California Pizza Kitchen's (NASDAQ:CPKI) shares rose 4% on heavy volume yesterday after an analyst's "upgrade" from sell to neutral. Investors' renewed appetite for the stock likely reflects hopes of a turnaround.

Last Friday, California Pizza Kitchen posted a fourth-quarter revenue gain of 17.8%, and earnings that were essentially flat. While flat earnings might not seem cause for celebration, the results were a major improvement over the third quarter. At that time, the gourmet pizza purveyor revealed that, due to poor performance at 11 restaurants, it would take an impairment charge of $12.9 million. The charge resulted in a steep loss for the period, and a shake up in upper management. As a result, California Pizza's CEO, chief development officer, and chief financial officer all resigned.

California Pizza's taste for speedy growth proved to be a recipe for disaster. The company accelerated expansion over the past couple years, adding 16 new properties in 2001, 18 in 2002, and 22 in 2003. Evidently, several of the new eateries were poorly situated. Sales averages at the new sites proved disappointing, while performance at pre-2002 properties continued to improve.

Following a thorough review and quick action by new management, it now looks like the worst is over. California Pizza managed to shut down two sites without further charges to earnings, and negotiated lower rents at other problem properties. Future write downs, if any, probably won't be so severe.

In 2004, the firm will put the brakes on growth and cut the ribbon on 10 locations. Further, this year's new restaurants won't open until the third and fourth quarters. The reduced openings and slower pace reflect a more deliberate site selection process by management, which feels it now has a good handle on the ingredients for success.

Like P.F. Chang's (NYSE:PFCB) and Cheesecake Factory (NASDAQ:CAKE), California Pizza projects that higher prices on certain commodities, including cheese, will increase the cost of sales. Even with higher costs and slower expansion, California Pizza is forecasting that earnings for 2004 will be between $0.95 and $1.00 per share.

That's a healthy improvement over earnings of $0.89 per share last year before the impairment charges. If management can maintain the 2.5% same-store sales growth it achieved in 2003, and deliver on its promises over the coming quarters, more investors may find the stock a worthy snack.

Got a favorite pizza from California Pizza Kitchen? Is the company doing well or poorly in your neck of the woods? Talk it over with other Fools on the California Pizza Kitchen discussion board.

Fool contributor Brian Gorman is a freelance writer in Chicago, Ill. He does not own shares of any companies mentioned in this article.