What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-24 · 168 added, 159 removed, 277 unchanged (54% of the section changed)

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We are culinary forward and relentlessly focused on hospitality.

We currently own and operate 294 restaurants throughout the United States and Canada under brands including The Cheesecake Factory ® , North Italia ® and a collection within our Fox Restaurant Concepts business.

We currently own and operate 306 restaurants throughout the United States and Canada.

Internationally, 29 The Cheesecake Factory ® restaurants operate under licensing agreements.

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The content of our website is not incorporated by reference into this Form 10-K.

On October 2, 2019, we completed the acquisition of North Italia and the remaining business of Fox Restaurant Concepts LLC ("FRC"), including Flower Child and all other FRC brands (the "Acquisition").

On October 2, 2019, we completed the acquisition of North Italia and the remaining business of FRC, including Flower Child and all other FRC brands (the “Acquisition”).

The results of operations, financial position and cash flows of the acquired businesses are included in our consolidated financial statements as of the acquisition date.

We utilize a 52/53-week fiscal year ending on the Tuesday closest to December 31 for financial reporting purposes.

Fiscal years 2020, 2019 and 2018 each consisted of 52 weeks and fiscal year 2021 will also consist of 52 weeks.

Fiscal years 2021, 2020 and 2019 each consisted of 52 weeks and fiscal year 2022 will consist of 53 weeks.

COVID-19 Pandemic

We have experienced significant disruptions to our business due to the COVID-19 pandemic and related suggested and mandated social distancing and shelter-in-place orders, which initially resulted in the temporary closure of a number of restaurants across our portfolio while the remaining locations shifted to an off-premise only operating model on an interim basis.

Beginning in March 2020, COVID-19 and measures to prevent its spread led to significant disruptions to our business as suggested and mandated social distancing and shelter-in-place orders led to the temporary closure of a number of restaurants across our portfolio while our remaining locations shifted to an off-premise only operating model on an interim basis.

Reopening of restaurant dining rooms resumed, generally at reduced capacity, at various points since May 2020.

While restrictions on the type of permitted operating model and occupancy capacity may continue to change, currently nearly all of our restaurants are operating with no capacity restrictions on indoor dining.

The ongoing effects of COVID-19 and its variants, including, but not limited to, consumer behavior, capacity restrictions, mask and vaccination mandates, wage inflation, our ability to continue to staff our restaurants and disruptions in the supply chain, will determine the impact to our operating results and financial position.

The impact to our operations has been most notable during the periods of greatest accelerating COVID-19 case counts.

We have incurred and will continue to incur additional costs to address government regulations and the safety of our staff members and customers.

The impacts of the COVID-19 pandemic on our business are discussed in further detail throughout this Business section, Item 1A — Risk Factors, and Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K.

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All of our restaurants offer a full-service bar where our entire menu is served.

Alcoholic beverage sales represented 9% of The Cheesecake Factory restaurant sales for fiscal year 2020 compared to 12% in fiscal 2019, primarily due to lower alcoholic beverage sales associated with off-premise orders, which increased significantly during the COVID-19 pandemic.

Alcoholic beverage sales represented 11% of The Cheesecake Factory restaurant sales for fiscal year 2021 compared to 9% in fiscal 2020 and 12% in fiscal 2019.

These fluctuations were primarily due to higher alcoholic beverage incident rates associated with on-premise dining.

All items on our menu, except alcoholic beverages where disallowed by regulation, are available for off-premise consumption.

Off-premise sales represented approximately 43% of our restaurant sales for fiscal year 2020, an increase from approximately 16% in fiscal 2019 as most of our restaurants shifted to an off-premise-only operating model at the beginning of the COVID-19 pandemic and consumer behavior shifted toward off-premise dining throughout the pandemic.

Sales through the off-premise channel comprised approximately 32% of our restaurant sales during fiscal 2021 as compared to 43% in fiscal 2020 as many customers have returned to on-premise dining, whereas consumer behavior had shifted towards the off-premise channel during the prior year period due to the pandemic.

However, off-premise sales mix remains higher than the pre-pandemic level of 16% during fiscal 2019.

We work with a third party to provide delivery service, which is now available at all of our restaurants.

In addition, we offer online ordering for to-go sales at all of our domestic locations.

Currently, we operate 208 The Cheesecake Factory locations.

The Cheesecake Factory menu features approximately 235 items, including items presented on supplemental menus, such as our SkinnyLicious ® menu that offers innovative items at 590 calories or less.

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We offer approximately 45 varieties of proprietary cheesecake and other desserts in our restaurants.

Our brand identity and reputation for offering premium desserts results in a significant level of dessert sales, representing approximately 21% of The Cheesecake Factory restaurant sales for fiscal year 2020, up from 16% in fiscal 2019, primarily driven by increased dessert incident rates on off-premise orders during the COVID-19 pandemic.

Our brand identity and reputation for offering premium desserts results in a significant level of dessert sales, representing approximately 19%, 21% and 16% of The Cheesecake Factory restaurant sales for fiscal 2021, 2020 and 2019, respectively.

These fluctuations were primarily driven by the varying proportions of off-premise sales which generally carry higher dessert incident rates, as compared to on-premise sales.

Competitive Positioning

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In addition, we face competition for customer traffic from fast casual and quick-service restaurants, home delivery services, mobile food service, grocery stores and meal kits that are increasing the quality and variety of their food products in response to customer demand.

This increased competition, coupled with an oversupply of restaurants, has driven declines in casual dining industry comparable traffic in recent years.

This backdrop has made it even more challenging to improve customer traffic.

However, we believe the COVID-19 pandemic could drive a contraction in restaurant supply and in turn, could result in more favorable conditions to grow customer traffic and comparable restaurant sales.

We also compete with other restaurants and retail establishments for quality sites and qualified staff and managers to operate our restaurants.

(See Item 1A — Risk Factors — Risks Related to the Restaurant Industry— “Our inability to grow comparable restaurant sales could materially adversely affect our financial performance.”)

(See Item 1A — Risk Factors — “Our inability to grow comparable restaurant sales could materially adversely affect our financial performance.”)

The key elements that drive our total customer experience and help position us from a competitive standpoint include the following:

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We also regularly introduce new and innovative cheesecakes and other baked desserts.

In 2020, we launched the Chocolate Caramelicious Cheesecake Made with Snickers ® in conjunction with National Cheesecake Day, as well as the Low-Licious Cheesecake, a low carb, no sugar-added and gluten-free offering.

In 2021, we launched the Coconut Cream Pie Cheesecake in conjunction with National Cheesecake Day.

We generally update The Cheesecake Factory menus twice each year, and our philosophy is to use price increases to help offset key operating cost increases in a manner that balances protecting both our margins and customer traffic levels.

We plan to continue targeting menu price increases of approximately 2% to 3% annually, utilizing a market-based strategy to help mitigate cost pressure in higher-wage geographies, and expect near-term increases to be at the higher end of this range.

