Wendy's Company (The) (WEN)

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The Wendy's Company (WEN)

Morgan Stanley Retail & Restaurant Conference

April 04, 2013 7:30 am ET


Stephen E. Hare - Chief Financial Officer and Senior Vice President


John S. Glass - Morgan Stanley, Research Division


John S. Glass - Morgan Stanley, Research Division

Everyone, thanks for joining us. My name is John Glass. I'm the restaurant analyst for Morgan Stanley. Welcome to our blank annual field trip and conference. I say blank because I think we've done this now for over 25 years in various locations, far predating me. On behalf of the retail team at Morgan Stanley, I'd like to welcome you. My colleagues here in the audience: Kimberly Greenberger, who does softlines; Mark Wiltamuth, food and drug retail; David Gober, who does hardline retail. There's a number of other Morgan Stanley representatives around for you today and tomorrow to ask questions of. Many of our team members are here.

And just a couple of thoughts about the logistics over the next 36 hours and how this will work. So all the presentations are in this room here. We're going to do chat-show or talk-show formats for all of them. Some are webcast. Some are not. At the end of this session at noon, there's a lunch here with Urban Outfitters. So please stay around for that. There are one-on-ones going on concurrently. So I understand people will be coming in and out. Leave yourself a few minutes. It is across the lobby. I don't know exactly where, but the people out in the hallway will direct you. But leave about 5 minutes to get to those. After that, we're going to get on a bus. We're going to go, I think, just a short distance to a couple of malls, really interesting stuff we're seeing. So please stay with us then. And then we're coming back here after a brief break to kind of -- for people to come back, get organized, come back to this room for a dinner and 2 panel discussions, very interesting, one from Bucks & Associates, one at real estate panel that we've done for years, which I've always found fascinating. And then tomorrow, we'll repeat the process at least in the morning.

Question-and-Answer Session

John S. Glass - Morgan Stanley, Research Division

Okay. So with that out of the way, I'll change hats as an analyst and step over here. It's my pleasure to introduce our first company in the conference and the first restaurant company, The Wendy's Company. Steve Hare is the company's Chief Financial Officer. And, Steve, I wanted to start by asking you, Wendy's is going through a fairly significant transformation, the most significant transformation, I think, I've seen in this brand, it in turn -- it touches the restaurants. It touches the menu. It touches a number of aspects of the strategic plan. So can you -- just for those who maybe haven't followed as closely as I have over the years, what are the big pieces of that structure that you are undertaking now? What are the key milestones you're looking for this year?

Stephen E. Hare

Sure, John, and thanks for having us here. It's good to be with you this morning. I think when you look at the brand transformation that Wendy's is going through today, I think you go back to our CEO. Emil Brolick rejoined Wendy's about 1.5 years ago. I think the advantage that Emil had in coming back to the company is that he was an important part of Wendy's really at the time it was most successful, was a close confidante and partner with Dave Thomas, our founder, and comes in with credibility with the franchisees to really lead the company. Not necessarily back to the good old days, but ahead. And I say -- and ahead, I say a comprehensive, as you mentioned, brand transformation that I think the most visible piece is what we call Image Activation. And that really started with a realization, as we looked at the brand positioning that Emil believes is a natural fit for Wendy's, is A Cut Above. And what do you mean by A Cut Above? We mean a higher quality product offering, consistent innovation in the category and being able to compete not only with the traditional QSRs that are out there, but also with what we call sort of the new QSRs, the Paneras and the Five Guys that present another pull on some of our premium customers. As we looked at it, one of the clear obstacles we had was the age of our facilities. We're a 40-year-old brand. The average age of our facilities then is somewhere in that 20-year category. And so as a result, we felt that we were not presenting a contemporary environment to our customers that was consistent with A Cut Above. So we embarked on a program, and we can talk some more about the details of that. But to really look at, starting in 2011, what kind of designs could we incorporate and reimage a number of our restaurants and really present a consistent customer experience that's very different than a typical QSR experience and one that we think is consistent with the higher quality of our food -- but when we think about transformation, it goes beyond that. I think you've seen some of our new advertising. And frankly, Wendy's is a company that has suffered from an advertising message standpoint really since the glory days when Dave Thomas was such an effective spokesperson for the company. And I think you're seeing us now with really a two-pronged attack on an advertising campaign, using Wendy Thomas, Dave's daughter, to really reinforce the traditional values that Wendy's brings, but also a new character called Red that brings a more come contemporary feel to the brand. And that's been an effective sort of one-two punch in terms of our advertising. Beyond that, if you go into our restaurants today, you'll see new packaging that incorporates the new design, a brand-new logo. We had not touched our logo for a long, long time and, I think, again, all designed to bring a more contemporary feel to the building and all the way down to new uniforms for our restaurant crews. And it's an energizing event when we bring in the new uniforms. And people feel good about working both in a better environment and in a successful restaurant.

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