CPKI California Pizza Kitchen, Inc. (MM)

Los Angeles-based California Pizza Kitchen Inc. (CPKI), which currently owns and operates 205 restaurants, and franchises 60 restaurants, recently entered into an agreement with Quanta Foods to expand in Taiwan.

As per the deal, Quanta Foods will develop minimum 6 California Pizza Kitchen restaurants in Taiwan over the next five years, through franchising. However, the financial terms of the deal were not disclosed.

In the past, Quanta Foods had partnered with several renowned brands such as McDonald’s Corp (MCD) and TGI Friday’s. Currently, Quanta Foods serves as an exclusive franchisee for Outback Steakhouse and also runs several other restaurants in Taiwan.

We believe that California Pizza’s partnership with Quanta Foods will enhance its market share in Taiwan going forward, as Quanta Foods has been around in the restaurant industry for more than 20 years and achieved great success in Taiwan. Moreover, we are certain that people in Taiwan would love California Pizza Kitchen’spopular offering of pizzas, salads, soups and sandwiches as well as its innovative menu offerings.

California Pizza Kitchen is focused on development through franchised restaurants, which are less capital intensive and expects to open 11 franchised restaurants in the international market in 2011.

The company is already operating in 11 international markets and plans to further expand its footprint internationally. The company opened its first restaurant in China during the fourth quarter and intends to open the second one in the second half of 2011. California Pizza also plans to open 15 units in India over the next 10 years.

A leading casual dining restaurant chain, California Pizza Kitchen has also recently entered into a definitive agreement with a private investment firm, Golden Gate Capital, under which the latter will acquire California Kitchen for approximately $470 million or $18.50 per share in cash. The transaction is expected to be completed in the third quarter of 2011.

California Pizza Kitchen currently retains a Zacks #3 Rank (short-term Hold rating). We are also maintaining our long-term Neutral recommendation on the stock.

 
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