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4-Traders Homepage  >  Equities  >  Nasdaq  >  Cheesecake Factory Inc    CAKE

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Cheesecake Factory : sued over claims of misleading gratuity on bills

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08/12/2017 | 10:06pm CEST

The restaurant chain The Cheesecake Factory is being sued by a customer who alleged the company intentionally tricks customers into leaving exorbitant tips.

The plaintiff, Marcel Goldman, said he noticed the situation after eating a meal at a Cheesecake Factory during which the parties asked to split the check. When the bills arrived they included suggested tipping amounts ranging from 15 percent to 22 percent.

Goldman said he opted to leave a 20 percent tip. His half of the check was $38.50. The suggested "20 percent" tip on the bill was $15.40.

Math-hobbled customers might not realize a $15.40 tip on a $38.50 is actually 40 percent gratuity, not 20 percent.

Goldman's suit said Cheesecake Factory receipts suggest gratuity based on the entire bill, even if customers ask to receive separate checks just for their portion.

"Consumers should be aware," Goldman's attorney Julian Hammond told BuzzFeed News. "Why are we left to our own devices to do arithmetic acrobatics when the suggested gratuity represented is not true? The mathematic calculation is misleading. It must end; it needs to change."

The suit alleges the practice has been used in at least 200 Cheesecake Factory locations for as long as four years.

The company has also received criticism by customers for choosing to calculate gratuity on the post-sales tax total, rather than the pre-tax total, further inflating the tip amounts suggested.

A company spokeswoman said the figures on the receipts are nonbinding and customers are free to leave as much or as little of a tip as they deem appropriate for the service they received.

"​All gratuity amounts listed on our guest checks are suggestions only. Guests are free to tip as they please. We believe our guests appreciate service provided by our hardworking staff and tip accordingly," the spokeswoman said.

Copyright 2017 United Press International, Inc. (UPI). Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent., source US Top News

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Financials ($)
Sales 2017 2 266 M
EBIT 2017 171 M
Net income 2017 132 M
Debt 2017 55,7 M
Yield 2017 2,26%
P/E ratio 2017 16,34
P/E ratio 2018 15,06
EV / Sales 2017 0,94x
EV / Sales 2018 0,89x
Capitalization 2 066 M
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Cheesecake Factory Inc Technical Analysis Chart | CAKE | US1630721017 | 4-Traders
Technical analysis trends CHEESECAKE FACTORY INC
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Mean consensus HOLD
Number of Analysts 21
Average target price 47,7 $
Spread / Average Target 8,4%
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Managers
NameTitle
David M. Overton Chairman & Chief Executive Officer
David M. Gordon President
Russell S. Greene EVP-Operations Services & Sustainability
Matthew Eliot Clark Chief Financial Officer & Executive Vice President
Jerome I. Kransdorf Lead Independent Director
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