The restaurant concern reported fourth-quarter earnings of $15.6 million, or $0.30 per share, compared to $13.2 million, or $0.26 per share, in the year-ago quarter. Revenues were 23% sweeter. Comparable restaurant sales rose 2.5%, an increase the company linked to higher prices on the menu. Watch your wallet, as more price increases are on the way -- Cheesecake Factory plans to offset some higher costs for commodities, including a key ingredient, cream cheese.
As Fool Rick Munarriz pointed out last spring after the company reported its first quarter ever with down same-store sales, price hikes are fairly common at Cheesecake Factory. At that time, the average check was $15.78; now it has increased to $16.00.
Will patrons continue to eat cake if the tab keeps increasing frequently? Although Darden's
Meanwhile, Reuters reported in late January that Cheesecake Factory has taken a 12% hit in wait times compared to last year, down to an average of 18 minutes. (When my local Cheesecake Factory was new many moons ago, I remember two-hour wait times for a coveted spot to order from that novel-sized menu.) Although the survey showed decreased wait times for many restaurants, it is an important aspect to watch.
There is, admittedly, plenty of room for growth -- the company has 74 Cheesecake Factory units in the U.S., where it sees room for 200. It is also planning to expand its Grand Lux concept; there are currently only three of these restaurants, but in its conference call (transcript courtesy of CCBN StreetEvents), management said it believes it could grow to 125 or maybe 150 outlets over time. Cheesecake Factory said that because its restaurants usually operate at capacity, it's not same-unit sales that garner revenue growth, but new restaurant openings.
Having 45 out of 46 quarters with positive same-restaurant comps is impressive. Just watch for signs that the Cheesecake Factory idea is getting stale. Then, higher checks and new restaurants may not be enough reason for investors to strap on the feedbag.
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