Wendy's burger bonanza
The fast-food chain's new pretzel bun has the company on a roll.
By Neal Rau
Not all burgers are created equal. Americans love their fast food but they are growing tired of the same old thing. The niche burger-chains like In-N-Out Burger and Five Guys Burgers are becoming much more popular among Americans. These burger chains offer a smaller menu but better quality food.
Most Americans are looking for more than a dollar menu; they are looking for higher quality, variety and value. The only big burger-chain that seems to realize this trend is Wendy's (WEN). They just introduced a new burger that has created the biggest buzz in fast food in years, the Pretzel Bacon Cheeseburger. It has been so successful that since the launch of their new Pretzel Bacon Cheeseburger on July 1, Wendy's has seen its stock price increase over 42%!
Most people probably do not know that Wendy's passed Burger King (BKW) last year, becoming number two on the largest burger-chain list behind McDonald's (MCD). Burger King's creepy King mascot ads a few years ago probably helped Wendy's cause. This year the chain has built on that momentum by cleaning up its stores and offering more premium burgers and sandwiches. Now customers can get a burger like the Pretzel Bacon Cheeseburger, which rivals any Five Guys burger, or choose from a variety of different menu items. WEN is upgrading many stores with bistro-like features, hoping to be associated more with the fast casual, higher quality restaurants like Chipotle Mexican Grill (CMG) and Panera Bread (PNRA). Both PNRA and CMG have seen big gains this year. PNRA just bounced back after testing long-term support, the stock recently fell on disappointing Q2 earnings.
WEN shares are trading at a 52-week high and at their highest levels since 2008. Wendy's says it earned $12.2 million, or 3 cents per share. That compares with a loss of $5.5 million, or 1 cent per share, a year ago. For the year, Wendy's said it expects the sales figure to grow between 2% and 3%, given its expectation for stronger sales in the second half of the year. The company also increased the quarterly dividend by 25% to 5 cents, a 2.8% yield. Stock Traders Daily has WEN strong near-term, but the stock is in play because it is testing long-term resistance; if resistance holds the stock could reverse all the way to longer term support.
No doubt, the new pretzel bun has WEN on a roll. The timing of remodeling stores and a popular new product is what is driving the sales for WEN. They are offering customers the best of both worlds, the premium burger choice of the niche burger chains and the value only a big burger-chain can offer.
Customers are willing to spend more to get something different and the pretzel bun is certainly different. In the end, just a bun can make a difference. Look for WEN to keep the new Pretzel Bacon Cheeseburger as a permanent item on the menu; it was originally intended to only be a limited time product. Who knows, maybe they will add the pretzel bun to other sandwiches on the menu. It is important for WEN to strike while the iron is hot and right now, the pretzel bun is hot. There is nothing on the market quite like it, and with this kind of buzz on one product, you can be sure that others are sure to follow. After a big move in the stock, keep an eye on WEN long-term resistance.
Last night on my way to Dairy Queen, Wendy's was closer and I thought why not. I'm not a fan of drive through hamburgers , like Sonic or McDonald's, but was really hungry for a cheeseburger. I tried a pretzel/bacon cheeseburger and it was DELICIOUS! Will definitely go back for another one.
Five guys was the most disappointing burger I ever had and for the price certainly not a good value. I usually go to Carl's or Wendy's as they both provide the most value no matter which burger you choose.
How about a pretzel-pretzel? It's a pretzel wrapped in a pretzel!!
This reminds me of Jim Gaffigan's funny jokes about Hot-Pockets. Eventually, it comes full circle and people are simply being duped into eating junk under the premise that it is "new and improved!"
But kudos to Wendy's, they do have decent food compared to McDonalds. This is more a comentary on US consumers who will frenzy over a Doritos Taco or a Pretzel bun burger. It's the same consumer who is easily bought with the most minimal of marketing tricks.
Most of this story is BS. Americans are not switching to the higher end burgers. Maybe a few have but in large numbers no way. Do some of your own non-scientific research. Check out the parking lots and drive thru's at your local McDonalds and Wendy's as compared to Five Guys if you have one. I drive by a Five Guys everyday along with a couple McD's and a Burger King and a Wendy's. McD's is always and I mean always packed. Wendy's is also usually very busy. Burger King is busy at meal times. Five Guys is at best 4th out of 4 as far as traffic in their lot. Of course at the prices they charge it don't take many to make a profit. I think the writer is full of mud! The dollar menu is what drives the traffic to the front door. Wendy's and McD's would like to sell more of the $2.99 burgers sure. But, that $1 Sweet tea and McDouble is pulling those Fords and Chevys on to their lots.
I usually go to Burger King when I have fast food, but maybe I will try Wendy's new burger. I recently had a great burger at a place called "Two Guys" in Lumberton, North Carolina, just off exit 20 on Route 95. I highly recommend that place if anyone is in the area.
This place is not a fast food joint. It is a regular restaurant with good food and a bar.
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