California Pizza Kitchen (NASDAQ: CPKI), a leading casual dining restaurant chain, focuses on the premium pizza segment. By expanding its menu and restaurant base, California Pizza Kitchen plans to obtain a leading market share in the premium pizza and casual dining segments. Along with this, high customer satisfaction and positive returns to its investors rank highly among their goals. The menu development team is constantly designing creative and innovative dishes which include a variety of contemporary and traditional pizzas with a wide selection of toppings. In addition to the pizza selection, other menu items consist of soups, salads, pastas, a full alcoholic beverage list, and a broad selection of specialty entrees and appetizers .
The company was established in 1985 by Richard Rosenfield and Larry Flax, in Beverly Hills California. Current headquarters are located in Los Angeles, California. In May 1992, PepsiCo bought a controlling interest in California Pizza Kitchen. This ownership only lasted for five years and officially ended in September 1997 with Bruckmann, Rosser, Sherill & Co., L.P. acquiring a controlling interest in the company. Since the first flagship restaurant was opened, California Pizza Kitchen has grown to 265 restaurants located in 32 states and 10 foreign countries . As of November 7, 2010, 56 of these locations are franchised or licensed . The company operates by using three different restaurant models: full service, CPK/ASAP, and LA Food Show Grill and Bar. In 1997, the company entered into a trademark license agreement with Kraft Pizza Company to manufacture and distribute premium frozen pizzas..
Full Service Restaurants
The full service restaurants, totaling 249, are the primary source of revenue and offer a full menu selection. Full service restaurants accounted for 98% ($652.185M) of revenue in 2009. A new full service format was introduced in 2004. This format achieves higher value scores from guests than the original format. The new format included exhibition-style kitchens, catering, take-out, and delivery options for customers. Since the introduction of this change, 86 new and remodeled restaurants have been opened under this format..
CPK/ASAP restaurants are designed for the busier "grab and go" customer. These location are smaller than the full service restaurants, offer common seating, have curbside service, takeout, cater, and sport a slimmed down menu . They are primarily located in airports and other non-traditional locations, including Hofstra University campus.
LA Food Show Grill and Bar
LA Food Show Grill and Bar steps away from the premium pizza segment and focus more on grilled items such as specialty burgers. There currently are only 2 locations; Beverly Hills and Manhattan Beach .
Franchises are located domestically and internationally. All international franchises are full service restaurants and are located in Asia, Central America, and the Middle East. Domestic franchises consist of both CPK/ASAP and full service restaurants. Preferred rights to CPK/ASAP restaurants are owned by HMSHost Corporation and new locations are subject to approval by California Pizza Kitchen. Royalties on franchise locations range from 5% - 5.5% of gross revenue. In 2009, domestic franchises accounted for 0.4% ($2.684M) of revenue and international franchises accounted for 0.3% ($2.078M) .
Under the license agreement with Kraft, California Pizza Kitchen will collect royalties based on a tiered schedule. The agreement also requires Kraft to spend a percentage of net sales on advertising and promoting California Pizza Kitchen's products. In 2009 California Pizza Kitchen collected $7.7million in royalties from Kraft (1.2% of revenue). 
The business segment is family friendly casual dining with a primary focus on premium pizzas. This is attainable based on the company's wide assortment of dishes and beverages, which cater to kids as well as adults.
California Pizza Kitchen is primarily known for its "exotic" pizza combinations and attention to quality. The firm's signature creation is the Original BBQ Chicken Pizza which uses barbeque sauce instead of tomato sauce and adds barbeque chicken breast as a topping, with a mixture of smoked Gouda and mozzarella cheeses . A few other examples of the wide variety of flavors are the Jamaican Jerk Pizza, California Club Pizza, Chipotle Chicken Pizza, and Cheeseburger Pizza. More traditional pizzas are also offered for the customer that is seeking a more authentic Italian experience. Such pizzas include the Mushroom Pepperoni Sausage Pizza, Italian Tomato & Basil Pizza, and Italian-style Neapolitan pizza. 
The same level of quality and innovation is used for the entire menu and not just the pizzas. The salad menu contains The Original BBQ Chicken Chopped salad, Thai crunch salad, Moroccan Chicken Salad, and CPK Cobb Salad just to name a few. Some of the pastas offered are Chicken Tequila Fettuccine, and Tomato Basil Spaghetti. The menu even offers specialty entrees, sandwiches, soups, appetizers, and desserts ranging from Baja Fish Tacos, to Spinach Artichoke Dip, all the way to Key Lime Pie. 
