JCP holds a 2% stake in Cheesecake Factory. Credit: sockagphoto/Shutterstock.

Activist investor JCP Investment Management has urged Cheesecake Factory to spin off three of its restaurant brands into a distinct public company, as reported by the Wall Street Journal. 

JCP, which holds a 2% stake in Cheesecake Factory, has been advocating for the spin-off of its smaller restaurants Flower Child, North Italia and Culinary Dropout.  

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These brands are expected to benefit from independent management to achieve faster growth.  

A regulatory filing in August disclosed JCP’s initial stake in Cheesecake Factory, which has a $2.2bn market value. 

JCP is prepared to invest additional capital into the new entity post-spin-off.  

It believes that separate management for the brands would lead to a more focused approach towards meeting financial objectives. 

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JCP also recommends that Cheesecake Factory undertake a strategic review of several other smaller concepts that have not performed well.  

Cheesecake Factory, which went public in 1993, has seen significant growth in its stock price, increasing by more than 20% in 2024.  

However, it experienced a growth stall in 2017, leading to a commitment to improve its operations. 

A Cheesecake Factory spokesperson confirmed its awareness of JCP’s investment, stating: “We regularly engage with shareholders and consider their perspectives.”  

In October 2019, Cheesecake completed the acquisition of Fox Restaurant Concepts (FRC) for $308m. This included Flower Child and the remaining stake in North Italia. North Italia alone received a $130m cash consideration for its interest.