Fast-Food Chains Buck the Healthy Trend

Burger joints are making healthy profits by catering to Americans' appetite for beefed-up menus at bargain prices. (Burp!)

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Two years ago, just as all sorts of fast-food restaurants were adding salads and healthier items to their menus, Andrew F. Puzder went in the opposite direction. The chief executive of CKE Restaurants (CKR), which owns the Hardee's and Carl's Jr. restaurant chains, bet that what his customers really wanted were even bigger, juicier, and better-tasting burgers. Super size? Try monster size. He introduced a 1,400-calorie burger called the 1-lb Double Six Dollar Burger for $5.49 and followed that up with a series of artery-clogging sandwiches.

Customers have been gobbling them up. On June 27, CKE announced that same-store sales for the Hardee's and Carl's Jr. chains were up an average of 4.7% for the four weeks that ended June 19. The company's sales are expected to rise about 5%, to $1.6 billion, for the fiscal year ending this January. Puzder boasted at the company's annual shareholder meeting on June 27: “Our premium, innovative products are second to none and copied by most.” Investors love the attitude, sending CKE's shares up more than 20% so far this year.

Hardee's gift to consumers fed up with “healthier” and “low-fat” menu items is a line of sandwiches called Thickburgers, introduced in 2004. The Monster Thickburger, which debuted in November, 2004, is made of two one-third-pound slabs of Angus beef, four strips of bacon, three slices of cheese, and mayonnaise on a buttered sesame seed bun and is trumpeted as “a monument to decadence.” Even today, the tribute to indulgence at Hardee's marches on. Its latest addition? A burger with “meat as a condiment.” The Philly Cheesesteak Thickburger features a one-third-pound Thickburger patty topped with sliced steak, cheese, green peppers, and onions.


  Stomach churning? Perhaps. But the Hardee's experience is a reflection of America today. Americans thrive on value and bargains. Good health be damned, if there's a good bargain to be found. If people can drive the extra 30 miles in their quest for everyday values to shop at discounter Wal-Mart (WMT) or hunt for treasures at warehouse club Costco (COST) or at the dollar store, why should they settle for less when they stop at a restaurant? “Value is a big lure,” says Brian Wansink, professor of food marketing at Cornell University in Ithaca, N.Y. “Compared to a basic burger, if you get something really huge for just 45 cents, more is worth trading up to, especially for young men who like to leave a restaurant feeling really full.”

Even McDonald's (MCD), which has been at the forefront of adding healthy items to its menu, like premium salads and sliced apples for children, recently launched the World Cup Burger during the six weeks of the World Cup soccer games. The burger, 40% larger than a Big Mac, is a whopping 1,227 calories, or more than half of the 2,000 daily recommended calorie intake.

As research already shows, Americans are eating more hamburgers, french fries, and fried chicken than before (see, 11/9/05, “Fat Times for Fast Food”). And fast-food restaurants are giving it to customers in ever-more appealing forms. This year, in a nod to the increasing influence of new immigrants and globalization, almost all the nation's fast-food restaurants adopted new, spicy foods. McDonald's launched its spicy chicken sandwich, and Hardee's introduced a jalapeño sandwich, which became a permanent item after its limited-time introduction. Sonic (SONC) also introduced its own jalapeño cheeseburger. “Burgers are the No. 1 entrée ordered in America,” says Harry Balzer, vice-president at researcher NPD Food World. “It's good to experiment with different ways of consuming such a popular food and give people reasons to come back one more time.”


  The advertising isn't shy either. For instance, Hardee's has thrived on luring young men into its restaurants by using suggestive ads, the most famous of which showed the socialite Paris Hilton in a swimsuit soaping down a Bentley and taking a bite out of a hamburger. “You can see young men say, that's the brand for me,” says Jeffrey Davis, president of restaurant researcher Sandelman & Associates. “These young men have big appetites and are certainly not dieters.”

Puzder may infuriate health advocates who bemoan the fact that obesity levels in the U.S. are at record highs and who feel that chains like McDonald's and Hardee's are contributing to the problem. But the chief executive says the issue is simply about choice, the long-held American value of letting people make their own decisions. Hardee's, he says, is giving people what they want, not what some Washington bureaucrat says they should want. “People know they can go to a fast-food restaurant and get burgers of quality that they could get at a sit-down restaurant, for a better price and faster,” says Brad Haley, executive vice-president for marketing at Hardee's and Carl's Jr.

Click here to see a slide show of bad things Americans love.

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