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Carl's Jr. expands turkey burger line, CKE's Q3 sales up

Another New Zealand franchisee on board for Carl's Jr. expansion.

December 13, 2011 by Alicia Kelso — Editor, QSRWeb.com

CKE Restaurants Inc., parent company of Carl's Jr. and Hardee's, reported positive same-store sales for the fiscal 2012 third quarter ended Nov. 7.

Blended same-store sales were up 1.9 percent, with Carl's Jr. reporting an increase of 2 percent and Hardee's up 1.8 percent.

The company also experienced a boost in total revenue of $292.6 million, up $7.8 million, or 2.8 percent, compared to Q3 FY11.

Despite the rise in sales and revenue, the company's profits dropped $1.5 million, compared to a $45,000 profit during the same period last year. In an earnings call today, the company attributed the loss to higher commodity prices, especially for beef, oil and cheese.

"Hardee's has now had 22 consecutive periods and six consecutive quarters of positive same-store sales. Carl's Jr. also performed well, posting its third consecutive quarter of positive same-store sales," said Andrew F. Puzder, CEO, adding that the brands are well positioned to succeed as they've navigated well through a challenging macro-environment and commodity inflation.

For the third quarter specifically, the brands got a boost from the Steakhouse Burger launch in September and the addition of Hardee's Made from Scratch biscuits to the Carl's Jr. breakfast menu.

Turkey burger line expands

In the earnings call, Puzder said CKE has responded to the rising commodity challenge by adjusting menu prices and, when possible, promoting products that have experienced less inflation. Examples include the new Buffalo Chicken Fingers and the Turkey Burger.

"Our chicken products have been great for both brands, especially since we introduced chicken tenders last year. We'll certainly do variations on that, and with turkey, especially as commodities remain high," Puzder said.

He said the turkey burger, originally launched in March, has done "very, very well," especially at Carl's Jr.

In response, the Carl's Jr. brand announced today that it is expanding its line with the new Santa Fe Turkey Burger. It is now available at most locations in California, Colorado, Idaho and Oregon.

Like the original Charbroiled Turkey Burger, Teriyaki Turkey Burger and Guacamole Turkey Burger, the Santa Fe Turkey Burger has less than 500 calories.

"The initial success of the Carl's Jr. Charbroiled Turkey Burgers was not a big surprise to us, but the continuing popularity of the line over the better part of the past year has been a very pleasant one," said Brad Haley, chief marketing officer for CKE Restaurants Inc. "So, we naturally wanted to expand the line, while still maintaining the goal of offering a truly delicious and decadent burger for less than 500 calories, and the new Santa Fe Turkey Burger does that in a big way."

The Santa Fe Turkey Burger features a charbroiled turkey burger patty, Santa Fe sauce, pepper jack cheese, lettuce, tomato, red onion and sliced green chili, all served on a toasted, honey wheat bun. The Santa Fe Turkey Burger is available as an entree for $3.49, or ordered as a combo meal with fries and a drink for $5.99. Prices may vary.

New AOR

In the call, Puzder also addressed the recent dismissal of David & Goliath as its agency of record, a role it held for less than a year.

"We felt that D & G initially understood who we were as a brand and where we wanted to go. The Miss Turkey and Anthem ads, we were very happy with those," Puzder said. "After that, I'm not sure why, but the agency's vision diverged materially. We had no intention of changing the brand image and I think the agency, while hardworking and good, was not in line with what we considered the correct direction for the brand."

72andSunny, out of L.A., has been handed the creative duties for the company without a review. Two veterans from Mendelsohn/Zien, Carl's Jr.'s former AOR, are now part of the 72andSunny team, which factored into the company's replacement choice. Mendelsohn/Zien was responsible for some of Carl's Jr.'s more memorable ads featuring celebrities such as Paris Hilton, Kim Kardashian and Padma Lakshmi.

"We're expecting to get back to edgy, attention-getting ads that appeal to young, hungry guys and taking that up to a new level," Puzder said.

Footprint grows in New Zealand market

This week, CKE Restaurants signed a deal with Restaurant Brands New Zealand to expand the Carl's Jr. brand in that country. According to the New Zealand Herald, Restaurant Brands NZ currently operates KFC, Pizza Hut and Starbucks brands there.

The company is the second franchisee for Carl's Jr. in New Zealand. In July, Forsgren NZ Limited, owned by Carl's Jr. American Samoa operator Barry Forsgren, opened a unit in Auckland.

CKE's Carl's Jr. plans call for the development of about 25 restaurants in New Zealand within the next five years, and up to 50 within seven to 10 years. Most of them will be franchised.

Restaurant Brands expects to open its first Carl's Jr. restaurant by the middle of 2012.

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