Indigestion at Cheesecake

These are tough times for the locally based casual dining chains like California Pizza Kitchen and Cheesecake Factory. As public companies, they rely on steady growth to keep investors happy. That means opening new stores, year after year. Trouble is, you can't keep doing that when times get tough. And when you open fewer stores, you generate lower-than-expected revenue. Cheesecake has decided to cut back, opening at most nine new stores next year, compared with 21 the year before. There also are plans to increase menu prices by 1.5 percent, though that might not be enough to satisfy some larger shareholders who have recently groused about needing to trim portions and charge more (LABO). These decisions come on top of fourth-quarter EPS of 22 cents, four cents under what Wall Street was looking for (that’s a lot). Writing in Motley Fool, Rick Aristotle Munarriz says he's owned Cheesecake for several years, and even bought some for his son so he could get excited about the stock market. "Now I feel like Chicken Little as I'm trying to find better opportunities," he says.