Company Reports

Even as cash-strapped consumers cut back on dining out, Cheesecake Factory's namesake comparable sales growth accelerated 6% in the second quarter of 2026. Investments in menu, operations, and guest experience, bolstered by a revamped digital strategy, appear to be bearing fruit.

Even amid broader macroeconomic pressures, we believe Cheesecake Factory is a formidable player in the mature, fragmented full-service dining category. Indeed, the namesake brand’s exceptional $12.4 million average unit volume tops full-service dining’s $1.2 million average (per Euromonitor) and supports an edge peers can’t easily replicate profitably. We contend this dynamic drives outsize profits and funds reinvestment in service, food quality, and the dining experience. More specifically, that scale allows the chain to spread fixed costs over a larger sales base, so Cheesecake Factory can offer large portions, an unusually expansive 250-item menu, and an elevated experience at accessible price points, supporting average check size and demand for its fare. Ultimately, the operator has demonstrated the ability to keep traffic drawn to its stores as an anchor in high-profile malls and retail centers; these strengths have manifested in 5% average annual sales growth over the past eight years at its namesake, ahead of the industry’s 4% pace. We expect this outperformance to continue, forecasting 5% annual sales growth over the next five years versus 3% for the full-service dining industry.

We are transitioning our coverage for Cheesecake Factory and plan to publish an updated report shortly. Our report on Cheesecake Factory will now utilize our quantitative ratings in conjunction with an analysis on the firm's business strategy and competitive advantage from our analyst team. The quantitative ratings are philosophically analogous to Morningstar's proprietary, analyst-driven equity ratings. However, they are derived using advanced techniques that compare the firms to those with similar attributes from our universe of analyst-driven ratings.

The Cheesecake Factory CAKE posted second-quarter results on Wednesday that missed guidance and reflected the competitive nature of the restaurant industry. Total revenue grew by 3.4% over the prior-year period, though same-store sales growth from the firm's namesake restaurants sat at 0.9% while struggling Grand Lux Cafe contributions remained flat at 0.1%. Meanwhile, a $1.5 million charge relating to the planned relocation of two restaurants contributed to a 20-basis-point decline in the firm's operating margin to 8.8%. Management also cited adverse climate patterns that negatively affected the quarter due to the absence of material contributions from patio seating. Meanwhile, the firm still plans to open eight to 10 company restaurants within the year, while its foreign expansion initiatives in the Middle East are likely to bear fruit with higher than expected volume and growing brand awareness. Going forward, the EPS guidance range for 2013 stands at $2.10-$2.15, which is slightly lower than the $2.12-$2.18 range given last quarter and represents a 12%-14% expansion of the $1.88 figure posted in 2012. Same-store sales growth is expected to come in at around 1.5% with a 50-basis-point operating margin expansion driven by growth in the Middle East and easing commodity expenses, principally from favorable dairy prices.

The Cheesecake Factory CAKE reported solid top- and bottom-line growth in its first quarter. The ongoing trend of positive comparables at the flagship concept paved the way, while Grand Lux Café continues to struggle. While the results are encouraging, we remain comfortable with our outlook and are maintaining our $35 fair value estimate and no-moat rating.

The Cheesecake Factory CAKE posted modest fourth-quarter results that were in line with our expectations. A combination of one less operating week relative to the prior year and the impact of Hurricane Sandy hampered top-line growth, while higher compensation and bonus expenses took a bite out of its profit margin. At this time, we are maintaining our $35 fair value estimate and no-moat rating.

With an upscale decor, extensive menu, and reputation for decadent desserts, Cheesecake Factory is a leading upscale casual dining chain. The firm, which operates more than 170 restaurants between its namesake concept, Grand Lux, and RockSugar Pan Asian Kitchen, has maintained prudent domestic growth while venturing into the expansion of its brand abroad via a licensing agreement. While the Cheesecake Factory brand resonates with consumers, we believe low switching costs and minimal barriers to entry in the industry hamper the firm's ability to gain a competitive advantage.

We are placing Cheesecake Factory CAKE under review as we transition coverage to a new analyst.

