The Commercial Life of Happy Star Karcher : Profile: The man who built a hot dog stand into a fast-food empire keeps plugging despite personal and corporate problems.

He dashes across the parking lot of one of the more than 600 restaurants that carries his name, drawing surprised looks from hungry customers who recognize the jowly great-grandfather as if he were their own.

“Welcome to Carl’s Jr.,” Carl Karcher enthusiastically intones to a woman motorist in the drive-through line. Others gape at the avuncular executive in their rear-view mirrors.

Fifty years after founding his fast-food empire, Karcher is ready to take his place in the TV pitchman pantheon reserved for the likes of popcorn purveyor Orville Redenbacher and auto painter Earl Scheib.

Karcher revels in his newfound fame, passing out autographed coupons for free hamburgers to everyone he encounters. “He’s an idol of kids throughout America,” chimed a Ventura girl as the hamburger king rubbed elbows last week with politicos and Hollywood celebrities at the dedication of the Ronald Reagan Presidential Library.

But this idol is beset by personal as well as business troubles. Karcher’s brother, company President Don Karcher, was diagnosed as having inoperable lung cancer over the summer. Carl Karcher’s wife, Margaret, underwent cancer surgery herself earlier this year. The 69-cent cheeseburgers of his competitors have taken a toll on Carl’s Jr. profits and Karcher fired his executive vice president, the third-highest-ranking officer in the company, on Halloween.

“The last two years have been the most difficult in my 50 years in business,” Karcher said. “Competition is very keen. This year, with my wife and my brother--these things make you stop and think.”

The Carl’s Jr. chain remains a favorite target of women and gay rights activists riled by Karcher’s conservative politics. And the tale of Karcher’s storybook rise is forever marred by the insider stock trading case lodged against him and several of his children three years ago by the Securities and Exchange Commission. The Karchers paid $664,000 to settle.

Carl Karcher, however, is not one to dwell on setbacks. He still has a desk-rattling laugh and a smile as broad as the golden “happy star” that towers over his restaurants. He is a oversized man whose ample belly reflects a lifelong affinity for chili dogs topped with six hot peppers. He chats as comfortably with a fry cook as he does with a corporate vice president. He eats in his own restaurants about three times a week.

Karcher has uncanny abilities to remember obscure dates and names. “My (computer) hard drive probably crashes more often than Carl’s memory,” said Joseph Olin, a vice president with Della Famina McNamee in Los Angeles, Karcher’s former ad agency.

At 74, Karcher thrives on five hours of sleep a night. He rises in the wee hours to devour three newspapers and to attend dawn Mass at the same Anaheim church where he married more than half a century ago.

At the office, where he arrives by 7 a.m., Karcher is known as a consummate deal-maker, a patient listener and a boss who demands allegiance. He does not hesitate to follow a gut feeling over the advice of his cadre of top executives.

Sometimes his intuition pays off. Karcher bucked the advisers when he decided the company should build a Carl’s Jr. on Century Boulevard near Los Angeles International Airport. Today, the Century Boulevard restaurant is the chain’s top seller and does twice the business of an average Carl’s Jr.

Sometimes he is wrong. In a nostalgic move to celebrate his 50th anniversary, Karcher decided to spend $480,000 on equipment to reintroduce hot dogs to all his restaurants. Sales of the $1.89 wieners have been weak.

Karcher professes to have no hobbies. He had a magnificent cherry-wood paneled library built in his home, but said he does not read books. There are televisions in most of the rooms of his house, but Karcher said he seldom watches. The Karchers have such an ambitious social schedule, however, that Carl Karcher recently spent 14 consecutive evenings at benefits, ballgames and other gatherings.

He holds company stock worth more than $50 million, yet lives with his wife in the same rambling Spanish-style house that they bought in 1949. Some of Karcher’s 12 adult children, concerned about gang activity and crime encroaching into the peaceful Anaheim neighborhood, have urged their parents to move. But Carl and Margaret Karcher say they are not about to uproot, not after all these years.

One morning after Mass, he escorted a visitor through his darkened home--past pictures of family and religious artifacts--to a Federal Express envelope. Inside was the tattered and red-stained glove of a Roman priest whose palms are said to bleed each Friday. “You can touch it,” Karcher said reverentially.

Karcher’s religious beliefs are woven deeply into his business and political activity. He hands out little beige cards imprinted with a prayer from St. Francis of Assisi along with those burger coupons. The prayer, seeking the Lord’s guidance for peace, love and hope, is recited before every corporate meeting.

