CKE Restaurants, Inc. (NYSE: CKR) announced September 7 that it has signed a letter of intent with Red Tail Ventures LLC, an affiliate of Commercial Revolution LLC, to purchase its Taco Bueno subsidiary for in excess of $90 million, based on a multiple of cash flow. The transaction is expected to close during CKE’s fourth quarter.
The company also announced that, effective immediately, Tom Thompson has resigned as president and chief executive officer. He will stay on in an advisory capacity, assisting in the transition, through the end of the Company’s fiscal year, January 31, 2001.
Andrew Puzder, who was named president and chief executive officer of Hardee’s in June 2000, will take the additional title of president and CEO of CKE Restaurants, Inc. Puzder’s primary focus will remain on the Hardee’s brand. He has been with CKE since 1997.
As for selling off one of the three divisions of the company, Puzder remarked that, “Taco Bueno is a fantastic brand, with the highest restaurant operating levels in the Mexican QSR segment and tremendous potential. What it needs now is the ability to grow company restaurants and potentially develop a franchise program. With our focus on Hardee’s turnaround, there is a disconnect between what this brand needs and CKE’s current focus. Equally important for CKE, the sale will allow us to continue to focus on debt reduction.”
CKE has sold multiple units of Hardees recently as part of it’s effort to reduce debt. “At the beginning of this year, we indicated that our objective was to sell at least 500 restaurants to franchisees this year and raise $200 million, with $50 million raised through July,” Thompson said in early August. Since the outset of the Hardee’s re-franchising program, CKE has sold 251 Hardee’s locations to franchisees and raised approximately $82 million.
In November 1999, CKE announced that it would consolidate the majority of the corporate functions of Hardee’s Food Systems, Inc. within CKE’s corporate headquarters in Anaheim, creating a single support and administrative center for Carl’s Jr., Hardee’s and Taco Bueno restaurants. These changes resulted in the layoffs of approximately 150 corporate employees from Hardee’s headquarters in Rocky Mount, N.C.
The Company also announced the promotion of Richard E. Fortman to executive vice president, operations for Carl’s Jr. and the appointment of Brad R. Haley as executive vice president, marketing for Hardee’s.
Fortman, who currently is a senior area vice president for Hardee’s, will return to California to oversee operations for Carl’s Jr. restaurants. Fortman has a long and successful operations background with Carl’s Jr., dating back to 1969. In addition to his experience at CKE, he served as president and chief operations officer of Checkers Drive-In Restaurants, Inc. from 1997-1998. Fortman is a graduate of California State University, Fullerton.
Fortman will take over responsibilities from Rory J. Murphy, who is resigning from CKE to pursue franchise opportunities with Carl’s Jr.
Haley, who was named executive vice president, marketing for Hardee’s, most recently was chief marketing officer at Church’s Chicken. Before joining Church’s Chicken in 1999, Haley served as vice president of marketing communications at Jack in the Box, where he was instrumental in the brand’s turnaround. Haley holds a master’s degree in business administration and a bachelor’s degree in biology from Santa Clara University, in Santa Clara, Calif.
“I am confident in the leadership we’ve assembled on both coasts,” said Puzder. “I believe that Rick Fortman is the right person to work with the successful team at Carl’s Jr., which continues to post impressive results. I am excited to welcome Brad to the Hardee’s family and I am confident that Brad, along with Noah Griggs, who was recently named executive vice president, operations at Hardee’s, will be an effective force in the recovery at Hardee’s.”
Thompson’s final remarks included, “I have enjoyed nearly six years of tremendous highs and challenging lows. Now I am looking forward to returning to operating my franchise restaurants.” He will remain on CKE’s board of directors.
CKE Restaurants, Inc., through its subsidiaries, franchisees and licensees, operates more than 3,800 quick-service restaurants, including 962 Carl’s Jr. restaurants in 13 Western states and Mexico; 2,762 Hardee’s restaurants in 37 states and 11 foreign countries; and 125 Taco Bueno restaurants in Texas and Oklahoma.