I'll never forget my first time walking into The Cheesecake Factory
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
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.
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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.