The Decline of Carl's Jr,

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Bagels
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The Decline of Carl's Jr,

Post by Bagels » January 13th, 2020, 4:17 pm

Since we were having a sidebar conversation about Carl's Jr. in the Habit Burger thread, I created this one, which is about Carl's Jr.


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viewtopic.php?f=22&t=2340
veteran+ wrote:
January 13th, 2020, 11:23 am
jamcool wrote:
January 13th, 2020, 9:34 am
Carl’s Jr isn’t HQ in Anaheim anymore...they moved HQ to Tennessee (along with Hardee’s). And they have previously stated that they would be doing less development in California because of the anti- business climate there
Anti business climate? The 6th largest economy in the world!

LOL

Not surprised they would use that excuse.
The comments you're referring to were made solely by Andrew Puzder, the former CEO of the chain. Keep in mind that Puzder is a staunch conservative who was nominated by Trump to lead the Labor Department, but had to withdraw his nomination after realizing this his views were so far to the right, that many within his party didn't support him.
jamcool wrote:
January 13th, 2020, 2:49 pm
The only parts of CA that are doing well are the Bay Area/Silicon Valley and Los Angeles.... the Central Valley has been in an economic downturn for a long time. Also see how much it costs to rent a U-Haul from CA to AZ or TX versus the other way.
Central Valley, sans Sacramento, has always lagged behind No/SoCal. Legislation pushed to "help" No/SoCal (e.g. $15 minimum wage) hurts the region, and has furthered the divide. And people are leaving California primarily because of the high cost of living, which includes the lack of "affordable" single family housing (and others who bought low are cashing in on the equity in their homes). California's population was stagnant in 2019, but it's still expected to lose a Congressional district/electoral vote. Articles I've read in the LA Times in recent months quote experts who predict that the state's population will declinethis year, as "peak" Millennials turn 30 and seek to root themselves where they can afford single family housing. Some experts predict the numbers will be even uglier on paper, with many undocumented immigrants choosing not to participate in the Census this year.

That said, the people who remaining and moving to here (sans legal and undocumented immigrants, who come and stay for other reasons) generally have much higher discretionary incomes than those who are leaving. That's why Yum! Brands shelled out a bunch of cash for Habit Burger, which is more-or-less breaking even and struggling to maintain (let alone) grow foot traffic. And "modern" fast food chains such as Raising Cane's and Chick-Fil-A have made growth in California their highest priority; Chick-Fil-A, for example, recently angered some of its Bible Belt base when it was revealed the chain donated to causes that it believed generated goodwill in places like California.

xxx

It's amazing how, over time, Carl Karcher's legacy has shined. People seem to forgot that Karcher's far-right views, which sparked large protests in Northern California and LA County, helped push the chain to the brink and largely forced him out (of course, the failed side business - e.g. Taco de Carlos - played a larger role). Heck, even when Orange County Airport opened in 1989, the Board voted for McDonald's proposal over Carl's Jr., with speculation that they were trying to avoid controversy (Karcher's support of pro-life politicians was sparking protests in the state's then-liberal cores). Puzder is a lightweight compared to Carl!

While Puzder helped fuel the misguided Hardee's purchase, arguably if it wasn't for this leadership, the chain would've failed. The oversized portions and sex-based advertising fueled a 20-year renaissance. Of course, in 2020 California, high-caloric, oversized portions and sex-based advertising is a no-go. So once again, the chain has to reinvent itself. Given that it's likely the chain will eventually try to spin off Hardees, and the lion's share of Carl's Jr. locations are in California, it's surprising they closed both the Carpinteria and Anaheim headquarters. Few people moved to Nashville, and I doubt many of the new hires understand the California market.

(Please don't infer any political beliefs from my posting ... for the record, I believe the media unfairly cast Puzder as a supervillian, making his positions more extreme than they were, but that doesn't mean I agree or disagree with his positions.)

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Re: The Decline of Carl's Jr,

Post by Alpha8472 » January 13th, 2020, 9:43 pm

Carl's Jr. has not come out with anything new to draw people in. The service is slow, the prices are high, and the restaurants look old.

The Beyond Meat is not bringing in vegetarians in droves. It is a novelty to try once or twice, but people tire easily.

