An Oral History with ANDREW PUZDER

CENTER FOR ORAL AND PUBLIC HISTORY CALIFORNIA STATE UNIVERSITY, FULLERTON

Karcher Family/Southern California Food Culture and Visionaries Oral History Project

Interviewed

Allison Varzally

December 7, 2009

OH 4430

This is a slightly edited transcription of an interview conducted for the Center for Oral and Public History, sponsored by California State University, Fullerton. The reader should be aware that an oral history document portrays information as recalled by the interviewee. Because of the spontaneous nature of this kind of document, it may contain statements and impressions which are not factual.

Scholars are welcome to utilize short excerpts from any of the transcripts without obtaining permission as long as proper credit is given to the interviewee, the interviewer, and the University. Scholars and those intending commercial profit from the use of this material must, however, obtain permission from California State University, Fullerton before making more extensive use of the transcription and related materials. None of these materials may be duplicated or reproduced by any party without permission from the Center for Oral and Public History, California State University, PO Box 6846, Fullerton CA 92834-6846.

CENTER FOR ORAL AND PUBLIC HISTORY CALIFORNIA STATE UNIVERSITY, FULLERTON

NARRATOR: ANDREW PUZDER

INTERVIEWER: Allison Varzally

DATE: December 7, 2009

LOCATION: Carl Karcher Enterprises in Carpinteria, California

PROJECT: Karcher Family/Southern California Food Culture and Visionaries

AV: I’m Allison Varzally here with Andy Puzder on Monday, December 7, 2009 in Carpinteria, California. And, it is my great pleasure. And, thank you for creating some time for us, and being so patient. Um, I’m gonna start off—

AP: It’s a pleasure to be here, and I’m glad you’re doing this for Carl.

AV: Yes. Well, I’m gonna start out with some general background questions—

AP: Sure.

AV: —and then, maybe some questions about, um, Carl, the individual and the entrepreneur, and then, ask some general questions about the evolution of the food business in Southern California and your role in that evolution. So—

AP: Okay.

AV: —um, if you would start off—would you spell your name for us?

AP: It’s, uh, Andrew F., and then, Puzder is P as in Peter, u-z-d as in David, e-r.

AV: Um-hm. And, where were you born?

AP: Uh, Cleveland, Ohio.

AV: And, how did you find your way to Southern California?

AP: I went to law school in St. Louis, Missouri.

AV: Um-hm. PUZDER O.H. 4430

AP: At Washington University. And, in 1986, I got a telephone call to represent, uh, a guy called Carl Karcher (laughs) in, uh, in a lawsuit in federal court in St. Louis. And, in connection with that lawsuit, Carl and I got to be very good friends. And, at one point, uh, he—his lawyer of thirty years had decided to retire and go into the, uh, into the real estate business. This would’ve been in 1990. And, I had only handled the one case for Carl, but he called and said, “Would you like to handle some more business for me? My lawyer’s going to retire.” And I said, uh, “I’d like to handle all your business for you. (both laugh) And-uh, I’ll fly out and spend a week in Anaheim a month, and you cover the, you cover the hotel, and the firm will cover the airfare. And, I’ll bill you at St. Louis rates, as opposed to California rates.”

AV: Which, presumably were lower, right?

AP: Were lower, yes. And-uh—and, he liked that. Carl and I had gotten to be good friends in connection with that one case. And-uh—and then, I was—as I was—for about a year I flew back and forth and realized that while Carl thought he was worth $150 million, he was essentially bankrupt. And-uh—and, you know, had a number of really bad investments, and was, was kind of not being told by his advisors just how bad things were. And so, I sat him down in the house—at his house and said, “Look, you need to know this.” And, he—at first he said, “No, no.” He says, “That can’t be true.” And, I went—Carl was very good with numbers. He was kind of a savant with numbers. So, I took him through the numbers. And, at the end he said, “Well, I guess you better move out here and get me out of trouble.” (both laugh) And, I talked to my wife, and we decided that it was—uh, it would be a good move, you know? It was something we wanted to do. I mean, it really was a tough decision. I’m being kind of glib about it. But, I was, uh, an equity partner at a prestigious firm in St. Louis and had clients, and went to law school there, lived there sixteen years. So, I was, uh—I had a good career there, but decided that, uh, I wanted to see if I could get Carl out of trouble. And, I liked California. So, we made the move.

AV: So, tell me, why was it that Carl first approached you in 1986? And then, how did you discover these, uh, financial discrepancies?

AP: Well, it’s kind of interesting. I, I had a case for a, I had a case for a, uh—I had done a lot of traveling out West early in my career. I used to—I started out representing Morris Shenker and the Dunes Hotel. He was the major shareholder of the Dunes Hotel in the seventies, late seventies, early eighties. And, he had a lot of real estate holdings in California and Nevada. And, I represented—I worked in Morris’ office and represented him in the West and made—met a lot of people. And-um, a broker who I knew, um, had a broker—a securities broker I knew had gotten sued. His firm had gotten sued in St. Louis. And so, he called and said, “Would you represent us in this case,” which I did. And, there was a—the broker who had, who had created the problem that lead to that lawsuit was, um, a broker in a different, in this case I handled for Carl. And, I had settled the first case, um, you know, for very little money and got the broker who had caused the trouble out of trouble, which he loved.

AV: (laughs)

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AP: And so, when Carl got sued in St.—in—actually, Carl was sued in Kansas City. The original case was in St. Louis, but Carl got sued in Kansas City. But, people in California think Kansas City and St. Louis are, like, right next to each other, you know?

AV: (laughs) I know.

AP: So, when the, uh—so when the, um, when this broker who was also involved in Carl’s lawsuit found out that the case was in Missouri, he said, “I know just the guy.” And-um so, they called. And-uh, I remember I got the call sitting at my desk, and somebody said, “Well, Carl Karcher, uh, who’s the CEO of Carl’s Jr. and the founder, has been sued in Kansas City. Can you handle the case?” And, I wasn’t really all that familiar with who Carl was, at the time. I knew about Carl’s Jr. from my travels in the West. But I said, “Sure, just send me a check for $10,000 and-um, a copy of the complaint, and I’ll run a conflicts check.” And, I got ‘em both FedEx the next morning, so—and then, on September 24, 1987, which was the day that I got married— (laughs)

AV: Busy times.

AP: Yeah. I, I had to meet with Carl the next day. So, before our—my wife’s and my honeymoon, we, we got married, we flew to California, (laughs) I met with Carl the next day. That was my first meeting with Carl. And-uh, you know, then we just, we just hit it off right from the beginning.

AV: And so, what were you first impressions, uh, of Carl?

AP: Well, that he was big. That was the first one. (both laugh) And, that he spoke very, very fast. I mean, Carl was, uh, was very difficult to understand if you didn’t, if you didn’t know him well. He, he actually—there was, um, a guy named Eric Ingle that ran Carl’s trust, at the time. And, we’d have a meeting with Carl that would go fifteen, twenty minutes, and I’d have to ask him afterwards exactly what Carl had said because he would, he would speak so fast, and assuming that you knew things, you know, that maybe you didn’t know. But, after a while, he—Carl—what a wonderful guy—he would tell the same story over and over. So eventually, you started—did begin to understand him. And then, I was interpreting for people who (both laugh) had sat through a meeting. But, it was—and, you know, he was a very engaging guy, very charismatic, obviously in control in the room. Very smart guy, a real interesting individual.

AV: And, when you moved out—and, this was a risky decision for you and your family, professionally.

AP: It sure was. (laughs)

AV: What were those early years like as you became Carl’s attorney?

