Carl’s Jr. parent CKE to be sold to Cinnabon owner Roark Capital

Carpinteria-based CKE Inc., known for the raunchy commercials and juicy burgers from its Carl’s Jr. chain, will be sold to the owner of decidedly G-rated brands Cinnabon and Auntie Anne’s.

CKE, currently controlled by affiliates of New York private equity firm Apollo Global Management, will change hands to an affiliate of Roark Capital Group, a private equity firm in Atlanta.

Roark’s portfolio is stuffed with popular food brands such as Wingstop, Corner Bakery Cafe, Seattle’s Best Coffee and Arby’s. The firm will acquire a majority stake in CKE, the umbrella company for names such as Hardee’s, Green Burrito and Red Burrito.

“We were right in their line of vision,” CKE Chief Executive Andy Puzder said in an interview Tuesday. “We’re just the kind of company they like. They were ready to step it up.”


CKE senior management will retain a minority stake. Financial terms were not disclosed.

The transaction, which has been in the works for several months, is expected to close in the fourth quarter, assuming that it clears regulatory hurdles.

Apollo took over CKE in 2010 in a deal worth about $694 million.

Puzder said the average private equity firm hangs on to its holdings for three to seven years.


“This is a good-performing investment for Apollo,” he said. “We performed well enough to justify a sale.”

John A. Gordon, principal with Pacific Management Consulting Group, said Roark’s involvement was encouraging.

“This is good news because Roark has the infrastructure in place to support restaurants,” he said. “There are a number of private equity firms that work in the restaurant space and some of them are more well-developed than others.”

CKE’s history is deeply entwined with Southern California’s. The company began as a hot dog stand founded in Los Angeles in the 1940s by charismatic, controversial entrepreneur Carl Karcher.


Last summer CKE, which has some 3,400 restaurants in 42 states and 29 countries and territories, scrapped plans to go public.

Gordon said the IPO failure probably triggered Apollo’s decision to exit its investment.

“It’s not that the company wasn’t good,” he said. “It has to do with the internal machinations of private equity funding.”

CKE brings in about $3.9 billion in annual revenue. Puzder declined to disclose other CKE financial data, saying the business is profitable and “very strong.”


“We expect to continue to grow in the next five to 10 years,” he said.

Puzder said he believes that Roark supports CKE’s push abroad, an effort he said has become a major focus in recent years.

In general, though, Puzder said he “would not expect there to be changes in the way we run the business.” That means no changes in management stemming from the sale, “no discussions about reducing staff” and no immediate plans to move CKE headquarters — at least not until the leases are up.

“They’re large offices, so we can’t just walk away,” Puzder said. “The market now is such that it’s not good to sublease.”


But the most important aspect of CKE, some patrons would argue, may be the infamously steamy ads. The commercials, which in the past have featured scantily clad celebrities such as Paris Hilton, Kim Kardashian and Kate Upton, probably won’t be threatened by Roark, Puzder said.

“We don’t anticipate any changes to our advertising campaigns or our advertising agency,” he said.

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