Wendy’s expects to have between 45-50 restaurants in the UK by the end of the year, with long-term potential for an estate of 400 across the country.
Speaking on an earnings call, CFO Gunther Plosch said the Ohio-based fast food chain has signed up several franchisees and is making progress on profitability in the UK.
“The UK is a key strategic market for us and acts as a beachhead for the rest of Europe,” he said. “Over time, we expect 400 restaurants. We’ll see how long that takes us but we believe it’s our fair share in that market.”
Wendy’s ended Q1 2024 with 37 UK sites, 12 of which are company-owned.
The group reported international systemwide sales growth of 8.8% in the quarter, compared to 21% in Q1 2023. Total revenue grew 1.1% year-on-year to $528.8m.
“From a margin point of view, the investments we’re making have had an adverse impact on our consolidated margin,” Plosch explained. “But we’ve improved that by about 90 basis points year-on-year, which tells you we’re making progress on UK profitability.
“We continue to expect headwinds on our consolidated margins until the end of the year.”
Expansion will be both through company-owned restaurants and franchising.
Wendy’s is also exploring opportunities in mainland Europe, namely in Ireland and Spain.
“We have a great deal of potential,” president and CEO Kirk Tanner added. “By getting the UK right, we’re in a great position to grow to 400 units in the UK as well as leveraging that for the rest of Western Europe.”
Tanner and Plosch also discussed how Wendy’s is positioned to take advantage of the increased emphasis on value across the QSR industry.
The ‘Biggie’ meal deals are “consumer-famous” and deliver everyday value, Tanner said, while the digital strategy has helped build loyalty, grow the customer base, and drive personalisation.
The app now has 6 million monthly active users and has gained traction in Q1, according to the management team.
“The structure of our menu allows us to win across consumer segments,” Tanner explained. “There’s a lot to look forward to on the breakfast side.
“We also see our momentum continuing in the evening and late night day part. Overall we’re in a competitive position where we hold share in traffic and the dollar across day parts.
“Were continuing to invest in our app and loyalty platform. When we have a digital order, it’s a larger order and has a nice impact on profitability.”
Wendy’s consumers can look forward to menu innovation in the chicken category, as well as the brand’s Frosty desserts, he added.
