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).