End of the line for CPK founders?

California Pizza Kitchen is one of L.A.'s great entrepreneurial stories - two attorneys with no experience in the food business plunk down a half-million dollars in 1985 and take a gamble on a casual dining restaurant on Beverly Drive that specializes in California-style pizza - at the time a still-exotic item. The concept quickly catches on, the two lawyers add more stores, and the next thing you know Pepsico wants to buy a majority share of the business. Larry Flax and Rick Rosenfield become very wealthy men - talk about your California dreaming. But now with the company being sold to private equity firm Golden Gate Capital for $470 million, it looks as if Flax and Rosenfield will be easing their way out of the operations. Golden Gate is developing a succession plan, according to DealBook, with Flax and Rosenfield tendering their shares. There's a "Groundhog Day" element to the story - in 1997 another private equity firm bought out Pepsico's share, and while the two guys were still on the board they had little say in day-to-day operations. From my August 2008 article in Los Angeles magazine:

At this point Flax and Rosenfield might well have moved on, just like other founders who get overshadowed by professional managers. "The firm's position," Rosenfield says, "was 'Leave it to us to run the business, and you guys do what you do,' which is the menu and public relations. Their attitude was 'You're not the businessmen--we are.' Remember, we weren't feeling so good about ourselves then. Larry and I were pretty insecure--we hadn't run it very well."

Later on, after the company was taken public, Flax and Rosenfield engineered a boardroom coup and regained control of the company. But like other restaurant chains, CPK struggled mightily during the recession and has been slow to rebound. A year ago, the company put itself on the block. Golden Gate is "buying an undermanaged business," analyst Bill Kavaler told Bloomberg. CPK was too cautious in its expansion and "Golden Gate is going to make them more aggressive," he said. Here's the press release.