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AP: Well, they were real interesting. We, um—when I moved out, we had twenty-six different matters for Carl, any one of which could’ve put him into bankruptcy. I was there with one client, basically, who was on the verge of bankruptcy. (laughs) You know, so it was—we needed—plus, Carl told me if I didn’t get him out of trouble, he’d, he’d fire me. So, it was, uh—he didn’t, he did not want to declare bankruptcy. He was adamant about that, despite advice from, um, his financial advisors and-uh— and, a bankruptcy attorney, one of the top bankruptcy attorneys in Orange County.

AV: Why was he so resistant? And, what were the sources of his financial troubles?

AP: Well, the, the sources were, uh, Carl’s, uh, generous heart and his trust of people. I think if you came in his office, and, you know, told him that you were Catholic, and you, you needed a chance, and you had this great business idea, that he would invest. And, he, he had gotten a lot of money when the company went public. He probably should’ve kept it private; he would’ve made more money. But, when he went public he got a lot of money and-um, felt that everybody that came in was kind of like him.

AV: Um-hm.

AP: Well, here’s a guy with an eighth grade education who used to work, uh, you know, worked on the farm at home, came out, ended up driving a truck, met his wife at, at church. And-uh, you know, he felt if people had a chance they could succeed.

AV: Um-hm.

AP: And, that really what you needed was a chance. And, I think some of the darker sides of the human nature were, were things that Carl easily ignored. And so, he was, uh, taken advantage of by a number of people. And so, he, um, he made too many loans and invested in too many projects, really wanting to build up—Carl had plenty of money. Carl didn’t need more money for anything for himself, but he wanted this foundation that would be enduring after he passed on and that would do charitable work after, you know, Carl and Margaret were gone. So, he overinvested. And then, your second—what was the second part of your question? The first one was—

AV: That, that—the origins of the bankruptcy. And then, also, I guess, how you lifted him out of bankruptcy?

[00:09:01]

AP: Well, the first thing I did was, we got rid of most of the people who were advising Carl and brought in new people. (laughs) And, I brought in a friend of mine named Ed Pasquale, who was, um, actually used to work in Las Vegas for the Dunes, and was a, a CFO, and was an accountant, um, a CPA, and had been, actually had been himself the CEO of a small public company. So, Ed had good experience. And, he and I had worked trying to get Morris Shenker out of trouble. Morris had similar problems. He was overcommitted, lot of real estate loans, uh, owned 40 percent of a public company—in that case [he] owned the Dunes Hotel, not, not, uh, Carl’s Jr.

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Restaurants. But-uh, he had experience in getting people in workout1 situations out of trouble. And, we just, we took the twenty-six matters and-uh, lined ‘em up and said, Look, let’s start at the top and work our way down. And, we went through them one at a time, dealt—we had a huge loan with Union Bank. (clears throat) And, it took us months to negotiate out of that. We actually went through a process where we tried to negotiate with his lenders, didn’t work; we tried to take the company private, uh, didn’t work. And then, they fired Carl. This was a big thing back in 1991, ‘92 where they had fired Carl. And, we put together a—and, Carl had a—we were going to have a, uh, proxy contest, a hostile proxy fight to get rid of the board of directors. And, in the process of coming up with directors for that, I—another client of mine—I’d gotten, uh, Fidelity National Financial, which is a title insurance company—had become a client of mine once I moved to California. And, the CEO of that company, Bill Foley, was, uh, kind of a dealmaker, an investor. And, I met with Bill, and we got Bill to bail Carl out of the Union Bank problem. And-uh—and then, Bill took over as the CEO of the company. We brought Carl back, he became chairman emeritus, and- uh, that got him out of the Union Bank mess. But, there were still these other twenty- five matters, and we just, we dealt with them one at a time. Everybody understanding that if anybody filed suit or pushed too hard, that it would scare all of the other creditors—

AV: Um-hm, um-hm.

AP: —into, uh, filing suit. And, if they did that, that we’d have a—he would be forced into bankruptcy and would financially collapse, and nobody would get paid. And, the way we did it, essentially everybody got paid. And-uh, I remember, we were about—you know, Carl was a very religious man. His faith was a very big deal to him. And, I think we were through about half of these twenty-six matters, and I was sitting with Ed Pasquale in my law office, and Ed said, “You know, God, we’re really—we’re really good, you know? We’ve got thirteen, fourteen of these resolved, and we only have—” I said, “You know, Ed, I’ll be the first one to admit that we’re really good. (both laugh) But, but, there’s something else going on here. There’s, you know, there’s no way! Even, even we shouldn’t be able to get him out of all these. There’s, there’s a higher power involved here.” So, I would have to say, um, you know, God had an eye on Carl Karcher, and- uh, that was kind of a big help as we went through the process.

AV: And, was Carl faithful through that process? Did he believe that, um, bankruptcy could be avoided?

AP: Yes, Carl was, uh, an eternal optimist. He always believed things would get better, and that there would be a way through this. We actually had a big, a big fight, a big discussion with him. Uh, it wasn’t a fight between Carl and I—I don’t think Carl and

1 Industry term used to describe the situation of a company in dire financial straits that must workout a system to restructure their debt or group of debts. 5

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I ever fought—but, it was between Carl and the bankruptcy lawyer we brought in. It was a very, very reputable bankruptcy lawyer in Orange County, and [he] told him he absolutely had to file. Uh, you know, as it turned out, there was a question, at that time, where, where if you filed, your creditors who were secured could foreclose on your stockholdings. The bank held a lot of the stock of Carl’s—of this company, um, as collateral. And, it turned out that the, a couple of years later the decision was that, that bankruptcy wouldn’t protect you. So, if Carl had filed, at that point, he, he—over the years he would not have wound up with the protection that you file to get. But, Carl was adamant. He would not file. And-uh—and, he didn’t.

AV: And, why was he so adamant against filing?

AP: I think it was his growing up in the Depression, his Horatio Alger story, how he was a, you know, a self-made man who was very proud. Carl was a very proud guy. And, this going into bankruptcy was something that decent people just didn’t do.

AV: Hm.

AP: And, to Carl, this was not something he was willing to do.

AV: In the end he didn’t have to.

AP: In the end he didn’t have to.

AV: And, you mentioned, um, changes in personnel and negotiations with various lenders. Were there other shifts in business practice that you recommended for Carl to make sure that once lifted out of bankruptcy that he stayed out of bankruptcy?

AP: Well, there was, yeah. Well, you know, I, um—once I got Carl out of bankruptcy, I—Bill Foley, who had made the loan to, to Carl, put together a partnership to make a loan to Carl to get him out of his biggest problems. I became Bill’s attorney, and then, I became general counsel at Fidelity. And, Bill was also CEO and chairman of Carl’s, as I said. And, I became general counsel at Carl’s. And, the stock—we, we bought Hardee’s.

AV: Um-hm.

AP: And, the stock went up to about 40, $42. And, I sat down with Carl, and I said, uh, “You know, Carl, you should sell some stock. ‘Cause, now, you still have a lot of stock in the company. Sell some stock, pay off your remaining debts, any debts you have, and then just enjoy, you know, enjoy the rest of your life, and you’ll still be a very wealthy man.” He said, “No, the stock’s gonna go to 60.” The eternal optimist, Carl, it’s going to go up. And I said, “Carl, you know, you should just—you only have to sell—” he had maybe, I don’t know, maybe 3 million shares. [I said], “If you have to sell 500,000 shares, right, at $40, that’s, you know, $20 dollars. You can pay off your debt. And, you still got 2.5 million shares left.” “Uh, no. You know, it’s gonna go to 60. You know, I—” so, he didn’t sell, the stock went to 2. And, he was kinda back in the mess. But then, we got the stock back up, and it was okay.

