CKE Restaurants, Inc.

¤
CKE Restaurants, Inc.
chain specializing in hand-crafted
Mexican favorites and appealing to
health-conscious individuals with
discriminating tastes.
LA SALSA A fast-casual restaurant
HARDEE’S The popular quick-service sandwich
restaurant chain in the Midwestern and
Southeastern U.S. known for premium
charbroiled, Angus beef “Thickburgers™” and
innovative breakfast entrees.
GREEN BURRITO A dual brand
with Carl’s Jr., this quick-service
Mexican brand offers customers
greater variety and taste.
CARL’S JR. The place to go in the Western U.S. for
premium quality, juicy and delicious charbroiled
burgers and chicken sandwiches—featuring a signature
menu that includes the “restaurant-quality” line of
Angus beef Six Dollar Burgers™.
®
®
®
®
®
KEEP US
®
ALL THE RIGHT INGREDIENTS >
COOKING
TODAY’S CONSUMER HAS AN ABUNDANCE OF OPTIONS
WHEN DINING OUT. REMAINING TOP-OF-MIND ISN’T
EASY. AT CKE RESTAURANTS, WE TRY NOT TO FOCUS
ON THE COMPETITION. INSTEAD, WE CONCENTRATE
ON DELIVERING THE RIGHT INGREDIENTS TO KEEP
OUR GUESTS COMING BACK FOR MORE.
FELLOW SHAREHOLDERS
PROGRESS: REVOLUTION OR EVOLUTION? At CKE Restaurants, we believe it is both. Progress requires swift, dramatic
action and a vision to effect continuous change that, over time, can yield powerful results. To be successful, we must do more
than adapt to the competitive environment and consumer trends. We must set the standard to which others aspire—in our
guest service, in our operations, and in our food offerings.
By definition, fiscal 2004 was indeed a year of progress. That progress was evolutionary at Carl’s Jr.®, where our unflagging
focus on the “young, hungry guy” resulted in a highly successful marketing campaign aimed at solidifying our leadership
position among this important demographic. This in turn led to strengthening sales trends, particularly during the last nine
months of the year. At Hardee’s®, the pace of progress was more revolutionary, in keeping with the fundamental changes
we have made to reverse the fortunes of this once-failing brand. Improvements in same-store sales, average unit volumes and
consumer perceptions at Hardee’s continue to give us reason to believe that the Hardee’s “Revolution” is working.
Even so, fiscal 2004 was not without challenges. During the first half of the year, the quick-service restaurant (QSR) industry
experienced an extremely difficult competitive environment—with continued fallout from the aggressive discounting pursued
at major national chains initiated during the prior year. This was compounded by a weak overall economy and severe winter
weather conditions early in the first quarter. In the latter half of the calendar year, consumer confidence picked up—and for
some, including us, so did sales. However, beef and other commodity prices also spiked, which impacted restaurant-level
margins and profitability. At CKE, we weathered the storm by remaining focused on our strategy, which includes an emphasis
on high quality, “craveable” fare; marketing that speaks to the tastes and lifestyles of our target demographic; and operational
improvements designed to exceed our guests’ expectations in the areas of customer service and facilities.
THE HARDEE’S “REVOLUTION” Fiscal 2004 was the year of the Hardee’s “Revolution”—a new menu and marketing
strategy designed to reverse the consumer perception of Hardee’s as the discount-variety brand of fast food, and reposition it
as the premium burger specialist among quick-service restaurants in the Midwestern and Southeastern U.S. At the heart of the
Revolution is the Thickburger™ menu—a streamlined menu centered around 1/3-pound, 1/2-pound, and 2/3-pound Angus
beef burgers. In addition to using a higher grade of beef, we improved virtually all of the ingredients in the burgers. We knew
these burgers brought a huge improvement in taste over previous offerings, but even we were surprised at just how big a splash
we made when the Hardee’s Thickburger began winning “Best Burger” awards in many markets. Publications such as the
Maryville Daily Times (Maryville, Tenn.), MetroBeat (Greenville, S.C.), and the Morristown Citizen Tribune (Morristown, Tenn.)
all bestowed “Best Burger” honors on the Thickburger. It also won the 2003 Better Burger Contest in Madison, Wisconsin, and
was named Best Burger in Nashville by The Tennessean. Our wins were followed up with first, second and third place finishes
in citysearch.com’s Best of Citysearch competition. The Thickburger received “Best Burger” accolades in St. Louis, Indianapolis
and Jacksonville, followed by second-place honors in Charlotte and Louisville and third-place finishes in Atlanta, Kansas City
and Tampa Bay. The most gratifying aspect of these third-party endorsements was that our competition in these categories was
comprised mainly of one-of-a-kind restaurants with higher price points and a more premium orientation than our QSR target.
