Please ensure Javascript is enabled for purposes of website accessibility

Cheesecake Factory Satisfies

By Phil Wohl – Updated Nov 16, 2016 at 3:57PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The restaurant chain produces both good results and full stomachs.

I'll never forget my first time walking into The Cheesecake Factory (NASDAQ:CAKE). The smell of fresh-baked bread almost led me to uncontrollably dive over the metal barrier and onto the bread-slicing counter. Surprisingly, about a dozen Cheesecake meals later I have still eaten only one piece of the restaurant chain's decent cheesecake. It's not the cake that keeps me coming back; it's the huge and tasty food portions and that mouthwatering bread.

The only thing I can think about at the end of a meal at The Cheesecake Factory is a nap. Dessert is probably one of the last things on my mind (along with movement) once I have attempted to consume a mile-high serving of meatloaf and mashed potatoes. It's no wonder the chain has been growing like a wildflower lately; it's always packed with customers who are willing to wait (however long it takes) for the superior food and service. In an industry sprinkled with inconsistent eateries, The Cheesecake Factory has managed to concoct a successful restaurant formula and an effective business plan.

Given how crowded the restaurants already are, I'm not really sure how the company produced an impressive 4.5% increase in comparable restaurant sales in the second quarter. Cheesecake's total revenues were up 25%, which leads me to the question: How can they squeeze more and more people into its restaurants? Maybe management's installed a greasy shoehorn or has built extra levels onto existing locations, because the menu prices haven't gone up too much.

While many food-oriented companies and other restaurant chains continue to complain about the wild upswing in commodity prices, The Cheesecake Factory has apparently taken a deep breath and countered the potential problem. The company recently signed a six-month contract for fresh poultry (to spread the costs out) and plans to raise prices a mere 1% on its summer menu. I really like management teams that remain calm under pressure, and the Cheesecake brass barely breaks a sweat while others look like they just stepped out of a sauna.

The way I see it, supposed competitors such as Applebee's (NASDAQ:APPB), Brinker International's (NYSE:EAT) Chili's, and Ruby Tuesday (NYSE:RI) just don't stack up to The Cheesecake Factory. The only other restaurant chain that gets my stomach to growl in this category is Outback Steakhouse (NYSE:OSI).

Cheesecake has also bumped up its sales to warehouse clubs and other food service operators, which should serve to only bolster future growth. Based on the company's double-digit growth rate, rock-solid management, and superior business concept, Cheesecake deserves consideration for investors' portfolios, as well as their stomachs.

What is your favorite dish at The Cheesecake Factory? Visit The Cheesecake Factory discussion board and share your thoughts with other people.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Brinker International, Inc. Stock Quote
Brinker International, Inc.
EAT
$25.53 (-5.02%) $-1.35
The Cheesecake Factory Incorporated Stock Quote
The Cheesecake Factory Incorporated
CAKE
$28.43 (-2.44%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.