California Pizza Kitchen Case 33

California Pizza Kitchen

CASE 33

Introduction

California Pizza Kitchen (CPK) was established in 1985 in Beverly Hills, California by Rick Rosenfield and Larry Flax. The two men were former criminal defense attorneys inspired by the gourmet pizza offerings of Wolfgang Puck’s restaurant Spago. California Pizza Kitchen is a restaurant service company whose casual dining model consists of family friendly surroundings, excellent ingredients, and inventive offerings. These elements have allowed CPK to perform well across many regions, including 213 locations across 28 states and 6 foreign countries as of 2007. Forty one percent of those restaurants remain centrally located in California. CPK coined the concept of “designer pizza at off-the-rack prices,” headlined by its hearth-baked barbecue-chicken pizza. CPK is able to derive revenues from three different sources: sales at company-owned restaurants, royalties from franchised restaurants, and royalties from a partnership with Kraft Foods which included an agreement to sell CPK-branded frozen pizzas in grocery stores. However, the company’s main focus was operating its company owned restaurants. The ability for CPK to expand both domestically and internationally is directly related to its “dedication to guest satisfaction and menu innovation and sustainable culture of service” as stated during a press release in 2007.

Brand Extension

In 1996, CPK developed the new ASAP restaurant concept. This idea revolved around a franchise agreement with HMSHost, who would go on to franchise 16 ASAP restaurant locations. ASAP restaurants were located in airports and were designed as a “grab-n-go” model. These small shops offered a limited selection of CPK pizzas, as well as salads and sandwiches. By 2007, there was enough success with these franchised ASAP’s to go ahead and extend its partnership with HMSHost through the year 2012. This was not the case however for company owned ASAP locations. These restaurants opened...