The Fruit Loop donuts were mediocre and the restaurants had too many that went unsold.

Moving the offices out of California is simply a cost cutting move. The company needs new options and improvements to draw customers in.

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Re: The Decline of Carl's Jr,

Post by storewanderer » January 13th, 2020, 10:52 pm

I don't think politics have much to do with what has happened at Carl's over the past 10ish years.

There is another fast food chain based in Orange County with very defined politics, even bible sequence numbers on some of its food packaging, that is thriving. I think the average fast food customer just wants a reliable meal that is convenient to obtain and at a fair price and is not thinking much about the chain's politics. I am sure they lose a few customers over it, but the number of customers gained by running the locations well outweighs the losses from political disagreements.

Carl's went the wrong way when they started to refranchise corporate operated locations. Carls had a good base of corporate owned locations in SoCal, and also around Sacramento, and those locations ran really well. They were clean, well maintained, pricing was reasonable, food came out hot, and in a reasonable time period, and they executed the brand well and represented it well. Locations were regularly remodeled or refreshed and they had a good amount of labor in the locations (I won't forget the time I was eating in a location and it was not busy at all and an employee came out and started cleaning the lights above the tables).

Where I think Puzder went wrong (he saved Carl's as a chain from the brink and I think he did a good job running the chain most of the time he was involved, particularly given his background prior to getting involved with the chain in the 90's had nothing to do with fast food) was giving franchisees who were very greedy too much say in the menu decisions. For instance for a number of years they had no "Junior" burger offering (it was discontinued in the mid 00's and came back again in the early to mid 10's). This made it very difficult to go buy a small snack at Carls when the smallest burger available was the "big burger" or "famous star" which is about 1/4 lb of meat (slightly less) and at a high price point. This also made them very uncompetitive on kids meals since they only had that bigger burger size which was not appropriate for that menu item or price range.

Franchise locations seem to have a history of mixed results with Carls. Some franchisees execute well, others, not so much. But one theme has been very common with Carls franchisees over the years: very slow service, lukewarm food, and prices higher than other fast food chains. Again the experiences I had with their corporate locations were the opposite and always very positive.

One of Carls largest franchisees in AZ was run by relatives of Carl and the thing folded and went bust. That should have been an important market. Carls expanded into Texas initially with corporate locations and did well (enough to keep expanding and sell the locations to franchisees) but after franchising the locations out many of them closed rapidly due to poor operations.

This is not to say the entire franchise program with Carls is bad. Carls expanded organically into Salt Lake City under franchisees and seems to have done very well there. Those locations are run like corporate locations and seem to have been successful. I think Boise has done okay as well. Seattle they tried to enter with franchisees and seems to have had some problems, some of those like Marysville, WA went corporate again after some real problems but I think since refranchised.

Now that they have refranchised most of the locations (often to existing franchisees) this seems to be Carls now. Lukewarm food, very slow service, and absurdly high prices. Many locations in need of a refresh with a lot of old equipment, low staffing levels, and a general dead feel and vibe. Somehow they seem to really struggle to get food out at the right temperature.

This is a chain that used to be one of my favorites but I've given up on them.

Nothing beats a good BBQ Chicken.

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Re: The Decline of Carl's Jr,

Post by veteran+ » January 14th, 2020, 7:08 am

Yes Bagels, I am very aware of the "Putz" story.

It's truly not about him, it's about the historical leadership (perhaps current as well?) and their decisions in and out of the company.

I know most people don't care cuz it's about convenience, price and product regardless of consequences. Corporate success is still mostly amoral.

:|

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Re: The Decline of Carl's Jr,

Post by Bagels » January 15th, 2020, 2:19 am

storewanderer wrote:
January 13th, 2020, 10:52 pm
I don't think politics have much to do with what has happened at Carl's over the past 10ish years.

There is another fast food chain based in Orange County with very defined politics, even bible sequence numbers on some of its food packaging, that is thriving. I think the average fast food customer just wants a reliable meal that is convenient to obtain and at a fair price and is not thinking much about the chain's politics. I am sure they lose a few customers over it, but the number of customers gained by running the locations well outweighs the losses from political disagreements.

