RETAILING : Arby’s Will Challenge the Hamburger Giants With a Major Expansion Here

Watch out, McDonald’s and Carl’s Jr. Arby’s Inc. is betting that hungry Orange County diners will be willing to swap their burgers for roast beef.

And to put its money where its mouth is, Arby’s has announced plans to develop at least 20 Arby’s restaurants in Orange County over the next 3 years--an expansion that will more than double its presence here.

The roast beef sandwich chain has signed an agreement with Kyotaru Co. Ltd., a Tokyo-based restaurant company, to build 20 franchise restaurants. Construction of the first should start within a few months.

Arby’s also has commitments from other franchisees to build an additional 50 restaurants in Southern California over the next 3 years.

Leonard Roberts, Arby’s president and chief executive, said the company plans to open 400 additional restaurants in California within the next 5 years. “Our goal is to have 500 total by 1993,” he said in a telephone interview Wednesday.

Why is Arby’s so bullish on California?

“We like what we see in terms of demographics,” Roberts said. He cited the state’s dense population and highly competitive environment for fast-food dollars as factors that make the state attractive.

“We do the strongest when you put us next to a McDonald’s, a Burger King or a Wendy’s, where the traffic pattern is established,” he said. When a market is saturated with competitors, Roberts explained, customers are more likely to choose an alternative like roast beef sandwiches.

Not that Arby’s sells only roast beef these days. The chain’s menu includes a breakfast menu with croissants, sausage and biscuits, and chicken items such as chicken cordon bleu and a roasted chicken club sandwich.

The chain operates 2,100 Arby’s worldwide, including 105 in California and 13 in Orange County. Arby’s is a subsidiary of DWG Corp., a holding company with interests that include textiles, propane gas and soft drinks.