...California Pizza Kitchen (CPK) was co-founded in 1985 in Beverly Hills, California by Rick Rosenfield and Larry Flax. Rosenfield and Flax both hold the title of Co-President, Co-CEO, and Co-Chairman of the Board of Directors for California Pizza Kitchen. Susan Collyns, Chief Financial Officer, currently leads the financial team at California Pizza Kitchen which is faced with reducing the corporate income-tax liability while balancing the goal of the management team to grow the business. California Pizza Kitchen is in the food industry business. California Pizza Kitchen is a casual dining restaurant chain that specializes in innovative and non-traditional pizzas. California Pizza Kitchen also provides various soups, salads, pasta, sandwiches, and desserts at higher quality for lower prices. California Pizza Kitchen is in 213 locations in 28 states (41% located in California). California Pizza Kitchen’s core patrons tend to have an average household income of $75,000 (survey results from 2005); creating less of an impact on patron’s dining habits during times of inflated gas and food prices. California Pizza Kitchen’s inventive menu was not the only draw-in for patrons, their below average check (usually around $13.30) was much lower than their competitors such as, The Cheesecake Factory, Olive Garden, P.F. Chang’s, Chili’s, Red Lobster, and Panera Bread to name a few. The California Pizza Kitchen chain was labeled by RBC Capital Markets as the “Price-Value-Experience” leader...
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...Carts of Colorado and California Pizza Kitchen. The acquisition of these restaurants would expand PepsiCo’s restaurant business, but PepsiCo must consider how each deal will affect the scope of the firm and potential synergies in each deal before making a decision to acquire these firms or not. There are several potential synergies in the Carts of Colorado (COC) deal. Specifically, there are operational synergies and financial synergies, along with a little strategic synergy. There is operational synergy because acquiring COC would create economies of scope. There could be shared resources or activities because PepsiCo could sell items, or at least similar items, from their other restaurants on these food carts. There is some strategic synergy in this deal because making this deal would mean entering a new market, the food cart industry, to extend market power. Even though food carts are also fast food, it is in a new segment that PepsiCo has not yet experienced. Financial synergies are also evident in this deal with COC because since they nearly tripled its income in one period, they could be a valuable asset. By investing in it, PepsiCo will be able to gain much revenue and capital from a new source. For California Pizza Kitchen, there are operational, strategic, and financial synergies. In terms of operational synergies, there are economies of scope because there are shared activities and items, like different kinds of pizza. There are strategic synergies because...
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...DISTRIBUTION CHANNEL The California Pizza Kitchen strategy to build a strong company with leadership position in the pizza industry decided to expand their distribution channel by not just having company owned business but utilizing franchises to expand their customer base. Franchising provides the ability to expand business rapidly at less of a financial risk. Profits are higher due to lower costs. Another channel is their high quality fast-casual concept called California Pizza Kitchen ASAP. The ASAP restaurants are smaller than the full service restaurants and offer a limited menu in attractive high traffic areas. They offer in-house dining or take out. This channel allows the company to get their product out to the consumer at a lower cost with smaller overhead (smaller rents, less employees, lower utilities). They also teamed up with Kraft Pizza a division of Kraft Foods another distribution channel, which has a line of frozen pizzas that are sold to supermarkets. These additional channels provide growth opportunities and name recognition. Currently, Kraft distributes pizzas in supermarkets focusing on markets in which the restaurants are located in from east coast in Georgia, Maine, to the west coast in Arizona, Nevada and California. The extensive development process involved input from CPK so that they maintained the quality of the restaurant in the frozen product. From the Kraft Manufacturing building, the pizzas are delivered by trucks equipped with...
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...I was born and raised in California and had never experienced dining at the California Pizza Kitchen. I have heard about it through a few other people and passed by it numerous times. It never occurred to me to go experience eating and dining at this traditional American restaurant. This restaurant was established in 1985 in Los Angeles, California. When I was growing up, my family use to take us on road trips every so often down south to Los Angeles and San Diego. Every time we went there, I would see the sign, but never had a desire to eat there. I would see this bright, yellow sign with a single palm tree, the name, California Pizza Kitchen right below on a square shape tilted so the points are pointing North, South, West, East. The yellow sign attracted my attention and grabs other people’s attention I would think. I believe the yellow is a symbol of sun, which describes the feel of southern California. After so many years of hearing about it by word of mouth, I finally made the decision to try this food, California Pizza Kitchen, that the American people have been raving about. As I come walking into this restaurant in Los Angeles, I noticed the outside had tables, seating for four, an umbrella, lighting/heater post, and a gate for privacy and distinction. It was also very clean. This patio area is very attractive and grabs my attention. As I enter, I notice immediately the feel of the place is extremely relaxing and intimate. There’s music playing in the background...
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...The proposed acquisitions of California Pizza Kitchen and Carts of Colorado by Pepsico 1. Should PepsiCo buy California Pizza Kitchen? For both acquisitions it's more about what they add to PepsiCo, not what value PepsiCo adds to them Pros: - needs to acquire CPK to learn casual dining. That's where the growth is, and internal attempts to develop casual dining in Pizza Hut Cafe have failed. whether CPK is merely a passing yuppie fad, or if it is a long-term market segment doesn’t matter to PepsiCo if it merely wants to learn casual dining. - PepsiCo startups failing Cons: - possibly PepsiCo’s failure to develop a casual chain internally, along with the real differences between fast food and sit-down dining, will prevent it from succeeding. •New segment that PepsiCo doesn't know - Yuppie casual dining • $11 check, dinner on pizza dough - PepsiCo ignorant of key success factors •high level waiter service •PR not advertising key to marketing •capital cost $1 - $2m, sales $3m not $800k, $800k. •New untested concept - 25 restaurants, 8 states, $34m sales, $3/4m net income - may be a "fad" •only seven years old - may not stretch beyond Yuppiedom 2. Should they buy Carts of Colorado? Pros: - while CoC's $8m sales is very small for Pepsico, the real market size is the revenue from non-traditional PODs, and this is potentially enormous ($2 billion to PepsiCo alone) The real reason to own CoC is to preempt Coke and MacDonalds in the best locations...
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...California Pizza Kitchen Company Background: White-collar criminal defense attorneys Larry Flax and Rick Rosenfield in Beverly Hills, California created California Pizza Kitchen in 1985. Famously known for its hearth-baked barbecue-chicken pizza, the “designer pizza at off-the-rack prices” concept thrived. Over the last twenty years, the company has expanded into 213 locations in 28 states and 6 foreign countries. Although approximately 41% of the U.S. stores are located in California the business model has done well throughout all regions. California Pizza Kitchen derives its revenues from three sources: sales at company-owned stores, royalties from franchised restaurants, and royalties with a partnership with Kraft Foods to sell CPK-branded frozen pizzas in grocery stores. In 1996, CPK extended its brand with franchised ASAPS located in airports that offered a limited selection of pizzas and an assortment of “grab and go” sandwiches and salads. In 2000, CPK launched company owned ASAP locations as well. In 2007, CPK ceased development for any future ASAP locations to focus more on continued expansion of both domestic and international franchised locations. With the recent 10% share price decline, CPK is questioning whether this is an ideal time to repurchase shares and potentially leverage the company’s balance sheet with its prevailing line of credit. CPK is considering repurchasing shares and using debt financing to fund the strong expansion outlined for the company. In...
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