California-based The Cheesecake Factory Inc. (CAKE) is on the verge of launching new restaurants in Latin America. In this regard, Cheesecake Factory has penned a licensing agreement with Alsea, S.A.B. de C.V. Cheesecake Factory has chosen the emerging markets of Latin America to tap its increasing growth potential.
Under the terms of the agreement, Cheesecake Factory will develop nearly 12 new restaurants across Mexico and Chile over the next eight years. Cheesecake Factory will mark its first appearance in Latin America with the opening of a new outlet in Mexico City in 2014.
In addition, the contract also includes expansion plans in other Latin American countries including Argentina, Brazil, Colombia and Peru. These openings are expected to give a boost to the company’s earnings and revenue growth, going forward.
Cheesecake Factory is continuously trying to expand its presence in the international market. Earlier, Cheesecake Factory made its international debut with the opening of its first restaurant in Dubai in August 2012 and it has also opened another restaurant in The Avenues Mall in Kuwait. By 2016, the company is expected to launch 22 new Cheesecake Factory outlets in five countries of the Middle East.
During the fourth quarter of 2012, Cheesecake Factory reported net earnings of 51 cents a share, down 3.8% year over year due to sluggish sales. Cheesecake Factory’s revenues fell 2.7% year over year to $464.7 million. Hurricane Sandy played foul with the quarterly sales. The company currently operates 177 restaurants, including the units opened during the fourth quarter.
Cheesecake Factory currently carries a Zacks Rank #3 (Hold). Some restaurant companies that are also worth a look at present are Red Robin Gourmet Burgers Inc. (RRGB) carrying a Zacks Rank #1 (Strong Buy) as well as Burger King Worldwide Inc. (BKW) and Cracker Barrel Old Country Store, Inc. (CBRL), both carrying a Zacks Rank #2 (Buy).
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