Can Carl's do a Quiznos?

RICHARD BLOOM

From Monday's Globe and Mail

"The $7.59 Burger" doesn't quite roll off the tongue but that's not stopping American fast-food chain Carl's Jr. -- famous for its mammoth Six Dollar Burger in the United States -- from entering the Canadian market.

Carpinteria, Calif.-based CKE Restaurants Inc. is planning to bring its Carl's Jr. chain to this country -- currently searching for franchisees, regional developers and possibly someone to hold the entire Canadian master franchise.

"We've always had an eye on the Canadian market . . . it's really our No. 1 priority [internationally]," Ned Lyerly, CKE's vice-president of international operations, said in an interview.

The company will first focus on urban areas in British Columbia, Alberta and Ontario, and hopes to start opening stores within 18 months. It "makes sense logistically" to have the bulk of its locations in the Western provinces because most of the chain's 3,200 American restaurants are peppered across the U.S. Southwest, Mr. Lyerly said.

"We think that our burger platform and our positioning as a premium-quality burger chain . . . certainly has a place, and we're looking forward to serving some young, hungry burger lovers out there."

Founded as a hot-dog cart operator by Carl Karcher in Los Angeles in the 1940s -- about 10 years before Ray Kroc opened his first McDonald's restaurant in Des Plains, Ill. -- CKE boomed in post-war California, transforming itself into a drive-in burger seller. Sixty years later, CKE has annual sales of $1.5-billion (U.S.) and 30,000 employees working under the Carl's Jr., Hardee's, Green Burrito and La Salsa Fresh Mexican Grill banners.

Canadians are expected to spend almost $14-billion (Canadian) at fast-food restaurants this year. Of that tally, 32 per cent will be spent at burger joints, according to market research firm NPD Group Canada.

Figures also reveal that while customer visits to fast-food eateries increased 2 per cent over the past year, servings of hamburgers declined 2 per cent.

"It's a tight marketplace right now, we're not seeing any gains in traffic," NPD vice-president Jim Robinson said. It will be interesting to see how McDonald's Restaurants of Canada Ltd. -- the largest burger seller in the land -- responds to Carl's Jr.'s entrance, he said.

"The question will be, can Carl's do a Quiznos? Because everyone thought Subway was invincible and nobody could eat more sandwiches, until Quiznos came in and introduced an upscale sandwich at a higher price point," he said.

"Are people willing to pay for a bigger burger in quick service? That is the key question."

As chains like McDonald's and Wendy's International Inc. have altered menus to include healthier items like salads, yogurt parfaits and grilled chicken sandwiches, CKE trumpets heftier products.

Carl's Jr.'s flagship sandwich is called The Six Dollar Burger -- a half-pound beef patty with cheese and mayonnaise. It also sells a double version of that burger that has one pound of beef. The burger will have a different name in Canada, Mr. Lyerly said, adding "we've got something up our sleeve . . . [but] it won't be The $7.50 burger."

Last year, CKE's Hardee's chain rolled out the Monster Thickburger, which includes two 1/3-pound patties of beef, four strips of bacon, three slices of cheese and mayonnaise on a buttered bun.

The chain is also known for racy advertising campaigns that target 18- to 34-year-old men -- the key burger-eating demographic.

CKE made waves in the U.S. advertising industry last week with a commercial starring Paris Hilton. With a rock version of I Love Paris in the Summer in the background, the ad features Ms. Hilton in a revealing black swimsuit, seductively washing a black Rolls Royce and biting into the chain's spicy new burger.

In 2003, Carl's aired a commercial with Playboy founder Hugh Hefner surrounded by scantily clad models. At the end, the announcer says: "Because some guys don't like the same thing night after night."

This isn't the first time CKE has done business in Canada. In 1997, the company paid Montreal's Imasco Ltd. $457-million for the Hardee's burger chain. Hardee's, however, is not allowed in Canada because of possible patent infringement with Cara Operations Ltd.'s Harvey's chain.

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