On Wednesday, The Cheesecake Factory Incorporated announced that it will buy Phoenix-based Fox Restaurant Concepts for $353 million.
Over the past three years, Cheesecake has invested $88 million in Fox restaurants Flower Child and North Italia in anticipation that it would eventually buy both of them.
“Since making our initial minority investments in North Italia and Flower Child in 2016, we have not only helped fuel the growth of both brands, but also developed a deep relationship with Sam Fox at Fox Restaurant Concepts,” says David Overton, chairman and chief executive officer of Cheesecake Factory. “We realized the true potential of this relationship as we worked through the integration process for our planned acquisition of North Italia. It became evident that the combination of two of the most experiential and entrepreneurial restaurant companies could drive greater value as one organization.”
Sam Fox, a third-generation restaurateur, opened his first restaurant, Wildflower, in Tucson in 1998. Fox Restaurant Concepts now operates 45 restaurants across seven states and Washington D.C, including Culinary Dropout, Blanco, The Arrogant Butcher, Doughbird, Olive & Ivy and The Henry in the Valley. The culinary maven is a 10-time James Beard Award nominee and a New York Times best-selling cookbook author.
Cheesecake Factory has 2019 eateries in the U.S., including its other ventures Grand Lux Cafe, RockSugar Southeast Asian Kitchen and Social Monk Asian Kitchen. Overton says bringing Fox Restaurants and The Cheesecake Factory together will “reinforce our leadership position in experiential dining.”
“With the power of The Cheesecake Factory brand, infrastructure and growth potential, complemented by an additional growth vehicle in the North Italia concept and an incubation engine to develop concepts of the future, we believe we will be even better positioned to provide our guests with exceptional dining experiences, offer growth opportunities for our respective teams and maximize long-term value for our shareholders,” he says.
The deal will occur in stages, with Cheesecake paying $308 million upfront and another $45 million over the next four years. The deal is expected to close at the end of the third quarter of the fiscal year.
After the deal is finalized, North Italia’s support services will move to The Cheesecake Factory’s headquarters in Calabasas Hills, California. Fox Restaurant Concepts will continue to be helmed by Fox and headquartered in Phoenix.
Not unlike many of Fox’s concepts, the partnership is a pioneering move in the restaurant industry.
“David Overton and I quickly realized the magic occurring between our organizations while we worked through North Italia’s integration,” he says. “With our aligned cultures and philosophies, The Cheesecake Factory is the right partner to embrace our creative spirit, enabling us to innovate concepts, while providing the infrastructure and capital to scale.”