The Investment Column : Pizza Express still on track

PizzaExpress has been a phenomenal performer since the 32-year- old pizza chain reversed into Star Computer in early 1993. In just four years, the shares have soared from around 70p to 560.5p, up 2p yesterday, as management have taken what was a predominantly South-east of England concept and started to extend it across the country.

Pre-tax profits have rocketed from pounds 1.42m in 1993 to pounds 9.98m last year and yesterday the group announced it had grown another 54 per cent to pounds 6.28m in the six months to December. This success is all the more remarkable for the fact that the menus and the format have hardly changed in a generation which has seen the arrival of a flood of pizza- purveying rivals.

But PizzaExpress is aiming at a more upmarket audience. It still imports most of its ingredients from Italy (and is therefore benefiting from the strong pound) and genuinely attempts to make each restaurant different, with attractions and features ranging from clock towers and river terraces to jazz.

The "affluent, aspirational 20 to 50-year-olds" who crave this combination are still not being catered for, according to David Page, the chief executive. He reckons they could double or triple the size of the 127-strong chain in five years. The first (franchised) overseas restaurant opens in Los Angeles next week and there could be 10 to 15 within 18 months, ranging from the West Coast of the US to Delhi.

In the meantime, there is plenty to go for in the existing business. Last October's pounds 25.5m share-financed deal to buy in 32 franchised outlets and one other restaurant will replace pounds 719,000 of royalties with a contribution of pounds 4.5m in a full year.

There are still eight franchised locations to be bought, with negotiations under way for half of them, which could eventually deliver up to pounds 1m more.

This is a chain still far from maturity, with restaurants open for more than 10 years still producing growth of around 10 per cent and group like- for-like growth ahead of last year. Kleinwort Benson's forecast of full- year profits of pounds 15.5m puts the shares on a forward multiple of 30, falling to 21, which looks up with events. Hold.