Food Business News - March 12, 2013 - 19

Wendy’s brand transformation boosts
earnings, conﬁdence in outlook

DUBLIN, OHIO — With a new logo unveiled
in late February and restaurant revamps
under way, the Wendy’s Co. predicts positive momentum from its brand transformation efforts during the coming year.
Bolstered by the January launch of the
chain’s “Right price, right size” value menu,
the company said it is “pleased with what
we are seeing in our first-quarter performance,” in spite of continued economic
challenges for consumers.
“As we step back and look at the big picture, consumers are no doubt feeling the effect of higher gasoline prices, the 2% payroll
tax increase and delayed tax refund checks,”
said Emil Brolick, president and chief executive officer, in a Feb. 28 call with financial
analysts to discuss fourth-quarter earnings.
“While we can’t control these forces, we
certainly can control how we think about
this great Wendy’s brand and how we bring
this brand to life. We remain convinced that
our cut-above brand position is the natural
position for Wendy’s and will serve us well
against traditional Q.S.R. competitors as
well as against new Q.S.R. competitors.”
New menu boards, packaging graphics
and uniforms, plus what the company describes as “bolder” advertising, all figure into
Wendy’s system-wide revamping. This year,
the company plans to remodel 100 company-operated restaurants and a targeted
100 franchised restaurants. Contemporized
locations benefit from added lounge seating, flat-screen televisions, Wi-Fi and digital
menu boards.
“In 2014 and 2015, we expect our image
activation efforts to accelerate, and we believe that about 20% of the total system and
about 50% of the company restaurants will
have completed image activation reimages
by the end of 2015,” Mr. Brolick said.
To offset costs, the chain is discontinuing breakfast in some restaurants and closing lower-performing locations.

March 12, 2013

“These closures will allow franchisees
to reallocate capital to image activation instead of maintaining those lower-performing restaurants,” said Steve Hare, senior
vice-president and chief financial officer.
Alongside the eponymous redhead’s makeover came an overhaul of the chain’s value
menu, which now features six 99c items and
eight items that range from $1.19 to $1.70.

“We had been losing share of price-valued customers for some time, and we knew
we had to correct this with a compelling
consumer offering that could also achieve
broad franchisee support,” Mr. Brolick said.
Looking ahead, Wendy’s remains focused
on balancing its lower-price offerings with
a pipeline of premium products, which last
year included the Bacon Portobello Melt,
Spicy Chicken Guacamole Club and Flatbread Grilled Chicken.
“We have begun to see signs of this effort
paying off in the fourth quarter of 2012, as
we successfully built share of large hamburger and large chicken sandwiches and
sold more large sandwiches than in the previous year,” Mr. Brolick said.
While net income fell 28% in fiscal 2012,
the company reported a sharp increase in
the fourth quarter, due in part to a larger
tax benefit. For the quarter ended Dec. 30,
2012, income attributable to Wendy’s totaled $26,388,000, up from $3,984,000 in the
same period a year ago. FBN

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Food Business News - March 12, 2013

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