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Wendy’s looks to improved operations to build sales

The chain is working to speed up orders as the company looks to turn around weak traffic.
Photograph courtesy of Wendy's

Wendy’s hopes that improving speed and operations will get customers coming back in the long run.

The Dublin, Ohio-based fast-food chain is undertaking an effort to improve operations inside of its restaurants to serve customers more quickly and consistently, in the hopes that such efforts will pull in sales.

“Speed and consistency of experience matter most in delivering our brand promise, and they are getting our full attention,” CEO Todd Penegor said on the company’s second quarter earnings call Wednesday.

Same-store sales at the chain, which has 6,700 locations globally, rose 1.4% in North America in the quarter ended June 30. That was an acceleration from the previous quarter, executives said.

But traffic also declined, company executives said. And Wendy’s didn’t sell as many premium items as it had expected—notably salads, something the company blamed on unusually cold weather in the spring and weaker-than-expected performance of seasonal offerings.

Company executives have better hope for the second half of the year, however, in part because expectations are easier and also because the company has some things coming up that executives believe will pull sales.

That includes its Made to Crave items, which now include chicken sandwiches in addition to burgers.

Wendy’s also is making progress on digital efforts. It has delivery in 80% of its locations, though Penegor acknowledged Wednesday that it has some work to do to build customer awareness that it has the capability.

The company also has mobile ordering in 90% of its U.S. locations, and Penegor said the chain has promotions in place to improve awareness of that capability and improve sales.

“We believe that being successful in digital will be a competitive advantage for us,” he said. “Consumers are craving customization, speed and convenience, all of which can be enhanced through our platforms in our restaurant operating model.”

That puts some pressure on operations. And more chains are focused on speed and operations as more digital sales come into their restaurants. Wendy’s rival McDonald’s, for instance, has held competitions among restaurants and is aggressively adding technology to improve drive-thru speed.

Wendy’s executives said they have made progress on improving speed of service, though they would not quantify that. “I don’t want to get into specifics,” Penegor said, “because I know you’d be asking me every quarter how much we peeled off and how much does that actually translate into sales.”

“But,” he added, “it was a nice improvement from trends, which were going in the wrong direction.”

The company has been using training and improvements in credit card processing to improve speed and increase throughput.

Executives acknowledged that “we were a little bit slower than a lot of the industry” in credit card processing. But the company made software changes and is “seeing some improvement.”

The company is also using training and “a relentless focus on staffing levels” to improve consistency.

“Our staffing levels have been as good as they have been in a long time in our restaurants, which certainly helps,” Penegor said. “We continue to put more tools in the restaurants to make sure that we’re measuring speed consistently across the restaurants, so we can coach and help.”

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