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Cheesecake Factory Can't/Won't Pay Rent For All Their Stores

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Cheesecake Factory Can't/Won't Pay Rent For All Their Stores

Old 03-25-2020, 08:15 PM
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Default Cheesecake Factory Can't/Won't Pay Rent For All Their Stores

Where's this all going to end up? SMH

https://la.eater.com/2020/3/25/21194...ain-restaurant
Old 03-25-2020, 08:17 PM
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Goes tits up and those with money will buy up cheap real estate. Once we recover, they’ll pump up those rent prices
Old 03-25-2020, 08:18 PM
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Yawn...I’ve been telling you where it will all go for a few years, now. All about the leverage, baby. One man’s liability is another man’s asset...until it isn’t. When y’all wake up to how leveraged our system is...and how intertwined it is, you’ll know.

derivatives redux v2.0
Old 03-25-2020, 08:20 PM
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Originally Posted by Jeremy24 View Post
Goes tits up and those with money will buy up cheap real estate. Once we recover, they’ll pump up those rent prices
elementary understanding...this ain’t your daddy’s market.

rent stops, debt not serviced...any derivative tied to that implodes as the “loser” of bet can’t pay the winner. That zero sum game becomes a negative game.
Old 03-25-2020, 09:28 PM
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They are asking for a bailout they probably don't need. I respect you guys opinion but I couldn't understand the way you expressed it..Please put it in layman's terms.
Old 03-26-2020, 12:02 AM
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Originally Posted by peacemon View Post
They are asking for a bailout they probably don't need. I respect you guys opinion but I couldn't understand the way you expressed it..Please put it in layman's terms.
Restaurant spaces have very high rents: Rents so high that independent (mom and pop) restaurants probably can't survive a 4 week shutdown without closing the doors for good. Cheesecake Factory is applying leverage to reduce overhead - maybe they can survive a couple of months, and maybe they can't, but since so many restaurants are going to be hurting, it's probably a good time to try and cram down the cost of those leases. In my opinion, it's a first step before shuttering stores - because that can be blamed on property management companies who were greedy and refused to agree to lower rents.
Old 03-26-2020, 04:05 AM
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I’m sure they will survive just fine. The one by my house has indefinite wait times during peak hours. They are just trying save their cash like most businesses are doing. The kicker here is they own about 300 of them so they have leverage. Just imagine that many stores multiplied by 50K+ in monthly rent per store. That’s a 15MIL savings for them during a shut down.
Old 03-26-2020, 04:24 AM
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I know a family that owns a good property on South Dixie Highway. Heard that 4 of the 5 tenants have announced they won't be paying rents. The blowback and multiplier economic effect of covid are real and far reaching.
Old 03-26-2020, 04:31 AM
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We need another 2.2 trillion bail out for restaurants and hotels.
Old 03-26-2020, 04:48 AM
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Financial institutions are going to have to do a reduction on accrued interest and allow delayed payments for several months. In return they will likely drop interest paid on all monies held. They can't take on excessive defaults right now or probably for the next year.
No simple answer.
Old 03-26-2020, 05:05 AM
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Everybody wAnts Something for free. Everybody is playing an angle. Starts with "Well if nobody can evict a residential tenant..." and it snowballs from there.

Its no longer people proud of their ability to weather storms and get by on their own hard work, it's gaming the system. It's not even really "gaming" it's applying leverage at a time you think it's worthwhile to do so.

Old 03-26-2020, 05:10 AM
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Originally Posted by Darksails View Post
Restaurant spaces have very high rents: Rents so high that independent (mom and pop) restaurants probably can't survive a 4 week shutdown without closing the doors for good. Cheesecake Factory is applying leverage to reduce overhead - maybe they can survive a couple of months, and maybe they can't, but since so many restaurants are going to be hurting, it's probably a good time to try and cram down the cost of those leases. In my opinion, it's a first step before shuttering stores - because that can be blamed on property management companies who were greedy and refused to agree to lower rents.
The management company does not decide the rent the market and the property owner's do.
Old 03-26-2020, 06:23 AM
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Restaurant rents are not high on a psf basis by comparison with soft goods retailers in the same center, in fact they are much lower. They are a big monthly check because of the space requirements. To make up for the lower psf rent, restaurants often pay a % rent to the LL.

