The buffalo blue cheese burger from Carl’s Jr. and Hardee’s. Parent company CKE Restaurants has been sold to the Atlanta-based owner of Arby’s. (CKE media photo)

CKE Restaurants, the Carpinteria-based parent of Carl’s Jr. and Hardees, has been sold to an Atlanta private equity firm specializing in restaurant chains for a reported $1.6 billion.

The sale to Roark Capital Group comes five months after CKE owner Apollo Global Management hired Goldman Sachs to explore a sale or spinoff of the company. The sale price — which the news service Reuters reported at $1.65 billion to $1.75 billion, citing anonymous sources — represents a healthy return for Apollo, which took the company private in 2010 for about $1 billion.

CEO Andy Puzder is expected to remain at the helm of the restaurant chain known for its big burgers and raunchy TV ads.

“These are very good guys,” Puzder told the Business Times in an email. “The cultural match is very positive, and we look forward to taking full advantage of their experience and expertise in the restaurant segment.”

CKE will join Roark affiliated companies, which include Arby’s, Cinnabon, Carvel, Wingstop, Corner Bakery and a number of others. While Arby’s is a competitor in the quick-service food sector, Roark does not have a specialized burger chain of national scale in its portfolio.

The deal comes after Apollo’s attempt to sell off CKE in 2012 failed. The firm filed to take CKE public again, but the deal did not attract a lot of attention on Wall Street and Apollo opted for a refinancing of CKE debt instead.
Darren Tristano, executive vice president of restaurant industry research firm Technomic, said that Roark represents a stable home for CKE for the next few years.

“It’s an organization that’s large enough and experienced enough to improve the brand and leverage economies of scale that they have because of the other brands in the portfolio,” Tristano told the Business Times.

Tristano said that Roark’s typical way of operating is to look to reduce supply costs with its increased negotiating power and then slowly work on a brand. “They aren’t going to react quickly. They generally work through the management of a business,” Tristano said. “The cost side will likely come first, and then the way they market the brand and then menu will be important further down the road.”

In the long term, Tristano said, CKE’s former focus on “young, hungry guys” is not where the company is likely to find sales growth. The company will need to draw in so-called Millennials, women and Latinos to succeed. “I would suspect that the Hardee’s brand, which has the Thick Burger, will have to find a way to create the Thin Burger. In reality, women control their own vote and most of the men’s vote. If they want to go to Subway, then guess what, the man is going to Subway.”

Nation’s Restaurant News reported that Atlanta-based Roark likes to operate restaurant brands with a strong emphasis on franchising. CKE has 3,381 restaurants and systemwide revenue of about $3.9 billion annually, according to the news service. The last time that CKE publicly reported its finances — which include only franchise income and sales from the portion of stores that are company-owned —  its revenues for the first three quarters of 2012 was $951 million with profits of $16 million.

While CKE management is expected to stay on in the short-term, the medium and long term are less clear. Analysts had long pointed out that executive pay at CKE was outsized for the food industry, given the size of the company. Puzder’s compensation, for example, peaked at $10.1 million in 2011.

When the company sold to Apollo, it inked a deal in which the executives were hired for a four-year term, and contractual provisions that would have forced Apollo to pay out more than $8 million in cash for firing Puzder. Those contracts would be coming up for renewal in July. Puzder declined to comment on employment contracts.

Also up in the air might be some of the executive perks the company pays for. During the last year that disclosures were made, CKE said that it paid for dues to recreation clubs, car allowances and even personal use of the company aircraft by executives and their family members, which the executives paid income tax on. The perks themselves came up to about $241,000 in the most recent year data was reported. Puzder also declined to comment on perks.

CKE has made news in the region in recent years with a high-profile trip to Texas, where state officials tried to woo the company. Puzder said the Roark deal does not alter the company’s previous position: no immediate plans to move, but the possibility remains. “Our lease expires in March of 2015,” Puzder said in an email. “We are considering our options.”