CKE Inc. (CK), owner of the Hardee’s and Carl’s Jr. fast-food chains, plans to delay an initial public offering until after the presidential election as rising health- care and commodity costs deter investors.
An IPO is “unlikely in 2012,” Chief Executive Officer Andrew Puzder said yesterday in a telephone interview. During the company’s August roadshow with investors, “there was concern about our costs going up and our inability to increase prices,” he said.
“People were saying, ‘How are you going to deal with the increased costs of Obamacare at the same time you’re dealing with the increased cost of commodities and the economy kind of in the ditch?’” Puzder said. The company has answers, including selling less-expensive meats, such as turkey, and hiring more part-time workers to cut health-care expenses, he said.
CKE, based in Carpinteria, California, said in a U.S. Securities and Exchange Commission filing in August that it was delaying its public offering due to market conditions. The company had earlier this year filed for an IPO to sell about 13.3 million shares priced at $14 to $16 each on the New York Stock Exchange under the symbol CK.
Other restaurant operators recently have cited uncertainty around costs associated with President Barack Obama’s health- care overhaul. McDonald’s Corp. (MCD) in July said additional health- care costs may be $10,000 to $30,000 for each of its 14,000 U.S. stores. Jamie Richardson, vice president of White Castle System Inc., said in July that it will be hard to predict health-care expenses.
With Obama’s Patient Protection and Affordable Care Act, health-care costs for CKE would likely more than double to about $30 million a year, Puzder said. The hamburger seller probably would decrease capital spending and raise menu prices because of the higher expenses, he said.
CKE’s revenue rose 3 percent to $308.6 million in the three months ended Aug. 13, while net income was $1.77 million, compared with a net loss of $2.23 million a year earlier, the company said in a statement Sept. 18. It has recently attempted to draw customers with a $6 Memphis BBQ burger topped with fried onions.
Apollo Global Management LLC (APO), based in New York, took CKE private in 2010 for about $1.01 billion. There are about 3,279 Hardee’s and Carl’s Jr. locations, of which 73 percent are franchised.
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