Wendy's/Arby's year begins with some promise

Executives cite February's menu introductions at Wendy's, including a bacon and blue cheese hamburger. A larger breakfast menu is coming. Executives promise additional new products for both Wendy's and Arby's but aren't yet disclosing details.

Arby's came off a fourth quarter in which its sales fell short of even pessimistic Wall Street predictions. But early in 2010, same-store sales trends at Arby's improved somewhat. In January, same-store sales at company-operated restaurants fell 7.4 percent in North America, an improvement from the 12.6 percent drop in the fourth quarter.

Wendy's/Arby's plan to increase customer traffic and sales at Arby's includes expanding value menus and remodeling stores. Wendy's/Arby's has also gotten its Arby's franchisees to sign off on bigger spending on national advertising.

As competitors such as Burger King have launched significant discounts, Arby's has rolled out its $1 value menu to more than 2,500 restaurants. To executives' chagrin, Arby's rated low on recent consumer surveys asking whether it was "worth what you pay for it." Many customers said they loved Arby's food but couldn't afford the prices.

"Competitors have moved to a price war," said Roland Smith, CEO of Wendy's/Arby's. "We have lost a significant number of sales. In this economy, you need to have a strong value proposition, or you lose the bottom end of your consumer base."