Board’s surprise move leaves analysts banking on a ‘fresh’ leadership perspective
The Wendy’s Co.’s surprise CEO succession announcement, at a company with recently stable leadership at the top, left observers settling on the possibility of a “fresh” leadership perspective.
T
he Dublin, Ohio-based company on Thursday named Kirk Tanner, a former PepsiCo Inc. division CEO, as president and CEO, to succeed Todd Penegor, who had held the role since May 2016. The new positions are effective Feb. 5, the company said.
“Some fresh perspective [is] likely well-received ahead of a more challenging year,” wrote equity analyst Alexander Slagle, in a Jefferies Research Services note Friday morning, “given some uncertainty around the consumer and traffic environment, along with competitive pressures on the domestic front.”
Slagle cited the planned investments in Restaurant Brands’ International Inc.’s Burger King advertising in 2024, part of the brand’s $400 million “Reclaim the Flame” investments,” which indicated more promotional activity in the year ahead. And competitor McDonald’s Corp. has debuted a wide number of initiatives, including the CosMc’s beverage-oriented concept.
“We believe [Wendy’s] is looking to build on key drivers such as digital, loyalty, ops/execution to regain footing/share ([same-store sales] more challenged in recent quarters, and leverage some of Mr. Tanner's track record in innovation, ops improvement, and strategic partnerships in his prior roles,” Slagle noted.
Tanner most recently served as CEO of North American Beverages at PepsiCo, where he oversaw the $26 billion business unit. Prior to his most recent role, Mr. Tanner oversaw PepsiCo's Global Foodservice division, during which time he expanded the Company's presence in foodservice through strategic partnerships, new product lines and significant deals with major sports leagues and restaurant chains.
Penegor, the former Wendy’s chief financial officer, took the reins from Emil Brolick, who announced his retirement in 2015. Penegor joined the burger chain in June 2013.
Wendy’s recently had wrested with activist investors, including Blackwells Capital as well as the Trian Fund Management L.P., which is headed by Nelson Peltz, chairman of Wendy’s Board.
"We are thrilled to welcome an executive of Kirk's caliber to the Wendy's team," said Peltz, as chairman of the Wendy's board, in a statement Thursday. "Kirk is a proven operational leader whose customer-centric mindset and broad experience positioning and growing some of the most well-known global brands make him the ideal candidate to lead Wendy's into its next phase of growth and expansion.”
Peltz said he wished “nothing but the best” for Penegor.
Penegor and his Wendy’s team had a relatively long tenure at Wendy’s, especially for quick-service industry leadership, despite having to walk back some initiatives like the planned 700-unit REEF off-premises deal in 2022.
“We believe [Wendy’s] is prudently looking to regain some footing, particularly in the domestic business at a time when multiple competitive crosswinds have emerged,” Slagle wrote.
Wendy’s is scheduled to release fourth quarter and full-year 2023 earnings before the market opens Feb. 15.
Slagle said commentary from executives, especially about development targets, would be key to the company’s outlook in the financial community.
“Following industry challenges through most of '23 (permitting, construction, interest rate/lending environment),” he said, “expectations have been appropriately reset, in our view, relative to [management’s] view for net unit growth of 2%-3% in '24, and 3%-4% in 2025.”
Jefferies rated Wendy’s shares as a “hold.” Wendy’s shares were trading on the New York Stock Exchange Friday noon at about $19.03 each. They closed Thursday at $19.26 a share.
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