California Pizza Kitchen

California Pizza Kitchen

California Pizza Kitchen (CPK) is a restaurants services that operates a casual dining chain, with a particular focus on the premium pizza segment. The company’s headquarters is located in Los Angeles, California. As of December 2007, CPK employs 14,800 people. At the end of fiscal year 2007, the company had recorded $633 million in revenues, which was a 14.1% increase from fiscal year 2006. The increase in revenues was credited to its full service restaurants, ASAP restaurants and from the LA Food Show. The operating profit for fiscal year 2007 was $22 million, a decrease of more than 28% from fiscal year 2006. The net profit was $15 million, which was a decrease of 29.5% from fiscal year 2006.

Porter’s Five Forces Analysis

Threat of Substitute Products: California Pizza Kitchen is in a market that is seeing competitors enter and exit its market daily. They are in a mixed environment, but according to Porter’s five forces analysis, even though the competition is high, the forces are only moderate. Although they have a steady diet of competitors, with the likes of Dominoes, Pizza Hut and Papa John’s to name a few, neither of these establishments offer such a variety of pizzas with different tastes. CPK offers a menu that is very unique to its customers, something that the likes of Dominoes and other pizza themed restaurants cannot rival. However, where these competitors cannot make up with their menus, they can make up with their prices. CPK does have higher prices than that of their competitors, but it coincides with the different types of foods that they serve. Aside from the well established pizza restaurants, there is always the threat of new competitors.

Entry of New Competitors: This is a relatively easy industry to enter, although the new competitors will not only have to deal with “regular” pizza joints, but with the likes of CPK as well. Depending on the demand and prices of their products, new entrants could...