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The Cheesecake Factory Incorporated Message Board

  • envesting1 envesting1 Aug 1, 2012 6:03 PM Flag


    CAKE has 4 "moats" and 3 catalysts that are likely to drive the stock price for several years to come.

    The moats are, IMO:

    1. Locations. No need to expound on this one. Obvious.
    2. Menu. Where else can you go with any group and find something for everyone? With quality ingredients and consistently great quality?
    3. Dessert. 15% compared with 5% for competitors? Breathtaking.
    4. Process. Every CAKE store, every visit, every time of day, the process is the same. Look at how th emenu is delivered, the wait staff dressed, the food presented and on and on. Every single store, every single day, every single customer.

    I don't know another chain with even one of these moats, much less four.

    1. Cash Flow. Huge. Over $200mm a year and growing. At $6 to $7 million for a new domestic store, they cannot spend all the cash. So a dividend and share buy backs. $175mm in buy backs last year and over $100mm this year and probably next. Plus a 1.5% yield dividend.
    2. International expansion. A penny per share in eps for each store opened a year. 3 this year, more next year, many, many more the year or two after that. Asia. Europe. Caribbean. Mexico...
    3. Grand Lux. The new store in Cherry Hill hit the mark, IMO. The old store concept works in Vegas and Chicago, but mid America? Ugghhhh. The new store combines lots of modern feeling materials.

    In Q2, just reported, CAKE grew revenues and visits, "taking market share" from competitors as Brother Overton saith.

    Recession may impact near term price support, but longer term, it will likely be embarrassing to not own this name.

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