Small Cravings Menu
California Pizza Kitchen created the Small Cravings Menu to offer guests smaller portions of their favorite dishes for a much lower price. This allows customers to affordably try multiple menu items in one meal with the price of said items ranging from $3.99 to $6.49 per dish.
Beers, Wines, and Liquors
For a more appealing casual dining experience for adults, the company offers various kinds of alcohol including beer, wine, and mixed drinks. The wine menu was expanded recently and prices remain reasonable. The company carries a selection of both tap and bottled beers. Mixed drinks are offered to complement meals.
The original trademark license agreement with Kraft in 1997 was to manufacture and distribute a line of five different premium pizzas, including the famous BBQ Chicken Recipe Pizza. Since that day, four new lines of frozen pizzas have been created. These line are the: "Crispy Thin Crust" pizzas, "Flatbread Melts", "For One" individual pizzas, and a line of pizzas that doesn't use preservatives, artificial flavors, or colors. 
California Pizza Kitchen is part of the Restaurant Industry. There are over 960,000 U.S. restaurants, making competition in the restaurant industry extremely intense and requires a company to differentiate itself from the competition to become successful . This industry encompasses all restaurant types ranging from fast food to family dining. This wide range of businesses results in both direct and indirect competition, further applying pressure to promote a quality product.
The National Restaurant Association predicts the industry will see $604 billion in sales for 2011, an increase of 3.6% over 2010. Growth for the full service segment is projected to be a 3.1% increase over 2010, totaling $194.6 billion in sales for 2011. The quick service segment is expected to grow by 3.3% over 2010 with sales around $167.7 billion for 2011.
Restaurants can be found as frequently as gas stations, with nearly one on every corner. Consumers are presented with numerous options and choices that forces them to make a decision on where to eat. When a market is saturated, competition reaches a high and potential profit margins fall to a low. Increased competition forces a business to constantly innovate and adjust to consumer preferences, so that they can capture an adequate percentage of the profit pool. Pizza parlors are a dime a dozen now, with both local and national chains directly competing with California Pizza Kitchen. In addition to this direct competition, the company must try not to lose market share to other businesses involved in indirect competition. Consumers may not necessarily base their eating decision off which kind of pizza they want, but they may be deciding between a bacon cheeseburger or a meat lover's pizza. In the end, quality and value ultimately make the decision for the consumer.
Price of Food
The price of food weighs heavily on profitability and can be devastating to a company's profit margin. At present, demand on food has greatly increased and a steady rise in price has been the result. One food item in particular, that is central to California Pizza Kitchen's menu ,would be cheese. The USDA has projected that milk production for 2011 will be around 196.1 billion pounds, which is 3.4 billion pounds more than 2010 production. Based on the milk projection, the USDA has forecast cheese to average $1.64 to $1.71per pound in 2011. The new average price is up from last year's average of $1.5226 per pound . The firm's contract with its national master distributor is up for renewal in July 2011 . In addition to demand, other variables such as the weather's effect on crop growth, government regulations, and even gas play a part in determining food prices going forward.
Eating out at a restaurant can be considered a luxury, even more so given the present state of the economy. Unemployment levels have never been higher than they currently are, and even these numbers don't represent the true number of those without a job. With the nation still recovering from the recession, extra disposable family income has been hard to come by to say the least. This has led more and more families to save money by dining at home. When consumers do decide to dine-out, they will be looking for an affordable option in the form of value menus and not necessarily a premium restaurant.
Just like fashion, eating trends are established from time to time. The current trend is to lead a healthy lifestyle, which includes both exercise and watching what you eat. Because of this, many restaurants are now offering lower calorie dishes, reduced fat dressings, lean meats, etc. to attract healthier eaters. Based off of these menu trends, it is reported that 7 out of 10 consumers claim they are trying to eat healthier when dining out than they have in the past . Often times these dishes cost a premium, but the perceived well-being the customer will have afterward may be worth the price.
 *Numbers represent data from 2009 fiscal year
When compared to these four companies, California Pizza Kitchen has underperformed. Its calculated return on invested capital (ROIC) is the lowest of the group by a full 7%, suggesting that the company is not using their capital as efficiently as its competitors. The company's operating margins, gross margins, and net income are also the lowest of the group; implying lower sales and a higher cost of operations.
