Los Angeles-based California Pizza Kitchen Inc. (CPKI), which currently owns and operates 207 restaurants and franchises 60 restaurants, recently opened a restaurant in Mexico, a first in an airport. California Pizza Kitchen collaborated with Grupo Calpik, S.A.P.I. de C.V to open its maiden airport restaurant in Mexico, thus adding to its existing portfolio of 10 restaurants in Mexico.
The new restaurant is located in Terminal 2 at the Cancun International Airport, which is Mexico’s second busiest airport after Mexico City International Airport. Cancun International Airport is the biggest and one of the most important international airports in Mexico and Latin America, and hosts over 3 million passengers each year.
Given its strategic location, we believe this new restaurant will enhance the market share of the company. However, California Pizza will likely face stiff competition from Domino’s Pizza, Inc (DPZ) and T.G.I. Friday’s who already have their outlets in Terminal 2 at the airport.
The other ten restaurants of the company in Mexico are located in Guadalajara, Cancun, Lomas Verdes, Bosques de Las Lomas, Polanco District, Santa Fe, Coyoacan and Satelite.
California Pizza Kitchen,one of the leading casual dining restaurant chains, expects to open two international full-service franchised restaurants and one company-owned full service restaurant in first-quarter 2011. In 2011, the company’s international franchisees expect to open a minimum of 10 restaurants.
The company is widening its presence internationally. Currently, the company has 35 restaurants located in China, Japan, Philippines, Malaysia, Singapore, Mexico, South Korea, Guam, India, Indonesia and the United Arab Emirates. Most significantly, California Pizza Kitchen is accelerating its presence in the Asia-Pacific region due to its growing economy.
In China, during the fourth quarter, the company opened its first company-owned restaurant as well as the first international office to work with franchisees and facilitate the company’s growth. In India, California Pizza Kitchen has already opened its first restaurant and plans to open 15 more units over the next 10 years.
We believe the opening of new restaurants is indicative of the company’s efforts to gain market share in the gradually recovering restaurant industry, which was badly hit by the recent economic downturn.
California Pizza Kitchen currently has a Zacks #3 Rank, implying a short-term Hold rating. We also reiterate our long-term Neutral recommendation.
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