Should You Invest in The Cheesecake Factory?

PHOTO CREDIT: The Cheesecake Factory

OVERVIEW

The Cheesecake Factory Incorporation is a company based in the United States. The company operates a chain of 264 Cheesecake Factory restaurants in the United States and Canada. In these restaurants, the company serves a wide variety of cuisine, including both American and Italian food. The company was founded in 1972.

Why You Should?

  1. The Cheesecake Factory is a great reopening play. As more people get vaccinated, they will return to malls and public spaces around the world. This will cause a spike in sales for Cheesecake Factory store because most of their locations are in malls and in large public spaces, which have been shut down due to this pandemic. This will benefit the company and investors.
  2. The Cheesecake Factory will benefit off more COVID-19 stimulus. Not only will the company receive some of these funds in order to aid its recovery but people who have more disposable income due in part because of this stimulus will go out to a Cheesecake Factory restaurant in order to spend it. This will benefit both the company and its investors.
  3. The Cheesecake Factory has some good brand recognition across most of the markets that it will serve. It is known as a great fast-casual dining restaurant which serves good Italian and American food. This will benefit the company’s recovery as more people will flock to these restaurants due in part because of strong brand recognition. This will benefit the company and investors in the company.
  4. The company has seen rising revenues and profits over the past couple of financial years. Though this might not return for some time, these previous financial numbers have somewhat aided the company through these dark economic and financial times. This has benefited the company and investors in the company. In the financial year of 2019, the company reported revenues of around 2.33 billion and profits of around 99 million. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had lower revenues of around 2.26 billion but higher profits of around 157 million.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The Cheesecake Factory faces tough competition across all of the markets that it serves. In addition to small business competition, the company also faces competition from Chipotle, McDonald’s, Darden Restaurants, Shake Shack, and many others. This has hurt the company’s sales during this pandemic and might also hurt investors in the company.
  2. The COVID-19 pandemic has hurt the company’s sales over the past couple of financial quarters. This is because of the COVID-19 pandemic, which has shut down some of the company’s restaurants. Furthermore, this has also shut down indoor dining something which Cheesecake Factory relies on for most of its revenue. This has hurt both the company and its investors.

MY OPINION

In my opinion, I think that The Cheesecake Factory is not the best restaurant stock to invest in. This is because of stiff competition as well as this pandemic. However, it remains a decent reopening play, it will benefit off more COVID stimulus, it still has decent brand recognition, and has had rising revenues and profits in the past.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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