By George Putnam, The Turnaround Letter

The Wendy's Company (WEN) began in 1969 as a single restaurant in Columbus, Ohio named after founder Dave Thomas's daughter. Now it has more than 6,500 restaurants in the U.S. and 27 other countries.

After carving out a niche in the fast-food industry based on good quality food and service, Wendy's has faltered in recent years, suffering from a stale menu and image. Nevertheless, we consider it one of our favorite turnaround ideas for 2013.

The company was acquired by financier Nelson Peltz in 2008, who tried combining Wendy's with the Arby's chain, which he already owned.

Wendy's is another company with a number of the characteristics that we like to see in a turnaround situation: a well-known brand, renewed focus, a new management team with turnaround experience, decent financials and a large shareholder with a lot at stake.

After selling off the Arby's franchise last year, the company is now solely focused on the Wendy's brand. In late 2011, the company brought in Emil Brolick as its new CEO.

Brolick has a long and successful career in the restaurant business, including a previous stint at Wendy's where he helped engineer an earlier turnaround beginning in the late 1980s.

Brolick is committed to restoring Wendy's quality image, with particular emphasis on bringing back adult customers who have been lost in recent years. Early efforts to remodel and re-image certain locations are showing impressive results.

Brolick is also moving into the lucrative breakfast segment, which Wendy's has missed out on until now. Although there is a fair amount of debt on the balance sheet, the financials look solid enough to support Brolick's turnaround strategy.

The company recently increased its dividend and initiated a stock buyback program. Peering over management's shoulder is Peltz who owns almost 100 million shares and has a big incentive to make sure things get back on track at Wendy's.

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