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Cheesecake Factory Won't Follow Chili's and Applebee's

By Rick Munarriz – Feb 13, 2014 at 10:22AM

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Cheesecake Factory won't be taking two tablets. It won't be calling you in the morning.

Cheesecake Factory (CAKE -3.85%) is posting meager growth in its latest quarter, but it's not ready to embrace table-side technology to spice things up the way that some of the bigger names in casual dining are.

One of the nuggets from the high-volume eatery's conference call last night was its open reluctance to incorporate interactive tablets the way that Brinker's (EAT -4.25%) Chili's and DineEquity's (DIN -0.73%) Applebee's are doing this year. 

"I think we're going to be careful when it comes to technology," CEO David Overton said last night, suggesting that the 181-unit chain won't shy away from some trends like texting someone when a table is ready instead of handing out pagers. 

However, Cheesecake Factory won't be following Chili's and Applebee's into installing touchscreen devices where guests can order food and pay their checks right from the table -- at least, not in the near future.

"I doubt very much that we're going to do tablets," President David Gordon elaborated. "I think that's great for Chili's in that level -- where people are coming in for one experience -- but for us they're coming in for a different experience."

Given Cheesecake Factory's massive menu, it's easy to see why a little wait staff handholding may be necessary. It also bears pointing out that Cheesecake Factory bucked the trend of of negative comps in the casual dining industry. Despite the crummy weather and mall shoppers making holiday purchases online, Cheesecake Factory did post slightly positive comps: 0.9% during the quarter.

This doesn't mean that Cheesecake Factory is right. 

One of the biggest selling points for Applebee's installation of 100,000 tablets this year is that it helps turn tables faster. Instead of having to flag down a waiter when a table is ready to order -- boom, there's the tablet. Instead of dealing with the four-trip process of closing out a meal (asking for the bill, getting the bill, handing over plastic after reviewing the bill, waiting for it to be returned after being processed), swiping a credit card at a table-side tablet settles the score. The company providing the Applebee's technology claims that tables using its device check out seven minutes faster than before. That may not be such a big deal for places like Chili's and Applebee's that aren't at full capacity most of the time, but it's a different story at Cheesecake Factory. 

There's nothing wrong with the human connection that some diners crave, but many would prefer to save time and not have to worry about sending hand signals across a restaurant. 

Cheesecake Factory is doing well, but it's not doing great. Total sales climbing 2% isn't all that impressive. Negative comps at its smaller Grand Lux eatery is something worth watching. If Brinker and DineEquity begin posting spikes in comps and customer satisfaction later this year, Cheesecake Factory had better not be so cocky that it ignores the inevitable. 

"Right now we don't have a roadmap that talks specifically about adding technology for the sake of adding technology," Overton says.

That's fine, but when the technology makes the dining experience more convenient, it's just bad business to ignore the future.

Rick Munarriz owns shares of The Cheesecake Factory. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Brinker International Stock Quote
Brinker International
$33.09 (-4.25%) $-1.47
Dine Brands Global Stock Quote
Dine Brands Global
$73.08 (-0.73%) $0.54
The Cheesecake Factory Stock Quote
The Cheesecake Factory
$34.98 (-3.85%) $-1.40

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