February 03, 2003 CHICAGO (AdAge.com)-- While McDonald's and Burger King consider ending their cut-rate pricing on large sandwiches, Hardee's Food Systems wants to outflank them with a new line of super-size premium burgers. After tests in 200 units, Hardee's last week began to streamline its menu to one anchored by Thickburgers: seven Angus beef burgers weighing in at a third-pound, a half-pound, or two-thirds of a pound. Making space on menu To emphasize its big-beef focus, the No. 6 burger chain will cut nearly 40 lunch and dinner items, including fried chicken, roast-beef sandwiches and various side items. What it will keep is its popular breakfast menu, the Six Dollar Burger launched last year, chicken strips and limited "non-burger items." Stores will make an overnight conversion to the new menu one market at a time. The timing is critical for the CKE Restaurants chain. After nearly a decade of resuscitation attempts, Hardee's enjoyed four consecutive quarters of same-store sales growth until October, when sales fell 3.1%. Since then, sales were down each month between 3% and 4%. December sales fell 3.2% compared to up 10.9% the same year earlier. Anton Brenner, senior vice president of research and restaurant analyst for Roth Capital Partners, said nearly half Hardee's business comes from breakfast. "Their opportunity is to build a larger lunch and dinner business," he said. Strong demand for steak One trend in Hardee's favor is that while burger sales in general have declined slightly, large burgers outsold regular burgers 2 to 1 last year, according to NPDFoodWorld. Following a modest two-year gain, total per-capita consumption of beef has declined since the first half of 2001, according to Andy Gottschalk, owner of HedgersEdge. However, "demand for steak items and ground beef has been strong," fueled by heavy competition among burger chains and casual steakhouses. He estimates that ground beef makes up 48% of total beef production.
Burger King last year pulled its own version of thicker, half-pound patties after it botched the launch by promoting the burgers before stores converted to a new grilling system. Hardee's doesn't plan to make that same mistake. "Everyone is in process of installing a charbroiler," said Brad Haley, Hardee's executive vice president of marketing. "We're phasing this in a gradual, controlled manner to manage inventories down on items that are going to be deleted. One night we're selling Frisco Burgers and the next morning all Thickburgers." He expects the rollout to be completed by summer. Honest Advertising Backed with advertising by independent Mendelsohn/Zien, Los Angeles, the marketer will run between eight and 11 TV spots that take a surprisingly frank approach to Hardee's disappointing past performance, said Richard Zien, president. A black-and-white spot features a young man who says Hardee's "used to be cool," but he doesn't go there anymore. He laments how all the chains are the same with their 99¢ menus and plastic toys and that if he wants a burger, he wants a big, juicy burger. The spot ends with a color product shot of a Thickburger and the line: "It's how the last place you'd go for a burger will become the first." "People realized that after numerous attempts to try new products and new ad campaigns over the years without moving the needle, it was time for brutal honesty," Mr. Haley said, adding that the entire $60 million media budget will back the effort. The question is whether consumers will buy the ads enough to buy the burgers. Can't do worse "Hardee's has been in decline for more than a decade," Roth Capital's Mr. Brenner said. "I don't think that too many people will give Hardee's the benefit of the doubt and assume it will be successful, but I think it is a well-thought-out plan that has a reasonable chance of success. Surely it would be tough to do worse than they have done."
