Larry Flax and Rick Rosenfield: courting a new success

Nation's Restaurant News, Sept 20, 1993 by Richard Martin

In what must seem like another lifetime, federal prosecutors Larry Flax and Rick Rosenfield helped put away bad guys and then teamed up and switched sides of the aisle to defend white-collar clients against criminal charges.

But since Flax and Rosenfield abandoned their Beverly Hills law practice to become restauranteurs eight years ago, the duo has earned fame and fortune by defending consumers' rights to eat designer pizza at off-the-rack prices.

The ongoing verdict of midscale gourmets from coast to coast is being rendered in the form of annual per-unit sales averaging around $3 million for the partners' 35-branch California Pizza Kitchen chain, which routinely taps the clienteles of higher-scale restaurants.

Through their promote-from-within policies and career nurturing, the co-founders of CPK also have defended their "family" of employees against the feelings of job futility that often afflict restaurant workers.

And by mounting a total smoke-screen defense of their employees' health rights two years ago, the pizza partners established a strong case against presumptions that smoking bans are guilty of harming hospitality revenues.

Although persuasive briefs, compelling motions and plea bargains are things of the past, Flax and Rosenfield still know how to cut winning deals, as evidenced by their negotiations last year with PepsiCo Inc.

After pocketing nearly $17.5 million each from PepsiCo's initial $71.6 million investment in their Los Angeles-based chain, the partners saw the food-and-drink conglomerate increase its 50-percent equity stake to nearly 70 percent through a tender offer to CPK's remaining minority shareholders -- while Flax and Rosenfield remained co-chairmen and retained control of half of CPK's four-man board of directors.

Today the partnership between PepsiCo and CPK's two originators is flourishing, especially since seemingly limitless capital for a targeted 50-unit-a-year expansion pace is being supplied by the bottler, snack-food maker and owner of Taco Bell, Pizza Hut and KFC.

Regarded by PepsiCo as gurus of service and menu innovation, Flax and Rosenfield are key forces behind the fast-food franchisor's ambitious thrust into the booming market for trendy, full-service dining concepts.

Although originally inspired by Wolfgang Puck's Spago, CPK's founding partners -- both avid amateur cooks -- are personally responsible for creating, developing and perfecting most of the offbeat pizza, pasta and salad recipes that have become the hallmarks of the chain's nothing-over-$9.50 menu. Among the almost-anything-goes array of dishes, CPK's two-dozen-plus varieties of wood-oven-baked pizzas include such signatures as BBQ chicken, B.L.T., Southwestern burrito, Thai chicken, tuna melt, shrimp-pesto and Peking duck. They complement other dishes, such as chicken-tequila fettuccine and moo shu chicken calzone.

Through their constant internal recruiting and coaching and through efforts to enhance the company's pay scale and benefits, Flax and Rosenfield are also point-men in CPK's drive to improve service, foster opportunities for promotion and inspire career aspirations among their work force.

Examples of CPK's staff-nurturing orientation are found in the company's executive ranks, which includes unidentified key people who shared $2.3 million in special bonuses that the founders negotiated for them in the last year's deal with PepsiCo. Directly under Flax and Rosenfield are Gary Beauregard, a former Spago waiter and cook who joined CPK's then-month-old prototype outlet in Beverly Hills and now is vice president for back-of-the-house operations; John Kaufman, vice president for front-of-the-house operations, who joined the company as a unit-level assistant manager; and Julie Thompson, who was CPK's very first waitress and who now is the chain's vice president of training.

"These are kids that started with us," says Flax, who regularly delivers recruitment talks to his service and kitchen staffs to encourage would-be management candidates. To a large extent, he says, California Pizza Kitchen's formula for success "is really working with our people and bringing them up from within."

As a result of the co-founders' culinary passions and human resources initiatives, CPK has transcended the status of flashy trendsetter and proved itself to be a durable and consistent hospitality provider.

"People used to say, 'What a great concept'; now they say, 'What a great product,'" Rosenfield remarks. "People recognize the kind of effort we've put into this and the quality of the execution."

Says Flax: "We love the fact that we've achieved this success in the restaurant industry, as contrasted with our 17 years in the legal industry."

Beyond the numerous plaudits CPK's founders have garnered in the national business press, Flax cites the satisfaction he and Rosenfield now derive from their restaurant industry recognition as Golden Chain awardees.

However, Flax says his law career, particularly his two-year stint as the Justice Department's civil-rights division chief in Los Angeles, indelibly influenced his approach to foodservice management.