In its heyday, California Pizza Kitchen Inc. opened as many as 20 restaurants a year in the United States. This year, the company is opening only one. And it will be a prototype.
Speaking at a restaurant conference at UCLA earlier this month, Chief Executive G.J. Hart said the chain is planning to build the prototype restaurant in Florida. Hart said it will be used to test brand upgrades but declined to reveal details.
The prototype comes at a challenging time for the chain. Like many casual dining restaurants, CPK struggled during the recession. Same-store sales fell 6.6 percent in 2009 and an additional 2.4 percent in 2010, the last available data before the company went private. While CPK was on the cutting edge of pizza-making 20 years ago, analysts say the company has fallen behind the times.
Restaurant consultant Jerry Prendergast in Culver City said demand these days is for wood-fired, Italian-style pizzas with ingredients such as fresh mozzarella and salami rather than the toppings CPK popularized a generation ago, such as barbecue sauce or pineapple.
“The whole pizza world has really evolved tremendously in the last few years,” Prendergast said. “Meanwhile, California Pizza Kitchen has sort of stayed in the 1990s vision of that world.”
According to National Restaurant News’ report on Hart’s comments at the conference, he acknowledged that the company lost its way in recent years.
“We want to be best in class at what we know how to do best,” he said at the conference. “We were the California pizza authority once, and we will be the pizza authority again.”
But that may not be easy.
“Any brand that has been established for a long period of time and has developed a public image has a problem changing directions,” Prendergast said. “It’s hard to change the public’s perception of you once an image is embedded in their brains.”
CPK executives declined to comment for this article.
Rick Rosenfield and Larry Flax, former federal prosecutors, co-founded the pizza chain in 1985 with a single restaurant in Beverly Hills; by 1992, they had 26 locations. They sold a controlling share of the company to PepsiCo. in Purchase, N.Y., in 1992. New York private-equity firm Bruckmann Rosser Sherrill & Co. bought out PepsiCo five years later. In 2000, the firm took CPK public.
Rosenfield and Flax left day-to-day operations then, but problems arose and they came back in 2003. The duo ran the company until selling it to San Francisco’s Golden Gate Capital for $470 million last year. Today, the chain, headquartered in Los Angeles near Los Angeles International Airport, has 265 restaurants in 30 states and 11 countries. The company is planning a move to Playa Vista later this year.
Hart came to CPK in August after working 10 years as chief executive for Texas Roadhouse Inc., a publicly traded casual dining company based in Louisville, Ken., that owns and franchises more than 350 restaurants across the country. He is also president and executive chairman for CPK.
One of the first announcements under the new ownership was that CPK would close underperforming restaurants and it had trimmed unpopular menu items.
Analysts believe the company may try to tap into the fast-casual market.
Darren Tristano, executive vice president at Chicago market research firm Technomic Inc., said that small is big these days.
“The trend in growth has been toward smaller square footage,” Tristano said. “Fewer people are dining out in full-service restaurants, so it makes sense to reduce seating and focus more on takeout to keep overhead costs down.”
But the pizza company already tried that with limited success. It launched CPK Asap in 1996, a fast-casual version of its restaurants located in airports, malls and stadiums. But the concept didn’t gain traction the way executives expected, so the company put an end to it last year.
Although domestic expansion is slow this year, Hart said at the conference that the chain will continue its international growth, with 16 restaurants planned abroad.
Tristano said he wouldn’t be surprised if CPK looked into franchising some of its U.S. restaurants, too.
“The trend has been toward taking company-owned stores and selling them to franchise groups so that the parent company can focus on menu, marketing and efficiency of the organization rather than on the operations at the unit level,” he said.
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