Most of the time, the finance-speak I hear in quarterly earnings calls or read in restaurant securities analysts’ research notes goes way over my head. Yet the talk surrounding the proposed sales of secondary chains at Wendy’s/Arby’s Group and Yum! Brands Inc. recently went straight to the heart of the matter for me.
No, I’m not saying that I get all choked up thinking of Wendy’s and Arby’s breaking up. But in executives’ and investors’ analyses of Wendy’s decision to sell Arby’s or Yum’s proposal to divest Long John Silver’s and A&W All-American Food, the talk revolves not around nine-figure sale prices, but focus, which is resonating with me strongly this year.
Just as Wendy’s and Yum officials are expecting big things in 2011, I have a monumental year on deck: After nearly two years of struggling to start a family, my wife and I will become parents in April. Having withstood the emotional and financial wringer of our journey, we want to begin our daughter’s life focused only on the things that truly matter, family being foremost among them.
So as I try to clean up my personal balance sheet by rebuilding savings and paying down medical debt these last few months of my wife’s pregnancy, I applaud Wendy’s and Yum for attempting to return to their knitting before embarking upon their ambitious growth plans this year. Cynics may see these proposed sales as retrenchment or, in the case of Wendy’s/Arby’s Group, an admission that the $2.3 billion merger of 2008 didn’t work. But I think of these moves as optimistic bets for the future.
By reducing its stable of brands down to its big three of Taco Bell, KFC and Pizza Hut, Yum would be more likely to achieve its torrid international growth targets of 475 locations in China and 900 units in other emerging markets. Wendy’s should be able to make a more concerted push to expand internationally and roll out its test of breakfast to additional domestic markets.
Even the brands being sold could have serious growth potential in the hands of the right buyer. Long John Silver’s just unveiled a new brand slogan, and Arby’s posted a 2-percent increase in same-store sales for its most recent fourth quarter. The last time a major foodservice company wound down its portfolio to focus on the core business, in 2006, it worked out pretty well for McDonald’s and former growth vehicle Chipotle.
From soon-to-be parents to soon-to-be corporate empty nesters, we’re all learning the benefits of focus, and I for one think it will raise the bar for 2011.
Contact Mark Brandau at mark.brandau@penton.com.