Karcher has angered groups favoring legalized abortion by contributing what he says is “a few thousand dollars a year” to anti-abortion groups. That decision has cost the chain an undetermined amount of business--”I haven’t eaten a Western Bacon Cheeseburger in years,” said one Orange County women’s activist--but Karcher is undeterred. “I don’t let dollars stand in the way of my philosophy,” he declares.

About 15 years ago, Karcher said, he visited a Carl’s Jr. near Palm Springs where he chatted with a manager and an employee named Betty. The manager told Karcher that Betty was scheduled to have an abortion that afternoon.

Karcher recalled pulling her aside and saying, “Betty, do you really want to have an abortion? I know there are pros and cons, but you could have the most beautiful child you ever laid eyes on.” He said the woman changed her mind and kept the baby.

Carl’s Jr. restaurants are also singled out by homosexual groups. A Garden Grove restaurant was chosen as the gathering point last month for one of the largest gay marches in Orange County history to protest Gov. Pete Wilson’s veto of a homosexual anti-discrimination bill. Gays have also joined the women’s groups in opposing establishment of Carl’s Jr. restaurants on some college campuses, including Cal State Northridge where students recently voted down a proposed on-campus Carl’s Jr. by a narrow margin.

Opposition from gays stems from Karcher’s support of Proposition 6 of 1978, a failed initiative that would have allowed school boards to fire teachers or other school employees who practice or advocate homosexuality.

Karcher said he pledged $5,000 to the campaign after talking with then-state Sen. John V. Briggs (R-Fullerton), the measure’s primary backer. Karcher says, though, that “I’ve done nothing to be anti-gay.” He said he was less concerned about teachers being homosexual than whether they might “indoctrinate your child into being homosexual.”

Told of Karcher’s comment, Anaheim gay rights lawyer John J. Duran replied, “It’s clear Karcher has no idea who gay and lesbian people are and he is basing his ideas on stereotypes and bigotry.”

A stalwart Republican, Karcher is a bedrock Orange County conservative who believes Watergate was “a bum rap” against his friend, former President Richard M. Nixon. As for the late Sen. Joe McCarthy, castigated for his anti-communist crusades in the 1950s, Karcher said, “I think some of his points were valid.” Just which ones, Karcher won’t say.

Last year, Karcher and other executives at his company contributed $41,206 to Republican candidates, various political action committees and groups supporting GOP-backed issues such as limiting state legislators’ terms, according to the company’s campaign donation statement on file with the state. While a respectable sum, it is far less than some wealthy Republicans have given to party causes.

Karcher said that friends have urged him to run for elected office, but he wants no part of it. He explains that he is having too much fun at work.

If someone pinched Karcher and told him his life was all a dream, he would probably believe it.

Carl Nicholas Karcher: the Ohio farm boy presiding over one of the West’s largest restaurant chains. The grade school dropout who mixes with Presidents and Popes.

Karcher tells the story with a sense of awe. And he tells it to just about anyone he can--through TV ads, on restaurant place mats and in two self-published biographies.

Karcher could not have picked a better time or place to start his career. The California of 1937 was on the cusp of a tremendous boom. Who better to tap this bounty than a gregarious young risk-taker?

After arriving in Anaheim to work in his uncle’s feed store, Karcher met and soon married the daughter of a local orange grower--Margaret Magdelen Heinz. The site of what was the Heinz family groves is today headquarters for Carl Karcher Enterprises, the $500-million-a-year parent company of Carl’s Jr.

Karcher later took a job driving a bread truck in South-Central Los Angeles. After a while, he started to notice hot dog stands popping up along his delivery route and yearned to be his own boss.

Over Margaret’s objections, Karcher drew a $311 loan against their new 1941 Plymouth and combined it with $15 cash to buy his first hot dog stand. Then came his second. Then came his third. As World War II ended, he was operating his first restaurant, Carl’s Drive-In barbecue in Anaheim.

The first Carl’s Jr. did not come along until 1956. Built in Anaheim, this takeout-only eatery was called a “junior” to distinguish it from Karcher’s full-service restaurant.

It was a hit, and within a year Karcher opened two more mini-restaurants where customers ordered food at a window and ate at picnic tables underneath an awning.

Karcher toiled at his restaurants from morning until closing time, stopping only to go home for dinner.

As his restaurant business grew, Karcher never shied away from experimenting. In the 1960s and 1970s, he tried railroad-themed hamburger restaurants called Carl’s Whistle Stop, took a swipe at Mexican food with Taco de Carlos and hauled out tartans for Scot’s coffee shops. All three ideas bombed.

