California Pizza Kitchen
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California Pizza Kitchen was formed twenty five years ago and became public in the year 2000. The Company is a leading casual dining chain and their full service restaurants have a very imaginative product of hearth-baked pizzas that include the BBQ Chicken Pizza which is original, there is broad selection of very distinctive pastas, assorted salads, various soups, appetizers and also sandwiches. The average price for products per guest for 2009 was approximately 15.00 dollars. By April 12, 2010 California Pizza Kitchen had 253 locations system-wide. About 205 outlets are domestic locations, and about 48 outlets operate under franchise or certain license agreements. Of the 48 franchised outlets, 28 outlets operate internationally and 20 outlets operate domestically. California Pizza Kitchen also has a licensing agreement with the Nestle S.A. that manufactures and also does distribution California Pizza Kitchen premium frozen products.
Strong balance sheet – According to a report by CPKI (2010) California Pizza Kitchen has a net market capitalization of about 490 million dollars. The company has an annual average earnings growth of about 7.7% over the past decade. Total Revenues for California Pizza Kitchen is $156.7 million in the first quarter of 2010. Depreciation and amortization has over time decreased and it now stands at 9.1 million dollars in the first quarter of year 2010 down from $9.4 million in the first quarter of year 2009. The company has continued to invest every year by using its working capital and also borrowing from their line of credit fund, this has been in the development and also construction of new restaurants as well as to remodel their existing restaurants. In 2010 California Pizza Kitchen converted one of its CPK ASAP to a full service restaurant. In May 2008, California Pizza Kitchen entered into the Facility with a group of banks, the banks helped to increase the maximum available money for borrowing capacity to about $150.0 million. The Borrowings under this facility gives the company the opportunity to access more revenues that can be important in expansion and driving the company plans ahead. California Pizza Kitchen has over the year been able to reduce its long term debt significantly.
Brand Name – during the twenty five years that California Pizza Kitchen has been operating, it has been able to developed a recognized brand by consumers and this is not only in California but they have also demonstrated their concept appeal to a very wide variety of geographic areas. This is why they have a number of outlets internationally in a lot of countries. This has been possible due to various factors that include, California Pizza Kitchen menu is develop with the leadership of its co-founders and also co-Chief Executive Officers who are Richard Rosenfield and Larry Flax, they lead who the menu development team and ensure that they continually create menus selections which are innovative and to a great extent capture more distinctive tastes. Their diverse menu on more often than not focuses on how to introduce or enhance imaginative toppings and also ensure they showcases various tastes and flavors which the customers will readily identify with, but this tastes and flavors are not typically associate with pizza, salads or even pastas. The company also ensures that they produce quality food. The company also is involved in marketing California Pizza Kitchen brand by use of many nontraditional and creative ways. Since it is one of the the pioneers of premium pizza, California Pizza Kitchen has over time benefitted from the national media. This provides California Pizza Kitchen with a significant competitive advantage over their competitors (Checco 2005).
Competitive prices – competition in the restaurant industry is very intensely competitive. California Pizza Kitchen has to compete on the taste of food, quality and price of food and the service they offer to consumers also of importance is the ambiance, customer service, location of the restaurant and the overall dining experience. California Pizza Kitchen believes in the relationship of attractive price-value and good quality of food and also service to enable them to differentiate from their competitors. To ensure that their prices of products are competitive, they have embarked on a purchase system that ensures all their ingredients and supplies are well negotiated. This is done through either a contract with their suppliers or employing various commodity pricing formulas. The average dine-in guest check of California Pizza Kitchen is approximately 14.49 dollars, and this is inclusive of alcoholic beverages.
Location – According to United States Securities and Exchange Commission (2010), the franchisees included California Pizza Kitchen currently operates over 88 restaurants in California alone. 80 outlets are owned by the company and 8 outlets are franchised. This is approximately about 40% of all the California Pizza Kitchen outlets in America which are based in California. This puts California Pizza Kitchen in a particularly susceptible position in case of adverse trends and unfavorable economic conditions in the State of California. Also with this geographic concentration, any negative publicity that regards any of California Pizza Kitchen restaurants in California will lead to a material adverse effect on California Pizza Kitchen business and its operations, also other possible regional occurrences like earthquakes, local strikes, and other natural disasters that may affect California.
The above internal analysis of California Pizza Kitchen will help the company policy makers in their strategies formulation of plans to make plans which will lead California Pizza Kitchen to prosperity.
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