No matter how you slice it, California Pizza Kitchen (CPK) is in deep dish trouble. The casual dining restaurant chain filed for bankruptcy last week after accumulating more than $400 million in debt.

The collapse of CPK cuts into the divide between dine-in pizza chains and delivery services in 2020. Its bankruptcy could also affect the real estate investment trusts (REITs) that have CPK locations.

💎 Data Digs

With just $13 million cash on hand, CPK hasn’t paid rent for several months in the majority of its 200 locations. The company, which has received default notices and lawsuits from landlords, is trying to renegotiate its leases. 

Some of the REITs impacted by CPK’s demise include Simon Property Group (with 19 locations), General Growth Properties (with 15 locations), and Westfield Shopping Centres (with ten locations).

The fall of CPK can be felt across the entire company. In the past year, the number of CPK employees on LinkedIn dropped by more than 10%.

⚔️ Big Picture

  • Two years after acquiring CPK in 2011, Golden Gate Capital added more company debt so that it could pay itself a larger dividend, according to The Wall Street Journal.
  • CPK’s failure to think outside the pizza box resulted in a loss of market share to takeout-only competitors, including the emergence of third-party delivery apps.
  • As the business struggled to pay off the debt, a potential buyer was sought in 2019, but never secured.
  • With nearly 80% of sales coming from dine-in service, closures from the pandemic devastated the business. Revenue fell 40% from the same time last year, with cash flow between March and June at -$18.9 million.
  • By April, the company responded to the downfall by cutting corporate pay by 35%, withholding rent, furloughing thousands of employees, and taking out a $30 million loan (more debt).

⚡ Get Ahead

Whereas dine-in pizza chains are struggling in 2020, takeout and delivery pizza chains are thriving. With consumers opting to stay in due to the pandemic, demand for pizza delivery is up.

  • In May, Papa Johns reported that sales increased by more than 33% in North America.
  • Since the beginning of the year, the number of Domino's employees on LinkedIn has shot up by 15%.

Unlike their pizza, nationwide delivery chains can’t be topped.

Which delivery pizza chain will benefit the most from CPK’s demise? We mapped out all of the CPK locations nationwide against competitors Papa Johns, Domino’s, and Pizza Hut. On the map below, bigger bubbles signify more competitors within three miles of each CPK location.

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