California Pizza Kitchen Case

Topics: Stock, Stock market, Weighted average cost of capital Pages: 4 (1289 words) Published: December 11, 2013
Introduction to California Pizza Kitchen
California Pizza Kitchen is known worldwide for its high quality menu and ingredients, with budget friendly prices. They collect their revenues from three different sources. Sales from company owned restaurants, royalties from franchised restaurants and royalties from a partnership with Kraft to sell CPK branded frozen pizza in grocery stores. CPK has a "dedication to guest satisfaction and menu innovation and sustainable culture of service." CPK has the lowest average bill cost of any other casual dining restaurant, of $13.30 per guest. Their menu has very few choices, but the choices that are offered are of high quality and nothing less. Their goal is to extend their franchises to Mexico and South Korea in the coming years being as in the last five years they were capable of increasing total businesses up 38% so a small extension would be of no issue for them. In 1997 they also introduced the idea of an ASAP option. The ASAP options offers guests the most popular items on the menu, pre-made and ready to grab and go. With society becoming more and more fast paced, the ASAP option has been growing steadily.

Upcoming decisions for the Chief Financial Officer (CFO)
In recent years restaurants in North America have been seeing a large increase in prices of cost of goods sold (COGS), labour and commodities. In 2007 President Bush increased the minimum wage in the United States from $5.15 to $7.25 which was a large increase that most companies were not ready for. There was also a large increase in the cost of petroleum gas which as a result had an effect on the entire economy, making people be much more frugal when it come to their disposable income. When surveyed on the increase in gas prices, the majority of people said that food purchases would have the be the first thing to be cut in their budgets. There has been a 10% decrease in share prices in recent years and with all of these issues to keep in mind, Susan...
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