In addition to exceeding previous customer expectations of Hardee’s food quality, the Thickburger conversion—which was
largely completed in April 2003—simplified and streamlined the menu offerings at Hardee’s. In some cases, we deleted up
to 40 menu items to focus on our core competencies and gain important cost advantages and customer service upgrades.
We also installed new menu boards that emphasized the appeal of the products and made ordering easier; the incidence
of combination meal ordering has increased in most restaurants with the new menu boards. What we kept in place was
Hardee’s unique position as a leader in QSR breakfast.
We accompanied the menu changes with a marketing strategy aimed at bringing back our target market of burger lovers—
“young, hungry guys” primarily between the ages of 18 and 34. We launched the initial phase of this strategy in April 2003
and rolled it out market by market as each was fully converted. We designed the advertising campaign to rebuild Hardee’s
credibility with consumers and get them to try the Hardee’s Thickburger. The advertisements admitted to previous, poor
customer experiences with the old Hardee’s, taking a self-deprecating approach to acknowledging the brand’s prior missteps.
Intended to inspire consumers to give Hardee’s another chance, one ad tagline illustrates the profound changes we were
attempting to communicate: “How the last place you’d go for a burger will become the first.”
As with any change of this magnitude, sales and margins were at first impacted by the realities of marketing what was virtually a
new Hardee’s brand. Changeovers to the new Thickburger menu had to occur at all locations within each market before we
could unveil a corresponding marketing campaign informing consumers of the change. We knew this transition would create
some initial drop-off in sales. We also knew that, given the importance of this changeover, we would need a surplus of staff
during the transition to effect the change and ensure a positive customer experience in this critical period. This put pressure
on our restaurant-level margins. However, we knew from our test restaurants that the initial dip in sales, fueled by the many
menu deletions, would be followed by an ultimate sales recovery. In period five (consisting of sales for the last two weeks
of May and first two weeks of June) of fiscal 2004, sales began to stabilize. By period seven (the last period of our second
fiscal quarter), and through the remainder of the fiscal year, Hardee’s generated same-store sales increases. For the year,
same-store sales increased 2.5 percent—far surpassing our expectations. On an average unit volume (AUV) basis, Hardee’s
ended the year with an AUV of $792,000, well above the prior year AUV of $763,000—a significant accomplishment given
that same-store sales were negative in the first quarter and flat in the second quarter.
In the face of this sales success, cost pressures, in particular beef prices, affected restaurant-level margins—taking away most
of the sales leverage in our third fiscal quarter. To combat the cost pressures, we implemented an approximate 4 percent
price increase at the beginning of the fourth quarter. As a result of the price increase and other “fine tuning” of our labor
costs, we saw further signs during the fourth quarter that the Revolution was headed in the right direction—toward our goal
of increasing profitability at the brand. Restaurant-level margins for the fourth quarter were 9.0 percent—doubling the prior
year’s quarterly margin of 4.5 percent.
THE CARL’S JR. “EVOLUTION” Not content to rest on our laurels as a leader in the premium burger category, we
maintained our focus on premium quality products throughout the year at Carl’s Jr. Early in the year—while our competition
was discounting—we introduced our first product extension of the award-winning Six Dollar Burger™ (which retails for
approximately $4.00). The Guacamole Six Dollar Burger™ kicked off what turned out to be a spectacular year for the
brand—particularly in light of strong historical same-store sales performance—and proved what we have long believed:
that consumers will indeed pay more for premium products.
This year, we continued to score with such products as our bigger charbroiled chicken sandwiches and The Six Dollar Burger
Line (which now includes six varieties of the award-winning burger), including the very popular Low Carb Six Dollar Burger™.
In a market environment where consumers are seeking choice but won’t sacrifice taste, Carl’s Jr. is positioned decisively to
offer our guests a high-quality, delicious option. In addition, Green Burrito® continues to be integral to the success of Carl’s Jr.,
providing our guests with a variety of menu options. We will continue our expansion of dual branding on a prudent basis.
