Cheesecake Factory Sets Record

The company's net income increased 26% to $23.4 million for the quarter, and diluted net income per share increased 26% to 29 cents on revenue that climbed 23% to $328.3 million for the quarter. Comparable restaurant sales increased half a percent at the Cheesecake Factory locations and 3.8% at the chain's Grand Lux Cafes. Comparable restaurant sales at the Cheesecake Factory would have increased 1.1%, excluding the estimated impact of $1.2 million of lost sales from hurricane-related closings in the Southeast last year.

For the year, net income rose 28% to $87.5 million, or $1.09 per share, on revenues that increased 22% to $1.2 billion. Comparable store sales rose 1.6% at the Cheesecake Factory and 3.3% at the Grand Lux Cafe for the year.

The company plans to open up to 21 new restaurants in fiscal 2006, including up to three Grand Lux Cafes, executives said during the conference call. The majority of the openings will occur in the second half of the year, with signed leases or letters of intent already in hand for nearly all of the planned fiscal 2006 openings. The schedule calls for two new locations in each of the first two quarters, two in the second quarter, five to six in the third quarter and 11 to 12 in the fourth quarter.

The company describes its new concept as "a broad-based Asian concept with very little Chinese influence," explaining that its interest in this category is based on the growing popularity of a wide variety of Asian foods among Americans. The company has not signed a lease for the new restaurant yet, but is evaluating potential sites and expects to open the first new-concept location by the first half of fiscal 2007. Despite the pursuit of this new concept, the Cheesecake Factory expects its namesake brand and the Grand Lux to be its two primary drivers of growth for the time being.

The Cheesecake Factory Inc. operates 103 upscale, casual dining restaurants under the Cheesecake Factory name and seven upscale, casual restaurants under the Grand Lux Cafe name. The company said it is very confident in its opening plans, pointing out that they will lead to 20% growth in square footage. However, since many of the openings are late in the year, the benefits are not expected to occur until fiscal 2007.