Progress outpaces original targets, CEO Todd Penegor says
The Wendy’s Co. is expanding its third-party delivery platform, offering it in about 40 percent of its North American restaurants, executives said Wednesday.
“Delivery has outpaced our original rollout expectations, and we are very pleased with our rapid expansion, as delivery is another great way to provide access to the brand,” said Todd Penegor, Wendy’s president and CEO, in a post-second-quarter analyst earnings call.
The number of Wendy’s restaurants on the delivery platform, which was introduced in December, is up 25 percent from the end of the first quarter, Penegor said, and the company is expanding the delivery rollout ahead of schedule.
The company partners with DoorDash in the United States and SkipTheDishes in Canada.
“The consumer has an appetite for convenience and we have seen this through our delivery economics,” Penegor said. “Average check sizes have been 1.5 to two times higher on delivery orders and we continue to see incrementality and customer repeat. In addition, our strongest customer satisfaction scores are coming from delivery, which is very encouraging.” Wendy’s currently rates about 4.5 out of five stars on the DoorDash app.
Penegor said the company is working to integrate DoorDash onto Wendy’s own app, as it works on delivery times that are already “favorable.” Wendy’s targets an optimal order-to-delivery time of 30 minutes, he said, and deliveries are running “just slightly over that.”
Gunther Plosch, Wendy’s chief financial officer, said the company uses DoorDash data to identify “control” stores and runs testing software against those.
As the company relies more on technology, Penegor said Wendy’s is making changes among executives in its newly created “digital experience organization,” which will oversee such new technology such as smartphone apps, loyalty programs and in-store kiosks.
David Trimm, Wendy’s chief information officer, will retire early next year, Penegor said, which provides a change to refocus the digital leadership structure.
The company has named Kurt Kane as Wendy’s chief concept and marketing officer, to lead the new digital experience group.
“We have also engaged a global consulting firm to accelerate our work to bring consumer-facing technology — such as mobile ordering, rewards and kiosks — to life,” Penegor said. Plosch’s CFO role will expand to take enterprise technology for the company’s information systems, he added.
In other executive changes, Penegor said Robert D. Wright, currently Wendy’s chief operations officer and head of international, will be transitioning his international responsibilities to Abigail Pringle, the company’s chief development officer since December 2014. Pringle will assume the newly created role of chief global development officer.
For the second quarter ended July 1, Wendy’s income swung to profit of $29.9 million, or 12 cents a share, from a loss of $1.8 million, or one cent a share, in the same period last year. Revenues increased 28.3 percent to $411 million, from $320.3 million in the prior-year quarter.
Same-store sales at North American Wendy’s units were up 1.9 percent, compared to a 3.2 percent increase in the same quarter last year.
Sales have remained steady as Wendy’s continues to evolve the design of its units.
Penegor said Wendy’s has introduced a new prototype in the Dublin area that shaves about $150,000 of the cost of the earlier “Smart” design, which cost in the range of $1.7 million to build, depending on the location.
“What we've done is tried to make sure that that design can fit in all trade areas, so we can get onto a half acre or less,” he said. Customizable designs can range from 28 seats up to the traditional 65 seats.
Wendy's, founded in 1969, has 6,600 owned and franchised restaurants worldwide.
Contact Ron Ruggless at [email protected]
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