Franchising to Fuel Domestic Growth for California Pizza Kitchen

California Pizza Kitchen may be celebrating its 40th anniversary, but it’s also starting fresh.

For the first time in its history, CPK has a domestic franchise system, something that was previously only reserved for international development. To begin the new venture, the brand signed its first agreement with Las Vegas-based franchisee Sundine, which will acquire three units in its home market and develop six more in Nevada and Utah.

Those will join 131 units in the U.S. that are all corporate-owned or licensed, as well as 18 franchised international restaurants. President Michael Beacham said since it was founded in 1985, CPK had been a corporate entity domestically. Recent trends, however, caused the concept to look in another direction for development.

“I think that we’ve seen over the last decade that many companies have shifted to a more asset-light strategy to help spark growth,” Beacham said. “We came to the realization that having great partners in parts of the country who will love the brand like we do and grow it was going to be the best way forward.”

Sanjiv Bhagat, CEO of Sundine, said the group brings a mix of engineering and business administration experience to the table, and worked with companies such as Xerox and Boeing. On the restaurant front, Sundine operates more than 85 Jack in the Box and Del Taco locations.

The addition of CPK, said Bhagat, wasn’t only made as a business move. A love of the brand’s pizza was a factor, too.

“My family has been going to CPK restaurants for a long time, since my kids were little,” Bhagat said. “It’s such an iconic company and we fell in love with it from the beginning. We go there in pretty much every city we visit. They have high standards and strive for innovation and creativity with a commitment to quality. I think that resonated with us and has kept the brand relevant.”

As knowledgeable restaurant owners, Bhagat said the Sundine team followed up their initial inspiration with a due diligence phase, and walked away impressed.

“Each concept is a little different in how they operate, but we felt that CPK has been able to use their skills to build an efficient system,” Bhagat said. “Not only in terms of their guest experience, but also in their food costs and kitchen needs. That was an advantage this brand has, and one it’s perfected over the course of 40 years.”

Beacham said the brand prioritized perfecting its franchise system before launching it, not wanting to risk a faulty start.

“There was talk in the last few years about getting the franchise thing going but it took time to get it right,” Beacham said. “We had to make sure we had the right team in place to support franchisees, because it’s different working with the domestic ones than the international franchisees.”

“Domestically, your guests are going in and out of different stores and you want to make sure they’re getting the same experience, food and LTOs in each location,” he continued. “We took our time to get aligned, and do this in a world class way. We then started looking at what kind of franchisees we wanted.”

CPK is on the lookout for multi-unit operators who have experience running restaurants and a passion for the business. Beacham said Bhagat fits the bill.

“They are the perfect fit for what we have targeted as a partner,” Beacham said. “They are strong operators and have nearly 100 units across their brands. We visited their restaurants and can see their strong beliefs in operating with great food and service.”

Bhagat said his team was able to visit the existing Las Vegas locations as well, something he appreciated about the new partnership.

“They’ve been very supportive and upfront by introducing us to the employees at the restaurants,” Bhagat said. “I appreciate them being transparent in letting us meet them and address their concerns ahead of time so they can form a relationship with us. It creates a nice precedent for good corporate governance.”

Sundine leaders have become so confident in the brand that they feel there’s room to grow beyond the first deal.

“This is our initial commitment, but we’re not limited to only six,” Bhagat said. “We feel that the Las Vegas market can definitely absorb another three to four units between traditional and non-traditional locations. I’m sure markets in Utah can absorb more than two to three units as well.”

For CPK, the development fills in an area where its presence is light. In addition to its California footprint, the brand carved out space along the East Coast in markets from Maine down to Florida. It’s those markets that they haven’t penetrated that will be a focus for franchising, Beacham said.

“The best strategy going forward is to have partners do that,” Beacham said. “It doesn’t mean getting 100 franchisees. We’re going to add about three or four partners each year, and in a couple years we’ll have 10 to 12 franchisees. If they each open one or two stores over those years, the amount of growth will far exceed what we do as a corporate entity.”

QUICK HITS

Eggs Up Grill signed a trio of multi-unit agreements to grow in North Carolina, South Carolina and Tennessee. In North Carolina, it signed a 10-unit agreement for Raleigh, Durham and Greensboro with Pankaj Parmar and Tahir Kakar, who have experience owning convenience stores, gas stations, dry cleaners and hotels. The brand signed a seven-unit deal with existing franchisee

Conley McIntyre, who will open six restaurants in Charlotte and one in Travelers Rest, South Carolina. Additionally, Eggs Up Grill signed a deal for three restaurants in Knoxville, Tennessee, with Ken Bates, who owned 24 Little Caesars.

Walk-On’s Sports Bistreaux will expand in Georgia and Tennessee after signing a deal for 20 restaurants. The franchisee is Port Royal Brands, which was founded by Phil Sanford, who previously owned the Krystal brand.

Potbelly is entering Georgia with a 15-unit agreement. The deal for the Atlanta market is with existing Potbelly franchisee Royal Restaurant Group, which earlier this year signed a 40-shop agreement for Ohio and Florida.

K9 Resorts Luxury Pet Hotel signed a deal to develop 11 locations across the Los Angeles area. The agreement is with Luxury Pet Hotel Investments, formerly Partners Pacific Resorts, which will also open eight locations in Chicago and 11 in the Washington D.C. metro. Earlier this year, Luxury Pet Hotel Investments invested $10 million into the brand.  

Sandwich brand Cheba Hut will enter Virginia with a 10-unit agreement. Behind the development is existing franchisee WAHI Brands, led by Isaac Montoya. In addition to Cheba Hut, WAHI Brands is a franchisee of Anytime Fitness and Dave’s Hot Chicken.

Dave’s Hot Chicken is teaming up with its original franchisees to grow in Arkansas and Missouri. Business partners Deryl Pangelinan, Sean Varvello, Andrew Feghali and Lawrence Kourie will open seven restaurants between the states.

Zaxby’s is continuing its East Coast push with a six-unit agreement for New Jersey. The franchisee is GSP Group, led by Premanand Gupta. The venture isn’t Gupta’s first in the restaurant space; he has experience with Dunkin’ and Subway.

Indoor trampoline park brand Sky Zone inked a pair of three-unit deals for the Austin and Seattle markets. The former, is with franchisee group Kersan Partners, which includes a mix of existing and new Sky Zone owners. The Seattle development, meanwhile, is with entrepreneurs Abhishek Sinha, an IT professional, and Pushpinder Singh, who brings a background in real estate.

The Wire is the place to find news of multi-unit development agreements, brought to you by Senior Writer Matthew Liedke. Want more? Sign up for the e-newsletter at franchisetimes.com/e-newsletter. To share your brand’s multi-unit deals, email details to [email protected]