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But, it—you know, he did good in—thank God we’d gotten all those matters resolved. But, they ended up—the person who made him the grievous, the, uh, margin loan that was the 20 million in debt that I wanted him to pay, they ended up selling the stock. And so, he ended up going from 3 million shares down to about 700,000 shares, uh, ‘cause they had to sell the stock to pay off the debt. You know, he didn’t listen to me there. (both laugh) I was trying to think of another place—and most, most of the other, while I was actively representing Carl and we were going through this mess, I would say we were very much in sync. We were on the phone regularly. He was in my office, or I was in his almost every day.

AV: And—

AP: And, there was—and, by the way, if you’re doing this history, there was—the Orange County Register and the, uh, L.A. Times covered this, you know, for months, you know, almost every day. And the, uh—as a matter of fact, I remember I’d be on the phone with Carl—I had—I have six kids. My, my—three of them are—you know, by this time were pretty much in college or late high school. I have my, my now seventeen-year-old, Matthew, was just a little guy, and I would hold him and he would—he, uh—and, I’d be on the phone with Carl. My wife was in law school, at the time, at night, so I’d be holding him, talkin’ on the phone to the press or to Carl.

AV: (laughs)

AP: Matthew and Carl were very close. Carl really liked Matthew. Matt used to call him Carlo. And, Carlo wanted to do, Carl wanted to do a, uh, an Italian burger and call it the Carlo Burger, after Matthew.

AV: (laughs)

AP: But, in any event the, um, reporter that covered the story for the Orange County Register, who’s a—became, we became very good friends. His name’s Russ Stanton. Russ is now the editor of the L.A. Times. But, but, around the time of this bankruptcy thing, I think somebody from the—somebody told Russ in a phone call that Carl was going to file bankruptcy the next morning. And, I got a call at, at home, maybe 6:00 or 6:30, “Andy, we’re going to run this story. Carl’s gonna file bankruptcy in the morning. I’ve got it on very good authority.” I said, “Well, you know, you have it on even better authority that he’s not going to file.”

AV: (laughs)

AP: And I said, “If you want, I’ll get Carl on the phone.” But, I was in this meeting, and he was adamant that he will not file. And I said, “And, Russ, if you print this story, if you print a story he’s gonna file—everybody is gonna go in and file a lawsuit, and we’re kind of at the—”

AV: Yes.

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AP: “—at this delicate balancing point, where if they all file, we’re gonna be in big trouble.” And he says, “Well, let me call you—” he wanted to talk to his editor, call his editor. And he says, “Are you sure? You’re absolutely—” I said, “If you print that he’s gonna file for bankruptcy, you will be printing a false story, but your story will create the reality of the bankruptcy. And, we’ll be very clear about that when we’re interviewed.” And, he didn’t run the story, thank God, ‘cause it really would’ve sent us over the, over the edge. But, Russ is now the editor of the L.A. Times with much bigger problems than—

AV: Yes.

AP: (both laugh) —as they try to fight off the digital world.

AV: And—but, at this time, there was such attention to this particular story. Why do you think at least the Southern California newspapers were so intrigued by this story?

AP: Well, they were really intrigued by the fact that Carl, who had—who really was an icon in, uh, in Orange County in a—politically, economically, he was really viewed as this—you know, really an example of what you could do in America. And-uh, what was his book called? Never Stop Dreaming. Well, Carl never did stop dreaming. He, you know, he was dreaming right up to the end. He always had something going on. And, to take—and, I think the fact that he might have gotten himself in over his head and really kind of destroyed that was, was something people were intrigued by. But, I think a lot of people were really rooting for Carl. And, every time we ran a story that indicated something positive, I’d get a lot of phone calls, uh, from people really encouraging about, uh—you know, Carl’s reputation helped save him.

AV: Um-hm.

AP: I mean, part of the negotiations with people was, Look, this guy does not want to file bankruptcy, and he does want to see you get paid. We just need the time. And, this is, you know, the fact that it was Carl made the difference. If it had been somebody else, they might not have believed that.

AV: You mentioned that, um, over the course of your working relationship with Carl that the two of you were in sync. Was there a common vision for the business or common values that you drew from?

[00:19:40]

AP: Well, we’re both Catholic, and we share political views. Uh, we’re—we were on the same page in that respect—and, family views.

AV: Um-hm.

AP: So-uh—and, we just—you know, Carl and I just got along extremely well. We were best friends. I mean, it was, uh, it was a wonderful relationship. We would—my

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kids, my younger kids don’t remember—you know, we left—my wife’s family’s in St. Louis, and mine’s in Cleveland. We didn’t have family in California, so if you talk about family gathering to my, my younger children, they’re the ones at Carl’s house. He would invite us to all the—if there was a get together at San Clemente at their house or at Anaheim, uh, you know, I know all the kids, I know all the grandkids. I mean, we were, we were treated like part of the family. That’s the way Carl was, anyway. So, it was—we, we were in sync. And, I think Carl, Carl knew that solving these problems was sorta beyond his expertise. And-uh so, I could talk very openly with him and we generally went in—other than the one time I told him to sell and he wouldn’t sell, I think—I don’t think we every had a splitting of opinions.

[00:20:48]

AV: (laughs) You mention the decision, um, to purchase Hardee’s. What was the thinking behind that?

AP: Well, that was, really—you know, Carl was on the board of directors when that happened. But, he was no longer an officer of the company. It was kind of after Carl’s day. But, the thinking was, uh, Bill Foley, who was, uh, very much of a visionary dealmaker and has done extremely well in the financial services industry—I had been buying up restaurant companies like crazy since, uh, since he got, he was running Carl’s he bought, uh, geez, JB’s Family Dining, La Salsa, uh, we ended up buying Green Burrito. We bought Checkers, Rally’s. Uh—and, the idea was always to sort of grow, uh, grow Carl’s Jrs. nationwide, if you could. And, the idea with Hardee’s was we would buy Hardee’s and turn it into Carl’s.

AV: Oh, um-hm.

AP: And then, we would have Carl’s Jr. coast to coast. Now they, they tried that in— Oklahoma and Peoria were the first two markets converted, and it didn’t work. So, that’s what really took the stock from forty-two to two, was the inability to get that, um, that purchase to be what they had envisioned it would be. And so—but, the idea was you would take Carl’s Jr. coast to coast.

AV: And so, Hardee’s persisted, and the conversion didn’t happen.

AP: Yeah, actually there was a meeting. I was—at this point, I was the lawyer for Carl’s and executive vice president. And, I negotiated the deal to purchase Hardee’s in New York. And then, we went to Rocky Mountain, North Carolina, where Hardee’s was located. And, all the operators and everybody had a, had a big meeting, and I was there to fire lawyers. Hardee’s had, like, twelve lawyers; they needed three. It was an overstaffed, poorly run company. It had just been, really, kind of messed up.

AV: Um-hm.

