Karcher Future Pegged to Better Food Value : Strategy: Cost cuts, menu and price changes called key to reversing revenue slump.
The president of Carl Karcher Enterprises told more than 200 shareholders Wednesday that the company can reverse its revenue slump by trimming costs and giving customers better value for their dollar. But he warned that the turnaround will be long and painful.
President Donald E. Doyle’s strategy was evident at Karcher Enterprises’ annual meeting, held this year at the Anaheim Marriott hotel: Instead of a free lunch, shareholders got coffee, pastries and a card good for a free chicken sandwich and a soft drink at “participating Carl’s Jr. restaurants.”
Despite the budget fare, founder and Chairman Carl N. Karcher was greeted warmly by shareholders. In his remarks, Karcher, 76, maintained that “we’re going to survive and make things happen in the future.”
Since joining Karcher Enterprises in January, Doyle has waged an intense cost-cutting war that has eliminated nearly 60 corporate staff positions. He has also hired Karen Eadon, an eight-year marketing veteran, away from competitor Taco Bell Corp. in Irvine.
Doyle is encouraged by Karcher Enterprises’ recent progress, he said Wednesday, but he cautioned shareholders that “it’s not going to be an easy or a rapid turnaround.” The company, he said, faces “a lousy economy and intense competition.”
Customers view Carl’s Jr. as providing good-tasting, high-quality food, Doyle said, but the chain has grown “less relevant” in the restaurant industry because lower-cost competitors are luring customers with better values. Customers are telling Carl’s Jr. that “the food is really good but it’s not worth the pricing,” said Doyle, who promised to deliver “great quality food at a surprising price.”
In addition to cutting costs, Karcher Enterprises is preparing new menus and pricing strategies, as well as revamping advertising and marketing campaigns. New advertisements will be “very aggressive,” Doyle said. “We will have better ads and more of them.”
