California Pizza Kitchen Essay

1450 words - 6 pages

William Upham
Fin. 461
California Pizza Kitchen Brief Case Analysis

“[R]estaurants don’t start out making money─ they build over time. So it’s really about having the capital and the staying power.” ─ Rick Rosenfield, Co-CEO of California Pizza Kitchen. Rosenfield, and longtime business partner Larry Flax, went from being defense attorneys to innovative pizza entrepreneurs. Their idea was to make “designer pizza at off-the-rack prices,” using unusual pizza toppings to create delicious combinations at low prices. California Pizza Kitchen began in 1985 in Beverly Hills, California and took off from there. The company went public in 2000, less than two decades after the opening of its ...view middle of the document...

The model shows the competitive nature of the industry and thus the attractiveness of a certain market due to the general profitability. The framework for the restaurant industry and how that affects California Pizza Kitchen is described below:

1. Supplier power

The amount of supplier power can be determined by the amount of suppliers in the industry. If a certain industry has very few suppliers, a company in this industry has few alternatives and may have to accept a higher price from a certain supplier if it wishes to compete in the industry. This gives each supplier more power to choose who they sell to and for what price. On the other hand, if an industry has a large amount of suppliers, a company in that industry would have several suppliers to choose from and would be less willing to accept unfavorable terms from any specific supplier, leaving each supplier with very little negotiating power. The restaurant industry as a whole has very little supplier power. There are an abundant amount of suppliers which would give the buyer the option to find the best suitable supplier.

2. Buyer Power

The concept of buyer power is similar to supplier power, but instead it is the power of the customers. The restaurant industry as a whole has fairly strong buyer power due to low switching costs for customers, the large size of the industry and the availability of substitute products; however, California Pizza Kitchen has done very well managing buyer power and this continues to be one of the company’s strengths. Looking at the selected menu offerings provided, California Pizza Kitchen offers a wide variety of different types of food. For example: Avocado Club Egg Rolls, Singapore Shrimp Rolls, Carne Asada Pizza, Thai Chicken Pizza, Shanghai Garlic Noodles, and Chicken Tequila Fettuccine. This is not even the full menu and we see a wide variety of unique cuisines on display. This minimizes the availability of substitute products and reduces buyer power. Additionally, California Pizza Kitchen has an average check of $13.30, well below many of its upscale casual dining peers, such as P.F. Chang’s and the Cheesecake Factory. This increases buyers’ switching costs and further reduces buyer power.

3. Threat of new entrants and entry barriers

There are very few entry barriers for the restaurant industry thus the threat of new entrants is high. Any ordinary person with an idea and the financial power can lease a building and start a restaurant. Initial start-up costs are very low for this industry, unlike a tech company.

4. Threat of substitutes

The restaurant industry has a very high threat of substitutes. In many locations, there are likely dozens of dining options within a very short distance, including a variety of pizza restaurants. However, most of these do not offer the same casual dining experience and menu options that California Pizza Kitchen does, which is a good thing, but there are casual dining restaurants like BJ’s...

Other Essays Like California Pizza Kitchen

Marketing Essay

3881 words - 16 pages  largest  pizza  brand,  but  also  includes  California  Pizza  Kitchen,  Tombstone,  and   Jack’s.  Kraft  Foods  just  introduced  DiGiorno  Flatbread  Melts,  which  are  premium,  single-­‐ serve  meals  that  cook  up  in  the  microwave  in  less  than  four  minutes,  and  DiGiorno  Crispy   Flatbread  pizza,  featuring

Strategy Implementation Essay

1302 words - 6 pages This report provides an analysis and evaluation of strategy implementation used by California Pizza Kitchen (CPK) and discusses the effectiveness of their strategy through organization design, control systems, people and culture. My research concluded that CPK relies on control systems to undertake a majority of the company’s operational activities and that human resources and organizational culture must support the strategy implemented, which

Mc Donalds

4361 words - 18 pages was $14.2 billion (up 7.4% from the previous year). Almost 80% of the units are franchised. In addition to the burger business, McDonald's has invested in Chipotle Mexican Grill, and acquired the Donatos Pizza chain in addition to the acquisitions stated earlier (3). McDonald’s is truly a diverse international corporation, a far cry from the one restaurant in San Bernardino, California . McDonald’s are opening in more non-traditional locations


3978 words - 16 pages  is  undergoing:   A.  functional  magnetic  resonance  imaging  (fMRI)   B.  transcranial  magnetic  stimulation  (TMS)  Correct   C.  electroencephalography  (EEG)   D.  positron  emission  tomography  (PET)     Pizza!  Beer!  Sex!  Our  motivation  or  drive  for  such  things  is  based  in  part  on  the  activity  of

