CARPINTERIA Calif. Carl’s Jr. and Hardee’s parent CKE Restaurants Inc. reported a slowdown in same-store sales growth for the third quarter, citing discounting at competing burger chains and a tough October at Carl’s Jr.
For the quarter ended Nov. 3, blended same-store sales for both chains showed an increase of 0.9 percent, compared with an increase of 1.7 percent for the same quarter a year ago.
At Carl’s Jr., same-store sales grew 0.5 percent for the latest quarter, compared with a 0.7-percent increase a year ago. During October, Carl’s Jr. posted no growth in same-store sales. According to CKE and industry analysts, the October slowdown indicates that the chain may be feeling the impact of discounting by competitors, particularly in the brand’s core market of Southern California, where economic headwinds are particularly strong and where restaurants have heavily advertised lower price points. A year ago in October, same-store sales had increased 2 percent.
During the latest quarter, Carl’s Jr. continued to focus on its premium products and debuted its Guacamole Bacon Six Dollar Burger and the Big Country Breakfast Burrito.
Hardee’s same-store sales increased 1.3 percent for the third quarter, compared with a 2.7-percent increase a year ago. Hardee’s fared better in October than its sister brand, however, reporting a same-store sales increase of 2.1 percent. A year ago in October, Hardee’s same-store sales increased 3.6 percent.
Analysts said the chain likely benefited from the promotion of its new Little Thickburgers, which are quarter-pound versions of its signature line priced at a suggested $1.99 each and positioned to appeal to both budget- and calorie-conscious customers. Hardee’s also promoted a Pork Chop ‘N’ Gravy Biscuit during the quarter.
Sales from corporate locations totaled about $140.3 million at Carl’s Jr. and about $115.2 million at Hardee’s, CKE reported. The aggregate corporate-store sales are down 6.5 percent from sales of $273.3 million in the third quarter of last year, although CKE has been working to refranchise restaurants and the difference could be attributed to a reduction in store count. The company does not release updated unit counts until quarterly results are published.
Company officials said food costs for the third quarter were down from the near-record highs experienced during summer months, but are still higher than year-ago levels. Price increases and cost-cutting measures have offset the impact, the company said. Labor costs are also set to be lower than expected, though occupancy and remodel costs will likely be higher than anticipated, CKE said.
CKE Restaurants operates or franchises 1,170 Carl’s Jr. and 1,917 Hardee’s restaurants in 42 states and 14 countries.