Carl's Jr.

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Carl's Jr.

6307 Carpinteria Ave., Ste. A
Carpinteria, California 93013
USA
Telephone: (805) 745-7500
Fax: (714) 780-6315
Web site: www.carlsjr.com

SIX DOLLAR BURGER CAMPAIGN

OVERVIEW

As Carl's Jr., one of the country's leading fast-food burger chains, prepared to celebrate its 60th anniversary in 2001, the brand was feeling the pains of an aging icon. Despite its reputation for serving quality burgers and for introducing innovative options not usually found at early fast-food establishments, such as self-serve beverage counters, the company was losing customers to a new niche: fast-casual restaurants. These restaurants had higher prices and better-quality food than found at fast-food places. Carl's Jr. was hurt further by the deep discounts on products that competing fast-food chains, such as Burger King and McDonald's, were offering customers. A Carl's Jr. press release stated that the company's practice of offering a small but quality selection of menu items and limiting discounts had contributed to a continuing weakness in same-store sales.

To remedy the situation, Carl's Jr. took a closer look at the fast-casual niche and saw it as an opportunity to expand its business. The business-lunch crowd was typically in a hurry but hungry for a quality meal. To entice these customers, Carl's Jr. began offering a new product, the Six Dollar Burger. The burger gave customers the best of both worlds: a restaurant-style burger that was as convenient as fast food. To support the burger's introduction, a campaign was created by Los Angeles-based Mendelsohn/Zein Advertising, at an estimated cost of $50 million. It kicked off with a series of television spots that not only praised the Six Dollar Burger but also spoofed casual-dining businesses such as T.G.I. Friday's. One TV commercial showed hapless customers who were forced to join the birthday celebration of a diner at a nearby table, and another showed an overenthusiastic waiter pushing dessert on diners before the main course was served. Radio spots also promoted the product.

Consumers ultimately bought the concept. The company reported that, following the launch of the "Six Dollar Burger" campaign, same-store sales took a positive turn and reversed the downward slide Carl's Jr. had experienced for the previous three periods. In addition the campaign won a bronze EFFIE award and was presented a Silver Skillet award by Restaurant Business magazine.

HISTORICAL CONTEXT

In 1941 Carl Karcher went into business for himself by setting up a hot-dog cart in Los Angeles. By 1946 his business had grown into a drive-in restaurant with hamburgers as one of the featured menu items. As Carl's Jr. continued to expand, it earned a reputation for serving delicious charbroiled hamburgers. In 1997 CKE Restaurants, owner of Carl's Jr., purchased a floundering Midwestern burger chain, Hardee's. Rather than proceeding with CKE's initial plans to convert Hardee's to Carl's Jr. shops, the two sister chains maintained separate but similar identities and menus, which confused consumers. In addition, as the core customers of Carl's Jr.—baby boomers—aged, their tastes changed. Although these baby boomers had grown up with fast food, they also possessed significant disposable income and were looking for higher quality food like the kind served in casual-dining restaurants. Carl's Jr. went into a slump as customers fled to its high-end competitors and as sister chain Hardee's carried it along on its own downward spiral.

To win back its former customers and lure new customers, Carl's Jr. began carving out a new niche for itself as a fast-food chain serving restaurant-quality food. After experimenting with a variety of larger burgers and testing four prototypes with consumers, Carl's Jr. introduced the Six Dollar Burger in 2001. With its launch Carl's Jr. joined the ranks of other fast-food chains (such as Noodles & Co., Chipotle Mexican Grill, and Boston Market) competing with casual-dining restaurants by promoting their businesses as "fast-casual" dining establishments.

TARGET MARKET

According to the Oklahoma City Journal Record, Carl's Jr. launched its Six Dollar Burger because it "[viewed] the fast casual niche market—the hybrid between quick service and casual dining—as offering a strong business opportunity, especially with the average lunch hour being just 36 minutes these days." While Carl's Jr. targeted its core customers who had left the chain in search of a quality dining experience, the new burger and marketing campaign also appealed to time-strapped office workers, especially women, by offering a casual-dining restaurant meal without the hassles and costs associated with eating in a midscale restaurant.

Carl's Jr. also did not alienate the consumer group most likely to eat fast food: young men aged 18 to 35. At $3.95 the Six Dollar Burger fit the budgets of most men in that demographic. Weighing in at almost one-half pound of beef, and with toppings that included two thick slices of cheese, the burger could also satisfy the appetites of most hungry young men. To make sure this group of consumers got the message that Carl's Jr. was the place to go for burgers, the "Six Dollar Burger" campaign eventually evolved to include commercials featuring attractive young women in provocative situations.

SIZZLE IS COMING FROM MORE THAN THE BURGERS IN NEW CARL'S JR. SPOTS

In 2001 Carl's Jr. introduced its successful Six Dollar Burger and an accompanying campaign. The burger, which cost $3.95 but was designed to replicate more pricey casual-dining fare, was a hit with consumers. To keep the momentum growing, the chain in November 2003 expanded its offerings to feature a full line of premium burgers. In an effort to reach its target audience of men 18 to 35 years old, Carl's Jr. simultaneously launched a new campaign of provocative TV spots starring Playboy founder Hugh Hefner and a bevy of Playboy bunnies.

