Wendy’s passed a few milestones at the end of 2017.
The Dublin-based hamburger chain crossed the $10 billion mark in system-wide sales for the first time, reached an all-time high average of $1.6 million in sales per store, and inched past rivals Burger King and Taco Bell into the No. 4 spot on QSR Magazine’s list of the largest restaurant chains.
Though Wendy’s didn’t post eye-popping same-store sales gains, a key industry metric, its 1.3 percent rise capped five straight years of positive same-store sales, an industry-best streak.
“2017 was a strong year for Wendy’s,” Wendy’s CEO, Todd Penegor, told analysts on an earnings call.
Penegor went on to outline some near-term goals for the company, including $12 billion in system-wide sales by 2020. System-wide sales includes the combination of sales from company-owned stores and those controlled by franchisees.
If the $12 billion mark is realized, it could bump Subway out of third place on the QSR Magazine list. Helping Wendy’s move up the list is Subway’s free fall, with about 1,000 stores closing in the past year. Chipotle’s struggles have also helped.
It’s still a predominately hamburger market in the U.S., with McDonald’s, at No. 1, Wendy’s and Burger King all in the top five largest chains. Starbucks is the second-largest restaurant chain.
“Fundamentally, the three burger majors are in one pack,” said John Gordon, principal of Pacific management Consulting Group, a restaurant industry analyst, “then you have everyone else.”
Analysts on the quarterly earnings call focused on technology rollouts, delivery, store development and the company’s stake in Arby’s, which just bought Buffalo Wild Wings. Wendy’s restated its Arby’s investment at just more than 12 percent of the new, combined company, worth about $325 million.
Will Slabaugh, an analyst at Stephens, said Wendy’s has gotten aggressive with its advertising again, going after rivals with its ads on TV and online touting fresh beef instead of frozen. The push differentiates the brand, Gordon said.
“Fresh beef tastes better,” he said, “and they have rung that bell for 40 years.”
Another area Wendy’s has led is in the rejuvenation of the value menu. Its “4 for $4 deal” launched two years ago has created a wave of copycats, even a few five items for $4 offers, and sparked efforts at competitors like McDonald’s to restart their own value menus.
Slabaugh asked Penegor about delivery, a new service for most fast-food chains, and whether it was receiving any pushback, or lower satisfaction ratings, from consumers.
“None,” Penegor said, “we aren’t seeing any pushback at all.”
Wendy’s has joined with DoorDash to offer delivery at about 20 percent of its stores. Penegor said the company is seeking other partners to expand the service.
There’s another milestone the company hopes to surpass by 2020: more than 7,000 stores, up from about 6,600. That’s one hurdle that Gordon sees as pretty high given the crowded restaurant market.
“It is hard as heck to get a Cadillac store site,” he said.