Image Courtesy of Wendy's
In the face of sluggish U.S. sales -- and after having slashed its guidance twice over the course of the past year, as Chain Store Age editor-in-chief Marianne Wilson noted -- Wendy's is now preparing to embark on a significant turnaround effort titled "Project Fresh."
According to an Oct. 9 press release, Wendy's is seeking to reinvigorate the brand, spur growth, and improve shareholder value as broad goals of the turnaround initiative.
"Wendy's Board of Directors and management team are dissatisfied with the current valuation of the Company and have been working to put the Company on the right path to create value for our franchisees, employees and shareholders," said Art Winkleblack, board chairman.
"Execution is underway and we are confident that Project Fresh will position Wendy's as the industry leader—one that guests love, franchisees are proud to operate, teams are excited to be a part of, and creates significant value for our shareholders," he added.
As Wilson pointed out, Wendy's CFO Ken Cook has been serving as interim CEO following the departure of Kirk Tanner, who left to helm The Hershey Company as president and chief executive.
Cook was equally optimistic about the brand's future prospects.
"Wendy's is a brand built on quality, authenticity and innovation," Cook began.
"With Project Fresh, we're taking decisive steps together as One Wendy's to strengthen our foundation, enhance restaurant performance and modernize how our customers experience the brand. Project Fresh is about reigniting the energy and distinctiveness that have always made Wendy's special, while positioning the Company and our franchisees for profitable growth," he continued.
Cook had previously taken aim at Wendy's for confusing its customers with too many promotional deals at once, also stating at the time (early August) that the brand was leaning on its "Wednesday" promotion -- and adding new chicken menu items -- to improve sales.
Wendy's 'Project Fresh' Sounds Promising, But Will it Actually Work?
The press release detailed four core pillars upon which the "Project Fresh" push rested:
- Brand revitalization: The company indicated it had retained former CEO of Taco Bell and Yum! Brands, Greg Creed, and more broadly Creed UnCo to assist in tuning up Wendy's marketing effectiveness. That pivot would include nods to "data-driven, needs-based customer segmentation analyses to improve relevance, ease and distinctiveness of the Wendy's brand."
- Capital allocation: The company plans to trim capital allocated to the Build to Suit program by ~$20 million in 2025, with an even larger reduction to that allocation slated for 2026. This re-allocation is done with aims to allow Wendy's to invest in a broader array of areas to drive average unit volume growth, with technology and marketing operations singled out as of prime importance. An independent financial advisor has been tapped to "identify additional opportunities to optimize its capital allocation."
- Operational excellence: Doubling down on hospitality, digital and equipment efficiency, a simplification in terms of general practices and processes -- including those tied to labor and technology -- and enhanced training overall, Wendy's seeks to established a higher bar for customer experience in its restaurants.
- System optimization: Zeroed in again on the all-important average unit volume growth in U.S. restaurants, Wendy's pointed to "optimizing labor and operating hours across dayparts, partnering closely with franchisees to maximize profitability within each market, leveraging insights from Company-operated restaurants and adopting a returns-based approach to franchisee investments."