Karcher Patron Count Up, Revenue Still Off
Carl Karcher Enterprises’ new “back to basics” theme and reduced food prices boosted its customer count by 13% in the past quarter, but earnings and revenue for the 448-restaurant chain remained depressed in a year-to-year comparison.
On Tuesday, the Anaheim-based fast food chain posted fiscal 1986 second-quarter earnings of $1.5 million, down 65% from $4.3 million a year earlier. Revenues for the 12 weeks ended Aug. 9 were $77.7 million, down 5.5% from the $82.2 million posted in the same period a year ago. Net earnings for the first half of fiscal 1986 were $2.3 million, down almost 74% from the $8.8 million posted a year ago. Revenues for the six months were $174.6 million, down 4% from $181.8 million a year earlier.
In a statement issued Tuesday, Karcher Enterprises President Donald Karcher said the company’s second-quarter earnings “are of greater significance to the future of Carl’s Jr.” when compared to the company’s first-quarter performance than in a conventional year-to-year comparison.
In the first quarter, Karcher reported net earnings of $811,000 and revenue of $97 million. The company’s second quarter results show an 85% increase in profits, but a 20% drop in revenue. Karcher officials said that although the number of customers has increased, revenues have dropped because each customer is spending less.
The company has suffered five consecutive quarters of reduced earnings. Last month, it switched to a New York advertising agency and on Friday unveiled a new television advertising campaign. Karcher Enterprises is also cutting operating costs, has laid off 35 employees at the corporate headquarters, restructured a number of divisions and recently slashed its building program by 25%.
Last month, the company switched its $12-million annual advertising account to New York-based Della Femina, Travisano & Partners. For nearly 12 years, Carl’s had its account with the Newport Beach firm of Cochrane, Chase, Livingston & Co. The company also retained an Ohio consulting firm to design its new stores to save up to 20% on building costs.