We have historically targeted menu price increases of approximately 2% to 3% annually, utilizing a market-based strategy to help mitigate cost pressure in higher-wage geographies.

Due to the cost pressures we are currently experiencing, particularly in commodities, in the first quarter of fiscal 2022, we implemented price increases above our historical levels to protect margins.

We will continue to consider the cost environment and consumer price sensitivity when evaluating future menu price increases.

Value Proposition.

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The average check for each customer, including beverages and desserts, was approximately $29.30, $28.90 and $23.50 for fiscal 2021, 2020 and 2019, respectively.

Fiscal 2020 average check reflects the impact of higher off-premise channel mix, as most of our restaurants shifted to an off-premise-only operating model at the beginning of the COVID-19 pandemic and consumer behavior shifted toward off-premise dining throughout the pandemic.

We account for each off-premise order as one customer for traffic measurement purposes.

Therefore, average check is higher as most off-premise orders are for more than one customer.

Therefore, a higher mix of off-premise sales produces a higher average check as most off-premise orders are for more than one customer.

Fiscal 2020 average check reflects the impact of higher off-premise channel mix, as most of our restaurants shifted to an off-premise-only operating model at the beginning of the COVID-19 pandemic and consumer behavior has shifted toward off-premise dining during the pandemic.

The increase in average check from fiscal 2020 to fiscal 2021 reflects the impact of menu price increases, partially offset by lower off-premise mix as many customers have returned to on-premise dining.

Commitment to Excellent Service and Hospitality through the Selection, Training and Retention of High-Quality Staff Members.

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By providing extensive training, our goal is to encourage our staff members to develop a sense of personal commitment to our core values and culture of excellence.

(See “Restaurant Operations, Management and Staffing” below.) Our commitment to people-focused programs and creating a great workplace for all of our staff and managers contributed to The Cheesecake Factory being named to Fortune magazine’s list of “100 Best Companies to Work For ® ” in February 2020, for the seventh consecutive year.

High-Quality, High-Profile Restaurant Locations and Flexible Site Layouts .

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Interior and exterior patio seating, either or both of which are available at approximately 95% of our restaurants, allow for additional customer capacity at a comparatively low occupancy cost per seat.

During the COVID-19 pandemic, we have also been able to access additional space to augment our outdoor seating capacity in some locations.

During the COVID-19 pandemic, we have also been able to access additional space to augment our outdoor seating capacity in some locations where indoor dining spaces were restricted.

Exterior patio seating is generally available as weather permits.

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Accordingly, we intend to continue developing The Cheesecake Factory restaurants in high-quality, high-profile locations that meet our rigorous site standards.

Subject to our broader capital allocation strategy, we plan to open as many locations in any given year as there are sites available that meet our site selection criteria.

In accordance with our broader capital allocation strategy, we plan to open as many locations in any given year as there are sites available that meet our site selection criteria and for which we can obtain goods, materials and adequate staffing.

It is difficult for us to precisely predict the timing of our new restaurant openings due to many factors that are outside of our control, including the effects of the COVID-19 pandemic.

(See Item 1A — Risk Factors — Risks Related to Our Business— “Our inability to secure an adequate number of high-quality sites for future restaurant openings could adversely affect our ability to grow our business.”) We have the flexibility in our restaurant designs to penetrate a wide variety of markets across varying population densities in both existing and new markets.

(See Item 1A — Risk Factors — “Our inability to secure an adequate number of high-quality sites for future restaurant openings could adversely affect our ability to grow our business.”) We have the flexibility in our restaurant designs to penetrate a wide variety of markets across varying population densities in both existing and new markets.

We continue to target approximately 300 Company-owned and operated The Cheesecake Factory restaurants domestically over time.

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Due to the flexible and customized nature of our restaurant operations and the complex design, construction and preopening processes for each new location, our lease negotiation and restaurant development time frames vary.

The development and opening process usually ranges from six to eighteen months, depending largely on the availability of the leased space we intend to occupy, and can be subject to delays either due to factors outside of our control or to our selective timing of restaurant openings.

The development and opening process usually ranges from six to eighteen months, depending largely on the type and availability of the leased space we intend to occupy, as well as our ability to obtain goods, materials and adequate staffing, and can be subject to delays either due to factors outside of our control or to our selective timing of restaurant openings.

Unit Economics

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Average sales per productive square foot (defined as all interior square footage plus seasonally adjusted exterior patio square footage) for restaurants open for the full year were approximately $1,019, $716 and $986 for fiscal 2021, 2020 and 2019, respectively.

Fiscal 2020 average sales per location and average sales per productive square foot reflect the impact of the COVID-19 pandemic on our business.

Fiscal 2020 average sales per square foot adjusted for interior capacity restrictions related to the COVID-19 pandemic was $1,127.

The variance as compared to fiscal 2019 was primarily due to an increase in off-premise sales.

Fiscal 2021 and 2020 average sales per location and average sales per productive square foot reflect the impact of the COVID-19 pandemic on our business.

Fiscal 2021 and 2020 average sales per productive square foot adjusted for interior capacity restrictions related to the COVID-19 pandemic was $1,192 and $1,127.

Fluctuations in both average sales per location and average sales per productive square foot generally track with comparable restaurant sales trends.

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We currently lease all of our restaurant locations and utilize capital for leasehold improvements and furnishings, fixtures and equipment (“FF&E”) to build out our restaurant premises.

Total costs are targeted at approximately $1,000 per interior square foot for The Cheesecake Factory restaurants.

Our distinctive design and decor require a higher investment per square foot than is typical for the casual dining industry.

However, our restaurants have historically generated annual sales per square foot that are also typically higher than our competitors.

The construction costs to build our restaurant premises vary depending on a number of factors, including geography, the complexity of our build-out, site characteristics, governmental fees and permits, labor and material conditions in the local market, weather and the amount, if any, of construction contributions obtained from our landlords for structural additions and other leasehold improvements.

These costs have trended higher over the past several years due primarily to wage inflation and the availability of trade labor in certain geographies.

Total construction costs to build our restaurant premises average approximately $1,000 per interior square foot.

However, these costs vary depending on a number of factors, including geography, the complexity of our build-out, site characteristics, governmental fees and permits, labor and material conditions in the local market, weather and the amount, if any, of construction contributions obtained from our landlords for structural additions and other leasehold improvements.

In selecting sites for our restaurants, an important objective is to earn an appropriate return on investment.

We measure returns using a cash-on-cash return on investment calculated by dividing restaurant-level margin (earnings before interest, taxes, depreciation and amortization and preopening costs) by our cash investment.

We measure returns using a cash-on-cash return on investment calculated by dividing restaurant-level profit (earnings before interest, taxes, depreciation and amortization and preopening costs) by our cash investment.

Our new restaurants typically open with initial sales volumes well in excess of their future run-rate levels.

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During the three to six months following the opening of new restaurants, customer traffic generally settles into its normal pattern, resulting in sales volumes that gradually adjust downward to their post-opening run-rate level.

