The Cheesecake Factory Inc.
) opened a Cheesecake Factory restaurant at The Dubai Mall on
August 16. The new 13,851 square feet Dubai restaurant can
accommodate 300 guests. This new unit, opened in association with
the Kuwait-based Alshaya group, marks Cheesecake Factory's first
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Cheesecake Factory's restaurants are primarily located in or near
malls and shopping centers. The newest unit, opened opposite the
Dubai Aquarium, enjoys one of the prime locations in Dubai. We
believe the location is strategically perfect to attract high-end
In January 2011, the company entered into an agreement with 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 the other markets of the Middle East and North Africa,
Central and Eastern Europe, Russia and Turkey.
Management believes that this agreement with Alshaya will provide
another stream for revenue growth along with its existing domestic
operations. 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.
Founded in 1890, the Alshaya group of companies is a leading
international franchise operator. The company enjoys local market
knowledge and has a proven track record of franchising over 55 of
the world's big retail brands. Other food service brands in
Alshaya's pipeline include
Texas Roadhouse Inc.
), Potbelly, and Shake Shack.
Alshaya stores can currently be found in 15 markets across the
Middle East, North Africa, Turkey, Cyprus, Russia, Poland, Slovakia
and the Czech Republic. According to the Alshaya group, Cheesecake
Factory is one of the most sought after U.S. based casual dining
restaurants among consumers in the Middle East.
The deal affirms Cheesecake Factory management's intent to make the
Middle East one of the prime markets for international expansion,
particularly as it sees a fondness for American dining brands in
that region. The company seeks to fully capitalize on this.
Another U.S. restaurateur
Darden Restaurants Inc.
) signed a deal with the Americana Group of Kuwait in October 2010
to set up 60 restaurants in Bahrain, Egypt, Kuwait, Lebanon, Qatar,
Saudi Arabia and United Arab Emirates. Other western restaurateurs
with prominent presence in the Middle East are
Yum! Brands Inc.
Krispy Kreme Doughnuts Inc.
Cheesecake Factory currently carries a Zacks #2 Rank that
translates into a short-term Buy rating. We reiterate our long-term
Neutral recommendation on the stock.