CKE Restaurants (NASDAQ:CKR) is known within its industry for following its own path. When companies like McDonald's (NYSE:MCD) and Wendy's (NYSE:WEN) were emphasizing healthier non-burger fare with items such as fruits and salads, CKE simply made bigger burgers. Now, in the face of declining sales, one of CKE's outlets is getting on the salad bandwagon, too -- sort of.
Complementing a Green Burrito Taco Salad already being sold at Carl's Jr. burger chains (which compete west of the Mississippi), CKE is now rolling out a similar Red Burrito Taco Salad at its Hardee's outlets (which contend in points east of the Mississippi). The move comes after recent declining sales numbers at both chains. The trend is especially noticeable at Hardee's, where same-store sales fell 3.9% year over year in the four weeks ended Dec. 5.
At first blush, a salad might seem an odd addition for a company selling outrageously large burgers to young, hungry males. But fear not-- the Red Burrito Taco Salad, with ground beef, refried beans, and two types of cheese, is a salad only in the loosest sense of the term. But still, just because Hardee's new item doesn't totally clash with the company's brand, that doesn't mean it's a good idea.
"Green Burrito" itself is a separate CKE brand that offers a Mexican menu at some Carl's Jr. restaurants. CKE added the Green Burrito Taco Salad to Carl's Jr. in part to introduce the Green Burrito name to a larger audience, with the idea of possibly expanding the concept to other Carl's Jr. locations. The thinking seems to be the same with Hardee's and the Red Burrito Taco Salad, as CKE has been testing a separate Red Burrito menu in some Hardee's locations.
More co-branding, though, seems somewhat risky. After all, CKE has put a lot of effort into building the reputations of Carl's Jr. and Hardee's as premium burger chains. Expanding further into Mexican-type fare could dilute this image.
What's more, CKE is also in the Mexican-food business via yet another concept, La Salsa Fresh. Indeed, the taco salads from Carl's Jr. and Hardee's are remarkably similar to those sold at stand-alone La Salsa Fresh restaurants. If CKE sees opportunity in Mexican food, it seems far more sensible to capitalize on the opportunity by expanding its Mexican concept, rather than by transforming its burger joints into Mexican restaurants.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
