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CKE Restaurants Holdings Inc., parent company of Carl’s Jr. and Hardee’s, has named Jason Marker as CEO, succeeding Andy Puzder, the company said Tuesday.
Marker most recently was president of Kentucky Fried Chicken U.S., and his successor there, KFC chief marketing officer Kevin Hochman, was named earlier Tuesday. Marker is expected to start as CEO in April, Franklin, Tenn.-based CKE said in a statement.
Puzder was President Donald Trump’s nominee as U.S. Secretary of Labor, but he withdrew his name after opposition to his appointment grew.
“Jason has tremendous experience in franchising, in the QSR sector, and in positioning and growing iconic brands,” said Puzder, who served as CKE’s CEO since 2000.
“I expressed my desire to have CKE plan for succession approximately a year ago, and I could not be more pleased to have Jason Marker selected to be the company’s next leader,” Puzder said in a statement. “He is an outstanding executive who will continue to build the Hardee’s and Carl’s Jr. brands both internationally and domestically.”
Marker said: “It is a privilege to lead an organization that has pioneered the quick-service restaurant space for more than 75 years.”
Before becoming KFC president in 2013, Marker served at KFC and Yum! Brands International in various marketing leadership roles, including general manager for KFC U.S., chief marketing officer for KFC U.S., vice president of global marketing for KFC, and chief marketing officer for KFC and Pizza Hut South Pacific.
Carl’s Jr. and Hardee’s have more than 3,800 franchised and company-operated restaurants in 44 states and 41 foreign countries and U.S. territories.
Contact Ron Ruggless at Ronald.Ruggless@Penton.com
Follow him on Twitter: @RonRuggless
This post is part of the On the Margin blog.
Franchisees are running an increasing number of the country’s restaurants. So should they have a say in running the actual companies?
It’s a question shareholders at McDonald’s Corp. could get a chance to decide, after the Securities and Exchange Commission last week said the company had to let shareholders decide on a proposal to let franchisees pick a board member. McDonald’s has appealed the decision.
The proposal came from shareholder Segal Marco Advisors, a firm that works with large investors like pension plans. The proposal, which few expect to be approved, would nevertheless have big implications for a restaurant business increasingly operated by franchisees.
“Any time McDonald’s moves, it creates precedent,” said John Gordon, a restaurant consultant who has long advocated for franchisee board representation.
Under the proposal, franchisees would get a special class of stock and would vote on a person to represent them on McDonald’s board of directors. It’s a proposal unique to corporate governance in the U.S., said Maureen O’Brien, vice president and director of corporate governance at Segal Marco.
“McDonald’s doesn’t have much franchise experience on its board,” O’Brien said. “We really think, given it comprises such a huge part of the success of the company, there needs to be somebody on the board who is familiar with the challenges and issues that franchisees have.”
McDonald’s, for its part, gives franchisees some say in many of the company’s initiatives. The company itself said in a statement that its franchisees have plenty of communication with the board and management.
“The board has a fiduciary duty to act in the best interests of all shareholders,” the company said. “In selecting director candidates, the board seeks individuals who, among other things, display the independence of mind and strength of character to effectively represent the best interests of all shareholders. Existing robust lines of communication already exist between the board, management and franchisees, and all stakeholders are able to communicate directly with the board.”
Franchisees operate a growing percentage of the country’s restaurants, a long-term trend dating back at least two decades. As of 2015, according to Nation’s Restaurant News data, franchisees operated 76 percent of the restaurants in the 100 largest chains. That was up from 75 percent two years earlier.
Investors have pushed brands to sell company stores to franchisees. Applebee’s, IHOP, CKE Restaurants Inc., Yum Brands Inc., TGI Friday’s, The Wendy’s Co., Burger King and many others have all sold off company stores. McDonald’s is in the process of doing so, with plans to have 95 percent of the company’s restaurants franchisee owned by 2018.
Bojangles’ Inc., and Famous Dave’s of America Inc., both have operators who serve on the board. CKE Restaurants Inc., a private company, has had franchisees on its board for years — including its time as a publicly traded company a few years ago.
“They're great additions and have been meaningful contributors,” CKE's CEO, Andy Puzder, told me in 2015. “Plus, the franchisee community feels more involved and confident in how the company is run.”
