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Cheesecake Factory (CAKE) Expands in Tennessee and Texas

In a bid to expand in the domestic market, The Cheesecake Factory Incorporated CAKE opened restaurants in Chattanooga, TN, and Lubbock, TX. The restaurants offer over 250 menu items along with more than 50 cheesecakes and desserts.

Currently, the company operates 217 full-service company-owned restaurants — 201 under The Cheesecake Factory brand, 14 under the Grand Lux café brand and two under the RockSugar Southeast Asian Kitchen brand.

Notably, shares of the company have declined 3.3% against the industry’s gain of 9.6% in the past year.

Continual Expansion — A Major Growth Driver

Cheesecake Factory continues to focus on expanding in domestic and international markets. In 2018, the company plans to open five company-owned restaurants, including one Grand Lux Café. In fact, in the third quarter, the company already opened Cheesecake Factory in Lynnwood and a Grand Lux Cafe in Atlanta.

Internationally, the company plans to open restaurants in Mexico in the first quarter of 2019. Overall, management believes there is potential for 300 Cheesecake Factory locations in 2019, expecting to drive at least 3% unit growth.
The company is known for its innovative menu and fabulous desserts. It further focuses on menu innovation by adding Super Food items and flavors.

Meanwhile, in third-quarter 2018, total revenues came in at $580.9 million, up 4.6% year over year on the back of increased comparable sales. Comps at Cheesecake Factory restaurants increased 1.5%, while the same declined 2.3% in the year-ago quarter.

However, pre-opening costs of outlets, given the company’s unit expansion plans and expenses related to sales initiatives, add to the costs and might hurt profits.

Zacks Rank & Stocks to Consider

Cheesecake Factory carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the Retail-Restaurants industry are Papa Murphy's Holdings, Inc. FRSH, The Habit Restaurants, Inc. HABT and BJ's Restaurants, Inc. BJRI. While Papa Murphy's and Habit Restaurants sport a Zacks Rank #1 (Strong Buy), BJ's Restaurants carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Papa Murphy's has an expected earnings growth rate of 160% for the current year.

Habit Restaurants reported better-than-expected earnings in two of the trailing three quarters, the average being 66.7%.

BJ's Restaurants has an expected earnings growth rate of 66.7% for the current year.

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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
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