Karcher Enterprises Posts Profit : Fast food: The Anaheim company, however, reports a drop in third-quarter sales at its Carl’s Jr. restaurants<i> .</i>

Carl Karcher Enterprises, struggling through corporate infighting between its founder and its board, Thursday reported slightly higher quarterly earnings but a decline in sales at its Carl’s Jr. restaurants.

Profit for the company’s third fiscal quarter, which ended Nov. 1, was $1.5 million, or 8 cents a share, up from earnings of $1.3 million, or 7 cents a share, for the same period a year earlier. Revenue fell 5% to $106.4 million from $112.6 million. Same-store sales--business at outlets open more than a year--were off 7.4%.

The company linked the revenue drop to “recessionary factors throughout California,” where most of its 649 fast-food restaurants are located.

Karcher Enterprises executives maintained that corporate cost-cutting and new pricing strategies now in place will stop the revenue slide and bolster profits. “The important thing is that operating earnings--money made through our restaurants--was $3.9 million better than last year,” said Loren Pannier, chief financial officer.

But Andrew Puzder, an attorney who represents founder and former Chairman Carl N. Karcher, questioned whether the company is making headway.

“They appear to have gotten profits up by cutting costs faster than sales are falling,” Puzder said. “The problem is, you can only cut costs so much. At some point if sales don’t go up you’ll be losing money.”

Large national competitors offering lower-priced menu items have stolen market share from Carl’s Jr. in recent years. The company recently started to experiment with a value menu at a handful of restaurants in Bakersfield. That test will now be expanded to a Las Vegas restaurant, Pannier said.

Pannier acknowledged that the value menu is “a balancing act. . . . You need to get more customers in, and you do that by lowering prices. But in the end, you want to end up with more revenue, so you have to tweak pricing to the optimal level.”

Product pricing and the restaurant chain’s menu are key issues in an ongoing fight between Karcher and the corporate board, which ousted him as chairman on Oct. 1. The board also rejected Karcher’s plan to test-market Mexican-style products from the Green Burrito chain. Karcher maintains that the test would succeed and, by drawing new customers, give the company a much-needed revenue boost.

For the fiscal year to date, Karcher Enterprises’ earnings came to $4.5 million, down from $5.3 million for the same period a year earlier. Nine-month revenue fell to $354.5 million from $396.9 million.

In Nasdaq trading Thursday, Karcher Enterprises’ stock gained 12 1/2 cents a share to close at $9.75.

Karcher Enterprises’ Earnings Increase

For the quarter ended Nov. 1, Carl Karcher Enterprises reported a profit of $1.5 million on revenue of $106.4 million. Earnings were up slightly from a year earlier despite a downturn in overall revenue. Both revenue and profit were down for the first nine months of the fiscal year. Dollar amounts in millions, except data per share:

3rd qtr 3rd qtr 9 months 9 months 1992 1993 1992 1993 Revenue $112.6 $106.4 $396.9 $354.5 Net income 1.3 1.5 5.3 4.5 Per share $0.07 $0.08 $0.28 $0.25

* Current quarter results included a $1.7-million charge for the previously announced future retirement benefits granted to Carl N. Karcher.

Source: Carl Karcher Enterprises; Researched by JANICE L. JONES / Los Angeles Times