Swallowing his pride, Karcher closed, converted or sold the unprofitable restaurants and concentrated on perfecting the Carl’s Jr. formula: Cater to mature customers who want California-inspired fast food in comfortable surroundings and are willing to pay higher prices to get it.

That meant adding such then-unheard-of touches as carpeting and having food delivered directly to the tables. Carl’s Jr. was the first burger chain to add salad bars and recognize a market for healthier fare.

By 1980, the chain has grown to more than 300 locations and Karcher handed the president’s job over to brother Don while he kept the title of chairman.

The company set a growth goal of 1,000 restaurants nationwide by 1990. But Karcher resisted franchising until 1984, long after McDonald’s had used the method to spread its Golden Arches across America. It was a hesitation he says he now regrets.

Carl’s Jr., while remaining strong in California, has met with limited success in attempts to expand elsewhere in the Southwest. The company sold off its 21 restaurants in Texas less than two years after their opening and 31 company-owned eateries in Arizona were converted to franchise operations last year. However, licenses granted to foreign operators in Japan and Mexico have done well, and soon Carl’s Jr. will appear in Malaysia and the Mideast.

Domestically, the chain has been shaken lately by price competition. Taco Bell, the Irvine-based subsidiary of cola giant Pepsico Inc., saw its profits soar in the past two years after a series of price cuts. McDonald’s and other chains copied the strategy and began offering bargain menus, including 69-cent cheeseburgers.

Carl’s Jr., sticking with its premium-price strategy, saw its corporate profits dive 25%--from $5 million to $3.7 million--in its most recent three-month period, compared with a year earlier.

“They’re struck right now with an extremely difficult environment,” said Douglas Christopher, a stock market analyst for the brokerage of Crowell, Weedon & Co. in Los Angeles.

Said another, Steven A. Rockwell of Alex. Brown & Sons in Baltimore, “I think it’s a solid company that’s being hurt by the recession.” When conditions turn more favorable, Carl’s Jr. will “do pretty well in the long term.”

Karcher himself said he hesitates to blame the recession for his company’s recent poor performance. “I hate the people who say it’s a recession-depression because it gives you a crutch, “ he said. “Instead of saying, ‘Things are slow,’ we should be trying to do a better job than ever.”

For Karcher, that means sweating the details. Carl’s Jr. managers quake at the sight of the company namesake scouring their parking lots for cigarette butts on one of his unannounced visits. They cringe when he runs one of his thick fingers across a greasy smoke duct.

By the late 1980s, Karcher was collecting industry awards and rolling in success. Then came the proverbial fly in the milkshake: allegations of insider trading.

The SEC filed a civil suit in April, 1988, alleging that Karcher had tipped six of his children to a company announcement that profits were expected to drop by half. The suit alleged that the family, along with the company’s chief accountant, acted on inside information about the impending announcement to dump thousands of shares of stock before the announcement was released to avoid losses of nearly $250,000.

The SEC acknowledged that its case was circumstantial, but said in court papers that there was “overwhelming evidence” against Carl Karcher.

Irving Einhorn, the regional director of the SEC at the time, said that he was surprised at how reluctant Karcher was to settle in the face of the evidence. He added that phone records showed that one the Karcher children called father Carl just minutes before calling a stockbroker. “Everything pointed at dad,” Einhorn said.

Carl Karcher denied the allegations, saying in a deposition that when any of his children asked whether to sell stock, he would urge them to “talk to your broker.” All of the other defendants--except son Carl Leo, a company officer who said he did not know at the time that his own trading was illegal--denied the allegations as well.

But after the case dragged on at prolonged expense to both sides, Einhorn said, he invited Karcher to meet with him. Karcher told him that he wanted an apology and the charges dropped. Einhorn said he told Karcher that a jury, hearing arguments on both sides, would rule against the family based on the evidence.

“The only thing that that case did (was) to consume an inordinate amount of unnecessary time and attention,” said Einhorn, now a lawyer in private practice. “It was not complicated. The evidence was all there.”

Later, the Karcher family settled for a total of $664,000. Karcher said that he agreed because he did not think he could get a fair trial.

“Even with a jury trial, when I had 12 children, 500 to 600 Carl’s Jr.’s and you’re the founder of the company, there’s a certain amount of jealousy,” Karcher said.

Karcher looked at the settlement as a sound business deal. After all, the government had originally sought more than $2.5 million and the agreement carried no admission of guilt. He had knocked them down by three-quarters and gotten the monkey off his back. But the case, which he considers politically inspired, left a bitterness that lingers.

