Shares of The Cheesecake Factory (CAKE 2.25%) are down over 20% since reporting earnings at the end of July. Contrary to what you might expect, results for the quarter weren't so bad.

Add to the drop that the company's shares have trailed the industry for the past six months, and you might be wondering if it's time to add the restaurant stock's shares to your portfolio.

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In the wake of Covid's destruction

The pandemic has taken a brutal toll on small businesses across the globe, not the least of which is the $334 billion American full-service restaurant market. In May, the National Restaurant Association estimated that 90,000 restaurants had closed. And while we're all rooting for the pandemic to end for everybody's sake, some larger restaurant chains see opportunity ahead of them.

Restaurant chains have the benefit of scale to control costs, helping cushion the impact during down periods. They also have an easier time accessing capital markets, as evidenced by The Cheesecake Factory's issuance of $90 million in long-term debt and $200 million in preferred stock in 2020.

Even still, 2020 was ugly for The Cheesecake Factory as it produced an operating loss of $106 million. But management views Covid's inherent volatility as a chance to drive market share gains for the company and other chains within an industry that heavily favors independents.

Two strong brands and one "incubation engine"

The Cheesecake Factory's flagship brand currently has 207 company-owned locations inside the U.S. Management believes it can support 300 locations stateside, and it expects to be opportunistic with licensing growth outside the U.S.

North Italia is The Cheesecake Factory's contemporary Italian concept with 27 locations in 12 states and D.C. The company believes it can support 200 full-service locations and is targeting long-term unit growth of 20%. Add in that North Italia boasts better restaurant-level margins, and you've got an interesting second growth engine residing inside a mature brand.

Finally, The Cheescake Factory acquired Fox Restaurant Concepts (FRC) in 2019. FRC has a track record of incubating successful restaurants – North Italia was one of its brands before being acquired by its now parent company. Other brands like Flower Child and Culinary Dropout show promise, too. To me, FRC represents an innovation engine that could very well add contributing brands and slight growth upside to the mix – and, with some luck, maybe a homerun concept.

Is now time to place your order

The raging Delta variant should make anybody extra cautious when considering a company that relies on customers being in person, though off-premises sales have remained strong even as traffic has come back for The Cheesecake Factory.

The stock is trading well below a market multiple on next year's earnings as many investors are choosing to wait out the uncertainty. Management has put together a strong growth strategy and boasts deep experience within its ranks. So, what's the verdict? I'll say this: I haven't bought shares – yet. But if prices remain depressed even while the company meets its 7% annual unit growth goal, then I would consider adding a position to take advantage of the "reopening 2.0" trade.