Obama mocked Cheesecake Factory, Trump defended it — meanwhile its sales are humming, and the stock has more than doubled this year

Yet Cheesecake Factory is back in the news for a different reason: a verbal tiff between two U.S. presidents during the final week of October, which caught the restaurant chain in a crossfire between two political heavyweights. The sparring began with a quip from former President Barack Obama at a Democratic Party campaign event in Cleveland on October 24.

“He seems very focused on home renovations. He should be on HGTV,” Obama noted, referring to ongoing White House renovations supervised by President Donald Trump. “What’s with the gold? … He’s got the White House looking like Saddam Hussein opened a Cheesecake Factory.”

Speaking at a GOP campaign rally in Corinth, Mississippi, on October 26, Trump swung back hard.

“It’s not about money. It’s about seeing. Guys like Obama don’t see it. He doesn’t see dirt, he doesn’t see filth, he doesn’t see broken ornaments on a building,” Trump responded. “For you to say it was a Cheesecake Factory, that just shows why you were a lousy president.”

Can political battles swing a stock either way? Sure, marketing experts say

While Cheesecake Factory’s share price reached a weekly high on the heels of the Obama-Trump Cheesecake Factory quotes, nobody is attributing that to the political jabbing.

The runup in CAKE shares had more to do with an impressive earnings report released on October 27, which showed quarterly revenues cresting $1 billion. In fact, during the traditional Wall Street quarterly conference call banter between analysts and Cheesecake Factory execs, the presidential rumble didn’t even come up.

That doesn’t mean the political squabble can’t add a few ticks to a company’s share price.

“It certainly can, though it’s very difficult to measure,” Patrick Vishy, a veteran Wall Street trader and a behavioral finance educator who works with high-level investors and traders, told Moneywise. “As polarized as our country is right now, the combination of the free exposure and desire to support your side absolutely plays a part, yes, and Republican support in particular can move the needle quite a bit.”

Vishy pointed to the Chick-fil-A controversy during Trump’s first term, when sales rose amid potshots at the White House for serving Chick-fil-A fast food at a political function in March 2019. “American politics are world politics, and a restaurant getting a free mention like that is advertising gold,” Vishy noted.

Other business experts agree, adding that the Obama-Trump squabble doesn’t cost Cheesecake Factory a penny in advertising.

“You can’t buy that kind of attention,” Jay Aldebert, chief growth officer at International Services, Inc., who’s worked with 86,000 small and medium-sized businesses, told Moneywise. “A former president made your restaurant the punchline, and a sitting president called you a very successful company. That’s a week of free national advertising.”

Aldebert noted that Cheesecake Factory executives are savvy not to speak up or take sides between political combatants, even at the White House level.

“The smartest move is to stay out of the fight and keep seating tables,” he said. “Publicity makes people curious. It doesn’t fix a profit and loss issue. And the traffic numbers were there before anyone in Washington said a word.”

Here’s what to like about CAKE’s stock and why

Serious Wall Street investors care more about earnings, cash flow, and green stock tickers than political rabbit punches. In that context, Cheesecake Factory is scoring high right now, presidential punchlines or not.

“I’ve spent 26 years in small and medium-sized businesses, and the first thing I check is whether the money is real, and with CAKE, it is,” Aldebert said. “Cheesecake Factory grew traffic 9.5% last quarter and beat the casual dining index by 940 basis points (a financial unit of measurement equal to 1/100th of 1 percent). That’s more people walking in the door, not just higher prices on the menu, and that’s a real improvement.”

That said, it’s important to keep some perspective, as even the largest restaurant chains face narrow profit margins. “CAKE kept about 5.1 cents of every dollar as adjusted net income,” Aldebert added. “In a business that thin, a small slip in labor or traffic shows up fast.”

Cheesecake Factory’s flexible ‘something for everyone’ dining experience is also resonating with customers.

“Most people in this industry will tell you a giant menu kills margins,” Aldebert added. “More inventory, more waste, more training, more ways to get it wrong, but Cheesecake Factory turned that problem into a weapon. One table can have five people and five different budgets, and everybody finds something. Management credits industry-leading retention for pulling that off.”

Customers also seem to like not only Cheesecake Factory’s large menus, but its large portions, too.

“Value plays a huge part,” Vishy said. “Most Americans are struggling now due to the overwhelming inflation of the 2020s, but they still don’t want to cook; it just hasn’t gotten bad enough yet.”