AP: And, in the meeting, the operators—and, Bill was there—they were all talking, Well, we’re gonna take Hardee’s, we’ll keep the breakfast, but we’ll take the signs down. We’ll put in Carl’s products, put Carl’s sign up. And, you know, I looked around at

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everybody in the room, and everybody in the room was from, uh, everybody in the room was from California except me. (laughs) I said, “You know, I grew up in Ohio, and then I lived sixteen years in St. Louis where they had Hardee’s.” I said, “You know, I don’t, uh, I don’t think this is going to work. I think you guys are ignoring the fact that Hardee’s is a pretty established brand, and that, really, people in the Midwest and Southeast, they have no idea what Carl’s Jr. is.” And, they laughed and they said, “Andy, you know, go buy something or go fire a lawyer.” You know, I had known these guys a long time ‘cause—from my Carl’s days. And-uh so, I did. So, the next couple of years I, I actually was working for—I was also executive vice president of Fidelity. And, I spent the next two years working kind of buying Chicago Title for Fidelity. And then, I went to this board of directors—and, the stock just—and then, they tried this conversion in Peoria and Oklahoma City. To this day, Oklahoma City is, Oklahoma is the lowest average unit volume Carl’s market in the country. In Peoria they had to change back from Carl’s to Hardee’s— they changed it from Hardee’s to Carl’s, [and] had to change it back to Hardee’s or close the restaurant. Because, the, the research indicated people who lived in those areas looked and said, Hey, where’s my Hardee’s, and who the hell is Carl Jr.? (both laugh) And, you know, it just never—you know, Carl’s is really well-known in the West; it was, at that time. You know, Famous Stars and Super Stars are, like, you know, Whoppers and Double Whoppers and Big Macs and Quarter Pounders. People who grew up here think of them the same.

AV: Um-hm, um-hm.

AP: You get out of this part of the country, and people do not think of them the same. The Famous Star is—you know, Famous Star is a better Whopper. And, you know, it’s better than a Whopper, but it’s a little better Whopper.

AV: Um-hm, um-hm.

AP: Well, you know, in Knoxville, Tennessee, they’re not looking for a little better Whopper. It just didn’t matter to them. And so, it wasn’t something you could sell. Now, The Six Dollar Burger has made a difference. We’ve been able to go into markets ‘cause nobody really has anything comparable to The Six Dollar Burger line. But, at the time, we had Famous Star, Super Star, and Western Bacon Cheeseburger. And, we’ve never really been able to get the Western Bacon Cheeseburger to sell in the Southeast and the Midwest. I don’t know why, it’s my favorite burger, everybody loves it. But, we even—we’ve tried to introduce it at Hardee’s and it, it does okay for a while, but then it stops. So, they, they had to change it back. And, I went to this board of directors meeting. I’ve been buying Chicago Title; the stock went from 40 to 2. I knew in, in Orange County, 200 [or] 300 people would show up for these board of directors meetings ‘cause it was, you know, it was little old ladies who were, you know, schoolteachers that invested because Carl ran the company. They invested in 1982 when it went public. You know, it was—a lot of people would come. And, I knew there was gonna be problems. So, I walked into the meeting, and-uh, I didn’t do anything. I was the secretary and general counsel, I

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had my pinstripe suit on. I was thinking of what kind of joke I could tell while they were counting the votes, you know? (both laugh) And-uh, Bill Foley was with Allum—Byron Allumbaugh, who is our chairman of the board now, took over as chairman from Bill. They were—all the board was, like, in, like, a corner. They said, Andy, come here. You’re gonna be the CEO of Hardee’s. I said, “I’m going to be what? (both laugh) So, why on earth would you make me the CEO of Hardee’s?” Well, they wanted to do this conversion, and you were the only one who knew that it wasn’t a good idea. (both laugh) Well, I think they really just said, Let’s see if the cocky lawyer can fix it, you know? ‘Cause, ‘cause, I always had an opinion about—I actually learned a lot about fast food representing Carl. You know, you’re with Carl Karcher—

AV: Um-hm.

AP: —every day for how long? Maybe five, six years, you know, you’re gonna pick up on a couple of things. And-uh so, I always had opinions as to what would work and what wouldn’t work. And, Carl had a very simple approach to the business, and it worked well. I’ve been using it ever since. You know, it’s a—very smart guy, and a guy who knew what he was doing. But anyway so, I became the CEO of Hardee’s, and then the CEO of the whole company, Carl’s and Hardee’s. It was a very good friend of mine—and, still is—he’s a franchisee of Carl’s and still very supportive. He called me and said he was gonna resign. Let’s see, June was the shareholders meeting. In August, Tom Thompson calls and says, “I’m gonna resign. If you, if you don’t wanna work for somebody else, you better get out here.” And-uh so, I went to the board meeting. And so, they made—elected me, uh, CEO of the whole company.

AV: You mentioned both, uh, Carl’s Jrs.’ simple approach, and then, um, changes that you made over time as you learned the business. How would you describe Carl’s approach?

AP: Well, Carl—number one was the consumer, was the customer. Carl was very, very customer focused. So, it—you know, some of these other guys who came in and were more deal guys, they wanna come in and they want, you know, it’s the signage, it’s the new product, it’s the ad. Well, with Carl, it was always the customer, and what did the customer want. I remember when we, we were approached by a guy named Willie Thiesen, who had, was the founder of Godfather Pizza, and sold it for a bunch of money, went out of the business for a few years and then came back and had bought controlling interest in a company called Green Burrito, which just had a few little Mexican restaurants. But, he had this idea that you could put it in other brands. And, he met with Carl, and Carl really liked the idea. I remember we were sitting in Carl’s office in Anaheim while these discussions were going on, and I said, um, “Carl, do you really think this, this Green Burrito thing can work? I mean, you got Carl’s already. You gonna put, like, a separate menu in the restaurant? Do you think that’s gonna make a difference?”

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AV: Um-hm.

AP: He said, “Well, we got Restaurant 512 out here.” I said “Yeah.” He said, “Now, think about lunchtime there.” Okay. He said, “Now, think about adding a dozen Mexican food items on a menu next to the menu we have now.” I said, “Yeah.” He said, “Well, do you think we’d sell more food or less?” So, “I guess you’d sell more.” So he says, “Then, it’ll work.” (both laugh) So it, it was a very, very what the consumer wanted approach to the business, not what deal can we do, what—you know, when it came to the restaurants, he stayed focused on his core constituency, and it worked real well for him.

AV: And, how did customers’ taste change, um, over the course of your knowing Carl and being involved with—with Karcher?

[00:28:58]

AP: You know, it’s interesting when, uh, when Carl and the guys from McDonald’s, and the guys—and, you know, Wilbur Hardee, they all started their restaurant chains kind of within five or six years of each other, maybe ten years at the most. And-uh—and- um, you started out with that very simple, sort of what In-N-Out [Burger] has now, you know, just a simple burger and fries and a milkshake. And, as long as you stuck to, you know, a few hundred restaurants, that was okay. And, what McDonald’s learned, uh, initially was if you, if you went to a broader area, you had to expand your, your menu, particularly if you had restaurants kind of close to each other. You had to have a wider variety of food to, to bring in enough business to justify the unit count that you had. Uh, Carl kind of got into that late, Wilbur Hardee got into that late, and they, they—Wilbur Hardee, actually, got out of the business. The people that took over Hardee’s got into it. But, they start—but, they began expanding the menu at these brands. Then, all of a sudden you had all of these brands with all of these different products on ‘em, and really no focus.

AV: Um-hm.

AP: And-uh so—and so, I think what we did that was different than a lot of brands—and, this happens at Carl’s beginning around 1994, ‘95—was we went back to that burger focus, the big, juicy, delicious burger.

AV: Um-hm.

AP: And, we also went on the focus on young hungry guys, which was the initial—you know, the initial appeal of fast food. Uh, when I was a kid on Friday nights, Saturday nights, you’d go to—you know, in Ohio there was, uh—it was called Burger Chef. Burger Chef, McDonald’s. And, on Friday night the parking lots would be packed. There’d be high school kids. It was kinda like that show Happy Days.