The sizzling commercials may have been hot to the target audience, but they offended other consumer segments, including Thomas Aquinas College president Thomas Dillon. After the ads aired Dillon asked Andrew Puzder, president and chief executive officer of Carl's Jr. parent company CKE Restaurants, to resign his position on the college's board of governors. Prior to Puzder's resignation from the board, CKE issued a statement regarding the Hefner ad campaign, stating, "As a pop icon, Hefner appeals to our target audience and credibly communicates our message of variety."

COMPETITION

For Carl's Jr. the key competitors were number one burger chain McDonald's Corporation and number two chain Burger King Corporation. Both were also struggling icons trying to reach the time-strapped business-lunch crowd, and both launched new campaigns in the early 2000s. McDonald's and Burger King also took a cue from Carl's Jr. by giving consumers what they wanted: big, juicy burgers like those found in casual-dining restaurants but served up fast and at a good price.

Using a group of 20-something office workers known as the "Lunch Break Gang" as spokespersons, Burger King in 2004 began a campaign promoting its Whopper hamburger and reintroduced its well-known slogan "Have It Your Way." To further appeal to the casual-dining crowd, the chain began offering an upgraded burger made with Angus beef, which it called the Western Angus Steak Burger. The campaign was a success for the chain, which reported monthly sales increases in the 10 consecutive months following its launch.

In 2003 McDonald's launched a campaign with the slogan "I'm Lovin' It." The chain's advertising agency stated in an interview with Money magazine that the plan was "to make McDonald's a 'lifestyle,' not just a place to eat." The new campaign became the first that McDonald's had launched internationally. After the "I'm Lovin' It" campaign appeared, McDonald's was named "Marketer of the Year" by Advertising Age for the brand's "marketing achievements around the world."

MARKETING STRATEGY

Introducing the Six Dollar Burger when many other fast-food chains were discounting their burgers was something of a risky strategy for Carl's Jr. The company explained, however, that the "Six Dollar Burger" campaign was designed to create a marketing concept that would set the chain apart from the competition. It also hoped that, by positioning the product as the first restaurant-quality burger offered by a fast-food chain, it could win back its market share from high-end and midscale casual-dining restaurants.

The campaign's television and radio commercials, created by ad agency Mendelsohn/Zein, were designed to reach burger lovers who craved restaurant-quality burgers but wanted them without the annoyances or high prices of sit-down restaurants. Television spots that kicked off the campaign portrayed the traditional restaurant-dining experience as less than desirable. One commercial featured diners who were forced to listen to a neighboring customer being sung to on his birthday, while another showed a pushy waiter encouraging customers to order dessert before their main course was served. At the end of each spot a voice-over asked, "Wouldn't it be nice if you could just get one of those great $6 restaurant burgers … without the restaurant?" The radio ads employed a man-on-the-street format, with people sampling the Six Dollar Burger and then commenting on the product in their own words.

OUTCOME

Following the launch of the "Six Dollar Burger" campaign, the Orange County Register reported that sales at Carl's Jr. restaurants made a turnaround and that for 14 straight months CKE reported positive sales at Carl's Jr. restaurants open more than one year. Restaurant analyst Bob Sandelman noted that the campaign successfully reinforced the company's message that Carl's Jr. was at the high end of fast food. Noting the success of the Six Dollar Burger, sister chain Hardee's introduced a similar product, called the Thickburger, within months. Hardee's customers received the new burger with the same enthusiasm that Carl's Jr. customers had, which helped boost the chain's falling sales. Based on the popularity of the Six Dollar Burger and the success of the campaign, Carl's Jr. introduced in 2003 a complete line of Six Dollar Burgers with five flavor varieties and an expanded marketing campaign that featured sexy commercials designed to appeal to men 18 to 35 years of age.

CARL'S JR. JUMPS ON LOW-CARB BANDWAGON

With the influence of diet-conscious consumers helping to determine the menu offerings at many dining establishments, Carl's Jr. adjusted its product line in response to one of the latest diet crazes: low-carbohydrate meals. An estimated 32 million Americans at the time were on a low-carb diet. Starting in December 2003 burger lovers could get their favorite Six Dollar Burger with all the trimmings except one: the bun. To reduce the carbohydrate count of the half-pound burger from 61 grams to a skimpy 6 grams, Carl's Jr. wrapped the burger in iceberg lettuce, reduced the amount of ketchup, and switched from sweet to dill pickles.

In 2002 the "Six Dollar Burger" campaign won a bronze EFFIE award for achieving the company's goal of developing a unique marketing concept and setting the chain apart from the competition. In addition Carl's Jr. won a Silver Skillet award, which was presented by Restaurant Business magazine in recognition of "exceptional innovation in new food or beverage items and uniqueness in product and marketing strategy."

Although the campaign was a success for Carl's Jr., there was one negative outcome: Dallas-based casual-dining restaurant chain T.G.I. Friday's filed a lawsuit against Carl's Jr. parent company CKE, alleging false advertising. The suit, which was settled in U.S. District Court in Los Angeles, according to Nation's Restaurant News, was related to one of the Carl's Jr. ads, which included the claim that its $3.95 Six Dollar Burger was "like the burger I just paid about $6.25 for at Friday's." Both companies declined to comment on the settlement or to divulge its terms.