Shit just got REAL, people.
Updated: Waffle House has increased the number of restaurants closed since this story was first published.
Waffle House, the restaurant chain known for having its own unofficial index used during natural disasters, said it’s closing 418 of its restaurants.
In various social media posts, the chain featured a map showing the 418 closed restaurants, while another 1,574 across the southeastern U.S. remained open. The posts also featured the hashtag “#WaffleHouseIndexRed.
Being a HUGE fan of Waffle House myself—anybody who’s spent as much time on the road as I have over the years simply couldn’t NOT be—this reads like a real tragedy to me. But it ain’t just Waffle House that’s suffering; the national Restaurant Holocaust I’ve been predicting is just getting its boots on, looks like.
The Cheesecake Factory, one of the most popular sit-down restaurant chains in the country, says it will not be able to make upcoming rent payments for any of its storefronts on April 1 because of significant loss of income due to the coronavirus crisis.
The Calabasas Hills-based company informed all of its landlords in a letter dated March 18 (reproduced below) that a severe decline in restaurant traffic has decreased its cash flow and “inflicted a tremendous financial blow” to business. Cheesecake Factory’s affiliated restaurants, such as Rock Sugar and North Italia, will also not make April 1 rent payments.
Company chairman and CEO David Overton writes, “Due to these extraordinary events, I am asking for your patience, and frankly, your help.” He continues, “we appreciate our landlords’ understanding given the exigency of the current situation.” The letter says that the company hopes to resume paying rent as soon as possible.
Cheesecake Factory, for those of you unfamiliar with ’em, isn’t exactly your basic small-time mom-and-pop operation.
The Cheesecake Factory was founded in Beverly Hills in 1972 and maintains its original location on Beverly Drive, with 39 locations in California. In total, it operates 294 restaurants in 39 states, plus the District of Columbia, Puerto Rico, and Toronto, Canada. In 2019, the company also acquired Phoenix-based Fox Restaurants, including North Italia, Flower Child, and The Henry. Most of the company’s landlords are malls, including Simon and Westfield.
In telling landlords that it will not able to pay rent, the Cheesecake Factory essentially confirms that it is in the same position that many independent restaurateurs currently find themselves in. In a statement to investors on March 23 — five days after the letter to landlords — the Cheesecake Factory announced that it would curtail development of unopened restaurants and tap into a $90 million credit line to increase its available cash. Since the outbreak of the coronavirus, the Cheesecake Factory has closed 27 locations across the country, and pivoted other locations to a takeout and delivery-only model — which it said just days ago was enabling the company to “operate sustainably at present” — and its stock price has fallen by more than 50 percent in the past month.
With 38,000 employees, the Cheesecake Factory is one of the largest restaurant employers in the country. Given its recent stock woes and the ongoing reduction in business due to the coronavirus pandemic, it seems possible that it, like many restaurants, could end up needing a bailout to survive.
As I keep saying, this shutdown/lockdown business is going to wind up being one hell of a lot more costly long-term than some folks seem to realize. If a huge national chain like CF is struggling, just imagine what this is doing to all the independently-owned places out there—and how many of those businesses are going to simply cease to exist.
Nor is the dismal impact limited to restaurants and bars; pretty much any small business you could name, in any field, is in a similar untenable situation. The jobs they provide, the taxes they pay, the livelihoods their employees depend on—all gone for good, never to return no matter how big a “stimulus” the goobermint finally comes up with. The suppliers and services they support, the customers they serve, the communities they enliven—all damaged if not brought to ruin themselves by this cascade of catastrophe.
Our “leaders,” in the arrogance of their mistaken assumption of omnipotence, decided to light a fuse that cannot be extinguished. Now it’s too late for the rest of us to do anything but sit back and wait for the explosion, and see how much of American society is caught inside the blast radius.