CKR reported its second period of increasing 2-year same-store sales trends at both its Carl’s Jr. and Hardee’s concepts in 2Q09. Blended same-store sales were up 5.2% in period 6 with Carl’s Jr. up 4.9% and Hardee’s up 5.7%. The company does not breakout out the price versus transaction contribution on a monthly basis, but prices were up 4% in 1Q09 and the company stated on its 1Q09 conference call that it would take price increases as necessary to combat rising commodity costs.
- CKR’s management has chosen not to react to today’s tough environment with “margin impairing low prices and discounting” and addressed on its last conference call its concerns around raising prices too much at the expense of growing traffic. I am encouraged to see that management is acknowledging the risks of both discounting and increasing prices and the impact both actions can have on margins and driving increased traffic. If anything, the company is wavering closer to the risk associated with increasing prices too much, but we will not know the real traffic impact until the company reports its 2Q09 results. That being said, comparable sales results are trending up in 2Q09, on tougher comparisons, which should help margins in the quarter at the same time the company is lapping the initial spike in food and packaging costs that it experienced last year in 2Q.