#129 Say “Cheese”
Founded in 1978 by David Overton and with more than 200 restaurants, 2 billion US$ in revenues and about 40,000 employees, the Cheesecake Factory is one of the United States’ top restaurant chains in the casual dining category. For most of its history, the Cheesecake Factory was focused on the US market, and only started to expand internationally in 2012 with a restaurant at the Dubai Mall in the United Arab Emirates. Until 2017, a few other international locations in Canada, Kuwait, Lebanon, Mexico, Puerto Rico, and Saudi Arabia were added. In May 2017, the Cheesecake Factory opened its first restaurant in Hong Kong, and it seemed that what the restaurant is best known for – large portions of comfort food – caught Chinese customers by surprise. As the Wall Street Journal reported in late 2017, diners at the Hong Kong location had troubles with the concept. Some were confused by the restaurant’s name, some were concerned about the calorie count of some dishes that exceeded a normal daily intake, others were astonished by the amount of cheese used in many menu items, and yet others were marveling at the size of the portions. It was not unusual to see parties of diners share their food. “I don’t think I can have cheese for another three months.”, a customer said, according to the Wall Street Journal. The Cheesecake Factory strives to keep their concept and menu mostly the same across the globe – from drinking glasses and decor to the 200+ item menus. In Hong Kong, they may have to stumbled on a new value proposition – pay for one meal and stretch it to many.
January 16, 2018 @ 2:05 pm
On one hand you have to admire The Cheesecake Factory for holding the line and sticking with their roots, their model, their menu, and what grew them into what they are today. On the other hand you have to wonder how long they can weather the storm as diners continue to trend towards healthier options, smaller portion sizes, lower prices, and increased convenience.
In the company’s global expansions there is an interesting opportunity to take advantage of the perceptions of the rest of the world about the excess in American culture and offer a playful atmosphere where international customers can get a slice of Americana. If I were consulting The Cheesecake Factory on their international efforts I would focus on the bar and on a shareable, decadent menu that is even more over-the-top than their domestic menu to play on foreign perceptions. Eating at The Cheesecake Factory isnt a daily option (hopefully) but it can be a fun night out for a group of friends or work colleagues looking to blow off some steam.
February 1, 2018 @ 4:30 am
I think that this Blog is great and i found it really interesting how the issues arose in China. I am not surprised that the portions are an issue in other markets as well as in China. I would be intrigued if the profit margins that come from China are positive if the public is actually utilizing the strategy of one order but its feeding many people. I do think that Cheesecake Factory is very smart with the methods on implementation into new markets as they keep all the different locations the same with materials and style and by doing this the really give themselves a simple blueprint that is easy to have success implementing into different unique markets. I would be very intrigued with how the United States is moving towards a healthier society if Cheesecake may adapt to this and make portions smaller. Would love to find out more information about the Chinese Market and if its been profitable.
February 8, 2018 @ 3:20 am
The Cheesecake Factory is a classic example of over-standardization. Even though The Cheesecake Factory has been successful with it’s extensive menu items, they are doing themselves a disservice by not being more specific to the markets they are moving into. It would be best for them to look into the cultural norms of the countries they go to so they can cater the menu to those norms.
Although The Cheesecake Factory is famous for their novel sized menu, they are being lazy with this approach and playing it safe in cost. If they were to try to meet the demands of their customers more, they could make more money in several different markets. I myself have been overwhelmed by the size and variety of options in their menu; it makes ordering a very difficult decision.
I think that if they were to take some of their $2 billion in U.S. revenues alone, they could adapt rather than over-standardize and have a larger share of foreign markets.
On another note, I highly suggest not looking at how many calories are in a slice of Cheesecake there.
February 9, 2018 @ 1:27 am
The Cheesecake Factory is a company known for their variety of dishes and desserts. Although they are successful in the United States, they struggle to please the citizens of China. The societal preferences of the Chinese public are ‘healthier’ dishes and smaller portions. The Chinese public worry more about the total number of calories they consume in each dish and how big the portions are. This indicates that the Cheesecake Factory did not assess if the items sold on their menu was acceptable for the Chinese public. This type of strategy is called standardization and this is where the Cheesecake factory ignored the desires and wants of the Chinese public. It is clear that Cheesecake Factory had the financial income to change their dishes in order to please the Chinese public, but they did not. If they were to cut their portion sizes into half, then the Chinese public would not have to buy one dinner and ‘stretch it to many people to have’. This small change will inhibit the Cheesecake factory from losing money.
In addition, the Cheesecake Factory did not change their name in order to inhibit any confusion about their restaurant/business. This is a prime example of Cheesecake factory ignoring the dynamics of the Chinese culture and the ignorant display of doing business internationally. If the Cheesecake factory does not change their menu items based on the preferences and the desires of the Chinese public, then there is a strong possibility for less revenue to be made and demand in consumption will decrease. Overall, if the Cheesecake Factory wants to succeed globally, they need to meet the demands, the wants, the political ‘correctness’ and the laws of each country.