Carl's went the wrong way when they started to refranchise corporate operated locations. Carls had a good base of corporate owned locations in SoCal, and also around Sacramento, and those locations ran really well. They were clean, well maintained, pricing was reasonable, food came out hot, and in a reasonable time period, and they executed the brand well and represented it well. Locations were regularly remodeled or refreshed and they had a good amount of labor in the locations (I won't forget the time I was eating in a location and it was not busy at all and an employee came out and started cleaning the lights above the tables).

Where I think Puzder went wrong (he saved Carl's as a chain from the brink and I think he did a good job running the chain most of the time he was involved, particularly given his background prior to getting involved with the chain in the 90's had nothing to do with fast food) was giving franchisees who were very greedy too much say in the menu decisions. For instance for a number of years they had no "Junior" burger offering (it was discontinued in the mid 00's and came back again in the early to mid 10's). This made it very difficult to go buy a small snack at Carls when the smallest burger available was the "big burger" or "famous star" which is about 1/4 lb of meat (slightly less) and at a high price point. This also made them very uncompetitive on kids meals since they only had that bigger burger size which was not appropriate for that menu item or price range.

Franchise locations seem to have a history of mixed results with Carls. Some franchisees execute well, others, not so much. But one theme has been very common with Carls franchisees over the years: very slow service, lukewarm food, and prices higher than other fast food chains. Again the experiences I had with their corporate locations were the opposite and always very positive.

One of Carls largest franchisees in AZ was run by relatives of Carl and the thing folded and went bust. That should have been an important market. Carls expanded into Texas initially with corporate locations and did well (enough to keep expanding and sell the locations to franchisees) but after franchising the locations out many of them closed rapidly due to poor operations.

This is not to say the entire franchise program with Carls is bad. Carls expanded organically into Salt Lake City under franchisees and seems to have done very well there. Those locations are run like corporate locations and seem to have been successful. I think Boise has done okay as well. Seattle they tried to enter with franchisees and seems to have had some problems, some of those like Marysville, WA went corporate again after some real problems but I think since refranchised.

Now that they have refranchised most of the locations (often to existing franchisees) this seems to be Carls now. Lukewarm food, very slow service, and absurdly high prices. Many locations in need of a refresh with a lot of old equipment, low staffing levels, and a general dead feel and vibe. Somehow they seem to really struggle to get food out at the right temperature.

This is a chain that used to be one of my favorites but I've given up on them.

Nothing beats a good BBQ Chicken.
I don't believe politics is playing into the decline of Carl's Jr. status quo, or even within the past decade, but I do believe it played a role in the chain's demise into the 1990s - which ultimately caused it to reinvent itself. Chick-Fil-A and Hobby Lobby have been welcomed with open arms into region, so things have definitely changed since.

IMO, Carl's Jr's biggest challenge is that most of its locations are located in California, which has become a battleground for fast casual restaurants over the past decades. In-N-Out, Habit Burger, Farmer Boys, etc. have had explosive growth in the region; Chick-Fil-A, Raising Cane's and Five Guys entered the market and are posed to do the same. Whataburger was sold to a private equity firm last year, and is widely expected to target the California market. And that's just the burger joints... let's not forget about Mod Pizza, California Fish Grill, Dog Haus, etc.

Carl's Jr.'s prices are similar to these new chains, but its food is inferior. The goodwill it built from being the hometown chain was gone long before it relocated its (California) HQ from Anaheim to Nashville. Carl's Jr. isn't alone -- Burger King has shed dozens of locations in SoCal (the Chapman location in Orange -- site of a gruesome murder circa 1980 -- permanently closed a few days ago) and Wendy's (which was never nearly as big) has shrunk its footprint as well. Del Taco has acquired many of these shuttered properties, with the goal of eventually re-franchising them (but, like McD's, keeping the real estate).

The $5 "All-Star Meals," introduced in late 2017, were successful in creating excitement and driving traffic to the restaurants, but franchise owners claimed that regular patrons were trading down and thus it was cutting into profits. Many owners quickly stopped participating, and the meals were immediately dropped. The place-mats on the tray tables featured the meals for months after they were discontinued, hinting that the program was intended to last longer than it did. Stripped down versions of the meals were re-introduced last year, but at a higher price point and didn't draw anywhere near the excitement or foot traffic.

