Lawyers Find Big Dough in Pizza
For years, as government prosecutors and then defense attorneys, Larry Flax and Rick Rosenfield got used to having others in the courtrooms stand in judgment of their work. Now, as restaurateurs, they have the public at large as judge and jury.
So far the verdict has been quite favorable.
The partners’ 3 1/2-year-old California Pizza Kitchen chain, which sells “designer pizzas” with such offbeat toppings as bacon, lettuce and tomato with mayonnaise, Thai chicken and chicken burrito, is poised to grow from six locations to 20 units either open or under way by the end of 1989. Plans are afoot to expand quickly in the United States and to build restaurants in Europe, Australia and Japan in joint ventures with other companies.
After just weeks in business, the newest unit, in Brentwood Gardens on San Vicente Boulevard, is already selling pizza and pasta at a pace of $3 million a year. It opened with little formal fanfare but a lot of word-of-mouth trumpeting from customers of the chain’s original location on Beverly Drive in Beverly Hills and another in Beverly Center in Los Angeles.
Meanwhile, Flax and Rosenfield, who have given up practicing law for the restaurant business, predict that sales will grow to $15 million this year from $1.5 million in 1985. Profits for this year are projected at $1 million. Flax and Rosenfield own 66% of the company, with 200 investors holding the rest. There is talk of “going public” with an issue of stock in a couple of years.
It seems that making dough makes Rosenfield and Flax a lot more dough than their law practice ever did, although they didn’t do badly there, either.
“This is a lot more fun than law,” Flax said recently with a grin. “The rewards are far greater. Why were we ever attorneys?” Quite a turnabout for a Los Angeles native with meat-and-potatoes tastes who recalls having eaten at most four or five pizzas in his life before deciding to risk nearly everything he owned on a pizza chain.
So far, these fledgling restaurateurs appear to be relishing their success. In an interview, they bubble over with enthusiasm, looking like two players who just turned over get-out-of-jail-free cards and are building an empire in a real-life game of Monopoly.
“I think they put together a very good operation,” said Robert J. Nyman, president of George Lang Corp., a New York consulting firm that works for restaurants. “They have seized a market niche that was available--good food, fair prices, something familiar yet different. . . . You can see I’m a fan.”
What Flax and Rosenfield did was to borrow an idea originated by Alice Waters in the wood-fired ovens of the Cafe at Chez Panisse in Berkeley and expanded by Spago, Wolfgang Puck’s new wave eatery on Sunset Boulevard, and to become, in the view of James McNair, author of a book called “Pizza,” part of a restaurant subset that makes “most people rethink their notions about this ubiquitous dish.”
In the sleek yellow, black and white decor of California Pizza Kitchen, patrons enamored of New York-style pizza with classic thin crust or the heavy, tomato-laden, deep-dish variety made famous in Chicago are in for a surprise.
Here the pizza varieties include the Hawaiian, with fresh pineapple; Canadian bacon and tomato sauce; the Teriyaki, with grilled chicken or shrimp marinated in an orange teriyaki sauce, red onions, scallions and sweet peppers; the Goat Cheese, with bacon, red onions, sweet bell pepper, fresh tomatoes and mild goat cheese; and the Original BBQ Chicken, with barbecued chicken, sliced red onion, cilantro and smoked Gouda cheese. Prices for the single-serving pizzas range from $5.95 to $8.95.
Many of the toppings have been devised in the kitchens of their Beverly Hills homes by Flax and Rosenfield, longtime best friends and law partners who share a passion for cooking and good restaurants.
“I learned to cook very young because I love to eat,” Flax said. When he creates variations, “I try to capture in my mind what Americans want to taste.” Americans love peanut butter; hence the Thai Chicken pizza, marinated in a spicy peanut, ginger and sesame sauce. Flax, 45, admits to being “a mayo freak;” hence the BLT.
Pretty tame stuff for men who prosecuted such high-profile cases as the first involving hidden mob interest in a Las Vegas casino and then ran a lucrative defense practice.
The two met in 1971 when Rosenfield, a 43-year-old native of Chicago (where he grew up eating deep-dish pizzas), moved from the Justice Department in Washington to the U.S. Attorney’s office in Los Angeles, where Flax was assistant chief of the criminal division.
