Stock in the Cheesecake Factory Inc. fell by double digits Wednesday after the Calabasas-based restaurant chain released second-quarter results that beat analysts’ expectations.The company said its cost of sales inflation is expected to be 3 percent in the last half of the year, which some analysts cited for the drop in stock prices. Also, it anticipates greater expenses in business reinvestment.Earnings for the quarter ended June 29 were $17 million, up from a loss of $70 million in last year’s second quarter. On a per share basis, adjusted earnings in the second quarter were 80 cents, which beat analysts’ expectations by 5 cents. In last year’s second quarter, earnings per share were a negative 90 cents.Revenue in the quarter was $769 million, up nearly 3 percent from analysts’ expectations of $748 million. Revenue was $296 million in the second quarter of last year and $603 million in the pre-pandemic second quarter of fiscal 2019.“Comparable sales at the Cheesecake Factory restaurants far outpaced pre-COVID levels during the second quarter and we leveraged the sales to drive solid bottom line performance,” David Overton, chairman and chief executive said in a statement. “Sales across our concepts further strengthened early in the third quarter as nearly all of our restaurants are now operating with no indoor dining restrictions.”Comparable restaurant sales at the Cheesecake Factory restaurants increased 150 percent year-over-year in the second quarter of fiscal 2021, according to the company’s statement. Relative to the second quarter of fiscal 2019, comparable restaurant sales increased 7.8 percent.“Additionally, we opened three new restaurants during the second quarter and with our most recent opening last week, we are on track to meet our development objective to open as many as 14 new restaurants across our concepts this year,” Overton said.In addition to increasing sales, the company has seen continued rising in operating costs partly because of seasonal sales shifts and anticipated wage inflation.“Following the benign commodity inflation we experienced in the first half of the year, we currently expect total cost of sales inflation of approximately 3 percent for the back half of the year,” Matt Clark, chief financial officer of the Calabasas-based restaurant chain, said in the sales call. “We currently have 3 percent pricing in the Cheesecake Factory menu and plan to remain at that level for the second half of the year. We believe this is sufficient to cover the inflationary factors currently contemplated.”Cheesecake Factory owns and operates 301 restaurants in the United States and Canada under brands including The Cheesecake Factory and North Italia. Internationally, 28 Cheesecake Factory restaurants operate under licensing agreements.Stock in the Cheesecake Factory (CAKE) closed down $7.26, or 13.2 percent, to $47.75 a share on Wednesday, a day when the overall Nasdaq went up 0.7 percent.