Additionally, our new restaurants usually require a period of time after reaching normal traffic levels to achieve their targeted restaurant-level operating margins due to cost of sales and labor inefficiencies commonly associated with new, highly complex restaurants such as ours.

Additionally, our new restaurants usually require a period of time after reaching normal traffic levels to achieve their targeted restaurant-level margins due to cost of sales and labor inefficiencies commonly associated with new, highly complex restaurants such as ours.

Restaurant Operations

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This tenure and knowledge drives our high productivity and contributes to our ability to deliver an exceptional customer experience.

When the closure of our dining rooms in March 2020 due to the COVID-19 pandemic necessitated the furloughing of approximately 41,000 hourly staff members, we made the decision to retain our restaurant management teams which we believe enabled us to adapt quickly to a mandated off-premise only operating model and reopen indoor dining rooms safely when allowed.

When the closure of our dining rooms in March 2020 due to the COVID-19 pandemic necessitated the furloughing of most of our hourly staff members, we made the decision to retain our restaurant management teams which we believe enabled us to adapt quickly to a mandated off-premise only operating model and reopen indoor dining rooms safely when allowed.

All newly-recruited restaurant managers complete an extensive training program during which they receive both classroom and on-the-job instruction in areas such as food quality and safety, customer service, financial management, staff relations and safely serving alcohol.

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In addition, these licensees purchase bakery products branded under The Cheesecake Factory ® mark from us.

Once the operating environment normalizes from the COVID-19 pandemic and assuming full capacity conditions are ultimately permitted in each jurisdiction, we project each international licensed location to contribute approximately $0.01 in annual earnings per share (“EPS”), on average, once the location has been in operation for a full year.

Assuming the operating environment continues to normalize from the COVID-19 pandemic and assuming full capacity conditions are ultimately permitted in each jurisdiction, we project each international licensed location to contribute on average approximately $0.01 in annual earnings per share (“EPS”), on average, once the location has been in operation for a full year.

As of February 22, 2022, our international licensees operated the following The Cheesecake Factory restaurants:

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Due to the complexities of opening The Cheesecake Factory restaurants in other countries, including, but not limited to, the selection and design of appropriate sites, construction of our complex restaurant designs, training of licensees’ staff members, approval of supply sources and exportation of our bakery products to new countries, the number and timing of new openings in foreign countries may vary from expectations.

(See Item 1A — Risk Factors — Risks Related to Our Business— “We face a variety of risks and challenges related to our international operations and global brand development efforts, any of which could materially adversely affect our financial performance.”)

(See Item 1A — Risk Factors — “We face a variety of risks and challenges related to our international operations and global brand development efforts, any of which could materially adversely affect our financial performance.”)

Consumer Packaged Goods

Given the strong affinity for The Cheesecake Factory ® brand, in 2017 we began leveraging opportunities in the consumer packaged goods channel.

We now partner with third-party manufacturers to offer a variety of products marketed under The Cheesecake Factory At Home ® mark.

These offerings include our Famous "Brown Bread,"

refrigerated puddings and ice cream available in select retail stores nationwide.

We are actively evaluating other synergistic, on-brand licensing opportunities to add incremental revenue streams to our business.

Given the strong affinity for The Cheesecake Factory ® brand, we leverage opportunities in the consumer packaged goods channel by partnering with third-party manufacturers to offer a variety of products marketed under The Cheesecake Factory At Home ® mark, including our Famous “Brown Bread,” refrigerated puddings and ice cream available in select retail stores nationwide.

We continue to evaluate other synergistic, on-brand licensing opportunities to add incremental revenue streams to our business.

North Italia and Fox Restaurant Concepts

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With our aligned cultures and philosophies, we believe these transactions are consistent with our long-term strategy of being a leader in experiential dining and provide a significant accretive unit growth opportunity.

In addition, we are pursuing a number of synergistic opportunities with our core infrastructure, including payroll and purchasing services.

North Italia is a modern interpretation of Italian cooking in the upscale casual dining segment.

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The menu features appetizers, salads, fresh pastas, pizzas and entrees.

Examples of menu offerings include White Truffle Garlic Bread, Tuscan Kale Salad, Bolognese, Burrata Tortelloni, Margherita Pizza, Tuscan Half Chicken, Chicken Parmesan and Braised Short Rib.

Examples of menu offerings include White Truffle Garlic Bread, Tuscan Kale Salad, Bolognese, Burrata Anolini, Margherita Pizza, Tuscan Half Chicken, Chicken Parmesan and Braised Short Rib.

North Italia offers an assortment of wines, beers and house-made cocktails.

Alcoholic beverage sales represented 24% of North Italia sales for fiscal year 2020 compared to 29% for the fourth quarter of fiscal 2019.

This decrease was primarily due to lower alcoholic beverage sales associated with off-premise orders, which increased significantly during the COVID-19 pandemic.

North Italia restaurants are generally open seven days a week for lunch, dinner and weekend brunch.

We see a number of potential synergistic attributes, including operations and real estate development, as well as significant market opportunity for an on-trend Italian offering.

North Italia's operations have been relocated to the Company's corporate headquarters to help scale the concept nationally.

With Italian cuisine the number one ethnic food category in the United States, coupled with strong national reception of the North Italia concept to-date, we believe there is potential for 200 domestic locations over time, which supports our plan for approximately 20% annual unit growth as the operating environment for the full-service segment of the restaurant industry normalizes from the COVID-19 impact.

We target an average unit size of 5,000 to 6,500 square feet and average sales per mature location of approximately $7 million, or approximately $1,200 per interior square foot.

Alcoholic beverage sales represented 25% of North Italia sales for fiscal 2021 compared to 24% for fiscal 2020.

Our North Italia restaurants are generally open seven days a week for lunch, dinner and weekend brunch.

Currently, we operate 29 North Italia restaurants.

We target an average unit size of 6,000 to 7,000 square feet and average sales per mature location of approximately $7.2 million, or approximately $1,200 per productive square foot.

We have implemented a number of integrative initiatives with North Italia, including operations leadership, real estate development and marketing.

FRC operates as an independent subsidiary in Phoenix, Arizona.

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Other FRC potential growth concepts include Culinary Dropout and Blanco, which together with the other FRC brands, serve as an ecosystem for talent, menu and design development.

We expect to target approximately 15% to 20% annual unit growth for the aggregate FRC portfolio as the operating environment for the restaurant industry normalizes from the COVID-19 impact, driven primarily by the anticipated growth of the Flower Child concept, complemented by additional market tests of the potential growth concepts.

Currently, we operate 28 and 31 Flower Child and other FRC locations, respectively.

We target approximately 15% to 20% average annual unit growth for the aggregate FRC portfolio, driven primarily by the anticipated growth of the Flower Child concept, complemented by additional market tests of the potential growth concepts.

Unit sizes range from approximately 3,500 to 15,000 square feet.

The FRC restaurants target sales of approximately $1,000 per interior square foot, on average.

