Wendy’s has been busy this year. The company’s value menu continues to pull people into restaurants, its DoorDash delivery partnership is going well, and Wendy’s now has order kiosks in 300 of its restaurants driving about 10% of orders. Average monthly Wendy’s app downloads have increased from 100,000 to 300,000 since the company started offering food discounts via the app last year. Mobile ordering is coming, although like other competitors in the space, Wendy’s declined to give a hard date for its arrival.
Wendy’s also acknowledged that McDonald’s is coming for its lunch with its own fresh beef push, and the company welcomes the competition.
“We’ll keep screaming back from the rooftops and making sure that we hold others in check on what’s really happening in the restaurant,” Wendy’s CEO Todd Penegor said on the company’s earnings call Wednesday. “Do they provide fresh everything, every day, in every restaurant?” (A lot of that screaming plays out on Wendy’s famously biting Twitter feed.)
Everyone Loves a 50-Cent Frosty
Leadership touted Wendy’s value menu heavily on the call. The company recently brought back its 50-cent Frosty promotion for the summer, says its popular 4 for $4 menu deal is going strong, and noted that millions of people bought into the “Dollar Doublestack” promotion throughout the winter.
The concern here, of course, is that once people get used to paying $0.50 for a Frosty, it’s really hard to convince them to pay much more for anything else on the menu. Plus, all of Wendy’s competitors offer value menus as well. Won’t this create a risky value menu dependency?
Penegor shrugged it off, because the value menu upsides far outweigh potential downsides. “Our biggest competitor is food at home,” he said. “So, you’ve got to continue to create reasons for the folks to get out of the house and into the restaurant.” And if anything is going to get consumers out of the house, it’s a 50 cent Frosty.
In other menu news, Wendy’s proactively moved away from romaine at the beginning of the year, sourced its greens from California, and didn’t see any noticeable sales hits based on the E. coli outbreak in Arizona. “We had our team really well-trained to make sure that they could tell the consumer where our lettuce was sourced from,” Penegor said.
DoorDash Needs More Drivers
Wendy’s rolled out a national partnership with DoorDash at the end of last year, and Penegor noted that DoorDash currently covers about 25 percent of the company’s restaurants (up from 20 percent at the start of the year). As for any other details on the program, Penegor repeated much of the same lines that the industry has been reporting as a whole. Positive initial customer reaction has been encouraging and the average delivery check is higher than an in-store order, but it’s still too early to make any big decisions in this area.
When asked if Wendy’s was considering other delivery services with perhaps more reach, CFO Gunther Plosch said that nothing was off the table. “We are not ruling out exclusivity for total U.S. with DoorDash,” Plosch said. “We are clearly exploring other options as well.” However, he noted that DoorDash has more reach than it might look like. Although DoorDash can currently serve 25 percent of Wendy’s restaurants, it has the potential to serve up to 40 percent, or 2,500 restaurants, based on markets that DoorDash currently touches. The problem is that even though DoorDash is technically in those markets, it’s not fully operational yet. However, DoorDash did recently close a huge round of funding earmarked to nearly triple its coverage. The delivery company is also seeing success with its just-launched Chipotle partnership; according to the fast casual chain, delivery orders are up almost 700 percent in the week since the program launched.
“It is conceivable that with our consistent partner DoorDash, we can get up to 40 percent coverage,” Plosch said. “It depends on how successful they are in hiring drivers and the likes.”
For now, Plosch said that the “underlying bones of the business” are attractive to Wendy’s, but it’s in DoorDash’s court to prove that the business can scale in a way that makes it a viable exclusive partner on a national level.
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