Cheesecake Factory Enters San Diego


The Cheesecake Factory Inc. (CAKE), recently unveiled a restaurant in Escondido, California. With the 7,500 square-foot restaurant, the company stepped into San Diego County.

Cheesecake Factory restaurants are primarily located in or near malls and shopping centers. We believe that such a location is strategically perfect in order to attract high-end customers. The latest restaurant, located in Westfield North County mall in Escondido, can accommodate around 205 diners at a time. We believe that the restaurant’s strategic location, along with its attractive platter and contemporary ambience, will drive traffic, going ahead.

California is the home court for the restaurateur where it boasts as many as 34 outlets. As per the National Restaurant Association, California’s restaurant industry contributes considerably to the state’s revenues. According to the research organization, California’s restaurants are expected to record $67.4 billion in sales in 2013. Californians are inclined toward eating out frequently and this is favorable for the sector’s growth. We believe Cheesecake Factory’s venture into California, the most densely populated U.S. states, will immensely benefit it.

The Zacks Rank #3 (Hold) company is on a growth trajectory and intends to open 8 to 10 units in the U.S. in 2013. Apart from the traditional units, management is focusing on formats of different sizes and scales to cater to local demand. The better-than-expected income from the smaller units has encouraged the company to focus more on smaller sites to improve the return on investments. The company is also considering international expansion for further growth.

Investors interested in the restaurant industry may consider stocks like Buffalo Wild Wings Inc. (BWLD), DineEquity, Inc. (DIN) and Darden Restaurants, Inc. (DRI). While Buffalo Wild Wings carries a Zacks Rank #1 (Strong Buy), DineEquity and Darden Restaurants hold a Zacks Rank #2 (Buy).

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