In a bid to boost its two brands' images and performance in a wobbly economy, Atlanta-based Wendy's/Arby's Group plans to renovate 200 stores, roll out salads and an expanded breakfast line-up, and help franchisees achieve wider profit margins, top executives say.
Wendy's is pushing its breakfast menu -- including grilled panini sandwiches, carry-out oatmeal bars and premium coffee -- into new markets. New salads are coming in July, including an apple pecan chicken salad and a spicy chicken Caesar offering. The number of Wendy's restaurants with high scores for operational efficiency has risen, chief executive Roland Smith said Wednesday at an analyst conference sponsored by Oppenheimer & Co.
Meanwhile, executives say the dollar menu is a key tool in helping Arby's adjust to an economy in which consumer confidence is deeply shaken and people spend less on travel and entertainment. One example: Arby's will give away its new Jr. Deluxe sandwich on July 5 with the purchase of a drink.
"You need to give the people what they want," said Bob Kraut, senior vice president of advertising and communications at Arby’s Restaurant Group. "If they want lower-entry price points, we're going to do that. That is to address a major purchase obstacle that people had for Arby's."
A reputation for quality eats, but at a higher price, put the Arby's brand at a disadvantage when diners looked for cheap deals. Before the introduction of the value menu, an average meal at Arby's went for $7.50, higher than the industry average by $2 or more. As competitors instituted significant discounting in recent months, "we've had to respond to that," said Smith.
Revenue fell 3 percent to $837.4 million in the first quarter of the year, and the company lost $3.4 million in the period. "The Arby's brand is in accelerated decline and the Wendy's brand is stalling," Vicki Bryan, senior high yield analyst at Gimme Credit, wrote in mid-June.
Even though sales are down at Arby's stores open at least year, Smith said he is encouraged by an increase in transaction volume in April as the company pushed its value offerings. "Arby's clearly is in the early stages of a turnaround," said Smith.
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