The FRC restaurants target sales of approximately $1,000 per productive square foot, on average.

Bakery Operations

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We produce approximately 60 varieties of proprietary cheesecakes and other baked desserts using high-quality ingredients for The Cheesecake Factory and Grand Lux Cafe restaurants and for international licensees and third-party customers.

Some of our most popular cheesecakes include the Original Cheesecake, Ultimate Red Velvet Cake Cheesecake TM , Godiva ® Chocolate Cheesecake, Oreo ® Dream Extreme Cheesecake and Pineapple Upside Down Cheesecake.

Other popular baked desserts include Chocolate Tower Truffle Cake TM , Carrot Cake, Black-Out Cake and Lemoncello Cream Torte.

Other popular baked desserts include Chocolate Tower Truffle Cake TM , Carrot Cake and Black-Out Cake.

The primary role of our bakery operations is to produce innovative, high-quality cheesecakes and other baked desserts for sale at our restaurants and those of our international licensees.

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Current large-account customers include retail and supermarkets, foodservice distributors and operators, a national retail bookstore, other restaurants and national warehouse clubs.

We also currently sell a selection of our cakes online and in catalogs domestically through an agreement with an upscale retailer.

Items produced for outside accounts are marketed under The Cheesecake Factory At Home ® marks and other private labels.

We also sell baked goods internationally in approximately 25 countries under The Cheesecake Factory At Home ® mark.

Additionally, we currently sell a selection of our cakes online and in catalogs domestically through an agreement with an upscale retailer.

Items produced for outside accounts are marketed under The Cheesecake Factory At Home ® and The Cheesecake Factory Bakery ® marks, as well as private labels.

We sell baked goods internationally in approximately 30 countries under The Cheesecake Factory At Home ® mark.

Offering our cheesecakes and other baked desserts internationally is important to our branding, creating awareness and driving demand, not only for bakery products but for the international expansion of our restaurants.

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Grand Lux Cafe is an upscale casual dining concept that offers globally-inspired cuisine with an ambiance of modern sophistication.

Using fresh ingredients, the menu of approximately 175 items at Grand Lux Cafe offers classic American dishes and international favorites, including appetizers, pasta, seafood, steaks, chicken, burgers, salads, specialty items and desserts.

Using fresh ingredients, the menu offers classic American dishes and international favorites, including appetizers, pasta, seafood, steaks, chicken, burgers, salads, specialty items and desserts.

Examples of menu offerings include our Cedar Planked B.B.Q Salmon, Buffalo Chicken Rolls and Shrimp Scampi.

Each Grand Lux Cafe features an on-site bakery which produces a selection of signature desserts, and a full-service bar.

Currently, we operate nine Grand Lux Cafe locations, having closed two locations subsequent to the end of fiscal 2021.

Social Monk Asian Kitchen

In February 2019, we opened the first location of Social Monk Asian Kitchen, a fast casual Asian concept with a modern urban feel.

Social Monk Asian Kitchen is a fast casual Asian concept with a modern urban feel.

The menu features the cuisines of Thailand, Vietnam, Malaysia, Singapore, China, Indonesia and India in made-to-order starters, salads, soups, sandwiches, rice and noodle bowls, classic entrees, vegetables and sides and house-made frozen custard.

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Examples of menu offerings include Crisp Vegetable Spring Rolls, Asian Chicken Salad, Thai Basil Cashew Chicken, Shaking Beef and Dan Dan Noodles.

Currently, we operate one Social Monk Asian Kitchen location.

Human Capital

At the heart of our culture is the belief that our people are our most important resource.

We depend on our staff members to successfully execute all aspects of our day-to-day operations that differentiate our concepts.

Our ability to attract highly-motivated staff members and retain an engaged, experienced team is key to successful execution of our strategy.

While we continue to operate in a competitive labor environment, we believe our people practices contribute significantly to our ability to attract talent and to The Cheesecake Factory restaurants’ industry-leading retention rates, which are consistently in or near the top tenth percentile of the upscale casual dining industry with respect to both restaurant management and hourly staff.

(See Item 1A — Risk Factors — Risks Related to the Restaurant Industry — “If we are unable to successfully recruit and retain qualified restaurant management and operating personnel in an increasingly competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect our financial performance.”)

Retention and engagement of our staff members, one of our top priorities, is fostered by our investment and support particularly in the following areas:

Cultivating and maintaining our culture is a key strategic focus.

Our core values and purpose reflect who we are and how our staff members interact with one another, as well as with our customers and other external stakeholders.

Our purpose – to nurture bodies, minds, hearts and spirits – and our values – quality in everything we do;

passion for excellence;

integrity, respect and responsibility;

people – our greatest resource;

service-mindedness;

dynamic leadership;

high performance and create a sustainable future – are the foundation of our company culture.

We seek to embed our purpose in everything we do by cultivating a sense of pride and belonging to the Company and our brands.

We are proud of the way our people nurture one another and extend that nurturing to our customers and communities.

Diversity, Equity, Inclusion and Belonging

We strive to offer an atmosphere of inclusion and belonging for all.

We believe the cultural alignment we cultivate around respect and inclusion builds trust and promotes teamwork to achieve our common goals.

Furthermore, when our people feel valued and respected for their worth as individuals, they are better able to maximize their potential at work and more likely to share their perspectives, opinions and ideas, which contributes to our ability to innovate.

Our Diversity, Inclusion and Belonging Steering Committee is responsible for establishing strategy, goals and accountability around this important area of focus.

In 2021, key activities included conducting an assessment of our diversity and inclusion efforts and providing in-depth diversity, inclusion and bias training to our above-restaurant operational leadership.

We are committed to providing equal opportunities and seek to ensure there is equity in hiring, development and advancement.

We sponsor developmental support groups, such as The Cheesecake Factory Women’s Network Group, with the goal of advancing women into senior-level positions.

Our Female Kitchen Leader’s Program pairs new female managers with an advisor to provide extra support with navigating kitchen environments, which tend to be predominantly male.

The Leaders of Color Program provides networking and development opportunities for managers from diverse racial or ethnic groups.

As of December 28, 2021, approximately 47% of our staff members were women and approximately 67% of our staff members were racially or ethnically diverse.

We annually conduct pay studies among our restaurant management and corporate teams to help ensure that we are paying fairly and equitably.

In addition, we review pay parity for hourly staff on an annual basis.

Development and Training

We invest significant resources to ensure our people receive, what we believe is industry-leading training in order to maximize their potential.

Our hourly staff members and managers receive a considerable amount of training through a combination of in-person learning and development and online coursework.

In addition to company-provided job training, we encourage the pursuit of educational opportunities at The Cheesecake Factory, North Italia and Grand Lux Cafe restaurants through our tuition reimbursement and free high school equivalency and associate degree programs.

We also strive to provide our staff with career advancement opportunities, and our internal management promotion rate for fiscal 2021 was 53%.

