Essay on California Pizza Kitchen

2089 Words May 2nd, 2015 9 Pages
California Pizza Kitchen

November 16, 2013 ABSTRACT The purposes of this case study are to discuss the main issues of CPK (California Pizza Kitchen) and think critically to find solutions to the current situation. In order to achieve these purposes, we first analyze time frame of the CPK’s establishment and recent development to find the absolute advantages and disadvantages of CPK compared with its competitors. According to our calculation, we will discuss whether to use moderately levering up CPK’s equity. Finally, a more suitable and profitable model will be established to improve the competitiveness and market share percentage of CPK. Key words: time frame, stay power, levering up, and debt

INTRODUCTION
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As a result, management decided to halt all ASAP development in 2007. In 1997, CPK entered into a licensing agreement with Kraft Foods. It started to run with the concept that includes increasing the guest satisfaction, ”. In order to maintain the creative menu’s originality, two co-founders led the menu-development team to distinguish its menu and prevent it from being found at its casual dining competitors so that RBC Capital Market labeled the chain a “Price-Value-Experience” leader in its sector. CPK spent less percentage of sales on advertising than that of its peers. Despite the strong performance, CPK still faced with 10% share price decline during June 2006 to a current of $22.10. To leave the dilemma, the management had to put debt on the balance sheet. They should make a choice, staying power or levering up CPK’s equity.

SWOT ANALYSIS Strengths On one hand, CPK achieves benefits with its subjective factors: family-friendly surrounding, excellent ingredients, and inventive offering. These factors can be narrowed down as creative menu, unique products, reasonable cost allocation, increase in minority interest, and strong management team. On the other hand, the cooperation with other strong company like Kraft can improve CPK’s competitiveness. Weaknesses In recent years, several factors had challenged restaurant industry, including increasing

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