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Checkers' checkered past is past

Published Jan. 21, 2004|Updated Aug. 27, 2005

Keith Sirois spends his days as a bantamweight bobbing and weaving amid the heavyweights. He takes his occasional shots but mostly tries to stay out of harm's way.

It's a good strategy for the CEO in charge of the country's ninth largest hamburger chain, Tampa's Checkers Drive-In Restaurants. In the cutthroat fast food business, there's no upside to Checkers in taking on McDonald's, Burger King or Wendy's. But there is a future in doing what the big chains do not, and selling where they are not.

"We went places we never should have gone and spent too much," concedes Sirois. It's taken three years to dig the company out.

Checkers' ad slogan may say "You Gotta Eat." But nobody says you gotta eat there without a good reason.

Sirois (pronounced sa-ROY) wants Checkers to appeal to the busy middle-class and blue-collar customer. That's why Checkers is a "Pewter Partner" with the Tampa Bay Buccaneers. That's why the chain signed a three-year deal as the "official burger" of the Atlanta Falcons. And that's why Checkers last year said its Checkers and Rally's brands _ with a combined 785 locations _ became the "official burger" of the Indianapolis 500 auto race.

Checkers' goal? To grab the overscheduled, 18- to 34-year-old, mostly male consumer who wants his burgers and fries fast, low-priced and packaged to eat behind the wheel and on the move.

Checkers is an all-takeout chain and, Sirois says, has no in

terest in building dining rooms or big parking lots. The burger maker boasts it is the country's largest "double drive-thru" fast food chain. So the faster Checkers can move vehicles past the service windows of its modular buildings _ and maintain good service and quality control _ the better its bottom line.

After an annual loss of $1.7-million in 2002, Checkers is back in the black for the first nine months of 2003, the most recent figures available. And after sinking under $5 a share last spring shortly before Sirois took control, Checkers' stock now trades above $10. (It closed Tuesday at $10.55.)

Sirois is not worried about last month's brief tremor in the burger business when mad cow disease was discovered in an adult Holstein cow in Washington state. After some brief December jitters, sales actually went up at Checkers.

"America is not putting much attention on that right now," says Sirois, who recently outlined Checkers' plans at a "leisure lifestyle" investor conference.

Nor is Sirois worried that the country's fixation with the meat-heavy Atkins diet should force any near-term change in the basic Checkers menu. Other fast food chains may introduce bun-free burgers, but not Checkers, Sirois insists.

Imagine eating a bunless burger while driving down the street! It's a scary scene the CEO conjures.

And Atkins? It's just a fad, he predicts. Still, Checkers will watch it should the diet morph into something bigger.

Given all the other challenges confronting Checkers, Sirois has bigger fish _ pardon the seafood _ to fry.

Sirois joined Checkers in 1996, after decades of jobs with other fast food businesses. Last April, as vice president of franchise operations, Sirois was plucked to serve as Checkers' interim CEO after the swift and unexplained departure of the chain's former chief, Dan Dorsch. Sirois' CEO title soon became official.

His tasks at rebuilding Checkers are many:

The company merged in 1999 with another drive-thru burger chain called Rally's that operates in parts of the Midwest and West, while Checkers operates mostly in the Southeast. So Sirois has two burger chain brands to manage and market in different parts of the country.

Checkers' franchises have had a rocky history at times. To revive interest in the burger chain franchise, the company last summer cut its franchise fee in half, to $15,000 from $30,000, for stores opening before the end of 2004. As another sweetener, Checkers is cutting the royalty fee it charges in the first year of a store's operation from 4 percent to 2 percent.

As much as Checkers wants to attract more franchisees and open more locations, the chain is discouraging single-store owners who tend to be thin on investment capital or vulnerable to economic curve balls. Five-to-ten store franchisees are ideal, he says, because those owners can better weather any problems one store may encounter.

Executive turnover did not stop with Dorsch. Last month, David Koehler resigned as chief financial officer and was replaced from the outside by Pat Plumley. In December, the company also hired new managers in charge of training and performance, franchise development and construction.

Checkers was founded in 1985 in Mobile, Ala., then later moved to Clearwater. It went public 13 years ago after first growing into a 85-store chain in nine states. The 99-cent burger offered 19 years ago is still on the menu today.

Almost apologetically, Sirois says Checkers will expand in 2004. But oh so conservatively. Look for as many as 25 new locations this year, up from just three in 2003, he says. And look for them in middle class _ "not upscale" _ neighborhoods.

Sirois recalls all too well the times at Checkers several years ago when cash flow was poor. Instead of focusing on training employees, meetings were spent discussing which bills to pay and which to delay.

"I never want to go back there," Sirois says. That memory's a keeper.

_ Robert Trigaux can be reached at trigauxsptimes.com or (727) 893-8405.

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