Designer pizza at off-the-rack prices - success of innovative pizzeria chain California Pizza Kitchen

Nation's Business, March, 1991 by Michael Barrier

Designer Pizza At Off-The-Rack Prices

Larry Flax and Richard Rosenfield met 20 years ago, when both worked as federal prosecutors in Los Angeles. In 1973, they left the government to go into private practice together, defending mob bosses and union officials against criminal charges. It was lucrative work, but, Rosenfield says, it was ultimately frustrating--because most of their clients were guilty. "The government's conviction rate was something like 95 percent," he recalls.

In 1985, Flax and Rosenfield set the law aside to enter a field that had appealed to them for years, but where the odds against them were almost as daunting: They opened a restaurant in Beverly Hills. They have since opened 15 more, scattered across the country from Honolulu to Atlanta, and so far their success rate beats the government's. All of their restaurants are thriving, and this year Flax and Rosenfield will open seven more.

Flax, 48, and rosenfield, 45, are the founders of the California Pizza Kitchen chain--restaurants that offer what one reviewer calls "a trendy menu of pasta and designer pizza," in a bright, cheerful setting dominated by an open, wood-burning kitchen and decorated in black, yellow, and white tiles. The service is courteous and efficient, the food arrives quickly, and the tab typically hovers between $10 and $11 per person.

"We're in a niche where there are not many players," Rosenfield says. "We're not fast food, and we're definitely not white tablecloth--but our clientele is a white-tablecloth clientele." In other words, CPK targets diners who have demanding standards where food is concerned but who don't want to contend with the formality of fine restaurants every time they eat out.

"There aren't many players in that market," Rosenfield says, "but those that are there are doing very, very well."

Including, beyond a doubt, CPK. Its revenues rose from $15 million in fiscal 1989 to $22 million in 1990, with $35 million likely in the fiscal year that ends in June. Average annual sales per restaurant are now $3 million, and none--not even the first one, which opened on South Beverly Drive in March 1985--has yet hit a sales plateau. Even in Southern California, where nine of its restaurants are located, CPK can open new restaurants with no fear of cannibalizing its old ones.

The "designer pizza" is, of course, the heart of the matter, and it is in putting together their pizza menu that Flax and Rosenfield have shown the subtlest understanding of their target audience.

Superficially, the CPK pizzas resemble the "California pizzas" that celebrity chefs Wolfgang Puck and Alice Waters made a part of fine dining on the West Coast in the early '80s Flax and Rosenfield acknowledge their debt to Puck, in particular. Like its models, CPK tops the pizza dough with unfamiliar ingredients, often in surprising combinations. There is, for instance, barbecue chicken pizza (with sliced red onion, cilantro, and smoked gouda cheese), and there is Thai chicken pizza (with chicken marinated in a peanut sauce, bean sprouts, and roast peanuts). But there is an important difference.

"If you go to Spago today," Flax says, referring to Puck's famous West Hollywood restaurant, "you'll find on his menu some very interesting pizzas. You want to taste them, but you can't imagine what they're going to taste like until you get them."

At CPK, on the other hand, "we try very hard to make a pizza that you can taste when you see it on the menu. We want you to taste the barbecue chicken pizza in your head before you even order it."

That is true of even the most exotic-sounding pizzas. The Thai pizza, Flax says, is basically an attempt to get peanut butter on a pizza.

CPK thus offers to diners the gustatory equivalent of the jungle cruise at Disneyland: a perfectly safe adventure. And, as at Disneyland, the crowds keep coming back for more.

So much so, Flax says, that now "our landlords are treating us as an attraction restaurant." All but three CPK restaurants are in malls in affluent neighborhoods, but, Flax says, "people don't eat at California Pizza Kitchen just because they happen to be at a mall. They come to the mall to eat at California Pizza Kitchen."

In a weak economy, with commercial real estate on the ropes, such an "attraction" is irresistible to many developers. Says Rosenfield: "We are now so sought-after by developers that they are literally doing turnkey deals for us. In the seven restaurants that we've signed leases for, we have something like $6 million in contributions by the landlords. The units are instantly profitable."

In fact, Rosenfield says, the restaurants have always been profitable--even though, for its first few years, the company wasn't. That was because Flax and Rosenfield were building up a management infrastructure that could support the large chain they had in mind from the day they opened their first restaurant.

"If we saw something slipping," Rosenfield says, "we would put more management in, we would spend more money, not less money."