Cheesecake Factory (CAKE)

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See all Bulls Reasons Bulls: Reasons To Buy The company is unique among restaurants 0% agree The company is unique among restaurants The company is unique among restaurants. Landlords provide rent subsidies because the restaurants draw tremendous traffic. There is often a long wait to be seated. That's why they are often located at or near shopping malls View or Edit Reason 0 votes 0% agree Company has historically sold at a premium valuation to other restarants 0% agree Company has historically sold at a premium valuation to other restarants Historicaly the company has sold at a premium valuation to other restarants. With a modest slowdown in earnings growth the stock is selling at a low historical multiple both to the industry and the market View or Edit Reason 0 votes 0% agree See all Bears Reasons Bears: Reasons To Sell Eerily similar to Cheesecake factory restaurants 0% agree Eerily similar to Cheesecake factory restaurants When it comes down to it, CAKE's Grand Lux Cafe concept really isn't much different than the Cheesecake Factory restaurant. In fact, the menus and decorating are eerily similar. If built in close proximity, the two restaurants would cannibalize each other's sales. ... read more View or Edit Reason 0 votes 0% agree Send the authors a comment or suggestion Be the first to make a suggestion See All Suggestions

Top Contributors Ryan McCarthy Related Articles Brinker International (EAT) Casual & Upscale Restaurants Commodities Prices Darden Restaurants (DRI) McCormick & Schmick's Seafood Restaurants (MSSR)

Cheesecake Factory (NYSE: CAKE) operates 127 upscale casual dining restaurants under its namesake in the United States. The company also includes 10 Grand Lux Cafes, a growing secondary chain with a more upscale design ^[1]. The company is unique in that it offers both a broader menu selection and more upscale experience than many of its more casual peers. It is also able to compete with more upscale restaurants, by pricing its selections on the lower end of the upscale casual dining spectrum. Because Cheesecake Factory restaurants operate near capacity, opportunities for same store sales growth are limited. Instead the company has achieved steady growth over last five years by growing its number of stores. By the end of their fiscal year 2007, CAKE aims to open 21 new stores. At the same time, CAKE has successfully established both Grand Lux and Cheesecake Factory as two distinct brands in the eyes of consumers, giving the company the opportunity grow both concepts without fear of cannibalization.

[edit] Business Financial

Because their restaurants run at or near capacity, same store sales for The Cheesecake Factory are limited. In fact, CAKE posted negative same store sales growth in 2007.

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[edit] Key Trends and Forces

• Rising costs creep up on profits-Along with labor and rent costs, rising commodity costs may depress profits Because the Cheesecake Factory has year-long contracts for many of their commodities, they are partially protected against this.

• Economic trends mean consumers spend less-Consumer spending on casual dining is discretionary in nature. In times of economic recession consumer's quickly decrease expenditures on services like dining. For example, in 2007,with oil prices flirting with the $100 mark, consumers faced higher expenditures on necessity items leaving less money to devote to luxury goods and services. The subprime crises has also made access to credit difficult for consumers thereby further reducing their appetite for non-essential goods and services.

• Physical challenges for expansion- Much of Cheesecake's success depends on finding the right locations, which may become more difficult as the company expands. Recently the company has opened new stores in Connecticut, New Jersey, Massachusetts, Arizona, Indiana and Pennsylvania. Such speedy growth may become more difficult as the company works to expand its Lux Cafe brand as well. One major factor affecting the company's ability to expand profitably is the overall health of the commercial real estate market. If rental prices in this market are high, achieving profitability for any one location becomes more difficult.

[edit] Competition

The Cheesecake Factory (both as the namesake restaurant and second project, Grand Lux Café) competes in the casual dining segment, which is defined as full-service restaurants serving moderately-priced food in a casual setting. The Cheesecake Factory has lower prices than their upscale competitors.

