American fast food chain Carl’s Jr. is looking for an investor to resume operations in Brazil, after its six stores in the country were closed in the last decade, and aims to establish itself in a price segment above competitors such as McDonald’s and Burger King.
The California state chain in the United States, founded in 1941, operates in 28 countries and is controlled by CKE Restaurants Holdings. In Brazil, the chain arrived in 2012 through IMC, the restaurant brands Viena and Frango Assado, but stopped operating in the country six years later.
“We’re all around Brazil, so we thought, ‘Now that Covid-19 is behind us, let’s go back to the biggest market in Latin America,'” Marc Mushkin, vice president of international franchise sales and development of CKE. He was in São Paulo last week to meet with investors.
The executive said that the chain’s positive returns in Latin American countries such as Chile, Ecuador and Mexico give confidence that Carl’s Jr. could be successful in Brazil, in its second attempt to operate in the country. In the region, the chain operates 387 stores in eight countries.
According to Mushkin, the plan to return to Brazil involves opening 100 stores in five years, with the potential for the network to reach 500 units between 10 and 15 years.
The focus is, at first, the city of São Paulo, already studded with fast-food chains and hamburgers, and nearby municipalities, such as Campinas. The expectation is to open the first Carl’s Jr. between the second half of 2023 and the beginning of 2024, said the executive.
“It’s not crazy to think of another hamburger chain when it’s positioned correctly,” he said.
Wendy’s was one of the most recent American brands to try their luck in the country. The chain decided to close all its stores in Brazil in 2019, three years after announcing its arrival. Other names in the US fast food sector that have not been able to stay in Brazil include Hooters.
Now Carl’s Jr. calculates an investment of between at least US$ 50 million and US$ 75 million to open its stores in Brazil over the next five years. In addition to larger stores with drive-thru booths, the company is also targeting leaner points with costs of up to a quarter of what is needed for larger ones. These smaller locations would focus on online order delivery.
“We think it’s possible [abrir cem lojas em cinco anos] and that will give the kind of penetration that makes a brand successful in a place like Brazil. If we expand more slowly, we don’t think we have enough marketing power and scale. And going faster would be great, but it’s very difficult to have the capital,” Mushkin said.
The executive said that in other developing countries the larger Carl’s Jr. require around US$ 1 million in investment.
“We are positioning ourselves a little bit above rivals like McDonald’s, Burger King and etc, but not so much above that we have very high prices, as some gourmet hamburgers have,” said the vice president of international franchise sales at Carl’s Jr.’s parent company. . According to him, the positioning helps to face the scenario of inflation and high interest rates in the country.
SEARCH FOR INVESTOR
Conversations over the past week with investors who could become a master franchisee of Carl’s Jr. were productive, Mushkin said, but without identifying the stakeholder groups. According to him, there were no discussions with listed companies, although that door is not closed.
On the Brazilian stock exchange, which belongs to the sector, in addition to the IMC, there is Zamp, which operates the Burger King and Popeyes chains in the country.
Large restaurant chains would be the ideal partner, but private equity firms are also open options, according to the executive. Even companies from other sectors, but with complementary experiences, including expertise in Brazilian retail or in acquiring good geographic points, may be alternatives. “We can teach them the restaurant part,” he said, adding that CKE has partnerships of different types around the world.
To gain scale quickly, CKE wants a more privileged location, which, for Mushkin, was one of the “problems” in the previous passage of the brand in Brazil.
CKE expects to close a deal with a new investor to relaunch the network in Brazil in about three to nine months, the executive said.
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