PROSPECTUS SUMMARY
The items in the following summary are described in more detail later in
this prospectus. The summary provides an overview of selected information and
does not contain all the information you should consider. Therefore, you should
also read the more detailed information set out in this prospectus, including
the "Risk Factors" section and the consolidated financial statements and notes.
California Pizza Kitchen
California Pizza Kitchen is a leading casual dining restaurant chain in the
premium pizza segment with a recognized consumer brand and an established,
loyal customer base. We currently own, license or franchise 100 restaurants in
21 states, the District of Columbia and three foreign countries, of which 74
are company-owned and 26 are licensed or franchised. Our signature line of
innovative premium pizzas include our original best sellers, the BBQ Chicken
Pizza and the Thai Chicken Pizza, and more recent creations such as the Philly
Cheesesteak Pizza, Havana Chicken Pizza, and Grilled Garlic Shrimp Pizza. We
also serve distinctive pastas, salads, soups, appetizers and desserts,
including our Chicken-Tequila Fettuccine, BBQ Chicken Chopped Salad, Hearth-
Baked Tortilla Spring Rolls and Key Lime Pie. Our restaurants feature an
exhibition-style kitchen centered around an open-flame oven and provide a high
energy, casual dining experience. We believe our restaurants, which offer a
highly differentiated and distinctive menu, outstanding customer service, and
an average guest check of approximately $10.50, provide an exceptional dining
value and appeal to a broad base of consumers.
California Pizza Kitchen was founded in 1985 by Rick Rosenfield and Larry
Flax who were among the first to recognize the broad consumer appeal of
innovative premium pizzas. In 1992, PepsiCo, Inc. acquired a majority interest
in our company. In September 1997, PepsiCo divested its interest, and
Bruckmann, Rosser, Sherrill & Co., L.P. became our controlling shareholder
through a merger and leveraged recapitalization transaction. Soon thereafter, a
new management team led by Frederick R. Hipp, our Chief Executive Officer and
President and a 25-year veteran of the restaurant industry, was put in place.
Under our new ownership and management team, and in conjunction with our co-
founders, we implemented a number of new initiatives including increased
portion sizes, cost reduction strategies, broadened distribution channels,
upgraded ingredients and menu items, and a more disciplined growth plan. These
initiatives have resulted in improved operating results as evidenced by an
increase in our restaurant level cash flow margins from 13.9% in 1997, to 17.6%
in 1998, to 18.4% in 1999 and to 19.4% in the first three months of 2000, and
increases in company-owned comparable restaurant sales of 6.1% in 1998, 4.1% in
1999 and 6.8% during the first three months of 2000.
Since our inception 15 years ago, we believe we have developed strong brand
awareness primarily through the development of our full service restaurants. As
part of our strategy to build upon our leadership position in the premium pizza
segment and expand our channels of distribution, we have developed a high
quality fast-casual concept called California Pizza Kitchen ASAP. Our ASAP
restaurants, which are significantly smaller than our full service restaurants
and offer a limited selection of our most popular pizzas, salads, sandwiches
and appetizers, provide us with additional development opportunities in
attractive high traffic venues. There are currently a total of 19 franchised
ASAP locations, of which 18 are franchised by Host Marriott Services. We also
have a strategic alliance with Kraft Pizza Company, a subsidiary of Kraft
Foods, Inc., to distribute a line of premium frozen pizzas through supermarkets
and other retail outlets. We expect these additional distribution channels to
provide significant growth opportunities; however, development of full service
restaurants will remain our primary focus in the near-term.
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Our objectives include continuing to build our brand awareness and customer
loyalty, and extending our leadership position in the casual dining and premium
pizza segments. We intend to utilize the strategies discussed below to achieve
these objectives.
. Offer high quality, innovative menu items. We believe the success of our
concept is due to our ability to interpret various food trends on our
platform of pizza, pasta, salads and appetizers, and offer items that
appeal to a variety of tastes. Our restaurants feature menu items that
use high quality ingredients, such as 100% pure olive oil, imported
cheeses and fresh produce, imaginative pizza toppings such as barbecue
chicken, spicy peanut ginger and sesame sauce and Japanese eggplant, and
showcase recipes that capture an assortment of unique tastes and flavors
that customers readily identify, but do not typically associate with
pizza.
. Provide an excellent dining value with broad consumer appeal. We offer
large portions of innovative, high quality food, superior service and a
sophisticated yet casual atmosphere, all for an average guest check of
approximately $10.50. We believe this price-to-value relationship
differentiates us from our competitors, many of whom have significantly
higher average checks, and allows us to appeal to a broad group of
consumers.
. Build awareness of the California Pizza Kitchen brand. We believe that
California Pizza Kitchen is a brand that has traditionally been
associated with high quality, innovative food items, exceptional service
and a strong price-to-value relationship. We also believe that many of
our original recipes are closely associated with the California Pizza
Kitchen brand name. We have promoted brand awareness through the
distinctive features of our yellow, black and white logo, innovative
marketing and public relations programs and strategic alliances with high
quality partners, including Kraft Pizza Company which distributes our
premium frozen pizzas, and Host Marriott Services, which franchises our
ASAP fast-casual concept.
. Pursue disciplined restaurant growth. Our new management team adheres to
a disciplined expansion strategy, including the limited development of
additional franchise restaurants. We opened five company-owned full
service restaurants in 1999 and expect to open an additional company-
owned restaurants in 2000, of which will be full service restaurants
and will be ASAP restaurants. Thus far in 2000, we have opened three
full service restaurants in Chicago, Denver and San Diego. We currently
have four company-owned restaurants under construction, including two
ASAP restaurants. We have signed leases and letters of intent
covering the remaining restaurants we plan to open in 2000. In
addition, in late 1999 we hired a Senior Vice President and Chief
Development Officer with more than ten years of restaurant real estate
experience to oversee our expansion.
. Maintain strong unit economics. For 1999, sales for our 66 full service
restaurants open for the entire year averaged $2.6 million and generated
average restaurant-level pre-tax cash flow of $496,000 or 19.2% of
restaurant sales. Since the beginning of 1998, our total cash investment
per full service restaurant, net of landlord contributions, averaged $1.4
million, excluding pre-opening costs, which were approximately $147,000
per restaurant. We believe that our cash flow margins and return on
investment for our company-owned ASAP restaurants will be comparable to
those of our full service restaurants.
. Provide superior customer service. We have developed and fostered an
organizational culture based on mutual respect, open communication and
strong relationships with our employees. We believe that our culture, a
highly evolved training program for our restaurant staff, and a
profitability and service-based bonus program for our restaurant
managers, allow us to achieve a high level of customer service and
satisfaction and help us to ensure superior execution at the restaurant
level.
We are a California corporation formed on October 7, 1985. Our principal
executive offices are located at 6053 West Century Boulevard, 11th Floor, Los
Angeles, California 90045, and our telephone number is (310) 342-5000. Our
website is located at www.cpk.com.
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