The Cheesecake Factory Agreed to Settle Allegations That it Misled Investors About How Covid-19 was Affecting their Business
Cheesecake Factory agreed to pay $125,000 to settle allegations that it misled investors regarding the effects of the coronavirus outbreak on its business.
CAKE Cheesecake Factory told investors that it enabled the chain’s pickup and delivery operations to “sustainably.” This statement was made in financial documents. In March and April, several restaurants were forced to close their doors to prevent the spread of the coronavirus.
The SEC stated that internal documents showed a totally different picture. According to papers, the company was losing $6 million per week in cash and had only four months’ worth of cash.
According to the SEC, the company also told its landlords in March it would not be able to pay rent in April. It did not disclose this information to investors in a March 23 filing that detailed its steps to preserve the company. The inability to pay rent later became public.
In its order outlining the allegations, the SEC stated that the inconsistencies made the March and April notifications of the company “materially false” and misleading. Thus, the SEC has charged a public corporation with deceiving investors regarding Covid-19’s commercial effects for the first time.
Cheesecake Factory spokeswoman referred to Friday’s financial statement, in which the company stated that it had “completely cooperated with the SEC on the settlement,” but did not acknowledge or dispute the claims of the SEC.
The epidemic has also affected casual dining establishments like Cheesecake Factory. These businesses have been marketed to customers as places to meet friends and have suffered a lot of damage.
Many franchises filed for bankruptcy during the crisis. These include Sizzler, California Pizza Kitchen and CEC Entertainment. This is the parent company to Chuck E. Cheese.
Cheesecake Factory sales suffered during the recession. As a result, the sales at Cheesecake Factory locations that have been open for less than a year fell nearly 23% during the 13 weeks ending September 29th, compared to the same period last year.
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