Casual dining restaurant chain California Pizza Kitchen (NASDAQ:CPKI) will treat us to preliminary fourth-quarter 2006 results on Wednesday, Jan. 10. (We'll probably have to wait a few weeks to be seated for actual results.)

What analysts say:

  • Buy, sell, or waffle? Most of the 10 analysts are bullish, with seven rating it a buy, two saying hold, and one who wants to sell.
  • Revenues. They forecast revenues growth of more than 14% this quarter, to $143.6 million.
  • Earnings. Profits are forecast to be in line with management expectations, which is $0.15 per share, or almost half of the $0.29 per share the company recorded last year.

What management says:
California Pizza's quirky menu has allowed it to set itself apart from the typical slice-and-a-Coke crowd. Not too many pizzerias serve Shanghai garlic noodles or avocado egg rolls as an appetizer. Yet the almost serendipitous nature of what you'll find at California Pizza, aside from the pizza, has allowed it to grow to more than 200 stores. Most of these are full-service casual dining restaurants, although a handful are what it calls its ASAP model, a fast casual dining experience with most of the same unusual menu items.

Last quarter, management had to ratchet down expectations for the fourth quarter because of a number of one-time charges that will be coming due and slower-than-expected openings of new stores. While the new restaurants tend to boost revenues initially, thanks to promotions and an increase of public awareness, things settle down after a few months. But it's also during those first few months that the company incurs additional costs that tend to level out over time. Management says the store opening delays themselves will cost about $0.06 per share.

What management does:
We can see that while restaurant profits (profits after food, packaging, labor, and rent expenses) have been improving, the costs associated with its expansion have been slowly eating away at operating results and bottom-line profits. It hasn't helped that sales growth has also been slowing lately, and while management didn't provide a reason for the restaurant opening delays, the desire to stay on track with its same-restaurant sales growth projections of 5% to 6% a year may have played a part. For all that, its average check order has remained a fairly consistent $12.85 per customer.

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All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
California Pizza Kitchen has a niche of its own, with a more specialized menu than you would find at other restaurants lumped in the casual dining sector. But it can't be considered in the same way you'd look at Yum Brand's (NYSE:YUM) Pizza Hut or Domino's (NYSE:DPZ). While that makes comparisons a little more tricky when trying to find out if the company is performing well to "industry standards," it also means it is able to stand out from the crowd of other run-of-the-mill slice slingers.

Now, I like tomato sauce and cheese on my pizza -- maybe some pepperoni, but that's it. Still, California Pizza has obviously struck a chord with diners who are looking for something a little offbeat and different. The menu may not be tempting me, but the stock is another matter.


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Related Foolishness:

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Buffalo Wild Wings is a recommendation of Motley Fool Hidden Gems.

Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.