Wendy's looking to keep quality, freshness as key component
May 11, 2017
by Monica Watrous
Wendy's is touting 'fresh' messaging as the driver of its same-restaurant sales growth.
DUBLIN, Ohio — The Wendy’s Co.’s focus on fresh is boosting same-restaurant sales growth for the fast-food chain, said Todd A. Penegor, president and CEO.
Net income in the first quarter ended April 2 was $22,341,000, equal to $0.09 per share on the common stock, which was down more than 12 percent from $25,363,000, or $0.09 per share, in the year-ago period. Revenues of $285,819,000 were down nearly 25 percent from $378,787,000. The decline was driven by the ownership of 301 fewer company-operated restaurants at the end of the quarter compared to the beginning of the prior-year quarter.
During the quarter, North America same-restaurant sales increased 1.6 percent, up 5.2 percent on a two-year basis.
|Todd Penegor, president and CEO of Wendy's
“This is our 17th consecutive quarter of positive same-restaurant sales, which demonstrates the long-term strength and relevance of our brand,” Penegor said during a May 10 earnings call with financial analysts.
A driver of consistent growth in a competitive environment is Wendy’s brand positioning around “fresh, never frozen” beef, he said.
“We really continue to talk about our freshness message of everything that we do in our restaurants every day with whole heads of lettuce and fresh-chopped vegetables every single day and absolutely committed to continue to upgrade the quality of our food,” Penegor said. “We did it on hamburgers one and a half years ago with moving back to the original buns, the original mayo, putting it into a foil wrap, and just extended the foil wrap to our chicken sandwiches, made a big investment in chicken to go to the smaller, lightweight birds to make sure that those fillets are tender and more juicy. And we’re going to continue to up our game on the quality of food. And consumers are voting with their feet, and we’re seeing it in our brand health metrics.”
Technology represents another opportunity for Wendy’s, which is rolling out mobile ordering to half of its restaurants by the end of the year and plans to test a loyalty program in the coming months.
Wendy's is rolling out mobile ordering to half of its restaurants by the end of the year.
“We still have strong demand for kiosks, but you’ll see that coming more in the back half of the year, and still committed to 1,000 restaurants having kiosks,” Penegor said. “And we’re testing other things like delivery, so we got a delivery test in Columbus and Dallas right now with DoorDash. We’re learning and understanding what the consumer expectation is around that. So across all of these initiatives, because we’ve created the platform, we’re ready to scale up quickly when we need to. And it really is then making sure that all of the elements are working, so when we want to drive awareness to the consumer, we make sure that they understand we’re serving or solving for a consumer need and really complementing why we exist in QSR: speed, convenience and affordability, and making it easier for them to have access to our food.”
Based on first-quarter performance, the company has raised its guidance for adjusted earnings before interest, taxes, depreciation and amortization. The company now expects adjusted EBITDA of $400 million to $406 million, an increase of 2 percent to 4 percent compared to 2016 and up from the prior guidance of $396 million to $404 million. Additionally, Wendy’s management expects same restaurant sales growth of 2 percent to 3 percent for the North America system.