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Checkers aims for growth with spate of turnaround initiatives

Checkers aims for growth with spate of turnaround initiatives

TAMPA FLA. Checkers Drive-In Restaurants Inc., as the company works to regain traction and fuel growth at its Checkers and Rally’s double-drive-thru brands. –A roster of new initiatives is in place at

New leadership, improved service training, extended hours, fresh marketing initiatives and a new value menu are among the strategies unveiled since Enrique Silva took the reins as president and chief executive of the 825-unit quick-service company based here last February. –A roster of new initiatives is in place at

Silva, a Burger King veteran, is working to continue a turnaround begun in the 1990s following a period of severe economic problems for the company, including high debt levels and falling sales, that almost forced it into bankruptcy. In 1999 Checkers merged with Rally’s, a similar double-drive-thru concept founded in Louisville, Ky., in 1985. –A roster of new initiatives is in place at

In June 2006 Checkers, then publicly traded, agreed to be acquired by an affiliate of private-equity firm Wellspring Capital Management LLC for about $189 million. At the time, Checkers reported total revenues of $133.2 million for the nine months ended Sept. 12, 2005. Nine-month net income was $6.8 million. Both revenues and profits were down from the same period in the prior year. –A roster of new initiatives is in place at

Earlier this month, Checkers reorganized its executive management team, including the appointment of Wendy’s veteran Robert D. Wright as executive vice president of company and franchise operations, a new post. Todd Lindsey, a former chief financial officer at Gaylord Resorts and Hard Rock Cafe International, was named senior vice president and CFO,replacing Janette McDugald, who left the company in December. –A roster of new initiatives is in place at

Checkers also named Michael Arrowsmith senior vice president of development, another new position; he was franchising vice president at the Gloria Jean’s coffeehouse chain. Checkers also promoted Wendy Harkness from director of employee relations to vice president of human resources, replacing Steve Cohen, who retired last June. –A roster of new initiatives is in place at

“Organizational changes were carefully made in key areas that will further strengthen the company for the long term and provide the necessary foundation to grow in this highly competitive and changing business environment,” Silva said in a statement when the changes were announced. –A roster of new initiatives is in place at

In an interview, Silva also noted that his team has sliced $1.7 million from its supply costs, improved sales and traffic, and reached a record number of wide-area development agreements for new restaurants in the past year. –A roster of new initiatives is in place at

Checkers, with 69 percent of the restaurants franchised by 98 groups, generated $649 million in annual systemwide sales in 2006 and expects its long-range revenue growth to be in a range of 3 percent to 5 percent annually, the company said. Check averages are approximately $5.75. –A roster of new initiatives is in place at

Historically, Checkers average unit volumes have been more than $800,000, but units opened since January 2007 are averaging between $950,000 and $1 million, Silva said. –A roster of new initiatives is in place at

“The all-inclusive cost for opening a restaurant, excluding real estate, is approximately $700,000 to $800,000,” said Silva. “That is about half what it might cost to open a unit of a bigger chain.” The 800-square-foot restaurants also sit on just half an acre, about half the land needed for the units of other burger players, he added. –A roster of new initiatives is in place at

Given the troubled economy, the low cost of entry is one of the factors that helped the chain add 30 new restaurants in 2007, he said. Plans call for 80 more units to open in 2008. –A roster of new initiatives is in place at

“We signed more area development agreements in 2007 than the past two years combined, with plans in place to open 215 restaurants by year-end 2009,” Silva said. –A roster of new initiatives is in place at

Nick Nasrollahi, a 20-year Jack in the Box veteran, recently signed an agreement with Checkers to open 20 units in the Las Vegas area. Nasrollahi has 40 Jack in the Box units in the Las Vegas market, but was attracted to Checkers by its smaller footprint and consequent lower cost of entry. –A roster of new initiatives is in place at

“Close to 70 percent of fast-food business comes from the drive thru, so not having the dining room and all the expenses that come with it was a plus,” he said. –A roster of new initiatives is in place at

Nasrollahi also noted that possible plans to add breakfast to Checkers’ menu intrigued him. –A roster of new initiatives is in place at

Another program Silva introduced is called “PEAK Capacity.” The initiative helped to boost same-store sales by more than 5 percentage points in six months and improved speed of service by 36 seconds, Silva said. –A roster of new initiatives is in place at

Aimed at the unit level, PEAK Capacity is designed to increase efficiencies during lunchtime, when 50 percent of business is done, Silva said. –A roster of new initiatives is in place at

In June, Checkers extended its hours. Now 75 percent of units are open until midnight during the week and 98 percent remain open on weekends. –A roster of new initiatives is in place at

In other changes, Terri Snyder joined Checkers last April as executive vice president and chief marketing officer. Snyder most recently was senior vice president and CMO for Carlson Restaurants Worldwide. –A roster of new initiatives is in place at

Checkers last September selected New York-based ML Rogers as its new ad agency. The agency, which replaced Amalgamated of New York, recently rolled out to 35 markets a new TV campaign with the tagline “little place. BIG TASTE.” The campaign focuses on a value menu that was launched Dec. 31 and Checkers’ taste profile, Snyder explained. –A roster of new initiatives is in place at

The value menu offers Single Deals, with 10 items starting at $1, and Double Deals, with such items as double burgers priced at two for $3, $4 or $5. –A roster of new initiatives is in place at

Allan Hickok, managing director of Houlihan Lokey in Minneapolis, sees room for Checkers to grow. –A roster of new initiatives is in place at

“Are they going to grow like Chipotle?” he asked. “Doubtful. But they aren’t going to get wiped out by McDonald’s. They’ve been around for 20 years, and they sell hamburgers, and that’s what we eat the most in America.” –A roster of new initiatives is in place at

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