DUBLIN OHIO Wendy’s International Inc. is trying to stay focused on the business of burgers, value menus and, in a new move, premium beverages. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
This month the parent to the No. 3 burger brand, whose performance has struggled in comparison with quick-service competitors McDonald’s and Burger King and large regional players like Jack in the Box and Carl’s Jr., alerted employees and franchisees to 10 key initiatives for 2008 that are expected to drive customer traffic, build unit-level efficiencies and improve restaurant returns. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Those initiatives include continued use of Wendy’s “Red Wig” and “Hot n’ Juicy” ad campaigns, promotion of Combo Choice meals and Value Menus, and a focus on beverages, including iced tea, specialty coffees and Frosty choices that could include Frosty Milkshakes, which are now in test at three restaurants in Ohio. Wendy’s breakfast program, which has been rolled out to about 750 units out of the chain’s 6,600, also is a highlight of next year’s plan, the company said. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
The so-called “Phase II” of Wendy’s turnaround was outlined in an Oct. 17 letter from chief executive Kerrii Anderson sent to the entire Wendy’s system. Nation’s Restaurant News obtained a copy of the letter. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
“We have clearly started to turn the Wendy’s brand around and produce improved results,” Anderson said, citing both five consecutive quarters of positive, albeit slowing, same-store sales and improved margins at U.S. corporate restaurants. “However, we must do more. We must intensify our focus on driving growth and transactions.” —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
In the letter, Wendy’s stated its desire to become a beverage “destination.” The push for beverage products and sales comes at the same time as segment leader McDonald’s Corp., parent to a system of more than 30,000 corporate or franchised restaurants, also is discussing the best way to penetrate what sources have pegged as a $60 billion market. McDonald’s has reportedly said it hoped to gain $1 billion in incremental sales from new espresso drinks. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Wendy’s has been testing iced teas, a premium coffee, and Frosty Milkshakes in chocolate, strawberry and vanilla flavors. The milk shakes are a less-thick variation of the chain’s traditionally firmer, spoonable Frosty soft-serve desserts and are the latest variations on the Frosty, which was on the menu of the first Wendy’s that brand founder Dave Thomas opened in 1969. Since July 2006, Wendy’s has debuted a vanilla Frosty, a Frosty Float and the Twisted Frosty, which is mixed with candy. The new milk shakes are made with the same equipment used for the Twisted Frosty items. Sales from Frosty-branded products have risen 60 percent and topped $300 million annually since the vanilla version was introduced, according to Wendy’s. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
In other beverage-related tests, a Wendy’s franchisee opened this month a separate coffee bar, called Javaccino’s, in a unit in Starkville, Miss. The bar serves coffees, cappuccinos, lattes and “Frosty-cinos,” described as a Wendy’s Frosty mixed with coffee flavoring and chocolate or caramel. Those menu items sell for $3.69, a price point more associated with beverages at fast-casual concepts than at quick-service chains. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
The Starkville restaurant, operated by the Wendelta Inc. subsidiary of 100-unit Wendy’s franchisee Carlisle Corp., also boasts flat-screen televisions, free Wi-Fi access and flowers on the tables. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
“People have come to our stores to buy breakfast, lunch or dinner with a beverage as a side, and that’s been our business for 50 years,” said Gene Carlisle, chairman and founder of Carlisle Corp. “But there has been a dramatic shift in the consumer, and people are going to restaurants to purchase premium beverages.… This is our opportunity to go after that market.” —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Carlisle, who has been a Wendy’s franchisee for more than 30 years, is a suitor in the pending auction for franchisor Wendy’s International, which has been exploring for six months ways to increase shareholder value, including a sale, a recapitalization or a shift in strategic direction. Carlisle would not discuss his moves within Wendy’s auction process. Other suitors include activist investor and 9.8-percent Wendy’s stakeholder Nelson Peltz and, reportedly, another Wendy’s franchisee, Cedar Enterprises, based in Columbus, Ohio. Peltz has floated a possible offer price as high as $3.6 billion. Neither Peltz nor David Karam, Cedar’s chief executive, would comment. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
“[Wendy’s has] to get to driving same-store sales,” Carlisle said. “Breakfast is huge, and we need to be there, but we can’t be left out of the beverage business either.” —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Carlisle said the breakfast initiative that Wendy’s started last year is a difficult one to make profitable, while beverages have high margins that are easy to capitalize on. The Javaccino’s coffee bar is located in one of Carlisle’s highest-grossing units—it posts an average unit volume of more than $2 million—and is located right next to the Mississippi State University, which provides a somewhat captive and younger consumer base, he said. It also is a remodeled unit, one of many in the system that was in need of an upgrade, Carlisle added. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Carlisle’s remodeled units typically gain between 30 percent and 50 percent in sales during the first three months after a completed renovation, and the annual return on investment is near 20 percent, he said. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Remodeling the older restaurants is “a big piece” of what Wendy’s needs to do, Carlisle said. Carlisle previously has said that half the restaurants in Wendy’s 6,600-unit system need to be renovated or replaced within the next five years at a cost of $500,000 to $1.5 million per restaurant. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Wendy’s officials share Carlisle’s sentiment, although they did not provide specifics about the remodel program. In the Oct. 17 letter to the Wendy’s system, Anderson said reinvestment in restaurants, including the remodeling of corporate units and the buying of franchised locations to be upgraded and then refranchised, would be a major initiative. She said in her letter that restaurant reimaging was “critical to meeting consumer needs, becoming more competitive and driving long-term sales improvement.” —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Corporate officials were supportive of the new Starkville unit and the branded coffee bar, Carlisle said, acknowledging, however, that there appears to be increasing friction between corporate officials and franchisees. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
This month Wendy’s largest franchisee, DavCo Restaurants Inc., filed a $2 million lawsuit against the franchisor for allegedly overcharging the 160-unit operator for soda syrup and diverting the extra money to a national advertising fund. The suit also calls into question Wendy’s relationship with its soda vendor and whether franchisees should be restricted to certain providers. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Crofton, Md.-based DavCo could not be reached for comment by press time. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
Wendy’s senior vice president of corporate affairs and investor relations, John Barker, said the lawsuit “has no merit” and that the company planned to “vigorously defend the Wendy’s system and brand.” —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
DavCo was one of 16 owners of more than 1,100 Wendy’s unit that last month wrote to the franchisor claiming that management had harmed the Wendy’s brand through various alleged mis-steps regarding pricing and product testing and had failed to consider franchisees’ concerns regarding a potential sale of the company. Wendy’s officials called those accusations “flatly wrong” and said the company had taken “special steps” to reach out to franchisees. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
In Wendy’s letter to its franchisees and employees, the company encouraged the system to pay attention to the restaurant business, rather than news reports and hearsay over the future of the company and its brand. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,
“Despite all of the media stories and speculation, it’s important that we all stay focused on the business and building for the future,” Anderson wrote. —Amid corporate distractions ranging from a possible billion-dollar buyout to a million-dollar lawsuit filed by its largest operator over alleged overcharges for supplies,