Chapter 2 Choice Opp Cost

4412 words - 18 pages , overtaxed natures abilities to renew the water supply. As a consequence, we dam rivers to create resevoirs. In addition to the envrionmental damage this does, these resevoirs are not sufficient. Water has become an exhastible resource. Nearly half of the people in the world do not have adequate access to clean drinking water and even in California, where we use clean water to wash our cars and grow thirsty lawns, we are now facing the

Hrm Term Paper

4766 words - 20 pages Chapter 1 The Problem and Review of Related Literature Introduction Fastfood is a growing business centralized on the idea that not everyone can cook. There are days, especially when there is work overflow that people tend to forget that they have enough tools in their own kitchen therefore they opt for the easier solution which is to purchase from establishments that sell cooked food. A fastfood follows a standard time

The Separation Of Capital Ownership And Control

1577 words - 7 pages The argument of whether the separation of capital ownership and control is an efficient form of organization has constantly been a controversial issue. The criticism whether the controllers’ act is in the best interest of the owners’ wills never end as long as hired managers operate management. As the number of public companies has been increasing over the course of this century, meanwhile the American style of contact based corporation has

The Versatility And Flexibility Of OLED's

1014 words - 5 pages In April 1, 2002, organic light emitting diodes gain rise in the scientific community with their published, more practical form at Ames Laboratory. “Scientists at the U.S. Department of Energy's Ames Laboratory, in collaboration with scientists at the University of Michigan, Ann Arbor, have developed and demonstrated a novel, fluorescence-based chemical sensor that is more compact, versatile and less expensive than existing technology of its

Comparing The Moral Virtues Of Antony And Julian The Apostate

1103 words - 5 pages Roman emperor Julian the Apostate and Christian leader Antony both exhibited many qualities of character during their existence. Both of them led very distinctive lives although shared several ethical values. Book 25 of “The Later Roman Empire” and the book “Early Christian Lives” show concrete evidence of this. In the following essay, I will argue how both leaders’ lives were devoted to their religious beliefs and their mutual cardinal virtues

Living In A Cashless Society

1637 words - 7 pages Money in a traditional sense no longer exists. Money is becoming much of a concept than a physical material, and most ordinary bitter have not see the reality of the switch. People today are using credit and debit cards on a regular basis and in everyday situations such as meal purchased at fast food, highway tolls, clothing, groceries, gas stations, etc. all of these means of systems could be regarded as a cashless society or world. The question

The French And Indian War: The "Real" First World War

1955 words - 8 pages The Seven Years War, or more commonly referred to as “The French and Indian War”, has been called the true First World War. In this book The French and Indian War: Deciding the Fate of North America, the author and historian Walter R. Borneman paints a detailed and elaborate picture that justifies the claim of it being the first true war of global proportions. If ever there truly was a climax to the never ending feud of the European powers

Related Papers

California Pizza Kitchen Essay

1193 words - 5 pages CALIFORNIA PIZZA KITCHEN Suggested Discussion Questions 1. Provide a brief description of California Pizza Kitchen. California Pizza Kitchen (CPK) is a restaurants services company that operates a casual dining chain, with a particular focus on the premium pizza segment. The company is headquartered inLos Angeles, California and employs 14,800 people as on December 30th, 2007. The company recorded revenues of $633 million during

California Pizza Kitchen Case Essay

2919 words - 12 pages California Pizza Kitchen Case FIN 4385 Eric Lundberg Kelly Deeds Kevin Pope Drew Williams Summary of California Pizza Kitchen Recapitalization Proposal * Brief history of CPK (p.3) * Reasons for CPK’s success (p.3) * Ways to facilitate the success of CPK (p.3-4) * Anticipated effect of changing the capital structure on return on equity (p.4) * Anticipated effect of changing the capital structure on cost of capital

Teachings Note California Pizza Kitchen Essay

2421 words - 10 pages CALIFORNIA PIZZA KITCHEN Teaching Note Synopsis and Objectives This case examines the question of financial leverage at California Pizza Kitchen (CPK) in July 2007. With a highly profitable business and an aversion to debt, CPK management is considering a debt-financed stock buyback program. The case is intended to provide an introduction to the Modigliani-Miller capital structure irrelevance propositions and the concept of debt tax

Carts Of Calorado Essay

732 words - 3 pages the competitors as the experience showed they weren’t fond of vertical integration (example of PFS against KFC national Purchasing Cooperative Inc.) About California Kitchen Advantages Within the core business of PepsiCo Could be merged with Pizza Hut as it is looking forward to expand its market to casual dining High average table turnover and revenues per unit much higher than typical restaurant ($ 3’000’000 against $ 1’200’000) Culture within