Took Down Shingle
Two years later, they opened their law practice in Century City, then moved to Beverly Hills in 1982. Prominently displayed in their California Pizza Kitchen offices, next to the original Beverly Hills location, is a stained-glass window with the firm name--Flax & Rosenfield--above three monkeys demonstrating speak no evil, see no evil, hear no evil.
Eventually, the strain of defending criminal fraud cases caught up with them. After a particularly arduous three-month trial in San Francisco, they decided to take down their law shingle.
“Larry and I were both idealistic as prosecutors and defense attorneys,” Rosenfield said. “It became increasingly frustrating to deal with judges and juries.”
Their longstanding relationship notwithstanding, Flax and Rosenfield are a bit of an odd couple. Rosenfield, who is slight with thinning sandy brown hair, is a devoted marathon runner and family man. Flax, a big man with a thick thatch of white hair, is a bachelor and does yoga for his bad back. The two constantly trip over each other’s comments, but neither seems to mind. Both have largely forsaken the lawyerly suits they wore early in their restaurant careers for casual slacks and sweaters.
As Rosenfield explained: “I talk to Larry before I go to sleep and the first thing in the morning.”
In 1974, they had a short-lived, disastrous experience as investors in a failed Los Angeles restaurant called Derrick’s, where fitness personality Richard Simmons was maitre d’. That sour interlude did not diminish their appetite for the restaurant business, however.
After consulting with friends and scouting around for ideas, they decided on a chain with an emphasis on pizza. Including California as part of the name was a move calculated to take advantage of the state’s lure worldwide.
When their initial $200,000 investment for the first restaurant fell short, they signed on friends as limited partners, increasing the pot by $300,000. Luckily for their personal fortunes and friendships, the restaurant opened to sizzling business in March, 1985.
Restaurants in the Beverly Center and Topanga Plaza came next, followed by locations in Atlanta, Hawaii and now Brentwood. In the works are restaurants in Chicago (opening Sept. 15), Newport Beach (opening in November) and Wells Fargo Center in downtown Los Angeles (scheduled for spring, 1989).
In the meantime, the company has sold a California Pizza Kitchen franchise to the Golden Nugget in Las Vegas. And it has reached agreement with Vie de France Restaurant Corp., a division of France’s largest flour miller, Grands Moulins de Paris, under which Vie de France will provide capital for expansion of California Pizza Kitchen restaurants on the East Coast and in Paris and elsewhere in Europe. That joint venture, which will operate separately, will be called Cal de France.
Flax and Rosenfield also recently returned from Japan, where their concept generated so much interest that four companies are bidding for rights to a joint venture or licensing agreement to expand into Pacific Rim nations such as Japan and Australia. Whichever company succeeds, the partners said, will also agree to provide additional funding in the United States so that California Pizza Kitchen can begin to acquire land for its restaurants.
“It’s the Ray Kroc theory of growth,” Flax said, referring to the strategy of the legendary founder of McDonald’s of buying the land under his fast-food restaurants. “We went over there intending to conclude a joint-venture relationship with one of these parties but were overwhelmed with the potential for California Pizza Kitchens in the Far East.” So the negotiating continues.
Concern Over Expansion
After stating as recently as January that they expected to sell a public issue of stock this year, the two have now decided to bide their time. “The way to get the best valuation (in the market) is to show a lot of strength going in,” Rosenfield said, adding that it would be a “minimum of two years” before the company converts, if it does. “We want a track record of increasing profitability.”
The big expansion schedule is about the only thing that would give consultant Nyman pause. “I can give you stereotypes of any small fledgling chain (that) would expand too fast, not have the proper management in place or pick locations that weren’t exactly their target market,” he said. "(But) I think both Rick and Larry are very shrewd and know what’s going on.”
Herbert T. Fink, owner of Theodore and other Rodeo Drive fashion boutiques, recently invested about $100,000 in the chain and has “done very well with it.”
“I like the way they’re handling the business, from an intelligent point of view,” he said. “They’re certainly on a long-term growth pattern. They’re diligent, well organized and disciplined.”
Rosenfield and Flax have no regrets about leaving the law business. “We really found our niche, something that is exciting and fulfilling,” Rosenfield said.
“We’re influencing hundreds of thousands of people,” Flax said, interrupting. “You could never do that in law.”