A Texas-Sized Move for Carl's Jr.?

March 16, 2011 - By admin

Katy Grimes: If everything really is bigger in Texas, then the departure of the Carl’s Jr. headquarters from California could be big, big, big news.

Today, Republican Assemblyman Dan Logue hosted another of his monthly Economic Recovery Group lunch meetings to hear firsthand from Andy Puzder, CEO of CKE Restaurants, Inc., the parent company of Carl’s Jr., Green Burrito and Hardees restaurants, on the imminent decision to move the headquarters from California, to Texas.

Carl’s Jr. has 700 restaurants in California, one-half of which are owned by CKE Restaurants, and the other one-half are franchises. The company has more than 72,000 employees total, 18,500 of which are in California.

And while Puzder made very clear that Carl’s Jr. would be “maintaining” status of their California restaurants, the company plans on opening 300 new restaurants in Texas.

Describing CKE Restaurants as a ” job creation machine,” Puzder said that the company had more than $4 billion last year in revenues, and paid $60 million in California taxes.

But more than just the large, Texas-sized revenue and tax bills, new Carl’s Jr. restaurants in Texas have already realized record opening-week sales figures, and much less upfront costs than the California restaurants.

“It costs us $250,000 more to build one California restaurant than in Texas” said Puzder. “And once it is opened, we’re not allowed to run it.”

Puzder discussed the difficult California permitting requirement process, and “oppressive environmental requirements.”  ”It takes eight months to two years to get permits to build a restaurant in California,” said Puzder. “In Texas, it’s one and one-half months.”

As for the difficulty in operating a restaurant once it has opened, Puzder described how California’s restrictive overtime laws are a nightmare for food retail. Because California requires overtime to be paid after eight hours everyday, restaurant managers can’t determine their own hours based on actual production needs, and instead must take mandatory breaks, and collect overtime, instead of being flexible and working when and where needed.

Other states follow the federal overtime laws, and pay overtime after 40 hours in one week, allowing the Carl’s Jr. managers to work more flexible schedules based on actual need. And Puzder said that when there is a line out the door at a Carl’s Jr. restaurant and you see a couple of employees in the corner on break, it is because they aren’t allowed to help with the rush because the break time is mandatory in California.

Puzder said that California is quashing the entrepreneurial spirit. “People are just dying to get out there and make money. But California is setting a bar here,” said Puzder. “You can’t work smarter, harder, longer or better.”

Moving just the CKE Restaurants headquarters would take 500 high-paid California jobs to Texas. And with plans to build 300 more Carl’s Jr. restaurants means more than just the 7,500 restaurant jobs to the “friendship” state. Puzder said that every Carl’s Jr. restaurant is a $1.4 million business, costs $1.2 million to build, and has 25 employees, and feeds a great deal of money into the local and state economy through other jobs that support the operations of a Carl’s Jr. restaurant.

The company spends $120 million annually on advertising, $100 million on capital expenditures (remodeling and building), and $15 million on repair and maintenance.

“I know it would be a psychological blow to move to Texas, but it would be irresponsible of me not to discuss a move to Texas,” said Puzder. “We just want to build restaurants. It’s hard to stay in a place where you feel hated all of the time.”

MAR. 16, 2011

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Comments(16)
  1. John Seiler says:

    Last business left in California please don’t forget to turn out the lights.

  2. Tylerle13 says:

    Maybe the hacks in Sac will pay attention now that the big companies are jumping ship. Small businesses have been moving out of state or closing their doors for years because of the neverending stream of crazy regulations and tax hikes every year. If they pass another tax increase, they will lose even more tax paying businesses. Its going to be hard to fund all of the wasteful state programs when all the taxpayers head east.

  3. Jeff Lassle says:

    Good job Andy.

  4. Deb in Texasa says:

    Hopefully In and Out Burgers will follow… I’m just sayin’…

  5. kbaker says:

    Is Andy saying he wants to close Carl’s restaurants in California and redeploy capital to Texas? If so that’s excellent news for entrepreneurs who are looking for good locations to open restaurants in beautiful California! The more he leaves California out of his expansion plans the opportunities will be better for others! Way to go Andy – leave the Golden State to the rest of us who know how to capitalize on strong demand.

  6. steve says:

    The wonderful tax advantages of Texas must be why Texas is near bankruptcy. Long live the corporations, too bad for the people.

  7. paul Cohen says:

    You’re going to like it!!!!

  8. Dennis says:

    Steve – you’re a joke. Texas near bankruptcy — Not. California on the other hand ~~~~~~

  9. Tony says:

    As former Californians now living in the Katy Texas area, we say COME AHEAD
    Carl’s JR !! As an insurance agent specializing in commercial insurance here, I can guarantee the business landscape in Texas is much better than in California right now.. I ran my own business there & I think I can say for sure Carl’s Jr management will never regret their decision if they decide on the move..

    Tony

  10. MArk says:

    Carl’s Jr is welcome in Texas. Oh by the way Steve, Texas is not anywhere near Bankruptcy. We have Tons of Black Gold in the ground.

  11. Bill S. says:

    Way to go CKE, I tip my hat to you, Texas is friendly, the knuckle heads that have their heads in the sand that say Texas is going broke and california is in the black, tese are the same knuckle heads that stood on the Titanic and said it is not sinking.

  12. PeteS says:

    Why would it take California 8 months to 2 years to approve a burger restaurant that has been efficiently duplicated 700!!! times in their state?

    Must be about jobs. Yes jobs, So the state approval folks can justify the existence of their jobs.

    Of course bowling shirts for the municipal employee league takes about a week.

  13. Larry S says:

    kbaker’s response is so typical of the liberal mentality in California, which is ‘leave!’ Trust me we will leave Baker. I was born and raised here and I am an Independent registered voter. Sadly my wife and I are too old to start anew job wise, (we have our own business), but we have decided to take early retirement (2018) and get the hell out of this state. Hopefully it won’t implode financially before we get out.

  14. Ben says:

    It would be a great move. I miss the OC weather in the hot summers in Texas, but I enjoy my 3,700 squarefoot mansion for 250k all year long. Especially during the california like weather. Oh and I pay 3k less taxes here than I did in Cali and make more money!! I miss the Angels though. It is hot, but kids swim all summer just like they did in Cali!! Finally they are building a Carl’s near me in Katy!!!

  15. Brendan K says:

    Houston would be very very happy to welcome you Mr. Pudzer!! I am sure you know all about the tax and regulatory advantages of coming to Texas, but I’d like to point out that there is a lot more to the picture than just that.

    For example, Houston is the largest city in the USA that has no zoning. Yes sir, you read that right… no zoning. This makes it a lot easier to build or remodel your locations. It also makes it possible for you to actually have real neighborhood restaurants, where the restaurants are in the neighborhood, near where your customers live and your employees work.

    Also, did you know that the Houston suburb of Clear Lake (where NASA is) has the 3rd largest basin for pleasure boats in the US? In large part that’s due to the lower taxes here, so people can AFFORD boats. http://www.swaviator.com/html/issueSO04/SailinginWAS.html

    So please bring your headquarters, and your jobs, to our low tax State!

  16. Aaron says:

    CA has enough fat food! Keep the cheap crap in the south!
    No loss of a burger joint leaving CA.

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