CKE Restaurants, parent company of Carl’s Jr. and Hardee’s, today announced the opening of its 1,000th international restaurant. The milestone restaurant is located in Madrid, Spain, and comes amid an ambitious international expansion strategy that focuses on Europe, the Americas, Asia, the Middle East, Australia and more.
In total, Carl’s Jr. and Hardee’s have more than 3,900 restaurants in 44 U.S. states and 40 countries and U.S. territories. The company will enter Peru this year, making it 41 countries.
CKE has had an international presence for 40 years, but expansion has accelerated in recent years. In fact, about 60% of CKE’s development from the past 10 years has come from international markets.
For CEO Ned Lyerly, this milestone is a “matter of pride” for the company, and for him personally. Lyerly has been with the company for most of those 40 years, with roles that included overseeing the international business and global franchise development efforts.
“I was there when we hit 100 and 500 and now 1,000. This really puts us into the top tier of chains that have an international presence. It’s a small list and it’s one of the attractive aspects of our business,” Lyerly said during a phone interview last week.
Though it took 40 years to hit 1,000, CKE’s goal is to double that in just five years. For Lyerly and Mike Woida, president of CKE’s International Division, this accelerated pace makes plenty of sense now, despite the lingering global pandemic. The company has experienced a double-digit compound annual growth rate for the past 10 years in its international business, which has both boosted brand awareness and the company’s dexterity in scaling.
Further, while Covid-19 may have slowed the pace a bit, it has been favorable for quick-service brands that never had to shut down their businesses, including both Carl’s Jr. and Hardee’s.
“We’re still struggling in some markets, but the pandemic supercharged our performance in a lot of markets. Our existing franchisees are seeing sales and traffic growth and they want to build more restaurants. Prospective franchisee candidates are excited about how the whole segment is performing and they want to be a part of that. They’ve seen the vulnerability of limited-channel casual concepts, so they believe QSR is a great investment, especially in markets with a lot of room to grow,” Woida said.
Priority markets as this development continues include those where CKE’s brands are already well penetrated. Mexico, for example, currently has about 300 restaurants with plans to get to 500, while the Middle East currently has about 400 with plans to reach 600 to 700. Woida said there is a “huge white space” in Africa and China as well.
“We’re building on the scale we already have. We think 70% of our growth in the next 1,000 restaurants will come from markets we’re already in–where the heavy lifting has already been done for awareness, supply chain and more,” Lyerly said.
That said, the company is also hoping to enter Germany and the UK in 2022, in addition to Peru this year.
Leveraging best practices
The pandemic may have been an advantage for the QSR segment, but that doesn’t mean CKE isn’t making changes to meet demands expedited by the crisis. Currently, for example, about 35% to 40% of its international restaurants include a drive-thru (versus 99% of its domestic business). The company will prioritize drive-thru real estate moving forward.
“We’ll see a shift as markets are now evaluating the importance of off-premise channels,” Lyerly said. “There are some markets where that doesn’t make sense, like Shanghai, but off-premise is what’s so exciting and attractive about the QSR segment and our brands have been adept at optimizing the business through those channels.”
That includes delivery, which is as high as 60% of the sales mix in some markets that have had delivery in place for decades. CKE has been able to translate learnings from those markets in the past year as delivery has grown exponentially in the U.S.
This illustrates a major advantage to scaling overseas. Like other restaurant chains with a global presence, CKE stands to benefit from its international expansion simply by leveraging best practice sharing–on real estate, technology, menu innovations, marketing, operations, just about everything.
“We’re at a position where best practice sharing is happening and that’s been really valuable. We’ve evolved our company from a domestic business with an international division to a global operation,” Lyerly said. “We have taken a lot of learnings from different markets operationally this year, especially those with high delivery business.”
Lyerly expects the off-premise boom to continue even as vaccinations roll out. As such, CKE is planning new facility designs around the world that focus on omnichannel access, including drive-thru, curbside, pickup and delivery. Prototypes are already under development in the Middle East and Australia and will be translated elsewhere, including the U.S., which will debut a new prototype in Nashville before the end of the year.
“The nice thing about having a big international business is it gives us the ability to freshen up our brand in ways we’ve seen and are able to bring back into domestic markets–to those legacy assets–and decide what’s the best foot forward,” Lyerly added.
The best foot forward for the domestic business will also entail quite a few changes to the chains’ digital business, which Lyerly admits was behind its peers. The company plans to launch a new app in the next month, including a new loyalty program, which will accelerate its data and analytics platform to better build one-to-one relationships with consumers.
“This is huge for us. One of the things for us coming out of the initial stages of the pandemic is to seize on the opportunity to focus on our growth transformation. We’ll focus on growth enhancements that roll into the remodel program. Our future remodels will emphasize off-premise consumption, with dual drive-thrus, curbside order-ahead, engagement facilitations,” Lyerly said.
This comes as the domestic business is setting record same-store sales growth, he said. The idea of having momentum both at home, while pressing the gas and leveraging best practices from overseas is particularly exciting for the 37-year veteran of the company.
“We have built depth in our international team and awareness and overall capabilities. We’re very focused on accelerations and we have a ton of momentum. There’s high demand around the world for premium quality, California-style burgers,” Lyerly said. “Doubling our international business will be amazing and I’m enjoying the ride.”