AV: (laughs)

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AP: They were at the malt shop. I mean, they were really places you went. Well, fast food stopped being that. You don’t see people—the kids hanging out on Friday nights like you used to. It’s, it’s transitioned now to a broader, more far-reaching business than it was in those days. But, the Carl’s menu and the Hardee’s menu got so complicated that the kids in the back room, you know, really couldn’t make the food. And then, both brands stopped being known for what they really had—had, uh, been created to do, which was to sell really delicious burgers. So-uh—so, what we did at both brands that started at Carl’s in ’95. And, after our management came and took over in 2000 at Hardee’s, we got ‘em all focused back on those burgers and young guys. And-uh— and, you know, that made a big difference for us. I’d say the, the biggest thing that’s happened since I took over was probably the line of Six Dollar Burgers that we introduced. Because, prior to, prior to the Six Dollar Burger, nobody was doing a, you know, a half-pound burger. We were doing it on Black Angus beef. And-uh, you know, it was $3.99, it was about four bucks. And, I remember after we introduced, when we, we tried to introduce with big franchisee resistance. Well, it’s too big. You know, the Carl’s guys [said], It’s too big, nobody’s gonna pay $4 for a burger. And-uh—but, really, it was such a great tasting burger. Plus, we charbroil ‘em. You know, we decided—I remember we had a big franchise meeting in Washington, and they were all over me to, uh, you know, Gotta test this more, don’t roll it out. At that time, both brands were kind of in trouble. I mean, sales had been going negative, again. And-uh, I said, “No, we’re gonna—” and one—I remember one franchisee defended me. It was Tom Thompson, who was CEO, who had had this job before me. He’s a franchisee up in San Francisco. And, his wife, Stella, who’s kind of running the business, as well. She’s really smart, you know, a good restaurant person. They both came up in the Jack in the Box system. And-uh, Stella said, “No, I think Andy’s right. I think we need to give—” I mean, she was in. I had Stella’s support and nobody else. (both laugh) Anyway, you know, we rolled it out, and it just as soon as we put it in it was—

AV: Really successful.

AP: —selling off the shelves. And then, the franchisees—but we, but we did limit because of that meeting. We decided to test it in our core market, which was Los Angeles. And, I remember we had a meeting about a month after that, and the franchisees were saying, Well, can’t we expand the test now? Can’t we— (both laugh) it was a big change. But-um, that was a big change for the industry. And, I remember the guys from Coca Cola coming up to me—I guess we introduced this in July and it was the fall—and they said, Well, you did it. I said, “I did what?” And they said, Well, you proved you could sell a $4 burger in a fast food joint, which I never really thought about it before, but I guess we did.

AV: And so, what was the fate, then, of some of those other menu items, including, um, the Green Burrito, uh, foods?

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AP: Well, Green Burrito now is in about, uh, half of our company stores, and about 25 percent of the, of the franchise stores. And, it’s, it was a homerun.

AV: Um-hm.

AP: I mean, it really is. In the stores it’s in, it’s about 10 percent of sales, uh, with those items up there. And, they don’t cannibalize the burger sales.

AV: Hm, interesting.

AP: It’s, like, you know, if I said, “Allison, let’s go to lunch.” And you said, “Well, I feel like Mexican.” And I said, “Well, I feel like a burger.” “Well, let’s go to Carl’s.” And so, you actually end up selling more burgers, as well as more Mexican food, which was what Carl thought would happen. So, he was proved right there. We’ve actually come up with a brand called Red Burrito, which we introduced in Hardee’s. And, we did Red Burrito ‘cause being from the Midwest, I knew that green meant moldy.

AV: (laughs)

AP: While here it means green chili, there it means moldy. And, I thought Moldy Burrito was a bad name, so we decided to go with Red Burrito. (laughs)

AV: So, the fact that you come from someplace other than Southern California—and, Carl’s Jr. really had, uh, Southern California roots—has really shaped the business.

AP: It helped, yeah. And-uh, you know, Carl was, Carl was maybe—grew up maybe seventy-five miles east of me.

AV: That’s—

AP: You know, he was in, uh—near Cedar Point, Missouri, or, Cedar Point, Ohio, right on Lake Erie, uh, and kind of in that area. So, he was—oh, maybe it’s 100 miles. But, he’s from the Midwest, as well. So, I think there are some Midwest values goin’ on there somewhere.

AV: Now, you mentioned strategies for national expansion. What about global expansion of Carl’s Jr., at least as in Mexico?

AP: Yeah, we’re—well, we now have, uh, 10 percent of the company’s restaurants are, are outside of the United States. And, within the next 3 to 5 years that’ll be 20 percent. Uh, we’ve opened our first restaurant in China about two months ago. We just opened a restaurant in Pakistan. We have 200 Hardee’s in the Middle East. We have about 110 Carl’s in Mexico. Uh, I was just in Venezuela and Brazil last week. We are looking to go to Venezuela and Brazil, particularly Brazil, which is a very exciting economy. We’ve got about 10 restaurants in Singapore and Malaysia. We’ve got eight in Russia. So, I mean, we’re—we are really, uh, international

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development has become a huge part of our plan. And, some of that started, uh, under Carl.

AV: Um-hm.

AP: But-um, it, it, uh—the people we had in charge of international development early on were probably the wrong people. There were deals made that—the key to being successful in the international environment is who your licensee is. None of the, none of the restaurants outside of the United States are owned by the company; they’re all licensees. You have a good licensee, you’ll have a successful, uh, venture. If you have a bad licensee, your venture will fail. And, it doesn’t matter what country you’re in, those two things are true no matter where you are. And-uh, we had some bad licensees, uh, initially in China—or, [in] Japan we opened some restaurants, they failed. Korea failed, Hong Kong failed. Uh, there were, there was, uh, somebody had an agreement for most of the, the Far East, which was a terrible situation. They never built any restaurants. And so, we’ve taken—over the last ten years we’ve cleaned that up.

AV: Um-hm, um-hm.

AP: And, we’ve got a real good guy in charge of international now. And, I know Carl would be—everywhere except the Middle East is Carl’s. The Middle East is Hardee’s ‘cause historically it has been. But, I know he would be real happy to see the, the Star up in Singapore. I was in Singapore in July of last year, right around the Olympics. I went to Singapore, then Beijing. And, you go in the restaurants in Singapore, and they’ve got the picture of Carl and Margaret in all the restaurants.

AV: That’s—

AP: Which, uh, I wish Carl would’ve been around to see that. I know he would have loved that. (laughs)

AV: (laughs) How else, uh, is this kind of an American cuisine in this American restaurant kind of tailored to these other markets?

AP: You know, you do make some product changes when you go to these markets. For example, in Singapore, um, the number one selling burger is the portabella mushroom burger.

AV: Hm.

AP: So, we had—because of a shortage of mushrooms, we took that off the, off the menu at Carl’s for a while. It’s a permanent menu item now. But, when we took it off here in the United States, we couldn’t take it off in, uh, in Singapore. So, it stayed on. And, it’s interesting, go to Singapore and there’s a, there’s a restaurant called Big Splash. It’s right on the ocean—which, a lot of things in Singapore are right on the ocean. But, it’s, it’s right on the ocean, and-uh, it looks like an American California restaurant, if you look at it. And, you walk in and other than a few things on the

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menu you’d think you were at a Carl’s here in the United States. You know, the kind of plastic seats with the cushions, but then there’s this little area where you walk up these three steps, and it’s like a Starbucks. It’s carpeting and cushy chairs, and that, and—so, I asked our, our Singapore franchise licensee what that was. Why? And he says, “Well, there are people in the, who come in to enjoy the American California experience, and then there are people who watch them.” And so, it’s really a lifestyle. It’s, it’s a lifestyle concept that their selling, and-uh, it’s interesting how that works. Really, across the world, people want that American experience, they want that California experience, and-uh, you know, and the food’s great. So, it’s—it, it seems to be working real well for us.

