CKE Plans to Serve Up Buffet-Style Chain
CKE Restaurants on Monday unveiled plans to create a company with 25 restaurants that will try to expand into the buffet-style restaurant niche.
CKE, parent company of Carl’s Jr. and Hardee’s burger chains, said that Star Buffet Inc. will be composed of CKE’s 16 HomeTown Buffets and two Casa Bonita Mexican theme restaurants. In addition, the company has agreed to acquire seven restaurants from North’s Restaurants Inc., which operates in the Northwest.
CKE said it plans to sell 55% of Star Buffet through an initial public stock offering this year. The company will be based in Salt Lake City.
CKE also announced a “strategic alliance” with Stacey’s Buffet Inc., a Largo, Fla.-based company that operates 24 buffet restaurants with $38.8 million in revenue.
CKE will loan $2 million to Stacey’s Buffet in exchange for warrants to purchase up to 30% of Stacey’s Buffet common shares. Star Buffet will appoint two of the company’s five board members.
Star Buffet was formed to give CKE a separate operating arm to enter the buffet restaurant segment dominated by Buffets Inc., an Eden Prairie, Minn.-based company with 355 restaurants in 34 states.
“We’re starting to build what may become a national presence in the buffet industry,” said CKE Senior Vice President Loren Pannier.
“Star Buffet has the potential to be a national operator of regional buffet concepts.”
CKE entered the buffet niche two years ago with its acquisition of Salt Lake City-based Summit Family Restaurants Inc., which operated 16 HomeTown Buffet franchised restaurants. CKE had hoped to expand the HomeTown chain but lost a court battle with Buffets Inc. over rights to the HomeTown name.
Former Summit executive Robert E. Wheaton will serve as Star Buffet’s president and chief executive officer. CKE Chairman William P. Foley II will serve as Star Buffet’s chairman.
Buffet restaurants are popular in smaller towns and draw heavily from families and senior citizens, said Robert Sandelman, a Brea-based restaurant industry consultant.
“The buffet concept isn’t right for every neighborhood, but there are lots of markets where it could be successful,” Sandelman said.
CKE’s shares rose by 81 cents to $35.19 in New York Stock Exchange trading. Shares of Stacey’s Buffet rose 16 cents to $1.38 in Nasdaq trading.
