Call them Founders, CEOs and the management types who love them are often called "suits," but the word does not apply to California Pizza Kitchen founders Larry Flax and Rick Rosenfield. They grin. Frequently.
anything but late
for dinner
CPK founders delight in
succeeding where even their
banker said they would failBy Erika Engle
Star-BulletinThey finish each other's sentences. Frequently.
They speak to executives from American Savings Bank and make them laugh. Frequently.
Among the heartiest laughs was the explanation for the success of their 27-year personal and business relationship. Rosenfield said neither invests his ego in being right, that they're more interested in finding the right answer. Flax added, "It's a good marriage, without the sex."
This is not to say the former federal prosecutors don't know how to be serious. The two played hardball with multinational corporate giant PepsiCo Inc. and came out with a win-win deal. As seen in some local supermarkets, the company now has an alliance with Kraft Foods to sell CPK frozen pizzas across the United States.
The pair addressed an American Savings Bank lunch gathering yesterday at the Japanese Cultural Center of Honolulu, smiling broadly. Mere hours earlier the company they founded in 1985 reported record first quarter financial results. Total revenues were up 18 percent to $57 million, and comparable restaurant sales were up 6.3 percent. California Pizza Kitchen Inc. went public in August of last year, and trades on the Nasdaq under the symbol CPKI.
Rosenfield said sales at the Kahala Mall and Ala Moana CPKs are always in the top five in the company. An average store generates $2.8 million in annual revenue, he said, while the Ala Moana store "is approaching $4 million."
CPK debuted during a period that saw many trendy restaurants open -- then close. Flax and Rosenfield attribute the company's success to their product and their corporate culture.
"Of course a restaurant is going to emphasize customer service," said Flax, "I mean, duh!"
Flax said the difference is a concept called "ROCK," which stands for Respect, Opportunity, Communication and Kindness. "Each word reflects our company spirit," Flax said. It has no mission statement.
Both said their experience in opening CPK in Hawaii cemented the "K" element of the company's "ROCK" philosophy. They observed the "aloha spirit," and sense of family among the crew at the Kahala Mall store, the friendliness "between the front of the house and back of the house," and the crew's participation in community fundraising events. "They had 'it' and we listened."
Rosenfield provided a bit of company history, from the L.A. law firm "Flax and Rosenfield," established to defend clients in federal criminal cases, to the now 115-store restaurant chain stretching across the United States and in Malaysia, the Philippines and Singapore.
Rosenfield said they established California Pizza Kitchen based on their own concept with about half a million dollars and against their banker's advice. "He was mortified," Rosenfield said.
The first restaurant opened in Beverly Hills, and Rosenfield projected it might do $700,000 to $800,000 the first year. The 67-seat eatery raked in $107,000 the first month, $116,000 the second and on up. The banker assured Rosenfield and Flax the place was merely a fad, that they were "topping out," and that business would fall off. Soon they recorded a $200,000 month, and "we fired that banker," Rosenfield said.
In order to expand, Rosenfield said, they needed capital. One day on the phone with 22 friends netted them 21 "yes-es," and $300,000. A second store opened, more investors came into the fold and in 1992 PepsiCo Inc. bought in. The investors who didn't sell to Pepsi were paid $189,000 -- those who did received $423,000.
The deal did not produce desired results on either side, and Rosenfield and Flax used their legal expertise to negotiate terms under which Pepsi was required to gain "Rick and Larry's approval," before selling its interests. That, even though as Rosenfield said, " We were not even a rounding error for Pepsi."
Investment bankers were brought in to broker a three-way deal that Pepsi, "Rick and Larry," and the buyer would find mutually agreeable. Now, CPK serves Pepsi "proudly," Rosenfield said.
While legal expertise helped in their dealings with Pepsi, their legal talk now is used for humorous references. Rosenfield said he was engaging in "due diligence," as he "tested" a Toffee Crunch Tartufo at the Ala Moana CPK on Tuesday.
Neither misses the courtroom task of trying to persuade a jury. Now, Flax said, if a customer is not pleased with his or her experience, CPK personnel are empowered to make it right, "We can pay 'em off and it's not an ethical violation."