With The Cheesecake Factory set to open restaurants in Dubai and Kuwait next year, the Calabasas- based restaurant chain is making its first moves globally, a strategy that is expected to continue. Through its recently announced partnership with Kuwait-based Alshaya Co, one of the largest retail conglomerates in the region, The Cheesecake Factory plans to open 22 restaurants over the next five years in five countries- United Arab Emirates, Kuwait, Bahrain, Qatar and the Kingdom of Saudi Arabia. The franchise agreement also gives Alshaya Co. the opportunity to expand the agreement to include other markets in the Middle East and North Africa, Central and Eastern Europe, Russia and Turkey. “It definitely gives [The Cheesecake Factory] an ability to diversify overseas and expand its growth potential,” said Conrad Lyon, senior analyst with investment banking firm B Riley. “I think what you’ll see is as they learn more, and get to know more people in that international arena, this will be a stepping stone for further expansion.” The retail conglomerate Alshaya already operates a large portfolio of American brands in the Middle East including Starbucks, H & M., Pinkberry and PF Chang’s, and has a proven track record of successfully operating high profile brands in that market, according to Cheesecake officials. Cheesecake’s Chairman and CEO David Overton said the licensing agreement with Alshaya represents a significant step forward in the implementation of the company’s global growth strategy. “The Cheesecake Factory is an iconic brand and a consumer favorite, not only in the United States, but by reputation across the globe. Our agreement with Alshaya provides us with another avenue for growth and will enhance our ability to continue delivering shareholder value,” he said in a statement. The Cheesecake Factory has been able to build a powerful brand, growing in name recognition since the first restaurant opened in 1978, and yet the company doesn’t have nearly as many locations as other brands that have equal recognition, said Lyon. 163 restaurants Currently The Cheesecake Factory operates 163 full-service, casual dining restaurants throughout the U.S., including 149 restaurants under The Cheesecake Factory name; 13 restaurants under the Grand Lux Café name; and one restaurant under the RockSugar Pan Asian Kitchen mark. The company also operates two bakery production facilities in Calabasas and Rocky Mount, N.C. “The Cheesecake Factory is pretty much a household name, and yet it only has about 163 stores – if you look at their brand relative to the number of stores they own – it’s incredible,” Lyons said. “That brand power says a lot and will enable it to grow into these international markets.” The Cheesecake factory has been doing well domestically even during the very difficult retail climate. Increase in sales The company projected restaurant sales at The Cheesecake Factory and Grand Lux Cafe increased 0.9 percent in the fourth quarter of 2010 from the fourth quarter of the prior year. Total unaudited revenues were approximately $417 million in the fourth quarter of fiscal year 2010 as compared to $401 million in the prior year fourth quarter. The company expects to announce final results for the fourth quarter of fiscal 2010 on Feb. 10. Although the national market is arguably pretty saturated, Lyon said The Cheesecake Factory still has a lot of room to grow. The company is taking the approach of “very disciplined, managed growth”, he said, making sure that they invest in the right prototypes in the right locations locally, always keeping in mind high return on investment for shareholders. There’s little doubt, nonetheless, that the chain has its eyes set on the international market.
