CAKE's dip below $100 is a buy for long-term holders due to multi-brand unit growth potential (Flower Child/North Italia) outweighing short-term margin risks.

the greatest stock in the world. Cheesecake Factory. Or shall we call it Cheesecake Factory down $27,000 here today.

So that horrible move from the cake got balanced out with the good old AMD.

Number one, we're going to talk about Cheesecake Factory. We're going to talk about is the stock a buy or not? The stock's finally under 100 again. So, I thought we'd talk about that.

All righty, ladies and gentlemen. So, cheesecake factory. Last time the stock was under $100 was way back uh in July, right? July. And then after that, it went above 100 and basically it's been there ever since, right? So, back under 100 now at this point in time.

Here today, Cheesecake Factory maintained at equal weight by Wells Fargo. So, they raised their price target to 105 from 90, but I mean that's where the stock just was, right? And so that was kind of like uh like basically they're kind of like almost saying like there's no upside in the stock.

Like if you're going to slap a 105 price target and the stock's around 105 like uh that's that's nothing, right? So that could have negatively affected the stock.

why like why do we need to freak out about this? Like like this is just ridiculous, right? And I mean you could have freaked out about this back in May, right? And then Cheesecake went on an absolute ripper rally after that.

So, it's just silly short-term stuff is what I would call it. Very, very silly short-term stuff that negatively affects stocks and brings the stocks down, right?

it leads into even fertilizer products and like like it's just thing after thing after thing. It's like a domino effect, right? And so next thing you know, you're stuck in this situation where everything's more expensive than maybe you're able to offset in the menu.

And if at the same time the consumer's a little in a weaker spot, it could lead you to lower margins. And that happened at Cheesecake Factory back in 2022. GK Factory margins went down quite a bit into 2023 if I recall and essentially and that's when I started really buying my position is 2023 right and their margins were down bad at that particular time and they got slice and dice by inflation

Right now, when it comes to Cheesecake Factories, there are an opportunity here, right? Well, here's the thing. If you look at Cheesecake Factories forward P, it's around a 21.

Right? Now, we could debate that maybe it's actually lower in reality than that. We could debate that maybe it's higher than that, right? Like let's say inflation slice and dice the consumer.

Uh the cost of running the business is more expensive, right? And they can't offset that over the next couple quarters. You could make an argument that maybe they're less profitable than than what you would expect.

And so maybe the forward P is actually like 24 or 25, right?

But the moral of the story is let's say this is accurate. Forward P of 21, right? Well, here's the thing. When you think about Cheesecake Factory, right, they have this unbelievable long-term growth that I talk about, right?

Like next decade of growth ahead, right? Cheesecake Factory, they're not going to grow units much there. They will grow units, but not much. 2 to 3% a year, right? But North Italia are talking about growing units 20% a year.

Flowerchild, 20% a year. Fox Restaurant Concepts, their other uh you know, bunch of different restaurant chains that they're trying out that many are highly successful. That's 10 to 15% annual unit growth, right?

That's a company that's got the next 10 plus years of growth ahead, right?

And you look at like Flowerchild, Flowerchild can put up a very similar sales per square foot, but they're doing in a much smaller size, right? And so it doesn't cost nearly as much to build a Flower Child and you can fit them in a lot more locations.

And so if you look at Flower Child, they're talking about a market potential in North America of 70 or excuse me 70 700 700 Flower Child locations, right? Versus Cheesecake Factories 300.

And so and the Flower Child comps are insane. Like their most recent comps were, if I recall, was like 13%. Like that's that's unheard of. That's astonishing. Just ridiculous numbers, right?

And so Flowerchild is in a position here where if they keep accelerating the comps over the next few years and then you have this sort of runway of growth. I mean they have 44 Flower Childs right now and they're talking about going to 700. 700 like that alone is bigger than anything the company has going on.

Right. Then you have North Italia. North Italia's 51 locations. They're talking about taking that to 200 over time. And then the culinary dropout, the Henry, those have huge long-term opportunities as well, not like the flower child in North Talia, but they definitely have big long-term opportunities, maybe even Blanco as well. And so Cheesecake's like got it right.

And so the way I look at this, is this an opportunity to buy Cheesecake Factory stock? Listen, if you're focused on a company like this for the long term, any short-term weakness in the stock needs to be taken advantage of.

So if the stock's 90 bucks, 80 bucks, 70 bucks, 60 bucks, anything in there, right? you you know if you're really a believer of this company, you believe this is going to be a stock that is several hundred dollars years from now because of this runway of growth and where they could take margins, where they could take profitability, etc., right?

Uh guess what? Like we got a long long flipping flapjack and way to go. A long way to go in regards to this one. So you can't get too caught up in the short term.

Listen, all these chains got built out over several decades, right? And all them had countless crap to go through in the short term. All of them. so much BS, so much baloney, you know, like like think about, you know, all the the, you know, inflationary times they had to go through or deflationary times or recessions or lawsuits or health scares.

I mean, think about that for a moment. And yet, you know, over the long term, these became massive companies. And so whenever you're thinking about companies like this that have a, you know, a 10year plus runway of growth ahead, like just understand there's going to this is not the last time Cheesecake's going to go through crap.

They're going to go through a lot more. And as a long-term investor, you have to be okay with that.