At Carl’s Jr., advertising is our primary means of reaching our target demographic of young, hungry guys. Recent market
research has validated our goal of being a place that men of all ages want to be a part of and that burger lovers can
appreciate. During fiscal 2004, we launched several provocative advertising spots for our new varieties of The Six Dollar
Burger that, in themselves, created a positive buzz and significant word-of-mouth that cemented our place in the hearts
and stomachs of burger-loving guys. We have continued to enhance the popularity of the brand’s Six Dollar Burger Line
by using 100 percent Angus beef patties beginning early in fiscal 2005.
Due in part to this marketing success, Carl’s Jr.’s financial performance in fiscal 2004 continued to impress. Same-store
sales at company-operated restaurants rose an impressive 2.9 percent and restaurant-level margins were once again at
the high end of the industry at 21 percent. As a segment, Carl’s Jr. contributed $56.6 million to operating income.
LA SALSA STRATEGY La Salsa, with approximately 100 restaurants, is far smaller than either of our primary brands.
However, we believe that over time La Salsa can become more significant as a growth vehicle, once we finalize our strategy
for the brand. While we have been working on a new strategy for La Salsa during the past year, much as we did with Hardee’s
before the Revolution, the results to date have not been as positive, and the process has taken longer than we anticipated.
We remain committed to finding the right strategy for La Salsa before we embark on significant expansion of the brand.
GETTING OUR FINANCIAL HOUSE IN ORDER In addition to our primary mandate of continuous operational
improvement at the store level, we remained committed to improving our capital structure. During the third and fourth quarters,
we completed the refinancing of our 4-1/4 percent Convertible Notes due March 2004, in part through issuing $105 million of
4 percent Convertible Notes due 2023 and through a new $175 million credit facility. Subsequent to year end, we announced
that we received a commitment from our lead bank for a $380 million credit facility which would replace the existing
$175 million credit facility and provide funds to pre-pay and retire the company’s $200 million 9-1/8 percent senior notes.
We expect the new credit facility to be in place by the end of the company’s first fiscal quarter of 2005 and will generate
interest savings of approximately $6.5 million in the first year. The completion of the refinancing allows CKE management
to focus on improving the performance of its brands while giving the company additional flexibility to finance its growth.
In fiscal 2004, consolidated revenue grew by 3.7 percent to $1.41 billion. However, due to a $34.1 million goodwill impairment
charge and $19.8 million in facility action charges, the consolidated operating loss for the year was $4.6 million. Absent these
charges, fiscal 2004 operating income would have been $49.3 million, a $1.3 million increase over fiscal 2003 measured on
a comparable basis—a noteworthy accomplishment considering the costs incurred and sales erosion experienced early in
the year as we implemented the Hardee’s “Revolution” strategy.
LOOKING AHEAD In an industry as competitive as ours, being satisfied with the status quo is not an option. Fiscal 2004
was indeed a year of progress for CKE, but we still have much to do. To move forward, we must seek continuous improvement
in our business every day and remain focused on the opportunities that lie ahead. New products and marketing are only
part of the story. We’ve learned that superior service must be viewed as a strategic imperative, not merely as a cost of doing
business. Our commitment to clean stores, friendly service, and convenience must always seek a higher level—especially if
we want to attract those consumers willing to pay more for quality products.
As our results this past fiscal year show, Carl’s Jr. continues to validate our premium product positioning and marketing strategy;
and we are encouraged by the performance thus far of the Hardee’s Revolution. We believe there is significant opportunity in
the year ahead for each of our brands—particularly at Hardee’s—where we have yet to realize the full potential of our strategy.
We thank all of you for your continued support in our plan and we look forward to sharing our future successes with you.
William P. Foley, II
Chairman of the Board
June 2004
Andrew F. Puzder
President and CEO
TASTE
{ THE TASTE THAT PEOPLE CRAVE }
1
TASTE
YOU’VE BEEN THINKING ABOUT IT ALL DAY–
THE TASTE OF A BIG, JUICY, DELICIOUS
CHARBROILED BURGER. TELL US ABOUT IT.
