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Puzder Assigned to Rescue Hardee's Hamburger Chain

Restaurants: Analysts warn CKE Restaurants' former general counsel has 'some heavy lifting ahead of him.'

June 15, 2000|GREG HERNANDEZ | TIMES STAFF WRITER

CKE Restaurants Inc. executive Andrew F. Puzder has been tapped to run the company's struggling Hardee's chain.

Puzder, 49, who for years served as attorney for CKE founder Carl Karcher, takes over a chain that has been a major drain on the Anaheim company's resources.

"He's got some heavy lifting ahead of him, because Hardee's is in a serious state of disrepair," said Allan F. Hickok, an analyst with U.S. Bancorp Piper Jaffray.

Puzder said his first objectives are to sell hundreds of company-owned stores to franchisees and to improve marketing for the chain, which CKE purchased in 1997.

Hardee's has been a bigger challenge than the company anticipated, because many of the restaurants CKE purchased had been poorly run, company executives said.

Puzder said CKE is not actively soliciting offers to sell the 2,774-unit chain, although the possibility Andrew F. Puzder has been considered as the company explores ways to reverse its sagging fortunes.

"It's not for sale, but at the right price anything is for sale," he said Wednesday.

Puzder replaces Tom Thompson, who remains CEO of CKE Restaurants and its Carl's Jr. chain.

Puzder joined CKE in 1997 as its general counsel and executive vice president. He has been in charge of franchising for Carl's Jr. since joining the company and undertook the same tasks for Hardee's a year later.

But some industry analysts question his credentials to run such a large chain, particularly one mired in problems.

"You look at his background, and he's not going to go in and get the operations revved up and turned around," said Johnson Rice analyst Mark Sheridan. "He's more of a conduit to [CKE's] stated goal of turning over the stores to franchisees. The problems Hardee's has are operational, and I certainly don't think he has a lot of experience in that regard."

Puzder, who has also served as chief executive of Santa Barbara Restaurant Group, insists he is up to the task.

"I know our company, and it's not going to take me six months to figure out where the men's room is," he said. "I'm very familiar with the problems, and I can make the decisions. . . . They're just going to have to wait and see."

CKE wants to convert Hardee's restaurants into what is internally referred to as the "Star Hardee's" concept, bolstering the menu with Carl's Jr.-type charbroiled burgers as well as offering table service.

The company plans to sell 500 company-owned Hardee's restaurants to new or existing franchisees, a move expected to generate $150 million in revenue for CKE, the nation's fourth-largest hamburger chain.

CKE is coming off a disappointing year. Same-store sales at company-owned stores--a key barometer of company growth--were down 5% at Hardee's and 3% at Carl's Jr.

CKE's stock, which has lost nearly 75% of its value in the past year, closed Wednesday at $3.31, off 13 cents a share, on the New York Stock Exchange.

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