Internal Analysis and SWOT Analysis

Internal Analysis and SWOT analysis on California Pizza Kitchen

Internal Analysis and SWOT Analysis of California Pizza Kitchen

California Pizza Kitchen (CPKI) has as of October 2010 a total of 252 franchised locations in 32 states throughout the U.S. And in 9 countries. Of these 252 locations, 205 are company-owned and 47 operate under specific franchise and license agreements with the corporate headquarters. The company successfully operates locations throughout such diverse locations as China, Japan, Hong Kong, Indonesia, Malaysia, Mexico, South Korea, Singapore and other nations globally. Founded in 1985 in Los Angeles, California the company is headquartered in the Wilshire District near its first store. The company has successfully devised a franchise model that can operate globally at a profit while also funding new product development. As of November 30, 2010 the valuation of California Pizza Kitchen is $415M. This takes into account current assets, potential for future growth, the strength of their price/equity ratio that is attracting institutional investors to their stock, and the results of operations showing excellent control over costs and operating expenses. With 88% of the company's stock held by institutional investors, the company's ability to deliver positive Return on Equity (ROE) is evident in the faith of institutions holding their stock for the long-term (Fair Disclosure Wire, 2010). Despite the difficult economic times that have been especially challenging for restaurants to contend with, California Pizza Kitchen has been able to still deliver a positive ROE and an impressive 9% Operating Margin Before Depreciation. The valuation of $415M is also supported by the expansion plans of the company globally and the successful standardization of the new location process mentioned during the last conference call hosted by the company with investment analysts (Fair Disclosure Wire, 2010).

Introduction

Any restaurant or consumer-based services business that is withstanding the economic turbulence and recession has found a value proposition that resonates with consumers strongly enough to bring them in to purchase. California Pizza Kitchen has been able to do this without resorting price competition and instead concentrated on creating a unique dining experience. The focus on the customer experience, from seating customers in the full-service restaurants promptly and providing an exceptional experience, to the consistency of quality for their carryout pizzas served in airports and malls, all share a common attribute of delivering greater value than they cost and promising a unique experience. In setting and exceeding customer experiences in each of their food service delivery venues, California Pizza Kitchen has successfully differentiated itself from the many other competitors who concentrate on price alone. The use of experience as a means to different food service deliver by setting and exceeding expectations consistently is more effective than a continual stream of price cuts and building programs (Dasu, Chase, 2010). California Pizza Kitchen has also successfully created a new product development process that keeps the pizzas, entrees and side dishes unique and new so that even the most loyal customers have something new to try on their menus (Fair Disclosure Wire, 2010). The ability to create unique experiences by tailoring each element of the service mix and continually adding uniqueness and value enhanced the customer experience and further differentiates a meal provider over time (Hanefors, Mossberg, 2003). California Pizza Kitchen has successfully created balance in their organization between the need to continually bring creativity into the product development process while at the same time maintaining a stable cost structure.

Analysis of California Pizza Kitchen Strengths and Weaknesses

California Pizza Kitchen has been able to rise above the difficult economic conditions in their largest markets by concentrating on the most strategically important process areas first. At the center of their strengths, the chain has is the ability to support their global brand with a unique, branded dining experience (Fair Disclosure Wire, 2010). Creating the integration between a restaurant's global brand and having the dining experience support and accentuate the brand's messaging and value is elusive and yet very profitable (McCaw, 2009). This is the greatest strength that California Pizza Kitchen has been able to attain in its history including its growth across geographies.

The second greatest strength of the company is its ability to continually create unique food entrees and continually keep the in-restaurant dining experience new and exciting even for the most loyal customers. This ability to create a continual new series of entrees that fuel a new dining experience is a competitive strength that California Pizza Kitchen continues to pursue and succeed at (Fair Disclosure Wire, 2010). Often the most challenging aspect of any branding effort is fulfilling the commitments the brands make (Ziobro, 2010). By continually investing in new product and service development, California does not need to resort to price competition or bundling of entrees its competitions have often resorted to over time (Hanefors, Mossberg, 2003).

The third competitive strength of the company is the ability to consistently deliver an exceptional and memorable in-restaurant experience. The ability to set and achieve expectations on behalf of customers is one of the most critical areas of making a brand stronger and expand from the conceptual to the concrete through service delivery (McCaw, 2009).