What is in this article?:
- Wendy's to adjust marketing for remainder of 2013
- Building upon remodels
The company plans to focus advertising on both premium products and its new value platform.
TheCo. chief executive Emil Brolick said during the company's first-quarter earnings call that the brand would adjust its marketing calendar to bring about stronger sales growth in the second half of the year after revenue fell below expectations in the first quarter.
For the March 31-ended first quarter, Wendy’s net income fell sharply to $2.1 million, or 1 cent per share, compared with $12.4 million, or 3 cents per share, a year earlier. Results for the first quarter of 2012 included an after-tax gain of about $18 million on the sale of certain investments, Wendy’s said.
Revenue increased 1.8 percent to $603.7 million during the period. Same-store sales rose 1 percent at company-owned restaurants and 0.6 percent at franchised locations in North America, despite challenging calendar shifts involving New Year’s Day and Easter, the company noted.
Wendy’s national messaging jumped around during the period, Brolick explained, as the January launch of its Right Price, Right Size value platform gave way to two weeks of advertising fish sandwiches for Lenten season and then a five-week period when local marketing co-ops were free to market whatever they wanted.
“When we went to that local pillar, the messaging didn’t carry the day,” he said. “By definition, you’re more fragmented because local [demographic marketing areas] can run different messages.”
Going forward, the brand needs to keep consistent messaging in front of all customer groups, he said, meaning ongoing ads for Right Price Right Size for value-conscious consumers and sustained commercials for premium products for other guests.
“We have to evolve to where we have more continuity against a price-value message, as opposed to a pillar approach,” Brolick said. “We don’t want to move away from our premium messaging, because we’re building sales there, but we have to address that price-value consumer.”
For instance, in April while Wendy’s promoted the Flatbread Grilled Chicken sandwiches, sales of the chain’s large chicken sandwiches rose to their highest level in nine years, Brolick said. The chain also has been growing sales of its large hamburgers and salads.
But Wendy’s lost market share for the “price-value consumer” dependent upon 99-cent menus and other value platforms, he said. The brand’s approach to solving that dilemma via simultaneous, ongoing advertising is what Brolick characterized as “the power of ‘and.’”
“We’re not stepping away from the high end; we have some outstanding products coming into the pipeline,” he said. “Our strategy has to put pressure against high-end items but also recognize that 20 percent of the overall business out there in quick service is the price-value shopper. Some of the growth we’ve seen through very strong sales of Flatbread Grilled Chicken have been offset by share losses on the price-value end of the business.”