Consistent with its strategy to expand in the Middle East,
The Cheesecake Factory Inc.
) recently ventured into Kuwait. The new 13,160 square feet
Kuwait restaurant, opened in association with the Kuwait-based
Alshaya group, follows the company's first overseas opening in
Dubai this August.
Cheesecake Factory's restaurants are primarily located in or near
malls and shopping centers. The newest unit, opened in The
Avenues, one of Kuwait's renowned malls, enjoys one of the prime
locations in the country. We believe the location is
strategically perfect to attract high-end customers.
In January 2011, the company entered into an agreement with the
Alshaya group of companies to build and operate 22 Cheesecake
Factory restaurants over the next five years in five countries of
the Middle East--United Arab Emirates, Kuwait, Bahrain, Qatar and
the Kingdom of Saudi Arabia. The agreement also includes
expansion plans in other markets of the Middle East and North
Africa, Central and Eastern Europe, Russia and Turkey.
The deal affirms management's plan to make the Middle East as one
of the prime destinations for international expansion, as it sees
a fondness for American dining brands in that region. It is being
witnessed that the young population in that region are more
inclined towards western fast-food chains.
Consumer confidence is higher in Kuwait due to a stepped up
economy backed mainly by the enormous oil reserve that heavily
contributes to rising GDP of the country. Increasing disposable
income has enabled the residents to spend big on branded food
items. Hence, we believe that Cheesecake seeks to fully
capitalize on this trend.
The company aims to open about three locations in the Middle East
in fiscal 2012 but does not expect these openings to have a
material impact on the financial results of fiscal 2012.
Another U.S. restaurateur
Darden Restaurants Inc.
) is also foraying into the Middle East market. Other western
restaurateurs with prominent presence in the Middle East are
Yum! Brands Inc.
Krispy Kreme Doughnuts Inc.
). Cheesecake Factory currently carries a Zacks #3 Rank that
translates into a short-term Hold rating.
CHEESECAKE FACT (CAKE): Free Stock Analysis
DARDEN RESTRNT (DRI): Free Stock Analysis
KRISPY KREME (KKD): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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