Case Notes/Answers
Carl's Jr. Developing a Sustainable Competitive
Advantage By Fabrizio Di Muro
Discussion Questions:
1. What are potential sources of competitive advantage for a company?
2. Is a competitive advantage sustainable?
3. Conduct an analysis of the strengths, weaknesses, opportunities, and threats (a SWOT analysis) of
Carl’s Jr.
4. What changes should Carl’s Jr. make in order to develop a sustainable competitive advantage?
(Hint: to help answer this question, think of how you might further segment the YHG group that
Carl’s Jr. Is trying to sell to, and develop a strategy around these subgroups.)
, W20031
Teaching Note
CARL’S JR.: DEVELOPING A SUSTAINABLE COMPETITIVE
ADVANTAGE
SYNOPSIS
Carl’s Jr. Restaurants LLC (Carl’s Jr.), founded by Carl Karcher and his wife, Margaret, began as a hot dog
stand in Los Angeles, California, in the 1940s. The company moved to a barbeque concept in the mid-1940s
and eventually settled on selling hamburgers in the mid-1950s.1 In its early years, Carl’s Jr. operated solely
in California, but it slowly expanded throughout the West Coast and the Southwest United States.2 The
company also engaged in significant international expansion, and by 2019, it had opened restaurants in
various countries such as Australia, Brazil, Canada, Chile, China, France, Indonesia, Malaysia, Mexico,
Russia, Spain, and Turkey.3 In the 1990s, the company engaged in some co-branding initiatives: Carl’s Jr.
co-branded with Green Burrito, a California-based Mexican taco fast-food restaurant, in 1994 and
eventually bought out the restaurant in 2001.4 Carl’s Jr. also co-branded with Hardee’s Restaurants LLC
(Hardee’s) for many years before the two companies started to operate separately in 2018.5
Since 2002, Carl’s Jr. had targeted a group it referred to as “young, hungry guys” (YHGs)—18- to 34-year-
old men with big appetites.6 The company offered this target group generous portions of unique products,
such as the grass-fed All-Natural Burger and the All-Natural Turkey Burger, at above-average prices.7 Further,
Carl’s Jr. tried to appeal to this group through edgy, provocative ads that featured scantily clad women eating
the company’s products.8 However, in March 2017, Carl’s Jr. abandoned its racy ad strategy.9
With these significant changes—most notably, a new ad campaign and a split from Hardee’s—Carl’s Jr.
struggled to establish its own identity. The company faced significant competition from both the fast-food
and fast-casual sectors, as well as less consideration from fast-food customers; a recent survey had revealed
that only 11 per cent of fast-food buyers considered Carl’s Jr. for their next fast-food meal. Jason Marker,
chief executive officer (CEO) of Carl’s Jr., needed to establish a sustainable competitive advantage to make
the company relevant again in the minds of consumers.10
This Teaching Note is authorized for use only by DR. CAMILLA JENSEN, University of Nottingham until Nov 2024. Copying or posting is an infringement of copyright.
or 617.783.7860.
Carl's Jr. Developing a Sustainable Competitive
Advantage By Fabrizio Di Muro
Discussion Questions:
1. What are potential sources of competitive advantage for a company?
2. Is a competitive advantage sustainable?
3. Conduct an analysis of the strengths, weaknesses, opportunities, and threats (a SWOT analysis) of
Carl’s Jr.
4. What changes should Carl’s Jr. make in order to develop a sustainable competitive advantage?
(Hint: to help answer this question, think of how you might further segment the YHG group that
Carl’s Jr. Is trying to sell to, and develop a strategy around these subgroups.)
, W20031
Teaching Note
CARL’S JR.: DEVELOPING A SUSTAINABLE COMPETITIVE
ADVANTAGE
SYNOPSIS
Carl’s Jr. Restaurants LLC (Carl’s Jr.), founded by Carl Karcher and his wife, Margaret, began as a hot dog
stand in Los Angeles, California, in the 1940s. The company moved to a barbeque concept in the mid-1940s
and eventually settled on selling hamburgers in the mid-1950s.1 In its early years, Carl’s Jr. operated solely
in California, but it slowly expanded throughout the West Coast and the Southwest United States.2 The
company also engaged in significant international expansion, and by 2019, it had opened restaurants in
various countries such as Australia, Brazil, Canada, Chile, China, France, Indonesia, Malaysia, Mexico,
Russia, Spain, and Turkey.3 In the 1990s, the company engaged in some co-branding initiatives: Carl’s Jr.
co-branded with Green Burrito, a California-based Mexican taco fast-food restaurant, in 1994 and
eventually bought out the restaurant in 2001.4 Carl’s Jr. also co-branded with Hardee’s Restaurants LLC
(Hardee’s) for many years before the two companies started to operate separately in 2018.5
Since 2002, Carl’s Jr. had targeted a group it referred to as “young, hungry guys” (YHGs)—18- to 34-year-
old men with big appetites.6 The company offered this target group generous portions of unique products,
such as the grass-fed All-Natural Burger and the All-Natural Turkey Burger, at above-average prices.7 Further,
Carl’s Jr. tried to appeal to this group through edgy, provocative ads that featured scantily clad women eating
the company’s products.8 However, in March 2017, Carl’s Jr. abandoned its racy ad strategy.9
With these significant changes—most notably, a new ad campaign and a split from Hardee’s—Carl’s Jr.
struggled to establish its own identity. The company faced significant competition from both the fast-food
and fast-casual sectors, as well as less consideration from fast-food customers; a recent survey had revealed
that only 11 per cent of fast-food buyers considered Carl’s Jr. for their next fast-food meal. Jason Marker,
chief executive officer (CEO) of Carl’s Jr., needed to establish a sustainable competitive advantage to make
the company relevant again in the minds of consumers.10
This Teaching Note is authorized for use only by DR. CAMILLA JENSEN, University of Nottingham until Nov 2024. Copying or posting is an infringement of copyright.
or 617.783.7860.
