Wendy's '4 for $4' fullfilling a need

by Eric Schroeder
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Wendy's 4 for $4 deal
Wendy’s “4 for $4” promotion offers a Jr. Bacon Cheeseburger, chicken nuggets, fries and a drink for $4.

DUBLIN, OHIO — Solid early results from Wendy’s “4 for $4” promotion have executives at the Dublin-based quick-service restaurant chain optimistic about the future. Introduced in mid-October, the meal features a Jr. Bacon Cheeseburger, chicken nuggets, fries and a drink for $4.

Emil Brolick, Wendy's
Emil Brolick, president and c.e.o. of Wendy's

“We are very happy with the early results, and we are meeting a consumer need for a compelling value with a high quality, unique offering,” Emil Brolick, president and chief executive officer, said during a Nov. 4 conference call with analysts. “Our goal with this promotion is to complement our high-end messages with a program that will drive profitable customer count growth, and we are very encouraged by the customer count growth we are experiencing. We expect that this will be the first of several value bundles that you will see us use in concert with high-end, core, and (limited-time offer) messages.”

Mr. Brolick said Wendy’s strategy is to consistently project a balanced message of high-end messaging comprised of either a core message or a limited-time only product, supported underneath by a price-value message.

“Now, will that always be 4 by $4?,” Mr. Brolick said. “I will not share that with you. But there will be a price-value message underneath that. And I think that is the most important thing to take away from this. And I think that is also how we address — help address check, because the higher-end items, we have the opportunity to … have consumers make selections by themselves of items that will provide that. So we feel that one-two punch of high-end and price-value is going to serve as well for the remainder of this year and through 2016.”

In the third quarter ended Sept. 27, net income at Wendy’s totaled $7,584,000, equal to 3c per share on the common stock, down 67% from $22,830,000, or 6c per share, in the same period a year ago. Total revenues decreased 6% to $464,629,000 from $496,670,000. Wendy’s said the decline in revenues reflected the ownership of 153 fewer company-operated restaurants at the end of the 2015 third quarter compared with the beginning of the 2014 third quarter.

“Our strong third-quarter results demonstrate the positive impact of our transition to a predominantly franchised model, with royalties and rental income contributing a higher amount of earnings,” Mr. Brolick said. “Our year-over-year restaurant operating margin increased 330 basis points, from 15.5% to 18.8%, which is indicative of the improvements we have made in our restaurant-level economic model. We have also been able to increase the year-over-year earnings contribution from company-operated restaurants by 11%, even with ownership of 153 fewer restaurants relative to last year.”
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