February 10, 2018 @ 9:30 am
I agree that the portion sizes of The Cheesecake Factory menu items are impressively large. Yes, this is an example of over-standardization and represents a missed opportunity for greater success in Hong Kong. This may even have negative implications about future expansion plans to other countries in the world.
The Cheesecake Factory should not simply rely on its past successes in the United States and expect their methods to work just as well in other areas of the world, especially in countries that are more culturally distant from Western lifestyles. This case reminds me of how Oreo, on the other hand, was able to find an ideal balance between standardization and adaptation in order to succeed in China, which I think this company can learn from. Similarly, The Cheesecake Factory should invest in researching the local market to learn how to appeal to the local consumers’ preferences, which can include offering smaller portion sizes.
While “products” should be standardized as much as possible and adaptation should be kept to a minimum for practical and financial reasons, local nuances should not be completely ignored. The Cheesecake Factory risks failure by not acknowledging the unique tastes of its consumers in other countries.
February 11, 2018 @ 10:23 pm
Businesses would like to standardize as much as possible and adapt very little if they can. For the Cheesecake Factory to standardize their menu restaurants that are in other countries is something that their marketing and operations team deemed as the best option for them. As the Cheesecake Factory does have restaurants in other countries, those markets probably have the same tastes and feelings on eating comforts food that have calorie counts that are on the high side. Before they entered the Hong Kong market, their marketing team should have done the research to know whether these types of food were going to be a good match with the food culture there. To avoid the situation of people being concerned with the calorie count, the restaurant could have offered half portion plates. This would keep the menu standardized and still offer a way to address the concerns of the people. If the Cheesecake Factory does not localize in some way that addresses the peoples concerns, their customers will not be fully satisfied with the food chain and sales might not ever reach a sustainable level.
February 14, 2018 @ 2:48 pm
I am actually on the other side of this argument and think that the Cheesecake Factory has the opportunity to carve out a bit of a niche in foreign markets by sticking to the over-the-top decadence and outrageous portion sizing. By offering shareable-sized meals and a focus on the bar, the restaurant is positioned to help break the ice of a business meeting. Having a talking point distraction, like a giant slice of cheesecake, might help put all parties at ease; and a few drinks never hurt the flow of any meeting I’ve been in. While I don’t really believe this was the strategy that the Cheesecake Factory was going for, I actually think it could end up working out well for them in the end.
April 10, 2018 @ 10:41 pm
Food is not only a necessity. Food is, in the same time, a way to connect and build relationships, to show a certain status, to celebrate events (both joyful and less joyful ones), food is, most of all, an aspect which connects very much to a region, to family and for, sure, to religion. Food is sensitive with respect to traditions, symbols and superstitions.
Chinese culture puts a big emphasis on the food culture; e.g., in case of a wedding there are certain types of food which the future husband sends to the bride, having a specific symbolism, and there is food which should never be sent as a gift, as they bring bad luck, misfortune. Chinese medicinal food is acknowledged as an ancient healing method.
Chinese people have an eating culture:
– the way food is produced, prepared and served is important;
– table eating habits differ than the ones in US;
– the eating environment (design, table arrangements, etc) is different than in US.
The Cheesecake Factory is a quite popular brand; and successful on the US market.
It seems to me, that Cheesecake Factory did not really tried to put itself “in the shoes” of the Chinese consumers (customers). First of all, the cultural aspect was ignored, and it seems no significant market adaption was done; i.e., offering large portions of food is somehow contradictory to the Chinese food culture aspect. And this is confirmed by the consumers, who did not embrace this. Cheesecake applied the same concept (and did not consider a “product” adaptation) as in the US, but China has a totally different culture and a much older tradition than US. Hong Kong is a place abounding in people and places to eat. And Cheesecake Factory was, for sure, an attraction, a novelty in the beginning, who disappointed. Coming maybe with a healthier message & offer, a different eating environment arrangement could have proven to be beneficial.
Cheesecake Factory knows what it takes to be successful on their internal market, but no to the outside. Cantonese (and Hong Kong as well) is known for its seafood and rice dishes. There was, in my opinion, a pressure and a need for adaption of the service they offered for Hong Kong; especially when considering that “The most reliable Hong Kong history comes not in museums or architecture, but rather, in the form of food” (CNN – Best of Hong Kong, 2017). As food is a culture in China, there could have been a market potential for them. But cultural differences were ignored.
Name branding was confusing as well. So maybe they should have concentrated on a specific segment; e.g., consumers familiar with the name, or they should have communicated a more clear and culture adapted message. It seems no spefic segmentation was done and the goal was to reach all. And this is quite sensitive and challenging, when it comes to food, all around the globe.
Springer, K. CNN (2017). Best of Hong Kong – Explore Hong Kong’s history through its food. Retrieved from https://edition.cnn.com/travel/article/hong-kong-food-history/index.html. July, 2017.
June 26, 2018 @ 7:45 am
The Cheesecake Factory is a popular brand in US, which wanted to go global. Going global often implies standardizing the brand and its offers as much as possible for practical and financial reasons as well as to have the same image all over the world. This also means minimum adaptation. Nevertheless, local differences should not be ignored. – “Global as possible, local as needed.”
