Wendy’s New programs and products
Differentiated product offering: Wendy’s restaurant chain is based on various formats catering to different customer segments. Through Wendy’s restaurants, the company caters to the quick-service burger segment. Wendy’s can synergies with other brands like Tim Horton’s restaurants provide coffee and fresh baked products such as pastries and donuts. Baja Fresh restaurant provides Mexican fast food items such as burritos, tacos and nachos. The Pasta Pomodoro chain provides Italian fast-food cuisines.
Through its differentiated products offering, the company effectively caters to many fast food sub-segments, providing the company with a large consumer base and reduced business risks as a result of wide product offerings. Established Rapport with the study customers:- Wendy’s have an edge of having a study customer base with faith in its products. These customers prefer Wendy’s over the rest of the brands. WEAKNESS Weak returns: The Company has recorded weak returns in the last few years.
Its return on average assets, return on investment and return on average equity for the period 2002-2006 were 6. 7%, 8. 1% and 12. 3%, respectively, considerably lower than corresponding industry averages of 8. 7%, 11% and 14. 9% for the same period. Weak returns indicate the inability of the management to deploy assets profitably and adversely affects investor confidence. However the management has recently gone for a restructuring exercise. This may help improve the current scenario Weak performance in the US: The Company’s performance in the US was weak in fiscal 2006.
The revenues from US declined by 1. 4% from $2,475. 3 million in 2005 to $2,441. 1 million in 2006. The US is the largest geographical market for the company, accounting for 64. 5% of the total revenues. Lack of product association: Similar to Wendy’s, rivals such as McDonalds and Burger King are household names. In contrast to its competitors Wendy’s does not have a branded product that is easily associated with the company. The names “Big Mac”, “Whopper” and “Zinger” are extremely well known global brands which are easily identifiable with their respective companies.
Wendy’s needs to market and position a core product that can be used as a platform for the company’s image in order to expand market share. Uncultivated regional market:- Wendy’s image would have grown with its growth to the other regional markets outside US. It also reflects on the enlarged image of the company. OPPURTUNITIES Increase in restaurant industry in the US: Consumer food expenditure on away-from-home dining is on a rise in the US. Demographic changes have been pushing consumers towards fewer meals, a preference for less meal preparation time, and more frequent snacking in lieu of sit-down meals.
The Fast Food Hamburger Restaurant (FFHR) business in the US is expected to grow at an annual rate of 4% per annum during 2006-2011. This spells an opportunity for Wendy’s New programs and products: The Company launched several new products including Fresh Fruit Bowls and Cups, Mediterranean Chicken Salad, Strawberry Yogurt with Granola and Fix ’n Mix Frosty with M&M’s, Butterfinger and Oreo cookie toppings. The company also introduced a range of new menu items, including Hearty Vegetable Soup, Southwest Chicken Sandwich, and Hot Smoothees.
The company launched Combo Choices program, which offers consumers the option of substituting a small chili, baked potato, side salad or Caesar side salad in place of fries in a combo, at no extra charge. This program was well received by the customers, evidenced by the fact that close to 15% of combos are sold with an alternative side. Double-sided grilling system, which provides restaurants with product quality, faster cooking times and labor savings, was introduced into around 1,350 stores of the company. The company plans to use this system in all of the stores by the end of 2008.