For more than a decade, CKE Restaurants’ brands Hardee’s and Carl’s Jr. have posted solid average unit volume (AUV) increases, overall a 40-plus percent increase in blended AUV for the last decade, and the company anticipates—and is preparing for—continued growth with new franchisees in new markets.
CKE operates as one global concept running two powerful brands. In the U.S., Carl’s Jr. restaurants are located throughout the West and in Texas, while the Hardee’s footprint is in the Midwest and the East Coast. Globally, CKE has over 3,300 franchised or company-owned restaurants operating in 42 states and 28 foreign countries and territories. CKE plans to open 100 new international restaurants in 2013.
“We continue to bring a high quality product to consumers, focusing on a specific core demographic (young, hungry guys, ages 18 to 34). We do our part to set our franchisees up for success with that market,” says James Sullivan, SVP, domestic franchise development.
CKE maintains corporate stores. “We are 73 percent franchised, and we intend to grow that percentage while maintaining a large base of company-operated restaurants. We feel it is vital for our franchisees’ success that we share in the business. We don’t adopt value menus, for example. We are very conscious of their margins,” says Sullivan.
Growth markets for CKE are the Northeast, Florida and Texas. “We have a lot of white space,” Sullivan says, “wide open geography where franchisees can secure territory without cannibalizing existing markets. In the premier burger category, we are one of the only brands with available markets to develop. We are also developing nontraditional markets such as airports, food court locations, and health care facilities. We’ve even gone into a water park where we sell to a captive audience.”
CKE wants experienced, multiunit operators who live in the markets they want to develop. That local tie is important. “We make sure franchisees can go out and do local store marketing and let the community know the business is locally owned and operated. They are able to reach out and connect better because they are a part of the community,” says Sullivan.
CKE integrates its franchisees into the system by putting two franchisees, one from each brand, onto its board of directors. The company works with the independent franchise associations of each brand, which represent the voice of the franchisees and contribute ideas to brand development.
Franchisee support from CKE includes 10 or 11 weeks of managerial training for new franchisees, sending an “all-star” training team to open the first restaurant of any new developer, and ongoing, online training for restaurant crew. CKE franchise business consultants offer business and operational support day in and day out, as needed.
The economic outlook is improving, says Sullivan. “We’ve seen lenders loosening up, and that has been exciting for our franchisees. We see folks who may have been reluctant to entertain additional investments looking at adding our brands to their portfolios.”
A draw to potential investors is the strong, multiple day-part menus at both brands, as well as the Red and Green Burrito brands. “Both are available to franchisees. The burrito brands go into existing restaurants, allowing our franchisees to diversify their menu offerings,” says Sullivan.
“We are stressing domestic growth this year,” he adds. “We will continue to strategize and prioritize new markets, and we will grow aggressively into contiguous markets. We hope to open 200 to 300 stores over the next three to four years.”
CKE is pleased with its TV cable spots for the two brands. “Commercials are already running in the Northeast,” says Sullivan. “People are seeing the ads and asking about our products, a benefit we are getting from the national cable buy—we are creating demand for our product even before it hits their markets.”
For more information about franchising opportunities with CKE, visit www.ckr.com
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