Wendy’s Executive Summary

Wendy’s “Quality is our Recipe”/“Fast Food Done Right” brand positioning stresses a commitment to fresh, never frozen, North American beef in the form of square, cooked-to-order burgers that are juicier, hotter and made with more melted cheese. The chain’s menu strategy is to: reinforce its burger quality leadership; raise consumer expectations with its chicken products; leverage its equity in bacon (Baconator); drive unique visits through salads & beverages; innovate with on-trend (spicy) flavors; and offer a multi-faceted approach to price/value. Further, in 2022 Wendy’s seeks to grow breakfast sales by 10% to 20% vs. the prior year and exit the year at breakfast sales of $3,000 to $3,500/restaurant/week (stores that have been offering breakfast prior to the 2020 national launch are generating $4,500+/week in sales for that daypart). The brand’s “one more visit and one more dollar” low/high marketing strategy is designed to use value to drive frequency and premium trade-up to drive check. The goal is not to discount the core, but to offer products with competitive entry price points that are operationally simple and margin friendly. Digital sales mix reached a respectable 10% during 1Q22. Notably, its 2021 store-level EBITDAR dollar profit is at an all-time high. All-the-same, Wendy’s cumulative comp growth from 2019 – 2021 underperforms the segment by -4.6% (including a -2.3% 2021 comp underperformance), revealing the chain’s challenge to maintain/drive traffic given that about a third of Wendy’s customers earn <$45k while its 2022 menu pricing target is expected to increase mid-to-high single digits, bringing cumulative pricing to double-digit levels on a 2-year basis. In conclusion, while Wendy’s has done well to magnify its significant menu prowess sufficient to generate a respectable +14% cumulative U.S. comp growth from 2019 – 2021, the chain must continue to work to translate its QSR+ positioning into increased frequency from a higher income demo sufficient to drive a higher check and in-line comp performance.