Hardee's Hometown Cafe settles in small towns; new concept keys into dinner daypart, steers clear of burger wars

Nation's Restaurant News, August 30, 1993 by Milford Prewitt

ROCKY MOUNT, N.C. -- Looking to enhance its long roots in Small Town, USA, Hardee's Food Systems is experimenting with a new restaurant concept, Hardee's Hometown Cafe, as an alternative growth vehicle expressly for small markets.

Hardee's, the nation's third-largest burger chain in sales volume, said the Hometown Cafe concept fulfills nearly a year's worth of internal debate for a way to avoid the burger segment's margin-draining price wars while capitalizing on Hardee's name recognition in small markets.

"It's what we do best, and it's the market where we are known the best," said Maurice Bridges a Hardee's spokesman, in assessing the new concept's market tract.

A key goal in the new concept's mission is to generate sales during the dinner, that elusive but alluring daypart all of the giant burger chains--except Wendy's -- have been struggling to tap for the past four years.

The first Hardee's Hometown Cafe opened in a converted Hardee's unit in Rocky Mount. The restaurant mimics an old-style diner or cafe except that there is not table service. Guests order from a central counter and carry their orders to their tables. The unit seats 50 diners.

Unlike most new product introductions, Hardee's Hometown Cafe brings together the company's marketing, research and development, and operations departments in a joint experiment to gauge customer reaction, kitchen applications and other issues in an actual unit rather than a test lab, Bridges said.

The major point of difference from a traditional Hardee's unit is the menu. It includes seven standard menu items like fresh fried-chicken dinners; open-faced roast beef with coleslaw, mashed potatoes and gravy; smothered salisbury steak with green beans, home fried potatoes (or "home taters," as listed on the menu) and sourdough toast; and some of Hardee's traditional sandwich fare.

The Hardee's Hometown Cafe menu will also feature a broad dessert list, including frozen yogurt, cookies and cake.

Dinners run from $2.99 to a maximum of $5.

Bridges said part of the company's motivation in experimenting with the new concept was to distance itself from the unremitting price wars in the burger segment, a desire that seemingly has intensified in Rocky Mount with the opening of a Wendy's unit and the arrival of a Hot'n'Now double drive-through burger outlet, both with deep discount promotions.

"Wendy's just opened, and here's Hot'n'Now with a burger, fries and coke for $1.17," Bridges said. "Meanwhile, McDonald's is saying, |You boys started this war, but we'll show you how to do it right.' We know we can't get in the price war, but what we can do is offer quality food at good value and this is what we want to capitalize on with the Hometown Cafe."

Reminded that McDonald's also attempted to penetrate small towns with its Golden Arches Cafe concept before scuttling the project last year, Bridges argued that Hardee's is better known in small towns, despite its giant rival's annual billion-dollar outlay for advertising.

"McDonald's is best known as a big-city operator in Chicago, Los Angeles or New York," he said. "But with all due respect to McDonald's, we grew up in small towns and have the brand equity.

"There's a high top-of-mind awareness to the brand name, and we won't be seen as a stranger. If you look at where we are, the majority of our restaurants are in small towns."

Hardee's, parent company of the Roy Rogers chain, has approximately 3,300 units domestically. But over the past two years Hardee's has been closing more stores than it opened.

In addition to strengthening its presence in markets where its brand name is popular, Hardee's also will test Hometown Cafe's ability to attract families and other customers after 4 p.m., the customer segment and daypart the company banked on when it bought Roy Rogers three and a half years ago.

Hardee's Bridges said the company -- a keen observer of Burger King's attempt to provide limited table service after 4 p.m. -- learned some lessons from its arch-rival's troubles in growing the dinner daypart.

"It's our sense that what Burger King did was a good idea, but we think it's the mix of products that makes the difference after 4 p.m.," Bridges said. "The menu is the key at dinner."

Over the past three to five years, McDonald's Burger King and Hardee's have invested heavily in various means to expand business after 5 p.m., perhaps the weakest daypart as a percent of daily sales for all of the burger players.

Burger King rolled out a limited table service and dedicated host program about a year and a half ago but has scaled the program back.

McDonald's was testing a series of dinner meals unrelated to its traditional burger menu but took the test back into its test labs.

Hardee's, which bought Roy Rogers and integrated fresh fried chicken throughout the chain's menu as a way of expanding dinner business, increases its stake in the after-4 p.m. business with Hometown Cafe.

Bridges said the test is expected to last well until the end of the year and beyond. He added that it was far too early to discuss the concept's expansion possibilities although the company could seed similar units in eight or nine other test markets.