All is not sweet at The Cheesecake Factory Inc. (NASDAQ: CAKE) as the company updated its outlook for the second quarter of 2017.
Sales are expected to drop by 1% compared to Q1 of fiscal 2017 as the company has cited volatility and subpar weather conditions in the downgraded stance. Having initially made the guidance of a 1%-2% increase on top of their Q1 results, the company has now backtracked and has felt the loss of confidence, with stock price dropping by over $5, or 9%.
“We have seen heightened volatility in week to week sales trends, indicative of uncertainty on the part of many consumers. Specifically, we have seen pockets of softness as we moved through the quarter, notably in the East and Midwest where we also faced unfavorable weather that reduced patio usage” said David Overton, Chairman and CEO, while also claiming that The Cheesecake Factory has been consistently outperforming the casual dining industry.
As the company is poised for growth in the long run this should not come as a major setback, however with the landscape of the market shifting towards the preferences of millennials, the industry should be in for some changes, namely technological as well as demographical. Should The Cheesecake Factory find a way to stay current in the changing times, as well as overcome the volatile nature of Commercial Food Services, it can continue its growth, but those are big ifs. The Piper Jaffray 37th Annual Consumer Conference in New York City tomorrow at 9:05 a.m. EST should shed more light.