Carl's Jr rollout hit by glitches

05:31, Jun 26 2014

Restaurant Brands says its fledgling Carl's Jr hamburger chain will become a "cash flow powerhouse" once supply chain problems have been ironed out.

Speaking at the listed cafe and fast food company's annual general meeting in Auckland today, chairman Ted van Arkel said most shareholders would be satisfied with the return on their investment over the past year. 

"Restaurant Brands is a business going from strength to strength," Arkel said.

"We have the core competencies, the financial muscle and scale to capitalise on any opportunities that do arise."

In May, Restaurant Brands - which also operates the Starbucks, KFC and Pizza Hut chains in New Zealand -reported that its total sales had increased by 5.9 per cent to $77.7 million during the first quarter of its 2015 financial year.

All four brands were recording sales growth, but chief executive officer Russel Creedy conceeded that the rollout of Carl's Jr restaurants had been problematic.


Creedy said there had been "delays in getting local suppliers up to speed" with the stringent quality control standards that were imposed by the US-based franchisor.

"Carl's Jr is probably not where we would like it to be at the moment," he said.

Creedy said that quality assurance staff from the US had been working with local suppliers to solve the problem.

"We're probably only about halfway through this process, but give us about 12 months and we'll see some encouraging numbers," he said.

Restaurant Brands was planning to build about four or five Carl Jr restaurant a year until the chain reached 50 to 60 outlets across the country.

Responding to one shareholder who questioned why Restaurant Brands was not operating any of its franchise brands in central Auckland, Creedy replied that the company was "looking around" but had struggled to find suitable sites.

"Auckland city central has been a pain in the backside as far as we are concerned.

"We have been desperately trying to find locations but it just hasn't worked for us," Creedy said.

Restaurant Brands was also still absent from central Christchurch, following the earthquakes there.

The company had lost four stores in Christchurch, three Starbucks cafes and a KFC outlet.

Creedy said four potential sites had been viewed in the last couple of months, of which two sites would probably be suitable.

Restaurant Brands was also "in a dialogue" with the US-based franchisor of Taco Bell to bring the chain to New Zealand, but no decision had been made.

Creedy said Restaurant Brands was aware of the success of the Starbucks "secret menu" social media-only marketing campaign in the US, but had not decided whether to replicate it in New Zealand.

Restaurant Brand shares traded today at $3.34, up 21 per cent on their price a year ago.