On Thursday, the fast-food chain Wendy’s announced “Project Fresh,” in which the company will hire former Taco Bell Greg Creed’s consulting company to help improve marketing while it shifts investments to building unit volumes.
It’s a notable announcement, because the company currently is without a new CEO. Wendy’s is “targeting” the end of the year to get someone into the position, but that hardly seemed definitive and Chairman Art Winkleblack said the company will “take the time necessary for this process.”
Wendy’s isn’t waiting. The company has developed the foundation of a strategy to improve its valuation and results.
Companies typically prefer to focus on hiring a CEO and then let that CEO devise a strategy. But a few companies recently started fixing things before hiring new chief executives, notably Starbucks but also Dave & Buster’s.
Doing so is risky, because hiring a new CEO is a major change in and of itself that has ripple effects throughout an organization. CEOs hire their own people and deploy their own plans, which result in big changes. Adding a fix-it plan before that takes place only intensifies the number of changes people must go through.
These pre-CEO plans don’t always work, either. It’s too early to tell with Dave & Buster’s. But in Starbucks’ case, the plan put together by Howard Schultz, then implemented by new CEO Laxman Narasimhan, did not take well enough and the company ended up hiring Brian Niccol. Niccol has undone a lot of what had been done the past couple of years. And the chain still has sales challenges.
Wendy’s next CEO will be its third since the start of last year, not including the interim chief executive. That’s a lot of change even without a new plan.
That said, Wendy’s Project Fresh strategy is relatively simple, outside the hiring of Creed, who is now a consultant. Asking the guy largely credited with developing the marketing strategy that took Taco Bell to its current, stratospheric heights to help your brand with its own marketing strategy is probably not the worst idea on the planet.
We’re particularly intrigued, however, with the company’s decision to cut spending on a “build-to-suit” program by $20 million this year, and likely more next year, to make investments to build unit volumes and improve profitability.
Wendy’s in recent years has been intent on opening more locations. While it is the fifth-largest restaurant chain in the U.S., it operates fewer than 6,000 locations domestically, half that of McDonald’s.
The company has aggressively used incentives and other strategies to encourage that unit growth. Its build-to-suit program was part of that strategy. The program was designed to help franchisees overcome financial challenges to expansion by effectively getting the restaurants built for them.
Instead, Wendy’s is going to take funds devoted to that program so it can make investments in technology and marketing. That can help build sales at existing locations.
That’s a key shift for the chain. While it operates half the locations of McDonald’s, it also has half the unit volumes. Those weaker volumes mean Wendy’s franchisees are less able to remodel locations and spend on maintenance, technology and customer service, which themselves slow sales. That makes building volumes crucial.
Wendy’s is not exactly ceasing opening new locations. It has opened 33 restaurants so far this year, though it closed underperforming units in 2024. The company said Thursday that it plans to continue opening restaurants in global markets under its new plan. Still, the company’s new priority is unit volumes.
Building those volumes won’t be easy in this era in which consumers are dining out less frequently at fast-food restaurants. Getting a head start on marketing improvements while at least diminishing the intensity of the company’s focus on unit growth should give the new CEO a head start. So long as they don’t muck it up.