Top 250 Franchise by Entrepreneur – Rank no.47 – Carl’s Jr. Restaurants – US
Products & Services: Hamburgers
Number of Locations: 1,400
Total Investment: $1.2M – 1.74M
Began Franchising: 1984
About Carl’s Jr. Restaurants
In 1941, Carl N. Karcher and his wife Margaret took $15 in savings, borrowed another $311 on their car, and bought a hot dog cart in Los Angeles. They grew their business to four carts before opening the first Carl’s Drive-In Barbecue in 1945 and adding hamburgers to the menu. The first Carl’s Jr. locations– so-named because they were smaller than the drive-ins– opened in the 1950’s. Today the company has locations throughout the West and Southwest, and is known for menu items such as its Six Dollar Burgers.
Alaska, Arizona, California, Colorado, Hawaii, Idaho, New Mexico, Nevada, Oklahoma, Oregon, Southwest, Texas, Utah, West, Washington.
Franchisor is seeking new units in Africa, Asia, Australia/New Zealand, Canada, Central America, Eastern Europe, Mexico, South America, Western Europe.
Startup Costs, Ongoing Fees and Financing
Franchise Fee: $35,000
Ongoing Royalty Fee: 4%
Term of Franchise Agreement: 20 years, renewable
Net Worth: $1,000,000
Liquid Cash Available: $300,000
100% of all franchisees own more than one unit. Absentee ownership of franchise is NOT allowed..
|FINANCING TYPE||IN-HOUSE||THIRD PARTY|
How This Franchise Supports Franchisees
Franchise Ranking History
The 2006-present logo
|Type||Wholly owned subsidiary|
|Headquarters||Carpinteria, California, U.S.|
|Number of locations||1,369 (January 2013)|
|Key people||Carl Karcher, Margaret Karcher, Founders|
Carl’s Jr., an American-based fast-food restaurant chain, predominantly operates in the Western and Southwestern states. As of 2013 it has started expanding or is already in Canada, Dominican Republic, Brazil, Puerto Rico, Malaysia, Denmark, Costa Rica,New Zealand, Australia, Singapore, Russia, Vietnam, Thailand, Panama, Turkey and China. CKE Restaurants, Inc owns the chain.
Carl Karcher founded the predecessor of Carl’s Jr. in 1941; he jump-started his operations with the opening of his first restaurant, a sit-down full-service location called Carl’s Drive-In Barbeque. As this grew wildly successful, he decided to open up a chain of smaller restaurants called Carl’s, with more limited menus. In 1954, the chain was renamed Carl’s Jr. and the fast-food chain took off. In combination with its sibling restaurant-chain Hardee’s, Carl’s Jr. comprises the fifth-largest fast-food chain in the United States after Subway (33,000+ locations), McDonald’s (32,000+ locations), Burger King (11,500+ locations) andWendy’s (6,700+ locations).
In 1941 Carl Karcher and his wife, Margaret Karcher (née. Heinz), borrowed $311 on their Plymouth automobile and purchased a hot dog cart which they operated at 1108 North Harbor Boulevard in Anaheim, California. One cart grew to four, and in less than five years, they owned a restaurant with hamburgers on the menu in Anaheim, California calledCarl’s Drive-In Barbeque. In 1956, Karcher opened the first two Carl’s Jr. restaurants in Anaheim, California and Brea, California; so named because they were a smaller version of his drive-in restaurant. The restaurant chain was characterized by its fast service, table service a standard feature, and its logo, the bright yellow five-pointed Happy Star. CKE’s other chain, Hardee’s, now shares this logo, after a post-merge rebranding.
In 1981, with 300 restaurants in operation, Carl Karcher Enterprises became a publicly held company. In 1988, Carl and his family were accused of insider trading by the Securities and Exchange Commission. They had sold large quantities of stock before the price dropped. Carl agreed to a settlement with the SEC and paid more than half a million dollars in fines.
The late 1980s and 1990s brought trouble early on and success later. Carl’s Jr. chains had struggled to gain success in Arizona and Texas, perhaps diminishing hopes of expansion to other states, though later states like Nevada, Oregon and Washington proved successful. During the 1990s Karcher and the Board of Directors began clashing over marketing and business practices, including the chain’s attempt at dual branding with such chains as The Green Burrito, which led to Karcher’s ousting as Chief Executive Officer in 1993. Soon after, the Board of Directors took a new approach by cutting the menu, lowering prices, and introducing a new marketing campaign which targeted younger urban and suburban males. During this time, commercials for Carl’s Jr. featured an animated caricature of Carl Karcher and the chain’s mascot, Happy Star.
