Wendy's Marketing Strategy

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1. Industry background data and history.

Industry Data
• • • • • Annual Growth of 3.7% a year in the next 5 years Australia is the 11th biggest-spending fast-food nation in the world experiencing exponential growth in the last decade Traffic to Australian fast-food outlets increased between 3 and 7% in 2010 We are now the 39th fattest nation on earth The industry employs 307,127 accounting for roughly 3% of the Australian Workforce

Australians are in love with franchising. The industry is going from strength to strength as the nation’s appetite for personal services and retail goods continues to grow and the business model attracts new industries. Facts The number of franchise chain has jumped by 21.4%, from 700 in 2002 to 850 in 2004, according to Franchising Australia and it is growing. 2010 - Reported double-digit increases in revenue and profits and expect the same this financial year

Industry Segmentation
0.20% 8.70%

QSR 31.80% Takeaways Leisure Locations Mobile & Street Vendors 59.20%

Wendy’s History
• • • • Start up: In 1979 opened the first shop in a shopping centre in South Australia; Business Model: Adopted a franchising model; Growth: 250 stores in Australia and New Zealand over 30 years. Position: Fast food industry within the treats segment.

Wendy’s with use of franchising model (lower risk capital and fast expansion into new locations) now has 250 stores. • Positioning in franchising industry: • Low cost entry • Low royalty and marketing fees • Easy and fun to run • No special skills required • Initial support & guidance for recently established franchisee

1. Strategic Challenges facing the business

Strategic Challenges
Industry Maturity: • The fast food industry is competitive and mature. With little room for growth and still more players coming into the industry and soaking up the available profits. The public awareness of negative health consequences of fast food • Increased focus on the quality of food served in fast food restaurants. Fast food companies have responded by adopting healthier choices and have had some measure of success, but the shadow of bad press still hangs over the industry. The rise of commodity prices • Increase in produce prices significantly crunched many fast food franchises. The affect of the GFC • During GFC there was some increase in consumer visits as people choose cheaper fast food options over fast casual or traditional restaurant choices. But overall, the recession hurt spending, and consumers overall purchased less with each trip. Regulation: • With issues concerning public health (obesity) as well as the quality of produce (Horse Meat Scandal, Free Range Chicken) being the source of controversy both here and overseas. The industry could face tighter sourcing, manufacturing and labelling standards in the future.

1. Environmental Analysis

Environmental Analysis
Political / Legal: Health campaigns – healthy eating, obesity Deregulation of shopping centre / store hours likely New food nutritional guidelines just released Increasing minimum wages + superannuation costs (labour intensive nature of the industry means 16.8% of costs are wages) Discussions about ‘sugar tax’ Economic: GFC has meant decreases in overall consumer spending, and increase in propensity to save. Fast food is sensitive to consumer confidence levels (which have been low in recent years). High levels of competition in the fast food industry, a small number of global players doing well and significant local startup activity and competition. Availability and price of produce can have an impact – for example bananas when there was flooding, fruit when we have droughts, milk production when there was very high rainfall in Victoria. Fast food / ice cream may be seen as an affordable luxury, and even in challenging economic times certain segments can tend to reward themselves.

IMPLICATIONS: Increased focus on healthy / low fat options means most participants in the...
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