Cheesecake Factory Inc. said Tuesday that its cheesecakes contaminated with the potentially deadly listeria bacteria may have been served to Olive Garden customers at 19 restaurants in the Midwest and the South.
The news could stain the Calabasas Hills-based chain's reputation and eventually hurt its sales and stock, some analysts said.
The chain's statement that consumers may have eaten the white chocolate raspberry cheesecakes sold to Olive Garden came just a day after Cheesecake Factory said it was confident nobody had eaten the contaminated products.
Cheesecake Factory executives declined to comment further Tuesday.
A serious case of listeriosis takes one to six weeks to develop, according to the Food and Drug Administration and other government agencies. An estimated 500 people annually die from it, with the elderly, pregnant women, children and those with weakened immune systems most at risk. Serious infections also can result in meningitis and miscarriages.
In a related development, Darden Restaurants Inc., parent of Olive Garden and Red Lobster restaurants, has stopped selling Cheesecake Factory products at its restaurants since learning of the tainted cakes on Thursday. The Orlando, Fla.-based chain has dispatched two scientists to California to inspect Cheesecake Factory's manufacturing plant in Calabasas Hills today, said Darden spokesman Jim DeSimone.
"We need to be thoroughly satisfied that the proper standards have been reestablished," he said.
On Monday, Cheesecake Factory announced it had recalled a batch of contaminated cheesecakes sold to Olive Garden. It also recalled all of its baked goods made from July 18 to July 21 as a precautionary measure. The company, which said it has been working with the FDA and Olive Garden, said the tainted batch was shipped because of "human error."
None of the contaminated cakes was sent to Cheesecake Factory or any other wholesaler, the company said. There have been no reports of illness due to the cakes.
Because of all the uncertainty, analyst David Rose of JMP Securities in San Francisco said he downgraded his rating on Cheesecake Factory's stock to "market underperform" from "market perform," even though he said the company is among the strongest in the restaurant industry.
"The halo has been tarnished," he said.
Rose said the negative publicity generated by the recall could hurt Cheesecake Factory's restaurant and wholesale businesses. Wholesale bakery sales account for about 8% of the company's revenue.
