Corporate responsibility has evolved well beyond the buzz for restaurants. According to recent data from the NYU Stern Center for Sustainable Business and Circana, despite inflation, sustainability marketed products outperformed conventional ones across 36 categories and grew .3 points to 17.3 percent of purchases. The category’s five-year compound annual growth rate today sits at 9.48 percent, outpacing its conventional counterpart at 4.98 percent.
Another survey, this one from global price and growth consulting firm Simon-Kucher, found American restaurant guests were willing to pay an average premium of 20 percent more for sustainable meals. The study also noted younger generations were more willing to fork up a higher premium for sustainable restaurant items than older populations (Baby Boomers and Gen X) with typically higher discretionary spending. Half of Gen Z and 36 percent of millennials reported they would pay a more than 20 percent price premium for sustainable meals.
It's a topic that covers far more than just sustainability as well. Wendy’s recently released its 2022 Corporate Responsibility report, which detailed progress against the three pillars of its Good Done Right ESG strategy: Food, People, and Footprint.
Among the notable reveals was Wendy’s hit a 10-year goal related to responsibly sourcing pork in the U.S. and Canada. Wendy’s also nearly doubled new, approved franchise candidates entering its system through the company’s “Own Your Opportunity” initiative, which looks to increase accessibility and diversity among potential operators.
QSR chatted with Liliana Esposito, Wendy’s chief corporate affairs and sustainability officer about the report, Wendy’s ESG goals going forward, how its new Global Next Gen design factors in, and where the burger giant brings it all together.
Firstly, what were some highlights from the report we should know?
Our 2022 Corporate Responsibility report reflects the meaningful progress we made in delivering on our commitments across Good Done Right to be a more responsible brand, partner, employer, and corporate citizen.
We achieved key milestones, including meeting a 10-year goal related to responsibly sourcing pork in the U.S. and Canada, setting near-term science-based targets to reduce Scope 1, 2 and targeted Scope 3 greenhouse gas emissions and nearly doubling new, approved franchisee candidates entering the Wendy's System through our new franchise recruiting initiative, Own Your Opportunity, which aims to increase accessibility and diversity among franchisee candidates. Additionally, Wendy’s has begun tying a portion of all bonus-eligible employees’ incentive compensation to the Company’s achievements across Food, People and Footprint.
Let’s talk specifically about some of the food goals and milestones (sourcing pork) and where this goes from here. What is Wendy’s broad approach on this topic and how has it evolved in recent years?
In 2022, we made headway toward our goal of responsibly sourcing our top 10 priority food categories by 2030.
We achieved our 10-year goal to transition our pork supply chain in the U.S. and Canada away from sow gestation stalls in favor of open pen or group housing for confirmed pregnant sows.
As it relates to advancing responsible sourcing, we identified approximately 140 suppliers in scope for our program, established criteria for measuring progress and enlisted a technology partner to assess supplier performance. Looking ahead, we plan to begin reporting against category-specific responsible sourcing criteria, based on supplier disclosures, in 2024. We also plan to explore place-based pilot programs tailored to local and/or regional ecosystems in priority focus areas, such as emissions reduction in the agriculture supply chain, with select suppliers, NGOs and industry organizations.
Turning to people, give us some background on Own Your Opportunity, and how it just helped the brand nearly double new approved candidates entering the system. How is it improving accessibility and diversity across the system?
Last year, we launched the Own Your Opportunity franchise recruiting initiative, designed to create more pathways for all entrepreneurs who want to grow with the Wendy's family. Through the initiative, we unlocked opportunities to increase accessibility and diversity among franchisee candidates by creating more competitive financial requirements for new franchise applicants, expanding economic opportunities for new franchisees working with preferred U.S. financial lenders and creating a Build-to-Suit development fund through which Wendy's secures and builds restaurant locations and hands over turnkey solutions to franchisees.
The response has been incredibly positive, with the efforts nearly doubling new, approved franchise candidates entering the Wendy’s System, compared to the prior year. We are committed to accelerating growth globally, and we have strong momentum fueling these opportunities for prospective franchise owners to join and grow with our system.
