The CMO Interview

Keeping a Premium Brand Premium During Recession

California Pizza Kitchen CMO Focuses on Innovation in Marketing

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CHICAGO (AdAge.com) -- After nearly 20 years with California Pizza Kitchen, CMO Sarah Grover knows exactly what the company's co-CEOs are looking for.

Lawyers Rick Rosenfield and Larry Flax established California Pizza Kitchen in Beverly Hills in 1985, eyeing celebrity chef Wolfgang Puck's phenomenal success as he codified California cuisine. The pair developed a casual-dining version of Spago, creating gourmet pizzas with then-surprising toppings such as barbecue chicken. CPK has built a cult following through the years with powerful word-of-mouth marketing.

Sarah Grover, CMO, California Pizza Kitchen
Sarah Grover, CMO, California Pizza Kitchen
Ms. Grover, 44, started handling PR calls for the chain in 1990, when it had 12 locations. She's stayed with the company through a variety of iterations: as a PepsiCo unit in the early 1990s, as part of private-equity company in the late 1990s and as a stand-alone public company since 2003. She said her handful of jobs over the years have prepared her to weather the economic storm that's beating up the casual-dining industry.

While the chain generally fares better than the rest of its sector, it reported third-quarter same-store sales down 6.5% earlier this month. By comparison, Applebee's, the sector's largest player, posted a second-quarter same-store-sales decline of 4.5%. In times like these, Ms. Grover said, it's critical to have strong lines of communication from the top of the company down to the servers at its 200 restaurants, about half of which are in California and the rest sprinkled throughout major U.S. cities.

She and Messrs. Rosenfield and Flax conduct regular meetings with regional directors and even wait staff to keep their fingers on their customer's pulse. Since the chain's start, imitations have proliferated and California cuisine has become less exotic. Still, Ms. Grover said CPK keeps its edge through continued menu innovation by the CEOs, based in part on their extensive travels and resulting in items such as the Moroccan Salad, with medjool dates.

It also doesn't hurt that CPK, which spends less than $3 million on advertising each year, has a partner in Kraft Foods. The package-foods company licenses the CPK name and likeness for a line of frozen pizzas. As part of the agreement, Kraft is required to divert a portion of revenue to advertising California Pizza Kitchen frozen pizzas nationally, thereby boosting the chain's brand. CPK's agency is Engine Company 1, San Francisco.

In an interview with Ad Age, Ms. Grover shared her strategy for guiding the chain through the recession, why you shouldn't expect to see any discounts from CPK and how her PR experience is informing her role as CMO.

Ad Age: Casual dining has taken a beating in this economy. Is your greatest competition others in the category, fast feeders or home cooking?

Ms. Grover: Honestly it's all of the above. People are doing things in a way that they've never done them before. So we're trying to evaluate and innovate every single day. People are trading down from fine dining, from casual dining to fast casual, so they're trading across the board. People are cooking at home and buying frozen products, so fortunately we have products at the grocery store. It's just an unprecedented time, and we're all trying to figure it out.

Ad Age: What is CPK's point of difference?

Ms. Grover: It's the innovative menu and the variety and taste profile that you really can't experience in other casual-dining chains, not just in our pizzas. Our salads are really popular and the pasta and sandwiches and basically every category. Another point of difference is the family-friendly environment and the overall service experience.

Ad Age: What's changed for you in the recession?

Ms. Grover: We've offered a number of [environmental] cost-saving initiatives. We ran a thank-you-card program in April and May and ended in it June. That's been a very successful program as a proactive way to reward our loyal guests. We just launched our adventure card. If you go online and register, it's good for [discounts on] some brand-new menu items that were introduced in June, good through Sept. 15. We're trying to find creative ways to recognize and reward our guests during this time.

Ad Age: What about on the marketing side?

Ms. Grover: We've tried to stay true to the brand. There are discounting wars and all different things going on out there. But over time that's not what's going to keep a brand -- it won't endure. It's a game, and we feel like if we focus on our innovative food and delivering service to our guests, we expect over time, when this is all over, we're going to end up on top.

Ad Age: You haven't done any discounting? Why?

Ms. Grover: Premium brands don't discount. It doesn't build loyalty; it just denigrates the brand over time. It's a quick fix, and then you have to comp it the next year.

Ad Age: CPK is pretty well-known for its charitable work, especially around store openings. How was that focus established? How did you make it work?

Ms. Grover: From the very beginning, Rick and Larry have had a big focus on giving back to the community [by giving a portion of sales to a local charitable organization], but it takes time to figure out who is the right organization, who isn't, who wants to partner with us, who we want to partner with. I was doing all of it myself initially, but as we opened more restaurants, I'd find someone locally in the community to assist me, and that was helpful because they knew the market and provided great insight.

Ad Age: How does your PR experience with the company inform your role as CMO?

Ms. Grover: We've really tried to leverage PR in every possible area of our business, specifically as we entered into doing some advertising over the year. We tried to create something real that would drive the news. Early on, when we were working with Colby, Effler & Partners, we did our first major outdoor campaign in L.A. The headline was written with an arrow pointing down to businesses below, like to the dentist's office, and said, "They prefer you lay off the garlic-chicken pizza." The Wall Street Journal picked up on it, and it created a life of its own.

Ad Age: How does your long-standing relationship with the founders affect your job?

Ms. Grover: The benefit to the company, to me, and to Rick and Larry is I really understand the brand. I understand what's worked and what hasn't worked, and I have a very good relationship with the two CEOs, who are very active and involved directly in the programs that I am responsible for, so we have the synergy that really gives us an advantage. Their law degrees are very helpful in so many areas -- crisis communications, pulling together a PR plan for new menu launch. Their perspective adds so much value to what I do.

Ad Age: What are your thoughts on the downturn and where we are in it?

Ms. Grover: We just started to lap when things really tanked. It's somewhat of a relief to know, we hope, that the worst is over. Larry and Rick have been phenomenal as product developers. We have a new fall menu coming in two weeks. The food is why people come to us, and we're never going to lose sight of that. We want to make sure we're delivering every step of the way.

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