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Rivals' discounts take bite out of CKE sales

CARPINTERIA Calif. CKE Restaurants Inc. finished its fiscal 2009 with nearly flat blended same-store sales in the fourth quarter, reflecting a decline at the Carl’s Jr. chain, and blamed colder weather in Southern California and discounting strategies of other quick-service brands.

CKE, which operates, franchises or licenses 1,185 Carl’s Jr. locations and 1,912 Hardee’s restaurants, said it would not change its focus on premium offerings even when losing “value consumers” to competitors.

On Wednesday, the company said fourth-quarter same-store sales fell 0.6 percent at Carl’s Jr. and increased 1.5 percent at Hardee’s. Officials credited the introduction of Hardee’s Little Thickburgers, quarter-pound versions of the larger one-pound Thickburgers, which are priced around $1.99. Together, the company’s quarterly same-store sales rose just 0.3 percent from the year-ago quarter.

“While we do have value products on our menus, our focus on premium products has resulted in a decline in ‘value’ consumers, as virtually all of our competitors simultaneously pursue their business,” said Andrew Puzder, CKE’s chief executive. “We believe competing with virtually every other fast food brand for these least loyal and least profitable of consumers would be counterproductive on both a short-term and long-term basis.”

Trends did not improve much in January, as same-store sales fell 0.2 percent at Carl’s Jr. and rose just 0.7 percent at Hardee’s.

“While we are also focused on driving same-store sales, our strategy involves distinguishing our brands as serving premium quality products for a reasonable price with great service in a clean and comfortable restaurant supported by cutting edge advertising,” Puzder said.

Full-year trends were positive, as blended same-store sales for the year ended Jan. 26 rose 1.7 percent, marking the sixth consecutive year of positive results. Carl’s Jr. posted a same-store sales gain of 2.1 percent, marking the ninth consecutive year of positive results. The average unit volume for the chain was $1.5 million, a $35,000 increase per unit since the end of 2008, officials noted. Hardee’s reported a same-store sales increase of 1.2 percent for the year. Average unit volume for that brand totaled $993,000, an increase of $39,000 per unit over fiscal 2008, and the highest since CKE acquired the brand more than 10 years ago, the company noted.

Fourth-quarter consolidated revenues from corporate locations totaled $250.4 million, including $142.4 million from Carl’s Jr. and $108 million from Hardee’s.

CKE officials said they anticipate operating costs for the fourth quarter to have increase between 10 and 45 basis points, or less than 1 percent, year over year.

Contact Lisa Jennings at [email protected].

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