Tell us about GiveCare. How did Wendy’s identify a need for parents and caregivers to connect, and what’s the reaction been so far?
Our Employee Resource Groups (ERGs) heighten our opportunities to celebrate different backgrounds, empower employees to bring their authentic selves to work and offer leadership and professional development opportunities. The pandemic was difficult for everyone, particularly people with caregiving responsibilities. In response, employees started an organic gathering of caregivers, in addition to sharing resources. In 2022, GiveCare launched as our newest ERG to provide support and resources for parents and caregivers while offering a space for employees to lean on one another.
GiveCare focuses on caretakers for children, siblings, parents, partners and other family members, and aims to provide support and a safe space for working caregivers. Team members have embraced the new group and participated in activities including a self-care day with take-home meals and well-earned chair massages and yoga for National Caregivers Month. This has also provided the opportunity for conversations with people managers about the complexity of caregiving while working full-time and how they can support caregivers on their teams.
What are some sustainability efforts on the horizon for Wendy’s, namely around packaging?
Our Footprint pillar focuses on delivering more with less environmental impact. Wendy’s will continue to partner across our industry to assess opportunities to transition to more sustainable packaging alternatives for our current customer-facing restaurant packaging and to develop category-specific improvement plans.
One area where we are partnering is to overcome barriers in achieving our sustainable packaging goal due to lagging composting and recycling infrastructure. Most of our packaging leaves our restaurants with our customers, and while we are working to implement recyclable or compostable packaging, infrastructure to easily recycle in communities, compost at home and/or curbside programs which accept foodservice packaging are limited.
For this reason, we are working with Closed Loop Partners’ NextGen Consortium, a multi-year, global consortium, which aims to address single-use foodservice packaging waste by advancing the design, commercialization and recovery of packaging alternatives, to improve both the recyclability of packaging and the building of needed infrastructure.
In 2022, Wendy’s kicked off a pilot project to introduce recycling for customers and restaurant teams at eight Company-operated restaurants in the Chicago area. We installed recycling bins and posted signage encouraging customers and employees to use them properly. Through the pilot, we are monitoring recycling at participating locations to determine what and how much is put in the bins to inform future improvements.
Now that we have set our science-based targets to address Scope 1, 2 and 3 greenhouse gas (GHG) emissions, we will continue to explore new ways to reduce our emissions footprint, including by working alongside our franchisees and suppliers to transition to less emissions-intensive practices. We will also continue to develop and implement our renewable energy strategy as our renewable energy program matures.
How does the Global Next Gen build aid these efforts?
We recently introduced Wendy’s Global Next Gen design standard for new restaurant builds for enhanced customer, crew and digital experiences. Starting this year, Wendy’s new restaurant builds will feature a sleek and modern design with an optimized layout and next-generation technology to deliver more Wendy’s to more people with an emphasis on convenience, speed, and accuracy. The new design standard is approximately 10 percent more energy efficient than Wendy’s most common existing restaurant format. To achieve this, these new restaurants will use more efficient building elements such as lighting and HVAC. These improvements support our efforts to reduce energy consumption at our restaurant locations.
Widely speaking, how does Wendy’s plan to lead the pack on these initiatives and topics into the future?
In recent years, many of our corporate responsibility accomplishments revolved around laying foundations: conducting a materiality assessment, formalizing our program, setting goals, forging relationships and developing a roadmap for success. With new systems, such as our responsible sourcing program, and new climate goals to benchmark against, we are excited to enter the next phase of our journey focused on accelerating and measuring progress. These efforts, along with our Animal Care Standards Program, which uses a detailed assessment tool to evaluate standards and practices within our protein supply chain, will also help us to report with greater transparency and visibility into our supply chain over time.
Only by working alongside key stakeholders, including our suppliers and franchisees, can we continue to make meaningful progress across our Food, People, and Footprint focus areas to achieve our goals and remain a desired choice for customers, franchisees, and employees.