There's no doubt about it: California Pizza Kitchen
Revenue is surging and profitability is growing, all in the midst of a tough operating environment. There is certainly a lot to like in California Pizza Kitchen's results, but the big question is whether it can keep up the pace. Although its gains have been impressive, the company looks as though it still has some room to run.
Revenue for the L.A.-based pizza purveyor climbed 17.3% to $124 million in the third quarter. The company added four new full-service restaurants during the quarter, but a nice chunk of top-line growth gain came from existing locations, with comparable restaurant sales at a healthy 7.1%.
Meanwhile, net income climbed 120% to $5.5 million, or $0.28 per share. The company owes that impressive result to improving operating margins. Operating margin reached 6.5% in the quarter, compared with 2.7% in the same period last year. The jump is particularly impressive considering that companies like Kraft
California Pizza has enjoyed a nice run. Currently, its shares trade in the same range as those of other large restaurant concepts like Cheesecake Factory
Management is committed to ongoing productivity improvements, even as the company accelerates its buildout. Further, through a relationship with Kraft, frozen versions of its pizzas are appearing in grocery stores nationwide, and that provides great brand recognition. What's more, the company is currently refining a new restaurant concept, LA Food Show. The sole location's year-to-date sales are up nearly 20%, and it recently turned cash flow-positive. It will take more time before the company is ready to add new sites, but so far, it appears to have another winner on its hands.
California Pizza's recent results have been impressive, and the company hasn't even hit its peak yet.
An extra helping of Foolishness:
Kraft is a Motley Fool Income Investor recommendation.
Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.