California Pizza Kitchen Case

1280 Words Dec 2nd, 2013 6 Pages
Introduction to California Pizza Kitchen California Pizza Kitchen is known worldwide for its high quality menu and ingredients, with budget friendly prices. They collect their revenues from three different sources. Sales from company owned restaurants, royalties from franchised restaurants and royalties from a partnership with Kraft to sell CPK branded frozen pizza in grocery stores. CPK has a "dedication to guest satisfaction and menu innovation and sustainable culture of service." CPK has the lowest average bill cost of any other casual dining restaurant, of $13.30 per guest. Their menu has very few choices, but the choices that are offered are of high quality and nothing less. Their goal is to extend their franchises to Mexico and …show more content…
Looking at Exhibit 7, Comparative Financial data between Restaurants, Frisch 's Restaurants have a 0.44 dividends per share while currently California Pizza Kitchen and Chipotle Mexican Grill have 0.00. Based on this chart there seems to be a correlation between dividends per share and share price, showing that Frisch 's Restaurants have one of the lowest share prices of $30.54, while Chipotle Mexican Grill has a share price of $86.00. Although CPK only has a share price of $22.10 if they follow in the footsteps of Chipotle Mexican Grill by having 0% debt and an equal debt to equity ratio, the more revenue that comes in, the higher their share price will be.

2) Based on the fact that all other competitors spend roughly four times as much on advertising as California Pizza Kitchen, it would be beneficial for them to up their advertising budget. From 2003 to 2006 net income went from $5 602 000 to $21 000 000 and even though cost of labour, and cost of goods sold have increased in that same span of time, the company still has
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