Wendy’s President-CEO Emil Brolick says there are a “lot of brain cells being burned” in the burger chain’s deliberations over how to remake the brand. The plan will be more clear next month when Wendy’s launches a new ad campaign, succeeding “You know when it’s real.”
Other components involve menu innovations, including upcoming launches of a Spicy Guacamole Chicken Club sandwich, a flanker version of the reformulated fries (likely twister fries) and a new premium salad, and continued premium-price burger testing. And he’s worried that it’s being too generous with its Value Menu lineup. But all this angst results from Brolick’s wrestling with the question of what the Wendy’s brand should be as it grows up.
“Too many consumers don’t have top-of-mind awareness of what makes Wendy’s better and what makes Wendy’s different,” Brolick said of the April ad campaign during today’s Q4 2011 analyst call. “We also see a distinct opportunity to create a consistent look, tone and feel for our advertising that will become synonymous with the Wendy’s brand… We are creating an original campaign that ties all the elements together with a unique look, tone and feel. So when consumers see it, they will say that that’s Wendy’s advertising.” Kaplan Thaler Group, New York, handles the roughly $250 million account.
Menu pricing is the cause of death for a lot of brain cells. Brolick noted that Wendy’s already has raised the price of the W cheeseburger from the $2.99 introductory price in November to $3.19. That’s the result of beef-cost increases. Other pricing questions are brand-image related and involve adding more premium-price items. The long-promised improved chicken line is coming this year, Brolick said, calling it “a pretty special product.” But he declined to be more specific.
Wendy’s is “going to be testing some evolutions that allow us to, I think, get a little better balance between the low end and the high end,” Brolick said. “And I don’t want anybody to be confused here. We know the importance of the price-value customer today, and we’re not going to do anything that’s going to disenfranchise the customer.”
But Brolick also worries that Wendy’s isn’t doing a good job pleasing both those seeking low-price fare and customers who want coupons and discounts on high-price food. They’re different audiences, he told analysts.
“As we have looked at this and studied this, the thing that we have learned too is that the coupon customer is in fact typically a different customer than the value menu customer. And the value menu customer has the tendency to be a little more male, younger and more economically challenged, where the coupon user has a tendency to be a little older, actually more stronger economically in using those,” Brolick said. “And so I don’t think we’ve been as bimodal as we need to be in terms of how we approach the price value customer. And we have made, and are going to be making changes in the rest of the year to reflect that.”
Without turning its back on value-menu diners, Wendy’s may trim the number of items.
Wendy’s “My 99¢ Everyday Value Menu” has a half-dozen center-of-the-plate options, including the Jr. Cheeseburger Deluxe, Cheesy Cheddar burger, Crispy Chicken and Monterrey Ranch Crispy Chicken. In contrast, McDonald’s Dollar Menu has just two protein options, said Brolick (the McDouble burger and McChicken). “Well, okay, and you just can’t be that out of balance on there. And quite honestly, I think we’re incurring the food cost for that but I don’t think we’re getting the sales benefit for that,” Brolick says. “So we do think that there’s an opportunity to better calibrate that and do that.”
Brolick also touched again on Wendy’s intention to remodel 50 of its restaurants this year. Average cost is $750,000 to $850,000 with a 15% ROI targeted. However, the company is working to “value-engineer” the four prototypes, he said, in order to bring down the cost of remodeling and thus encourage more franchisees to take part.