Why Cheesecake Factory Stock Popped Today

Shares of Cheesecake Factory (NASDAQ: CAKE) rose on Wednesday after the restaurant operator's profits exceeded investors' expectations.

Strong sales and earnings growth

Cheesecake Factory's revenue rose nearly 8% year over year to $1 billion in the second quarter, driven by new store openings and higher sales at existing locations.

Comparable sales at the company's namesake Cheesecake Factory restaurants, which include revenue from stores open for at least a year, grew a solid 5.8%, outpacing the broader casual dining industry.

"Continued momentum from our menu innovation, rewards program, and marketing efforts strengthened consumer awareness and engagement, contributing to our strong top-line performance," CEO David Overton said.

Additionally, Cheesecake Factory's labor productivity and food efficiency initiatives helped to boost its profit margins. The company's adjusted net income jumped 25% to $69.7 million, or $1.44 per share. That was well above Wall Street's estimates, which had called for per-share profits of $1.18.

Plenty of room for further expansion

Cheesecake Factory plans to open a total of 26 new restaurants this year. It currently operates 375 company-owned restaurants in the U.S. and Canada and 36 licensed locations in other international markets.

Management sees a long runway for store-count growth across its North Italia, Fox Restaurant Concepts, and Flower Child brands, as well as continued expansion of its flagship The Cheesecake Factory restaurants.

"Our success has long been driven by our commitment to delivering the exceptional hospitality, high-quality food, and memorable dining experiences our guests have come to expect," Overton said. "Together with our experienced operators, differentiated concepts, and strong financial foundation, these efforts position us well to continue executing our strategy, delivering profitable growth, and creating shareholder value."

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.