California Pizza Kitchen Inc. (CPKI) recently reported third-quarter 2009 results with a mid-single digit fall in the top-line but a surprise double-digit rise in the bottom-line. Effective cost management and a lower tax rate have driven earnings growth. The quarterly earnings of 24 cents a share surpassed the Zacks Consensus Estimate by a penny, jumping 20% [...]

(CPKI) California Pizza Kitchen’s Profit Climbs

California Pizza Kitchen Inc. (CPKI) recently reported third-quarter 2009 results with a mid-single digit fall in the top-line but a surprise double-digit rise in the bottom-line. Effective cost management and a lower tax rate have driven earnings growth. 

The quarterly earnings of 24 cents a share surpassed the Zacks Consensus Estimate by a penny, jumping 20% from 20 cents posted in the prior-year quarter. The casual dining operator now expects fourth-quarter 2009 earnings in the range of 16 cents to 18 cents a share. 

California Pizza Kitchen continues to experience fall in the top-line. After declining 2.2% and 3.2% year-on-year in the first and second quarters, respectively, total revenue dipped 5.3% to $164.8 million in the quarter under review. 

Restaurant sales slipped 5.7% to $161.2 million, royalties from the Kraft licensing agreement soared 35.2% to $2.5 million, domestic franchise revenue fell marginally by 1% to $714,000, and international franchise revenue plunged 18% to $468,000. 

Casual dining restaurant operators are facing the brunt of the global meltdown with sagging comparable-store sales and declining traffic, as cash-strapped consumers are dining out less and looking for cheaper alternatives such as fast food centers. Other operators in the casual dining segment are Darden Restaurants Inc. (DRI), Brinker International Inc. (EAT), Cosi Inc. (COSI) and Red Robin Gourmet Burgers Inc. (RRGB). 

California Pizza Kitchen’s comparable restaurant sales for the quarter dipped 8%, after declining 6.5% and 5.9% in the second and first quarters of 2009. The restaurant chain expects fourth-quarter 2009 comps to fall within the range of 5.5% to 6.5%. 

Restaurant operating cash flow margin shrank 40 basis points (bps) to 17%, hurt by a 120 bps rise in labor costs to 37.8% and a 100 bps increase in operating and occupancy costs to 22.2%, partially offset by a 180 bps fall in food and beverage costs to 23%. 

During the quarter, California Pizza Kitchen opened one company-owned full service domestic restaurant and one franchised domestic restaurant, closing one company-owned full service domestic restaurant and one franchised domestic restaurant. Management expects to open one international full service franchise restaurant in fourth-quarter 2009. 

In fiscal year 2010, the company plans to open eight full service restaurants, while franchisees plan to open eight international and two domestic locations. Currently, the company operates 256 locations, of which 208 are company-owned and 48 are operated under franchise or license agreements. 

California Pizza Kitchen ended the quarter with cash and cash equivalents of $14.3 million, total debt of $37 million and shareholders’ equity of $197.5 million.
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For Immediate Release

Chicago, IL – November 9, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Red Robin Gourmet Burgers Inc. (RRGB), Darden Restaurants Inc. (DRI), Brinker International Inc. (EAT), Cosi Inc. (COSI) and Tower Group Inc. (TWGP).

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Here are highlights from Friday’s Analyst Blog:

Red Robin Fails to Lure Diners

Red Robin Gourmet Burgers Inc. (RRGB), the casual dining restaurant operator, recently reported dismal third-quarter 2009 results. The quarterly earnings of 37 cents per share missed the Zacks Consensus Estimate by a penny and fell 17.8% from 45 cents posted in the prior-year quarter.

Total revenue tumbled 10.4% year-over-year to $187 million, as cash-strapped consumers are either trading down to quick-service restaurants or preferring to eat at home, leading to fall in traffic and same-store sales.

Same-store sales fell 14.9% for company-operated restaurants, driven by a 13.8% decline in guest counts and a 1.1% fall in the average guest check. Management expects guest count to decline in fiscal year 2009. Same-store sales for franchised restaurants in the U.S. dropped 14.4% and franchised restaurants in Canada fell 0.2%.

Other operators in the casual dining segment are Darden Restaurants Inc. (DRI), Brinker International Inc. (EAT) and Cosi Inc. (COSI).

Tower Group Falls in Line

Tower Group Inc.’s (TWGP) third-quarter earnings of 74 cents were in line with the Zacks Consensus Estimate. Results were affected favorably by an increase in premiums written due to the acquisitions of CastlePoint and Hermitage. Last year, the company had reported earnings of 79 cents per share.

Gross premiums written and produced increased 39.4% year-over-year to $283 million. Total revenues increased 96.1% year-over-year to $256.3 million. Net premiums earned of $223.9 million represented 87.3% of total revenues in the reported quarter, compared to 67.5% for the same period in 2008.

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Zacks Investment Research

Red Robin Gourmet Burgers Inc. (RRGB), the casual dining restaurant operator, recently reported dismal third-quarter 2009 results. The quarterly earnings of 37 cents per share missed the Zacks Consensus Estimate by a penny and fell 17.8% from 45 cents posted in the prior-year quarter. Total revenue tumbled 10.4% year-over-year to $187 million, as cash-strapped consumers [...]

(RRGB) Red Robin Gourmet Burgers Fails to Lure Diners

Red Robin Gourmet Burgers Inc. (RRGB), the casual dining restaurant operator, recently reported dismal third-quarter 2009 results. The quarterly earnings of 37 cents per share missed the Zacks Consensus Estimate by a penny and fell 17.8% from 45 cents posted in the prior-year quarter.

Total revenue tumbled 10.4% year-over-year to $187 million, as cash-strapped consumers are either trading down to quick-service restaurants or preferring to eat at home, leading to fall in traffic and same-store sales.

Same-store sales fell 14.9% for company-operated restaurants, driven by a 13.8% decline in guest counts and a 1.1% fall in the average guest check. Management expects guest count to decline in fiscal year 2009. Same-store sales for franchised restaurants in the U.S. dropped 14.4% and franchised restaurants in Canada fell 0.2%.

Other operators in the casual dining segment are Darden Restaurants Inc. (DRI), Brinker International Inc. (EAT) and Cosi Inc. (COSI).

Red Robin's total revenue comprises restaurant sales (down 10.4% to $183.9 million), franchise royalties and fees (down 8% to $3 million) and rent revenue (down 35.8% to $34,000).

Restaurant operating profit margin at company-operated units shrank 200 basis points (bps) to 16.5% in the quarter. The restaurant margin was hurt by a 160 bps rise in labor costs to 34.9% and a 100 bps increase in occupancy costs to 7.8%, partly offset by a 30 bps fall in cost of sales to 23.4% as well as in operating costs to 17.4%.

Management expects restaurant operating profit margin to fall 150 to 160 bps in fiscal year 2009. With every 10 bps change in the restaurant operating profit margin, earnings are expected to be affected by 4 cents a share.

Amid the recession, casual dining operators are either postponing their restaurant openings or slowing restaurant unit growth to reduce costs. Management plans to open 20 restaurants (15 company-operated and 5 franchisees) in 2009 compared to 41 restaurants (31 company-operated and 10 franchisees) opened last year. In fiscal year 2010, management expects to open 15 company-owned restaurants.

Read the full analyst report on "RRGB"
Read the full analyst report on "DRI"
Read the full analyst report on "EAT"
Read the full analyst report on "COSI"
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