Wendy's Reports Quarterly Sales Increase Thanks to Marketing, New Menu Items

Growth Shows Chain 'Is Beginning to Resonate With Consumers,' Says President-CEO

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After a rough first quarter, Wendy's today announced a North American same-store sales gain of 3.2%.

Wendy's is in the midst of a massive revamp that includes store remodels, new menu items and marketing that promotes it as being on par with fast-casual restaurants, but with fast-food prices.

Wendy's credits new items such as the Guacamole Chicken Club with helping sales.
Wendy's credits new items such as the Guacamole Chicken Club with helping sales.

Although sales were up in the second quarter, the company posted a quarterly loss, mainly because of the costs of debt refinancing.

It's the fifth consecutive quarter of same-store sales growth for Wendy's . But this quarter's results are a welcomed relief for the company, which in the first quarter eked out just less than 1% in North American same-store sales growth. At the time, Wendy's said it had to pull the plug on promoting its mid-tier W burger because it was stealing customers away from its higher-end burgers, as opposed to getting customers to trade up from the 99-cent menu.

"This growth was a result of improved restaurant operating experience, compelling product messages and integrated marketing that [shows] Wendy's [is ] beginning to resonate with consumers," said Wendy's President-CEO Emil Brolick during a conference call this morning.

Wendy's in April launched its new marketing campaign, which features two Wendys: founder Dave Thomas' daughter Wendy, who appears in commercials that promote the Wendy's brand, and another Wendy-like spokeswoman known as Red, who focuses on product promotion.

Mr. Brolick this morning called consumer response to the campaign "very encouraging," and said that consumers now better understand the company's values. He added that the chain will continue to refine the role of the two spokeswomen. "Qualitative consumer research indicates that consumers understand our approach and are getting a much more holistic impression of our brand."

Wendy's also credits its new spicy chicken guacamole club sandwich and its new side dishes -- mac and cheese and sweet potato fries, among others -- with helping to improve sales. The chain also mentioned that it will build on its "heritage" of limited-time offers, though Wendy's is not the only chain currently pushing that message --both McDonald's and Burger King have stepped up their game in the limited-time arena.

Mr. Brolick said that the chain has been working to evolve its communications in the media that consumers use, and for Wendy's , "mobile is it." In July Wendy's launched a mobile app that finds Wendy's items at a calorie level set by users. He said that Wendy's has seen positive results since the app's launch, and that it now has "26,000 users who are spending an average of nine and a half minutes per visit on the application."

And although Wendy's continues to evolve its marketing, Mr. Brolick admitted that there has been a lack of effort towards Hispanic consumers, adding that the chain will be targeting the demographic, though no details were provided.

Wendy's is now the No. 2 burger chain in the U.S., but Burger King is also seeing a sales turnaround. Burger King just last week posted systemwide same-store sales of 4.4% globally, including a 4.4% spike in the chain's U.S. and Canada business.

Like Wendy's , BK is also crediting its new menu items and marketing as key contributors to the turnaround.

McDonald's has been consistently outperforming its competitors throughout the recession, and has had more than eight consecutive years of positive same-store sales. But its second-quarter results this week disappointed Wall Street . While its global comparable sales were up 3.7% in the quarter, that figure is significantly less than its first-quarter global sales rise of 7.3%. U.S. same-store sales were up 3.6% in the second quarter.

McDonald's continues to see increased competition from Burger King and Wendy's . The chain yesterday released its July sales, which were down 0.1% in the U.S. It was the first time in nine years that the company's sales were not positive.

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