Ruby Tuesday and California Pizza Kitchen: Recipe for Success

Includes: CPKI, RT
by: Geezeo

March results are starting to come out and, unsurprisingly, restaurants that committed to aggressive cost controls and addressing their margins head on have reported better-than-expected first quarter results. Two of these chains are California Pizza Kitchen (NASDAQ:CPKI) and Ruby Tuesday (NYSE:RT).

Both of these firms beat Street expectations, since, as is reported by Reuters in the article "California Pizza shares rise on better Q1 outlook", tighter operations combined with lower commodity prices have surely helped sustain profits. MSSI monthly spending data shows that consumer spending at these two retailers also helps to explain the success seen at CPK and Ruby Tuesday restaurants.

Over the last twelve months, average spending at CPK has increased 20% and at Ruby Tuesday by more than 6%, which seems to indicate that the dining out sector has already begun its comeback from the recession that started back in December 2007.

Year on year comparisons also show that Geezeo customers are spending more at these two chains this year. MSSI statistics show a 10% increase at CPK through March-09 compared to March-08, while a 1% increase has been observed at Ruby Tuesday.

Spending across all restaurants tracked by the MSSI, which increased only 0.5% year-on-year indicate that CPK and Ruby Tuesday are both performing better than their competitors. This data was compiled by the Geezeo Main Street Spending Index (MSSI).