California Pizza Kitchen Analysis Structure

California Pizza Kitchen Analysis

Structure

Tess Stynes. (2010, April 12). California Pizza Kitchen Board Authorizes Strategic Review. Wall Street Journal (Online).

California Pizza Kitchen (CPK) has a highly decentralized organizational structure designed to support more regional levels of autonomy and marketing decision-making. The centralized functions of Information Technologies (it), Supply Chain management (SCM), Finance, Accounting, Marketing, Advertising and Public Relations (PR) are designed to support both CPK stores owned by the company and those that are franchised. Over the last five years CPK has also experimented with providing individual stores with the freedom of defining their own merchandising and marketing strategies as well (McCaw, 2009). This approach to defining individual store accountability did work well for cost control and quality control. Since the initial efforts to create store-level performance measures worked so well, this accountability led to the development of entirely new key performance indicators (KPIs) of performance and profitability, in addition to quality levels (Stynes, 2010).

The Wall Street Journal did an excellent job of analyzing how the structure of CPK was going to change over time based on the store-level accountability and market focus becoming a major focus. It also did a good job of explaining how the metrics of measuring per-store performance also drove to the decision to divest the lowest-performing stores.

Sources:

JOSEPH ASCENZI. (2007, May 28). REAL ESTATE & RETAIL / / Indian Wells mixed-use project lands tenants. The Business Press, p. 4.

Dennis K. Berman. (2010, April 10). California Pizza Chain Is Said to Be on the Block. Wall Street Journal (Eastern Edition), p. B.1

Over the last five years, this enhanced level of accountability also has led to a make greater focus on real estate management within the corporate structure as well (Ascenzi, 2007). Based on real estate management and KPIs being aligned to each location, senior management was able to define minimum levels of profitability and rank each store according to its performance levels (Stynes, 2010). This led to a review of the entire franchise and the eventual decision to begin selling off some of the less profitable stores, with the board of directors choosing at one point to sell the entire company if a buyer could be found (Berman, 2010). All of these factors were driven by the higher level of accountability into store performance and profitability. During the period of time that the sale of the company was being considered, reorganizations were also completed to provide real estate management with greater flexibility in re-assigning or closing lower-performing locations while also opening new ones