The Business Herald’s markets and banking reporter.

Carl's Jr winning full-price custom

While many fast-food outlets are discounting, the new arrival is expanding and keeping its prices steady.

Shares in Restaurant Brands closed down 1c to $2.84 last night. Photo / Stephen Parker
Shares in Restaurant Brands closed down 1c to $2.84 last night. Photo / Stephen Parker

In the ultra-competitive fast-food environment, Carl's Jr is providing Restaurant Brands with a way to avoid the heavy-discounting trap that has been plaguing the market, says chief executive Russel Creedy.

The Auckland-based company opens its sixth Carl's Jr restaurant today at the Auckland Airport shopping centre.

Restaurant Brands, which also operates KFC, Pizza Hut and Starbucks in New Zealand, will open its 90th KFC store in the same area on October 23.

Creedy said Carl's Jr - which arrived in this country in 2011 and has a reputation for racy advertising featuring young models such as Kate Upton - was new and unique and did not rely on heavy discounting to keep the cash registers clanging.

"I don't think Carl's Jr is a brand to be discounted," he said.

Some of Carl's Jr's 12 New Zealand stores - six of which are operated by Forsgren NZ, a company part-owned by former All Black Michael Jones - have been breaking world sales records for the brand that operates in more than 20 countries.

Restaurant Brands reported sales of $4.3 million for its Carl's Jr stores in the 16 weeks to September 9, up from $2.3 million in the previous quarter.

Other fast-food brands such as McDonald's, Burger King, Pizza Hut, Dominos and KFC have been placing a lot of focus on offering cut-price deals to drive sales.

Creedy said the high levels of discounting would persist for another year or so, but companies were beginning to wake up to the reality of the "discount at any cost mentality".

"You've still got to make a profit at the end of the day," Creedy said. "You've got to pay rent and pay wages and you can't discount yourself into oblivion."

He said the Auckland Airport shopping centre was a fast-growing area that provided "great brand visibility" for Restaurant Brands, which has invested $4.6 million into opening the new KFC and Carl's Jr stores.

The two stores were not expected to be in competition with each other, Creedy said.

"Carl's Jr and KFC seem to live very harmoniously next to each other."

Creedy said the KFC outlet inside the Auckland Airport international terminal was owned by HMSHost, a company that operates retail businesses in airports around the world.

Restaurant Brands would open Carl's Jr stores in Hastings and Otahuhu before Christmas, he said. It plans to establish up to 60 Carl's Jr stores nationwide.

Shares in Restaurant Brands closed down 1c to $2.84 last night.

- NZ Herald

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