Twenty years have passed since Evelyn Overton and her husband opened the first Cheesecake Factory restaurant in Beverly Hills. The Calabasas-based chain today owns and operates 23 outlets nationwide and that pace is about to ramp up.

Seven new Cheesecake Factory outlets are slated to open by the end of the year, with plans for 10 new restaurants each year, beginning in 1999 until the chain reaches 200 locations worldwide.

"Domestically we have room for 100 to 200 Cheesecake Factory restaurants; we have a very flexible concept," said Gerald Deitchle, the chain's chief financial officer. "We have them both in urban and suburban areas, office complexes, entertainment centers."

Michael Mueller, an analyst at Montgomery Securities, agreed that the growth potential for Cheesecake Factory Inc. is considerable.

"It's a great food-based concept," he said. "The (company) is relatively small. There could be at least 100 Cheesecake (restaurants)." Because of its broad appeal, the company could easily triple its presence and even go international, Mueller said.

Still, its popularity does not make it a "buy" at this point, according to David Rose, an analyst at Jefferies & Co. Inc.

"Currently, we have a 'hold' rating," said Rose. "We believe the company and concept are phenomenal. I haven't seen any other restaurant company that has had its consistent track record. However, their shares are currently overvalued."

Cheesecake Factory's stock hit a 52-week high of $27 on April 13, but has since trended steadily downward, closing on May 27 at $21. That price is still above the $12 the stock was trading at a year ago.

"If I could buy it at $16 or $17, then it might make sense," said Rose.

One possible reason the stock got ahead of itself, Rose said, is that retail investors often get excited about a popular restaurant concept.

As for its expansion, Cheesecake Factory receives several inquiries every week from parties interested in opening outlets in Asia, Europe and Canada, according to Deitchle. So far the company is holding out.

"If the right operating partner comes along, we'd consider it," said Deitchle. "The Cheesecake Factory is the most difficult restaurant (to run) from an operational perspective. It's not a cookie-cutter-type restaurant."

And because of that customized approach, said Deitchle, the company has no plans to franchise. "But we're not ruling it out," he added.

Deitchle says much of the success lies in the menu. The restaurants which are of the mid-range variety in price, not quite upscale but nicer than coffee shops feature more than 200 items, from burgers to pizza to seafood and steaks. In addition, the chain offers more than 50 kinds of cheesecakes.

"We have something for everyone," said Deitchle. "Most chain restaurants are boxed in by focusing on a single ethnic food or single focus, like steak or seafood."

It's a concept that the public has eagerly gobbled up. Since going public in 1992, the company has posted 23 consecutive quarters of same-store sales growth.

The only dip in annual net income over the past five years came in 1996 a 31 percent drop attributed to one-time start-up costs associated with a new bakery facility and several new restaurants being opened that year.

"This company has just been doing extremely well. It has had among the strongest same-store sales (of any U.S. restaurant chain)," said Mueller. "It's particularly amazing considering the range (of restaurants) in Southern California."

And the company is broadening its reach beyond Southern California. This month, a Cheesecake Factory is scheduled to open in Miami, with an outlet in Dallas soon to follow. The company also plans to open a 20,000-square-foot restaurant next year at the new Venetian Casino Resort in Las Vegas.

"It's an upscale dining concept that will have a high-quality menu especially created for the guests of the Venetian," said Deitchle.

The Cheesecake Factory started in the 1940s when Evelyn Overton began selling cheesecakes out of her basement in Detroit. Then in 1972, the Overtons moved to Los Angeles and opened a small bakery in North Hollywood. In 1978, Evelyn and her husband opened their first Cheesecake Factory restaurant in Beverly Hills to help promote their cakes.

Today, David Overton, Evelyn's son, is the company's chief executive and owns a 14 percent stake. (He was out of town and unavailable for comment last week.) His sister Rene has a 3 percent stake, but is not involved in day-to-day operations.

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