NEW YORK (AP) — Wendy's new CEO on Wednesday laid out his action plan for re-energizing the fast-food chain against the backdrop of a quarterly loss driven by costs related to the recent sale of Arby's.
Emil Brolick, who joined Wendy's as CEO less than two months ago, said in a call with analysts that he was focused on beating a relatively new crop of competitors of "fast-casual" brands like Five Guys and Smashburger. He gave more details on the company's push to offer breakfast nationwide, something that virtually all of its major fast-food rivals already do. He also outlined plans to expand into international markets like Japan and Russia.
Restaurants of all price ranges are facing the double challenge of higher costs for ingredients and customers who are wary of spending on eating out in the weak U.S. economy. Most fast-food chains are playing catch-up to the much larger McDonald's Corp., which has fared well throughout the recession and its aftermath by emphasizing low prices, remodeling restaurants and adding products like smoothies and fancy coffee drinks.
For years, Wendy's had carved out a niche as quality fast-food for adults, but sales have suffered recently because customers decided its offerings had grown stale. Adding to that, after founder Dave Thomas died in 2002, Wendy's struggled to find a new face for its advertising. Brolick, a company veteran who became CEO in September, said Wednesday that the company had gone through "an identity crisis."
Brolick's strategy for Wendy's is to be on the high end of the fast-food pecking order because he thinks customers will be willing to pay more than they would at other fats-food chains if the food is better. But they'll also get the benefit of prices that are lower than those at a fast-casual chain, he reasons.
"I'm not for the moment suggesting that we want to try to pretend to become a Five Guys or a Smashburger or something like that," Brolick said on a call with analysts. "But I do believe that there is a significant opportunity in the marketplace for higher-quality products that are fresh, made-to-order products."
Wendy's has been reshaping its menu with new ingredients and preparation methods for its salads, hamburgers and the rest of its offerings in an effort to attract more customers. Brolick said the new Dave's Hot 'N Juicy burgers had "exceeded our expectations" and would help Wendy's reclaim its "leadership in the premium-quality hamburger category."
Wendy's has previously talked about taking a "barbell" approach to pricing: offering high-priced and low-priced items to appeal to customers at both the top and bottom. On Wednesday, Wendy's said later this month it will introduce a new "W'' cheeseburger line, which it describes as mid-tier. Prices for those burgers would be around $2.99 — between the 99-cent "value" cheeseburger and the premium Dave's Hot 'N Juicy burger, which can cost nearly $6 for the biggest size. Wendy's is hoping that customers who previously bought the cheap burgers will trade up to the middle.