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The Factory Man

When it comes to running a successful restaurant, David Overton takes the cake — cheesecake, that is. As CEO of The Cheesecake Factory Inc., Overton has grown the company from its humble beginnings as a wholesale cheesecake vendor to the $1.6 billion restaurant chain it is today. As a youngster, Overton’s career aspirations included rock and roll, not running restaurants. An avid drummer, he moved from his hometown in Detroit, Mich., after college to pursue a music career in San Francisco. Shortly thereafter, his parents, packed up their own car and, with $10,000 to their name, moved to Los Angeles to launch a wholesale cheesecake business, selling primarily to restaurants. Overton found himself becoming increasingly immersed in helping out the family business — traveling back and forth between San Francisco and Los Angeles — until eventually he abandoned his rock star dreams and moved to Los Angeles to help run the cheesecake business. As less expensive brands such as Sara Lee cut into their wholesale business, Overton knew he needed a new strategy that would put his mother’s cheesecakes front and center. He decided to open the first Cheesecake Factory restaurant in Beverly Hills in 1978. In crafting the first menu, Overton aimed to include fresh and easy meals that would be easy enough even for him to create. “I said, ‘I’m only going to put things on the menu that I can cook’-and I was not a cook,” Overton said. The menu now includes more than 200 items, including favorite comfort foods such as four-cheese pasta, fish and chips and meatloaf, all of which have been instrumental in making Cheesecake Factory a consumer favorite in upscale casual dining. Not to be overshadowed, the company’s moniker and claim to fame has also grown. The company’s bakery facilities produce over 70 varieties of cheesecakes, including Hershey’s Chocolate Bar Cheesecake, Tiramisu Cheesecake, and the current favorite with customers: Ultimate Red Velvet Cheesecake. With the core business doing well, Overton has decided to venture into other restaurant concepts, launching Grand Lux Cafe and RockSugar Pan Asian Kitchen. To date, The Cheesecake Factory has 170 outlets and employs nearly 32,000 employees worldwide. After more than 30 years of building a restaurant empire, Overton has no plans of slowing down. The company recently announced plans to expand its global presence and open three to four restaurants in the Middle East this year. As Overton said: “You’re only as good as your last meal.” Question: When did you decide to join the family’s cheesecake business? Answer: In the late ‘70s my parents were going in and out of a number of businesses and none of them were faring particularly well. They were looking for a last attempt to have their own business. My father was 54 and my mother was 52. We all encouraged them to go into the cheesecake business because people loved the cakes. We were surprised when they decided they would do it. I was living in San Francisco, pursuing a music career. They had friends in Los Angeles. So they sold their house, packed everything up — they had $10,000 to their name — and they drove the car across the country to start their new (wholesale) cheesecake business. I began going back and forth to help them launch their business. I really didn’t join them fully until about 1975, when I moved down from San Francisco to Los Angeles. The first couple years were pretty rough going. Q: How did you go about launching the first restaurant? A: After working with them for a few years, I realized it was very hard. We were the Cadillac of cheesecakes and for 5 cents some of the restaurateurs would switch to Sara Lee. I realized the only way to really launch this brand was to go directly to the people. If we did that, then some of these restaurateurs would see how powerful it was to carry our cakes and how people responded to them. I thought Beverly Hills would be the best place (to open), if I could get there, because it was upscale. I had a new accountant that was working with us and he said the four magic words — “I’ll raise the money.” We opened Feb. 25, 1978. Q: How did you grow that one restaurant into the global chain it is today? A: I was the manager of the Beverly Hills (restaurant) for five years. It really took a while for me to learn the restaurant business so I wasn’t sure if I wanted to expand. But, at one point I felt that we should expand. Someone brought me the Marina Del Rey site. It was such a great site — right on the water with a great view. We opened that in July of 1983. We had a full liquor license. Also, our Beverly Hills location was 3,200 square feet whereas Marina Del Rey had almost 10,000 square feet, so that was really the beginning of us opening very large restaurants. The concept, as it exists today, was developed there. Q: How did you come up with the interior décor of your restaurants? A: There was an old bath in New York that had a palm tree over the pillars. So at first we were doing some palm trees and then we moved on to the Egyptian columns. It was really about having eclectic décor that wouldn’t wear out. If we went “modern” then it wouldn’t be “modern” for very long. So we wanted something that would live and we wouldn’t have to remodel every few years. We probably aren’t using the Egyptian columns as much as we did. We try to stay modern without being too modern. Q: How did you develop some of the other restaurant concepts such as the Grand Lux Cafe and RockSugar Pan Asian Kitchen? A: The Venetian Hotel came to us and wanted to know if we would go there. We were already across the street at Caesars (Palace), so we couldn’t. This seemed like a very good opportunity to do something different. (Grand Lux) was a 24-hour restaurant-breakfast, lunch and dinner. Now we have 13 of them and growing. With RockSugar, it was the same thing. You want to stay ahead. As a public company, you are committed to growth. We were thinking of where there was a niche that wasn’t really filled. Southeast