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RVB's Market Musings

What began here as an avenue to interact and learn has far exceeded those goals.

If you are a prospective employer, please consider this site a place where you can see my passion for investing...

Wednesday, July 05, 2006

Rethinking an idea

In an April edition of the Milwaukee Journal Sentinel, I recommended the Cheesecake Factory (CAKE) and Panera Bread (PNRA).

Cake hasn't fared well since the article interview: down 21%. Ouch. What did I miss?

The company isn't growing like it was, and there is a very simple reason why: patrons are no longer willing to endure the waits associated with eating at CAKE. It's not the food - the food is still delicious. What I believe is going on is that the company isn't growing its store base fast enough. The newer stores tend to drive same-store sales growth AND top-line growth. The days where these establishments increase same-store sales at a rapid pace is ending - the newness is wearing off.

The story is changing...and I would steer clear of CAKE.

Meanwhile, the Panera story remains in tact. We just need a bit of a sale in the stock.


At July 06, 2006 5:22 AM, Anonymous Mick Weinstein said...

Hey RVB,

This could be another contributing factor:


At July 06, 2006 2:10 PM, Blogger rvb1977 said...

Thanks, Mick

It's interesting that the sit-downs are getting pummelled. Chipotle and Panera continue to roll.

I guess that the lower price points combined with speed mean that these guys are more bulletproof.

Chipotle is a buy on any weakness, as is Panera - which, to me, is almost an outright buy (get it below $65)


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