TBO.com - TBO is Tampa Bay Online

Wendy's CEO Plans For Re-Branding

ADVERTISEMENT

The Associated Press

Published: September 30, 2008

NEW YORK - Wendy's customers will see new options on the company's Frosty and burger-heavy menu as the chain tries to draw more attention to the quality of its food, the new chief executive said Monday after it was formally taken over by the owner of Arby's.

The $2.34 billion deal, in the works for years, adds Wendy's International to the stable of holdings of Triarc Cos., the company controlled by billionaire investor Nelson Peltz.

Roland Smith, new chief executive of Wendy's and former CEO of Triarc, told The Associated Press he plans to re-brand the business - the No. 3 hamburger chain behind McDonald's Corp. and Burger King Corp. - to emphasize the freshness of its burgers and will attempt to reinvigorate the menu with new products.

"We fully expect to be able to fully position Wendy's as the leader in quality food in the hamburger segment," Smith said.

Smith said Wendy's has fallen behind, in part because customers have forgotten that the chain sells "the only hamburger that is fresh, not frozen." He said a new advertising campaign will bring that message back in front of people.

"I would hope we would start to be able to re-educate the consumer in very short order," he said.

The company plans to also improve its core menu items and offer better fries, buns and bacon. Wendy's also could make changes to its value menu in the next year, although the company did not offer any specifics.

Changes to the payroll are also ahead. Smith has said for months that job cuts at Wendy's will be necessary but has not provided any details.

"There will certainly be some consolidation of jobs," Smith said Monday. He did not offer many specifics, but said the cut positions may be those that have to do with services that will be shared between the two companies once they are fully combined, such as accounting or auditing. Smith said an announcement on job cuts could come in the next month.

The acquisition of the chain that Dave Thomas launched in Columbus, Ohio, in 1969 comes at a difficult time for restaurants as consumers cut back on spending and commodity costs take big bites out of profits. Most fast-food chains have dealt with the dismal economic environment far better than their sit-down restaurant peers since they offer lower prices and speedier service.

But Wendy's has not been as successful as its competitors, reporting lower profit and sales in its latest quarter. The chain also has struggled to find the right message.

Earlier this year, it scrapped its eight-month-old ad campaign that featured a man wearing a red wig with pigtails.

Smith said he plans to renovate some locations and grow the chain through franchisee development. The current credit crisis, though, has made getting financing for similar plans at other companies more difficult.

Lenders, who typically provide financing for new restaurants and renovations at older locations, reportedly are cutting back on approving loans and requiring more money down or more paperwork and documentation on the financial state of current or prospective franchisees.

Smith said it is too early to tell whether plans for expansion or renovation will have to be curtailed, but he acknowledged that tighter credit could have an impact.

"The total story is not yet understood," he said.

Peltz, known for acquiring or buying into troubled food companies, has been interested in Wendy's since at least 2006, when he gained control of three seats on the company's board. He said he wanted to buy the chain about a year later after Wendy's said it was considering selling itself.

Wendy's rejected two offers by Peltz. Then in April, Atlanta-based Triarc announced it would buy the chain for $26.78 per share in an all-stock deal.

Shareholders of both companies approved the deal earlier this month.

Triarc will change its name to "Wendy's/Arby's Group Inc." and will trade under the "WEN" symbol on the New York Stock Exchange beginning today.

Arby's Chief Operating Officer Tom Garrett, 44, will be the new CEO of Arby's. Smith is the CEO of both Wendy's and Wendy's/Arby's Group.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT