Big portions, big menus, and big lines have been welcome staples at Cheesecake Factory (NASDAQ:CAKE) since the casual dining concept opened its first eatery in California in 1978. Now the company is facing an unwelcome wave of bigness: big problems.

Last night, the company announced that it was unable to file its quarterly report on time as auditors continue to comb over the company's financials. Last month, Cheesecake Factory became one of the dozens of companies under investigation by the SEC for potentially shady options dating practices. Even though the auditing process continues, the prognosis is not good. The company expects "the range of potential adjustments" to "likely be material" and stretch into prior years.


At least, that would be my knee-jerk reaction if the stock hadn't already tumbled 37% since peaking back in January. At this point, investors need to assess the carnage and make investing decisions based on today's circumstances and today's price.

I've been an investor in Cheesecake Factory for a few years now. Technically speaking, it's a small stake in my 12-year-old son's account. It's his favorite restaurant, and I can't say that I blame him. Even though my wife and I prefer to dig in at dozens of superior nearby eateries, when it comes to mainstream casual dining, it's hard to turn down Cheesecake Factory, especially with cookie-cutter competitors like Ruby Tuesday (NYSE:RI) or the various flagship concepts owned by Brinker International (NYSE:EAT) or Darden (NYSE:DRI) as lamer alternatives.

Now, it's not just the restatement jitters that have investors spooked. Comps fell this past quarter, which is a big deal for a company like Cheesecake Factory, which once posted an amazing streak of 42 consecutive quarters -- more than a decade -- of higher comps. The company also missed Wall Street's profit estimates in the March quarter.

I never thought I'd see the day when Cheesecake Factory would command a forward P/E multiple in the teens. That's where the shares find themselves now. Unfortunately, it's a valuation that will be justified, and possibly generous, if the accounting chicanery proves true -- or, more importantly, if the company isn't able to get back on a financial winning streak again.

Got room for dessert? Check out these other slices of Cheesecake:

Longtime contributor Rick Munarriz fancies the Crusted Chicken Romano at Cheesecake Factory, though he has been known to try something different off the menu from time to time. He can't remember the last time he still had room for dessert, though. He owns shares in Cheesecake Factory. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.