With new CEO Kirk Tanner at the helm, Wendy’s is establishing a three-part plan to deliver profitable growth over the short and long term.

The first step of that plan is obvious—driving strong same-store sales. U.S. comps increased 0.6 percent in Q1, driven by carryover pricing and partially offset by declines in traffic, particularly lower-income consumers. However, Wendy’s maintained its dollar and share position in the quick-service burger segment, and customer count improved each month in the first quarter.

Wendy’s is boosting sales via three big levers: breakfast, value, and digital. The burger giant announced in February that it would earmark an incremental $55 million toward breakfast advertising in the U.S. and Canada, split evenly in 2024 and 2025. Wendy’s began spending about $2.5 million in the latter half of Q1, which drove high-single-digit year-over-year growth in domestic breakfast sales. The company owed its positive comps in part to the Breakfast Burrito and Cinnabon Pull-Apart morning offerings and 2 for $3 Biggie Bundle everyday value platform.

“No. 1 excitement is building the daypart of breakfast,” Tanner said during Wendy’s Q1 earnings call. “This gives a lot back to the franchisees. We’ve talked about it in the past. It allows us to build out and use the restaurant, use the labor model, and build out a profitable daypart where we have still a lot of potential for. So we’ve got a lot of system excitement around building that daypart that allows us to grow faster and grow our profits.”

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In addition to breakfast, Wendy’s said it planned to use $15 million to enhance mobile and loyalty capabilities. During the first quarter, U.S. digital sales increased more than 15 percent versus Q4 and 35 percent against Q1 2023. The acceleration pushed sales mix to over 16 percent. Wendy’s finished the quarter with more than 40 million rewards members and more than 6 million monthly active users, up 40 percent versus Q4.

“We still think that there’s still a lot of runway for us,” Tanner said. “So we’re going to continue to invest in our app. We’re going to continue to invest in our loyalty platform because we think this is certainly an avenue. We like it for a lot of reasons. And one of the reasons I like it the most is when we have a digital order, it’s a larger order. It has a nice impact to our profitability in our restaurants. So I’m excited about the potential that we still have and delighted with the traction that we’ve created in Q1.”

As for traffic concerns, Wendy’s will keep building its investment in breakfast and also plans to announce more product news around Frosty’s and chicken. Tanner said the brand experienced momentum in the evening and late-night daypart throughout the first quarter.

The CEO also believes the company has the right value messaging to reel in price-conscious guests.

“First on a value standpoint, we have a platform that delivers everyday value,” Tanner said. “It’s our Biggie platform. Consumers love that platform. That’s an important part of the menu. And then separately, we’re leveraging our digital communication to drive value, and it has a double benefit. One, it allows us to build loyalty. It allows us to add customers to our platform. It’s an exciting way to engage, drives personalization. So value at Wendy’s is going to be done with everyday value like our platform in Biggie, and we’ll continue to use digital value to drive loyalty and build our customers on our platform.”

The second tenet of Wendy’s strategy is what Tanner called a “significant acceleration in global net unit growth.” The fast-food brand wants north of 2 percent growth in 2024 and to increase that to 3 to 4 percent in 2025. The CEO said franchisees are motivated to open new stores because the returns are better than older legacy restaurants. Eight years ago, Wendy’s freestanding building cost $1.9 million to build. That’s the same cost as the Global Next Gen prototype, which debuted last year. Wendy’s most attractive development program is a build-to-suit, in which operators can see a levered return in about 3.5 years. If a franchisee uses no incentives, it’s about a six-year return.

Wendy’s opened a net of 35 restaurants systemwide in Q1, comprising 18 domestically and 17 internationally. About 70 percent of future growth will come outside of the U.S. The brand is especially high on the U.K., where it has 37 stores currently. It expects to have roughly 45 to 50 units in the market by the end of 2024 and 400 in the long term.

“We have a lot of interest from franchisees to pick to join the system,” CFO Gunther Plosch said. “And that’s obviously a great foundation to accelerate our growth.”

The chain finished Q1 with 6,028 restaurants in the U.S. and 1,220 across the world.

The forces of sales and global development feed into the third component of Wendy’s roadmap—increased profitability for franchisees. U.S. and Canadian franchisees achieved 4 percent and 6 percent growth in sales year-over-year, respectively. EBITDA dollars lifted 9 percent in the U.S. and 25 percent in Canada.

“We expect the sales and profit momentum to carry into this year just as we expect sales and margin expansion in our company-operated restaurants,” Plosch said. “This growth directly supports our new restaurant acceleration plans by putting our current franchisees in an even stronger position to build more restaurants and by continuing to attract new franchisees into the Wendy’s system. We look forward to achieving continued profitable growth together with our franchisees for years to come.”