Wendy's/Arby's to open 180 restaurants in Russia over 10 years

By Jeremiah McWilliams

The Atlanta Journal-Constitution

Wendy’s/Arby’s Group could open as many as 180 dual-branded restaurants in Russia over the next 10 years, under a development agreement with a Moscow-based group.

The nation of 139 million people -- making it the world's ninth-largest by population -- is attractive to Wendy's/Arby's because it is served by relatively few fast-food restaurants. The company is the third-largest fast food chain in the U.S. but does a relatively small percentage of its business outside the country.

"This is a key step in the continued acceleration of our international development strategy," said Roland Smith, CEO of Sandy Springs-based Wendy's/Arby's. He called Russia a dynamic market with significant long-term expansion potential.

The development group, Wenrus Restaurant Group, is affiliated with Food Service Capital, which currently operates 28 restaurants, including steakhouses in Moscow, Novosibirsk, Kiev and London.

"We have chosen to enter Russia with a franchise organization that has proven food service experience and knows the marketplace extremely well," said Bob Bertini, a spokesman for Wendy's/Arby's. "We believe this will be a real plus as we work to establish and build our presence."

Wendy's/Arby's, which reports quarterly earnings Thursday, has been trying to freshen its dual brands and search for growth overseas. Its stock has fallen 12 percent in the past year. Sara Senatore, an analyst with Sanford C. Bernstein & Co., predicted that second-quarter sales at Wendy's restaurants would rise 1 percent and for cost savings to expand profit margins. But she said weak traffic and spending at Arby's would lead to a 7 percent sales decline.

This is the fourth major international development agreement Wendy's/Arby's has announced since the merger of the burger and roast beef chains in September 2008. It is also the largest to date in terms of number of restaurants. Previous development agreements covered Singapore, the Middle East and North Africa, and Turkey.

Smith told Wall Street analysts in June that international expansion was a "a big growth opportunity." The company said at that point that it expected to sign development agreements for 400 international restaurants, and to actually open between 35 and 45 units.