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The Cheesecake Factory Incorporated

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Cheesecake Factory’s company’s profits have been under pressure owing to a rise in rates of wages. Moreover, as the company strives to expand its presence worldwide, pre-opening costs of outlets along with expenses related to sales initiatives will continue to hurt margins. While the company has a positive record earnings surprises in the last 4 quarters, estimates have been going down ahead of its Q1 earnings release. Nonetheless, various initiatives to boost sales and traffic volume like menu innovation, roll-out of an improved server training program, launch of mobile payment app and increased focus on delivery service bode well. Further, the company’s aggressive expansion initiatives also bode well and should drive growth. However, continued sluggish performance by Grand Lux Café raises concern. Also, soft consumer spending in the U.S. restaurant space is a major headwind.

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