Landlord wins $74 million in lawsuit with competitor over Cheesecake.
According to The New York Times, "The Galleria's owner, General Growth Properties, is also facing the prospect of substantial punitive damages because the jury found the company acted with "malice, oppression or fraud" by interfering with negotiations between the restaurant chain and Caruso Affiliated Holdings, the developer of the new shopping center. The punitive damage phase begins on Tuesday."
With the restaurateur's shares languishing near a multi-year low, this could be a good time to look anew at this once-hot growth stock.
The company enjoys phenomenal per-store sales and profitability -- they're nearly always full and the food is pretty expensive -- and currently has around 123 stores. There could be a lot of growth left to be had here. And it all comes at just 20 times earnings.
And the lawsuit also highlights the company's competitive strength: The brand is strong enough that General Growth Properties sought to stop the company from opening a location at a rival's mall. Can you imagine this happening with Applebee's or a similar second-tier chain? This lawsuit shows just how powerful of a draw Cheesecake Factory is.
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Reader Comments (Page 1 of 1)
11-10-2007 @ 7:24PM
floater99 said...
FYI, the $74M judgement isn't for Cheesecake Factory. It went to the developer of the rival mall. Cheesecake was only the subject of the lawsuit. The suit was between Caruso Affiliated (the rival developer) and General Growth. None of this judgement goes to Cheesecake.
11-11-2007 @ 11:45AM
Rick Lemmo said...
This headline is completely incorrect. Cheesecake Factory was not a party to this lawsuit. It was won by developer Rick Caruso of Caruso Affilitated Holdings.
I know because I work for Mr. Caruso.
Rick Lemmo
11-12-2007 @ 12:48PM
don said...
I believe the headline says Landlord. The Cheesecake Factory would be the tenant. Nothing in this article implies CCF would get money.