Cheesecake Enters Peru - Analyst Blog

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Casual dining restaurateur, The Cheesecake Factory Inc. ( CAKE ) recently opened a Cheesecake Factory restaurant at Plaza Las Américas shopping center in San Juan, Puerto Rico. The new 10,000 square feet restaurant can accommodate up to 305 guests. This new unit marks Cheesecake Factory's entry into the Peruvian market.

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 opening perfectly complements Cheesecake's strategy of expanding beyond the North American market.

Earlier this year, Cheesecake signed a deal with its development partner Alsea, S.A.B. de C.V. Per the deal, Cheesecake Factory will develop nearly 12 new restaurants across Mexico and Chile over the next eight years. In addition, the contract also includes expansion plans in some other countries including Argentina, Brazil, Colombia and Peru.

This Zacks Rank #3 (Hold) company is continuously trying to expand its presence in the international market. This Calif.-based restaurateur started its overseas expansion in August last year by venturing into Dubai and has already opened three restaurants in the Middle East so far.

By 2016, the company is expected to launch 22 new Cheesecake Factory outlets in five countries of the Middle East.

In fact, the company expects to attain historically peak margin levels in 2013, driven by international expansion, strong performance of its existing overseas units and lower food costs.

However, on the flip side, the company's presence in high-potential international market is still relatively low. While several other restaurateurs including Yum! Brands Inc. ( YUM ), McDonald's Corp. ( MCD ), Krispy Kreme Doughnuts, Inc. ( KKD ), have joined the bandwagon to open new restaurants to capitalize on the emerging market potential; Cheesecake is comparatively slow on this front. We believe that the company needs to spread its presence beyond the U.S. more aggressively, given cut-throat competition in the rather saturated domestic market.



CHEESECAKE FACT (CAKE): Free Stock Analysis Report

KRISPY KREME (KKD): Free Stock Analysis Report

MCDONALDS CORP (MCD): Free Stock Analysis Report

YUM! BRANDS INC (YUM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CAKE , KKD , MCD , YUM

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