Cheesecake Factory, Denny’s Among Restaurant Chains With Pasadena Locations Possibly Facing Bankruptcy Amid Pandemic

The Cheesecake Factory restaurant chain, which has an outlet in Old Pasadena at 2 W. Colorado Blvd., is among a half-dozen well-known restaurants in the U.S. that are facing significant debt and possible bankruptcy filings due to the COVID-19 pandemic, according to a report by Standard and Poor Global Market Intelligence (S&P Global).

Denny’s, which has a Pasadena location at 2627 E Colorado Blvd., is also on the list published by the credit-rating agency, considered the largest globally.

S&P Global said Denny’s and The Cheesecake Factory were No. 3 and No. 4 in the list of restaurant companies with the highest one-year probability of default scores as of Aug. 7. Denny’s scored 11.9 percent, while The Cheesecake Factory scored 11.7 percent.

On top of the list were Dave & Buster’s at 16.1 percent and Bloomin’ Brands at 13.2 percent.

Another large chain that has stores in Pasadena – Chipotle Mexican Grill Inc. – is listed in the S&P Global report as the least likely to default, at 0.1 percent. 

Chipotle Mexican Grill outlets are located at The Shops On Lake Avenue and at 3409 E. Foothill Blvd.

The report said there is a slight decline in the odds in recent months that the largest publicly traded U.S. restaurants will default, as states allowed businesses to reopen, although in a reduced capacity.

But the ongoing financial hits from the virus and uncertainty over whether laid-off consumers will receive extended unemployment benefits continue to pressure the industry as more companies enter bankruptcy, the report said.

When they eventually default on loans, restaurants are often forced to file for bankruptcy protection, close locations, liquidate assets, or do a combination of these measures.

In May, S&P Global said Denny’s Corp. and The Cheesecake Factory, along with Dave & Buster’s Entertainment Inc. and Bloomin’ Brands Inc., which owns Outback Steakhouse, were among the largest publicly traded U.S. restaurant companies most likely to default.

In March, The Cheesecake Factory alerted investors that it was suspending all development, withdrawing its financial guidance for 2020, and drawing down $90 million from its revolving credit facility. The company said it was “evaluating additional measures to further preserve financial flexibility.” 

Most of the chain’s stores, including Pasadena, have been operating sustainably by offering take-out and delivery, but the COVID-19 crisis forced it to close 27 restaurants in March. 

In June, The Cheesecake Factory said it had to close or cut back the operations of 87 restaurants for a few weeks because of the demonstrations and riots that followed the death of George Floyd.

Denny’s reported total operating revenues of $40.2 million for the second quarter, and a domestic systemwide same-store sales decrease of 56.9 percent compared to the second quarter last year. 

The chain announced in May that it was permanently closing 15 stores in New York and laying off 524 workers due to “unforeseeable business circumstances prompted by COVID-19.” 

Chipotle Mexican Grill, Inc. also reported second-quarter highlights in July, saying their revenue decreased 4.8 percent to $1.4 billion year-over-year. Comparable restaurant sales declined 9.8 percent, but digital sales grew 216.3 percent and accounted for 60.7 percent of sales for the quarter.

The Cheesecake Factory in Pasadena is open for take-out and delivery from 11 a.m. to 9 p.m. Monday to Thursday and from 11 a.m. to 10 p.m. Friday and Saturday. 

Sunday’s hours are 10 a.m. to 9 p.m., with brunch served from 10 a.m. to 2 p.m.

Denny’s is open 24 hours a day, seven days a week.

Chipotle Mexican Grill, Inc., located at The Shops on Lake Avenue and at Hastings Village, is open from 10:30 a.m. to 10 p.m.