Wendy’s patient with international investment
The benefits might not boost Wendy’s bottom line in the short term, but the Dublin-based hamburger c…The benefits might not boost Wendy’s bottom line in the short term, but the Dublin-based hamburger chain is proceeding with a strategy that will introduce its fare to new overseas markets.Wendy’s Malaysian franchisee has become the latest to open one of the fast-food company’s new restaurant designs in Kuala Lumpur, and it plans to add five more in central and southern Malaysia next year.
“The plan is to develop and expand the brand by opening five new restaurants every year” in major shopping malls throughout Malaysia, Eric Leong, a director for franchisee Wen Berjaya, told the Malay Mail newspaper.
In the United States, Wendy’s Co.’s newly designed flagship restaurant, which features an ultramodern design, a fast-casual-like ordering line and digital menus, has been selling 25 percent more food than its older restaurants.
International growth is important to the Wendy’s brand in the long run, but the company isn’t expecting a lot of impact immediately.
“We believe that International is a huge long-term opportunity for our company, although it will not be a significant short-term contributor to our business results,” said Wendy’s spokesman Bob Bertini in an email.
International growth is vital and could become an important profit driver for companies such as Wendy’s “because the ability to grow within the United States is so limited,” said Ron Paul, president of Technomic, a Chicago restaurant- and food-research firm.
“There were very few units added to the chain-restaurant population” in the past six months, Paul said. Restaurant chains of all types are working with franchisees to overcome barriers to expansion in the United States, he said, including lack of affordable real estate and bank financing, and a tough regulatory climate.
As of Nov. 8, Wendy’s and its franchisees operated 357 restaurants outside the United States and Canada — in places such as Singapore, Malaysia, Indonesia, the Philippines, Japan, New Zealand and Guam in the Asia-Pacific region, Bertini said.
McDonald’s, which is much larger than Wendy’s, the No. 2 U.S. burger chain, gets nearly 70 percent of its earnings from outside the United States, Paul said.
Wendy’s typically conducts international business through franchising companies that understand their home markets. In Malaysia, Wen Berjaya’s Leong is planning special menus for festivals during Chinese New Year; Deepavali, the Hindu festival of lights; and Hari Raya, the end of the Ramadan fasting period for Muslims.
“Our current development agreements would bring us to approximately 1,000 restaurants in the next 10 years,” Bertini said. However, that number could grow because company executives have other agreements in additional markets in the works, he said.
Wen Berjaya opened its first Malaysian Wendy’s in 2008 at Sunway Pyramid Mall, followed by nine more restaurants throughout the nation’s southern Klang Valley, Leong said. The company operates other U.S. franchises, such as Starbucks and Krispy Kreme.
