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On November 15, 1969, Dave Thomas put 20-plus years of restaurant experience into the opening of his very own fast-food joint, Wendy’s Old Fashioned Hamburgers. That first restaurant, located in Columbus, Ohio, set a precedent for quick-service burger chains by capitalizing on a promise to consumers that its iconic square patties were fresh, never frozen. Even in those years the buzzword resonated, and so Wendy’s began its journey to becoming one of the nation’s largest hamburger chains.
Fast forward to 2014: While McDonald’s, Wendy’s, and Burger King continue to be the segment’s top players, competition is fiercer than ever. Within the scope of limited service, fast casual is the only category seeing overall growth, according to numerous industry analysts. And though that certainly doesn’t signal any permanent decline or end for fast food, it may require traditional quick serves to adapt at a quicker pace than before.
Coming in at No. 4 on our QSR 50 list, Wendy’s provides a case study for just how a brand with deep roots can attempt to change with the times. When CEO Emil Brolick came aboard in 2011, he declared that the company would make moves to be a viable competitor to fast casuals like Five Guys Burgers & Fries. That goal culminated in a brand refresh that’s touched everything from the menu and marketing to store design and employee uniforms. The LTO pipeline at Wendy’s continues to churn out crowd pleasers like the game-changing Pretzel Bacon Cheeseburger, and is complemented by TV advertising aimed at the industry’s must-have demographic: Millennials.
“Wendy’s is a brand that challenges the status quo. Dave Thomas embodied the idea of never settling and always striving for better—of being ‘a cut above,’” says John Barker, chief communications officer and senior vice president of The Wendy’s Company, in an email to QSR. “We continue that tradition today, but in a contemporary way.”
Early indicators show Wendy’s revamp could be working—the Freckled Lady saw systemwide sales growth in 2013 for the third year in a row since a 2.26 percent decline in 2010. But some industry experts remain weary of the brand’s strategy.
“They’re saying they want to be ‘a cut above,’ but a cut above what?” says Warren Ellish, founder of Ellish Marketing Group, which has served several big quick-serve players. “They don’t know what to stand for. They’re getting looser instead of more focused.”
Whichever way you slice it, Wendy’s is certainly making waves. And while only time will tell how much success the brand truly sees, company executives are sticking to their guns in the hopes that they’ve found the right formula to excel in today’s stagnant quick-service landscape and beyond.
The LTO bandwagon
In the eyes of some industry experts, Wendy’s struck gold when it began innovating its bread. It all started with the reprise of a popular LTO, the Flatbread Grilled Chicken line, in September 2013, and picked up real momentum with the release of the Pretzel Bacon Cheeseburger and Pretzel Pub Chicken later that fall.
“That’s a good example of taking a category that’s stale—no pun intended—and really changing it up in that [quick-service] market,” says chef Adam Moore of Charlie Baggs Culinary Innovations, a menu development and consulting firm for the foodservice industry. “When it comes to Wendy’s and comparing them to other [quick serves] out there, what I’ve found with them is that they’re more open to menu innovation, their focus being on fresh—from fresh fries to their preparations and types of ingredients.”
Wendy’s followed up with the Bacon Portabella Melt burger on a brioche bun in November 2013 and the Mediterranean-inspired Ciabatta Bacon Cheeseburger in January. All of these LTOs hit on sophisticated flavor profiles intended to resonate with the Millennials who are demanding that of quick serves, allowing Wendy’s to stick a premium price tag on premium menu items. But some experts express concerns that the fleeting nature of LTOs, despite the fact that they build immediate buzz, isn’t a beneficial strategy in the long run.
“What happens a lot in the restaurant industry is that a brand tries to be everything for everybody, … adding something with the hopes it’ll extend their customer base,” Ellish says. “But typically what happens when you keep adding items is you don’t increase your reach, but you decrease the quality and performance of what you’re doing.”
Ellish adds that LTOs can also alienate core customers if not balanced with permanent menu item growth. Beyond that, some industry experts also say Wendy’s premium LTOs can be seen as a sign of defeat against the fast-casual segment and won’t resonate with consumers because of the perception surrounding all fast food.
“By doing some more upscale items, [Wendy’s] is telling everyone, ‘Yeah, these upscale guys are eating into our market share, and we need to do what they’re doing.’ It’s just tough because customers won’t give Wendy’s credit for [upscale items],” says Dan Rowe, CEO of Fransmart, a development group with several quick-service clients.
While Wendy’s hasn’t taken steps to incorporate popular premium LTOs or new sandwiches into the permanent menu, it has focused on revamping its salad platform, replacing low performers with more sophisticated options. Two chef-inspired salads, the Asian Cashew Chicken Salad and BBQ Ranch Chicken Salad, replaced the Baja Salad and the Chicken BLT Cobb in early March.
“People are seeking innovation, but usually it takes going back to the basics and then using seasonings or flavor profiles that are unfamiliar to the general mainstream, like in the Asian Cashew Chicken salad,” Moore says.
Wendy’s executives saw these permanent offerings, along with a seasonal Strawberry Fields salad that returned to the menu in June, as key items to target Millennials with distinct, bold flavors, Barker says. Both new salads also have 50 percent less fat, 29 percent less sodium, and 61 percent less saturated fat than the discontinued salads.
“With something like the higher-end salads, they’re giving people a way to get satisfaction within a category that has a health message,” says Steven Goldstein, partner at The Culinary Edge, a food and restaurant consulting firm. “Within that category, they have options that are more indulgent and ones that are healthy, as consumers define it.”
Just as LTOs and premium salads have let Wendy’s set higher price points, the brand’s revamped Right Price Right Size value menu, unveiled in January 2013, still offers consumers inexpensive options, but with more variety and a range of pricing. The Steakhouse Jr. Cheeseburger LTO, launched in late May, was the first LTO added to the value menu at $1.49 and exemplifies Wendy’s attempt to imbue all parts of the menuboard with more quality offerings.
Still, some industry experts caution against going too upscale and away from the brand’s core identity as an old-fashioned hamburger joint. The struggle lies in the fact that Wendy’s original fresh proposition has become an industry standard.
“Everyone makes their food today fresh and brings in the same ingredients,” Ellish says. “In a social media age, it’s very important for a brand to clearly and consistently tell people what their brand is all about. There’s nothing wrong with having more than just burgers on the menu, but they haven’t defined what their [boundaries] of the menu are.”