The Cash Conversion Cycle (CCC) is determined by Days Sales of Inventory (DSI), Days Sales Outstanding (DSO), and Days Payable Outstanding (DPO). The CCC measures how long it takes a company to convert its resources into cash through sales to customers. This measure is particularly important for retailers because it allows them to determine how effective their respective business models are in generating revenue. The lower the CCC the better it is for a firm's bottom line because it shows that capital is tied up in the business process for a shorter period of time. A negative CCC can be achieved by having a higher DPO, which determines how long a company takes to pay back its bills. A high DPO allows for a company to hold onto its cash for longer and use it for other activities, such as investing, before paying its suppliers. Overall, the industry has a much better CCC than California Pizza Kitchen as evidenced by this competitor selection. Three of the four selected competitors have a negative CCC with just Domino's having a higher CCC than California Pizza Kitchen. California Pizza Kitchen has the lowest DPO of the bunch causing its CCC to be less attractive than the others.
California Pizza Kitchen saw a decline in revenue from 2008 to 2009. This decline in revenue can be due to a number of reasons including: a poor economy, consumer preferences, and higher menu prices. Net Income also has been in a state of decline for California Pizza Kitchen over the past several years. This can be caused by a drop in sales, while the cost of sales has increased from year to year. Net income decline for 2009 was primarily caused by an increased loss on impairment of property and equipment which amounted to $22.9 million compared to 2008's $13.3 million. It should also be noted that if it weren't for the near costless $7.7 million of royalties collected from Kraft, the company would have posted a negative net income on the year. The company's single largest cost is its labor cost. In 2009 the total cost of sales was $543.50 million; labor costs for the same year were $247.35 million (45.5% of the total cost of sales). An increasing minimum wage and higher payroll taxes have caused the cost of labor to rise from year to year.
Domino's Pizza is a worldwide pizza retailer with approximately 9,000 stores worldwide in more than 60 countries and on every inhabited continent . Established in 1960 and trading on the NYSE they sell over 1.3 million pizzas a day. They have a wide variety of offerings such as baked subs, salads, desserts, and of course pizzas in thin original and deep dish crust styles. Domino's was recently named chain of the year by Pizza today, the leading publication in the pizza industry. Domino's has been very innovative in the pizza industry from its patented "heat wave" hot bag which keeps the pizza hot during delivery and helps keep moisture out so the pizza is crispy. Domino's also invented the 3-D car top box you see on pizza delivery cars and even taxi cabs, along with other industries  . Unlike California Pizza Kitchen, Dominos does not offer sit down dinning at locations and they do not have wait staff there to serve you. Dominos relies heavily on delivery service and carry outs for their business as opposed to California Pizza Kitchen which relies little on carry out orders and more on guests dinning in.
P.F. Chang's China Bistro is a publicly held casual dining restaurant with locations in the United States, Mexico, Kuwait City, and Dubai in the United Arab Emirates. P.F. Chang's serves an original menu of American Chinese cuisine developed by chef Philip Chang. P.F. Chang's China Bistro was founded by Paul Fleming and Philip Chang whose names make up the name of the restaurant itself. As of the year 2010, P.F. Chang's China Bistro, Inc. operates more than 200 restaurant locations worldwide. P.F. Chang's offers a dedicated gluten-free menu to accommodate customers who are gluten intolerant/ have Celiac disease and has been recognized for this by the Gluten Intolerance Group of North America. P.F. Chang's China Bistro, Inc. along with MBH Architects, has received several architectural awards for their restaurants designs.
Chipotle Mexican Grill is a casual fast-food restaurant located in the United States and Canada that specializes in burritos and tacos. It was founded in 1993 by Steve Ells in Denver, Colorado. In 1995, two more stores were opened, and in 1996, five more Denver based restaurants were created. 1998 marked a big year for Chipotle, as they went public and held their IPO. McDonald's made an initial minority investment in the company, and by 2001, the company had grown to be Chipotle's largest investor. McDonald's' investment allowed the firm to quickly expand, from 16 restaurants in 1998 to over 500 by 2005 .
Chipotle Mexican Grill has chalked up 12-month gains of about 160 percent on sales trends , while California Pizza Kitchen has reported better-than-expected 2011 quarterly earnings, but their sales trends lagged . California Pizza Kitchen has also reported a 1.1 percent decline in sales on February 10, 2011, underperforming Chipotle Mexican Grill this last quarter.