Asian food — mostly Thai and Vietnamese — was becoming more popular and no one else had really done that. We thought “Well, let’s just open one and give it a try.” You just try and keep ahead and find a niche in the industry and create something good enough that you can grow. Q: I understand you will be expanding the brand’s presence in the Middle East. Do you have plans to expand in other countries? A: We are going to open in 2012 — we will open three or four restaurants in the Middle East. We’ve already approved 10 sites and the goal is to build over 22 sites in the next five years. We have gotten many phone calls from different people in different countries. We will be looking in Mexico and South America, Asia. We’re trying to find partners that we feel can operate at the same level we do. We’re excited about all the possibilities of truly being a global brand. Q: How did you come up with your menu concept and how has it evolved over the years? A: I never wanted a chef to walk out on me and be helpless. At first, I said I’m only going to put things on the menu that I can cook — and I was not a cook. The first menu was just two-sided with not that many items on it. It had very simple food, because I was not a chef. I didn’t know any tricks. I didn’t know how to use steam tables. I didn’t know how to use frozen foods and bases that so many restaurants use. I did it the way I liked it, which was all fresh, all simple and no restaurant tricks. I think because I was so naïve about all those things, people responded positively. It gave them some very simple, straightforward, fresh food that they could trust. We’ve got a pattern of updating our menu twice a year. We’ve done that for over 30 years now. We’ll look at trends and what people want to eat and what’s really selling on the menu. We have an R& D team (research and development), although I do contribute quite a bit, especially in the early years. As I got used to being a restaurateur, I realized I had some talent in creating food items that people liked. Q: What has been the biggest challenge you have faced in working in the restaurant business? A: Our challenge was to have our operations be good enough to come out with the same product every single day, every single meal and eventually across the country. No one grosses as much as we do. No one has the menu size that we do and so the back side of that is getting consistent food, operations and service across the country, and soon, across the globe. That’s our biggest challenge. I think that job is never done. In this business, you’re only as good as your last meal. Q: How have you fared through the economic downturn and how have you shifted your menu to be more “recession-friendly”? A: We went many years — well into 2008 — without a glitch. We grew over 25 percent each year. But even (Cheesecake Factory) suffered in this recession and it took us a while to realize it was going to last and it was deeper than most people thought. We did not want to discount. We didn’t want to have a “three for $20” meal. It’s just not our style. So we offered another menu for people who wanted to spend less and eat less, but all at full price. That was very successful. Another trend that is out there is healthy dining and watching calories. We just put out the SkinnyLicious (menu) about six months ago. That menu alone has over 50 items. That is more items than most restaurants have on their whole menu. Appetizers are under 490 (calories) and all entrees are under 590 calories. So far it looks like it’s a hit. A lot of our new items have also been a big hit. We have some really fantastic cheesecakes. Our bakery R & D team has come up with Godiva chocolate cheesecake, Hershey’s (cheesecake) and the red velvet cheesecake, which I believe is still number one. All of it has helped us. We’ve worked very hard on our service, and I think we’ve done a very good job of that. Whenever we take surveys or measure how we are doing, our scores keep going up. So that’s the path we took to success. I think it was the right one, without cheapening our brand. AGE: 65 Education: Bachelor of Arts degree in economics and history from Wayne State University Career Turning Point: When I began helping my parents with the family business Personal: Married with 3 children Q: Has there ever been an idea for a cheesecake that didn’t fly? A: Yes. We’ve had many that we rejected. We have over 40 cheesecakes — as it gets down to the bottom 5 percent, there’s a good chance we’ll take it off and replace it with something new. It’s a constant battle for these cheesecakes to claw their way to the top of the list and stay there. We used to have a lot of cheesecakes that were made with alcohol, like brandy alexander, pink squirrel or grasshopper. And they’re just out of favor. It’s amazing what (the team) will come up with but not all of it works. Q: Besides plans to expand globally, do you have any other projects in the works right now? A: We think we have enough. Trying to grow Cheesecake and Grand Lux domestically and of course the international (expansion) is a big deal. That really takes a lot of work. Q: What’s your favorite item on the menu? A: I grew up in Detroit and they had these little burgers — the sliders. They’re great. You can eat them on the run or while you’re working. I think all the managers’ favorite is our sliders. They remind me of my childhood. I never worked in restaurants. So I had to pull food that I thought was good from somewhere, so some of it came from Detroit. Q: How do you deal with “copy cat” establishments that steal your business concept? A: We haven’t been copied very often because if you know what you’re doing you wouldn’t want to run a Cheesecake Factory. Most people see the difficulty factor and won’t do it. For those that try to do it, they either have half the items or half the items weren’t any good. Eventually they’ll fail because it’s just way above what they can do operationally. Really, it comes from the difficulty factor.

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