WE THINK ABOUT OUR AWARD-WINNING ANGUS
BEEF SIX DOLLAR BURGER™ LINE AT CARL’S JR.®
AND OUR ANGUS BEEF THICKBURGERS™ AT
HARDEE’S® EVERY MINUTE OF EVERY DAY. THAT’S
BECAUSE WE ARE COMMITTED TO CONTINUING
TO OFFER THE UNIQUE, “CRAVEABLE” FARE
OUR GUESTS HAVE COME TO KNOW AND LOVE.
ARE YOU A BIG BURGER FAN, BUT JUST AREN’T
IN THE MOOD FOR A BURGER TODAY? WE OFFER
MANY CHOICES – INCLUDING CHARBROILED
CHICKEN SANDWICHES, ENTREE SALADS, AND
EVEN LOW-CARBOHYDRATE OPTIONS. ONE
THING YOU CAN ALWAYS COUNT ON–PREMIUM
QUALITY INGREDIENTS AND BIG TASTE. BUT
DON’T TAKE OUR WORD FOR IT. JUST CHECK
OUT THE ACCOLADES FROM CONSUMERS AND
THE MEDIA FROM COAST TO COAST.
QUALITY
{ STANDARDS THAT EXCEED EXPECTATIONS }
2
QUALITY
WE TAKE PRIDE IN THE QUALITY OF OUR MENU
ITEMS – FROM THE ANGUS BEEF USED FOR ALL
OF OUR THICKBURGERS AT HARDEE’S AND OUR
SIX DOLLAR BURGERS AT CARL’S JR., TO THE
SKINLESS, CHICKEN BREAST FILLETS IN OUR
CHARBROILED CHICKEN SANDWICHES, TO
THE CRISPY WHOLE-LEAF LETTUCE AND SUNRIPENED TOMATOES THAT GRACE OUR BURGERS
AND SALADS. BUT WE BELIEVE THAT “QUALITY”
IS MORE THAN JUST THE CAREFUL SELECTION
OF INGREDIENTS. IT’S THE EXTRA EFFORT
WE TAKE TO ENSURE OUR SUPPLIERS UPHOLD
OUR EXACTING STANDARDS THROUGHOUT THE
SUPPLY CHAIN. THAT INCLUDES ENSURING THAT
ALL OF OUR MEAT PRODUCTS ARE PURCHASED
FROM USDA-APPROVED FACILITIES, ENFORCING
STANDARDS FOR THE PROPER TRANSPORT OF
INGREDIENTS, AND PROVIDING OUR RESTAURANT
TEAMS RIGOROUS TRAINING ON PROPER FOOD
SAFETY AND SANITATION. WE THINK ABOUT
THE THINGS OUR GUESTS SHOULDN’T HAVE TO
THINK ABOUT – THE SAFETY AND “QUALITY” OF
OUR FOOD.
2
the
QUALITY that exceeds expectations
FOCUS
{ KEEPS US RELEVANT TO OUR MARKET }
3
FOCUS
WE’VE LEARNED FROM EXPERIENCE THAT WE
SIMPLY CAN’T BE EVERYTHING TO EVERYONE – OR
AT LEAST DO IT VERY WELL. THE MARKETING AT
BOTH CARL’S JR. AND HARDEE’S FOCUSES ON OUR
CORE MARKET –“HEAVY FAST-FOOD USERS” WHO
REPRESENT THE LARGEST PER CAPITA SPENDING
IN QUICK-SERVICE. AND, AT EACH OF OUR BRANDS,
WE HONE IN ON OUR TARGET DEMOGRAPHIC
OF YOUNG, HUNGRY GUYS. OUR MENUS ARE
ALSO FOCUSED. WE WANT TO BE KNOWN FOR
SOMETHING–PRINCIPALLY, BIG, JUICY, DELICIOUS
BURGERS. OUR ADVERTISING EMPHASIZES
THE FOOD AND ITS APPEAL TO OUR CORE
DEMOGRAPHIC – IT COMMUNICATES A LIFESTYLE,
NOT A COOKING TECHNIQUE. THE IMAGE WE
PORTRAY IS ONE THAT MEN OF ALL AGES WANT
TO BE A PART OF AND THAT ANY BURGER LOVER
CAN APPRECIATE.
