Wendy's drops Arby's name as sale completes

With the sale of the struggling roast beef chain officially behind it, Wendy's sheds the Arby's name while keeping a small stock interest in the company.

By TheStreet Staff Jul 5, 2011 2:15PM

By Miriam Reimer, TheStreet


Wendy's (WEN) is once again a solo fast-food name brand -- dropping Arby's from its name now that its sale of the struggling roast beef chain is complete -- and the company is forging ahead with new menu items, an updated logo and a focus on global growth.


Wendy's said early Tuesday that it completed the sale of Arby's to private equity firm Roark Capital Management, a long-anticipated divestiture announced in June. Effective immediately, its corporate name was changed to The Wendy's Company, and its common stock will continue to trade under the ticker WEN.


The sale of its struggling Arby's chain showed that Wendy's was looking to deleverage its balance sheet and finally divest a brand that's been dragging on its financials for years.


Wendy's CEO Roland Smith said Tuesday that "we are pleased to retain an 18.5% common stock interest in the Arby's business."

"With the transaction now behind us, we look forward to devoting our full attention and resources toward realizing Wendy's exciting growth prospects, which include revitalizing the core menu, expanding into new dayparts including breakfast, modernizing our facilities, building new restaurants in the United States and pursuing global expansion," Wendy's Smith said.


"Our new corporate name and logo signals our commitment to the Wendy's brand following the sale of Arby's. We've incorporated the original Wendy cameo into our new company logo and we're highlighting a phrase that's been a defining point of difference for Wendy's for more than 40 years - Quality is Our Recipe," he added.


Wendy's also added the phrase 'Worldwide' to its tagline in an effort to emphasize what Smith called Wendy's "global aspirations."


Food chains McDonald's (MCD), Yum! Brands (YUM) and Starbucks (SBUX) have all been making a push to expand in international markets such as China and India.


The merger of Wendy's and Arby's occurred in 2008 under Chairman Nelson Peltz's leadership, and the company had tried to reinvigorate the brand -- most recently with a new advertising campaign labeling Arby's menu as "good mood food" -- but a meaningful turnaround had yet to materialize.

Roark certainly faces headwinds as it takes on the Arby's brand, perhaps most notably in the area of rising ingredient costs which have hit a roster of food and beverage companies across the sector from Kraft Foods (KFT) and Kellogg (K) to Jack in the Box (JACK) and Panera Bread (PNRA).


Wendy's shares were trading 0.4% lower at $5.17 Tuesday afternoon.


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