THE BUXTON REPORT
The Right Location Every Time
California Pizza Kitchen, Inc.
The Company
California Pizza Kitchen, Inc., founded in 1985, by lawyers Larry Flax and Richard Rosenfield, is a leading casual dining chain in the premium pizza segment. It is based in Los Angeles. The company's full service restaurants feature an imaginative line of hearth-baked pizzas, including the original BBQ Chicken Pizza. It also offers a broad selection of distinctive pastas, salads, soups, sandwiches, appetizers and desserts, including favorites such as Chicken and Shrimp Jambalaya, BBQ Chicken Chopped Salad, Singapore Shrimp Rolls and Key Lime Pie.
Currently, 180 CPKs operate in 27 states and five foreign countries. California Pizza Kitchen’s strong brand awareness has been developed through full service restaurants
and the expansion of its high quality fast-casual, CPK/ASAP concept. CPK also has 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.
The Business Challenge: Target Optimal Markets For New Sites
In 2003, the new management team, headed by founders Flax and Rosenfield, realized the company’s troubles lay in the aggressive expansion strategy that involved
questionable real estate sites in areas that couldn’t support the restaurants. They knew that significant changes needed to be made, particularly in determining where to open and not to open new stores. The team’s first priority was to reign in expansion. They reduced the number of planned openings for 2004 from 28 to 12 or fewer.
To help prove to analysts that the company would grow profitably, California Pizza Kitchen enlisted Buxton to help the restaurant chain focus its efforts on finding and
opening optimal new store locations.
Buxton Meets The Challenge
Buxton used its proprietary CustomerID® customer analysis methodology to identify California Pizza Kitchen’s best customers. This methodology creates a customer drive time trade area which is generated using data on how much time current customers are willing to spend driving to a CPK. Then, Buxton identified the number of these customers within the drive time trade area of each potential new site. Each site is given a score that predicts its success.
To date, Buxton has helped California Pizza Kitchen score more than 200 potential sites for new locations. Of these, 18 stores have been opened and are right on track with Buxton’s site predictions. Just as importantly, more than 90 sites, originally deemed as "prime locations," were predicted to be poor performing by Buxton. This information
enabled California Pizza Kitchen to remove them from their list, thereby avoiding locations which would have deteriorated CPK’s overall performance.
Conclusion
Buxton has helped California Pizza Kitchen vastly improve its performance. Data provided by Buxton shows CPK management where their best customers are located.
"Buxton helps us understand where those concentrations (of good customers) are," says Joel Mayer, California Pizza Kitchen’s Director of Real Estate and Development. "It’s a real great tool."
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Objective
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Benefits Achieved
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Increase revenue
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14-percent increase in revenue announced 13 months after implementing Buxton model
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Generate solid returns for shareholders
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Two years after implementing the Buxton model, CPK announced earnings per diluted share of 28 cents, up 13 cents from the previous year
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Increase profitability of new stores
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New stores are averaging sales of $80,000 per week, which is about $15,000 more than the aver age existing CPK
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