Wendy's continues premium push

by Monica Watrous
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Wendy's launched its new Fresh Mozzrella Chicken Salad and Fresh Mozzarella Chicken Sandwich in April.
 
DUBLIN, Ohio — Premium menu items, including a fresh mozzarella chicken salad and a strawberry mango chicken salad, contributed to higher sales at established Wendy’s restaurants in the recent quarter.

The Wendy’s Co. recorded a net loss of $1,845,000 in the second quarter ended July 2, which compared with net income of $26,480,000 in the year-ago period. Revenues totaled $320,342,000, down from $382,718,000. The decline was driven by the ownership of 251 fewer company-operated restaurants at the end of the quarter compared to the beginning of the prior-year quarter.

Meanwhile, North America same-restaurant sales increased 3.2 percent in the quarter and 3.6 percent on a two-year basis.

Todd Penegor, president and CEO of Wendy's

“The work that we've been doing around our fresh messaging on fresh, never-frozen North American beef has clearly helped us continue to grow our premium hamburger business,” said Todd Allan Penegor, president and CEO, during an Aug. 9 earnings call with investment analysts. “The work that we did to invest in smaller live weight chickens to have a more tender and juicy chicken breast on our sandwiches has helped us drive our premium chicken business. And then the messaging that we had, especially in the second quarter, around salads as we brought news out there with the Fresh Mozzarella Salad, followed it up with the Strawberry Mango Chicken Salad, all core premium items that we continue to drive nice growth on.”

 

Other initiatives under way at Wendy's include digital technology, such as mobile and kiosk ordering.
 
Other initiatives under way at Wendy’s include digital technology, such as mobile and kiosk ordering, and restaurant reimaging. More than a third of the company’s restaurants have been “image activated,” with plans to complete 42 percent of the system by the end of the year, Penegor said. 

“Image activation provided a tailwind of 70 basis points to our North America same-restaurant sales in the quarter, and we continue to expect I.A. to provide a tailwind of 80 basis points for the full year,” he said.

Based on year-to-date performance, the company has increased its full-year guidance for adjusted EBITDA. Management now expects adjusted EBITDA of approximately $404 million to $410 million, an increase of approximately 3 percent to 5 percent over the prior year, and continues to expect same-restaurant sales growth of approximately 2 percent to 3 percent for the year.

Premium menu items, including a strawberry mango chicken, salad, contributed to higher sales at established Wendy's restaurants in the recent quarter.
 
By 2020, the company expects to have more than 7,500 restaurants globally, with at least 70 percent of the system image activated, and more than $12 billion in global systemwide sales in constant currency, excluding Venezuela.

“A balanced marketing approach contributing to consistent same-restaurant sales growth, new restaurant development and the reimaging of existing restaurants are all key factors that will enable us to achieve our 2020 target of $12 billion in systemwide sales,” Penegor said. 

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