AV: Since this project is in part about, um, certainly changes in the food business, uh, and food visionaries, but also about Southern California, um, based upon your life here, how has, um, Southern California in particular changed, and how has that put new challenges and opportunities for your business?

[00:39:09]

AP: Well, I mean, there’s a lot more people in California now than there were when these chains arose. You’ve got a real, uh, a real issue with, uh, with the population density, and-uh, you know, some areas where—I think Carl started his restaurant—where was it? South Central and I don’t know.

AV: Florence?

AP: Yeah, Florence. Yeah, I don’t even know if I’d walk there now. You know, they used to leave his daug—they’d—Margaret would run the hotdog cart and their young daughter would—Anne would sleep in the car. You know— (laughs) I mean—so, you wouldn’t do that now. I mean, there are differences, and we’ve had some issues come up. Plus, California has gone really from being this golden state, the state of opportunity, to being a kind of nanny state where businesses are so highly regulated that you, that it might be impossible to do what Carl did.

AV: Mm.

AP: I don’t know that you could do it now. There’s too much government interference. In fact, we’ve slowed down. We’re either going to build none, or very few restaurants in California. We’re building in Texas, uh, ‘cause the business environment is friendly, and-uh, they don’t do nearly as much running of your business as, uh, as they do here. We can’t even, we can’t let our general managers run—we want them to run the restaurants like they own them—

AV: Um-hm.

AP: —like Carl would’ve done. And, these are—our general managers are about 80 percent minority and 63 percent female. And-uh, this is in—these are not people with, uh, you know degrees from Wharton.

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AV: Um-hm.

AP: You know, these are people that you’re lucky they’ve got high school educations, although I think most of them do. But you, you get, you really get MBA level experience. You’ve got responsibility for P&L on average a $1.5 million revenue business. You’re running a million dollar-plus facility, you’ve got twenty-five employees, you deal with the public. I mean, it’s a real, it’s a real learning experience. And, if you go around to, uh, I bet every major corporation in this state, you will find two or three executives who got their start in some fast food restaurant, in either—

AV: Interesting.

AP: —a Carl’s or one of our competitors. ‘Cause, it really is a way to get a good grasp on, on what makes a business work.

AV: Um-hm.

AP: You know, something I wish some people in the White House had now. You know, you gotta, you gotta get a grasp on what really makes business function. And-uh, California’s now told us we really can’t do that with people, that, um, if you work more than—if you work more than 50 percent of your time in non-managerial tasks—

AV: Um-hm.

AP: —you have to be paid overtime. So, you’re no longer a salaried employee, you’re now an hourly employee, which we really can’t afford to do. You can’t take all these general managers and turn ‘em into overtime employees. Well, what that means is that a general manager that wants to work, uh—you know, the greatest stories, Carl’s greatest stories are what he did when he was working as a, as a, you know, employee in his own store. He was behind the counter and he saw a woman walk in with a bunch of bags and kids, and he thought, You know, there’s a driveway along the side of this building. If I could just cut a hole there I could hand it out to her. Or, there was—when he was working the cook’s line, and-uh, decided he needed his own unique sauce, and he went home and made the Special Sauce that’s still on Famous Stars to this day.

AV: Yes.

AP: You know, Carl’s famous for walking out into the, into the, uh, dining area and talking to the customers, and picking up cigar butts in the ashtray when he would go visit the rest—uh, in the parking lot when he would go visit the restaurant. Well, if our general managers were to do that now, they’re working in non-managerial tasks, so they can’t. And so, what we did, what everybody—not just us but Wal-Mart, you know, our fast food competition—everybody has turned our general managers into hourly employees. Well, what does that mean? Well, again, looking at Carl, Carl’s story was—he said he would work in the restaurant for lunch, he’d go home and have an early dinner with his kids, and then he’d go work in the restaurant ‘til it closed.

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Well, in California, you—in most of the United States, if you work a forty-hour week, you’re entitled to overtime with forty-one hours, right? In California, you work an eight-hour day. So, if you work an eight-and-a-half hour day you’re entitled to overtime. And, you could work one eight-hour day a week, and if you work an extra half hour you’re entitled to overtime. So, our guys who would say, Look, I’m gonna work ten hours on Friday, and I’ll work six hours on Monday ‘cause it’s a slow—no, not allowed to do it. Well, what about, I’ve got a kid’s soccer game, I’ve got a funeral to go to, I’m gonna work—can I work six hours Thursday and ten hours Friday? No, you can’t. You know, that’s the law in California. And then, have you ever been to a fast food restaurant and the employees are sitting and you wonder, Why are they sitting? They are on what’s called a mandatory break. So, in most industries, in factories—if you’re making cars, for example, you control production.

AV: Um-hm.

AP: Well, restaurants don’t control production. If a bus pulls up with eighty elderly people and they want food, that’s when you—that’s when you’ve gotta work. Well, if you’re a general manager who now is an hourly employee—‘cause we want you to do entrepreneurial type things, even though you can’t work more than eight hours a day—uh, and you’re on your rest break when that bus pulls up, your restaurant can be falling apart, and you can’t move. You sit and watch ‘til your rest break’s over. So, we don’t build restaurants in California anymore. (both laugh) You know, it’s too— and—and plus, if you want to build a restaurant, you gotta worry about arrowheads, and toads, and little fish, and, you know? In, in Texas you can build a restaurant, and it’s okay, (both laugh) and they don’t hate you. So-uh, it’s, uh—California needs—I think the big change in California, it’s really become kind of a socialist state. And-uh, these are examples of socialism in practice that are probably more practical than most people ever come into contact with. But, you, you, you can’t be a capitalist in this state, and Carl was at heart a capitalist who created a company that to this day bears his initials and employs, with the franchisees, 72,000 people in the United States. You know, General Motors at its peak employed 250,000 people. I mean, this is a—and, we’re not the biggest company, and we employee 72,000 people. So, California needs to make some changes, uh, and then we’ll be happy to come back. But, I say the biggest change has been the, uh, regulatory environment [that] has made it impossible to really be the kind of entrepreneurs that, uh—that produced the success that this country has enjoyed for the past hundred years.

AV: And, how recent are these regulations that have really—

AP: The past twenty-five years. And, they’ve come in slowly, and they seem kind of like entitlement programs that just seem to keep growing and growing and growing. And, you know, really they’re not created by people with terrible motives who are out to— I mean, they want to protect workers, and there’s nothing wrong with that. But, this nanny state philosophy where the government’s going to be responsible for protecting

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you and you aren’t responsible for protecting yourself is not going to produce a, a class of people who are interested in really developing themselves or this economy. Now, I was a, I was a law student with a wife and two kids in college. And then—yeah, well, through half the college two kids. Um—and then, you know, I had another daughter born after. But, I worked—I worked every minute I could work, and I’m glad I did. I mean, I have a lot of respect for, um—for people who do that. And, I guarantee you Carl wasn’t working a forty-hour week and sitting watching when buses pulled up. You know, it’s (laughs) —you, you really have to give people the opportunity to succeed if you want them to succeed. And, Carl would be the first person to tell you that. And-uh—and, I think we’re getting to a point where we’re, we’re deciding that maybe we need to overprotect people.

AV: And, this is something, um, that led Carl into political participation.

AP: It did.

AV: His, his business experience, I think, shaped his political activism. Um—and, you mentioned that you maybe shared some of those, um, political ideas.

AP: Absolutely.

