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The Cheesecake Factory F2Q08 (Qtr End 7/1/08) Earnings Call Transcript

CAKE like everyone else is feeling the rising pressure from the increased costs of operation. All utility bills are skyrocketing, especially gas for restaurants. The prices of all commodities like beef, seafood are increasing. Don't forget the impact of our recent flood issues in the mid west states impacting produce, grains etc... Nearly every food purveyor has tacked on a fuel surcharge anywhere from 8 to 15 dollars per delivery. After reading the transcript of their call, they seem to have probably adjusted how store level labor costs are tracked. Many operators have focused on an employee productivity matrix. This matrix focuses solely on hours used for sales generated. This requires their KMS to only schedule a preset number of hours based on actual food sales forecasted. In my place of employment, this matrix scenario dropped our actual kitchen labor cost nearly 1.5%! As for their expansion and scaled down venues. There are reasons to actually look to open new stores. In the current market, landlords are more willing to offer operators such as CAKE even better deals. These landlords are feeling the pressure of having no tenants on their properties! With the likes of Macaroni Grill, Ruby Tuesday and others closing units despite their "discounted menus", CAKE continues to operate without discounting. They continue to be very selective with their site choices and focus on finding alternative avenues to increase sales. Their venture into enlisting the help of 3rd party delivery services is a great idea. CAKE is and remains a company that is built to last.