Benefits and Wellness

We believe access to healthcare is a compelling benefit for many staff members, and we offer healthcare benefits to our hourly staff members who work a minimum of 25 hours per week, on average.

We provide a robust suite of benefits and wellness offerings, including free mental health resources, free tutoring to support our staff and managers, and access to chronic disease care management, a maternal health program, financial wellness resources and adoption assistance.

All staff have paid sick time available to them starting at hire and are eligible to earn vacation time.

Employee Engagement

As of December 28, 2021, we employed approximately 45,800 people, with approximately 44,500 in our restaurants and the remainder in our corporate support center, FRC headquarters and bakery operations.

We believe that engaging our workforce is a key factor in our business success and in turn, have developed programs to promote enthusiasm and commitment, while providing a sense of belonging.

We measure our performance in this area through an annual engagement survey and pulse surveys throughout the year.

These surveys give staff company-wide the opportunity to share honest feedback about their work experience.

Based on survey results, leaders across the Company are tasked with responsibility for creating action plans to address and respond to staff feedback.

Listening to our staff members is an essential part of building an engaged workforce, and we provide additional avenues for staff to share their ideas and concerns, including our internal crowdsourcing innovation website and our Careline, which staff can use to confidentially express their concerns.

We believe our efforts in developing and engaging our workforce and creating a great workplace for all of our staff members are important, and in 2021, we were recognized by Fortune and Great Place to Work ® as one of the 100 Best Companies to Work For for an eighth consecutive year.

Our staff members are not covered by any collective bargaining agreements, and we consider our staff member relations to be good.

Another key aspect of our culture is giving back to the communities where our staff live and work, as well as uniting our staff members around charitable causes personal to them.

We provide donations to Feeding America and participate in their annual campaign as an opportunity to engage our teams in a culturally-aligning company-wide service program.

We have similarly promoted our teams’ participation in community volunteer events, and through our gift card program, we contribute to local fundraising events for community non-profit organizations.

Additionally, we partner with the California Community Foundation to provide a method for our staff members to assist other staff members in need through our The Cheesecake Factory “HELP” fund.

We also participate in a nationwide food donation program which redirects surplus food away from landfills to local food banks and non-profit organizations, and believe our sustainability programs and initiatives like restaurant-based composting and recycling and replacing our off-premise packaging with materials that reduce the use of plastics and improve recyclability serve to foster pride in our staff.

Actions Related to the COVID-19 Pandemic

Our management of human capital related to the COVID-19 pandemic during fiscal 2021 included the following:

● Safety – Continued our compliance with state and local government regulations and health recommendations in an effort to keep our teams and customers safe, including providing personal protective equipment and adhering to local vaccination requirements.

● Benefits – Further expanded our paid time off program so that hourly staff and managers could take time off from work to care for their health, including paid time off to receive COVID-19 vaccines.

● Support programs – Provided a complimentary daily meal and continuation of insurance benefits to provide support to staff members impacted by closures of dining rooms.

● Management – Guaranteed approximately 95% of our restaurant management teams’ annual bonus opportunity.

Corporate Social Responsibility

For us, the term “Corporate Social Responsibility” or “CSR” informs how we operate in relation to our people and communities, natural environment and our supply chain.

We evaluate our business and how we operate our corporate-owned restaurants in an effort to identify, create and implement meaningful and sustained change.

During fiscal 2021, in an effort to emphasize the importance of and to align with management, our Board amended our Corporate Governance and Nominating Committee charter to provide for review of the Company’s sustainability and CSR policies.

For more information, please review our CSR report on the Corporate Social Responsibility page on our website at www.thecheesecakefactory.com .

The contents of the CSR report and our website are not incorporated by reference into this Form 10-K.

Purchasing and Distribution

We strive to obtain quality menu ingredients, bakery raw materials and other supplies and services for our operations from reliable sources at competitive prices and consistent with our sustainability goals.

We continually research and evaluate various ingredients and products in an effort to maintain high quality, be responsive to changing consumer tastes and manage costs.

In order to maximize purchasing efficiencies and to provide the freshest ingredients for our menu items while obtaining competitive prices for the required quality and consistency, each restaurant’s management determines the quantities of food and supplies required for their restaurant and orders the items from local, regional and national suppliers based upon specifications determined and terms negotiated at a corporate level.

We strive to maintain restaurant-level inventories at a minimum dollar level in relation to sales due to the high concentration and relatively rapid turnover of the perishable produce, poultry, meat, fish and dairy commodities that we use in our operations, coupled with the limited storage space at our restaurants.

We strive to obtain quality menu ingredients, bakery raw materials, supplies and services for our operations from reliable sources at competitive prices and consistent with our sustainability goals.

We research and evaluate various ingredients and products in an effort to maintain high quality, be responsive to changing consumer tastes and manage costs.

In order to maximize purchasing efficiencies and to obtain the freshest ingredients that meet our required quality and consistency standards, each restaurant’s management determines the quantities of food and supplies needed for their location and orders the items from qualified local, regional, national and international suppliers based upon specifications determined and terms negotiated at a corporate level.

We strive to maintain restaurant-level inventories at a minimum dollar level in relation to sales due to the relatively rapid turnover of the perishable produce, poultry, meat, fish and dairy commodities we use in our operations, coupled with the limited storage space at our restaurants.

Independent foodservice distributors, including the largest foodservice distributor in North America, deliver most items multiple times per week to our restaurants.

During fiscal 2021, we began to experience certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic, and we expect these shortages and delays to continue in fiscal 2022.

We purchase food and other commodities for use in our operations based on market prices established with our suppliers.

Many of the commodities purchased by us can be subject to volatility due to market supply and demand factors outside of our control.

We mitigate the risk of supply shortages and obtain competitive prices by utilizing multiple qualified suppliers for substantially all our ingredients and supplies.

Certain of our suppliers were adversely impacted by the COVID-19 pandemic and as a result, we experienced certain shortages of food items and other supplies at our restaurants, none of which had a material impact on our operations.

Many of these commodities can be subject to market volatility driven by supply and demand factors outside of our control, including the relative availability of labor and distribution, weather, natural disasters, inventory levels, and political and economic conditions.

Climate change may further exacerbate a number of these factors.

We negotiate short-term and long-term agreements for some of our principal commodity, supply and equipment requirements, such as certain dairy products and poultry, depending on market conditions and expected demand.

We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing risk and variability associated with such commodities.

As a result of recent supply shortages that have affected the restaurant industry and broader economy, we have needed to purchase a greater portion of certain products in the spot market at a significantly higher cost than our historical contracted rates.

While we are in the process of contracting for certain key food and non-food supplies for fiscal 2022, these efforts may not be successful or yield our intended benefits.

We continue to evaluate the possibility of entering into similar arrangements for other commodities and periodically evaluate hedging vehicles, such as direct financial instruments, to assist us in managing price risk and variability associated with such commodities.

As of the end of fiscal 2021, we had no hedging contracts in place.

We may or may not have the ability to increase menu prices or vary menu items in response to food commodity price increases.

