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Wendy’s Realigns its Value Pitch

Wendy’s is confronting a “fiscal cliff” of its own but has done a better job of negotiating its less-dire version than has Congress. One of the chain’s resolutions for 2013 has been to create a new two-tier value menu to replace the ineffective My 99¢ Everyday Value Menu. The Right Price Right Size Value Menu Wendy’s intends to have in effect systemwide in 2013 already is being offered at selected stores and shows how the chain intends to make both budget-price customers and franchisees happy.

The My 99¢ menu failed because operators couldn’t agree on what should be priced at 99¢ so there was no national standard, making advertising difficult. That needed to change. In talking about plans for a new, simplified value menu in November, Wendy’s CEO Emil Brolick told analysts that “one of the reasons that we’re excited about this Right Price, Right Size menu, is that we have lost some share in the value menu area. And we believe that a lot of that is that, for quite a period of time now, that we’ve not had the continuity in offering that some of our large competitors have had. And when you look at the core five items that one of our very large competitors has, they have almost 99% compliance on their system. And we believe that, that has served them very well. So as we work toward that, we think that, that will address some of that traffic loss that we’ve seen on that end.”

After negotiations with its franchisees (no doubt more genial than what Washington has seen), the new Right Price, Right Size menu settles on six core items, each priced at 99¢: Jr. Cheeseburger; Crispy Chicken sandwich; 4 piece Nuggets; Value-size Natural Cut Fries; Value-size Soft Drink; and Small Frosty. The old My 99¢ value menu was larger (with baked potato and other items).

2013 brings a new logo for Wendy’s, too.

But rather than continue to wed itself solely to 99¢ pricing, Right Price, Right Size adds a second tier of value-priced foods with franchisee-friendly margins. These eight items range from $1.29 (Jr. Cheeseburger Deluxe, Crispy Chicken Caesar Wrap) to $1.79 (Jr. Bacon Cheeseburger, Double Stack). These items can be cycled on or off or adjusted in price (as long as they stay below $2) just as McDonald’s does with its Extra Value Menu, where it has added a Daily Double burger. On its bottom-tier Dollar Menu, McDonald’s now has added a Grilled Onion Cheddar burger.

In addition to aligning the value lineup across all its restaurants, the new menu is intended to better balance Wendy’s overall menu, which had gotten top-heavy through addition a strong of higher-priced sandwiches, including Dave’s Hot ‘n Juicy Cheeseburgers, the Baconator, the Bacon Portabella Melt and others. “We think what it does is provide a nice balance: still providing consumers with six items priced at 99¢, as well as having a series of items priced above 99¢,” Brolick told analysts. “And we think that this menu provides us an opportunity to get tremendous continuity across our system, which is something we haven’t had as much of as we would like to have and still, at the same time, do this in a way that is sensitive to margins.”

In an interview with BurgerBusiness.com in October, Wendy’s Chief Marketing Officer Craig Bahner stressed that price-sensitive customers aren’t all alike: some need 99¢ as a price point and others who are just looking for smaller meals are willing to pay more than that. Wendy’s needs to meet both those groups’ needs, he said, while also catering to those who want bigger, more indulgent meals, such as the Bacon Portabella Melt. Both Bahner and Brolick say they won’t walk away from that group, either.

“We believe that the high-end is an area that you’re still going to see an awful lot of pressure against as we look at our 2013 marketing calendar,” Brolick said in November. “But this Right Price, Right Size menu we think will be a nice addition.”

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