California Pizza Expands in Dubai - Analyst Blog

Los Angeles based California Pizza Kitchen Inc. (CPKI), which currently owns and operates 211 company-owned restaurants and 58  franchised restaurants, announced the opening of a restaurant in Dubai, United Arab Emirates. This is the third California Pizza Kitchen restaurant in Dubai, which was opened with franchise partner Gourmet Gulf Company.

The full-service restaurant was opened in the first floor of the Mall of the Emirates, a shopping mall in the Al Barsha district of Dubai. The new restaurant is located right across Ski Dubai, the first indoor ski slope in the Middle East and the biggest attraction of the mall. We believe this strategic positioning will drive traffic to the restaurant. This also gives the restaurant an advantage over its peers like McDonald's Corp. (MCD), PapaJohn's International Inc. (PZZA) and Yum! Brands Inc. (YUM), which also operate their units in the mall.

The menu of the new California Pizza Kitchen restaurant will feature all the popular offering of pizzas, salads, soups and sandwiches.

In 2009, the company entered in Dubai with the launch of its first restaurant in Dubai Mall. In 2010, California Pizza Kitchen opened its second restaurant at the Mirdif City Centre.

We believe that the recent opening is indicative of the company's efforts to gain market share in the gradually reviving restaurant industry, which was badly hit by the recent economic downturn. Moreover, the third restaurant in Dubai expands the company's presence in the Middle East. The company is also accelerating its presence in other international markets such as India and China to capitalize on the growing economy of these countries.

The company is also on track to open three company-owned full service restaurants in the fourth quarter of fiscal 2010 in the U.S. In addition, California Pizza Kitchen's franchisees plan to open two international full-service restaurants within the same time frame.

Currently, we have a Zacks #3 Rank (short-term Hold rating) on the shares of California Pizza Kitchen. We also reiterate our long-term Neutral recommendation.