In the next five years, the nation's No. 3 burger chain plans to add 200 locations in the Chicago area.
The Rocky Mount, N.C.-based chain won't, however, put up the $200 million needed to carry out the expansion. Still loaded with debt from its $365 million purchase of Roy Rogers in 1990, Hardee's will turn to 15 existing franchisees and look for up to 60 more to open the stores, said Gerald L. McGinnis, exec VP-restaurant development.
About 30% of Hardee's 4,000 U.S. stores are owned by the company. The chain is now opening only one corporate-owned location for every eight franchised stores.
With the Chicago expansion, Hardee's will make its strongest local bid to steal business from McDonald's Corp., the Oak Brook, Ill.-based giant with 356 Chicago area stores; No. 2 Burger King Corp. of Miami, with 227 local sites; and Wendy's International of Dublin, Ohio, the fourth-largest burger chain with 137 area stores.
Representatives of those chains declined to comment.
Already operating 239 sites across Illinois-making the state its third-largest market-Hardee's is now moving into "the jewel of the crown of Illinois," Mr. McGinnis said. "We've basically surrounded Chicago."
Just two of Hardee's 58 local locations are downtown. The chain aims to open at least half of the targeted 200 new sites in Cook and DuPage counties.
"The strategy is to go from the outside in," said Wayne Workman, president of Chicago Franchise Services, Hardee's Chicago franchise development broker.
Hardee's expansion plans are hardly surprising given the dominance of other chains in the area, said Robert J. Segal, president of the Restaurant Consulting Group in Evanston.
There's a reasonable chance of success, Mr. Segal said, given the city's appetite for eating out and the fact that "Chicago is actually underchained."
In bulking up its local presence, Mr. Segal added, Hardee's will be able to spread out the costs for the marketwide advertising from Chuck Ruhr Advertising that's essential to increase store awareness and sales. The Minneapolis agency handles an 11-state region. Deutsch, New York, handles Hardee's $75 million national account.
Ms. Gallagher is an associate editor for Crain's Chicago Business.