Proposed Acquisitions of California Pizza Kitchen and Carts of Colorado by Pepsico

In: Business and Management

Submitted By tanish50
Words 757
Pages 4
The proposed acquisitions of California Pizza Kitchen and Carts of Colorado by Pepsico
1. Should PepsiCo buy California Pizza Kitchen?
For both acquisitions it's more about what they add to PepsiCo, not what value PepsiCo adds to them
Pros:
- needs to acquire CPK to learn casual dining. That's where the growth is, and internal attempts to develop casual dining in Pizza Hut Cafe have failed. whether CPK is merely a passing yuppie fad, or if it is a long-term market segment doesn’t matter to PepsiCo if it merely wants to learn casual dining.
- PepsiCo startups failing
Cons: - possibly PepsiCo’s failure to develop a casual chain internally, along with the real differences between fast food and sit-down dining, will prevent it from succeeding.
•New segment that PepsiCo doesn't know
- Yuppie casual dining
• $11 check, dinner on pizza dough
- PepsiCo ignorant of key success factors
•high level waiter service
•PR not advertising key to marketing
•capital cost $1 - $2m, sales $3m not $800k, $800k.
•New untested concept
- 25 restaurants, 8 states, $34m sales, $3/4m net income
- may be a "fad"
•only seven years old
- may not stretch beyond Yuppiedom

2. Should they buy Carts of Colorado?
Pros: - while CoC's $8m sales is very small for Pepsico, the real market size is the revenue from non-traditional PODs, and this is potentially enormous ($2 billion to PepsiCo alone)
The real reason to own CoC is to preempt Coke and MacDonalds in the best locations for the new POD. Other students object that location, not the cart, is the asset, and that even locations are easily imitable (i.e., one cart next to another at Fenway Park). The answer lies somewhere in between, since at many locations (i.e. schools, factories), only one supplier will be invited in.
Critical to PepsiCo POD restaurant strategy
- unique cart design
- customize for PepsiCo…...

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