June 29, 2005 -- Paris Hilton soaping up a car may make for a "hot" commercial, but that doesn't mean she can sell hamburgers.
Carl's Jr. restaurants, which created a stir when it aired a television commercial featuring the scantily clad Hilton washing a Bentley and chowing down on the restaurant's massive Spicy BBQ Six Dollar Burger, reported only a 1.7 percent increase in same-store sales for the most recent four-week period, below analyst expectations.
The sales uptick was slight compared to the attention and controversy surrounding the commercial. But according to the company's chief executive officer, that may have been the point.
"We wanted the ad to boost sales, which we think it did, but we also wanted it to help with our brand-building," said Andrew Puzder, CEO of CKE Restaurants Inc., the parent company of Carl's Jr. and its East Coast sibling, Hardee's. "For long-term, brand-building purposes it was phenomenal. It got our name all over the country -- even places where we don't have restaurants."
When the Hilton ad first aired May 19, it spawned hundreds of news stories, drove traffic to the company's Web site for extra footage of Hilton and boosted awareness of the Carl's Jr. chain.
The commercial was derided by such groups as the Parents Television Council and Morality in Media. The Virginia franchise operator for Hardee's even decided against airing the racy commercial in the state of Virginia and other parts of the Southeast, fearing it was too risque.
The controversy fueled even more coverage, further raising the profile of the burger and the restaurants, if not the already ubiquitous Hilton.
Hardee's Increase Also Small
Along with the slight pick-up in Carl's Jr. sales, Hardee's restaurants saw a similarly slight 0.7 percent increase in same-store sales. So might the relatively small increase suggest the commercial provided more bang than bucks?
Not according to the company. CKE paid about $4 million to $5 million for the initial commercial run, and will sink another $4 million to $5 million into the Hardee's commercial buy. But the public awareness of the Hilton ad makes the benefits tough to estimate in dollar terms, Puzder said.
The commercial was replayed on news programs and late-night talk shows and got more than 4 million hits at the Web site SpicyParis.com, according to Puzder.
"The coverage has been incredible, and the ad works in a lot of ways. It's been huge, especially on the Internet, and it's hard to put a dollar value on that," he said.
Puzder noted that the burger itself is only available at Carl's Jr. through June 30. The goal of the commercial, he said, was mostly to perk up customer awareness rather than advertise one product.
One analyst who follows the company agreed, noting that Carl's Jr. and Hardee's both recorded big sales increases during the comparable time period last year as Americans coming out of the recession began returning to restaurants. The increases in 2004 made it difficult for the company to enjoy a similar jump in 2005, according to Dean Haskell, restaurant industry analyst with JMP Securities.
But that doesn't mean that the Hilton ad wasn't effective.
"Their customers are generally 18- to 34-year-old males. And 18- to 34-year-old males tend to have only one thing on their minds. Sex sells, and they've seen an increase in traffic," said Haskell.
Haskell said company sources told him that Carl's Jr. had seen a 3 percent to 4 percent increase in customer traffic over last year.
"There's some momentum going on in terms of customer traffic, and you have to be aware of that, regardless of the sales numbers."