WITHOUT US 3
SOME GUYS
WOULD
STARVE
the
YOU’D GO FOR A BURGER
BECOMES THE FIRST
PACE YOURSELF
FOCUS that keeps us relevant to our market
HOW THE LAST PLACE
TEAM
{ THE RIGHT INTEGRATION OF EXPERIENCE }
4
TEAM
WE RECOGNIZE THAT THE ENTIRE FACE OF OUR
BUSINESS RESTS IN A SINGLE INTERACTION WITH
A RESTAURANT EMPLOYEE – WHICH IS WHY WE’VE
ASSEMBLED A TEAM WHOSE HARD WORK AT
THE FRONT COUNTER, ON THE BACK LINE, AND IN
THE CORPORATE HEADQUARTERS ALLOWS US TO
ENSURE A GREAT RESTAURANT EXPERIENCE FOR
OUR GUESTS. EACH AND EVERY DAY, WHILE OUR
RESTAURANT CREW IS SERVING ANOTHER GREAT
MEAL, OUR PRODUCT DEVELOPMENT AND MARKETING
TEAMS ARE WORKING HARD TO DETERMINE THE NEXT
“HIT” PRODUCT; OUR OPERATIONS AND TRAINING
TEAMS ARE THINKING OF NEW WAYS TO “WOW”
OUR GUESTS. THE OPERATION OF A SUCCESSFUL
RESTAURANT BUSINESS REQUIRES THE RIGHT
TEAM IN ALL AREAS OF OUR BUSINESS – FROM FOOD
SCIENCE TO FINANCE. WE’VE ASSEMBLED THAT TEAM.
4
the
TEAM the right integration of experience
THEODORE ABAJIAN
MICHAEL W. LIBY
BRAD R. HALEY
RENEA S. HUTCHINGS
ANDREW F. PUZDER
EVP, Chief Financial Officer
EVP, Training and Operations
Development
EVP, Marketing
Carl’s Jr. and Hardee’s
EVP, Real Estate Development
and Franchise Sales
President and CEO
PRIORITIES
{ A STAR IN OUR COMMUNITY }
5
PRIORITIES
CKE WAS BUILT ON THE FUNDAMENTAL BELIEF THAT
SUCCESS IS POSSIBLE WITH VISION, HARD WORK,
AND DETERMINATION. THIS ESSENTIAL PHILOSOPHY
HAS ALLOWED US TO OVERCOME THE MANY
CHALLENGES WE’VE FACED IN OUR BUSINESS OVER
OUR 60-PLUS-YEAR HISTORY AND STAY ON TRACK.
IMPORTANTLY, WE BELIEVE – AS OUR FOUNDER,
CARL N. KARCHER DID, AND STILL DOES – THAT WE
CAN BEST SHARE IN OUR SUCCESS BY TAKING A
LEADERSHIP ROLE IN THE COMMUNITIES IN WHICH
WE SERVE. EACH YEAR, WE AWARD THOUSANDS
OF DOLLARS IN COLLEGE SCHOLARSHIPS THAT
RECOGNIZE BOTH ACADEMIC EXCELLENCE AND
COMMUNITY LEADERSHIP. WE WORK CLOSELY WITH
FOOD BANKS AND OTHER GROUPS TO SUPPORT
FAMILIES IN NEED. OUR WORK WITH LOCAL
CHARITIES ALLOWS US TO WITNESS FIRST-HAND
THE POSITIVE IMPACT OF OUR ENDEAVORS.
5
PRIORITIES a star in our community
NUMBERS
{ PROVE WE’RE DOING THINGS RIGHT }
6
NUMBERS
AT THE END OF THE DAY, OUR OPERATING PERFORMANCE
IS THE TRUE TEST OF WHETHER WE’RE RUNNING A
SUCCESSFUL BUSINESS. IN FISCAL 2004, WE FOCUSED
OUR ENERGIES PRINCIPALLY ON THE HARDEE’S® BRAND
AND THE NEW THICKBURGER™ MENU – RELYING ON
THE STRENGTH OF THE CARL’S JR.® BRAND TO CARRY
US THROUGH. OUR FINANCIAL PERFORMANCE THIS
YEAR TELLS US THAT WE’RE HEADED IN THE RIGHT
DIRECTION. CARL’S JR. CONTINUED TO SURPASS OUR
EXPECTATIONS – GENERATING ROBUST SAME-STORE
SALES AND INDUSTRY-LEADING RESTAURANT-LEVEL
MARGINS. AT HARDEE’S, OUR NEW THICKBURGER
MENU HAS BECOME A “HIT.” SAME-STORE SALES AT
THE BRAND GREW FOR THE LAST SEVEN CONSECUTIVE
PERIODS OF THE FISCAL YEAR AND RESTAURANT-LEVEL
MARGINS ARE ALSO IMPROVING. WE ARE COMMITTED
TO FURTHER IMPROVING OUR PERFORMANCE BOTH
AT THE BRAND LEVEL AND ON A CONSOLIDATED BASIS.
