Wendy’s is putting a bigger focus on data-driven marketing amid a push to restore brand relevance and bounce back from a stretch of flagging financial performance. The Frosty maker’s same-restaurant sales, an important measure of QSR health, slid 4.7% year over year in the U.S. to around $3 billion in Q3, according to an earnings statement, dragging results down.
While Wendy’s U.S. business experienced falling traffic for the period ended Sept. 28, digital sales rose 14.9% YoY, accounting for 20.3% of sales overall, an all-time company high. Executives from the QSR also offered further details on their vision for Project Fresh, a turnaround plan first announced in early October, during a call discussing the Q3 results with investors late last week.
“The first pillar of Project Fresh is revitalizing the Wendy’s brand,” said Ken Cook, Wendy’s CFO and interim CEO, on the call. “This is about positioning Wendy’s as the freshest and highest-quality choice in QSR by celebrating what makes us stand out from the competition.”
One of the chief aims of Project Fresh is winning over new customers to Wendy’s through “compelling marketing,” per Cook. Recent promotions oriented around value, such as an $8 meal deal, drove repeat purchases among existing diners, but fell short on other measures.
“It didn’t do as good of a job as we wanted attracting new customers,” said Cook. “So that tells me we have an opportunity to tell our value story in a different way by focusing on both price and the quality of the ingredients we get.”
Project Fresh entails shifting investment from build-to-suit development programs toward technology and marketing effectiveness initiatives that can support average volume unit growth. Technology improvements include souping up back-of-house systems, like the screens employees use to build sandwich orders, with an eye toward efficiency. On the marketing effectiveness front, Wendy’s has partnered with consultancy Creed UnCo to dig into customer insights that will improve precision and contribute to long-term brand building.
Creed UnCo, which was founded by former Yum Brands CEO Greg Creed, since last month has been helping Wendy’s run a customer segmentation study that “will clarify which attributes drive [customer] purchasing decisions and help us refine how we deliver and communicate value across every touch point,” said Cook, who has served as interim CEO since Kirk Tanner departed the chain last summer.
As with many turnaround strategies, Wendy’s still has to undergo some potentially painful pruning. Cook estimated that “around a mid-single-digit percentage of U.S. restaurants” could end up closing as Wendy’s shutters underperforming locations.
Wendy’s for years was known for its combative marketing streak, embodied in a sassy social media presence that was unafraid to dig into rivals. But the marketing needs of the QSR category changed quickly during the pandemic and are again evolving as macroeconomic pressures put the messaging emphasis back on value. Recent Wendy’s campaigns of note include a collaboration with Netflix’s hit series “Wednesday” on a limited-time goth-themed meal and mobile game.
