Wendy's loses share in value menu category

Published on NewsOK Modified: May 8, 2013 at 5:13 pm •  Published: May 8, 2013
Advertisement
;

NEW YORK (AP) — Wendy's is trying to reinvent itself as a purveyor of relatively higher-quality fast food. The problem is that its competitors are aggressively promoting cheap eats and stealing away price-conscious customers.

The Dublin, Ohio, company, which is known for its square hamburger patties and Frosty shakes, on Wednesday reported a first-quarter profit that met Wall Street expectations. But sales fell short of Wall Street's hopes. The company noted that it lost market share in the value category, which accounts for about 20 percent of the fast-food industry.

In a conference call with analysts, CEO Emil Brolick said Wendy's plans to adjust its marketing to emphasize the 99-cent portion of its revamped "Right Price, Right Size" value menu, which offers options ranging from 99 cents to around $2. The company had replaced its 99-cent menu in January to boost profit margins and give its franchisees more flexibility in pricing.

Brolick emphasized that the company's push to underscore the quality of its food remains a priority. The effort in part reflects the growing popularity of chains such as Chipotle and Panera, which offer food perceived to be of better quality and that commands higher prices.

But at a time when people are still being careful about their spending, Brolick added that Wendy's also needs to keep reminding people about its cheaper options.

"Because let's face it, there are a lot of other people who are," he said.

For the January to March period, Wendy's said sales at established company-run stores in North America rose 1 percent, with higher prices offsetting a decline in transactions. The company said bad weather and shifts in the timing of the New Year and Easter holidays hurt its results.

At franchised stores, the metric edged up 0.6 percent.

This figure is a key gauge of a restaurant operator's performance because it strips out the impact of newly opened and closed locations.

McDonald's, meanwhile, said Wednesday that sales at established restaurants rose 0.7 in the U.S. for April, helped by its new chicken McWraps and value menu. Wendy's noted that it also has several new items planned, including its "Frosty Waffle Cones" that were introduced this week.