AV: Tell me a little bit about your and/or Carl’s, uh, involvement, um, in politics, especially to counter increases in regulation.

AP: Well, Carl was, um, was extremely involved in politics in, uh, in Orange County back when Orange County was a real force—

AV: Um-hm.

AP: —in, in politics in the state, and a real force for Republican candidates in the state. I think one of Carl’s biggest conflicts was not supporting John Kennedy, who was Catholic, for president—

AV: Mm.

AP: —but, in fact, supporting Richard Nixon, who was a friend of his. And, I showed you a picture a little bit ago of Carl and I in one of my old offices. And, I remember sitting in that office when Carl was in the depths—really, seriously in trouble, and- um—and, I—my, the phone rang in my office, and I picked it up, and-uh—and, the voice there said, “This is President Nixon. Is Carl there?” “This is for you.” (both laugh) But, it was, it was—Carl—and, Carl was very close to Ronald Regan. You know, he was, he was a real stalwart in politics and would support anyone who believed in the American dream and the ability of the individual to achieve and to accomplish, and that that was really something that would benefit the greater good—

AV: Um-hm.

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AP: —more than government controlling whatever people did. And I’ve, and I’ve tried to carry on that tradition. We, I’m very active in supporting candidates. I, I’ll support a Democrat if they share these beliefs. I’m not—I mean, most of the people I end up supporting are Republicans because I think the Republicans are more interested in the individual than in the collective.

AV: Um-hm, um-hm.

AP: And-uh—but, that’s not true of all Democrats, and it’s not true of all Republicans. But, I think that generally it is. So, to the best of my, the best of my ability I’m trying to carry that on.

AV: What led Carl into politics? You mentioned calls from Richard Nixon.

AP: Well, you’d have to ask his kids. I, I think just, uh, I would guess just his nature. You know, I met Carl 1986, so he was born in 1917, so that would’ve made him, you know, fairly old by then. He was born in ‘17, I met him in ‘86—I guess not that old. So, he’d a been seventy-six minus seven, so sixty-nine, seventy years old. So, he, he was pretty, you know, pretty far along in politics by that time. He picked it up way before I met him. Uh—but, he was good buddies with John Wayne, too. And, John Wayne was always, you know, very supportive of those political things. As a matter of fact, John Wayne’s wife said that—after he passed on—that Carl reminded her of her husband more than, uh, anybody else that she knew.

AV: (laughs)

AP: So, that was—he—he was very proud about that. (laughs)

AV: (laughs) And, were there—

[00:49:57]

AP: His kids were like, Anne—I assume you’re gonna interview the kids?

AV: Yes, we are.

AP: Yeah. And, I’m sure Anne would have—

AV: Speak to that.

AP: —a real good feel for that. Or, Jerome.

AV: Um-hm.

AP: Who—I think Jerome and his father are on politics are complete—

AV: Yes. (laughs)

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AP: —you know, (laughs) they’re, like, completely separate ends of the spectrum. But- uh, I’d say Anne—Anne, you know, would know that much better than me.

AV: Were there other, um, maybe not associates of, of Carl’s, but associates that you’ve had, or even had competitors in this world of, of food that looked to kinda politics, uh, to shape the climate of doing business?

AP: Uh, you know, I’m sure there are. I’m not, uh, I’m not involved with any of them. I mean, Carl was, Carl was involved with a broad range of people. And, you know, the Snyders, the founders of In-N-Out were very good friends of Carl’s. In fact, I ended up representing Esther Snyder, uh, when I was an attorney because of her involvement with, uh, with Carl. And-uh, her son, Rich, who died in a plane crash, had, had hired me to represent his mom in something. Um—and, and, he was—you know, he knew, uh, Dave Thomas real well. And, of course, Dave sort of adopted Carl’s advertising persona, which was very successful nationally for Wendy’s. Uh— and, he knew the guys at McDonald’s that actually came in once to and tried to buy the company from him.

AV: Really?

AP: Yeah. And he said, he said—I think it was Ed Rendell. He said they came to his house and said, Carl, we want to buy Carl’s. And he said, “Oh. So, we’re gonna put, put the Star up all over the world?” (both laugh) And they said, No, we’re, uh, we’re gonna take it down and put up the arches. And Carl said, uh, “No thanks.”

AV: He didn’t hesitate?

AP: No, no, he didn’t hesitate.

AV: How, how were relations between some of the competitors of Carl’s over time? Was there a collaboration in terms of some of the innovations, or menus, or—

AP: Yeah, I think so. You know, Carl’s favorite story was how they took—Carl was— I—you’ll probably get this from more people than me—but, you know, Carl, uh, was very innovative.

AV: Um-hm.

AP: And, you know, he was one of the first ones to put the all-you-can-drink beverage bars in, the first one to put salad bars in. He also, back in the, in the, uh, forties was selling his hotdogs in a cart and had a, uh, an employee who, who he was talking to, says, “You know, we’re selling hamburgers, but they’re not selling. So, I’m going to put a big, thick slice of onion and a big, thick slice of tomato on ‘em and see how they sell.” And the employee apparently said, uh, “Tomato? Why would you put a slice of tomato on a hamburger?” (laughs) You know, which—so anyway, that’s— and then, like I told you, he, he came up with the Secret Sauce. There’s the story about him putting the hole in the side of the buildings so he could hand stuff—

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AV: Right.

AP: —out, out the window. You know, I don’t think anybody ever documented who thought of the drive-through window, or if six guys thought of it at the same time, but, I guarantee you that really a, a—so, Carl was always very innovative. And, one of the things they did—I don’t, I’m sure you don’t remember, but you may have seen pictures. When I was a kid, McDonald’s was a place you went and you parked, and you walked up, and you bought the food, and then you went and you sat in your car and ate it. And so, Carl came up with the idea to put a shed kind of on next to the—and, he had a unit where a shed would go next to it. And so, they put up a roof and walls and put in some, um, I think they said it was picnic tables, like cedar picnic tables where people could sit, and they carpeted it, you know, and made it nice. And, he said one of his, uh, one of the first customers was the—was Ray Kroc—

AV: Yes.

AP: —who came the night that they opened up the restaurant to see what Carl had done. So, it—so, I think there was a lot of sharing and a lot of respect. Those guys knew each other.

AV: Um-hm.

AP: You know, I think Ray Kroc, you know, he was selling restaurant equipment. He was probably selling to Carl before, or at least knew who he was. But, these guys all sorta knew each other. I think now we’re all, we’re all now more, uh, I don’t know, we’re more lawyers and accountants—

AV: (laughs)

AP: —and, you know, I don’t think we know each other as—at least I don’t. I mean, the others may know each other much better. But-uh, I mean, there’re a few guys I know. Like, I know—I’m real—I know the guy that runs, uh, El Pollo Loco or the Taco Bell. The guy that runs Taco Bell and I get along real. So, there are some I know, but not like, not like I think it was in the old days.

AV: (laughs) You also mentioned earlier—and, you pointed to a photo on the wall of— um, that religion mattered to you, and—

AP: Yeah.

AV: —certainly Carl was a very devout Catholic. And, his participation as a congregate in Saint Boniface, um, maybe shaped his employment, um, strategies. Um, can you tell me more about your and Carl’s, um, connections to the church and religion, and how that influenced your, your business?

AP: Well, it, it’s—I think when your, um—when religion is an important part of your life, no matter whether it’s Catholic or Protestant or Jew, or, you know, it, it doesn’t

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matter. It, uh, it helps to shape who you are as a person, and how you look at things, and how you feel about things. And, I think that gave Carl and I both, uh, you know, compassion for our employees. I think it certainly helped Carl with his compassion for consumers and his regard for consumers. Uh—and, a, and a feeling that it was important that the company give back to the community.

