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Wendy’s Takes the High Ground

Filed under LTO, Premium, Pricing

Wendys_Brioche2The “Year of the Bun” continues! Wendy’s this week brings back the Bacon Portabella Melt sandwich it first offered a year ago but this time puts it on a brioche bun for extra flavor and value cachet.

Unlike competitors Burger King and McDonald’s, Wendy’s isn’t shying away from premium-tier burgers. It can do that because it does premium well: the chain announced a strong 3.2% increase in same-store sales for its Q3 ended Sept. 29, 2013. Those sales were driven by the solid success of the Pretzel Bacon Cheeseburger launched in July. However, Wendy’s CEO Emil Brolick said the Flatbread Grilled Chicken limited-time item that followed “did not perform as we expected it to.” McDonald’s heavily marketed introduction of McWrap at that time may have hurt, he conceded. But the Pretzel Pub Chicken premium item just ending its run performed very well, Brolick said.

Wendy_PretzelBCheeseWhile maintaining its belief in premium products, Wendy’s is seeing the value of a “barbell” pricing strategy. Brolick said Wendy’s in the past was losing share with what he called the “price/value consumer.” The chain’s Right Price, Right Size menu has helped change that, he said, adding that the “high/low [pricing] strategy is the way to think about the business.”

Brolick said it is “safe to assume” Wendy’s will have new premium items in 2014 (as well as value items). As reported earlier, one of the items could be a Spicy Santa Fe Burger (beef and/or chicken) with pepper-Jack cheese and guacamole on a Cheddar-jalapeňo bun.

Screen Shot 2013-11-07 at 9.14.28 AMWendy’s has again revamped its unit-design template. The latest version has a shinier, diner-style exterior look, but its most important feature is the price tag: It will cost franchisees just $550,000 to build, compared with the $1.2 million required for the 2011 version. “Plus Ups” or add-ons to the new standard design are available.

Brolick said the new look—which will be the standard for all new and remodeled restaurants—targets “the sweet spot of wow impact,” meaning it focuses on what consumers want most in a restaurant. The design is yielding a 10% to 20% sales boost.

The chain continues its refranchising effort. It intends ultimately to sell 425 company restaurants to franchisees and has sold 118 so far. Systemwide, There are more than 6,500 Wendy’s restaurants.