What I can tell you is no LL that I am aware of is being "greedy" right now. They are all working to try and mitigate the fallout and that includes rent relief strategies etc. The hole/vacancy loss left behind by a restaurant operator like Cheesecake is huge so trust on top of whatever Federal program they take advantage of, LLs will be doing what they can to help the tenant and themselves, while trying to manage their own obligations i.e. operating expenses/debt service.

Last edited by Fish'nFool; 03-26-2020 at 06:28 AM.
Old 03-26-2020, 06:28 AM
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Kick their A$$ out. Property owners still have to pay taxes and interest on the note for the property.
Ding their credit and borrowing power so it will cost them when things recover.
Old 03-26-2020, 06:30 AM
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Originally Posted by rdmallory View Post
Kick their A$$ out. Property owners still have to pay taxes and interest on the note for the property.
Dong their credit and borrowing power so it will cost them when thins recover.
So when most of the LL's retail tenants cannot pay their rent and the LL kicks all their asses out, how does the LL pay their operating expenses and service their debt?
Old 03-26-2020, 07:19 AM
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I would have liked to see the CEO include a plan of repayment in his letter. When you just decide you are not going to pay rent and leave it at that, with no plan going forward, I say give them the eviction papers.
Old 03-26-2020, 07:36 AM
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Originally Posted by Darksails View Post
Restaurant spaces have very high rents: Rents so high that independent (mom and pop) restaurants probably can't survive a 4 week shutdown without closing the doors for good. Cheesecake Factory is applying leverage to reduce overhead - maybe they can survive a couple of months, and maybe they can't, but since so many restaurants are going to be hurting, it's probably a good time to try and cram down the cost of those leases. In my opinion, it's a first step before shuttering stores - because that can be blamed on property management companies who were greedy and refused to agree to lower rents.
This. Rents are often stupid high, plus they may pay a % of sales to the landlord. You gotta sell a lot of food to pay $1000/day rent.
Old 03-26-2020, 08:20 AM
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With the inability to evict, repo, or cancel services based on non payment there are a lot of businesses that are stripping down to the bare essentials to keep their head above water. I know of a few that have decided to stop paying rent, cell phones, utilities, etc..... and continue paying employees. They all plan to catch up ASAP, but given the choice, they are choosing personnel and daily operations knowing that the lights and phones will be staying on through this.

Not sure the correct course of action but it is something.
Old 03-26-2020, 08:30 AM
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If a large restaurant chain like them can't pay rent due to cash flow issues a couple of weeks into this, they have bigger issues....unless they are saving the cash for the long run....Not to mention, that customer's tips pay a chunk of their "payroll"

Originally Posted by billinstuart View Post
This. Rents are often stupid high, plus they may pay a % of sales to the landlord. You gotta sell a lot of food to pay $1000/day rent.
If I'm not mistaken, most retailers in large shopping malls pay landlords a % of their sales, if you exceed certain revenue targets.
Old 03-26-2020, 08:32 AM
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Originally Posted by Pipo6007 View Post
I’m sure they will survive just fine. The one by my house has indefinite wait times during peak hours. They are just trying save their cash like most businesses are doing. The kicker here is they own about 300 of them so they have leverage. Just imagine that many stores multiplied by 50K+ in monthly rent per store. That’s a 15MIL savings for them during a shut down.
Wish it was about "saving" money.

I run a business and own the building personally. We could close for a month like alot of restaurants and I could easily forgo a months rent expense to the landlord (me) but that doesn't "save" anything. The reality is I have a mortgage on the building and will still be required to make that payment. I've also calculated my expenses if the building sat empty for a 30 day period.....$225,000. That's what I spend if not a single employee reports to work or gets paid for a month.

This is "leverage" that was referred to above. In order to "make" money, I have to borrow money and put it to work. When money stops coming in the domino's start to fall quickly. The employees stop getting paid, the bank stops getting paid, the vendors stop getting paid, and the taxes eventually stop getting paid.

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