Wendy's International, Inc. announces new combo plan
To improve sales, profit margins and reduce costs over the next three years.
07/02/06 Wendy's International, Inc. has announced its new "3-Tiered, 3-Year Combo Plan" to drive sales, improve restaurant profit margins and reduce costs over the next three years.
Chairman and Chief Executive Officer Jack Schuessler discussed elements of the strategic plan during the Company's Analyst and Investor Meeting in New York.
"We are focused on driving Wendy's same-store sales by more than 3% annually and reducing costs throughout the organization by $40 million to $60 million beginning in 2006," said Schuessler. "Our goals are to improve restaurant margins 500 total basis points and to generate at least $100-125 million pretax profit improvement by the end of 2008. We are confident about our future and we are eager to begin writing the next great chapter of Wendy's long-term success story."
During the Analyst and Investor Meeting, the Company also provided its key financial projections for 2006.
Wendy's focused on significantly improving sales and profits over the next 3 years
Schuessler said Wendy's management team is confident about its "3-Tiered, 3-Year Combo Plan" strategy focused on:
1. Increasing Sales - Chief Marketing Officer Ian Rowden has developed a new marketing strategy to drive same-store sales by more than 3% annually. Wendy's will differentiate its brand in the quick-service restaurant industry with innovative products, new product categories and day-parts, and more compelling advertising.
- The Company's research and development process has been re-engineered to produce a steady stream of new products, line extensions and test products beginning in 2006.
- Wendy's will introduce this spring new Frescata(R) deli sandwiches, which consist of four different offerings on fresh-baked artisan bread. Wendy's is also introducing this year new Garden Sensations(R) salads, a 10-piece Chicken Nugget Combo and two Kids' Meal deli sandwiches.
- Test items in 2006 will include unique Double Melt cheeseburgers, a 99-cent chicken sandwich, new beverages, a Vanilla Frosty, Frescata deli sandwich line extensions and combo meal sizing options.
- The Company plans to test breakfast in 2006 and introduce it in 2007.
- The Company also plans to invest an incremental $25 million in advertising and marketing activity to support certain Wendy's products during 2006.
2. Improving Restaurant Margins - Management is focused on improving restaurant-level margins 500 total basis points over the next three years. In addition to the sale initiatives, there are several cost-saving initiatives to improve margins, including:
- A system-wide rollout of the innovative double-sided grill, which reduces labor costs while ensuring food safety and accelerating cooking times for greater throughput.
- A store automation program, which reduces administrative and labor costs.
- Supply chain management tactics to reduce food, paper and controllable costs.
- A heightened focus on "Service Excellence", which improves speed of service, accuracy and courtesy for customers.
3. Reducing Costs - Management is reviewing processes throughout the organization, analyzing opportunities for efficiencies and identifying cost reductions as it plans for the future. "Our plan is to reduce expenses by $40 million to $60 million," Schuessler said. "As we continue to move toward an initial public offering (IPO) and anticipated full spinoff of Tim Hortons(R), we recognize that tomorrow's Wendy's will look very different from the Company today."
Tim Hortons focused on continued success with Innovation
"Tim Hortons has delivered strong sales and profit growth for 10 years since the merger with Wendy's, and we expect that to continue," Schuessler said. "The 'Always Fresh' par-baking process enables Tim Hortons to provide customers with new and promotional products that drive transactions and overall sales."
Schuessler said the Tim Hortons IPO remains on track for its targeted date in late March. The Company filed its amended registration statement with the Securities and Exchange Commission on January 19.
The Company reiterated its plan, assuming a successful IPO, that a spinoff of Tim Hortons would occur within nine to 18 months after the IPO, depending on market conditions.
Wendy's International, Inc. is one of the world's largest restaurant operating and franchising companies with more than 9,900 total restaurants and quality brands - Wendy's Old Fashioned Hamburgers(R), Tim Hortons and Baja Fresh Mexican Grill. The Company also has investments in two additional quality brands - Cafe Express and Pasta Pomodoro(R).
