WEN’s 2Q17 performance
For 2Q17, Wendy’s (WEN) posted a systemwide SSSG (same-store sales growth) of 3.2%, with company-owned restaurants posting SSSG of 1.7% and franchised restaurants posting SSSG of 3.3%. WEN outperformed the analysts’ SSSG estimate of 3.1% in North America, posting SSSG of 3.2%.
Factors that drove Wendy’s SSSG
In 2Q17, Wendy’s SSSG was driven by menu innovations, improvements in food quality, value propositions, enhancement of customer experience through image activation and implementation of digital advancements, and a balanced marketing approach.
To drive its SSSG, Wendy’s introduced the fresh mozzarella chicken salad and sandwich, which was followed by the introduction of the Strawberry Mango Chicken Salad. Along with these offerings, the “4 for $4” and $0.50 Frosty both drove the traffic at Wendy’s restaurants.
Wendy’s has invested $30 million in its US restaurants in a move that is expected to improve the tenderness and juiciness of the chicken it serves. The company has also been emphasizing on the usage of never-frozen beef and is promoting this through its hit sandwich the Baconator.
To enhance the customer experience, Wendy’s has been focusing on image activation in its restaurants. By the end of 2Q17, 36% of the restaurants were image activated. WEN claims that image activation contributed 0.7% to its North American SSSG.
During the same period, Jack in the Box (JACK) and McDonald’s (MCD) posted SSSGs of -1.6% and 6.6%, respectively. Tim Hortons and Burger King, operating under Restaurant Brands International (QSR), posted SSSG of -0.8%, and 3.9%, respectively, for 2Q17.
Now let’s look at analysts’ revenue expectations for the next four quarters.