California Pizza Kitchen

California Pizza Kitchen Inc.
Type	Public (NASDAQ: CPKI)
Industry	Food and beverage
Founded	1985
Founder(s)	Richard ("Rick") L. Rosenfeld and Larry S. Flax
Headquarters	Los Angeles, California,; United States
Area served	United States, Asia-Pacific region, Western Asia
Key people	Richard ("Rick") L. Rosenfeld and Larry S. Flax, co-founders and Co-CEOs; Susan M. Collyns, CFO and Secretary
Products	Pizzas, pastas, salads, and desserts
Services	Casual fine dining restaurant
Revenue	$555 million (2006)
Net income	$21 million (2006)
Employees	14,800 (2007)
Website	www.cpk.com

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California Pizza Kitchen (NASDAQ: CPKI), known within the food industry as CPK, is a casual dining restaurant chain that specializes in California-style pizza. The restaurant was started in 1985 by attorneys Rick Rosenfield and Larry Flax in Beverly Hills, California, United States.

[edit] Description

The Ocean Terminal, Hong Kong location at Christmastime

A California Club pizza from CPK

A new California Pizza Kitchen in Stamford, Connecticut

The chain is widely known for its innovative and non traditional pizzas, such as the "Original BBQ Chicken Pizza", BLT, Thai Chicken, and Jamaican Jerk Chicken pizzas. They also serve various kinds of pasta, salads, soups, sandwiches and desserts. They have an extensive children's menu for children ages 10 and under which includes a variety of different pizzas, pastas, salad, and chicken.

The chain has over 230 locations in 32 US states and eleven other countries, including 26 California Pizza Kitchen ASAP kiosks designed to serve passengers at airports and shopping malls.^[1] The company licensed its name to Kraft Foods to distribute a line of premium frozen pizzas.;^[1] Nestlé purchased Kraft's pizza lines in 2010.

[edit] History

In 1985, Flax and Rosenfield pooled $200,000 in bank loans and savings along with $350,000 invested from friends to lease space on Beverly Drive in Beverly Hills, California. Almost immediately the restaurant was a success, and the company expanded throughout Southern California. By 1992, there were 26 CPKs.^[2]

In 1992, PepsiCo paid nearly $100 million for 67 percent of the chain, with Flax and Rosenfield each receiving $17.5 million. At the time this was thought to be more than CPK was worth, and PepsiCo pushed to expand faster. CPK opened 15 stores in 1993 and 28 in the following year, a plan which was a disaster. PepsiCo had invested tens of millions of dollars in debt on its hands and quickly slowed expansion and moved to cut costs. PepsiCo executives had started cutting corners by replacing fresh ingredients with frozen vegetables and cheese (a change Flax and Rosenfield reversed later).^[2]

In 1997, the private equity firm Bruckmann, Rosser, Sherrill & Company bought out PepsiCo’s two-thirds stake with the intention of taking CPK public in 2000, pushing for expansion to resume. Veteran restaurant executive Fred Hipp was hired to run CPK with an aggressive expansion plan including 18 new stores in 2002, 22 in 2003, and 28 in 2004. The expansion was to be carried out by former Brinker International vice president, Tom Jenneman, under the title of Chief Development Officer. Flax and Rosenfield remained on the board but had no day-to-day control.^[2]

In early 2003, CPK reported a 16 percent increase in profits, with Hipp telling analysts that CPK was in excellent financial condition. In a March 25, 2003, press release CPK cut its first-quarter earnings estimates, which didn’t make sense given the positive forecast laid out just a few weeks earlier. Rosenfield investigated the numbers and discovered the positive earnings numbers Hipp had been touting were masking difficult quarters ahead. An emergency board meeting was called, Hipp and Jenneman were fired, and Flax and Rosenfield resumed control of CPK.^[2]