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EARNINGS

Karcher Enterprises More Than Triples Its Earnings

September 15, 1987|MARY ANN GALANTE and JAMES S. GRANELLI

Reaping the benefits of a two-year "back-to-basics" program, Carl Karcher Enterprises Inc. of Anaheim reported Monday that its earnings more than tripled during its fiscal second quarter.

Karcher Enterprises, the owner and franchiser of 436 Carl's Jr. restaurants, posted a $5.5-million profit in three months ended Aug. 10, up from $1.5 million a year ago. Sales rose 15% to $87.6 million from $76.1 million in the same period last year.

Net income in the 1987 quarter included $1.5 million in tax benefits.

For the first six months of fiscal 1987, Karcher Enterprises reported earnings of $9.7 million, more than four times the $2.4 million earned in the same period last year. Six-month revenues rose 15% to $192.2 million from $166.6 million last year.

Donald F. Karcher, president and chief operating officer, said average restaurant sales throughout the chain are up 24% from last year.

The latest results are among the company's best quarterly earnings and a clear sign that a companywide austerity program is working, said Loren Pannier, chief financial officer.

After hitting a peak in mid-1984, Karcher Enterprises began an ambitious expansion program only to run into problems when the fast-food industry entered a continuing slump.

Over the past 29 months, the company has slashed its building program and scrapped plans to become a national chain, opting instead for West Coast growth. At its annual meeting in April, Karcher Enterprises touted how it had gone "back to basics" by emphasizing burgers, Cokes and low prices.

The latest quarterly results show that "our plan is working," Pannier said Monday. He cited enthusiastic consumer response over the past three months to a widespread remodeling program plus the introduction three months ago of new menu items, including an all-you-want beverage bar.

"We have a lower revenue base, but we're much more profitable," Pannier said. The Southern California market where Karcher units have been remodeled report significantly higher percentage growth than areas with older units, he added.

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