“We are asking for Cheesecake factory to invest in us – before you invest in them”
The private equity firm Roark Capital was able to make a $257 million profit (from April 2020 to July 2021) from their partial ownership of restaurant chain The Cheesecake Factory. Although these pandemic profits may have been great news for Roark investors – Cheesecake workers had a very different reaction.
On April 20, 2020, Roark Capital invested $200 million in the Cheesecake Factory, making it the largest investor in the company. As part of the transaction, the Roark Capital President Paul Ginsberg was added to The Cheesecake Factory Board of Directors, a position he still holds.In June of 2021, The Cheesecake Factory bought out most of Roark’s stake, paying $457 million to the private equity firm. Roark still holds with 2.4 million shares or 4.6% of the company’s stock. The Cheesecake Factory (Nasdaq: CAKE) stock has done very well during the Coronavirus pandemic: prices more than doubled from $18.93 per share on April 20, 2020 to $44.59 per share on August 11, 2021. Despite The Cheesecake Factory’s rising share price and willingness to pay hundreds of millions of dollars to Roark Capital, some workers at the company’s restaurants claim that generosity has not been extended to the essential workers that made the company’s recovery possible.
Cheesecake Factory workers from California and Arizona attended the Aug 10, 2021, board meeting of the Los Angeles City Employees’ Retirement System (LACERS) to voice their concerns. Workers explained to LACERS, an investor in Roark Capital, that throughout the pandemic employees have been overworked due to understaffing, clocking in as much as 12-hours days 6-days a week. Pablo, a California resident, told the board “People would come into work sick, and management wouldn’t care.” Cheesecake Factory workers illuminated major health and safety issues like poor ventilation including the use of leaf blowers to move the air around, cramped breakrooms, and managerial apathy towards staff wellness.
Sophia, another Cheesecake worker from California, closed her comments with a direct plea to LACERS:
“As financial investors, it goes without saying that everyone here understands the importance of long-term growth and development, but we cannot forget that employees are also an essential [and] valuable asset. If workers are cared for and appreciated, this will increase the quality of service within stores, which trickles up to company-wide profits. I’m asking LACERS to step up and invest wisely.”
Also joining was worker advocate and community organizer with Restaurant Opportunities Center in Los Angeles, Jessie Harmon. They pointed out that Roark Capital cashed in $457 million in Cheesecake Factory stock in July 2021, resulting in $257 million in profits in just over a year; “I’m calling on you to keep workers safe” said Jessie, “as they have clearly made everyone a lot of money throughout this pandemic.”
Lindsey, an Arizona Cheesecake Factory worker, asked the LACERS Board to reconsider its investment in Cheesecake Factory by way of Roark Capital until the company does the following:
- Follow CDC guidelines regarding COVID-19 protection regardless of standards set by municipalities.
- Provide higher incentives for workers to be vaccinated by compensating them for time off to get vaccinated.
- Increase hourly wages for tipped workers to $10/hour, non-tipped workers to $15/hour, and add a $2 an hour hazard pay during the COVID pandemic.
LACERS Board President Cynthia M. Ruiz closed the public comment segment of the meeting by thanking all the speakers saying they had been “heard,” and asking LACERS staff to prepare a report about LACERS’ investment in Roark Capital. Listen to the audio recording of the meeting here.