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John Gordon
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John A. Gordon is Principal and Founder of Pacific Management Consulting Group (http://www.pacificmanagementconsultinggroup.com), an independent restaurant analyst providing research and niche earnings analysis, management consulting and advisory expertise to those who need to know about chain... More
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  • Wendy's Outlook 0 comments
    Mar 8, 2010 1:01 PM | about stocks: WEN
     
    Last Thursday’s WEN conference call was jam packed with interesting news, messages and observations. WEN continues to work turnaround plans for both Wendy’s and Arby’s, getting closer on breakfast at Wendy’s and working an April Arby’s value menu launch with additional media weights. Wendy’s also scored dramatic improvement (330pbts) in restaurant operating margin.
     
    Both Wendy’s and Arby’s comparable sales continued to track down, with Q4 Wendy’s worse than the minus 3 and Arby’s worse than the minus 11 as noted, because of the 14 week vs. 13 week Q4 calendar difference. WEN did note January/February, early peek trendlines were improved.
     
    But a few additional questions that weren't asked, that could define future prospects more clearly:
     
    • How are the franchisees doing, from a profitability/leverage/development schedule standpoint?
    • Arby’s is increasing, and franchisees agreed, to increase the national ad fund, to 2.5% of sales. Is that enough, given competitors trends and that Arby’s has new news via Roastburgers/Salads/Value Menu to seed into the market?
    •  Wendy’s is upping CAPEX for its corporate unit remodels and new units, but how will the franchisees remodel, particularly the Arby’s franchisees who are stretched by 2-3 years of negative sales?
    •  Is the new, third purchasing co-op, that benefits both Arby’s and Wendy’s brands, a “for profit” co-op, non-profit, or 100% dividend distribution business format? 


    Disclosure: no stock positions
    Themes: retail, restaurants Stocks: WEN
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