Wendy's New Burger Brings In New Bacon, Keeps Patty Simple
October 08 2009 - 1:05PM
Dow Jones News
Wendy's will try to get the most out of its new products, while
also keeping things simple.
Wendy's, part of Wendy's/Arby's Group Inc. (WEN), will on Monday
begin selling its new Bacon Deluxe burger nationwide, after an
advertising campaign backing the latest entry in the premium burger
competition kicks off Friday.
The signature element of the sandwich is applewood-smoked bacon
cooked from scratch in the stores, which Wendy's plans to also use
on other items. Wendy's had typically used reheated, pre-cooked
strips, but will begin topping its Baconator sandwich with the
freshly prepared bacon, Wendy's Chief Marketing Officer Ken Calwell
said Thursday in an interview.
Wendy's patty for its new sandwich is also the same size as its
full-sized burgers, albeit cooked in a different way that it claims
makes the burger juicier. For more meat, customers can add one or
two extra patties to the Bacon Deluxe. Suggested prices range from
$3.99 for the single-patty version to $5.99 for the
triple-patty.
"People are very aware at Wendy's that if you want more for
bigger appetites, they can go for doubles or triples," Calwell
said. "We think that's a competitive advantage."
The method simplifies ordering for Wendy's by not requiring a
new-sized patty, although Calwell would not say if it was a
money-saving move. McDonald's Corp. (MCD) and Burger King Holdings
Inc. (BKC), Wendy's two larger competitors, are both using thicker
burger patties for their premium sandwiches.
Wendy's hopes the new products, corresponding with a marketing
campaign re-emphasizing freshness and quality, will lift sales in a
fast-food category fallen on increased discounting and continued
consumer unemployment.
Analysts say that a bigger opportunity for Wendy's investors is
an improvement in restaurant-level margins, which had deteriorated
leading up to its merger with Arby's. The company is trying to
raise margins to 16.7% by the end of 2011, up from 12.7% over the
last year, according to recent research from SunTrust Robinson
Humphrey.
But new food items are also key in driving sales. Wendy's had
been lacking a robust product development pipeline for years, but
it deepened since last year's merger. In June, Wendy's "Boneless
Wings" was the first product coming from that initiative, which it
credited for a big sales jump. Franchisees also appreciate the new
products.
"We're very excited about it. You have to have consistency in
rolling out new products," Robert Schermer Jr., president and chief
executive of Meritage Hospitality Group Inc. (MHGU), operator of 69
Wendy's restaurants in Michigan and Florida. "We didn't have that
in the last five years."
Wendy's/Arby's shares were recently flat at $4.77 and have lost
about 3.4% this year.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;
paul.ziobro@dowjones.com