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Cookie Dough Cheesecake and Asymmetric Information

The Cheesecake Factory is huge. Not only does it have the longest menu in history, its restaurants -- which are often two stories -- are in seemingly every mall across the United States.

What you may not realize when eating one of their meals -- that could feed 5 people but you somehow manage to finish -- is that the Cheesecake Factory is a publicly traded company.

What does it mean to be publicly traded? It means that the company sells stocks on the stock market, and the shareholders (or owners) live across the country and the world. Their ticker symbol could not be more perfect: CAKE!

How do you run a company if its owners are scattered, each with a small, small portion of ownership?

Well you hire people to run, manage, and oversee the company.

What this creates is what we call a principal-agent problem.

The principals here are the owners.

The agents are those that manage and run the restaurants.

There is incomplete (asymmetric) information between the two groups as the managers are more knowledgeable than the owners on the ins and outs of the company and what is occurring on the ground. The owners only know what they are told.

There are many ways firms can set up incentives to try and align the objectives of the owners and managers, and I won’t go into them here. But! the government also plays a part (a role for government!).

The Securities and Exchange Commission (SEC for short, but not to be confused with the college conference) was established in 1934 after the start of the Great Depression. It was determined during the Pecora hearings that there had been insider trading and false information from financial institutions leading up to the Great Depression. (More from

Thus, one of the missions of the SEC is to keep insider trading and other unfair activities from happening again (or at least try to). They do this by requiring the company to disclose important information on the status of the company. On the current SEC website they explain: “we require public companies, fund and asset managers, investment professionals, and other market participants to regularly disclose significant financial and other information so investors have the timely, accurate, and complete information they need to make confident and informed decisions about when or where to invest.”

So, let’s get back to the Cheesecake Factory. As I said, they are a publicly traded company so they fall under SEC supervision. As you know, the pandemic was not a friend to restaurants. Many had to be temporarily (and sometimes permanently) closed as people could no longer eat out.

We can see that the stock price of CAKE took a tumble in late February and March. Why? Well if the restaurant business (and the market in general) becomes uncertain, people might worry that their stock is going to lose money, so they sell it. If a bunch of people are selling their stock, then the price will fall.

Now here is where the Cheesecake Factory got in trouble. Back in March they reported that they were doing just fine… “operating sustainably.”

However… they were also not paying rent to their landlords, were drawing $90 million from a line of credit, seeking more liquidity, and had a negative cashflow. (For more on this from actual lawyers on Proskauer)

This is a clear example of asymmetric information. The owners (shareholders) were told the business was fine. The managers were scrambling to stay afloat.

So, the SEC stepped in. First the Cheesecake Factory had to report their current operating status. And, the Cheesecake Factory had to pay $125,000 to the SEC. (To be honest, that doesn’t sound like a lot). (SEC Press Release)

However, the Cheesecake Factory is not out of trouble yet. Apparently, their shareholders are now preparing to sue The Cheesecake Factory… which to be honest just sounds confusing. Owners of a company are suing their own company. My lawyer family members inform me that there are reasons for this (one of which is other lawyers wanting legal fees), but I’m not going to go into that.

The important part of the story (beyond the cheesecake I’m going to share below), is that this is the first filing of the SEC against a firm during COVID. The SEC is showing a commitment to ensure that companies are honest about the impacts of the pandemic on their business.

As for me, I hope the Cheesecake Factory recovers. Growing up, I often requested the Cheesecake Factory for my birthday dinner because I LOVE their cookie dough cheesecake. But, I also hope their managers are a little more upfront about the current status of their business.

No Bake Cookie Dough Cheesecake Cups

Warning: these do not taste like the cookie dough cheesecake that you would get at the Cheesecake Factory. This is a no-bake cheesecake inside some cookie dough cups. I’d argue they are just as good, but they are definitely not the same.

Source: The cookie dough recipe comes from my friend Jill Clouatre. One year for my birthday she made me not 1 but 4 of my favorite desserts. One of the nicest things a friend has done for my birthday. Her husband is my boss, and he is equally as kind and generous. I’m pretty lucky to know such wonderful people!

The no-bake cheesecake comes from Sally’s Baking Addiction. I’ve slightly adapted it to make a smaller quantity.

Cookie Dough Ingredients:

1 cup (120 grams) flour, cooked (see explanation below)

¾ cup (150 grams) brown sugar

½ cup (1 stick) butter, softened

1 ½ tsp. vanilla extract

¼ tsp. salt

2 tsp. water

3/4 cup mini chocolate chips

Cheesecake Ingredients:

½ cup heavy cream (or heavy whipping cream)

1 block of cream cheese - 8 oz. (NOT the low-fat kind), softened (sitting out on the counter for at least 45 min).

1/4 cup granulated sugar

2 tsp. confectioners’ sugar

1 tsp. sour cream, at room temperature

1/2 teaspoon pure vanilla extract

First, pre-heat your oven to 350 degrees. Lay out your flour onto a cookie sheet and then bake in 350 degree oven for 5 minutes. This process apparently kills the bacteria, or whatever is in the flour that they say you should not eat raw. **Important: let the flour completely cool before continuing.**

Using a stand or hand mixer (or a strong arm with a spatula), whip together the butter and brown sugar until well-incorporated and fluffy. Next add the vanilla extract, salt, and water. (The water keeps the cookie dough from being too hard. You can add a little more if your dough is too dry.)

Before adding the flour, make sure you break up any clumps that were created when baking it in the oven (and, again, make sure the flour is cooled, otherwise you will melt your chocolate chips and the cookie dough will become hard). Then add the flour to your butter/sugar mixture and stir until you cannot see any flour. Finally, stir in the mini chocolate chips.

Now, I’ll allow you to stop there if you would like. The cookie dough at its current state is delicious.

If you would like to continue, add paper cups to mini muffin tins. Next smash (yes, that’s a scientific word) the cookie dough in the paper cups. Leave room in the middle for the cheesecake. Basically, you are making a hollow cheesecake cup. Put the cookie dough cups into the refrigerator while you make the cheesecake.

For the cheesecake, first whip up the heavy cream until it is thick and stays up on its own (don’t whip too long or you’ll get butter!).

If using a stand mixer, transfer the whipped cream to another bowl so you can continue with using the mixer.

In a different bowl, whip together the cream cheese, sugars, sour cream, and vanilla extract until smooth.

Using a spatula or wooden spoon, stir in the previously-whipped cream. You want it to be completely incorporated while staying light and airy.

Your cheesecake filling is ready!

Take your cookie dough cups out of the refrigerator. Remove the paper lining from each cookie dough cup (optional step but will have to do eventually).

Add cheesecake to each one. Level off the tops.

If you want, you can sprinkle some mini chips on the top! Or sprinkles if you’re being festive!

Refrigerate until ready to eat. A few hours in the refrigerator will solidify the cheesecake. Although, to be honest, I think it tastes just delicious immediately. Up to you!

*** I have also done this in a 6-inch cheesecake format. I used the same amount of cookie dough but used the full recipe of cheesecake from I like the cups better because I like the higher cookie dough to cheesecake ratio, but I know others have different preferences…


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