Cheesecake Factory (Nasdaq: CAKE) is starting to feel as heavy as some of its decadent desserts. Its shares opened lower this morning after the company posted distasteful fourth-quarter results.

Earnings before legal settlement costs fell to $0.22 a share for the quarter, off from the $0.26 a share the casual dining chain earned during the same period a year earlier. Revenue climbed 13% to $406.3 million, but don't get too excited. The increase is merely the result of tacking on 21 new Cheesecake Factory and Grand Lux locations over the course of the year. Comps for the quarter actually fell by 0.4%, a rarity at the chain that once had a decade-long streak of posting higher comps.

Investors aren't happy this morning, and rightfully so. Wall Street was looking for a profit of $0.26 a share on $413 million in revenue. The company is also scaling back its expansion plans. It will open no more than nine new eateries this year, after opening 21 locations in each of the past two years.

Mr. Market doesn't like it when promising chains scale back on the building permits. We've seen shares of Starbucks (Nasdaq: SBUX) and Jamba (Nasdaq: JMBA) pull back in tandem when the companies pull back.

This doesn't mean that 2008 will be a wash. A third concept will enter the playing field when the company debuts its Rock Sugar Pan Asian Kitchen later this year. Cheesecake Factory still expects to grow revenue by 10% to 12% and earnings per share by 10% to 15%. That doesn't necessarily mean that margins will reverse course and improve: The key phrase there is "per share," because the company has been aggressively repurchasing stock, inflating profits on a per-share basis.

Building the better cheesecake
Cheesecake Factory earned $1.01 a share for all of fiscal 2007. Its guidance implies that profits will clock in between $1.11 and $1.16 a share this year. If the days of heady growth are over at the company, shares may not necessarily be a bargain now at 17 times earnings.    

I say that with a heavy heart because I've owned shares of Cheesecake Factory for several years now. I bought it for my son to get him excited about the stock market. He's a fanatic for the chain's Cajun Chicken Littles. Now I feel like Chicken Little as I'm trying to find better opportunities.

The thing is, I don't even have to leave the casual dining sector to find stocks that offer more compelling values. Let's explore three alternatives and some of their forward earnings numbers.


EPS Growth



CBRL Group (Nasdaq: CBRL)



Buffalo Wild Wings (Nasdaq: BWLD)



Darden (NYSE: DRI)



Source: Yahoo! Finance.

CBRL is the parent of the Cracker Barrel Old Country Store eateries that dot the highways. The company is a survivor, despite fears that higher fuel prices would eat into the stops at a Cracker Barrel for some comfort food and a look at rustic trinkets available at the attached stores.

Buffalo Wild Wings is trading at a marginally higher forward earnings multiple, but it's looking to grow twice as fast. The chicken wings specialist is a popular Motley Fool Hidden Gems recommendation, and I know I can't be the only potential shareholder intrigued by seeing a profit growth rate that is higher than its earnings multiple.

Darden is the company behind the Olive Garden and Red Lobster chains. If the 6% growth rate is uninspiring, let me sweeten the pot. The company's fiscal year ends in May. Earnings for fiscal 2009 are expected to grow a little better than 10%. Based on next fiscal year's profit target -- and again, this is a fiscal year that begins in less than four months -- Darden is trading at just nine times that target (as opposed to a still-attractive multiple of 10, based on this year's estimates).

I may not bail on Cheesecake Factory right away. Maybe I'll wait to see if it has a P.F. Chang's (Nasdaq: PFCB) on its hands with the Asian bistro concept. I also already own shares in Cracker Barrel's parent company. However, with so many tempting alternatives in today's market, you're doing yourself a major injustice if you don't explore the opportunities.

Yes, no matter how tasty that Godiva cheesecake may be.

Fill your plate up with more Foolishness:

Starbucks is a Motley Fool Stock Advisor recommendation. For 30 days, you can check out any of our newsletter services for free. The Motley Fool owns shares of Buffalo Wild Wings.

Longtime Fool contributor Rick Munarriz is a fan of the crusted chicken Romano at Cheesecake Factory, the caramel chicken at Grand Lux, and the grilled panini sandwiches at CF Express. He owns shares in Cheesecake Factory and CBRL Group. He's also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.