TO: David M.

Overton, Chairman, President, and Chief Executive Officer FROM: Junior Analyst DATE: September 5, 2012 SUBJECT: Cheesecake Factory outperforms Ruby Tuesday in all Key Indices Market research and analysis show The Cheesecake Factory is a leader in the industry with superior financial qualities. I prepared a comparative financial analysis to determine benchmark levels of performance for The Cheesecake Factory versus another company. I chose Ruby Tuesday (RT) as a suitable comparison for The Cheesecake Factory (CAKE) for several reasons. Both restaurants provide a casual comfortable dining atmosphere with an upscale dcor. CAKE provides an extensive menu prepared with fresh quality ingredients and RT provides handcrafted menu items prepared with fresh quality ingredients. CAKE opened its first restaurant in 1972 and RT opened its first restaurant in 1978 it is safe to say that Ruby Tuesday is a strong competitor in the industry.

CAKE shows an advantage in these three indices: Stock Price Net Income Earnings Per Share (EPS) Cheesecake Factory Stock Price continues to grow Our stock priced increased 21.4% year over year while the stock price of Ruby Tuesday has decreased18.8% in the same time period. In addition, CAKE outperformed the overall restaurant market, as measured by the Dow Jones Index of Restaurants and Bars Index ($DJUSRU) while RT underperformed the overall market in 2012. In general, employees feel good working for a company with a stock price that increases and, specifically, their net wealth is increasing under our performance incentive plans which issues stock for performance. I consider stock price the most important factor because the company lives and dies with the value of the stock price.

Cheesecake Factory and Ruby Tuesday compete with rising net Incomes Year over year comparisons of net income showed an increase of 91% in 2010 for CAKE and an increase of 139% for RT. The significant lows of 2008-2009 affected the 2010 numbers. Companies could not be expected to maintain these levels of increases but CAKE was able to show an increase of 17% in 2011 compared to 3.3% for RT. Earnings provide the company with revenue to support research and development, improve marketing, and personnel development as well as reward investors with an increase in the dividend. This proves that Cake is ready for the future. Net Income (in thousands)

2011 CAKE RT 95,720 46,878

2010 81,713 45,344

2009 42,833 (17,918)

Annual report for RT. (2011, August 01). http://yahoo.brand.edgaronline.com/DisplayFiling.aspx?TabIndex=2&FilingID=8070032&companyid=1345&ppu=%252 fdefault.aspx%253fcik%253d68270

CAKE is more profitable than Ruby Tuesday EPS is used to value a companys profitability and is an important factor in determining stock price. CAKE showed an increase of 22.3% in EPS for 2011 compared to RT which showed a decrease of 1.35%. CAKE has great Future growth CAKE provides investors with an excellent value and potential for upside growth if investors are willing to pay more for our earnings. CAKE has a trailing PE Ratio of 18.73 (08.31.12) while the PE Ratio of RT is not applicable because it has not made any profit for 2012. The overall PE Ratio for the restaurant industry is 21.40. CAKE and RT are both liquid Quick Ratio shows both companies have adequate cash to satisfy immediate debt obligations. CAKE Outperforms RT The Cheesecake Factory surpassed the performance of the overall market in specific categories and Ruby Tuesday in all categories. Past performance may not be an indicator of future performance but it does show if past business practices have been effective. The market has rewarded our business practices with guest satisfaction as our priority and I look forward to continued growth. I am available to discuss these results at your convenience.

References 2011 annual report for cake. (2012, February 29). Retrieved from http://investors.thecheesecakefactory.com/phoenix.zhtml?c=109258&p=irol-reportsAnnual 2011 annual report for RT. (2011, August 01). http://yahoo.brand.edgaronline.com/DisplayFiling.aspx?TabIndex=2&FilingID=8070032&companyid=1345&ppu=%252 fdefault.aspx%253fcik%253d68270 CAKE summary page . (2012, August 31). Retrieved from http://finance.yahoo.com/q?s=cake&ql=1 Industry browser. Sector: Services. Industry: Restaurants. (2012, August 31, 2-12). http://biz.yahoo.com/p/712conameu.html RT summary page. (2012, August 31). Retrieved from http://finance.yahoo.com/q?s=rt&ql=1

1 Year Line Comparison Chart

1-Year Stock Price Chart

CAKE Y/Y Change RT Y/Y Change $DJUSRU Y/Y Change

08.31.2012

33.21

21.4%

6.76 (18.8%)

756.16

8.5%

02.29.2012 08.31.2011

29.53 27.35

7.78 8.33

804.95 696.61

Chart Information provided by StockCharts.com

 Net Income (in thousands)

2011 CAKE RT
Information from Annual Reports

2010 95,720 46,878 81,713 45,344

2009 42,833 (17,918)

EPS
2011 CAKE RT 1.70 0.73
Information provided by Annual Reports

2010 1.39 0.74

2009 0.72 (0.35)

PE Ratio (trailing)
2012 CAKE RT Industry
Information from Yahoo! Finance

18.73 n/a 21.40

Quick Ratio
2012 CAKE RT
Information from CNBC.com

0.44 0.41