Cheesecake Factory beats expectations

Some Americans’ answer to the recession blues: Eat more cheesecake -- or at least don’t eat a lot less.

Shares of Cheesecake Factory Inc. rocketed 19% on Friday after the Calabasas Hills-based restaurant chain late Thursday reported better-than-expected first-quarter sales and earnings.

Same-store sales were down 3.4% compared with a year earlier, but that was far better than the 6% decline that analysts, on average, had expected.

The first-quarter drop also was about half the decline in the fourth quarter -- another sign that many consumers have opened their wallets a bit wider in recent months.

And although customers continue to reduce alcoholic beverage orders, dessert orders are up compared with a year earlier, Cheesecake Factory said.

Net income last quarter was $10 million, or 17 cents a share, down 30% from a year earlier. But analysts had expected earnings of just 10 cents a share.

Sales were $393 million, basically flat with a year earlier.

The company raised its earnings projection for 2009 to a range of 67 cents to 75 cents a share, from the 57-cents-to-67-cents range it forecast in February. The stock shot up $2.89 to $17.81, its highest close since June. The shares fell as low as $5.32 in late November, when it looked to some investors as if economic Armageddon was imminent.

Ironically for a restaurant chain known for its huge portions, Cheesecake Factory got a boost last quarter from its new Small Plates & Snacks menu.

Chief Executive David Overton said on a conference call with analysts Thursday that guests were using the small-plates menu “as an add-on when they might not have otherwise ordered an appetizer and also for shared dining.”

Overall, customers who ordered from the small-plates menu had higher check averages than customers who didn’t, Overton said.

That impressed Jeff Farmer, an analyst at Jefferies & Co. But with the stock already up 76% this year, and trading for 24 times the high end of the company’s 2009 per-share earnings forecast, Farmer maintained his “hold” rating on the shares.

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