DUBLIN, Ohio -- Wendy's International Inc. has initiated its new 3-Tiered, 3-Year Combo Plan to drive sales, improve restaurant profit margins and reduce costs over the next three years.
Chairman and CEO Jack Schuessler discussed elements of the strategic plan during the fast-feeder's analyst and investor meeting in New York. We are focused on driving Wendy's same-store sales by more than 3% annually and reducing costs throughout the organization by $40 million to $60 million beginning in 2006, he said. Our goals are to improve restaurant margins 500 [image-nocss] total basis points and to generate at least $100 million to $125 million pretax profit improvement by the end of 2008.
The 3-Tiered, 3-Year Combo Plan strategy focuses on increasing sales, improving restaurant margins and reducing costs.
1. Increasing Sales. Chief Marketing Officer Ian Rowden has developed a new marketing strategy to drive same-store sales by more than 3% annually:
The company's research and development process has been re-engineered to produce a steady stream of new products, line extensions and test products beginning in 2006. In the spring, Wendy's will introduce new Frescata deli sandwiches, which consist of four different offerings on fresh-baked artisan bread. Wendy's is also introducing new Garden Sensations salads, a 10-piece Chicken Nugget Combo and two Kids' Meal deli sandwiches. Test items in 2006 will include unique Double Melt cheeseburgers, a 99-cent chicken sandwich, new beverages, a Vanilla Frosty, Frescata deli sandwich line extensions and combo meal sizing options. The company plans to test breakfast in 2006 and introduce it in 2007. It also plans to invest an incremental $25 million in advertising and marketing activity to support certain Wendy's products during 2006.2. Improving Restaurant Margins. Management is focused on improving restaurant-level margins 500 total basis points over the next three years. In addition to the sale initiatives, there are several cost-saving initiatives to improve margins, including:
A systemwide rollout of the innovative double-sided grill, which reduces labor costs while ensuring food safety and accelerating cooking times for greater throughput. A store automation program, which reduces administrative and labor costs. Supply chain management tactics to reduce food, paper and controllable costs. A heightened focus on Service Excellence, which improves speed of service, accuracy and courtesy for customers.3. Reducing Costs. Our plan is to reduce expenses by $40 million to $60 million, Schuessler said.
As we continue to move toward an initial public offering (IPO) and anticipated full spinoff of Tim Hortons, we recognize that tomorrow's Wendy's will look very different from the company today, he said. Schuessler said the Tim Hortons IPO remains on track for its targeted date in late March. He reiterated the plan, assuming a successful IPO, that a spinoff of Tim Hortons would occur within nine to 18 months after the IPO, depending on market conditions.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.