US – Struggling US restaurant chain California Pizza Kitchen is making efforts to regain rights to sell its frozen line in retail stores from Nestle.
Nestlé currently holds the license to distribute CPK frozen pizzas, but returning this line could be valuable for a bankrupt company looking to restructure.
This is especially true at this time when retail sales have benefited as consumers spending additional time at home purchase more groceries while restaurants have struggled to make sales.
The Swiss giant is however not having intentions to give up the frozen line and it has since filed a lawsuit disputing California Pizza Kitchen’s (CPK) efforts to rescind its trademark contract that it to sell its frozen pizzas in retail.
Nestlé stated in the lawsuit that CPK “must not be allowed to manipulate the bankruptcy process to unwind a decades-old licensing transaction which operated as an effective sale of its frozen pizza business to Nestlé.”
Nestlé acquired the rights to sell CPK’s frozen pizzas in 2010 after purchasing the license from Kraft as part of a $3.7 billion deal for its pizza business.
Since then, the brand has remained one of the top 10 frozen pizza brand choices for consumers, according to Statista data.
Although CPK frozen pizza is popular with consumers, it is far from No. 1. Nestlé’s other brands DiGiorno, Tombstone and Jack’s all rank above CPK for sales from 2011 to 2017, Statista showed.
Nevertheless, the Swiss company gains much more than just a pizza brand from its licensing agreement and asked in the lawsuit that the reorganization plan include language that confirms its rights to continue selling the frozen pizzas.
Licensing a restaurant brand gives a CPG company such as Nestlé an opportunity to expand its offerings in the frozen aisle by adding a premium product that has a built-in consumer base for a widely recognized brand.
After CPK successfully launched a cauliflower crust nationwide in early 2018 at its restaurants, Nestlé worked to develop its version of the pizza, which hit store shelves a few months later.
This real-time information has proven invaluable to Nestlé and is no doubt one of the reasons the company wants to keep selling the frozen CPK pies.
With financial struggles defining CPK’s current outlook, sales in retail stores could be one of its few bright spots.
It likely wants access to the lucrative frozen pizza sales to help in its restructuring and to offset ongoing losses at its restaurants during the pandemic.
Regaining its frozen pizza line would be valuable for CPK, but would also represent a major loss for Nestlé that is not going to give up the brand without a fight.
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