Arby's may be for sale
Wendy's/Arby's Group says that focusing on Wendy's is a better bet. Will Arby's find any bidders?
Wendy's/Arby's Group (WEN) plans to put the Arby's chain up for sale, The Wall Street Journal reported. Arby's doesn't have the two things it takes to succeed as a fast-food chain these days: The ability to expand overseas or steal business from the competition.
The company now wants to focus entirely on Wendy's. "The reality is that the Wendy's brand, given its relative size and scope, is the key driver of shareholder return," said Wendy's/Arby's chairman Nelson Peltz in a statement to the Journal.
Shares of the company soared Thursday on the news, rising by more than 8% to $4.85.
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Arby's hasn't done well from a sales perspective, and only brought in $260.5 million in revenue for the third quarter, the Journal reported. That's nearly $30 million less than what it brought in the year before.
One reason for the decline was because Arby's didn't hop on the "value" meals bus early enough, and in the recession consumers were very interested in discount deals, the Journal reported. Arby's finally unveiled a value menu in April.
Why focus on Wendy's? The chain has more brand recognition and is better positioned to expand internationally (read: China), the Journal reported.
China is the main reason why Yum Brands (YUM) is dropping Long John Silver's and A&W. Most of Yum's business is overseas now, and the company thinks it can better expand internationally by focusing on Taco Bell, Pizza Hut and KFC.
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