IMO, the "All-Star Meals" was a missed opportunity. I've never seen the books for any Carl's Jr., but I've seen plenty for McDonald's, Burger King and Wendy's. Many McDonald's owners I've worked with complained bitterly about the Company's promotions and pressure to keep Big Macs priced below $5 (many restaurants in SoCal have surpassed that price point within the past year), etc. And these owners aren't hurting for money. They seem to forget that it was the Dollar Menu that reversed McDonald's slide twenty years ago, and made it relevant to Millennial/Gen Z again. I'm certain many of Carl's Jr.'s owners feel the same way. I imagine that most owners at both chains are now second-generation family members, who take status quo for granted. The "All-Star Meals" could've made Carl's Jr relevant again, just like the Dollar Menu and 4-for-$4 did for McD's and Wendy's.

Regarding re-franchising... usually, when restaurants move from corporate to individual owners, things improve. Dramatically. I don't know which Carls Jr. were corporate owned and which ones weren't, so I can't comment on that. But many legacy Carls Jr. owners own the land, and these restaurants typically take up large parcels that are very valuable. Given that the interiors are often in poor shape, one has to wonder if they'll give up on the company and cash in on the real estate.

There's a legacy Carls Jr. at I-5/Lake Forest Drive. I tried to eat inside earlier this summer, but it smelled like sewage. I tried again recently, and it smelled as if they still hadn't fixed the problem (but given the cooler temperatures, it wasn't as noticeable.... I went to Farmer Boys up the street anyway). The three closest locations to this restaurant - all legacy locations - have all went out of business. I'd bet this one will meet a similar fate. There's a lot more valuable use for that property than how it's being used today (largely a haven for the local homeless population).

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Re: The Decline of Carl's Jr,

Post by Super S » January 15th, 2020, 6:31 am

Carl's Jr. is one of those chains that has just never stood out to me. I have had issues with ordering food specific ways, food not cooked properly, and prices that seem too high to me. Within the past year, a brand-new Carl's Jr. opened by me, but the location is terrible. The drive-thru setup tends to back up on to the main road at certain times of day, and when heading east, is hard to get back on the road due to the road design and curbs down the middle. It only really suits traffic heading west. I had thought a few times about trying their breakfast sandwiches, but due to the store's layout, can't stop there in the mornings.

I can't really think of a reason to go there when the food doesn't stand out and the location is not the best. These issues also existed with the local restaurant towards the end that used to occupy the site that was demolished for the Carl's Jr.

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Re: The Decline of Carl's Jr,

Post by pseudo3d » January 17th, 2020, 8:39 pm

Carl's Jr. expansion in Texas has certainly ended poorly, it started out well in the late 2000s/early 2010s but have now been shutting down stores left and right, and frankly, I can't really blame them. I visited one in Pearland, TX a few years back and was not impressed with it...service was REALLY slow (not the longest time to wait but certainly enough to make me remember the bad service), and when I finally got my hamburger, it wasn't anything special, except for the fact that they used sweet pickles (which only distracted from the rest of the sandwich, pickles are there to provide acidic counterbalance to the other mildly sweet ingredients like ketchup or bread).

In comparison, In-N-Out Burger is still growing, but that's only thanks to not getting carried away with location count and monitoring its other locations closely.

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Re: The Decline of Carl's Jr,

Post by storewanderer » January 18th, 2020, 11:15 am

Looking at Carl's Jr. recently I think their marketing efforts actually are going "the other way" to not appear as if they are some sort of Right wing operation.

They ran the CBD infused burger in Colorado for a period (maybe only a day, at a location).

They are also heavily pushing the "Beyond" meat products.

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Re: The Decline of Carl's Jr,

Post by Brian Lutz » January 18th, 2020, 9:01 pm

Everyone seems to be pushing the Beyond products now (Del Taco has been putting them in tacos), mostly because it seems to be trendy (and also because up until recently Beyond Meat didn't have approval to sell their products in supermarkets, only to foodservice customers.) Whether or not it ends up being just a fad or a viable long-term product remains to be seen though.

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