Can Wendy’s catch up? CEO Tanner dishes on strategy to outperform rivals in 2025

A year into his tenure as Wendy’s (WEN) CEO, Kirk Tanner is looking beyond the iconic square burger to inject new energy into the 55-year-old restaurant chain.

In an increasingly competitive fast-food landscape, Tanner is betting on a multi-pronged strategy that combines enticing menu additions with cutting-edge technology to reinvigorate growth and attract investors.

Tanner’s vision includes a new burger featuring what he promises is “thick-cut” bacon, drive-throughs powered by AI, Frosty drinks with chocolate and vanilla swirls, as well as soon-to-be announced breakfast and chicken sandwich innovations.

“It’s huge,” Tanner told Yahoo Finance’s Opening Bid podcast when asked about the bacon.

I’ve eaten like six of these. I mean, it is substantial.

He added the company can always innovate and always move the bar higher.

Scheduled to roll out soon are: new chicken sandwiches (middle of this year), new thick-cut bacon burger (later in 2025), and new breakfast beverages (later in 2025).

One of the most ambitious elements of Tanner’s plan is the implementation of AI-powered drive-throughs.

Wendy’s aims to have 500 AI-powered drive-throughs by the end of 2025, a significant increase from the 100 currently in operation.

This technology promises to streamline the ordering process, improve accuracy, and enhance the overall customer experience.

Tanner also recognizes the importance of expanding Wendy’s physical presence.

The company plans to increase its total restaurant count from 7,200 currently to up to 8,300 by the end of 2028. It’s a key reason he took the job.

Tanner stated:

This is why I joined Wendy’s, for the potential for unit growth. That is the biggest unlock for the value. It’s directly correlated to the value of our stock. And the potential for us to build restaurants is tremendous.

Wendy’s shares have dropped 17% in the past year, underperforming rival McDonald’s, Yum! Brands, Restaurant Brands and Chipotle.

Wendy’s market cap stands at a mere $3 billion, compared to McDonald’s at $219 billion, Yum! Brands at $44 billion, Restaurant Brands at $30.8 billion, and Chipotle’s $66 billion.

Despite these challenges, Wendy’s has shown signs of progress. Its US same-store sales last year rose 1.4%, and Wendy’s same-store sales internationally rose 2.8%.

But, “While we view the company’s menu innovation efforts constructively, the categories of focus (chicken, frozen desserts, and beverages) will be fiercely contested grounds in the quick-service restaurant category with multiple brands expanding offerings, so the pace of innovation may prove to be table stakes for defending, rather than meaningfully growing, share in fiscal year 2025,” Stifel analyst Chris O’Cull said. O’Cull rates Wendy’s stock at a Hold with a $16 price target.

Despite lingering concerns on the Street if Wendy’s should still be in the competitive breakfast business, Tanner is fully committed to growing it from here.

Even with the state of pricey eggs, Tanner says Wendy’s can make a profitable egg sandwich. “[Breakfast is] still a profitable business,” added Tanner.

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