Gordon believes that companies have feared giving up control, which has kept more of them from putting franchises on their boards. “There’s always this us-versus-them mentality,” he said. “There is a fundamental fear baked into the franchisor DNA that somehow they are going to lose control.”
Gordon believes that putting franchisees on the board could improve communications between brands and their operators. He also believes it would promote internal ownership of the company, while also giving the board a more long-term focus.
“It could create a larger pool of committed shareholders over time, as opposed to mercenary ownership who might not be invested in the brand.”
O’Brien, for her part, acknowledged that McDonald’s and its franchisees do communicate regularly. But her firm’s proposal would elevate that line of communication, putting the operators on more of an equal footing with the company.
“McDonald’s has some experience, with directors from different countries, and it certainly has a diverse board,” O’Brien said. “It just seems like this is an obvious piece of experience that the company is missing.”
Few, however, ultimately see the proposal winning. Shareholders and franchisees are different constituents whose goals might not always coincide with one another. Concerns that shareholders’ own votes could be diluted under the proposal might keep them from giving it the go-ahead.
And there are other potential landmines in the idea of franchisee board membership. Richard Adams, a former franchisee turned consultant, believes there would be intense pressure on the franchisee who received that seat.
“The political pressure on such franchisees would be unbearable,” he said. “If the franchisee doesn’t support the CEO’s direction it’s going to impact the way the franchisee is treated by McDonald’s employees in the field.
“And, if the franchisee representative appears to be getting any perks from corporate they will become distrusted by their fellow franchisees. It’s an impossible position.”
Jonathan Maze, Nation’s Restaurant News senior financial editor, does not directly own stock or interest in a restaurant company.
Contact Jonathan Maze at email@example.com
Follow him on Twitter at @jonathanmaze
Negative same-store pizza sales were a drag on earnings for NPC International Inc., the nation’s largest Pizza Hut franchisee, in the fourth quarter ended Dec. 27, the company said Monday.
The Overland Park, Kan.-based company, which has been growing its Wendy’s burger chain holdings, said lower ingredient prices and favorable insurance adjustments helped it stem losses in the Pizza Hut division and assisted in keeping margins consistent with last year, the company said.
“Our Pizza Hut business has continued to struggle to consistently activate the consumer and drive the top-line in an otherwise thriving category,” said Jim Schwartz, NPC’s president and CEO, in a statement.
Schwartz said Pizza Hut and its franchisee association has completed consumer research and is formulating a plan “to modernize the brand and to continue on our mission to make it easier for consumers to get a better pizza.”
NPC’s same-store Pizza Hut sales were down 5.8 percent in the quarter, rolling over an increase of 3.2 percent last year, which was driven by the brand’s introduction of the Triple Treat Box.
The company’s same-store Wendy’s sales were up 0.8 percent, compared to a 5.8 percent increase in the same quarter last year.
“We were quite pleased with the results of our Wendy’s business, which posted comparable store sales growth of almost 1 percent and grew comps 6.6 percent on a two-year basis,” Schwartz said. “The top-line sales momentum combined with favorable commodities and solid execution from our operators resulted in significant margin improvement and profit growth.”
Schwartz said Wendy’s continues to expand its “4 for $4” value bundle, which has helped increase sales.
NPC earlier in March announced an agreement to buy 62 Wendy’s units in Pennsylvania from Valenti Mid-Atlantic Management.
“We remain enthusiastic about the opportunity to continue to diversify our restaurant portfolio through the acquisition of additional Wendy’s restaurants and we will remain active in this pursuit as we work to increase our ownership of this great brand,” Schwartz said.
NPC’s net income for the fourth quarter ended Dec. 27 rose 13.5 percent, to $4.3 million from $3.8 million in the prior-year quarter. Sales were up slightly, 0.2 percent, to $308 million from $307.2 million in the same quarter last year.
NPC did not conduct its typical earnings call for the quarter in lieu of lender meetings. The company has proposed refinancing its senior secured credit facilities and redeeming its senior notes.
NPC International, a subsidiary of NPC Restaurant Holdings LLC, operates 1,152 Pizza Hut units in 27 states and 184 Wendy’s units in five states.
Contact Ron Ruggless at Ronald Ruggless@Penton.com
Follow him on Twitter: @RonRuggless