If you ask Wendy’s CEO Todd Penegor, franchisee confidence is higher than ever.
Operators ended 2020 with solid balance sheets and profitability. Wendy’s franchisees have seen this level of profitability continue in 2021, allowing the company to invest in technology, reimaging and unit development.
And if double-digit increases in sales weren’t enough, Wendy’s launched a new incentive program earlier this year that rewards franchisees for new restaurant growth, timeline acceleration and multi-year commitments. The deadline for the incentive is June 30 and Wendy’s expects to see a “significant increase” in commitments.
Meanwhile, the chain’s franchise recruiting pipeline has grown significantly after last year’s investments. Wendy’s has approximately 150 potential new franchisees at various stages of the process. That includes more than 20 looking into the UK, a market Wendy’s will first enter on June 2 and could accommodate up to 400 stores. The hamburger brand also recently signed new development agreements with franchisees to open more than 50 stores in Central Asia by 2030 and double its footprint in Quebec, Canada.
The aggressive moves all aim to reach 7,000 stores worldwide by the end of 2021 and reach 8,000 by the end of 2025. Wendy’s has approximately 6,850 units worldwide, with a net 10 openings in the world. first trimester. The company expects net unit growth of 3% next year, the majority of which will come from international markets.
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And don’t think that rising construction costs or labor shortages will hamper franchise expansion.
“Those headwinds are out there, but with the momentum we have in the brand and the fundamentally strong restaurant business model that we deliver with the development incentives, the returns are always compelling,” said Penegor. “And our opportunity is to continue to grow and develop this business now, because we want to provide better access to fast, convenient and high quality food.”
“So we bend down,” he continued. “We have more and more franchisees coming into the pipeline and even wanting to fit into the system. We therefore feel good that despite these headwinds, with all the tools at our disposal, from the business model of catering to hiring, through the promotion of digital, to truly engage our employees and our customers, we are in a good position to start. growth.”
As the chain moves forward in unit development, it will do so knowing that COVID has accelerated consumer demand for convenience and digital avenues. Wendy’s recent surge of innovation dates back a few years, when she launched the Smart 2.0 prototype and created a new global standard. The conversation centered around enhancing the restaurant experience, refreshing the look, and connecting digital to physical space. This meant integrating the mobile ordering app, sidewalk, kiosks, and pickup shelves.
Two-thirds of Wendy’s footprint has been reshaped. Restaurants that underwent image activation experienced a 30 basis point improvement, or mid to high single-digit increase in same-store sales. The program is expected to end by 2024.
“That outlook is unchanged, which is actually quite remarkable since thanks to COVID, we’ve actually allowed franchisees to slow down a bit,” said Penegor. “And so they speed up. In terms of design, we obviously include new design cues and new options from a digital point of view. We went through the process of separating order from pickup. This is a key element in achieving this. And when we do that and execute it in our designs, we see a better experience for our customers for delivery drivers and others. “
With Wendy’s being a 95% franchisee, Business Development Director Abigail Pringle said it’s important to bring enthusiasm and energy to operators before they start using their wallets. That’s why the chain offers franchisees flexibility and a variety of design solutions, giving them the ability to adapt to where “customers work, live and play”. This includes a container restaurant, modular buildings, drive-thru only, Smart 2.0 design, conversions, and more.