Karcher Quarterly Profit Up on Reduced Revenue : Earnings: Net rises 19% despite a sales slowdown attributed to tougher competition in California.

Tougher competition in California contributed to a sales slowdown during the first quarter at Carl Karcher Enterprises Inc., parent of the Carl’s Jr. restaurant chain.

Quarterly profit rose by 19% to $926,000, up from $776,000 for the same period a year earlier. But revenue fell to $139.9 million from $161.6 million. Karcher President Donald E. Doyle blamed the revenue drop on increased competition--business at stores open more than a year was off by 9%--and the sale of 34 company-owned restaurants to franchisees.

Karcher Enterprises’ general and administrative costs fell by 8% to $886,000 during the quarter ended May 17 following the implementation of an ongoing cost-reduction program. Doyle said the program has cut food, direct labor and repair andmaintenance costs. The company, based in Anaheim, also sold a corporate investment portfolio and used $18.1 million in proceeds to pay off debts.

Following the recent hiring of former Taco Bell executive Karen Eadon as Karcher’s marketing vice president, Doyle anticipates a marketing push that will drive “a gradual improvement in the same-store sales performance throughout the remainder of the year.”

In a related development, Franklin J. Karcher, a former Karcher Enterprises executive, is suing the company for fraud and breach of contract. Franklin Karcher, brother of Carl N. Karcher, the company’s founder and chairman, would not comment Tuesday on the suit, which was filed in Santa Ana Superior Court on June 11.

The suit, which seeks $2 million in damages, alleges that the company overstated the value of a dozen Carl’s Jr. restaurants in Arizona that Franklin and his wife, Lucille, agreed to purchase in 1990. It also alleges that Karcher Enterprises has failed to provide agreed-upon corporate support for the Arizona stores.

Karcher Enterprises operates about 640 restaurants in California, Nevada, Oregon, Arizona, China, Japan, Malaysia, United Arab Emirates and Mexico.

In Tuesday’s trading on the NASDAQ market, Karcher Enterprises’ stock lost 25 cents a share to close at $7.25.

Mixed Economic Menu

Quarterly profit is up at Carl Karcher Enterprises Inc., but revenue is off 13% from the same period last year.

Figures in millions

For period ended May 17 Source: Bloomberg Business News