Nowadays, he is far more concerned about Margaret and his ailing brother. Steeling himself for the worst, Karcher is having an 8-foot statue of St. Francis of Assisi cast in bronze to preside over a 55-grave Karcher family plot at Holy Sepulcher Cemetery in Orange. He has begun to think about who will rise within his company and eventually try to fill his Size 14 shoes.

Until Oct. 31, the heir apparent was Executive Vice President Raymond J. Perry. But despite Perry’s respected image in the fast-food industry and Carl Karcher’s own previous praise of him, he was abruptly dismissed. Perry declined to comment, but at least one analyst privately speculates that Karcher was uncomfortable with choosing a non-family member to succeed him.

Far from wallowing in such problems, Karcher keeps his upbeat outlook. For he knows his life could have turned out differently.

After a Lakers game two years ago, Karcher and his wife went looking for a hot dog stand in southwest Los Angeles that opened down the street from his own 50 years ago. To their surprise, it was still there and Karcher ordered two chili dogs with the works and talked old times with the attendant.

The stand is still owned by the same guy after all these years, Karcher was told, a man he simply knew as ‘Art.’ Over the years, Art tried to expand but thought it was too much trouble.

Now Art has one hot dog cart. Karcher has 600 restaurants.

“Look at what happened to the two of us,” Karcher sighs as a look of wonderment crosses his broad face.

It was as if he expected to be pinched.

The Karcher File Jan. 16, 1917: Carl N. Karcher is born in Upper Sandusky, Ohio. 1930: Karcher quits school in the eighth grade, goes to work on the family farm in Ohio. 1937: Karcher and his brother, Ralph, drive out to California, where Carl goes to work in his uncle’s feed store. 1939: Finding work delivering bread for a bakery in Los Angeles, Karcher marries Margaret Heinz after meeting her at church in Anaheim. 1941: Karcher enters the fast-food business, buying a hot-dog stand in South-Central Los Angeles for $326. He eventually buys two other stands to form a small chain. 1945: Carl’s Drive-In Barbeque, Karcher’s first bona-fide restaurant, opens in Anaheim. 1956: Karcher creates Carl’s Jr., a take-out version of his full-service restaurant. The idea is successful and others are soon added. 1966: With 24 restaurants open throughout California, Carl Karcher Enterprises incorporates. 1980: Karcher turns over the presidency of the company to his brother, Don. Carl Karcher retains the title of chairman. 1981: Carl Karcher Enterprises Inc. offers stock to the public, selling shares at $3.60. Karcher celebrated by giving 67,500 shares, valued at about $1 million, to each of his 12 children. As of Friday, Karcher stock closed at $9.13 a share. 1984: The chain starts offering franchises. Also, Karcher expands his chain into Texas, only to pull out about three years later. Karcher blames the $13-million mistake on a sluggish economy in that state. April, 1988: The Securities and Exchange Commission files a lawsuit, alleging insider trading against Carl and Margaret Karcher, six of his children and the company’s chief accountant. The Karchers settle the case for $664,000. July, 1989: The company expands internationally by entering into a licensing agreement with Friendly Corp. of Osaka to introduce Carl’s Jr. in Japan. Oct. 29, 1989: Several hundred proponents of legalized abortion gather in front of a Carl’s Jr. to protest against Karcher’s anti-abortion views. It is one of a series of periodic rallies and picketing against the restaurants. Oct. 31, 1991: Raymond Perry, the No. 3 official at Karcher Enterprises, is dismissed as executive vice president; Cal State Northridge students vote 1,093 to 1,045 against establishment of a Carl’s Jr. on their campus after opposition is voiced by gay and abortion rights groups. This prayer is recited at the beginning of meetings at Carl Karcher Enterprises. Lord, make me an instrument of Thy peace. Where there is hatred, let me sow love; Where there is injury, pardon; Where there is doubt, faith; Where there is despair, hope; Where there is darkness, light; And where there is sadness, joy. Divine Master, grant that I may not so much seek to be consoled as to console; To be understood, as to understand; To be loved, as to love; For it is in giving that we receive; It is in pardoning that we are pardoned; And it is in dying that we are born to eternal life. Attributed to St. Francis of Assisi. Carl’s Top 5 Tips for Success 1. Think positive 2. Work hard 3. Feel good about yourself 4. Follow the Golden Rule: Do unto others as you would have them do unto you 5. Give back to the community Carl’s Top 5 Heroes (Listed in alphabetical order) 1. J. Peter Grace, former chairman of the Grace Commission 2. Pope John Paul II 3. McDonald’s leader Ray Kroc 4. Former President Ronald Reagan 5. KFC founder Col. Harland Sanders