The Wendy’s Co. expects to test digital features like dynamic pricing and daypart offers in 2025 as it expands its investments in technology, executives said Thursday.
The Dublin, Ohio-based burger brand, which released fourth quarter 2023 earnings, expects its digital sales to reach $2 billion in 2024, “a full year earlier than planned,” said Kirk Tanner, the company’s new CEO and president as of Feb. 5, on a call with analysts.
Among other growth pillars, Tanner also cited the company’s planned $55 million investment over the next two years to market the four-year-old breakfast platform in the United States and Canada.
“We are planning to invest approximately $20 million to roll out digital menu boards to all U.S. company-operated restaurants by the end of 2025,” Tanner said, “and approximately $10 million over the next two years to support digital menu board enhancements for the global system.”
Tanner added that the digital menu boards will improve order accuracy, grow sales with upselling and merchandising, and improve the crew experience.
“Beginning as early as 2025,” he said, “we will begin testing more enhanced features like dynamic pricing and daypart offerings along with AI-enabled menu changes and suggestive selling.”
Tanner said the company has rolled out its “Wendy's Fresh AI” in several restaurants, “where we see ongoing improvement in speed and accuracy.”
He said technology “plays a key role on our restaurant team, enabling the crew to focus on what matters: preparing fresh high-quality Wendy's favorites and building customer relationships to bring them back time and again.”
Tanner also said Wendy’s plans an advertising push behind its four-year-old breakfast platform, which the company announced earlier this week would include offerings created with partner Cinnabon, owned by Atlanta-based Focus Brands, for cinnamon pull-apart with cream cheese icing.
“We are planning to invest approximately $55 million of incremental company advertising in the US and Canada, split evenly over the next two years,” Tanner said. “This investment will further amplify our plans and support and always-on approach across media partnerships and activations as we tell our breakfast story.”
Wendy’s is targeting $6,000 in breakfast sales per restaurant per week, which would entail growing that daypart’s sales 50% over the next two years, said Gunther Plosch, Wendy’s chief financial officer.
“Part of the reason for this breakfast investment is that Wendy’s views it as a high-margin opportunity, as there isn’t any additional labor planned as this daypart’s sales expand,” wrote analyst Mark Kalinowski of Kalinowski Equity Research in note to investors Thursday.
Kalinowski noted that Wendy’s is testing chicken “Saucy Nuggets” in a small number of Ohio restaurants near the company’s headquarters, including such sauce flavors as honey-barbecue, Buffalo, garlic-parmesan, and ghost pepper.
Wendy’s is also continuing to offer variations on its Frosty, with an Orange Dreamsicle Frosty expected nationwide March 13, Kalinowski wrote.
For the fourth quarter ended Dec. 31, Wendy’s net income was $46.9 million, or 23 cents a share, up from $41.3 million, or 19 cents a share, in the same quarter last year. Revenues rose to $540.7 million from $536.5 million in the prior-year period.
Wendy’s same-store sales in the quarter were up 1.3% globally, with increases of 0.9% in the United States and 4.3% internationally.
Wendy's, founded in 1969, has more than 7,000 restaurants worldwide.
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