Carl’s Jr. to Unveil Marketing Plan
Carl Karcher Enterprises, struggling to reverse a sales slump, is set to unveil its long-awaited, value-oriented marketing plan during meetings this week with franchisees.
Company executives are scheduled to explain the strategy, which is designed to help the Carl’s Jr. fast-food chain bolster flagging profit and revenue, during meetings today in Southern California and Thursday in Northern California.
Karcher Enterprises executives declined to comment. And franchisees declined to discuss proposed menu changes until after the company solidifies the plan.
The meetings are a culmination of a months-long process designed to make Carl’s Jr. more competitive with Irvine-based Taco Bell and other national companies that correctly identified the growing demand for menu items that are perceived as better values.
Karcher Enterprises has been experimenting with a value menu at restaurants in Bakersfield, Sacramento and Las Vegas. Karcher Enterprises used those tests to experiment with new food items, to delete longstanding products and to tinker with pricing strategies.
Restaurant industry analysts generally agree that Karcher Enterprises must expand its selection of value-oriented menu items in order to cash in on the growing demand for better food values.
Karcher Enterprises profit for the third fiscal quarter ended Nov. 1 rose slightly to $1.5 million, but same-store sales--business at outlets open for more than a year--have continued to slide in recent years.
“I don’t think the company has a choice,” said Laurie Lively Smith, a restaurant industry analyst with Seidler Amdec Securities Inc. in Los Angeles. “They have to get into the game with everyone else in the industry.”
That doesn’t mean Karcher Enterprises should abandon the image of high quality that many consumers associate with the Carl’s Jr. menu, Smith said. “Each company has to find the right formula for value that works for them,” Smith said. “Value means different things to different companies.”
Some franchisees are cautioning Karcher Enterprises’ management not to risk alienating longtime customers by straying too far from the company’s heritage of being a slightly more expensive restaurant with higher quality food.
“There’s a lot of speculation and anxiety about what we’ll hear,” said Robert Wisely, who owns six Carl’s Jr. restaurants in Santa Rosa. “All the franchisees are in favor of fixing (menu) problems. But that doesn’t mean we need to reposition Carl’s as the low-priced leader.”
“We’re known for premium, quality sandwiches,” said Nick Trani, a Modesto-based businessman who owns several restaurants in Northern California. “We all say, absolutely, that we need value on our menu boards . . . but we also need to focus on our strength . . . which is our premium products.”
Karcher Enterprises owns and operates about 380 restaurants, while its franchisees operate about 240 locations.
The company is recovering from a months-long, highly publicized boardroom fight that pitted founder Carl N. Karcher against the company’s board of directors. Karcher, 76, was ousted as chairman in October after board members disagreed with the founder’s plan to test-market another restaurant’s Mexican-style foods at a handful of Carl’s Jr. locations.
Karcher, who also was struggling to solve severe personal financial problems, has since returned to the company he founded as chairman emeritus. Karcher also restructured his personal debts.