We may not have the ability to increase menu prices or vary menu items in response to food commodity price increases.

(See Item 1A — Risk Factors — “Our inability to anticipate and react effectively to changes in the costs of key operating resources may increase our cost of doing business, which could materially adversely affect our financial performance.”)

Information Technology

This information technology discussion, unless otherwise noted, relates to The Cheesecake Factory, North Italia, Grand Lux Cafe and Social Monk Asian Kitchen restaurants.

We have completed our assessment of the information technology systems and infrastructure for the FRC brands and are in the process of implementing identified improvements.

Unless otherwise noted, this section titled “Information Technology” relates to The Cheesecake Factory, North Italia, Grand Lux Cafe and Social Monk Asian Kitchen restaurants.

We are in the process of implementing similar solutions for the FRC brands other than North Italia where warranted based on our assessments.

Our technology-enabled business solutions are designed to provide effective financial controls, cost management, improved efficiencies and enhanced customer experience.

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The data and analytics provided by this software provide us with actionable insights to better understand what customer experience opportunities should be addressed, while reinforcing positive staff behaviors.

To enable a safer and improved customer experience in response to the COVID-19 pandemic, we implemented remote greeting and QR code menu capabilities as well as a touchless payment option.

To enable a safer and improved customer experience in response to the COVID-19 pandemic, we offer QR code menu and touchless payment options.

Our kitchen management system, which is in place at The Cheesecake Factory, Grand Lux Cafe and Social Monk Asian Kitchen restaurants, provides automated routing and cook line balancing, and synchronizes order completion, ticket time and cook time data, promoting more efficient levels of labor and productivity without sacrificing quality.

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This includes equipment that can also process smart payment cards, commonly referred to as EMV (Europay, Mastercard, Visa).

(See Item 1A — Risk Factors — Risks Related to Information Technology and Cyber Security — “Information technology system failures or breaches of our network security could interrupt our operations and subject us to increased operating costs, as well as to litigation and other liabilities, any of which could materially adversely affect our financial performance.”)

(See Item 1A — Risk Factors — “Information technology system failures or breaches of our network security could interrupt our operations and subject us to increased operating costs, as well as to litigation and other liabilities, any of which could materially adversely affect our financial performance.”)

Marketing and Advertising

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Historically, we have not used significant paid national advertising through television, radio or print, nor significant discounting for on-premise dining occasions.

We utilize a social media and digital marketing strategy that allows us to engage regularly with our customers outside of our restaurants, including communication and paid advertising on Facebook ® , Instagram ® , YouTube ® , Twitter ® , Snapchat ® , Pinterest ® and other social media platforms, influencer marketing, Google search advertising and direct email to customers.

(See Item 1A — Risk Factors — Risks Related to Our Business — “Any inability to effectively use and manage social media could harm our marketing efforts as well as our reputation, which could materially adversely affect our financial performance.”)

We utilize a social media and digital marketing strategy that allows us to engage regularly with our customers outside of our restaurants, including communication and paid advertising on Facebook ® , Instagram ® , YouTube ® , Twitter ® , Snapchat ® , Pinterest ® , TikTok ® and other social media platforms, influencer marketing, Google search advertising and direct email to customers.

We are in the process of updating our website and implementing a guest rewards program.

(See Item 1A — Risk Factors — “Any inability to effectively use and manage social media could harm our marketing efforts as well as our reputation, which could materially adversely affect our financial performance.”)

Public relations is another important aspect of our marketing approach, and we frequently appear on local and national television in connection with a variety of promotional opportunities, such as National Cheesecake Day, to perform cooking demonstrations and other brand-building exposure.

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Seasonality and Quarterly Results

While seasonal fluctuations generally do not have a material impact on our quarterly results, year-over-year comparisons can be significantly impacted by the number and timing of new restaurant openings and associated preopening costs, the timing of holidays, the impact from inclement weather, the additional week in a 53-week fiscal year, other variations in revenues and expenses and, for the fiscal 2020 versus fiscal 2019 comparisons, by the impact of the COVID-19 pandemic and results of the Acquisition.

Because of these and other factors, our financial results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

While seasonal fluctuations generally do not have a material impact on our quarterly results, year-over-year comparisons can be significantly impacted by the number and timing of new restaurant openings and associated preopening costs, the timing of holidays, the impact from inclement weather, the additional week in a 53-week fiscal year and other variations in revenues and expenses, including the impact of the COVID-19 pandemic and results of the Acquisition.

Because of these and other factors, our financial results for any quarter or fiscal year are not necessarily indicative of the results that may be achieved for the full fiscal year or subsequent fiscal years.

Food Safety and Quality Assurance

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We continuously seek to improve our food safety and sanitation policies and procedures.

Our work and management processes are verified by routine restaurant management reviews, third-party health inspection/food safety audits and regulatory agency inspections.

Our work and management processes are verified by routine restaurant management reviews, third-party health inspection/food safety audits and regulatory agency inspections, and we utilize a nutritional database consistent with the Food and Drug Administration’s recently-enacted rule regarding food and nutritional labeling of restaurant menu items.

In addition, our bakery facilities are Safe Quality Food certified in alignment with the Global Food Safety Initiative’s Global Markets Program.

The following discussion on suppliers and traceability applies to The Cheesecake Factory, Grand Lux Cafe and Social Monk Asian Kitchen restaurants and to our bakeries.

We are in the process of reviewing these processes for the FRC brands.

In selecting suppliers, we look for key performance indicators relating to sanitation, operations and facility management, good manufacturing and agricultural practices, product protection, government inspections and compliance, compliance with the Food Safety Modernization Act, recovery and food security.

In addition to measuring and testing food safety and security practices, we strive to ensure that all our food suppliers have annual food safety and quality system audits.

We have annual food safety and quality system audits for certain suppliers, while others are audited every other year or as needed.

Our restaurants and bakery facilities also follow regulatory guidelines required for conducting and managing ingredient and product traceability.

We utilize a web-based notification and tracking solution to efficiently contact our restaurants and monitor our progress in the event of a product withdrawal or recall.

(See Item 1A — Risk Factors — Risks Related to the Restaurant Industry — “Concerns relating to pandemics and other diseases, food safety and food-borne illness could reduce customer traffic to our restaurants, disrupt our food supply chain or cause us to be the target of litigation, which could materially adversely affect our financial performance.”)

Government Regulation

We are subject to numerous federal, state, local and foreign laws affecting our business.

Each of our restaurants is subject to licensing and regulation by a number of government authorities, which may include alcoholic beverage control, health, sanitation, environmental, labor, immigration, zoning and public safety agencies.

We are also subject to various environmental regulations, including water usage, sanitation disposal and transportation mitigation.

Our international business exposes us to additional regulations, including antitrust and tax requirements, anti-boycott legislation, import/export and customs regulations and other international trade regulations, privacy laws, the USA Patriot Act and the Foreign Corrupt Practices Act.

