Continued growth and the addition of higher-priced menu items helped California Pizza Kitchen Inc. post a 31% increase in fourth-quarter profit, the Los Angeles-based company said Tuesday.
Net income in the period ended Dec. 29 rose to $4.2 million, or 22 cents a share, compared with $3.2 million, or 17 cents, a year earlier.
The strong quarterly results helped the full-service pizza chain record a 16% increase in earnings to $15.3 million, or 81 cents a share, for the year. That's up from $13.2 million, or 71 cents, in 2001.
Fourth-quarter revenue rose 21% to $81.5 million. For the year, sales climbed 23% to $306.3 million.
The company reported earnings after the close of trading. CPK shares dipped 14 cents to $22.96 on Nasdaq.
The chain, which operates, licenses or franchises nearly 150 restaurants, has launched an aggressive growth campaign. The company plans to increase its number of outlets by 20% each year for the next seven years.
In 2002, 18 new company-owned locations were added, with 22 in the pipeline for this year. The chain also introduced several higher-priced pastas, which helped boost same-store sales by 4.2% for the quarter and 4.3% for the year.
It was the fourth straight quarter of earnings growth for the chain, which was founded in 1985 and was owned by a number of companies before it went public in August 2000.
"This is a company that has reemerged as a growth company after a period of shrinking in the late '90s," said Bryan C. Elliott, a restaurant analyst with St. Petersburg, Fla.-based Raymond James & Associates, referring to the closure of 11 underperforming stores.
"After [earlier owners] mismanaged the expansion, this management team has significantly improved the business. This time, it's well-managed growth unlike the first time."
President and Chief Executive Fred Hipp said he thinks California Pizza Kitchen is "in the best operational and financial condition since I joined the company five years ago."
CPK also reiterated its earnings guidance for 2003 of $1.03 to $1.06 a share. In addition to expanding the core brand, Hipp said the company was beginning to look at new concepts. High on the list is LA Food Show, a bar and grill being launched this year in Manhattan Beach by the founders of California Pizza Kitchen.
The chain will have a 25% stake in the new venture, Hipp said in an interview.
"We have confidence that this could be a strong contender," he said.