By George Anderson
When you're used to increasing same-store sales year after year, it comes as something as a shock to the system when you finally experience the opposite. That was the case this past year for Wendy's International, which experienced its first downturn after 18 years on the plus side.
"None of us really liked that," said John Schuessler, chairman and CEO of the company at the restaurant chain's analyst and investor meeting in New York earlier in the week.
Mr. Schuessler said the company had put together a new "3-Tiered, 3-Year Combo Plan" to increase sales, improve margins and reduce costs.
"We are focused on driving Wendy's same-store sales by more than three percent annually and reducing costs throughout the organization by $40 million to $60 million beginning in 2006," said Mr. Schuessler. "Our goals are to improve restaurant margins 500 total basis points and to generate at least $100-125 million pretax profit improvement by the end of 2008."
The company's chief marketing officer, Ian Rowden, said the company has developed a new strategy to differentiate its brand from other fast feeders with new products and more compelling advertising.
Mr. Rowden said the company would be developing between 30 and 60 new products, including Wendy's first move into breakfast. This spring, Wendy's will roll out its new Frescata deli sandwiches on fresh-baked artisan bread.
Wendy's intends to significantly improve margins with a three-pronged approach, including a system-wide rollout of a double-sided grill designed to reduce labor costs and accelerate cooking times; a store automation program to reduce administrative costs; and new supply chain management initiatives to reduce controllable costs.
Moderator's Comment: What caused Wendy's to experience its first decrease in same-store sales after 18 straight years of increases? Is Wendy's on the right track with its new "combo plan" for its business? - George Anderson - Moderator