An activist investor has built a position in Cheesecake Factory and is urging the restaurant operator to spin off three of its smaller brands into a separate public company, according to people familiar with the matter.

Cheesecake Factory (NASDAQ:CAKE) rose 5% in after hours trading on a report that an activist investor has taken a stake and is pushing for the restaurant operator to spin off three of its smaller brands into a separate company.

Houston-based activist investor JCP Investment Management is urging Cheesecake Factory to explore the possibility of creating a separate public company by spinning off three of its smaller brands, according to a report by the Wall Street Journal on Monday.