Back to top

Analyst Blog

Consistent with its strategy to expand in the Middle East, The Cheesecake Factory Inc. (CAKE - Analyst Report) recently ventured into Kuwait. The new 13,160 square feet Kuwait restaurant, opened in association with the Kuwait-based Alshaya group, follows the company’s first overseas opening in Dubai this August.

Cheesecake Factory’s restaurants are primarily located in or near malls and shopping centers. The newest unit, opened in The Avenues, one of Kuwait’s renowned malls, enjoys one of the prime locations in the country. We believe the location is strategically perfect to attract high-end customers.

In January 2011, the company entered into an agreement with the Alshaya group of companies to build and operate 22 Cheesecake Factory restaurants over the next five years in five countries of the Middle East––United Arab Emirates, Kuwait, Bahrain, Qatar and the Kingdom of Saudi Arabia. The agreement also includes expansion plans in other markets of the Middle East and North Africa, Central and Eastern Europe, Russia and Turkey.

The deal affirms management’s plan to make the Middle East as one of the prime destinations for international expansion, as it sees a fondness for American dining brands in that region. It is being witnessed that the young population in that region are more inclined towards western fast-food chains.

Consumer confidence is higher in Kuwait due to a stepped up economy backed mainly by the enormous oil reserve that heavily contributes to rising GDP of the country. Increasing disposable income has enabled the residents to spend big on branded food items. Hence, we believe that Cheesecake seeks to fully capitalize on this trend.

The company aims to open about three locations in the Middle East in fiscal 2012 but does not expect these openings to have a material impact on the financial results of fiscal 2012.

Another U.S. restaurateur Darden Restaurants Inc. (DRI - Analyst Report) is also foraying into the Middle East market. Other western restaurateurs with prominent presence in the Middle East are Yum! Brands Inc. (YUM - Analyst Report) and Krispy Kreme Doughnuts Inc. (KKD - Snapshot Report). Cheesecake Factory currently carries a Zacks #3 Rank that translates into a short-term Hold rating.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%