New Yorkers are expected to take major seats at the table of that culinary embodiment of the L.A. lifestyle, California Pizza Kitchen Inc.
The New York-based investment group, Bruckmann, Rosser, Sherrill & Co., has agreed to buy a 67.5-percent stake in the West Los Angeles-based California Pizza Kitchen from its current owner, Purchase, N.Y.-based PepsiCo, company officials confirmed last week. Terms were not disclosed.
"I can't discuss any of the terms; we have confidentiality agreement," said California Pizza Kitchen co-founder and co-chairman Larry Flax.
The New York investment house Bruckmann, Rosser already owns a controlling stake in the 46-branch Long Beach-based Acapulco Mexican Restaurants Inc., the second-largest Mexican restaurant chain in California.
In 1988, PepsiCo acquired a 67.5-percent stake in CPK. At that time, CPK was valued at about $140 million.
The soft drink giant is exiting the bulk of its restaurant businesses, to concentrate more on beverages.
The 78-branch California Pizza Kitchen, which posted sales of $183 million in 1996, was started in 1985 in Beverly Hills by Flax and a fellow attorney friend, Rick Rosenfield. The two co-founders along with other original investors retain the remaining 32.5-percent ownership stake in the company.
Both Flax and Rosenfield were former assistant U.S. attorneys in the Los Angeles office of the Justice Department before going into private practice.
The new-wave pizza concept proved a hit, and Flax and Rosenfield soon began opening up other branches, eventually expanding to 19 states.
But like many other restaurateurs, Flax and Rosenfield have struggled in the mid-1990s; the chain is not currently profitable, according to a source that has seen company financials. Official figures on profits are not disclosed.
Last week, Flax declined to answer whether the pizza chain is profitable, or to reveal how many seats on California Pizza Kitchen's board would be taken by Bruckmann, Rosser appointees.
Flax did say that he and Rosenfield will retain their titles as co-chairmen.
However, selection of a new California Pizza Kitchen CEO will fall heavily on the shoulders of Nick Valenti, now CEO of New York-based Restaurant Associates Inc., a Bruckmann, Rosser-controlled company, said Flax.
Bruckmann, Rosser is a private equity investment firm, which claims to have a potential of $400 million of committed capital under management. The three partners are former senior officers of New York-based Citicorp Venture Capital Ltd. In 1996, Bruckmann, Rosser completed five transactions, buying a bagel chip maker, a grocery store chain, a restaurant business, a health club chain and a pet food manufacturer.
In the restaurant business, through Restaurant Associates, Bruckmann, Rosser owns upscale restaurants in landmark buildings in Manhattan, and in 48 leading cultural institutions, art centers and corporations, such as the United Nations, Harvard Business School, and AT & T; Corp.'s headquarters. It also owns the New Jersey-based Charlie Brown's chain, and the Acapulco chain.
One employee at Acapulco's Long Beach offices, who requested anonymity, said he is looking forward to a Bruckmann, Rosser buyout of California Pizza Kitchen. "I get a $50 perk each month, good for meals (now only at Acapulco). If they buy California Pizza Kitchen, I would spend all of it there. I love that place."
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