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Category: Cheesecake Factory and Stock Market
Date: 12 June 2020 Stock Price: $22.66 We take a look at the business update provided by Cheesecake Factory following significant business disruptions due to Covid-19 and stay at home and lockdown orders across the United States
The reopened Cheesecake Factory restaurants have recaptured, on average, approximately 75% of prior year sales levels, reflecting continued strength in off-premise sales and building dine-in business " |
About Cheesecake Factory
The Cheesecake Factory Incorporated is a leader in experiential dining. We are culinary forward and relentlessly focused on hospitality. Delicious, memorable experiences created by passionate people – this defines who we are and where we are going. We currently own and operate 289 restaurants throughout the United States and Canada under brands including The Cheesecake Factory®, North Italia® and a collection within the Fox Restaurant Concepts subsidiary. Internationally, 24 The Cheesecake Factory® restaurants operate under licensing agreements. Our bakery division operates two facilities that produce quality cheesecakes and other baked products for our restaurants, international licensees and third-party bakery customers. In 2019, we were named to the FORTUNE Magazine “100 Best Companies to Work For®” list for the sixth consecutive year
Cheesecake Factory Business Update
CALABASAS HILLS, Calif.--(BUSINESS WIRE)-- The Cheesecake Factory Incorporated (NASDAQ: CAKE) today provided a business update given the ongoing COVID-19 pandemic.
The Company began to reopen dining rooms across its concepts the second week of May. As of today, approximately 25% of the Company’s restaurants across its concepts, including 34 Cheesecake Factory restaurants, have reopened dining rooms with limited capacity in accordance with local mandates.
The reopened Cheesecake Factory restaurants have recaptured, on average, approximately 75% of prior year sales levels, reflecting continued strength in off-premise sales and building dine-in business. For The Cheesecake Factory restaurants that are continuing to operate an off-premise only model at present, current weekly off-premise sales would equate to nearly $4 million per unit on an annualized basis, on average. Fiscal second quarter to-date through May 31, 2020 comparable sales at The Cheesecake Factory restaurants are down approximately 63%, including the impact of 87 full or partial closures due to demonstrations across the United States this past weekend.
The Company expects to have approximately 65% of dining rooms across its concepts that closed due to COVID-19 reopened with limited capacity by mid-June, including an anticipated 124 Cheesecake Factory restaurants, subject to any closures due to further demonstrations and other factors related to the ongoing COVID-19 pandemic.
The Company began to reopen dining rooms across its concepts the second week of May. As of today, approximately 25% of the Company’s restaurants across its concepts, including 34 Cheesecake Factory restaurants, have reopened dining rooms with limited capacity in accordance with local mandates.
The reopened Cheesecake Factory restaurants have recaptured, on average, approximately 75% of prior year sales levels, reflecting continued strength in off-premise sales and building dine-in business. For The Cheesecake Factory restaurants that are continuing to operate an off-premise only model at present, current weekly off-premise sales would equate to nearly $4 million per unit on an annualized basis, on average. Fiscal second quarter to-date through May 31, 2020 comparable sales at The Cheesecake Factory restaurants are down approximately 63%, including the impact of 87 full or partial closures due to demonstrations across the United States this past weekend.
The Company expects to have approximately 65% of dining rooms across its concepts that closed due to COVID-19 reopened with limited capacity by mid-June, including an anticipated 124 Cheesecake Factory restaurants, subject to any closures due to further demonstrations and other factors related to the ongoing COVID-19 pandemic.
Our latest valuation of Cheesecake Factory
So what is Cheesecake Factory stock worth based on the release of their 1st quarter 2020 earnings report? Based on Cheesecake Factory latest earnings report (and their business update) our valuation models provide a target price (full value price) for the stock of Cheesecake Factory at $24.90 a stock (down significantly from our last valuation) and therefore believe the stock of Cheesecake Factory is slightly undervalued
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $24.90. Therefore we believe a good entry point into Cheesecake Factory stock is at $22.40 or below. We expect the stock of Cheesecake Factory to trade in a narrow range around its current price in coming weeks and months as more of their stores starts opening up after Covid-19 related stay at home orders and lockdowns
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $24.90. Therefore we believe a good entry point into Cheesecake Factory stock is at $22.40 or below. We expect the stock of Cheesecake Factory to trade in a narrow range around its current price in coming weeks and months as more of their stores starts opening up after Covid-19 related stay at home orders and lockdowns