CKE Sales Decline – Analyst Blog

CKE Restaurants Inc. (CKR), the quick-service restaurant operator, recently posted dismal sales results at its company-owned locations for the four-week period ended March 22, 2010.

 

The sluggish economic environment, heavy job losses and raging discount wars among fast-food chains such as McDonald’s Corporation (MCD), Burger King Holdings (BKC) and Yum! Brands (YUM) to lure budget-constrained consumers continue to hurt CKE’s same-store sales.

 

The operator of Carl’s Jr. and Hardee’s fast food chain said that blended same-store sales dipped 4.1% for the period, compared with a fall of 2.7% witnessed in the prior-year period.

 

Same-store sales at Carl’s Jr. restaurants continues to struggle, tumbling 7.6% for the four-week period ended March 22 following the drop of 7% in the year-ago period. The fall was due to the chain’s high exposure to a soft economy and high unemployment in California.

 

However, Hardee’s restaurants have been faring better than Carl’s Jr. restaurant chain, helped by the sustained promotion of its Grilled Cheese Bacon Thickburger. Same-store sales inched up 0.5% for the period compared with an increase of 3.1% registered in the year-ago period.

 

To revive its sagging same-store sales, CKE had earlier hinted that it will focus more on value for menu items, new product launches, dual branding, remodeling of restaurants and aggressive advertising.

 

The Carpinteria, California based company, CKE said that consolidated revenue from company-operated restaurants for the period dropped 3.7% year-over-year to $83.6 million. Sales at Carl’s Jr. restaurant chain slid 6.7% to $45.9 million, but edged up marginally by 0.3% to $37.7 million at Hardee’s restaurants.

 

Year-to-date blended same-store sales for CKE dipped 4.2%, reflecting a 5.2% decline at Carl’s Jr. restaurant chain and a 2.8% drop at Hardee’s restaurants.

 

Year-to-date consolidated revenue also dropped 3.7% to $164.3 million due to a 4.4% fall to $91.9 million posted at Carl’s Jr. restaurant chain and a 2.9% decline to $72.4 million experienced at Hardee’s restaurants.

 

At the end of fiscal 2010, CKE operated 3,141 restaurants in 42 states and in 16 countries, including 1,224 Carl’s Jr. restaurants and 1,905 Hardee’s restaurants.