Wendy's unveils next big premium offering
Nov. 8, 2013
by Monica Watrous
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DUBLIN, OHIO — Following the success of this year’s pretzel bun and flatbread launches, the Wendy’s Corp. is adding a third premium bread to the mix: brioche.
The fast-food chain hopes its new Bacon Portabella Melt on a brioche bun, rolling out soon, will match the performance of the Grilled Chicken Flatbread sandwich and the Pretzel Bacon Cheeseburger, as well as its spinoff Pretzel Pub Chicken Sandwich, which helped Wendy’s narrow its loss during the third quarter.
“The strength of the third-quarter sales performance came from high-end product promotions, as we worked to re-gain our heritage of product innovation,” said Emil Brolick, president and chief executive officer, during a Nov. 7 earnings call with financial analysts. “On the high end, our very successful Pretzel Bacon Cheeseburger delivered excellent results, while the second appearance of our Grilled Chicken Flatbread in the latter part of the quarter did not perform as strongly as we had anticipated. While sales momentum slowed at the end of the quarter, we have seen a very solid response to our October Pretzel Pub Chicken sandwich promotion. Pretzel Pub Chicken is a fantastic product that delivers a cut-above eating experience that’s new-Q.S.R. quality at a Q.S.R. price.”
Wendy’s previously has offered a Bacon Portabella Melt sandwich, featuring a beef patty topped with thick-cut Applewood-smoked bacon and portabella mushrooms smothered in a cheddar cheese sauce, but the latest incarnation will feature a brioche bun that “simply melts in your mouth,” Mr. Brolick said.
“This really had been upgraded with the brioche bun, and we have conducted consumer research on this product,” he said. “The research numbers, and I won’t be specific, but they were extremely strong.”
While premium menu items have figured largely into Wendy’s growth strategy, the chain said its value platform remains a critical component.
“We have also not lost sight of the fact that consumer benefits of convenience and value are the cornerstone of the business, and they always will be,” Mr. Brolick said. “There’s a meaningful group of consumers today whose personal economic situation involves frequent usage of quick-serve restaurants and a high degree of price sensitivity.”
During the third quarter, Wendy’s continued to push its Right Price, Right Size menu, launched earlier this year and featuring items ranging between 99c and $1.99.
“Wendy’s went through a period of time when we lost share of this consumer segment but are now seeing very encouraging trends in regaining our historical position with economically sensitive consumers,” Mr. Brolick said.
For the quarter ended Sept. 29, the company reported a loss in net income of $2.2 million, compared with a loss of $26.2 million during the same period of the previous year.
Operating profit dropped to $26.8 million from $31.2 million last year on charges related to facility actions.
Sales for the quarter totaled $640.8 million, up slightly from $636.3 million during last year’s third quarter. Same-store sales increased 3.2%, compared with a 2.7% growth last year. Franchise same-store sales in North America rose 3.1%, compared with 2.9% last year.
Wendy’s in July announced plans to sell 425 company-operated restaurants. The company has sold 118 restaurants through Nov. 7 for total proceeds of $66 million and expects to complete all transactions by the second quarter of 2014.
The company also continues to make progress in its initiative to update restaurants to feature fireplaces and flatscreen televisions, with more than 180 re-imaged restaurants open and nearly 300 expected to be opened by the end of the year.
Looking ahead, Wendy’s expects its fourth quarter will be impacted by the construction and opening of 125 new or remodeled restaurants and related franchise incentive fees.