Repeat customers—a futuristic take
On the note of getting customers to come back, Penegor explained the outlook like this: “We talk a lot about the investments that we're making in technology. And when you think about what it's going to take to really win in the long-run, technology is going to have to be one of those things that connect to the next generation of consumer as a big enabler.”
In addition to offering brands the ability to connect with consumers in fresh ways, technology is the key to unlocking consistency across a multi-unit system of this size, Penegor said. Wendy’s is pouring investments into the runway.
In an effort to drive more active users into its app in Q3, Wendy’s focused on an acquisition strategy to entice customers to download and use the Wendy’s app with a free Dave’s Single offer.
“This deal resulted in us doubling the number of active users compared to the second quarter, which was a huge success. Our mobile offers, which are available for use in all of our U.S. restaurants, will continue to drive mobile app usage and will set us up for a successful roll-out of mobile ordering, which has now begun across North America,” Penegor said.
As mobile ordering rolls, Wendy’s keeps making improvements to its app. “This coupled with increased downloads from our mobile offers strategy is providing more access to the brand and more importantly, one that is seamless and easy to navigate,” Penegor said.
Wendy’s delivery program with DoorDash accelerated quickly. Wendy’s is now live at 50 percent of its North America system and forecasts 60 percent penetration by year’s end. Check sizes are 1.5 to 2 times larger and Wendy’s sees “repeat business and we believe this a clearly incrementality on the business especially in the evening daypart.” For perspective, only 25 percent of the system offered delivery at the end of Q1.
“We continue to see nice builds on delivery, every time we create a little more awareness, whether that's DoorDash support, or the brand talking about DoorDash delivery,” Plosch added. “So we don't feel like it's a fickle customer. We feel like we can get people into the routine and we're seeing customers come in on delivery across all dayparts, but a little more skewed to dinner in late night.”
Franchising and the growth path
Wendy’s opened 37 global restaurants in Q3 for a net increase of 13 units. Year-to-date, Wendy’s has grown its footprint by 35 restaurants. Also, 48 percent of the global system was image activated by quarter’s end compared to 43 percent this time a year ago. That should hit 50 percent by the end of 2018.
To stimulate franchisee demand for restaurants, Wendy’s recently launched what Penegor called a groundbreaking incentive that provides franchisees 11.5 percent of royalty and advertisement abatements over two years if the operator signs the development agreement to build incremental new restaurants. As part of the incentive, franchisees are also eligible to use Wendy’s “refresh light” model for any future reimaging projects. This was previously only available for restaurants with average-unit-volumes of $1.3 million or less. The incentive program removes the cap.
“While it is still early, we have been seeing low to mid-single digit lifts on refreshed lights and we have exceeded our internal expectations. These are great examples of how we find solutions to create better financial returns for our franchisees, as we continue to invest in growth,” Penegor said.