(See Item 1A — Risk Factors — “The impact of and our failure to effectively respond to pandemics, epidemics, endemics and other public health emergencies, or food safety and food-borne illness could reduce customer traffic to our restaurants, disrupt our food supply chain or cause us to be the target of litigation, which could materially adversely affect our financial performance.”)

Government Laws and Regulations

Our Company is subject to numerous federal, state, local and foreign laws and regulations.

Each of our restaurants is subject to various laws and regulations, including license and permit requirements, that regulate many aspects of our business, including, among other things, alcoholic beverage control, health, sanitation, labor, immigration, zoning and public safety.

We are also subject to various environmental regulations governing areas such as water usage, sanitation disposal and transportation mitigation.

Our international business exposes us to additional laws and regulations, including antitrust and tax requirements, anti-boycott legislation, import/export and customs regulations and other international trade regulations, privacy laws, the USA Patriot Act and the Foreign Corrupt Practices Act.

As a provider of food products, we are subject to a comprehensive regulatory framework that governs the manufacture (including composition and ingredients), labeling, packaging and safety of food in the United States , including the Federal Food, Drug and Cosmetic Act, the Public Health Security and Bioterrorism Preparedness Response Act of 2002, the Federal Food Safety Modernization Act and regulations concerning nutritional labeling under the Patient Protection and Affordable Care Act of 2010.

(See Item 1A — Risk Factors — Risks Related to the Restaurant Industry — “Our inability to respond appropriately to changes in consumer health and disclosure regulations, and to adapt to evolving consumer dining preferences could negatively impact our operations and competitive position, which could materially adversely affect our financial performance.”)

(See Item 1A — Risk Factors — “Our inability to respond appropriately to changes in consumer health and disclosure regulations, and to adapt to evolving consumer dining preferences could negatively impact our operations and competitive position, which could materially adversely affect our financial performance.”)

In order to serve alcoholic beverages in our restaurants or off-premise where permitted, we must comply with alcoholic beverage control regulations which require us to apply to a state or other governmental alcoholic beverage control authority for licenses and permits.

In addition, we are subject to dram shop statutes in most of the jurisdictions in which we operate, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

To help mitigate this risk, we carry liquor liability coverage as part of our existing comprehensive general liability insurance.

Various federal, state, local and foreign laws govern our operations and our relationships with our staff members, including such matters as minimum wages, breaks, scheduling, exempt classifications, equal pay, overtime, tip credits, fringe benefits, leaves, safety, working conditions, provision of health insurance, the COVID-19 pandemic and citizenship or work authorization requirements.

Dram shop litigation may result in significant judgments, including punitive damages.

We try to mitigate this risk by carrying liquor liability insurance coverage.

Various federal, state, local and foreign laws and regulations govern our operations as they relate to our staff members, including such matters as minimum wages, breaks, scheduling, exempt classifications, equal pay, overtime, tip credits, fringe benefits, leaves, safety, working conditions, provision of health insurance, the COVID-19 pandemic and citizenship or work authorization requirements.

In California, we are subject to the Private Attorneys General Act (“PAGA”) which authorizes employees to file lawsuits to recover civil penalties on behalf of themselves, other employees and the State of California for labor code violations.

We must also comply with local, state and federal laws protecting the right to equal employment opportunities and prohibiting discrimination and harassment in the workplace.

We have training and awareness programs in place for these areas and further expanded the curriculum in fiscal 2020.

We must also comply with local, state and federal laws and regulations protecting the right to equal employment opportunities and prohibiting discrimination and harassment in the workplace.

We regularly review and update our training and awareness programs addressing these concerns.

We are also subject to the regulations of the Department of Homeland Security, the U.S.

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Immigration and Customs Enforcement.

Our facilities must comply with applicable requirements of the Americans with Disabilities Act of 1990 (“ADA”) and related federal, state and foreign statutes which prohibit discrimination on the basis of disability with respect to public accommodations and employment.

Under the ADA and related state and local laws, we take steps to make our new or significantly remodeled restaurants, our corporate and bakery facilities and our websites readily accessible to disabled persons.

We make reasonable accommodations for the employment of disabled persons as required by applicable laws.

Our facilities must comply with applicable requirements of the Americans with Disabilities Act of 1990 (“ADA”) and related federal, state and foreign laws and regulations which prohibit discrimination on the basis of disability with respect to public accommodations and employment.

We take steps to ensure our places of public accommodation and our website comply with the requirements of the ADA and related state and local laws and regulations.

We also make reasonable accommodations for the employment of disabled persons as required by applicable laws and regulations.

A significant number of our hourly restaurant staff members receive income from gratuities.

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By complying with the educational and other requirements of the TRAC agreement, we reduce the likelihood of potential employer-only FICA tax assessments for unreported or underreported tips.

We are subject to laws relating to information security, privacy, cashless payments and consumer credit, protection and fraud.

An increasing number of governments and industry groups worldwide have established data privacy laws and standards for the protection of personal information (including social security numbers), financial information (including credit card numbers) and health information.

We are subject to laws and regulations relating to information security, privacy, cashless payments and consumer credit, protection and fraud.

We make efforts to comply with an increasing number of data privacy laws, regulations and industry standards regarding the protection of personally identifiable information and protected health information.

(See Item 1A — Risk Factors — “Changes in, or any failure to comply with, applicable laws or regulations could materially adversely affect our ability to operate our restaurants and/or increase our cost to do so, which could materially adversely affect our financial performance.”)

Trade Names, Trademarks and Other Intellectual Property

We own various types of intellectual property and have applied to register trade names, logos, service marks, trademarks and copyrights (collectively, “Intellectual Property”) in the United States, Canada and in additional countries throughout the world in various categories, including without limitation, restaurant services and bakery goods.

We own and have applied to register trade names, logos, service marks, trademarks and copyrights and other intellectual property (collectively, “Intellectual Property”) in the United States, Canada and in additional countries throughout the world in various categories, including without limitation, restaurant services and bakery goods.

We regard our Intellectual Property, including without limitation “The Cheesecake Factory,” “North Italia,” and a collection with the Fox Restaurant Concepts subsidiary, as well as our trade dress, as having substantial value and as being important to our marketing efforts.

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However, registrations of Intellectual Property are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

We have also registered various internet domain names, including, without limitation, “www.thecheesecakefactory.com,” “northitaliarestaurants.com,” and “www.foxrc.com,” as well as derivations of these and other domain names to include international country codes.

(See Item 1A — Risk Factors — Risks Related to Our Business — “Our failure to adequately protect our intellectual property could materially adversely affect our financial performance.”)

Human Capital

At the heart of our culture is the belief that our people are our most important resource.

We depend on our staff members to successfully execute all aspects of our day-to-day operations that differentiate our concepts.

Our ability to attract highly-motivated staff members and retain an engaged, experienced team is key to successful execution of our strategy.

