The Cheesecake Factory Incorporated (NYSE: CAKE) is a stock worth watching. The Cheesecake Factory has been able to meet its new 52-week high of $38.67. The popular restaurant chain will now be using IBM's (NYSE: IBM) Big Data Analytics to analyze large data sets from its 175 locations across the U.S. Being able to leverage collecting big data of The Cheesecake Factory's customer behavior patterns is significant. The use of Big Data analytics will help in providing the high quality experience to its customer base. The Cheesecake Factory's shares have had an excellent run this month. Current earnings per share is $1.78. The Cheesecake Factory began trading ex-dividend on March 04, 2013. A cash dividend payment of $0.12 per share was paid on March 19, 2013. Zacks Investment Research reported The Cheesecake Factory forecasted earnings growth in 2013 of 13.75%, compared to industry average of 17.9%.
IBM Big Data analytics built on IBM Power Systems and IBM Business Partner, N2N Global's solution will allow The Cheesecake Factory quickly, in real time to send alerts throughout its restaurant locations, filter through significant areas, which can result in the removal of its products or events. The key objectives are in customer satisfaction areas.
Big Data Analytics is crucial to The Cheesecake Factory as the restaurant chain deals with large data volumes and varieties of data on a daily basis. The business model of restaurant supply chains is very demanding. Timing is a crucial element in this type of process. The company being able to sift through complex data sources and communicate critical supply chain data delivers it new efficiencies and critical time saving information in real time.
"Advanced analytics technology helps us better leverage Big Data to ensure freshness and quality for our guests," shared Dr. Ata Baroudi, Vice President of Quality Assurance & Food Safety for The Cheesecake Factory Incorporated. "We collect and maintain large amounts of data. N2N Global and IBM are assisting us with utilizing this data to better maintain the highest standard of quality."
Customer loyalty programs also have increased, contributing to The Cheesecake Factory's aggressive marketing efforts. Using IBM's Big Data analytics will further help the process. When there are large amounts of data being generated through loyalty programs measurement in analytics can be complex. To overcome big data challenges, a common approach is testing several specific experiments. Whether it's data from customer feedback to optimization-related data, asking the right questions and acting as the problem solver this can resolve such issues. Restaurateurs are offering loyalty programs to enhance value dining as well as hone sales at a time when customers spend less enthusiastically on dining and seek incentives for doing so.
Opportunities are presented for companies such as IBM. The National Restaurant Association reported restaurant sales top over $660 billion per year, and with nearly a million eateries in the United States alone. Restaurant sales worldwide top $1.8 billion. According to the National Restaurant Association, the restaurant industry is projected to expand in 2013 on the back of the U.S. recovery. Another benefit is continued job growth in this sector. The National Restaurant Association expects the restaurant industry to create 2.4% more jobs compared to a projected 1.5% gain.
The Cheesecake Factory restaurant chain also has generated buzz this year for its overseas expansion. It opened its third location in the Middle East on Dec. 31. It has also announced plans this month to move into Latin America, opening an outlet in Mexico City. Restaurateurs are primarily concentrating on emerging markets that provide ample opportunities for expansion. The middle income population in emerging countries lures companies to shift to these countries due to an oversaturated domestic market.
The Cheesecake Factory is a part of the Consumer Services sector, which includes companies such as McDonald's Corporation (NYSE:MCD) and Starbucks Corporation (NASDAQ:SBUX). The Cheesecake Factory may not be the next McDonald's but its P/E ratios are definitely in line with McDonald's. The Cheesecake Factory's sales have outpaced McDonald's but the company still has its challenges to overcome from the conversion of sales to earnings growth.
Now is a great time for investors to be bullish for The Cheesecake Factory. The stock has shown support around $36.87 and resistance in the $37.67 range. Shares continue to edge even higher. Expect the labor and housing markets to continue recovery and therefore in the months to come, a rebound in consumer confidence. With The Cheesecake Factory reaching a 52-week high of $37.86, its gains in the last three sessions have gone to over 4%. The stock has since seen a series of higher highs since the start of this month. Year-to-date, it has now gained nearly 16%.
The Cheesecake Factory owns and operates 175 restaurants in the United States, including 14 Grand Lux locations.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.