The Chinese culture is a lot different from the US. Unfortunately, The Cheesecake Factory missed out to consider this cultural distance. Researching the local market would have been helpful by entering the Chinese market. If the Cheesecake Factory would have carried out a research, they would have find out interesting facts about consumers’ preference e.g. that Chinese people prefer smaller portions, a healthier menu and that they have another taste. I am sure, that by adapting just a little to these cultural differences the Cheesecake Factory would be a lot more successful in Hong Kong than it is with its over-standardization strategy.
July 9, 2018 @ 1:37 pm
Even though it is said, that standardization is important for a company that is willing to expand globally, it is sometimes crucial to consider cultural differences beforehand. In this case, the US-market is strongly different compared to the Chinese market. Not only do Chinese people prefer smaller and much healthier meals, they aren’t specifically used to consume cheese and other dairy products the same way American people do. If they don’t slightly adapt to the needs and wishes of the Chinese market, the Cheesecake Factory might have troubles finding enough customers. Communicating a message that their meals are for sharing rather than for one person might increase peoples’ interest in the restaurant chain and generate new and repeat customers. This way the company can keep their menu standardized all over the world and doesn’t have to jeopardize their image, but they will still be able to satisfy their customers and create customer value.
July 14, 2018 @ 9:45 pm
Cheesecake Factory have been very successful in the United States serving a variety of American comfort foods. Having $2 billion in revenue, it seems so easy to say that its success can also travel elsewhere. We can say that Cheesecake Factory being in the industry for forty years – has product offerings that are ready for internationalization. Therefore, serving standardized products and services in Hong Kong seems to make sense. However, the result didn’t appear to be the case. Its entry in Hong Kong wasn’t so successful due to some obvious differences in consumer preferences between its home diners and the Chinese diners. Cheesecake Factory over-standardized its product offerings during its initial opening. I think Cheesecake Factory missed to perform a thorough market research about Chinese dining preferences to ensure that its products offerings are ready for Hong Kong diners – like eating small portions or to share; eating more healthy foods, etc.
Though it is understandable why Cheesecake Factory served its standardized product offerings because adapting early on would require additional cost to adapt to the foreign target market. However, not serving or being open to even few adaptations to cater consumers’ preference early on, could potentially damage reputation – like the negative comments stated in the blog; and it could possible result to more cost to recover and improve its products and services to penetrate further in the market to earn more market share. It is therefore important that companies should have a balance approach in their standardization and adaptation strategies in entering a foreign target market. As learned from my research in restaurants industry, especially to corporations going international, local diners patronize restaurants that serve foods familiar to the local taste. People will initially wait in queue in the initial opening of foreign restaurant out of curiosity. But when curiosity fades, they will only come back for food that will satisfy their taste. Thus, it is important that restaurant companies should respond to the local preferences to stay operational and/ or grow in the new market. Though this adaptation pressure to adapt to consumers preferences is only a market attractiveness factor and will not hinder a corporation to operate in foreign target market – it is a critical factor that corporations should not miss to address to successfully penetrate to the foreign target market. Failure to address important adaptation pressure could potentially lead to exit the market.
Cheesecake Factory just opened in 2nd quarter of 2017, it can still improve its product offerings to cater to external pressure to society’s local taste/ preferences. I think it is financially stable that it can support its adaptation pressure of addressing to local preferences in Hong Kong. Like for example, serving dishes in smaller portions, which they could also price their dishes cheaper than usual. Though, they can serve the usual large portion and have a new value proposition – “pay for one meal and stretch to many.” However, if the Chinese diners prefer freshly cook meal in every meal, this new value proposition will not work. Therefore, it is very important to apply some adaptations that will work to certain market/s.
March 18, 2019 @ 1:47 pm
The Cheesecake Factory can be considered an “institution” when it comes to restaurant management. Through their standardization of the product and company itself, one would think that it is proven to go internationally easily, as standardization can be considered a crucial point for going global. Unfortunately, I think in the case of this company, they overdid it a little bit. There are always various options when going global. For some companies, it is easier than others. Personally, I think the restaurant industry is prone to adaption.
Looking at various restaurants all around the world we can say that there is a tendency that they adapt their offerings according to their new target market. Just looking at big chains like McDonalds, Hard Rock or L’Osteria each one of them always saw that there was adoption necessary and did so.
One question I would like to raise, which came to my mind during the process of writing this threat was the readiness of the Cheesecake Factory in terms of their motivation and strategy. When looking at the 10k statements of some of their competitors like RedLobster, BJ’s or Olive Garden I have to say they are “crushing” them in terms of financial indicators (e.g. the Cheesecake Factory’s net profit margin increased in each of the last three fiscal years from approximately 5.5% (2015) to 7.0% (2017)).
Because from a financial point of view, the company is performing very well. So my question would be “was it an intrinsic or extrinsic motivation to go overseas?” The answer to this question cannot be found so my assumption would be that they are doing it for experience purposes to gain some information and experience on the global level to obtain more global market share in the long run.