Carl Karcher, Carl's Jr. founding father and fast-food industry pioneer, dies at 90

Nation's Restaurant News, Jan 21, 2008 by Richard Martin

ANAHEIM, CALIF. -- Foodservice pioneer Carl N. Karcher is being remembered as the burly, genial, gravel-voiced entrepreneur and community benefactor who par-layed a single hot dog pushcart into the 3,000-plus-branch CKE Restaurants system.

Karcher, considered one of the last of the fast-food industry's founding fathers and one of the few whose own name came to symbolize a far-flung restaurant empire, died Jan. 11, six days short of his 91st birthday, at the St. Jude Medical Center in Fullerton, Calif., from complications of pneumonia and Parkinson's disease.

In 1937, at age 20, the one-time Ohio farm boy moved to then-rural Anaheim to work in his uncle's feed store. He later would launch his Carl's Jr. chain and Carl Karcher Enterprises in Anaheim, where CKE offices still stand on the former site of his father-inlaw's orange groves, just blocks from where Karcher would raise a large family and live the rest of his life as an Orange County icon.

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He also is remembered for the way his seemingly tireless work ethic, outgoing nature and uncanny memory for facts and figures helped him build a company that would become the industry's seventh-largest fast feeder. He liked to tell people that his parents had taught him "the harder you work, the luckier you may become."

Though he gained public renown for a time as Carl's Jr's TV-ad pitchman, Karcher also came to be seen in his later years as a survivor who surmounted legal challenges, his ouster as corporate chairman in a rancorous boardroom battle and near bankruptcy before he was restored as chairman emeritus in a subsequent regime change he saw as a personal vindication.

Despite those setbacks, Karcher never lost his reputation as a trailblazer and self-made achiever.

"Carl was a pioneer in this industry, a devout Catholic and a loving family man," said Andrew F. Puzder, president and chief executive of CKE Restaurants. "He touched countless lives through his generosity as a business leader and philanthropist, and his legacy will most certainly live on."

Karcher began his career in 1939 working as a delivery driver for a Los Angeles bakery. Two years later he borrowed $311 against his new Plymouth and, with another $15 from his wife's purse, bought a hot dog cart from a bread-route customer, recording first-day sales of $15.50. His wife, Margaret, later worked the night shift on cart No. 2. By 1943 they had four carts in Los Angeles, and by 1945 they'd saved enough to move to Anaheim and open the full-service Carl's Drive-In Barbecue, boasting the stillused smiling-star logo.

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In 1956, with his brother Donald, Karcher opened his first Carl's Jr. and began expanding the burger chain. It went on to pioneer such quick-service breakthroughs as conveyor broilers, carpeted dining rooms, padded seats, landscaped buildings, salad bars, limited table service, char-broiled chicken breast sandwiches and self-service beverage fountains.

He raised $13.8 million by taking Karcher Enterprises public in 1981, when there were 300 Carl's Jr. branches.

As CKE's chairman and chief executive, Karcher added breakfast and began franchising in the 1980s, when he focused on highly profitable operations in four Western states after retrenching from a failed expansion to Texas.

In 1989 he defused insider-trading allegations by paying a $664,000 fine to avoid litigation. Though a five-year-long decline in same-store sales ensued, CKE continued to innovate, including its 1990 rollout of a debit-card payment and cash-back system, and the 1991 enactment of a no-smoking policy as Karcher marked his 50th year in business.

By 1992, however, Karcher's troubled real estate investments had put him in financial jeopardy. After his attempted leveraged buyout of CKE failed, he sought board approval for a pioneering dualbrand relationship and exchange of equity with a company that owned the Green Burrito chain, GB Foods. But the board balked over GB's related offer of a $6 million personal loan to Karcher.

In a move he saw as a betrayal by "turncoats," Karcher was replaced as chairman in October 1993 after the board squabble became public. Karcher, who owned 35 percent of CKE, threatened a proxy fight for control, but the board wouldn't negotiate.

Facing the seizure of most of his shares by two banks, Karcher arranged instead to sell them to investor William P. Foley II, who became CKE's chairman in 1994 and brought Karcher back as chairman emeritus under a five-year contract. Foley then hired Carl's Jr. franchisee Tom Thompson as chief executive, replacing a former KFC president whom Karcher considered the instigator of his ouster.

Later in 1994, Carl's Jr. began a highly successful co-branding with Green Burrito, which eventually was acquired by CKE and melded into hundreds of dual-brand restaurants.

The following year, though facing a margin call on his depressed stock and a steep tax levy on his deal with Foley, Karcher resisted advice to file for bankruptcy to save his home, where he loved to show off scores of framed photos of himself with such luminaries as Ronald Reagan, Mikhail Gorbachev and Pope John Paul II.