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Higher expenses force 33.7% 2nd-Q profit plunge at CKE

CARPINTERIA Calif. Carl’s Jr. and Hardee’s brand parent CKE Restaurants Inc. cited higher packaging, food and occupancy expenses as drivers behind its 33.7-percent drop in net profit for the second quarter ended Aug. 13.

The increasing rents and higher costs for beef, cheese and pork, among other commodities, led to a 2.8-percent increase in total operating costs, the company reported.

Net income fell to $9.4 million, or 15 cents per share, from a year-earlier second-quarter profit of $14.2 million, or 20 cents per share. The company's operating income fell 31 percent year-over-year to $23.4 million.

Second quarter corporate revenue dipped 0.4 percent to $363.1 million. Sales from corporate restaurants fell 0.5 percent during the quarter to $287.8 million, and were negatively impacted by the refranchising of locations in certain markets, the company reported.

Same-store sales at company-operated restaurants increased 2 percent during the quarter at Carl's Jr., and 2.9 percent at Hardee's. Average unit volumes for CKE-operated Carl's Jr. locations increased to $1.5 million, up $41,000 since the end of the companyÕs latest full fiscal year, which ended in January. Average unit sales at Hardee's reached $934,000, a 10-year-high for the brand, CKE said.

At the end of the second quarter, CKE operated, licensed or franchised 1,111 Carl's Jr. and 1,909 Hardee's restaurants.

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