Friday, September 18, 2009

Andy Puzder's business geography lesson

The Midwesterner who heads the parent company of Carl’s Jr. and Hardee’s isn’t a fan of the West Coast, particularly Oregon and the concern’s home state of California. But it’s not personal, insists Andy Puzder. It’s business. The fast-food business.

“It depends on what state you are in,” he explained Thursday to financial analysts. Some are just easier than others for a restaurant chain to navigate these days, he explained.

Texas, for instance, is “more business friendly,” said Puzder, without explaining why. Not coincidentally, “we are targeting a large percentage of our growth in Texas,” he noted.

That rev-up in the Lone Star State will lessen the importance of California to the Carl’s Jr. burger chain, which was founded in the southern part of the state and still has the bulk of its units there. Puzder has remarked in the past that the state’s high unemployment, wheezing economy and taxing regulatory environment are a significant burden on Carl’s.

But at least it’s better than Oregon, he remarked. The state “has a higher minimum wage and a similar regulatory structure as California and also has a similar socialist type government,” he said, “so the business there actually can be as bad or worse than California. And I think their unemployment rate is higher.”

Arizona, said Puzder, is also a challenging market, partly because of the drop in tourism and “issues with immigration.”

In general, he said, “illegal immigrants leaving one state for another state will hurt the restaurant business in the state they leave, not because we can't employ them but where do you think those guys eat?”

In contrast to Carl's units in Oregon, stores in Washington State are doing fine, Puzder indicated. And Texas, where Carl’s now has some 25 stores?

“Texas is doing real well,” said Puzder.

“Meaningful geographical diversification in Texas should also improve our brands’ short and long-term prospects,” he noted.

Puzder came to CKE Restaurants, the parent of Carl’s Jr. and Hardee’s, via the latter brand, which is headquartered in St. Louis.
He was brought aboard as an attorney, but showed an aptitude and appreciation for the business.

But now, based outside Anaheim, he’s clearly not yet developed an affinity for its location.

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