Author Topic: CAKE - The Cheesecake Factory  (Read 16272 times)

SharperDingaan

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Re: CAKE-The Cheesecake Factory
« Reply #40 on: November 13, 2017, 04:52:19 AM »
You hit the nail on the head on multiple levels nofreelunch. It's ultimately a commodity business with no real moat. Overton is 71 and will eventually have some tool replace him who will lever up the balance sheet and chase new concept growth with no sustainable advantage. I get the impression from the cc scripts he calls most if not all the shots and rightfully so, he's a genius. At this point though, Overton is showing no signs of slowing down and they have pretty easy access to their stated 9% growth target for the foreseeable future.

This misses most of what this business is really about. They sell quality cakes (product), in a congenial atmosphere (experience), and are the place to go to provision your event (story). The combination allows them to charge a higher price, and keep a higher margin. Good marketing, good operational execution.

Expansion for them isn't more of the same.
It's 1) splitting the offerings into a core of 'standards' at a lower price (volume > margin loss), and an unlimited array of 'customs' at a higher price (margin gain > volume loss); 2) selling cake by the slice in European style 'coffee shops' (luxury market); and 3) getting paid for apprenticing master cake makers. Turn the limitation (working life of the master cake maker) into an asset, raise the number of these people that you have (more product to sell), and reduce exposure to the loss of any one of them. Sustainability.

Great business, but not so much as an investment. You have to sit on it, get paid via dividend, and hope for a buy-out when Overton chooses to 'retire'. Awesome if this is for retirement cash flow (dividend); otherwise - not so great.

It's not enough to find a 'great' business,
it also has to be consistent with your philosophy and investment requirements.

SD

 
   


DooDiligence

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Re: CAKE-The Cheesecake Factory
« Reply #41 on: November 13, 2017, 06:00:24 AM »
You hit the nail on the head on multiple levels nofreelunch. It's ultimately a commodity business with no real moat. Overton is 71 and will eventually have some tool replace him who will lever up the balance sheet and chase new concept growth with no sustainable advantage. I get the impression from the cc scripts he calls most if not all the shots and rightfully so, he's a genius. At this point though, Overton is showing no signs of slowing down and they have pretty easy access to their stated 9% growth target for the foreseeable future.

This misses most of what this business is really about. They sell quality cakes (product), in a congenial atmosphere (experience), and are the place to go to provision your event (story). The combination allows them to charge a higher price, and keep a higher margin. Good marketing, good operational execution.

Expansion for them isn't more of the same.
It's 1) splitting the offerings into a core of 'standards' at a lower price (volume > margin loss), and an unlimited array of 'customs' at a higher price (margin gain > volume loss); 2) selling cake by the slice in European style 'coffee shops' (luxury market); and 3) getting paid for apprenticing master cake makers. Turn the limitation (working life of the master cake maker) into an asset, raise the number of these people that you have (more product to sell), and reduce exposure to the loss of any one of them. Sustainability.

Great business, but not so much as an investment. You have to sit on it, get paid via dividend, and hope for a buy-out when Overton chooses to 'retire'. Awesome if this is for retirement cash flow (dividend); otherwise - not so great.

It's not enough to find a 'great' business,
it also has to be consistent with your philosophy and investment requirements.

SD


Thanks, your statement re: expansion buckets & Master Cake Makers is provocative.

I'm gonna keep watching & if it gets egregiously cheap, I'll look again.

Sell side gets paid to say YES & buy side gets paid to say NO.
« Last Edit: November 13, 2017, 06:02:28 AM by DooDiligence »
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Gregmal

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Re: CAKE-The Cheesecake Factory
« Reply #42 on: November 13, 2017, 03:35:09 PM »
Would have to think Roark/BWLD is a big time positive in terms of implications for CAKE.

Sullivcd

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Re: CAKE-The Cheesecake Factory
« Reply #43 on: June 15, 2018, 12:59:16 PM »
Congrats to everyone who invested in this great company. I sold today on the buyout rumor that is making the stock fly.

DooDiligence

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Re: CAKE-The Cheesecake Factory
« Reply #44 on: June 15, 2018, 02:45:40 PM »
Congrats to everyone who invested in this great company. I sold today on the buyout rumor that is making the stock fly.

(sound of me smacking myself in the forehead...)

I bought Berkshire instead so it's all good.
BRK.B - 24.9% // Healthcare 22.5% - EW NVO // Auto's & Oil 18.4% - CLB GPC PSX VDE

Banking 9.4% - WFC // Entertainment 4.7% - DIS // Drinkers & Smokers 6.4% - MO

Retail 9.0% - ULTA VLGEA

---

%'s held @ MV 2/25/20 fully invested
18 months of $

i trumpet my ignorance

https://twitter.com/tunawis

rkbabang

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Re: CAKE-The Cheesecake Factory
« Reply #45 on: March 26, 2020, 09:43:53 AM »
Not good.

The Cheesecake Factory Tells Landlords Across the Country It Won’t Be Able to Pay Rent on April 1
https://la.eater.com/2020/3/25/21194144/cheesecake-factory-rent-strike-chain-restaurant

ScottHall

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Re: CAKE-The Cheesecake Factory
« Reply #46 on: March 26, 2020, 10:15:53 AM »
I'm kinda retired from posting here but I wrote something about this from an alt perspective just this morning so I figured why not share it.

Probably wrong I'm just spouting off etc. etc. but maybe it's helpful in some way IDK.

https://lizardbrain.substack.com/p/corona-cheesecake-and-testing-the

farewell again friends <3

rkbabang

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Re: CAKE - The Cheesecake Factory
« Reply #47 on: March 26, 2020, 11:13:56 AM »
I'm kinda retired from posting here but I wrote something about this from an alt perspective just this morning so I figured why not share it.

Probably wrong I'm just spouting off etc. etc. but maybe it's helpful in some way IDK.

https://lizardbrain.substack.com/p/corona-cheesecake-and-testing-the

farewell again friends <3

Interesting.  Thanks for sharing.

LC

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Re: CAKE - The Cheesecake Factory
« Reply #48 on: March 26, 2020, 11:35:25 AM »
Leases are broken all the time. Property owners rarely expect to extract full payment from a bankrupt tenant who broke their lease.

Let's say CAKE refuses to pay. The property owners have two options:

-Let CAKE stick around, maybe make some deal where the property owner gets paid some % in the future.
-Or, the owner kicks out CAKE, finds a new tenant, and sues CAKE to eventually collect their capped payout in BK courts.

Now, cheesecake factory is not your neighborhood bakery and the property owners are not a little old couple who own a duplex. So you're looking at large CRE owners negotiating with a large tenant. So the game gets a little more involved. Can SPG for example, shut the doors on 30 CAKE restaurants, find new tenants, and launch a lawsuit against CAKE (all during a viral crisis) for a lower price than letting CAKE bail on rent for a month or three? And, how will that affect SPG's reputation among future tenants, investors, etc.? I don't know, but that's a big chunk of what this boils down to.
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roark33

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Re: CAKE - The Cheesecake Factory
« Reply #49 on: March 26, 2020, 01:27:23 PM »
This cap from bankruptcy is only if CAKE actually files for bankruptcy, if they just don't want to pay rent, there is no cap.