Cheesecake Factory Opens Outlet, Expands Presence in Florida

In a bid to expand presence in the domestic market, The Cheesecake Factory Incorporated CAKE announced the opening of its new restaurant in Coral Gables, FL. The restaurant will offer more than 250 menu items along with more than 50 signature cheesecakes and desserts.

Expansion & Sales Building Efforts to Drive Growth

Cheesecake Factory continues to focus on expanding in domestic and international markets. In 2019, the company plans to open five company-owned restaurants — including the Gainesville, FL location that was opened during the fiscal third quarter.

Internationally, the company opened its second restaurant in Abu Dhabi and debuted in Macau in the third quarter 2019. During the fourth quarter, it expects to open three additional locations and one North Italia restaurant. Overall, the company expects to open six locations in 2019 under licensing agreements.

Management believes that the company is likely to open more than 20 new restaurants — including as many as six Cheesecake Factory locations, six North Italia restaurants and eight restaurants within the FRC subsidiary — by 2020.

As of Oct 1, 2019, the company operates 289 full-service company-owned restaurants throughout the United States and Canada under brands including The Cheesecake Factory and North Italia as well as a collection within the Fox Restaurant Concepts subsidiary. Internationally, the company operates 24 The Cheesecake Factory restaurants under licensing agreements along with two bakery production facilities.

Notably, shares of the company have gained 16.7% against the industry’s  8.6% decline in the past three months. Cheesecake Factory has been benefiting from its diverse menu, operational distinction and unique ambiance appeal to customers along with expansion initiatives. Various initiatives to boost sales like menu innovation, roll out of an improved server training program, launch of mobile payment app and focus on delivery have been driving growth.

In order to stay afloat in the competitive environment, this Zacks Rank #3 (Hold) company is committed toward bolstering its sales. In fact, Cheesecake Factory’s efforts to improve guest experience have been stabilizing sales since the fourth quarter of 2017.

However, rising costs stemming from increase in wage rate scenario is a concern. Pre-opening costs of outlets, given the company’s unit expansion plans and expenses related to sales initiatives, are concerns.

Key Picks

Some better-ranked stocks in the Zacks Retail-Restaurants industry are Chuy's Holdings, Inc CHUY, Arcos Dorados Holdings Inc ARCO and Brinker International, Inc EAT. Chuy's Holdings sports a Zacks Rank #1 (Strong Buy), whereas Arcos Dorados and Brinker International carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chuy's Holdings surpassed estimates in three of the trailing four quarters, the average being being 8.7%.

Arcos Dorados current-year earnings are expected to rise approximately 72%.

Brinker International has three-five year expected earnings per share growth rate of 6.5%.

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