The Cheesecake Factory Incorporated is in the “Restaurant Industry.” It started in the 1940s in the home of Oscar and Evelyn Overton. The business was so successful that in 1971, they moved the cheesecake business to Los Angeles and named it “The Cheesecake Factory”. In 1978, their son David founded The Cheesecake Factory restaurant in Beverly Hills and 30 years later you can find their restaurant in towns and cities all over the United States with new businesses opening all the time. They do not offer franchise or joint venture opportunities and have no plans to do so in the future. They own and manage all of the full-service Cheesecake Factory restaurants and presently do not have plans for international expansion. (www.thecheesecakefactory.com, About us)
The Cheesecake Factory is a unique, upscale casual dining restaurant offering approximately 200 menu items including appetizers, pizza, seafood, steaks, chicken, burgers, pasta, specialty items, salads, sandwiches, omelets and desserts including approximately 40 varieties of cheesecake and other baked desserts. All the menu items (except desserts manufactured at their bakery production facilities) are prepared on the restaurant premises using high-quality, fresh ingredients based on innovative and proprietary recipes. (www.thecheesecakefactory.com, About us) CUSTOMERS
The Cheesecake Factory believes their restaurants are recognized by consumers for offering exceptional value with generous food portions at moderate prices. The restaurants possess a distinctive, contemporary design and decor that creates a high-energy ambiance in a casual setting.
The restaurant industry is highly competitive. There are a substantial number of restaurant operations that compete directly and indirectly with the Cheesecake Factory, many of which have significantly greater financial resources, higher revenues and greater economies of scale. With regard to their bakery operations, overall competition within that market remains intense. They believe that their restaurant and bakery operations compete favorably with consumers on the critical attributes of quality, variety, taste, service, consistency and overall value.
Their business is subject to seasonal fluctuations. Their highest levels of revenues and net income for their established restaurants have occurred in the second and third quarters of the fiscal year. Approximately two-thirds of their restaurants are located in or near shopping centers and malls that typically experience seasonal fluctuations in sales. Patio seating represents approximately 18% of the total available productive seating for all restaurants open as of April 1, 2005 and can be subject to disruption from inclement weather. Holidays, severe winter weather, hurricanes, thunderstorms and similar conditions may impact restaurant sales volumes seasonally in some of the markets where they operate. Their bakery operations are seasonal to the extent that the fourth quarter’s sales are typically higher due to holiday business. Quarterly results have been and will continue to be significantly impacted by the timing of new restaurant openings and their associated preopening costs. As a result of these and other factors, the Company’s financial results for any given quarter may not be indicative of the results that may be achieved for a full fiscal year.
Their constant focus on the quality of their people, their concepts and their growth has resulted in quality results. Between The Cheesecake Factory restaurants and the Grand Lux Cafes, they believe they operate the two most productive restaurant concepts in the industry on annual unit sales metric. Their 10-year average shareholder return of 26.4% ranks them number three among restaurant companies in the 2004 Wall Street Journal Shareholder Scoreboard.
ANALYSIS OF LAST 3 YEARS OF ANNUAL REPORTS:
Annual Income Statement