Presenting today at Oppenheimer & Co.’s 9th Annual Consumer, Gaming, Lodging & Leisure Conference in Boston, Puzder said CKE’s two chains will continue to focus marketing on large, premium-price burgers (such as the new Teriyaki Burger at right) and to target that marketing at “young hungry guys” who make up its core audience. He defended the chains’ “hot chicks eating burgers” TV strategy as a way to grab attention and “break through the clutter. We can’t be McDonald’s. McDonald’s spends $800 million [on TV]; we spend $120 million,” he said.
But CKE will increase its spending on digital, interactive media which can be much more specifically targeted. “We’re jumping in in a big way,” Puzder said. “We need to go where our customers are.” CKE last month tapped 72andSunny, Los Angeles, as its digital-media agency of record.
In the most recent reporting period, ended June 15, Carl’s Jr. same-store sales were down 7.1% vs. one year ago; Hardee’s sales were down -2.7%. “We’re still selling as many premium burgers but we are not selling as many combos,” Puzder said. “We’re seeing customers order a $6 Thickburger and a glass of water.”
CKE will rebuild sales with unique, premium-price products, he said, not with discounts. “We will not spend ad dollars trying to attract 99-cent customers,” Puzder added. “We have great 99-cent products but we don’t promote them, which is why we have higher margins than our competition.” Short-term planning trades brand equity for small sales gains, he said, and CKE won’t do it. Carl’s Jr. and Hardee’s are testing new lower priced snack items. But the chains will avoid couponing. “We don’t want to be seen as a place where you can get cheap, bad food for very little money,” he said.
Puzder said CKE will focus expansion in the next year on Texas, which he lauded for its “friendly business environment” and lack of state income tax. CKE has few stores in Houston and Dallas (which will be an all-franchised market). International business has been “spectacular” and will be accelerated. A first Carl’s Jr. China store opens in September in Shanghai, and the brand also will open in Pakistan.