The Cheesecake Factory CAKE turned in solid results in the third quarter, and the company is expressing optimism for 2013 in the face of industry headwinds. Still, we think our valuation and estimates are valid and are maintaining a fair value estimate of $27 per share.

The Cheesecake Factory CAKE continued to meet its goals as well as our internal forecasts in its second-quarter results, and we are leaving our $27 per share fair value estimate unchanged.

The Cheesecake Factory's CAKE first-quarter results were bolstered by a solid increase in guest traffic at the company's restaurants. Coupled with an improving gross margin, the firm was able to deliver a small increase in profitability. Our fair value estimate is unchanged.

The Cheesecake Factory CAKE reported fourth-quarter results that were bolstered by improving traffic trends. The company also announced modest expansion plans for 2012 that we think are attainable, though not quite meeting market expectations. All told, we will be maintaining our fair value estimate of $27 per share.

Cheesecake Factory CAKE delivered modest top-line results in its third quarter, but net income fell from the previous year, largely due to heightened food costs. We plan to maintain our fair value estimate of $27 per share, and we view shares as fairly valued at current prices. However, we remain concerned that a correction among restaurant stocks may occur as macroeconomic pressures and menu price increases from earlier in the year weigh on traffic industrywide. That said, a pullback could create an opportunistic entry point for this quality restaurant operator, which continues to deliver industry-leading unit productivity metrics despite elevated food costs.

The Cheesecake Factory CAKE reported mixed results in its second quarter as net income jumped nearly 30% even as operating income fell due to heightened food costs. Still, we believe the business is being managed well and we will be maintaining our fair value estimate of $27 per share.

Cheesecake Factory CAKE posted modest first-quarter results that were in line with our 2011 projections. We are not surprised by the firm's continued ability to improve guest traffic, and we're encouraged that the firm was able to increase its average ticket. However, food cost inflation, which management projects to be 3%-3.5% in 2011, has already taken a bite out of earnings and may continue to do so over the coming months. We are maintaining our $27 fair value estimate.

With an upscale decor, extensive menu, and reputation for decadent desserts, Cheesecake Factory is a leading upscale casual dining chain. With only 164 restaurants under the Cheesecake, Grand Lux, and RockSugar brand names, this chain has excellent prospects for growth, in our opinion. Still, we'd recommend a wide discount to our fair value estimate before buying the shares, given the intense competition and the discretionary nature of consumer spending at casual dining restaurants.

Cheesecake Factory's CAKE fourth-quarter results reflected healthy guest traffic and continued margin improvements, affirming our view that the firm's nimble approach in adapting its menu items to changing consumer preferences will serve it well. Results were in line with our expectations, and we are maintaining our fair value estimate.

After reviewing Cheesecake Factory's CAKE fourth-quarter sales, we are maintaining our fair value estimate. During the quarter, comparable-restaurant sales growth decelerated to 0.9%, from 2.8% during the third quarter. However, sales were affected by one-time factors including severe weather in the Northeast and a holiday calendar shift. Excluding these factors, comparable-restaurant sales were up 2.1% during the quarter. Despite the softness in sales, Cheesecake reaffirmed its operating margin forecast of 7.7%-7.8% for 2010, validating our view that the firm will be able to pass on cost increases to consumers. Additionally, the firm reiterated its 2011 earnings guidance of $1.55-$1.70 per share, assuming 1%-3% comparable sales and modest operating margin improvements, which is in line with our $1.60 forecast for the year.

Cheesecake Factory's CAKE third-quarter results reflected healthy guest traffic and continued margin improvements, affirming our view that the firm's nimble approach in adapting its menu items to changing consumer preferences will serve it well. Results were in line with our expectations, and we are maintaining our fair value estimate.

Cheesecake Factory CAKE continued to drive decent traffic during the second quarter, despite softer demand in the overall casual dining market, affirming our view that the firm's nimble approach in adapting its menu items to changing consumer preferences will serve it well over the long run. Reported revenue and margins were in line with our expectations, and we are maintaining our fair value estimate.