The decision to sell off stores in the 2006, 2007 and 2008 timeframes has also harmed the company's ability to deliver value (Fair Disclosure Wire, 2010). Balancing Profitability and Value

CPK needs to align its mission, strategy and organizational components to deliver value and build a foundation to grow exceptional customer experiences on. Based on an analysis of the investment in the ASAP locations, it is evident that building three well-located and executed full service restaurants would have been more profitable and supported the value proposition of delivering superior quality experiences and food.

This is the paradox that CPK finds itself in; by investing to broaden the reach of the company, it very well could have been better off developing even greater levels quality and experience in the existing stores and opening a few very high quality full service locations. Brand equity would have been preserved and the logistics costs of operating 23 CPK locations averted. While CPK chose to concentrate on the San Diego market (Long, 2006) with this strategy that was not done with the full investment possible due to the supply chain, real estate and program management departments of CPK being distracted with the 23 CPK ASAP locations in domestic and global airports. Clearly a focus on just one type of restaurant venue would have been a more cost-effective and profitable decision. Limiting the CPK ASAP locations to only 23 also minimizes the impact on the brand, which would become synonymous with price and availability if the CPK ASAP model were fully built out to over 100 locations globally for example.

CPK's decision to license its name and most popular low-end pizzas is proving to be the most profitable decision the company has made to date (Lockyer, 2008). This decision however also puts the perception of quality at risk. What CPK needs to do is quickly define the next generation...

The CPK ASAP restaurant concept addresses the time shortage travelers have. It would be excellent to take that concept and apply it to dual career families who are perpetually starved for time. This would further enhanced and add value to the experience of being in a full-service CPK restaurant was well.
Conclusion

Putting value back at the center of the CPK business model is critical to grow profitability. CPK senior management needs to be focused on the paradox that the initial CPK ASAP locations present. This accomplishes the goal of attaining higher levels of geographic reach yet potentially sacrifices the brand value. Ironically, the same investment in the CPK ASAP locations could have just as easily been made in two or three strategically located larger full service CPKs and the internal systems would have been more focused and effective as a result. Centering back on value and exceptional customer experiences, not just on driving up pizza sales or speed of transactions, is key for CPK to retain and grow relationships with their loyal customers who may feel the brand and products are becoming of lesser quality due to these strategy moves based purely on price reduction and margin growth.

References

Event Brief of Q2 2010 California Pizza Kitchen Earnings Conference Call - Final. (5 August 2010). Fair Disclosure Wire

Lockyer, S. (2008, March). Chains look to licensed products to drive revenues amid soft sales. Nation's Restaurant News, 42(11), 1,9,70.

Jessica Long. (2006, November). California Pizza Kitchen Refocuses Sights on San Diego Marketplace. San Diego Business Journal, 27(47), 1.

Ruggless, R. (2007, December). Fast-casual segment continues to…