BAKERY GOODS RECALLED CHEESECAKE BATCH HAS LISTERIA BACTERIA.

Byline: Evan Pondel Staff Writer

CALABASAS - The Cheesecake Factory Inc. said Monday that it has recalled all bakery items made during a three-day span after finding traces of potentially deadly listeria bacteria in a batch of cheesecakes.

The tainted white-chocolate raspberry cheesecakes were bound for the big Olive Garden chain owned by Darden Restaurants of Orlando, Fla. Subsequently, Calabasas-based Cheesecake Factory ordered a broader recall of all baked goods manufactured at its facility between July 18 and July 21.

``This batch was inadvertently released due to human error,'' said a Cheesecake Factory spokeswoman. ``The company has been actively working with the FDA and Olive Garden since the problem was discovered.''

Darden officials did not return calls seeking comment.

Cheesecake Factory officials would not comment on whether any tainted cakes reached Olive Garden restaurants.

No illnesses have been reported.

Listeria has been known to cause serious and sometimes fatal infections in pregnant women and those with weak immune systems.

The cheesecakes were made in a factory adjacent to the company's headquarters. The bacteria was discovered during routine testing, the company said.

``None of the affected product was manufactured for or sent to the Cheesecake Factory restaurants or any other wholesale customers,'' the spokeswoman said.

The company, which operates about 52 restaurants nationwide, decided to recall all baked goods as a precaution. So far, the white chocolate raspberry cheesecake is the only contaminated product.

The spokeswoman said consumers who have questions can call toll free at [phone].

Rumors about the tainted desserts hit Wall Street about midday Monday and the company's shares lost $2.81, or 9.1 percent, to close at $28 on the Nasdaq.

``With the market's conditions, this is the kind of news investors tend to act on severely,'' said Robert Curran, analyst with Pacific Growth Equities in San Francisco.

The sour news arrives a couple of weeks after the company posted a 30 percent increase in second-quarter profits, driven in part by lower food costs.

The Cheesecake Factory reported net income of $13.2 million, or 26 cents a share, vs. $10.2 million, or 21 cents a share, in the same period a year ago. Darden shares, which are down nearly 9 percent so far this year, fell a penny to close at $21.49 on the New York Stock Exchange.

Curran said it's a bit early to determine how the recall will affect the company's future.

In 2001, 7.3 percent of the restaurant chain's revenues came from outside vendors. That number has risen steadily in the past three years as more restaurants develop a fancy for cheesecake, Curran said. In 2002, outside vendors are expected to account for 8.5 percent, or about $50 million, of the company's revenues.

``It's been an area of good solid growth,'' Curran said. ``But I still think the company is looking to decrease its sales to outside vendors and focus on developing their product internally.''

Until that happens, The Cheesecake Factory might have to answer to a swarm of unpalatable reactions from customers.

David Rose, analyst with JMP Securities LLC, said the company will probably receive a flurry of calls regarding listeria concerns, but that he is confident the management will handle the situation with ease.

``It's one batch,'' Rose said. ``I'm not concerned about the long-term effects. This is merely a blemish for a company that has always had persistence.''

LISTERIA FACTS

--Listeria is a bacterium that can be found in unpasteurized milk, raw vegetables that haven't been washed thoroughly and uncooked meats.

--An estimated 2,500 people in the United States become seriously ill with listeriosis each year. Of these, 500 die. Pregnant women are about 20 times more susceptible to the illness than are other healthy adults.

--Symptoms include fever, muscle aches and sometimes gastrointestinal problems such as nausea or diarrhea.

--The illness is generally treatable with antibiotics.

SOURCE: The Centers for Disease Control and Prevention.

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LISTERIA FACTS (see text)