Specialist
Former director at NPC International Inc
Agenda
- QSR consumer behaviours and nuances in the current environment, focusing on Wendy's (NASDAQ: WEN)
- Wendy’s operational cost levers amid a potential recession
- Labour and wage dynamics – near and medium-term outlook
Questions
1.
What is your H2 2022 outlook for the QSR segment in the restaurant industry?
2.
What were some of your takeaways or surprises on the back of Wendy’s Q2 2022 results, released on 10 August, and some of management’s commentary?
3.
What are your thoughts on Wendy’s unit growth trims? Prior guidance on this was 5-6%, and the company is now guiding for about 3-4%.
4.
What are your takeaways from the dynamics with Reef and Wendy’s having to walk back on some of its major expansion plans?
5.
What else is expected for Wendy’s or the broader QSR segment within ghost kitchens? Do you find this strategy has legs in the longer term, not just for Wendy’s but for other players?
6.
What do you think is in store for Wendy’s in 2023? Do you have an outlook on specific KPIs that will have normalised by then or that are still volatile? Might there be any potential wildcards?
7.
Are there any issues that are specific to Wendy’s vs just broader macroeconomic headwinds, given you referenced food inflation?
8.
What are your thoughts on the total number of restaurants in the broader industry and how that’s potentially recovered vs 2019 levels?
9.
I would assume a lot of operators aren’t waiting for someone to say we’re in a recession. I think they’d have to significantly plan ahead, and we’ve already seen two consecutive quarters of GDP decline. What are they waiting for?
10.
Wendy’s 3-4% unit growth is ahead of the 1% that you’re estimating over the next few years. Do you see the company paring that back even further to get closer to what you’re anticipating for the broader industry?
11.
How much opportunity is there for Wendy’s to potentially infill in existing markets?
12.
What are your thoughts on the labour environment? To what extent are some of the staffing challenges that the broader industry is facing still a bottleneck for QSR operators including Wendy’s?
13.
What are your thoughts on wage hikes? Is that still in play?
14.
What does the hourly workforce think of Wendy’s? Is the company considered an employer of choice in the space, assuming they have other options, perhaps including a player such as Chick-fil-A?
15.
Do the dynamics you just outlined about Wendy’s as an employer potentially imply that the company has to be more competitive on its hourly rates vs someone that is more of an employer of choice?
16.
What does Wendy’s do to avoid one of its hourly employees from walking across the street and going to someone that’s paying USD 0.25 more per hour?
17.
How much does culture tend to drive hourly workers vs compensation in the current environment?
18.
What’s hard to replicate about Chick-fil-A’s culture specifically?
19.
Is there anything you think we could draw from the last recession and how QSR operators reacted? What could we expect this time around, and are there any specific operators you see as most resilient to a downturn today?
20.
Wendy’s Q2 2022 earnings call noted consumers trading up, going from a USD 4 menu item to a USD 5 Biggie Bag. What are your thoughts on this?
21.
You said Wendy’s does well on the value offerings, but is the company typically perceived as the value leader vs McDonald’s?
22.
Do you think value offerings or even promotional activity will intensify in the current environment?
23.
What scenarios do you see with Wendy’s during a recession, aside from potentially leaning on promotional activity? Do any other levers come to mind insofar as the company addressing a pull-back in demand?
24.
How might Wendy’s management, specifically its corporate, step in to help franchisees, if at all, especially if the consumer environment weakens significantly?
25.
Do you have any thoughts on Wendy’s franchise-franchisee dynamics?
26.
Understanding that NPC International is no longer operating the Wendy’s units, do you have any outlook on Wendy’s corporate relationship with Flynn Restaurant Group, who purchased those assets from NPC?
27.
Given Wendy’s corporate’s cap on franchise ownership of around 400 units per franchisor, how might Flynn address growth?
28.
Could you outline any consumer behaviours or nuances that you believe were shaped by the pandemic and are potentially here to stay?
29.
How are specific operators within the space addressing some of the newly formed behaviours post-pandemic or those that it expects to come back from pre-pandemic times? Are there any standouts in terms of who is best addressing some of these trends in the form of tech and venue investments that have allowed these players to be nimble and quickly respond to changing consumer tastes?
30.
What are your thoughts on the Wendy’s positioning in brand relevancy and whether it’s gained or lost relevancy vs pre-pandemic? From whom might it have gained this relevancy or who might have taken it?
31.
What is there to be said about Wendy’s efforts in the breakfast day part?
32.
If you owned 100% of Wendy’s today, or one of its largest franchisees, what would you be most excited about and what might keep you up at night?