Some of The Cheesecake Factory's competing companies are:

 Cheesecake factory

	Select All  |  Select None Metrics Company-operated Sales Sales per Restaurant Net Income Franchise Revenue Operating Income Company-operated Restaurants Number of Franchised Restaurants Number of Affiliated Restaurants Total Number of Restaurants Comparable Sales Growth Cancel

	Select All  |  Select None Companies Starbucks (SBUX) Ark Restaurants (ARKR) Flanigan's Enterprises (BDL) BJ's Restaurants (BJRI) Bob Evans Farms (BOBE) BUCA (BUCA) Cheesecake Factory (CAKE) Mexican Restaurants (CASA) CBRL Group (CBRL) O'Charley's (CHUX) California Pizza Kitchen (CPKI) Famous Dave's of America (DAVE) Domino's Pizza (DPZ) Darden Restaurants (DRI) Brinker International (EAT) Frisch's Restaurants (FRS) Granite City Food & Brewery (GCFB) Grill Concepts (GRIL) J. Alexanders Cp (JAX) Kona Grill (KONA) Landry's Restaurants (LNY) Morton's Restaurant Group (MRT) McCormick & Schmick's Seafood Restaurants (MSSR) P.F.Chang's China Bistro (PFCB) Panera Bread Company (PNRA) Rick's Cabaret International (RICK) Red Robin Gourmet Burgers (RRGB) Ruby Tuesday (RT) Ruth's Chris Steak House (RUTH) Steak n Shake Company (SNS) Star Buffet (STRZ) Carrols Restaurant Group (TAST) Texas Roadhouse (TXRH) Buffalo Wild Wings (BWLD) Burger King Holdings (BKC) CKE Restaurants (CKR) Chipotle Mexican Grill (CMG) Cosi (COSI) Denny's (DENN) Luby's (LUB) Good Times Restaurants (GTIM) Max & Erma's Restaurants (MAXE) Benihana (BNHNA) CEC Entertainment (CEC) DineEquity, Inc. (DIN) Cancel

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Company	Data From	Number of Affiliated Restaurants	Total Number of Restaurants	Comparable Sales Growth	Operating Income	Franchise Revenue	Company-operated Restaurants	Number of Franchised Restaurants
Brinker International (EAT)	2008	Add	1.8K[9]	Add	Add	Add	Add	Add
Cheesecake Factory (CAKE)	2007	3[10]	155[10]	Add	$111M[11]	Add	152[10]	Add
Darden Restaurants (DRI)	2007	Add	1.32K[12]	4%[13]	$377M[14]	Add	1.32K[12]	Add
McCormick & Schmick's Seafood Re… (MSSR)	2006	Add	66[15]	3%[16]	$19.1M[17]	Add	66[15]	Add
P.F.Chang's China Bistro (PFCB)	2006	Add	259[18]	0%	$53.2M[19]	Add	259[18]	Add

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[edit] References

1. ↑ 2006 Annual Report, Part one, pg1
2. ↑ 2006 Annual Report, page 2
3. ↑ 2006 Annual Report, page 69
4. ↑ Cheesecake Factory Restaurants 2006 Annual Report, page 28
5. ↑ Darden Restaurants 2007 Annual Report, page 22
6. ↑ McCormick & Schmick's Seafood Restaurants 2006 Annual Report, page 36
7. ↑ Brinker International 2007 Annual Report, page 57
8. ↑ Brinker International 2007 Annual Report, page 57
9. ↑ mergent
10. ↑ ^{10.0 10.1 10.2} CAKE, 2007 10-K, Item 1, Pg. 1
11. ↑ CAKE, 2007 10-K, Item 6, Pg. 28
12. ↑ ^{12.0 12.1} DRI, 2007 10-K, Item1, pg 2
13. ↑ DRI, 2007 10-K, Exhibit 13, Page 1
14. ↑ DRI, 2007 10-K, Exhibit 13, Page 18
15. ↑ ^{15.0 15.1} MSSR, 2006 10-K, item6 pg25
16. ↑ MSSR, 2006 10-K, Item 7, Pg28
17. ↑ MSSR, 2006 10-K, item6 pg24
18. ↑ ^{18.0 18.1} PFCB, 2006 10-K, Item 6 Page16
19. ↑ PFCB, 2006 10-K, Item 6,Pg.16