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Carl's Jr., Hardee's CEO on value, marketing
September 8, 2008
QSRWeb editor Christa Hoyland sat down with CKE Restaurants Inc. chief executive officer and president Andrew "Andy" Puzder in his office in Carpenteria, Calif. Puzder shared insights of the success of Carl's Jr. and Hardee's, including the brands' emphasis on premium burgers.
QSRWeb: It just seems really brave for a QSR to emphasize a high-quality burger at the higher price, so what made it succeed?
Andy Puzder: People were willing to pay a little more for a burger that was much better. I think quality in fast food had declined to the point (by 2001) where it was hard to eat some of the food. … We're selling people something they actually put in their mouths and swallow. So I think people were willing to pay a little more for something and get a decent quality product than had been the case in the past.
Q: For people who experienced Hardee's poor quality and suddenly there's this Thickburger, how did that pull people into the stores?
AP: One of the problems with how to tell people (about the rebranding was) because, really, fast food advertising has been lying to people for, I don't know, 25 years. You see an ad with an attractive young woman behind the counter with a clean uniform on and a beautiful product in her hand . . . and you go in and it's dirty and it's seedy and she's got food all over the front of her, you're lucky if she has all her teeth and she's holding up something in waxed paper that just came out of the microwave or the storage bin . . . We needed to do an ad that wasn't just shiny and new and pretty. We needed to do something that was hard hitting.
(So Hardee's did a series of 25 ads based on the "Hardee's, why the last place you would go for a burger will become the first" slogan.)
And really took a different approach to this — a lot of credibility in the ads, a lot of sincerity. ‘We're really going to change.'
Q: Are you finding that even in today's economy people are still willing to pay for premium burgers, or are they turning to the value menu?
AP: If I sold 99-cent products, my sales would be up 10 percent. The food would be terrible. I mean, it's not something we would do. And you wouldn't make any money at it. Your margins would go to hell. You can boost your sales. You give away food, a lot of people will come in. You can't giveaway very good food, but a lot of people will come in. The question is, can you maintain strong sales with a quality product and decent profit margins.
Q: Your target demographic is so focused on the young male. Where do women fit into your marketing?
AP: It's not a laser focus target, it's an aspirational target. So, the example I always give is it's shooting at a dartboard, but you're not shooting with a dart, you're shooting with a shotgun. In other words, we do advertise to 18- to 34-year-old males, but I'm 58, I want to be a young, hungry guy. There are women who want to date young, hungry guys. … I think at Carl's, (customers) are about 49 percent women, 51 percent men. It's pretty close to that at Hardee's.
When McDonald's was doing their Angus burger in Los Angeles, they had pictures of it, and of course they made it look just like ours. It wasn't nearly as good. But it looked just like it. And our Six Dollar Burger sales went up. I think people see this burger and they think Carl's or Hardee's.
Q: I saw in a Smart Business article the mention that when you were first taking over you were visiting the stores and visiting franchisees. Do you still do that?
AP: You have to. You can sit in here and put your feet up on the desk and do emails… and talk to people and pretend you're running the company, but if you're not in the restaurant, you're not running anything. But you have to be out there to know what's going on.
Q: As far as knowing going into the stores needed to be done, having been legal counsel before you took over the helm, had you just seen other CEOs do that, or what was it that in inspired you to get out to the stores?
AP: I came in with no preconceived notions, and actually one of my first memos at Hardee's was the next person who tells me that they're doing something because it's the way it was always done will be fired. I kept getting (when asking), ‘Why are we doing that,' ‘Well, that's the way we always did it.' That's not a reason. ‘Because we always did it that way' is not a reason that we should be doing it that way now. I want to know why we're doing it. And it worked. We got it turned around pretty quick.
Q: So you've been CEO for eight years, been with the corporation since 1997 (and as Carl's legal counsel since 1986 when in private practice.) So how do you keep things fresh and innovative?
AP: You've got to bring in people with fresh and innovative ideas. So we've got some younger guys involved. … And I think visiting the restaurants is a huge part of this. I talk to my kids — I've got six kids ages 10 to 37, with the youngest three ages 10 to 15 still at home).So I try to stay on top of what they are up to and what they are interested in…
We're the little guys. People talk about, ‘Well, there's Burger King, McDonald's, Wendy's, Hardee's, Carl's.' Well, we're really not Burger King, McDonald's and Wendy's. There's 1,100 Carl's, there's 2,000 Hardee's, there's 13,000 McDonald's, there's 7,000 Burger Kings, there's 5,000 Wendy's. We're two regional brands, and the only way we keep top of mind would be the only way we out-compete, or (to) stay in the same class as those larger companies is we're fresher, we're more entrepreneurial, we're more willing to take risks, and we're kind of a little bit more of a fun company.
Q: How is CKE being affected by menu labeling and trans-fat free legislation?
AP: Carl's Jr. and Hardee's are both transitioning to trans-fat free cooking oil. We are hoping to have the transition completed by the first of the year, more than a year ahead of the implementation date set by for the recently passed California legislation.
There are a hodgepodge of menu labeling laws being enacted around the country. And while we have posted our nutrition information in our stores and online for years, I still think the fundamental principle is that healthy eating should not be a mandate from the government, but rather a choice left up to the customer. If you are overweight or have health issues, don't eat a burger. But for everyone else, with moderation and exercise, go right ahead and indulge. I eat Carl's Jr. or Hardee's four times a week, but I also work out and watch what I eat at other meals. It boils down to common sense, not legislation. There are healthy items on our menu including the charbroiled chicken sandwiches and salads. And any burger or sandwich can be ordered low-carb style, wrapped in whole-leaf lettuce. Again, it's about personal choice and common sense.
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