Craig Bahner may only have started as Wendy’s chief marketing officer in April, but he’s already weighing significant changes to strengthen the brand. Speaking to analysts at Wendy’s Investors Day program on June 28, Bahner outlined plans to accelerate new-menu-product development, revise its 99¢ value menu into a two-tier pricing structure, increase its use of social media and more seriously target Hispanic consumers.
Bahner, who previously spent 20 years at Procter & Gamble, said Wendy’s needs bolder menu innovations that are “compelling, distinctive and ownable,” including what he called “step change” items that “create new [menu] categories in which we’re not competing.” These include the Grilled Flatbread Chicken Sandwiches that Wendy’s has been testing widely since December. Although not mentioned by name, the flatbreads were shown in several of Bahner’s slides.
VP-Culinary Development Lori Estrada mentioned the Black Label cheeseburger with Portobello mushrooms that is in test as another menu innovation and said the chain is looking at a Cheddar-topped jalapeňo bun for a Spicy Santa Fe Chicken sandwich. A pretzel-style roll is being considered with a Pub Club sandwich.
While McDonald’s and Burger King battle over smoothies and frappes, Wendy’s is focusing on its line of Signature Lemonades and striving for supremacy in that category, Bahner said.
Pricing for the 99¢ value menu has gotten out of control, with many franchisees raising prices for items above $1 in order to maintain margins. Bahner said Wendy’s is testing a simplified value menu that keeps six core items (including proteins, sides and drinks) at 99¢ with a second tier of low-price items all less than $2. This likely won’t be implemented systemwide until some time in 2013.
Bahner said Wendy’s had “lost relevance” with consumers in recent years through “inconsistency in menu and messaging” that essentially told consumers “We don’t even know who we are.” That is being corrected through current advertising that uses both Wendy Thomas and the young redheaded woman known internally as “Red.” Thomas “connects the past to present and points to the future,” he said. Red (actress Morgan Smith Goodwin) is the “consumer advocate.”
Bahner noted that Wendy’s superimposed the Twitter hashtag #DefiningMoment on the first commercial with “Red” (shown above) to see if consumers picked up on it. Bahner says it showed up in 18,000 tweets, 76% of which were positive about Wendy’s.
But Wendy’s needs to do more with digital media. Vowing to “drive like heck mobile, social and gaming” channels, Bahner said Wendy’s would “lead and win in this space.” Initiatives include a new smartphone app (Android only, so far) with advanced nutrition-information features. A relaunch of the wendys.com home page is in the works.
Latinos account for 21% of QSR customer traffic, but only 13% of Wendy’s, according to NPD data cited by Bahner. Wendy’s has adopted “Sabor de verdad” (roughly “Real flavor”) as its tagline for stepped-up multimedia advertising to Spanish-speaking consumers. TV advertising features recurring characters Caesar and Gabby.
Wendy’s CEO Emil Brolick asserted that the chain must not “fall victim to the tyranny of incrementalism,” which he defined as the temptation to play the same old game a little better. “We have to play a different game,” he said. That means not only innovating on the menu with “killer good” limited-time offers but with food presentation and packaging as well. Wendy’s must be “strategically driven and tactically brilliant” to reach its goal of a 3% annual increase in North American sales, Brolick insisted.
Store “packaging” also matters, so Wendy’s is refining its reimaging plans. SVP Abigail Pringle showed analysts the four design prototypes that have been in test and announced that the “Ultra Modern” and “Urban” styles (above) are the winners. These two designs will be the majority of store remodels and most new-unit builds because they “best reflect Wendy’s brand image for tomorrow,” she said. The Ultra Modern design has been revised to achieve a 35% reduction in the cost to build it, she said.
An in-line version of the standalone design also has been approved. It will be used in New York City and ultimately other urban markets.