The Cheese cake Factory growing with its fat business

The Cheesecake factory Inc. is going towards new era after passing two milestones in 2005. It has reached reaching $1 billion in annual sales. According to the analyst this new era will bring enviable growth and prosperity for The Cheesecake factory Inc. It is opening its 100th restaurant.

It is said that this will be another milestone of The Cheesecake Inc. But industry veterans averts that a history-making third performance landmark also can be claimed by the chain, whose average per restaurant sales already rank at the top of the casual-dining pack. In the beginning of this year it was considered that the cheesecake factory is the number one restaurant brand to reach the $1 billion profits mark with fewer than 100 restaurants.

It has completed its twenty-seven years. After twenty-seven years the Cheesecake factory Inc. has first time landed in Beverly Hills, California. The company will complete 2005 with 110 restaurants, with 103 Cheesecake Factory outlets and seven Grand Lux Cafes, as well as one Cheesecake Factory Express unit, in the Disney Quest family entertainment center in Orlando, Fla.

The cheesecake Factory has issued a license to the two

bakery-safe units. David Overton, the company's founder, chairman and chief executive stated "Many people took many bets that Cheesecake Factory would implode because of the complication factor, but we think we're stronger and operations are better than ever." Overton is referring to the brand's now-legendary capability to live large: Large restaurants with a great, something-for-everyone menu that serve huge portions to large numbers of people. Analyst says that the company has got immense power to manage complexity which has kept competitors at bay.

The imminent end of the present fiscal year has been a particularly hectic for the Calabasas Hills-based company. In its 18th newly opened restaurants in 2005, nine were opened in the forth quarter. It is astonishing that four of the restaurants were launched in one eight-day period. For Overton, however, the Cheesecake factory is middle in its eventual ambition of opening 200 Cheesecake Factory units as well as a total of 150 Grand Lux Cafes across the country. Overton said "Cheesecake Factory is only in about 45 of the top 100 major markets. And not all of those markets we're in are fully penetrated." They have future plans which are already well prepared. They are planning to open another 21 restaurants in the year 2006, including 17 Cheesecake

Factory brand units and four Grand Lux Cafes, which are estimated to extend the company's income growth rate of about 20 percent. Overton mentions this pace as "healthy."

In the coming year Cheesecake factory has planned to open a bakery facility near Raleigh, N.C. This will make signature desserts for the companys restaurants situated at east of the Mississippi River and the desserts for retail sale, mainly at warehouse outlets, such as Costco and Sam's Club. All the bakery production is maintained at the Calabasas Hills plant. It also has corporate offices near Los Angeles and cakes are shipped to different parts of the country.

The company is also planning to open a new plant in North Carolina. It can add up two more production lines which will ease up the shipping costs and allow the company to enlarge on retail bakery operations, said Michael Dixon. The Cheesecake

Factory's senior vice president for finance and chief financial officer Dixon said The warehouse clubs are all growing," Dixon said. "This will allow us to grow with them.

In the third quarter 2005 the bakery production accounted for nearly 5 percent of overall revenues, including desserts sold under The Dream Factory brand at other restaurants. Cheesecake Factory desserts are carried also by the Barnes & Noble cafes across the country. For the restaurants system wide, revenues for the third quarter ending Sept. 27 went up to 18 percent to $292.8 million, and net income went up to 43 percent to $21.9 million. Analysts forecast that the company will end the year with more than $1.2 billion in sales.

Cheesecake Factory units are averaging $11 million in yearly sales or $1,000 per square foot with the largest-grossing unit in Honolulu ruling with $20 million in annual sales. Mark Kalinowski, an analyst for New York-based firm Buckingham Research wrote Most restaurant companies would be foolhardy to attempt to run a chain of restaurants that generate the average-unit volumes that Cheesecake Factory generates." He added that Effectively the operational complexity involved in managing a

Cheesecake Factory restaurant or a Grand Lux Cafe restaurant acts as a barrier to entry within an industry in which erecting such barriers can be quite difficult to do." Kalinowski averted that the Cheesecake factory will have to make lot of efforts to maintain the infrastructure to support future expansion. Dixon said Price raises over the past year have brought The Cheesecake Factory's average check to $16.60, up from $16 at the end of 2004, and the average annual price increases of 1.5 percent to 2 percent will continue next year.

After the company became public with five units in 1992, its year end same store sales numbers have continued to be positive. This year the Cheesecake Company is expecting 1.8 percent increase which is lower than the same store increase of 3.9 percent for fiscal 2004.

Overton notes that this decrease is a part as the Cheesecake Factory is very popular. It is because the restaurants are opening with $300,000 in sales per week. Same-store sales assessments are not presenting dramatic increase as the restaurants do well from day one. It is quite obvious that the comparable-store sales in the third quarter would have been higher apart from having a raise of 0.9 percent for The Cheesecake Factory.

The menu at Grand Lux is a little less complex and most desserts are baked in house, but otherwise the ideas are very parallel. Miller stated about the Grand Lux Caf idea that "It's not about being different, it's very synergistic." And according to Dixon Grand Lux Cafes have averaged about $11.2 million in annual sales per unit.