News

CKE Restaurants Q2 sales up 2.2 percent

September 20, 2011

CKE Restaurants Inc., parent company of Carl's Jr. and Hardee's, announced its second fiscal quarter 2012 financial results for the period ended Aug. 15.

Blended same-store sales were up 2.2 percent compared to the same period last year. Hardee's same-store sales increased 2.5 percent, however were down compared to 6.8 percent in Q2 '11.

Carl's Jr. turned things around, ending Q2 '12 at 2 percent, compared to -7.4 percent for Q2 '11.

Year-to-date, blended sales are up 4.1 percent, compared to -2.7 percent during the same period last year.

"Hardee's continued to generate positive same-store sales results during the second quarter. Including period seven, Hardee's has now had 19 consecutive periods of positive same-store sales. Carl's Jr. also performed well, posting its second consecutive quarter of positive same-store sales," said Andrew F. Puzder, CEO, CKE Restaurants.

Total revenue for the company dropped to $299.7 million for the second quarter, a decrease of $14.2 million, or 4.5 percent, compared to Q2 '11.

The decrease was attributable to the sale of the Carl's Jr. distribution business on July 2, 2010. Total revenue, excluding the Carl's Jr. distribution center revenue in the prior year quarter, increased by $10.8 million, or 3.7 percent.

Navigating commodity costs

For the fiscal 2012 second quarter, company-operated restaurant-level adjusted EBITDA margin was 17.1 percent, a 120 basis point decrease compared to the prior year quarter.

Food and packaging costs increased 90 basis points as a result of higher commodity costs for beef, cooking oil, flour, pork and dairy products. Occupancy, packaging and advertising costs were also up, offset slightly by a 10 basis point decrease in labor.

Puzder said the company navigated rising commodity costs with adjusted menu prices and a bigger promotional focus on products such as chicken, which weren't as affected by cost pressures.

The company said in a conference call today that it seems price increases have reached a plateau and a bit of relief has set in. The beef market has been declining for about the past four weeks, although volatility remains high.

This is likely good news for the company, which introduced a Steakhouse Burger at both Carl's Jr. and Hardee's this week.

As of Aug. 15, there were 1,278 Carl's Jr. units, and 1,914 Hardee's units.

There have been 51 openings so far this year, 21 of which are in the U.S. and 30 international. This includes five new markets for the company – Turkey, Panama, Kazakhstan, Canada and New Zealand.

Domestically, Puzder said Texas is where a majority of the company's development will be.

"So far this year, though, we've had more international than domestic openings. The international sector of the business is doing extremely well and we look to see that become even more dynamic over the next couple of years," he said.

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