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Carl's Jr. Buys Hardee's Chain for $327M; Some...

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Corporate headquarters in Rocky Mount
ROCKY MOUNT — It's a merger made in hamburger heaven:Carl's Jr. gets a better breakfast menu and struggling Hardee'sgets a new owner.

The parent firm of Carl's Jr. paid $327 million for Hardee's,the No. 4 fast-food chain in the nation, in a deal announcedMonday.

The takeover gives Carl's a better breakfast menu and givesHardee's a stronger lineup for lunch and dinner, said William P.Foley II, chairman of Anaheim, Calif.-based CKE Restaurants.

``You're going to see both names on the door,'' Foley said.

North Carolina-grown Hardee's will be a subsidiary of CKE and27-year veteran H. Stephen McManus stays as Hardee's Food Systemspresident. Hardee's will remain headquartered here.

Hardee's - fourth behind No. 1 McDonald's, No. 2 Burger King andNo. 3 Wendy's - reported an operating loss of 11 million Canadiandollars in the first quarter. Hardee's was sold by Montreal-basedImasco Ltd.

Hardee's slack sales could be reversed by a plan already in theworks to convert from frying food to grilling it, McManus said. Hesaid many customers were turned off years ago when Hardee's changedto frying. Carl's Jr. grills food.

``Those of you who know us thought more of us when we werechar-grilling burgers,'' McManus said at a news conference.``That's the roots of Hardee's and part of the success that Carl'shas had.''

Hardee's sales last year totaled $2.98 billion. CKE had $742million, including sales from its Rally's, Green Burrito, TacoBueno, JB's, HomeTown Buffet and Galaxy Diner restaurants.

Foley said Hardee's offered too many menu items and those thatdon't sell will be eliminated during test marketing. McManus saidHardee's fried chicken would be eliminated in the first test marketof the combined companies in Peoria, Ill.

Carl's menu features large burgers that are advertized with aslogan, ``If it doesn't get all over the place, it doesn't belongin your face.'' One ad features construction workers eating on ascaffolding, where the burger dripping narrowly miss pedestriansbut hit a pigeon.

The merger creates a chain of 3,828 restaurants - 3,152 Hardee'soutlets in 40 states and 10 foreign countries and 676 Carl's Jr.outlets primarily in California. Foley said as the combination ofthe outlets takes place, restaurants will display both Hardee's andCarl's logos and signs.

McManus said the sales price was book value for the company andrepresented a fair deal for stockholders.

There is no overlap among the restaurant locations, Foley said.But the merger could result in some lost jobs, said McManus, addingthat the most secure jobs probably are in the restaurants.

Hardee's was attractive to Carl's Jr. because of its strongbreakfast trade - 30 percent of the company's business is breakfastcentered on biscuits. Carl's breakfast menu accounts for 10 percentof its business, Foley said.

McManus and Foley made statements and answered questions with abackdrop of the two company's premier products. Foley said theCarl's Jr. burgers will have more taste than Hardee's current fare.

``What the Hardee's customers want is taste and we'll be able togive them taste all day long,'' Mcmanus said.

Foley said the Carl's Jr. customer profile is male between theages of 15 and 34 who want large burgers. Carl's menu that willreplace Hardee's lunch and supper offerings include Big Star andSuper Star burgers as well as chicken sandwiches, a salad bar andbaked potatoes.

Since taking control of CKE following a bitter boardroom battlewith founder Carl N. Karcher in 1993, Foley has waged an aggressiveacquisition program to extend the company's reach.

Last year, CKE's earnings more than doubled to a record $22.3million.

Imasco bought Fast Food Merchandisers, a food processing anddistribution business, from Hardee's.

The largest franchisee of Hardee's restaurants, Flagstar Cos.Inc. of Spartanburg, S.C., said it would pursue an arbitrationclaim against Hardee's for failure to properly manage the brand.The claim was filed March 19, but the company refused to say whatdamages it sought.

-- From Staff and Wire Reports

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