Cheesecake Factory’s Profit Slips

From Reuters

Cheesecake Factory Inc. on Tuesday said quarterly net income, excluding a lawsuit-related reserve, fell slightly even as an increase in the number of its namesake restaurants helped offset the effect of severe weather in the Southeast.

The Calabasas company said earnings for the third quarter ended Sept. 28 fell to $12.8 million, or 24 cents a share, from $14.4 million, or 28 cents, a year earlier.

Excluding a reserve of $4.5 million, or 6 cents a share, that was established for pending lawsuits, the company earned 30 cents a share for the quarter, Cheesecake Factory said.


Wall Street analysts had expected the company to report earnings of 29 cents to 32 cents a share with an average view of 31 cents a share.

The company said it had established the reserve to pay expenses it might incur related to claims that Cheesecake Factory failed to provide employee meal and rest breaks, in violation of California labor laws.

Total revenue increased 25% during its third quarter to $247.7 million, and comparable restaurant sales increased 2.6% from the same quarter last year.

Chief Executive David Overton said the company was on track to open 16 new restaurants this year.

Cheesecake Factory’s shares fell 15 cents to $42.90 in Nasdaq trading.