Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-Bear Stearns has initiated coverage of the Red Robin Gourmet Burgers chain, which is based here, and has issued an “outperform” rating for the chain at the same it has downgraded its rating for Calabasas, CA-based The Cheesecake Factory. Bear Stearns calls Red Robin “a well-positioned casual dining operator, in the early stages of growth,” but it cites “disappointing” earnings per share among the factors in its downgrading The Cheesecake Factory to “peer perform” from its previous rating of “outperform.”

Bear Stearns analyst Ashley Reed’s Red Robin report estimates that the 268-store burger chain’s earnings per share will grow at 20% or better annually for the next three to five years and that Red Robin will nearly quadruple its store base in the long term.

The chain targets families and teens in a way that creates differentiation from competitors, and differentiation “is critical in casual dining, particularly for smaller companies without a significant media budget,” Reed’s report says. It says the company is well positioned to grow to 1,000 U.S. stores eventually, including both company and franchisee expansion.The Bear Stearns outlook on The Cheesecake Factory is tempered by concerns that the chain may miss its earnings estimate again this year. “We are concerned about the potential effect on the shares of another below consensus year,” Bear Stearns says.

With The Cheesecake Factory now operating 93 units and approaching 50% of its targeted 200-unit potential, the analysts’ report says, it may be difficult for the company to raise the target number of total stores and it’s too early to expect the Cheesecake’s Grand Lux Café concept to grow significantly.

“We continue to believe that The Cheesecake Factory can likelygrow EPS 20% or better for the next several years,” Bear Stearns says. However, the Bear Stearns report cautions that as the chain gets closer to its target number of stores, the risk increases that earnings will be disappointing in comparison with financial analysts’ consensus expectations for those earnings.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information

GlobeSt. NET LEASE Awards 2021Event

These awards honor the industry's most influential and knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.