“I grew up in California," says listener Tom Cronin, of Atlanta, "and about five years ago, I moved to Georgia, and I saw a lot of the same logos for ice cream and bread and restaurants, but they had different brand names. They looked like they're exactly the same company, and when you look, they're usually the same parent, but they use different names in the different places. So my question is: Is that for marketing reasons? Is that for regulatory reasons? Why would they do that?”
You can order a Budweiser Beer Cheese Bacon Burger at a Carl's Jr. west of the Rocky Mountains. And you can get the very same burger at a Hardee's restaurant east of the Rockies.
So why maintain two separate brands? Turns out that was not part of the original plan.
“There were initial attempts to try to convert Hardee's to Carl's Jr.,” said Brad Haley, chief marketing officer of CKE, the parent company of the two restaurants. Haley said Hardee's customers rejected attempts to rebrand their beloved local restaurants as Carl's Jr. when CKE acquired Hardee's 20 years ago. “And that loyalty kind of kicked in, and it really didn't work very well at all. Sales declined pretty significantly,” he said.
Most of the restaurants that converted to the Carl's Jr. name were switched back to Hardee's. And they've kept the two brands running separately ever since. The menus have a lot in common, though some of the offerings on the West Coast are a bit spicier to meet regional tastes there. And some Carl's Jr. stores are co-operated with the Green Burrito chain, while some Hardee's are co-branded with a chain called Red Burrito.
Hardee's customer Warren Weber in St. Paul, Minnesota, said he's tried Carl’s Jr. in Colorado.
“They're pretty much the same,” he acknowledged. “But we like this one best.” His preference comes down to familiarity. “We come here all the time,” he said.
There are other examples of brands going by different names depending on their region, with the Rocky Mountains being a common dividing line. That’s the case for the mayonnaise marketed under Hellmann's east of the Rockies and Best Foods west of the Rockies.
Jitender Batra at the consulting firm AlixPartners said food companies can't afford to lose customers when one brand takes over another. They have notoriously thin profit margins.
“In food, they are roughly half the average margin for other consumer good products,” he said. “So they have less money to advertise and also less risk they can take in terms of potential erosion in sales.”
Batra said it is therefore more common to see two separate brands maintained after a merger among food companies. He said running two brands costs more, but it’s better than losing gobs of customers.