CALABASAS HILLS, CA-The Cheesecake Factory restaurant chain posted what the company termed “strong sales” in the latest quarter despite issues that are making life tough for the casual dining industry. Company officials discussed the sales and expansion plans that remain on track during a quarterly conference call with financial analysts on Tuesday.

For the second quarter ended July 3, the company reported that its comparable restaurant sales increased 1.1% in the quarter, with that figure composed of a 0.8% increase at the Cheesecake Factory and a 5.7% increase at its Grand Lux Cafe format. Revenues increased 16% to $373.2 million from $322.6 million in the second quarter of fiscal 2006. Net income and diluted net income per share were $23.7 million and 33 cents per share, respectively, compared with $23.4 million and 30 cents the year before.

David Overton, Chairman and CEO, said that the company was “encouraged by our competitively strong sales during the first half of this year in spite of the industry issues facing casual dining operators.” The comment was a reference to a number of factors that have been slowing growth in the casual dining segment of the restaurant industry lately, including a generally slowing economy, high gas prices and a retrenching housing market that has dampened consumers discretionary spending.

Overton commented in the conference call that comparable sales in the early weeks of the third quarter “remain positive and in-line with our winter menu price increase.” He said that the company’s summer menu began rolling out last week and that an additional 1.5% in menu pricing “should help to offset known cost pressures for the second half of the year.”

The company opened two Cheesecake Factory restaurants during the second quarter and remains on track to open as many as 21 new restaurants in fiscal 2007. Its expects to open six Cheesecake Factory restaurants and one Grand Lux Cafe in the third quarter, with the majority of new restaurant openings planned for that quarter to be located in the Northeast.

Overton pointed out that the Northeast “has been an extremely successful area for us, given the population density in those markets and the popularity of our concepts in that region.” The newest Cheesecake Factory, for example, is one that opened in Braintree, MA in late June.

The Cheesecake Factory Inc. operates 125 upscale, casual dining restaurants under the Cheesecake Factory name, plus nine upscale casual Grand Lux Cafe locations.

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