SAME-STORE SALES
¤
517 M
508 M
524 M
2.9%
0.7%
2.9%
03
04
¤
¤
(in millions)
REVENUES
1,135
1,152
1,187
02 03 04
AVERAGE
UNIT
VOLUMES
02 03 04
¤
02
SAME-STORE SALES. THE STRENGTH AND VALUE OF THE CARL’S JR. BRAND IS REFLECTED IN ITS
POWERFUL CONTRIBUTION TO COMPANY PERFORMANCE. CARL’S JR. SHOWED STRONG GROWTH
IN SAME-STORE SALES, REVENUES AND AVERAGE UNIT VOLUMES IN FISCAL 2004. FOR THE
THIRD CONSECUTIVE YEAR, CARL’S JR. GENERATED POSITIVE SAME-STORE SALES.
HARDEE’S REPRESENTS THE COMPANY’S GROWTH OPPORTUNITY. WHILE STILL IN THE EARLY
PHASES, THE HARDEE’S REVOLUTION IS WORKING. THROUGH OUR NEW MENU AND MARKETING
STRATEGY, HARDEE’S SAME-STORE SALES INCREASED 2.5 PERCENT OVER THE PRIOR YEAR.
614 M
562 M
575 M
¤
0.1%
(2.2)%
2.5%
REVENUES
792
02 03 04
763
763
(in millions)
¤
02
03
AVERAGE
UNIT
VOLUMES
02 03 04
04
SAME-STORE SALES
Carl’s Jr.®
Fiscal 2004
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2.9%
2.5%
(0.4)%
(3.8)%
(1.9)%
2.3%
1.0%
(2.0)%
5.4%
6.8%
(2.6)%
5.3%
9.2%
2.0%
0.7%
(2.2)%
0.8%
4.2%
0.3%
1.9%
1.9%
Fiscal 2003
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
RESTAURANT LEVEL MARGINS
Hardee’s®
La Salsa®
(1.3)%
0.6%
(1.0)%
(5.0)%
(3.5)%
0.8%
2.1%
(5.8)%
(0.7)%
Hardee’s®
La Salsa®
Carl’s Jr.®
Fiscal 2004
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
21.0%
9.9%
6.5%
21.0%
7.7%
10.8%
21.8%
11.5%
10.8%
20.7%
11.9%
6.2%
20.5%
9.0%
(3.9)%
Fiscal 2003
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
21.7%
11.1%
12.6%
22.7%
12.3%
14.5%
24.1%
13.4%
16.1%
19.8%
13.1%
14.0%
19.7%
4.5%
5.6%
FISCAL 2004 ($000, EXCEPT GUEST CHECK FIGURES)
Restaurants open:
Company-operated
Franchised and licensed
Total
Restaurant revenue:
Company-operated
Franchised and licensed
Average unit volume per company-operated restaurant
Percentage increase (decrease) in comparable
company-operated restaurant sales
Same-store transactions (company-operated restaurants)
Company-operated restaurant-level operating margins
Average guest check (company-operated restaurants)
(A)
Carl’s Jr.®
Hardee’s®
La Salsa®
721(A)
426
61
580
1,400
41
1,006
2,121
102
$ 532,945
$ 575,238
596,318
1,186,490
$
1,187
$
42,310
28,176
$
723
2.9%
2.5%
(1.3)%
(1.7)%
(6.1)%
(4.9)%
9.9%(A)
21.0%
$
792
$
5.53
$
4.34
6.5%
$
9.20
Includes 28 restaurants closed subsequent to fiscal year end.