Porter's Five Forces of buyer bargaining power refers to the pressure consumers can exert on businesses to get them to provide higher quality products, better customer service, and lower prices. When analyzing the bargaining power of buyers, the industry analysis is being conducted from the perspective of the seller. According to Porter’s 5 forces industry analysis framework, buyer power is one of the forces that shape the competitive structure of an industry. In California Pizza Kitchens case, the buying power of customers is very high . There are numerous pizza places that consumers can choose from, and pizza is a pretty standard product.
In Porter's five forces, supplier power refers to the pressure suppliers can exert on businesses by raising prices, lowering quality, or reducing availability of their products. When analyzing supplier power, the industry analysis is being conducted from the perspective of the industry firms, in this case referred to as the buyers. According to Porter’s 5 forces industry analysis framework, supplier power, or the bargaining power of suppliers, is one of the forces that shape the competitive structure of an industry. California Pizza Kitchen is in an Industry where the suppliers have large bargaining power. Few, very large companies provide the raw materials that go into California Pizza Kitchen's products, as well as many other pizza producing companies. The availability of a few commodity type items that go into the production of pizza are also subject to price fluctuations and availability. If a crop performs strongly in a year, companies, such as California Pizza Kitchen, can expect lower prices. In the adverse situation, in a bad year, companies can expect suppliers to increase prices, forcing companies to raise their prices as well or take a loss.
In Porters five forces, threat of new entrants refers to the threat new competitors pose to existing competitors in an industry. A profitable industry will attract more competitors looking to achieve profits. More competition – or increased production capacity without concurrent increase in demand – means less profit to go around. The threat of new entrants is one of the forces that shape the competitive structure of an industry. Entrance of new competitors is very easy in the restaurant industry, which raises competition, creating barriers and reducing attractiveness of the old players.
Porter's threat of substitutes definition is the availability of a product that the consumer can purchase instead of the industry’s product. A substitute product is a product from another industry that offers similar benefits to the consumer as the product produced by the firms within the industry. According to Porter’s 5 forces, threat of substitutes shapes the competitive structure of an industry. California Pizza Kitchen faces very intense competition with companies that serve similar products at cheaper prices . California Pizza Kitchen looks to stand out by offering a full service dining experience, but in the current market recession, consumers are looking for cheaper prices and cheaper substitutes.
The intensity of rivalry among competitors in an industry refers to the extent to which firms within an industry put pressure on one another. If rivalry is fierce, competitors are trying to steal profit and market share from one another. This reduces profit potential for all firms within the industry. The intensity of rivalry among firms is one of the main forces that shape the competitive structure of an industry. California Pizza Kitchen is in an industry which has much heated competition. As shown by the graph below, there are many companies competing in the pizza industry, and some of the companies, such as Dominos, hold a vast market share that is hard to compete with. California Pizza Kitchen does not just compete against other pizza companies, they have to compete with the food industry as a whole.
California Pizza Kitchen has several strengths. First, their pizzas are hearth baked, which differentiates their product from competitors. Second, they are a leader in pizza innovation and have many innovative and non-traditional pizzas their competitors do not offer. California Pizza Kitchen, with their CPK ASAP locations, is also a pioneer in the "fast casual" dinning and have many locations in airports and shopping malls looking to offer their product to people on the go. Finally, California Pizza Kitchen offers consumers a fine dining experience that competitors like Dominos and Chipotle do not กินตับๆๆๆๆๆ
California Pizza Kitchen has several weaknesses. First, due to many of their locations being in shopping malls and airports, California Pizza Kitchen doesn't have the takeout revenue that competitors such as Dominos do. Second, limited franchising has greatly slowed the expansion of California Pizza Kitchen as both a brand and business. Limited franchising also puts all of the risks of expansion on California Pizza Kitchen. Finally, California ihohuKitchen being located in only 32 states makes marketing and creating brand equity difficult as their markets have to be segmented.
California Pizza Kitchen has several opportunities for growth. First, is to expand their frozen pizzas into fundraising with pizza kits. By allowing youth groups and charities to sell your product in exchange for donations, California Pizza Kitchen can increase revenue and generate more brand awareness among consumers. Second, is to expand California Pizza Kitchen ASAP to residential areas. Currently, California Pizza Kitchen ASAP is only offered in malls and airports. By putting them in more residential areas, California Pizza Kitchen could compete with pizza chains such as Little Ceasers and Dominos. California Pizza Kitchen also has great opportunities for growth through continuing innovation. Much of California Pizza Kitchens succes is from creative and new pizzas. By increasing the resources in this process, California Pizza Kitchen can expand both their brick and motor business popularity as well as their frozen pizza line. Finally, California Pizza Kitchen could create an employee loyalty program. Many of California Pizza Kitchen's locations are located in malls and airports, where people have many dining options. A customer loyalty program would give consumers incentive to choose California Pizza Kitchen over their competitors.
