Share Price: $21
Sticker Price: $8
What happened to Cheesecake Factory?
On the surface, this decline isn’t a surprise. This restaurant likes to strategically position itself near malls and malls are starting to go out of business which means this restaurant chain is feeling the pain.
I did a little more research and there are a few other reasons why the stock price is declining.
1. They menu is way too big. 250 items too big. That makes it difficult for the consumer to make a choice and more difficult for the kitchen to keep up. Too many items on the menu means a higher head count behind the scenes. Higher head count = higher overhead operation costs. Not fun.
2. The food isn’t cheap. The average meal is close to $20. In comparison, Applebee’s is about $10. Although the food is better quality at Cheesecake, double the price can steer a large percent of the population away.
3. Cheesecake Factory has been facing legal issues over the last few years due to food quality. Trying to cook too many meals at one time makes it hard to monitor the quality of meals, especially fish and pork.
What are your thoughts on Cheesecake Factory?