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Let the burger wars begin

Don’t look now, Hungry Jack.

U.S. burger chain Carl’s Jr. has announced plans to expand into the Australian market. The chain expects to open as many as 300 stores throughout the country in the next decade.

This follows Carl’s successful move into New Zealand, which saw eight franchises open within the last eighteen months. Emboldened by their success across the Tasman, executives at Carl’s Jr. parent company CKE Restaurants hope the new Australian stores will help the company to ultimately double its global store count.

“Australia is a highly attractive market for Carl’s Jr.,” said chief executive Andy Puzder. “Our research shows that the strong economy here, combined with our positioning and premium food offering complement what we’ve seen in New Zealand.”

Will sexy ads drive sales Down Under? 

In its home market in America, the chain is a well known purveyor of massive burgers   — some of which top the 1,000 calorie mark — to a core customer base of “young, hungry guys” ages 18 to 34. It’s also notorious for its online and TV ads, which feature bikini-clad models eating burgers in the most suggestive manner possible.

Writing in The Los Angeles Times in 2009, former columnist Dan Neil described one such ad, featuring Padma Laksmhi, as a “weird mash-up between sex and diabolically unhealthful fast food.” More recent ads featured supermodel Kate Upton.

Whether Carl’s Jr. will use similar advertising to achieve its growth goals in the Australian market remains to be seen. But let’s be honest: it sure seems likely. This is very much the burger maker’s modus operandi.

Carl’s Jr. to eat local competitors’ lunch?

In any case, Carl’s Jr. surely doesn’t need these ads to alert other Australian quick-serve restaurant operators that it’s on its way.

Most notably, soon-to-be competitors include Domino’s Pizza (ASX: DMP), currently on the offense with its March 11 “big announcement” about new toppings deemed underwhelming by some commentators in the social media sphere. There’s also Retail Food Group (ASX: RFG), the franchiser behind Donut King, Michel’s Patisserie, and Brumby’s Bakeries, among others. Both chains have been busily expanding their own store counts.

Collins Foods (ASX: CKF), operator of Kentucky Fried Chicken and Sizzler restaurants in Queensland, will no doubt also be paying close attention. That’s to say nothing of even more direct competitors such as McDonald’s, which has nearly 800 stores in Australia, and Hungry Jack, which has over 300 stores.

$37 billion industry heats up

In 2011, it was reported that Australians were expected to spend more than $37 billion on takeaway food that year, making us the 11th biggest spending fast-food nation on earth. It’s inevitable that the entry of Carl’s Jr. into this already crowded space will heat up competition. There are only so many “young, hungry” Australian men, after all.

However, chief executive Puzder has shown a willingness to serve those outside the restaurant’s core demographic. “We also believe that there’s a real appetite for Carl’s Jr. amongst not only our target 18 – 34 year old male audience… but also everyone in Australia who aspires to be young,” said Puzder.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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