California Pizza Kitchen has several threats. First is poor economic conditions. In poor economic conditions, consumers will substitute eating out with eating in. Also, consumers will substitute gourmet pizza with cheaper substitutes offered by national chains. The second threat for California Pizza Kitchen is the growth of competitors. Competitors such as Chipotle and Domino's have seen great growth in the past few years, with both having over 1000 stores. This dwarfs California Pizza Kitchen's mere 266. With the competition having so many locations, it is vital that California Pizza Kitchen finds locations where they can have the largest market share. Finally, the ups and downs of the airline industry can poise a threat to California Pizza Kitchen. With many locations in airports, the closing of airlines and terminals can destroy California Pizza Kitchen locations.
Price associated with California Pizza Kitchen reflects the segment they are in "premium pizza" comes at a premium price. The items on their menu vary from $6.49 to $17.99  and recently they have introduced a "smaller cravings" section to their menu where the dishes come in smaller portions and at a price that allows guests to explore different tastes without the monetary risk of a full priced menu item.
California Pizza Kitchen doesn't advertise with coupons and ads on TV as other pizza companies do. Instead they focus on high profile fundraisers and media events , they also rely on word of mouth and social networks like Facebook and Twitter to get their name out to consumers. Since the location of each restaurant is strategically thought out, the demographic in the target area most likely already has either heard of or ate at California Pizza Kitchen.
When California Pizza Kitchen opened it's first restaurant in Beverly Hills, California in 1985 it created a new category in the pizza industry- the premium pizza. Premium pizza uses the same basic type and structure of other types of pizza but with unorthodox toppings such as smoked Gouda, sliced red onion, and cilantro, and sauces ranging from barbecue to spicy peanut ginger sesame. Pizza can be had in any style, so to cater to a large variety of consumers California Pizza Kitchen offers the traditional American-style with tomato-sauce based pizza as well as authentic, Italian-style Neapolitan pizza. Contrary to what the name suggests, California Pizza Kitchen also has a menu including salads, sandwiches, soups, pastas, appetizers, and recently fish and steak tacos.
Location of a restaurant is one of, if not the most important decisions for California Pizza Kitchen. There is extensive research put into each potential location. Since California Pizza Kitchen caters to the premium pizza market they need to first set a target market and then analyze the demographic of a specific area, focusing on metrics such as daytime and evening populations, shopping patterns, availability of personnel and household income levels . Restaurant locations (265) are in 39 states, and 11 foreign countries.
Human Resources are a big part of the overall success of not only company owned resteraurnts but also the francise owned ones. The leadership structure at California Pizza Kitchen is first the two co-CEO's Rick Rosenfield and Larry Flax. Susan M Collyns is the COO and CFO of the company and there are 32 regional managers who report to Susan. Each Regional manager oversee 5 to 9 resteraunts and supervises the general manager from each one. Within each resteraunt there is a general manager, a kitchen manager, and depending on size and volume of the store there is up to three more managers. Most of their full service resteraunts have 60 to 80 hourly employees 
California Pizza Kitchen is overseen by a Board of Directors who select a Chairperson of the Board and the Chief Executive Officers to manage the company's business operations. The number of directors on the Board is limited to the number of people who can operate efficiently. The Board of Directors of California Pizza Kitchen has a majority of independent directors who make up the Nominating and Governance committee. The aforementioned committee is empowered to make recommendations to the Board with regards to corporate governance issues. The Board is made up of individuals who have "distinguished records of leadership and success in their arena of activity and who will make substantial contributions to Board operations". The number of other for-profit Boards which an independent director may belong to is limited to their better judgment of the time and energy that such a position would require and its implication on their position of the Board of CPKI. There is no term limitation on members of the Board of Directors. Should there arise any issue pertaining to an individual director's qualifications with regards to continued Board membership, the director is expected to tender his/her resignation or the Nominating and Governance committee will ask for it.
Larry S. Flax 
Richard L. Rosenfield
Susan M. Collyns
Sarah A. Goldsmith-Grover
Steven E. Rich
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