Join        Login             Stock Quote

Wendy's: A Fast Food Turnaround

 January 29, 2013 12:01 AM

by George Putnam, editor The Turnaround Letter

The Wendy's Company (WEN) began in 1969 as a single restaurant in Columbus, Ohio named after founder Dave Thomas' daughter. Now it has more than 6,500 restaurants in the U.S. and 27 other countries.

After carving out a niche in the fast-food industry based on good quality food and service, Wendy's has faltered in recent years, suffering from a stale menu and image. Nevertheless, we consider it one of our favorite turnaround ideas for 2013.

The company was acquired by financier Nelson Peltz in 2008, who tried combining Wendy's with the Arby's chain, which he already owned.

Wendy's is a company with a number of the characteristics that we like to see in a turnaround situation: a well-known brand, renewed focus, a new management team with turnaround experience, decent financials and a large shareholder with a lot at stake.

After selling off the Arby's franchise last year, the company is now solely focused on the Wendy's brand. In late 2011 the company brought in Emil Brolick as its new CEO.

Brolick has a long and successful career in the restaurant business, including a previous stint at Wendy's where he helped engineer an earlier turnaround beginning in the late 1980's.

Brolick is committed to restoring Wendy's quality image, with particular emphasis on bringing back adult customers who have been lost in recent years. Early efforts to remodel and re-image certain locations are showing impressive results.

Brolick is also moving into the lucrative breakfast segment, which Wendy's has missed out on until now. Although there is a fair amount of debt on the balance sheet, the financials look solid enough to support Brolick's turnaround strategy.

The company recently increased its dividend and initiated a stock buyback program. Peering over management's shoulder is Mr. Peltz who owns almost 100 million shares and has a big incentive to make sure things get back on track at Wendy's.


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageOversold Airline Ready For A Quick Rebound

Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible read on...

article imageWhat Is Your Sell Criteria?

Every stock market cycle has its darlings—the stocks investors believe can do no wrong.  I remember 1999 read on...

article imageUS Employment Growth Continued To Slow In April

Company payrolls increased by a lower-than-expected 171,000 last month, the US Labor Department reports–the read on...

article imageMake America Great Again

Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.