Carl’s Jr. is a regional chain with a West Coast orientation and a large burger mix. Key brand attributes include: affordable burgers with double patties; Thickburger Angus platform which is competitive with “better burger” brands but offered at more affordable prices; charbroiling for burgers & certain chicken sandwiches; bold flavor options (addressing large exposure to the Hispanic demo consistent with chain’s geographic orientation); hand-breaded chicken tenders; made-from-scratch biscuits; and milkshakes made with hand-scooped ice cream. The chain’s competitive positioning benefits from an improving value equation, including its compelling Charbroiled Double Deals ($2.99 currently or $2.49 in the recent past). While a historic targeting of “young, hungry guys” explains a 55%/45% male/female ratio, a switch from past use of racy TV ads to more food-focused ads broadens its appeal. Also, efforts to broaden its target market benefits from improved menu offerings for women, new healthful positioning and breakfast. 2018 comps (best since 2012 and +1.2% YTD 10/19) reflects: the chain’s recent de-coupling with Hardee’s; greater emphasis on value; and culling of weaker stores. An out-performing EBITDAR margin reflects a material COGs benefit which more than offsets a relatively low AUV, high ad expenditure and labor cost pressures. Having said all this, it is notable that high rent and labor costs on the West Coast challenge the chain’s ability to sustain competitive pricing in a price sensitive market. Also, sales are challenged by the lack of all-day breakfast (reflecting operational complexities) and digital access (late to the game in terms of customer facing tech & delivery). Further, the chain’s labor cost outlook is pressured by steadily rising minimum wages in California which is problematic given that Del Taco recently reported aggressive QSR pricing in the California market. The brand’s smaller scale and share of voice necessitates elevated ad spend as a % of sales and makes it difficult to support development outside of core markets with net unit count declines over the last 2 calendar years also reflecting a relatively long trend of operating cost inflation against flattish sales and a relatively low sales-to-investment ratio. In conclusion, Carl’s Jr. is making good progress in redefining and supporting its roots around a QSR better burger market positioning that can work so long as the chain is also able to continue competing around price value despite significant West Coast cost inflation prospects.