While we continue to operate in a competitive labor environment, we believe our people practices contribute significantly to our ability to attract talent and to The Cheesecake Factory restaurants’ industry-leading retention rates, which are consistently in the top tenth percentile of the upscale casual dining industry with respect to both restaurant management and hourly staff.

Retention and engagement of our staff members, one of our top priorities, is fostered by our investment and support particularly in the following areas:

Cultivating and maintaining our culture is a key strategic focus.

Our core values and purpose reflect who we are and how our staff members interact with one another, as well as with our customers and other external stakeholders.

Our purpose – to nurture bodies, minds, hearts and spirits – and our values – quality in everything we do;

passion for excellence;

integrity, respect and responsibility;

people – our greatest resource;

service-mindedness;

dynamic leadership;

high performance and create a sustainable future – are the foundation of our company culture.

We seek to embed our purpose in everything we do by cultivating a sense of pride and belonging to the Company and our brands.

We are proud of the way our people nurture one another and extend that nurturing to our customers and communities.

Diversity, Equity and Inclusion

We strive to offer an atmosphere of inclusion and belonging for all.

We believe the cultural alignment we cultivate around respect and inclusion builds trust and promotes teamwork to achieve our common goals.

With underrepresented talent making up nearly two-thirds of our workforce, we are committed to providing equal opportunities and seek to ensure there is equity in hiring, development and advancement.

We continue to work to increase the percentage of both underrepresented and female talent in our senior leadership across the organization.

To that end, we sponsor developmental support groups, such as The Cheesecake Factory Women’s Network Group, which helps advance women into senior-level positions.

In 2020, we strengthened our commitment to fostering an inclusive environment by forming a Diversity, Inclusion and Belonging Steering Committee to establish strategy, goals and accountability.

Key accomplishments included formulating an official statement that articulates our commitment to diversity, inclusion and belonging, conducting listening sessions between executives and staff members from underrepresented groups and providing education to our entire management team aimed at developing their inclusive leadership skills.

We are proud to have been recognized by Fortune and Great Place to Work® as a Best Workplace for Diversity for two consecutive years, a Best Workplace for Women for four consecutive years and a Best Workplace for Millennials for five consecutive years.

Development and Training

We invest significant resources to ensure our people receive, what we believe to be, industry-leading training in order to maximize their potential.

On average, our hourly staff members at The Cheesecake Factory restaurants receive approximately 130 hours of training per year through a combination of online coursework and in-person learning and development.

Our managers receive approximately 350 hours of training and development annually, on average.

Besides company-provided job training, we also encourage the pursuit of educational opportunities at The Cheesecake Factory and North Italia restaurants through our tuition reimbursement and free high school equivalency and associate degree programs for kitchen staff members.

In addition, we strive to provide our staff with career advancement opportunities.

Our robust training and educational programs allow us to fill a significant portion of our management positions with internal candidates.

Benefits and Wellness

We believe access to healthcare is a compelling benefit for many staff members and we offer healthcare benefits to our hourly staff members who work a minimum of 25 hours per week, on average.

We attempt to provide a robust suite of benefits and wellness offerings, including access to free mental health resources, autism coverage and resources, diabetes and chronic disease care management, a maternal health program and adoption assistance.

Employee Engagement

We believe that engaging our workforce is a key factor in our business success and in turn, have developed programs to promote enthusiasm and commitment, while providing a sense of belonging.

We measure our performance in this area through an annual engagement survey and pulse surveys throughout the year.

These surveys give staff company-wide the opportunity to share honest feedback about their work experience.

Based on survey results, leaders across the company are tasked with responsibility for creating action plans to address and respond to staff feedback.

As of December 29, 2020, we employed approximately 42,500 people, with approximately 41,000 in our restaurants and the remainder in our corporate center, FRC headquarters and bakery operations.

We believe our efforts in developing and engaging our workforce and creating a great workplace for all of our staff members, have been effective, as evidenced by our recognition as one of the Fortune “100 Best Companies to Work For®” in 2020 for the seventh consecutive year.

The list is published annually based on a culture review and surveys of current staff members to identify and recognize companies that create positive work environments with high employee morale and fulfillment.

In addition, in 2020 we received the Workplace Legacy Award from Black Box Intelligence/People Report, which recognizes success in balancing superior people practices and best-in-class operational results in the restaurant industry.

Another key aspect of our culture is giving back to the communities where our staff live and work, and uniting our staff members around charitable causes personal to them.

Since 2008, we have donated over $5.3 million to Feeding America, and we use the annual campaign as an opportunity to engage our teams in a culturally-aligning company-wide service program.

In addition, through our nationwide food donation program, we regularly donate surplus food from our restaurants to local food rescue operations.

Since the program’s inception in 2007, we have donated more than 5.8 million pounds of food, including approximately 620,000 pounds in fiscal 2020.

We also believe our sustainability programs and initiatives like restaurant-based composting and recycling and replacing our off-premise packaging with materials that reduce the use of plastics and improve recyclability serve to foster pride in our staff.

COVID-19 Pandemic

Key to our management of human capital during the COVID-19 pandemic were our decisions to 1) obtain adequate personal protective equipment for our staff and require the use of face masks by our restaurant teams in addition to any jurisdictional requirements in an effort to keep our teams and customers safe;

2) institute a special paid time off program with the goal of ensuring that hourly staff and managers could afford to take adequate time off from work to care for their health and 3) retain our restaurant management teams which we believe enabled us to adapt quickly to a mandated off-premise only operating model and reopen indoor dining rooms safely when allowed.

When the closure of our dining rooms in March necessitated the furloughing of approximately 41,000 hourly staff members, the Company funded a variety of support programs in an effort to provide them with stability, including a complimentary daily meal, continuation of insurance benefits during the furlough and contributions to a COVID assistance fund that provided $2.6 million in financial grants during fiscal 2020 to staff members in need.

Grants were funded through donations from the Company and its staff members.

In more recent instances where we have been required to return to off-premise only restaurant operations in certain jurisdictions, we have continued to offer the complimentary daily meal and benefit protections to our furloughed teams.

We believe these benefits have assisted us in maintaining a connection to furloughed staff with the goal of returning them to work as soon as dining rooms reopen.

Corporate Social Responsibility (“CSR”)

In addition to being a leader in experiential dining that strives to provide excellent food, service and hospitality to our customers, we also contribute to the well-being of our staff, local communities and the environment we all share.

We regularly examine multiple aspects of our business in an effort to identify, create and implement meaningful and sustained change.

For more information, please review our CSR report on the Corporate Social Responsibility page on our website at www.thecheesecakefactory.com .

The contents of the CSR report and our website are not incorporated by reference into this Form 10-K.

We have also registered various internet domain names, including, without limitation, “www.thecheesecakefactory.com,” “www.northitalia.com,” and “www.foxrc.com,” as well as derivations of these and other domain names to include international country codes.

(See Item 1A — Risk Factors — “Our failure to adequately protect our intellectual property could materially adversely affect our financial performance.”)

Executive Officers of the Registrant

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What changed 10-K

Item 1. Business