CKE Restaurants Says Profits Off by Two-Thirds : Marketing: Carl's Jr. chain operator blames lower revenue and the cost of building its Boston Chicken franchise. Earnings are reported at 7 cents a share.

CKE Restaurants Says Profits Off by Two-Thirds : Marketing: Carl’s Jr. chain operator blames lower revenue and the cost of building its Boston Chicken franchise. Earnings are reported at 7 cents a share.

By DEBORA VRANA

April 20, 1995 12 AM PT

TIMES STAFF WRITER

ANAHEIM —

The operator of the Carl’s Jr. fast-food chain, citing lower revenue and the cost of building its Boston Chicken franchise, said Wednesday that its profit last year fell nearly two-thirds to $1.3 million.

CKE Restaurants Inc., which picked up the rights last year to build up to 300 Boston Chicken stores in Southern California, reported earnings of 7 cents a share for its fiscal year that ended Jan. 30. It had earned $3.7 million, or 20 cents a share, for the previous fiscal year.

The company’s revenue fell 4% to $443.7 million last year from $463.5 million.

CKE’s chairman, William P. Foley II, has been trying to refocus the company on a quality menu for its 650 Carl’s Jr. stores, foregoing the so-called value menu with low prices that had contributed to last year’s lower overall revenue.

The refocusing included the company’s decision early this month to transfer its rights in the Boston Chicken subsidiary to a new company operated by Boston Chicken Inc. in Denver, the restaurant chain operator. The new company, if successful, eventually will be 65% owned by Boston Chicken and 35% owned by CKE.

Sales at Carl’s Jr. stores, long sluggish, continued to drop, said industry analyst Douglas Christopher at Crowell, Weedon & Co. in Los Angeles.

“But we’ll see what happens now that the company is able to focus on its core operations rather than Boston Chicken,” he said.

Christopher said he is cautiously optimistic that the company’s financial position will improve, though “we still need time to see how committed they are to this focused strategy.”

On Wednesday, the company’s stock dropped 62.5 cents a share to $6.875 a share in New York Stock Exchange trading.

For its fourth quarter, the company lost $542,000, or 3 cents a share, compared with a loss of $458,000, or 2 cents a share, for the same quarter the previous year. Quarterly revenue fell 7% to $99.6 million from $106.6 million.

Foley attributed the quarterly loss and drop in revenue not only to the Boston Chicken effort but also to the record rainfall and flooding in January that kept customers at home.