CKR – Taking the High Road on Discounting, But For How Long?

CKR reported its period 9 same-store sales results this morning. Carl’s Jr.’s comparable sales trend improved sequentially to up 1.6% from period 8’s 0.1% decline while Hardee’s slowed slightly to up 0.8% from 1.1%. Both concepts slowed, however, on a 2-year basis in both period 8 and period 9 (the first two periods of 3Q09) and have been declining since period 6 in 2Q09. This is somewhat concerning because both Carl’s Jr. and Hardee’s are facing more difficult comparisons in period 10 to close out the quarter and Carl’s Jr.’s tough comparisons continue into 4Q09. Management attributed its slowing trends in both period 8 and 9 to overall discounting, saying, “We believe competitors' aggressive discounting continued to negatively impact both brands sales results.”
  • It is interesting to note that CKR management made changes to its “Why Invest in CKE” section of its investor presentation highlighting the company’s defensive nature. The company supports this idea that it is well positioned to withstand tough economic times by pointing out that “fast food is not a luxury item” and “people are going to continue eating fast food.” The new presentation also includes a chart that looks at Carl’s Jr.’s same-store sales performance relative to overall QSR in other difficult times (attached below).

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