LOS ANGELES Joining the host of other restaurant chains that have reported terrible October sales trends, California Pizza Kitchen Inc. said Thursday its same-store sales for last month fell 7.3 percent.
The casual-dining operator said most of the traffic trouble came in the long-distressed California, Florida and Nevada markets and resulted mostly from depressed traffic at the malls or lifestyle centers where California Pizza Kitchens typically are based. This week, many retailers, even on the higher-end, posted double-digit same-store sales declines and said they expect the holiday season to be weak.
Rick Rosenfield, CPK co-chief executive said in a conference call with investors that the chain remains confident because consumers still flock to retail centers for entertainment, even if they aren’t shopping.
“Irrespective of how much they shop and how much they spent, they do still have to eat,” he said.
“While we’re doing everything in our power to spur additional sales,” he added, “the consumer state of mind is clearly not what it was even a few short months ago.”
Company officials said that the company is expanding points of distribution for gift cards and is focusing on web-based marketing efforts surrounding its new online ordering capabilities. CPK also will focus on nurturing high-margin ancillary revenue streams, such as its branded grocery products, including frozen pizzas.
The latest same-store sales result comes on the heels of a third-quarter report of decelerating sales that officials pegged to “consumer distractions,” including the July Fourth holiday, hurricanes, the Olympics and political conventions. Same-store sales for the quarter ended Sept. 28 fell 2.4 percent, a larger drop than the 2-percent decline officials had previously projected.
Despite the sales slowdown, CPK was able to triple its third-quarter profits to $5 million, or 20 cents per share, from $1.4 million, or 5 cents per share a year ago when the company booked $8.5 million in store closure costs.
Latest-quarter revenues grew 7.4 percent to $174.0 million.
Updating projections for the year, CPK officials now expect same-store sales to drop 2 percent, lower than the previously projected range of between a 1-percent decline and no change. Per-share earnings expectations were reduced as well, and CPK estimates it will earn between 60 cents and 63 cents, compared with previous forecasts of between 65 cents and 70 cents.
“As we look to the fourth quarter, our sales trends reflect a continued weak economic environment that we anticipate will continue to impact consumer sentiment and spending behavior,” Rosenfield said. “Despite these challenges, we will continue to focus resources on menu innovation, guest satisfaction, growing revenue and maximizing operational efficiency.”
CPK noted its secured five-year financing plan signed in May, “with terms far more favorable than would be available today,” according to Rosenfield. He said the company was comfortably within its debt covenants.
The company is scheduled to open 12 full-service restaurants by the end of the year, as well as one LA Food Show, the second location for CPK’s sister concept, which opened in October.
Franchisees will open eight CPK locations, and two domestic locations of the fast-casual CPK/ASAP varietal.
At the end of the third quarter CPK operates, licenses or franchises 251 restaurants.
