Cheese Cake Factory

CONSULTANT REPORT

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ANALYSIS OF GLOBAL EXPANSION

Presented to: Dr. Kent Springdal

The International Business Environment

Word Count: 2,770

29 October 2015

Table of Contents

1. Executive Summary

In response to the good world economic growth, the global restaurant industry is increasing in a striking way. In order to preserve higher sales and revenues, companies must seek new strategies to attain success. One of those good strategies is to expand in countries that possess healthy economic situation. The Cheesecake Factory already has well-recognized footsteps in America and Middle East, but still needs to adjust with the high competition in these regions to get distinguished. Therefore, one of the regions that the Cheesecake Factory has no presence in it is China, the country with the highest population in the world. By entering the Chinese market, the restaurant would be able to target the upper middle class of people due to the considerable rise in their forecasted disposable income throughout the years. Taking the advantage of this will boost The Cheesecake Factory's sales and so its profits.

1. The Company Profile:

The Cheesecake Factory Incorporated (TCFI) is an American Casual Dining Restaurant that serves cheesecakes and different kinds of food.  TCFI has been a prominent restaurant for 36 years and has earned its success through offering very large portions of food and delectable cheesecakes at reasonable prices. The creative menu and the decoration of the restaurant are important distinguishing attributes as well.

In 2014 and for a third year in a row, the Company has recaptured the title of "Most Preferred Casual Dining Restaurant" by the Nation's Restaurant News Consumer Picks (The Cheesecake Factory, 2015). The cheesecake Factory was selected for its menu assortment and for its outstanding reputation that includes Food Quality, Service, Cleanliness and Value (Mark Brandau, 2015). Winning such award for three times indicates that the Company has been always seeking for a competitive position to attract the customers and to meet their satisfactions at every time they visit the restaurant. Moreover, this has made the Cheesecake Factory the leader in the dining industry and made it generating higher profit margins year after year (Mark Brandau, 2014).

The Company has created unlimited opportunities for its growth during the past 5 years which can be noticeably shown through the gradual increase of its revenues through the years from 2010 to 2014. The Cheesecake Factory made $1,977 revenues (in millions) in 2014 which equals to an increase of 5.3% from the $1,878 revenues earned in 2013 (The Cheesecake Factory, 2015).Getting higher volumes of sales and revenues came out from the fact that the Cheesecake Factory always wanted to leave a fingerprint in each spot around the world. So, to be on this line, the Company has adopted the strategy of Global Expansion throughout the years. In which, the start was in the US, specifically in California and then growing up within the multiple States of America to reach 182 restaurants in total. Furthermore, The Cheesecake Factory has broadened the local circle and entered the International Market through the Middle East, Latin America and Asia, all under Licensing Agreements (The Cheesecake Factory, n.d.).

1. Restaurants Industry Sales and Locations:

The restaurant industry represents a leading segment among all other segments, forming more than 50% of the overall industry value (King, 2013a).Selecting a right geographic location for expansion is a crucial decision for The Cheesecake Factory because it will have a powerful impact on its profits. Typically, this can be attained through considering locations in countries where the economic situation is in a growth state; so ensuring higher sales.

And, as long as "sales" indicates to how much the consumers buy, then, the plan that should be followed to increase sales is to look after what those consumers "want" in order to let them "buy". In other words, to look after the demand. Generally, there are lots of factors that can increase or decrease the demand on restaurants, such as, population, demographics, economic growth, health consciousness and convenience. The effect of these factors varies from country to another (Chen, 2015).