During the mid-1990s, Carl’s Jr. unveiled its “If it doesn’t get all over the place, it doesn’t belong in your face” campaign which featured younger people eating Carl’s Jr.’s burgers with ketchup and juice dripping from the burger and onto clothes and other areas.
Carl’s Jr. expanded, and currently has more than 1,000 locations in 13 U.S. states, as well as in Mexico, Costa Rica, Singapore and Russia. In 2007, five new branches were opened in Kuala Lumpur, Malaysia, located at 1-Utama Shopping Complex, Midvalley Megamall, Sunway Pyramid, Mines Shopping Fair and the new Pavilion KL Shopping Complex is the first branch they opened for their comeback. In total, there have been seven branches in Malaysia. The Masjid Jamek branch, Ampang Park branch and the Lake Gardens branch were closed in 1998.
Featured food items include the Double Western Bacon Cheeseburger and the Six Dollar Burger, so called because it is claimed to be of the same quality of a burger one would pay six dollars for in a sit-down restaurant. In May 2005, Carl’s Jr. introduced “The Spicy BBQ Six Dollar Burger” in a controversial advertising campaign (see below).
In 1997, CKE Restaurants acquired Hardee’s, a restaurant chain with 2,500 locations in the Midwest, South and East Coast regions. Hardee’s restaurants are gradually being converted to be more like Carl’s Jr. with some of the same menu items and even adopting the same star logo. The chain opened at least one restaurant in a former Rally’s location in Hollywood with a drive-thru lane, walk-up window and no interior seating. This location carried the branding Carl’s Jr. Jr. This restaurant operated for over 10 years, but as of 2011 has been replaced by a Chick-Fil-A.
Carl’s Jr. in Denton, Texas opened on August 12, 2009. This restaurant is on Loop 288 about two blocks from Golden Triangle Mall.
In 2002, CKE Restaurants, Inc. acquired Santa Barbara Restaurant Group (the parent company of the Green Burrito brand). Some Carl’s Jr. stores are now co-branded as Green Burrito locations. Three Carl’s Jr. locations in downtown Los Angeles serve beer: Macy’s Plaza on 7th & Flower, California Mart at Main & Olympic, and Citigroup Plaza at 5th & Flower.
In 2004, Carl’s Jr. was portrayed in the film Idiocracy as the dominant fast food franchise in a dystopian future.
In October 2006, Carl’s Jr. and sister-company Hardee’s introduced a promotion with The Palms Casino Hotel to sell a $6,000 Combo Meal exclusively at The Palms. This meal includes the signature Six Dollar Burger, fries, and a $6,000 bottle of French Bordeaux. This meal is available on the Palms room service menu.
In 2008, Carl’s Jr. expanded into American Samoa, alongside fellow competitors McDonald’s, KFC, Pizza Hut and Checkers.
On January 11, 2008, Carl Karcher, the founder of hamburger chain Carl’s Jr., died at the age of 90. A spokeswoman for CKE Restaurants said Mr. Karcher suffered from Parkinson’s disease and was being treated for Parkinson’s-relatedpneumonia when he died at St. Jude Medical Center in Fullerton, California. Many Carl’s Jr. restaurants flew their flags at half-staff in memory of Karcher.
In February 2009, CKE Restaurants announced that Texas would be their top growth market for the next five years. Franchisee deals were made with two companies to open Carl’s Jr. locations in the Dallas/Fort Worth and Houstonmarkets. The franchisees plan to open 193 new restaurants in Texas over the next 10 years. Carl’s Jr. had initially expanded into Texas in 1984, but due to the poor state economy most locations never met sales expectations. By 1987, Carl’s Jr. had temporarily pulled out of Texas entirely closing approximately 36 locations. Another attempt to bring the chain to Texas occurred in the 1990s.
January 12, 2010 CKE announced deal to expand into the Houston metropolitan area, with the first two locations opening along Highway 6 on the west side. In June 2011, the restaurant chain open its first Canadian location in Kelowna, British Columbia. Since then, locations in Metro Vancouver have been opened; 25 are intended for that region.
In several Western U.S. locations, Carl’s Jr. parent CKE has begun operating co-branded restaurants with its Green Burrito group. This is a similar strategy used by Yum! Brands with its KFC, Pizza Hut, Taco Bell, A&W Restaurants, and Long John Silver’s concepts to help expand brands without the additional expense of new buildings and land.
