How we know that: Same-store sales for company-owned Wendy’s units declined 4% in October despite the $75 million launch of the “You know when it’s real” ad campaign and the Bacon Deluxe cheeseburger.
What happens now: Wendy’s may want to accelerate plans to introduce the Baja Wrap and BBQ Smokehouse Wrap that it has in test markets and that sources say have been well received by consumers. Execs say that by year-end Wendy’s will relaunch the Baconator burger (with the new bacon) and will introduce an unspecified “new value offering.”
Wendy’s/Arby’s Group reported third-quarter results today, and they aren’t bad. A $14.7 million profit sure beats a net loss of $12.1 million a year ago. But the sales numbers don’t reflect the strong turnaround momentum it no doubt hoped to see. Wendy’s North America systemwide same-store sales decreased only 0.1%. Take away the impact of discontinued breakfast sales at 300 locations and those comp sales would be +0.1%. Anything on the happy side of 0 is an achievement in this economy (ask CKE Restaurants). And company-store margin increased to 16.5% for the quarter from 12.5%.
October comp sales are down, but executives are staying positive there, too. “Sales mix for the Bacon Deluxe Cheeseburger has been encouraging, and we believe same-store sales will improve from October,” President-CEO Roland Smith said in a statement. “As we approach 2010, we have a full pipeline of new premium and value products in various test phases across the Wendy’s system, and we are focused on regaining our leadership position in product innovation and driving sales growth.”
The $4.29 wraps certainly are important to that innovation strategy. But Wendy’s will need to gear up burgers, beyond the Baconator, with Burger King already announcing that it will roll the 7-ounce XT (extra thick) burgers in February 2010, when its new batch broilers are in place. BK has promised the burgers will be “game changers.”
The company also announced formation of the Quality Supply Chain Co-op, a national buying co-operative for Wendy’s and its franchisees. It will manage food and related-product purchases and distribution services in the U.S. and Canada.
The news was even more bleak for Wendy’s sibling Arby’s, whose ersatz-burger Roastburger sandwiches haven’t moved the sales needle nearly as well as it hoped. For the third quarter, Arby’s North American company store sales dropped 6.5%; comp sales at franchised units declined 10.2%. Smith says Arby’s “$5.01 Combo Meal” promotion “has already generated substantial sales mix and it provides a platform to build transactions through increased frequency.” That sounds like the combos are accounting for a large share of sales, but are not yet bringing in incremental sales, doesn’t it?
October sales for Arby’s “have further softened,” the company says. Further? As in worse than -10.2%? Time for some big, new ideas—not fake burgers—for this brand.