CARPINTERIA Calif. Restaurant margins held steady at 19.9 percent for corporate Carl’s Jr. and Hardee’s restaurants, even as sales continued to slow during the chains’ May 18-ended first quarter.
Parent company CKE Restaurants Inc. said Wednesday that the Hardee’s chain drove the blended margin result with reduced food, packaging and labor expenses. Carl’s Jr. posted declining margins, but mainly because of reduced same-store sales that CKE said was a result of California’s economy. About 362 units, or 87 percent of corporate locations in the Carl’s Jr. system, are based in California, where the economy has been particularly hard hit by housing sectors woes and high unemployment rates.
“It has never been my goal to get excited over reporting flat earnings or margins,” Andrew Puzder, CKE’s chief executive, said in a statement. “However, holding operating income and company-operated restaurant-level margin steady in this economy and doing so while facing the heavy discounting taking place in the fast-food and casual-dining sectors … is a testament to our management team and the strength of our brands.”
For the first quarter of CKE's fiscal year 2010, net income was $14.4 million, or 26 cents per share, compared with $16.6 million, or 31 cents per share, in the same quarter a year ago.
CKE corporate revenues fell 4 percent to $446.8 million from $466.2 million last year.
Officials said increased interest and income tax expenses were partially to blame for its reduced bottom line. The company reported a $1.8-million increase in interest expense due to charges related to interest rate swap agreements.
As previously reported, same-store sales rose 2.5 percent at Hardee’s corporate restaurants and the average unit volume for the chain topped the $1 million mark to reach $1.01 million, a brand record.
Carl’s Jr. same-store sales fell 5.1 percent. The quarterly average unit volume totaled $1.5 million for the quarter, down by about $7,000 from the same quarter a year ago.
During the quarter, the company and franchisees opened 29 new restaurants, including 12 internationally, bringing the end-of-quarter unit count to 1,205 Carl’s Jr. locations and 1,915 Hardee’s units.
Contact Lisa Jennings at [email protected].