AV: Um-hm.

AP: And, not necessarily the Church. I mean, we individually contribute to our churches, but, but, you know, we just, we helped—we support the local hospital. You know, he did the same thing in Orange County. Um, we, we’ve built, uh, medical centers now in, uh, North Carolina for Duke, with cottage hospital here, in St. Louis. We’re affiliated with some of the medical, uh, projects. So, it’s, it does influence how you deal with things. You know, Carl—I used to join Carl—I used to go to 6:00 Mass, or 6:30 Mass at Saint Boniface every morning. And, whenever I was around I’d join him for that. And-uh, he, he initiated me into the Knights of Malta, something that I’m not particularly active in now but hope to be one day, once I can stop running this company. (laughs)

AV: Yes. (laughs) Can you tell me a little bit about that organization? The Knights.

AP: Yeah, it—it, it, uh, has a really storied history, it really is the Knights of Malta from, you know, back in, in medieval times, uh, when those kinds of things, uh, meant a lot more than they do now. There were organizations that would fight for the Church, or fight for territory, or hold back the, uh, you know, the herds of—the hordes. I should say the hordes, not the herds.

AV: (laughs)

AP: And now, it’s mostly charitable. Um, it’s, uh—it’s still an international organization. There was—I was in, uh, Austria a few years ago, and they had a small chapel there that was for the Knights of Malta. And, they’ve got a spot in Rome. And, they have meetings here regularly here in Los Angeles and San Francisco.

AV: I think earlier in our conversation you mentioned that when you came to Southern California you were uprooting your family, and so that you really became a part of Carl, Carl’s family.

AP: Yes.

AV: And, were invited to, to regular gatherings. Um, what’s your most vivid memory of the larger Karcher family?

AP: Uh, it—you know, it was a very close family, and they all had incredible respect for Carl. It was, this was a family that said the Rosary together at Mass every night, and where Carl made a real effort to come home. And, Margaret was, she was such a wonderful woman. It, uh—and, Carl thought the world of her. And, she was on the

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board of directors of the company when I came, one of the first women to be on a public company board of directors. And, he would always give her credit, uh, whenever he talked about what he was, uh—what he had done in life. And, of course, he gave her—sometimes he, he, uh, would kid her a little bit, like, that she didn’t want to give him the $17 out of her purse to buy the hotdog cart, you know? (both laugh) She always denied that, by the way. (laughs)

AV: (laughs) Sure.

AP: But-uh, he, he really thought a lot of Margaret. And, you could see in the kids that they had incredible respect for, for their parents, and-uh, were very proud of what they had done, and-uh, and, felt very much like a family, even though they were twelve kids. So, that’s a lot of kids and a lot of grandkids. And, Carl knew everybody’s birthday. He knew all the grandkids birthdays, and I think he knew all the great-grandkids birthdays. He just, he could tell ya—he’d talk about one, and he’d recite about what they were doing, where they were going. It was—they were very, very wonderful meetings. And, Carl would insist on beating me at Ping-Pong (both laugh) whenever he got the chance. And, the kids loved it. It was, it was, it was great.

AV: But, he never did introduce the Carlo Burger?

AP: No, we do have the Chicken Parmesan Sandwich. But, no, never did do the Carlo Burger. But, we—actually, it came up again a couple of years ago, and we didn’t do it.

AV: As kind of a concluding question, um, especially in maybe more recent years there’s been maybe greater attention to, to fast food and what it means in terms of American culture. Um—and, many would say that fast food is a distinctly American way of preparation and, and, distribution. Um, what do you think the future of fast food is?

AP: I think it’s bright. I—you know, it—you, uh—

AV: (pauses recording) Thank you. The, the final question was, What do you see as the, the future of fast food?

[00:59:13]

AP: Well, I think fast food will do great, as long as it continues to adjust to people’s taste. And, you know, we’ve been the place, for example, for young, hungry guys. You know, big, juicy, delicious burgers. You know, beautiful girls in skimpy clothes with big burgers. And-um—but, we’ve kinda stayed away from the healthy food side of it. And-um—and, really, that’s been very successful for us because you can’t—we have a brand image out there. And, if I start saying I’ve got gluten-free products, you know, the consumer will, you know—well, we’re now able to, we’re, we’re at—but, we do have gluten-free products—

AV: Um-hm.

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AP: —and, we have vegetarian products, and we have low fat products, and we have low calorie products. So, there are two things that are going out right now that are causing us to adjust, in this respect. One is I can advertise digitally. So, if we’ve, we’ve now got a digital site, where we have these healthy option items. And, I don’t have to do a TV commercial, and I don’t have to do a broad, appealing TV commercial, uh, that really sets your image. I can now—I know where vegetarians go on the internet. I can go where vegetarians go, and I can reach right into their heads.

AV: Um-hm.

AP: I don’t have to do something that, that, you know, like, when I was a kid you’d advertise on Leave it to Beaver, you know? Now, maybe it’s on the Lakers’ games. But, so many people watch that you have to be, you have to be broadly appealing, and you can’t be directed, especially if you’re a smaller company like we are. We’ve got $120 million to spend between Carl’s and Hardee’s. We spend about 60 million at each on TV advertising. Last year McDonald’s spent 810 million. So, they can be the woman’s brand on Desperate Housewives, and the guy’s brands on sports shows, and the kid’s brands on Disney Channel; we can’t. But now, digitally, you know, I can reach out to people that are gluten free— and, gluten free is actually—those are two of the most searched words on Google. Uh, this silly x disease has become something meaningful. So, we, we can now— we’re adjusting to digital advertising, which should give us a broader region and bring in more consumers. The second thing is, this—the younger generation is now become—our research has indicated that they are more open to healthy options.

AV: Um-hm, um-hm.

AP: So, that we may be able—we’re working with some, um, some outlets, you know, that actually rate healthy food, you know, like, Men’s Health does it, a thing every year. We may be able to work with organizations like that and have kind of cool, healthy food that will be appealing to, uh, to younger people. So, we’ll need to make an adjustment, again. I’ll tell you what, though, there’s still nothing better than a Famous Star and fries. (laughs) You know—

AV: (speaks simultaneously) (laughs) There’s no improving on the menu.

AP: —it’s—when you get right down to it, it’s, the basis of this is always going to be the burgers and (sniffs) that, uh, great American taste, and the convenience, and the speed, and, you know, you can get something that’s really, incredibly tasty. You know, we, we pride ourselves on always being rated on the top on quality and taste with respect to our products. And-uh so, there’s always going to be that real—that, really, kind of hook. We’re not, we’re not the place where you get toys, you know, we’re not the place with the clowns for kids. We’re the place where you get a really great burger. And, you get it for a really good price, and—as long as you stick with that. But, around the edges, you’ve got to appeal. And, I think probably

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the biggest opportunity for us right now is international expansion. Um, I think we— taking this brand, and—you know, we’ve never been attacked by a company that—by a country that had a McDonald’s. I don’t know if you knew that. We’ve also never been attacked by a country that had Carl’s. (both laugh) There’s only fourteen of them. But, I think the idea of getting the American image out there and letting people know that, you know, America’s a great place. And-uh, it can be a lot of fun.

AV: One burger at a time. (laughs)

AP: One burger at a time, yeah. (laughs)

AV: Well, with that kind of, uh, solution to world peace—

AP: Yeah. (laughs) Thank you, Allison.

AV: —thank you so much for your time.

AP: Thank you.

AV: It was a very enjoyable conversation. (laughs)

AP: Glad to do it.

END OF INTERVIEW