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A home-cooked meal

By   /   Friday, December 12th, 2008  /   Comments Off on A home-cooked meal

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In recent years, CKE Restaurants, parent of the Carl’s Jr. and Hardee’s, has become a nimble competitor in the tumultuous world of fast food.

Under CEO Andy Puzder, CKE turned around Hardees by  the exporting giant burgers and over-the-top advertising from the Carl’s Jr. menu to the regionally oriented Hardee’s stores in the South.

The Carpinteria-based chain hired Paris Hilton for sexy ads, rolled out a successful guacamole burger thanks to a collaboration with Santa Paula-based Calavo and helped Portfolio magazine sell a record number of issues by lending a multi-layered burger for a cover shot.

“We make big juicy burgers for young hungry guys,” Pudzer said during a visit to what will be the company’s newest store just off Highway 101 in Carpinteria.

With the new hometown venture, slated to open early in 2009, Puzder is betting that adding a green — as in environmental, not peppers — focus will provide an added attraction to the 18-and-up, largely male group of customers that keep Carl’s Jr. and Hardee’s in business.

That’s partly why he’s rolling out the new concept of Carl’s Jr. right in his own back yard.
Located at the site of a former Coco’s restaurant, workers are going to be installing new lighting, a 10-kilowatt solar panel array and dozens of other energy-savings innovations.

The idea is to shave operating costs and also give the company a test-bed for green programs that can go chain-wide.

“All the lighting is going to be LED or low-voltage fluorescent,” said Jack Willingham, CKE’s senior vice president of construction and design.

CKE operates slightly more than 3,100 restaurants worldwide, with about 1,900 in its Hardee’s chain and about 1,160 under the Carl’s Jr. banner.

 Puzder said the company has been looking for a location in its hometown of Carpinteria since 2002 — the nearest location is on Milpas Street on the lower east side of Santa Barbara, about five miles away.

In addition to all of the energy savings, the restaurant will be larger than an average Carl’s Jr. but it will give Puzder a chance to show off the latest menu items to Wall Street analysts and other guests.

Given California’s new greenhouse gas rules under AB32 and a younger generation’s penchant for all things green, Puzder said it made sense to try something new on his company’s home turf and at a company-owned location. “We’re going to see how this works,” he said.

Most of the energy-saving techniques are “not as glamorous” as the solar panels and state-of-the-art lighting, said Willingham. They include low-flush toilets and computer-controlled air conditioning.

Financially sound
At a time when many restaurants are experiencing sharp declines in revenue, CKE’s Carl’s Jr. and Hardee’s units seem to be holding their own. “This year it looks like revenue will be pretty steady but it all depends on the economy,” said Puzder, who is hoping that some of his international franchise operations will not be hit as hard as U.S. stores.

CKE has reported that same-store revenue is running slightly ahead of last year and said on Dec. 10 that it earned $5.4 million, or 10 cents per share, on total revenue of $336 million for its fiscal third quarter, in line with expectations.

A year ago, the company earned $6.2 million, or 11 cents per share, on revenue of $351 million in the quarter. After reaching a low of $4.88 in mid-November, CKE shares have rebounded sharply and were trading up 8 percent for the day to close at $8.66 on Dec. 10.

Expansion plans
CKE also recently announced the opening of its 100th franchise unit in Mexico and its global expansion plans extend as far as Kazakhstan. It also will open new Carl’s Jr. stores in Nevada and Idaho over the next decade, filling in Western U.S. markets that it hasn’t fully developed.

Meanwhile in Carpinteria, as workmen get ready for next year’s opening of the greenest Carl’s Jr. ever, Puzder said the innovations at the Carpinteria flagship will be a little bit like a fast-food menu.

He can export the items that work to other stores to drive more profit and skip over items that don’t work to help the bottom line.

The green store ideas “could be a big cost savings for us or it could be a cost disaster. If it’s a cost savings I’ll take all the credit. It it’s a cost disaster, I’ll blame it on Jack,” he joked.

If Willingham’s stores are half as good as the company’s triple-decker, bacon-avocado creations, odds are Puzder will be able to take his new green formula and his lower light bills right to the bottom line.


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