customer satisfaction (Douglas, 2009). A cost-cutting strategy has been implemented, resulting in a $27 million saving (company's 2009 annual report). This contributes to the goal of maximizing stockholders' wealth (Wong ; Wong, 2004). The company is strict in its expenditure, carefully managing costs (company's 2009 annual report). Additionally, the company is investing in expansion opportunities to increase its customer base and revenue (Cheesecake, 2009), further aligning with the objective of maximizing shareholders' wealth.

There are available resources and excellent operation managers who ensure that this objective is achieved (Luo,1999). The company also utilizes marketing campaigns to achieve target revenues. Marketing techniques for existing outlets mainly rely on "word of mouth" from satisfied customers (Reid ; Bojanic, 2009). The company advertises in radios, televisions, and organizes elaborate launch campaigns for new outlets. Increasing awareness directly impacts the number of customers visiting the company. Additionally, the company differentiates itself from competitors through its restaurants and operations management (Cheesecake, 2009), aiming to become unique.

The differentiation of the company is achieved through innovative products and unique customer care service. This differentiation allows customers to easily identify the company among its competitors. To achieve this, the company must offer exclusive and distinct products or services that are not available elsewhere. Employee satisfaction is achieved through effective human resource management, which includes training and education programs provided by the company. Employees are also given attractive compensation packages and other personal benefits. By focusing on and addressing employee issues, a sense of concern and loyalty is developed, encouraging

them to give their best in serving the company's goals. The company also maintains a strong operating cash flow, which is essential in paying off debts and ensuring a financially stable balance sheet (Cheesecake, 2009).

By reducing its debt, the Cheesecake Factory can decrease its financing costs and ultimately achieve the goal of maximizing shareholders' wealth. The company practices prudent financial management to maintain a stable financial position. Additionally, as a well-established company, it has built a strong brand name over the years.

However, there are challenges that need to be addressed for the company to meet its objectives. These challenges include expansion and worker welfare, which promote growth and retention of valuable assets. Despite these challenges, at present, the company excels in operations management and maintains a favorable financial position.

It is worth noting that Cheesecake Factory Inc. operates exclusively in Atlanta; therefore, this paper suggests expanding into other territories as a means of further growth.

With its strong financial resources and technical expertise, the company has the ability to establish branches in various regions and expand globally. However, currently it is mainly concentrating on the local market where it already has a solid reputation. Although there may be some minor legal hurdles, they are insignificant compared to the enormous potential of entering new markets. Therefore, it is highly recommended that Cheesecake Factory Inc. takes advantage of this opportunity as it is capable of surpassing expectations from all stakeholders.

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