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Cheesecake Continues to Expand

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In a bid to boost business, several U.S.-based restaurateurs are at present focusing on unit expansion. Calabasas Hills, Calif.-based upscale casual dining restaurateur, The Cheesecake Factory Inc. (CAKE - Free Report) is also geared to expand its presence in the lucrative domestic market.

Recently, the restaurateur opened an outlet in Bethesda, Md., at the Westfield Montgomery mall. We note that the company relocated its former North Bethesda, Md. unit to the current site. Spread over an area of 10,680 square feet, the new outlet can accommodate 320 guests. This relocated restaurant has a varied menu comprising 200 items and more than 50 low calorie items. Moreover, with new menu choices for Montgomery mall shoppers, the outlet has more than 50 signature cheesecakes and desserts. Meanwhile, like the extensive menu, the unit has a modern décor with French limestone flooring and wall paintings.

Maryland is one of the most densely populated states of the United States. We believe that the restaurant’s strategic location, along with its attractive offerings and contemporary ambience, will drive traffic, going ahead.

Cheesecake Factory restaurants are primarily located in or near malls and shopping centers. We believe that such a location is strategically perfect for attracting high-end customers. Recently, the company unveiled a restaurant in Westfield North County mall in Escondido, Calif. With the 7,500 square-foot restaurant, the company stepped into San Diego County.

Cheesecake Factory is well positioned to sustain its same-stores sales growth driven by improved guest traffic. Pricing actions, introduction of a new menu and the resurgence of high-end consumers are also encouraging. However, food cost inflation remains a matter of concern.

The company presently has a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Buffalo Wild Wings Inc. , Burger King Worldwide, Inc. and Cracker Barrel Old Country Store, Inc. (CBRL - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).


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