Checkers Traffic Falls During Pandemic, and Sales Climb Anyway

Checkers Drive-In Restaurants Inc. revenue increased during the pandemic as customers stuffed more food into each transaction, helping to offset a dip in visits, according to private financial results reviewed by Bloomberg.

Revenue from restaurants rose 4% to $64.4 million from March 24 to June 15, according to fiscal second-quarter results prepared for the company’s lenders.

Chief Executive Officer Frances Allen joined the company in mid-February and two weeks later held an emergency meeting to figure out how to respond to the coronavirus outbreak. The food chain had a built-in advantage with a dual drive-through format.

“We put in 15 new procedures in a matter of days,” Allen said in an interview. “We’ve obviously gotten a tailwind with the timing of the stimulus.”

Reversed Trend

Earlier this year, before Allen could implement either a pandemic response or a broader rejuvenation plan, Checkers was trailing much of its competition, according to data from market researcher NPD Group Inc. Sometime in March, the trend flipped. As pandemic shutdowns took hold across the U.S., Checkers losses were smaller than the group average of nine competitors, which included Sonic Corp., McDonald’s Corp. and Burger King Corp., NPD’s weekly tally shows.

By April, Checkers had pulled even further ahead, posting weekly sales 10% to 20% higher than the previous year, while the nine competitors combined averaged losses or flat sales growth, according to NPD.

The company breaks down its results into 13 time periods. On that basis, same-store sales for periods 4 to 6 that ended June 15 rose 7.3% for company-operated restaurants and 9.7% for franchised locations.

During that time frame, company stores saw traffic fall by 15.1%, but this was more than offset by an increase in the size of the average sales check, which jumped by 26.2%, Checkers reported.

Veteran Recruit

To help her guide the company’s comeback, Allen recruited Lenny Comma, the retired Jack in the Box Inc. CEO, to join the Checkers board, according to a person familiar with the process. Comma ran Jack in the Box from 2014 until retiring in June.

Checkers struggled in recent years after unflattering videos surfaced on social media showing employees smoking inside kitchens and mopping the floor with burger buns. The company was acquired in a 2017 leveraged buyout by New York-based private equity firm Oak Hill Capital Partners LP for $525 million including debt from Sentinel Capital Partners LLC, which bought Checkers in 2014.

The chain dates from 1986 when it opened in Mobile, Alabama. Checkers combined with fast-food outlet Rally’s in 1999 and many locations bear the 1950’s checkerboard theme as they serve burgers, milkshakes and wings.

©2020 Bloomberg L.P.

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