Wendy's scores with new strategy

Better times lie ahead for the burger chain.

By Jonathan Berr Feb 8, 2012 11:26AM

BananaStock/JupiterimagesWhen Wendy's (WEN) CEO Emil Brolick was hired last year, the burger chain was in the midst of an identity crisis. That's no longer the case.

The company made famous in folksy commercials featuring its late founder Dave Thomas has moved into the lucrative fast casual market with premium offerings such as the W burger. Brolick is also sprucing up the chain's locations and stressing the importance of good service. Though he took the job only in November, he is already seeing results.

Revenue in the last three months of 2011 gained 5.6% to $615 million, surpassing the $613 million predicted by analysts, though income from continuing operations fell 30% to $4.3 million. Same-store sales in North America rose 4.4% -- the chain's best performance in eight years -- helped by the popularity of offerings such as the revamped Dave's Hot 'N Juicy cheeseburger. Skeptics are clearly coming around.

For instance, the blog GrubGrade gave a positive review to the W burger, saying, "I didn't love it by any means -- and God knows I probably put something tastier in my mouth that very day, much less the entire year -- but I honestly enjoyed it for what it was."

Investors have also liked what they've been seeing. Shares are up nearly 7% over the past year, outperforming McDonald's (MCD), which eked out a gain of 1.53% during that same time. Earnings per share are expected to hit 18 cents this year and 24 cents next year, which would be a significant improvement from the 14-cent level Wendy's has earned for the past three years. Corporate insiders are also loading up on shares.

The one negative on Wendy's stock is that analysts have a one-year price target of $5.55, which is about where it trades now. If the company continues to improve, those figures will be adjusted.

Jonathan Berr is a freelance business writer. He owns shares of McDonald's.

Feb 8, 2012 2:10PM
I'd eat at Wendy's anytime over McDonalds!!!
Feb 8, 2012 3:59PM
Nothing beats a nice, cold "Frostie" on a hot day - or even a cold one, for that matter!
Feb 8, 2012 7:32PM
I have fallen in love with Wendy's all over again since they came out with the new fries and Dave Burgers.  Keep up the good work.
Feb 8, 2012 5:31PM
Feb 8, 2012 4:53PM
"I didn't love it by any means -- and God knows I probably put something tastier in my mouth that very day, much less the entire year -- but I honestly enjoyed it for what it was."

This is considered a positive review? Seriously?


It's always been [and always will be] Wendy's burgers, McDonald's fries... Frosty notwithstanding. And I do agree with "Someone" to an extent, the new fries definitely taste better, but the old ones? you literally couldn't give those to homeless people on the streets who were staving. The were gross.


Feb 8, 2012 1:38PM
What everyone really wants to know is: Does Wendy's put pink slime in their burgers?
Feb 8, 2012 5:05PM
Breakfasts are great, except that they got rid of the artisan bread for the sandwich. Their hamburgers and less healthy alternatives aren't my favorites (BIG MAC) but their service has truly been excellent for a couple of years now.  When I drive through, I barely have to apply the brakes before I am paid and served and back on the street.  I do love that!
Feb 8, 2012 8:58PM

Post the response, Gunnar... because I do not believe you.


First of all, they would not have responded, "... you must 'of' had the flu..." the word is HAVE... you must HAVE had the flu... HAVE, not OF, HAVE.


But, believe this about Wendy's... they did this $1 promotion... donate a dollar to their charity, buy a key-ring Frosty amulet and you will get a small Frosty free for the entire year.


Guess what... THEY DON'T HONOR those amulets!


What's that all about? 

Feb 8, 2012 5:03PM
I still think we need the old fries back. The new ones do not retain heat as well, and therefore are usually pretty crappy.
Feb 8, 2012 9:32PM
I had lunch at Wendy's today and I watched the new Flat Panels hanging in the dining area talking about how "Juicy" the burgers are. They overcook them so there's no juiciness to them at all. I remember when Wendy's first opened and they were much better then. I also prefer the old fries, if they weren't hot they were still crunchy, my luke warm fries today were somewhat limp.
Feb 8, 2012 8:02PM
I will never set foot in a Wendy`s again. I got terribly sick from their food, they would not refund my money and their corporate response was" you must of had the flu bug ". Not the case at all, it was the food.
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