FISCAL 2004 HIGHLIGHTS
• Hardee’s “Revolution” implemented
• Hardee’s generated positive same-store sales for the last seven
periods of the year; same-store sales +2.5 percent for the year
• Hardee’s restaurant-level margins rebounded in Q4 9.0 percent
vs. 4.5 percent in Q4 of prior year
• Continued strength at Carl’s Jr. as same-store sales grew by
2.9 percent; restaurant level margins of 21 percent
• Successful launch of low carb burgers at both Carl’s Jr.
and Hardee’s
• Convertible debt refinanced
ONGOING STRATEGY
• Maintain focus on quality, service and cleanliness
at all brands
• Maintain strong performance of the Carl’s Jr. brand
• Continue to grow average unit volumes at Hardee’s
in order to increase restaurant level margins
• Refinance $200 million 9-1/8 percent senior subordinated
notes and existing credit facility on favorable terms
• Continue to improve capital structure
CORPORATE INFORMATION
DIRECTORS
William P. Foley, II(D)
Chairman of the Board, CKE
Chairman and CEO,
Fidelity National Financial, Inc.
CKE RESTAURANTS, INC.
MANAGEMENT TEAM
Andrew F. Puzder
President and Chief Executive Officer
Carl N. Karcher (D)
Chairman, Emeritus, CKE Founder
Theodore Abajian
Executive Vice President,
Chief Financial Officer
Byron Allumbaugh (B)
Consultant and former Chairman of
the Board, Ralph’s Grocery Company
Jeffrey P. Chasney
Executive Vice President,
Chief Information Officer
Douglas K. Ammerman(B)(C)(E)
Former partner, KPMG
John J. Dunion
Executive Vice President,
Supply Chain Management
Peter Churm (B)(C)
Chairman Emeritus,
Furon Company
Richard E. Fortman
Executive Vice President,
Carl’s Jr. Operations
Carl L. Karcher
President,
CLK, Inc. (Carl’s Jr. Franchisee)
Janet E. Kerr(C)(E)
Professor of Law,
Pepperdine University School of Law
Daniel D. Lane (D)
Vice Chairman of the Board, CKE
Chairman of the Board,
Lane/Kuhn Pacific
Ronald B. Maggard, Sr.(E)
President,
Maggard Enterprises, Inc.
Noah J. Griggs
Executive Vice President,
Hardee’s Operations
Brad R. Haley
Executive Vice President, Marketing
Carl’s Jr. and Hardee’s
Renea S. Hutchings
Executive Vice President, Real Estate
Development and Franchise Sales
Michael W. Liby
Executive Vice President, Training and
Operations Development, La Salsa
and Green Burrito Operations
Daniel E. Ponder, Jr.
President,
Ponder Enterprises
(Hardee’s Franchisee)
E. Michael Murphy
Executive Vice President,
General Counsel and Franchising
Andrew F. Puzder (D)
President and Chief Executive Officer,
CKE Restaurants, Inc.
Victoria Straschil
Senior Vice President,
Human Resources
(A)
Frank P. Willey
Vice Chairman of the Board,
Fidelity National Financial, Inc.
Member of the Acquisitions and
Divestitures Committee
Member of the Audit Committee
(C)
Member of the Compensation Committee
(D)
Member of the Executive Committee
(E)
Member of the Nominating/Corporate
Governance Committee
(A)
(B)
ANNUAL MEETING
The annual meeting of shareholders
will be held on June 28, 2004
at 10:00 a.m. Pacific Time:
Irvine Marriott
18000 Von Karman Avenue
Irvine, California 92612
tel: 949-553-0100
fax: 949-261-7059
The meeting will also be broadcast
live over the Internet at
http://www.shareholder.com/cke/
investors.cfm?pagetype=events
INDEPENDENT AUDITORS
KPMG, LLP
600 Anton Boulevard,
Suite 700
Costa Mesa, California 92626
COUNSEL
Stradling Yocca Carlson & Rauth
660 Newport Center Drive,
Suite 1600
Newport Beach, California 92660
REGISTRAR AND
TRANSFER AGENT
Mellon Investor Services
400 South Hope Street
Los Angeles, California 90010
800-522-6645
www.melloninvestor.com
CORPORATE ADDRESS
CKE Restaurants, Inc.
6307 Carpinteria Avenue, Suite A
Carpinteria, CA 93013
805-745-7500
www.ckr.com
INVESTOR RELATIONS
866-400-4CKE in
the United States
805-745-7750 outside
the United States
[email protected]
www.ckr.com
Designed and produced by Baker | Brand Communications, www.bakerbuilds.com
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CKE Restaurants, Inc.
6307 Carpinteria Avenue, Suite A
Carpinteria, California 93013
Telephone: 805-745-7500
www.ckr.com