By choosing to spend more on remodeling, Wendy’s has re-invented the image of their restaurants and encouraged more customers and higher average ticket prices. The 25% increase in sales has the potential to fully cover the cost of investment in 1-2 years.
Steve Hare, the Chief Financial Officer for Wendy’s has this to say:
“We have a diverse restaurant system. We can’t have one solution for all restaurants. Our tiered strategy includes the full design for tier I. Tier II will maintain most of the critical elements customers want to reward us for. And Tier III will have a few less bells and whistles.”
Tier I will be available in the fourth quarter, while the other two designs will be ready to go in 2013.
Steve Hare, Wendy’s chief financial officer, said the returns on each tier are expected to be:
- Tier I: Investment is $650-700K, with a sales lift of 25 percent;
- Tier II: Investment is $500K, with a lift of 15 percent;
- Tier III: Investment is $300K, with a lift of 5 percent.
“Our competitors are doing re-imaging and spending $250,000. We did that and there was a minimal sales lift. It didn’t revitalize the brand or create a competitive advantage. Nobody said ‘wow,” Hare said. “If you spend less money, it’s easier to finance, but it doesn’t move the needle. We’ve got to do more than that. This is a game changer.”
Original article written by Alicia Kelso available here.