California Pizza Kitchen's (NASDAQ:CPKI) third-quarter revenues are expected to be extra large, which suggests that management's focus on enhancing restaurant performance is paying off.
The Los Angeles-based casual dining chain disclosed that 18-month comparable restaurant sales jumped 8.7%, a nice increase versus the company's early projections of a 4.5% to 5.5% gain. California Pizza likewise hiked its estimates for earnings before one-time charges to $0.25 to $0.26 per share from a range of $0.22 to $0.24.
The results are an impressive indication of the potential of the California Pizza concept and brand. Management has been adamant about fixing problems with existing restaurants, some of which had fallen into a bit of a slump, before pushing ahead with more openings. This sort of growth demonstrates that many if not all of the earlier problems have been remedied. It also confirms that California Pizza remains popular with diners despite recent dietary trends.
The road is now clear for expansion. But, as I've discussed before, in tandem with the build-out, the firm intends to float an experimental dining concept that could improve profitability significantly. Essentially, the plan is to increase sales of wine and beer. Given the savvy management has shown already in turning things around, the firm's biggest challenge here may be deciding whether to suggest a red or white wine as the best complement to Thai Chicken Pizza.
California Pizza stock is not cheap. But management seems to be making the right moves now and has a compelling plan to boost profits going forward. Despite a rise in the shares in the past month, the company is worth a look.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
