Wendy’s CEO Bob Wright has acknowledged that the burger chain allowed ingredient quality, customer value and restaurant service to slip while prioritizing cost savings, contributing to weaker U.S. sales and the loss of its long-held No. 2 ranking among major burger chains.
Wright, who became permanent CEO in May, told the Wall Street Journal that Wendy’s “shortchanged ingredient quality for cost savings” and became “over-reliant on promotional activity.” He said the company let its value equation erode and that service has been inconsistent.
In Wendy’s second-quarter earnings discussion, Wright stated: “Our quality differentiation has eroded, our value proposition has weakened, and we have not consistently delivered the experience customers expect from Wendy’s.” U.S. same-restaurant sales fell 7% in the quarter, with traffic down 12.5%, according to company results. It marked the sixth consecutive quarter of negative comparable sales. U.S. systemwide sales declined 8.2%.
Burger King reclaimed the No. 2 spot in U.S. sales by overhauling its Whopper and renovating restaurants, Wright said. McDonald’s remains No. 1.
Wright outlined a five-point turnaround focused on food quality and value, restaurant operations, store upgrades, marketing and digital sales. He said the menu must be rebuilt “at the ingredient level, at the item level, at the menu-category level,” covering hamburgers, chicken, salads and desserts. A former McDonald’s executive has joined as chief marketing and customer growth officer.
Wendy’s has closed hundreds of underperforming U.S. locations this year while continuing selective openings. The company cut its quarterly dividend and withdrew full-year guidance after the second-quarter results.
Wright has said the problems are within the company’s control and that restoring quality will take time.
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