Taco de Carlos was a fast-food Mexican restaurant chain that spun off from Carl’s Jr. In 1972 Carl Karcher Enterprises decided to get in on the Mexican fast-food business because it was a new phenomenon that was proving successful with Taco Bell going public just a few years earlier. Taco de Carlos offered menu items not found on Taco Bell, like the California Burrito, with the green chili, and the Machaca Burrito. It also served up the standard Carl’s Jr. burgers. Some of the Taco de Carlos locations opened next door to a Carl’s Jr. By the end of the 1970s Taco de Carlos had 17 locations. Carl Karcher Enterprises could never muster up enough business attention for Taco de Carlos, and the taco chain found itself in financial distress. Meanwhile, the bigger names like Taco Bell, Del Taco, Naugles, and Pup-n-Taco were enjoying success. In the early 1980s Carl Karcher Enterprises sold off most of its Taco de Carlos locations to Del Taco, and the rest to other buyers. In 1988, after strengthening the Carl’s Jr. brand, they decided to try their luck again with fast-food Mexican fare, Italian fare, and even some locations began a trial run of more gourmet products including but not limited to restaurants in the local areas. Most restaurants broke off of Carl’s Jr and struck up a co-branding deal with Green Burrito.
Paris Hilton campaign
In May 2005, Carl’s Jr. introduced its “Spicy BBQ Six Dollar Burger” in a television advertisement created by Mendelsohn Zien Advertising, which features Paris Hilton in a provocative swimsuit soaping up a Bentley automobile and crawling all over it before taking a big bite out of the burger and giving her signature phrase, “That’s hot.”
Carl ‘Jr. opened its first store in Brazil on November 29, 2012 at Guarulhos International Airport in São Paulo, and in 7 years plans to open 25 more stores next to the traditional Brazilian restaurant, the Frango Assado “Roast Chicken”, which has 25 stores located in two states, on highways, airports and shopping center, which belongs to the group MIC.
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Carl’s Jr re-entered the Thailand market after withdrawing a decade earlier. Carl’s Jr’s first Thailand loation opened in June 2012 at the Central Festival Pattaya mall located between Pattaya Second and Beach Roads. The second location opened on September 28, 2012 on Sukhumvit Soi 24 in the 24th Avenue Mall, part The Davis Hotel complex, not far from Rama 4 Road in the Khlong Toei district of Bangkok. The third location will open at Thaniya Plaza on Silom Road, near the infamous Patpong Road. Carl’s Jr Thailand is making a comeback with an aggressive business plan aimed at having 25 restaurants in five years.
The R&R Restaurant Group holds the rights to operate Carl’s Jr in Thailand and plans to operate five Carl’s Jr stores by year-end and nine more next year. On September 29, 2012 the Sukhumvit Soi 24 location had a promotion where the first 50 people in line when the restaurant opened at 11 a.m. would eat free for a year. People lined up as early as 4 a.m. and many more people showed up than the company expected. The lucky first 50 guests were given a coupon book which gives them a free Carl’s Jr. hamburger each week for one year (each coupon features a different sandwich). Each also received a t-shirt declaring them one of the first 50 who eat free for a year (photos on Carl’s Jr Thailand’s Facebook page). The opening weekend of the first Bangkok location was a roaring success with lines streaming out the door of the mall and waits up to 30 minutes to order. On Sunday of that weekend, the restaurant ran out of beef for a short while and the following Monday both coke machines broke down due to heavy use. Carl’s Jr. Thailand apologized for these hiccups on their Facebook page.
Around 2009, Carls Jr. signed a deal with Tuan V. Do and Luu Tuyet Mai, CEO of MESA Company owned by them; to open the very first 25 restaurants in Vietnam. The Grand Opening in Ho Chi Minh City was in April 2010. Their first restaurant opened in the Vincom Centre, Ho Chi Minh City. A further restaurant located in Phu My Hung, District 7. Yet another is located at Pico plaza on Cong Hoa street.
Since opening their first Russian restaurant in 2006, Carl’s Jr. has launched and continues to operate at least 28 locations in St. Petersburg, Novosibirsk and Nizhnevartovsk, with plans to further expand in the Russian market.
In Panama and Costa Rica
Carl’s Jr. opened its first restaurant in New Zealand in October 2011, in Takanini. Its first television advertisement was banned for being “exploitative and degrading”. In February 2013 the chief executive of Carl’s Jr’s parent company CKE Restaurants said he would like to thank whoever it was that banned them, as it brought the chain exposure it could not otherwise have afforded.
On April 5, 2013 Carl’s Jr. announced a partnership with Danish supermarket chain Bilka. As a result of the partnership Carl’s Jr. will open stores inside some of the Bilka supermarkets located across Denmark. The first restaurant will open in the city of Næstved (about 80 km. south of the capital) in the autumn of 2013  It will open on October 10, 2013 in Næstved.