The Cheesecake Factory

Here is a very cool article about one of my favorite places to eat – the Cheesecake Factory. I've thought about buying their stock because they really seem to have their act together. How do they do so well given their enormous menu? Technology is one answer.

The chain's high-tech approach begins at the front door. Like many low-priced casual chains, Cheesecake doesn't accept reservations, so on weekends the wait for a table routinely exceeds two hours. But a PC tracks "table turns" and forecasts wait times, helping to ensure that when a party of four asks how long they'll have to hang out, the staff's answer is accurate. On a screen behind the counter, tables flash red when the computer expects them to open, so hosts can "stage" guests to be ready for seating. The chain was among the first to give patrons pagers so they could shop while waiting for a table, and soon its hosts may institute a new system: calling guests' cell phones when a table frees up.

They also pay higher than industry average wages, because it allows them to hire the top people who are in turn the most efficient.

Competing restaurants use many of the same techniques, but industry consultants say —few combine them as effectively. Even successful chains like Outback Steakhouse or PF Chang's China Bistro don't deal with nearly as much complexity, since most of their offerings are cooked on grills and woks, respectively. "When you have that big volume, you really have to coordinate exceptionally well to make everything come out right," says New York restaurant consultant Malcolm Knapp. Cheesecake "was early on using a lot of technologies because they had to." The chain sells a lot of food, so it can afford larger teams of managers to maintain order; it also pays enough (cooks can earn $15 an hour with full benefits) to hire staff who have more experience than competitors. General managers like Gordon, 40, a Johnson & Wales grad who's been at the Cheesecake Factory for nine years, get a leased BMW; most earn six-figure pay and stock options that have turned some into millionaires.

With the exception of the book length menu, the strategy isn't that much different from other restaurants. Part of the key is that Cheesecake Factory just has better execution.