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Wendy’s eyes more international development

The chain wants to double its overseas sales within five years and is eyeing the U.K. for new restaurants.
Photograph courtesy of Wendy's

Much of the attention on Wendy’s in recent weeks has focused on the chain’s aggressive and somewhat sudden move into breakfast, which it says could quickly turn into a $1 billion business for the company.

But that’s not Wendy’s only $1 billion plan. The Dublin, Ohio-based burger chain wants to add that much in international sales over the next five years through a combination of new store development and same-store sales.

And just like its breakfast strategy, Wendy’s executives believe their international plan will work despite previous struggles.

“We believe international can grow unbelievably,” Abigail Pringle, president of international and chief development officer for Wendy’s, said during the company’s Investor Day presentation last week. “We know that we have a bold vision that is both exciting and grounded in reality.”

Wendy’s international growth has been considerably slower than most other large-scale fast-food chains.

The company has 950 locations outside the U.S., compared with 6,000 domestic units. By comparison, its primary competitors, McDonald’s and Burger King, both have well-established presences outside the U.S. that are larger in store count than their domestic markets.

International development is an important strategy for legacy fast-food chains that are finding the U.S. to be a tougher market. And Wendy’s is hardly the only such concept that is redoubling its efforts to grow globally. Taco Bell, which like Wendy’s is a top 10 chain, is also trying to find its growth footing internationally.

With relatively little growth domestically, international markets have become more important.

Wendy’s, for instance, is projecting to grow domestic unit count between 1% and 2% per year, even as it pushes into more urban and nontraditional locations and puts more restaurants into the hands of operators willing to build more units.

But the company is projecting 10% annual international unit count growth.

Wendy’s a year ago reorganized its business, giving Pringle oversight over international in addition to her chief development officer role. The company in the months since has spent time analyzing its international business, including what it does wrong and what it does right.

Half of the company’s international locations are in Canada, which only recently was reorganized as an international market. Another 30% are in Latin America, and 15% are in Asia and the Middle East.

The company’s international markets have quietly put together a string of 22 straight quarters of same-store sales growth, and year to date have generated 7% total sales growth.

The brand plans to use multiple strategies for franchising international markets, including master franchise agreements that put responsibility for developing a market into the hands of a company that both operates and subfranchises restaurants.

Wendy’s also plans to give operators new types of models to expand. It is opening a “dark kitchen” in the Dominican Republic, similar to a pair of dark kitchens for delivery that it plans to open in the U.S.

And it is opening container restaurants in Guatemala that could simplify the construction costs in some markets.

Wendy’s also hopes to get its stores into Europe for the first time and is eyeing the United Kingdom for its first presence there sometime in the next 12 to 18 months. Wendy’s wants to add both company and franchise locations in a market the company believes is receptive to the brand’s edgy social media voice and higher-quality burgers.

The company said it did “landmark research with thousands of customers” in the U.K. to understand Wendy’s perception there. The brand’s social media feeds are already popular in the country despite its lack of stores there.

Pringle also took current events into account. “Yes, we’ve thought about Brexit,” she said, mentioning the popular term for the U.K.’s pending exit from the European Union. The company “considered how we think about Brexit, and about how that would consider in terms of everything from supply chain to labor to how we think about our overall launch strategy.”

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