Earnings season is here, and while it can mean harsh reality for some, it’s apparently nothing but sunshine for California Pizza Kitchen. The restaurant chain just reported a 6.9% increase in same-store sales for the fourth quarter. As a result, it’s raising its Q4 earnings guidance. Liz Claman got a chance to talk with co-CEO Rick Rosenfield this morning on “Morning Call.”
California Pizza Kitchen has enjoyed 12 consecutive quarters of industry-leading comps, according to Rosenfield. And though chefs usually keep the most important ingredients to their favorite recipes a secret, Rosenfield is more than open to sharing the secret to CPK’s success.
“I think it’s the power of our brand,” he says. “We’re getting great brand extensions. Our relationship with Kraft frozen pizza went through $120 million in retail sales [in 2006]. That’s an increase of 80%.”
It’s more than that, though, says Rosenfield, who started the company almost 22 years ago with friend and now co-CEO Larry Flax. “Most importantly, I think it’s our culture, our people, the fact that we appeal to families…we just have 13,000 people that like coming to work, and I think that shows to our customers.”
Speaking about the vote in the U.S. House of Representatives today regarding an increase in minimum wage, Rosenfield admitted that the company stands to lose $3 million in 2007 because of it. That’s 9 cents per share. “But it’s baked into where we said we’re going to be,” he says.
According to company filings, Rosenfield earns $500,000 a year, plus about $450,000 in bonuses. He’s also one of the company’s majority shareholders. But that’s miniscule compared to the severance package Home Depot’s Bob Nardelli, who abruptly left the company last week. Rosenfield says his huge stake in the company keeps the focus on long-term value and not executive compensation.
“In our company,” he says, “it’s not going to get out of hand.”