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Wendy’s Updates Pandemic Response and Franchisee Assistance

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The Wendy’s Company announced an update on COVID-19’s business impact and the brand’s response. In a recent statement, the fast-food giant reiterated its commitment to its employees, customers, and franchisees.

“This is an unprecedented time, and we are focused on the actions where we can make a positive difference. To that end, we have taken several precautionary steps to advance public health goals, maintain essential access to high quality food, support our franchisees, and safeguard our team members and customers from the spread of COVID-19,” said President and CEO Todd Penegor.

Business Impact

Prior to the Coronavirus outbreak, Wendy’s saw a strong first quarter. Restaurant sales were up approximately 4% through the first two months of the quarter. The sales bump was partially attributable to a successful breakfast launch, where sales were up approximately 15% the first week of March.

In the most recent week Wendy’s has issued data for, the challenges presented by the Coronavirus are apparent. During the week ended March 22nd, restaurant sales were down approximately 20%. Penegor noted Wendy’s focus in navigating Coronavirus challenges will be on the company’s employees, customers, and franchise partners.

Wendy’s quickly shifted its restaurant focus to drive-thru and online ordering amid the pandemic. According to the company, drive-thru and digital ordering significantly increased in the U.S for the week ended March 22nd. During the period, drive-thru business grew approximately 90% of Wendy’s overall sales mix. Wendy’s Digital business grew to 4.3% of sales compared to 2.5% of sales in 2019.

Not surprisingly, the pandemic has impacted some franchisees harder than others. As of March 28th, the brand saw 235 temporary restaurant closures (or 3.5% of its system), of which, 46 were in the U.S. Wendy’s has updated its system-wide policies to include the closure of all dining rooms. The company is making the decision to continue offering takeout on a case-by-case basis, subject to applicable law.

Supporting its Franchisees

Penegor emphasized the brand’s commitment to its franchisees. The company announced it reached out to its primary franchise lenders and is aligning options to support franchisees. Wendy’s indicated it will extend payment terms for royalties and marketing funds by 45 days for three months.

In addition, the company is deferring base rent payments on properties owned by Wendy’s by 50% for three months. For those franchisees in the development process, Wendy’s announced it is extending its Image Activation and new restaurant development requirements by one year.

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