Wendy’s to introduce new products to fast food market

TIMOTHY HARDING
STAFF WRITER

Research done earlier this year that was verified by Pew Research Center indicated that there are around 160,000 fast food restaurants across the United States. They contribute to the service of nearly 50 million people living in the U.S. daily. The long term success of McDonald’s and Burger King has been driven by a strong desire for their delicious and well-known burgers and French fries. With the pace of today’s world, a fast meal on-the-go is appealing to many. However, with ever-changing tastes, adaptation is necessary and no one seems to be adapting to changes in consumer taste better than Wendy’s.
Restaurants such as Panera Bread are the image of a new fast food environment in which many selections, including a wide variety of healthy options, are readily available and reasonably priced. Wendy’s has not only been continuously adding to its wide variety of healthier selections, but also focusing on higher quality burgers in order to differentiate its products from those of its competitors. With higher quality comes higher costs. However, Wendy’s is not abandoning its “Right Price, Right Size” menu, which offers seven items priced at $0.99 and 11 other items at $1.99. Having several items priced under $1 adds to Wendy’s competitive advantage since McDonald’s has recently taken several items off its $1 menu.
During this year, Wendy’s introduced a new pretzel burger, which was a huge success. Because of the popularity of the pretzel burger, new offerings such as a pretzel pub chicken sandwich are becoming available. These new offerings are bringing in new customers and are great signs of innovation. Through its value menu and innovative new products, Wendy’s has been increasing its market share by meeting the needs of both new and current customers.
Wendy’s products are not the only thing that is being upgraded. The company also believes its restaurants need to be upgraded. Wendy’s expects its new customers to have high expectations since they were attracted to its higher quality products. These restaurant updates include updated packaging and modern designs. Some restaurants will go as far as to have fireplaces, televisions, outdoor patio space and seating for more than 75 people. By the end of the year, Wendy’s wishes to have 300 new and updated restaurants opened. Along with significant improvement in the appearance of its restaurants, Wendy’s has also sold several hundred of its restaurants to franchisees. This will improve Wendy’s cash position.
Since the start of this year, Wendy’s stock price has increased by more than 50 percent. Around July, its 20-day moving average crossed above its 50-day moving average, which was a bullish sign for investors. However, earlier in November, Wendy’s reported lower-than-expected quarterly revenue. This weakened investor confidence, shown by a decline in its stock price shortly after earnings were released.
Despite reported revenue that was not as great as expected, looking at Wendy’s from a technical view, its recent changes are well-timed. The company’s current relative strength index does not show an indication that its stock is overvalued. The index is a number that ranges from 0 to 100 and can be used along with other technical indicators to determine if a stock is overvalued or undervalued. Once an RSI approaches a value of 70, the stock is perceived to be overvalued. Wendy’s currently has a RSI of around 47. With an RSI well under 70 combined with the recent changes Wendy’s has undergone, there appears to be room for growth. It may be likely to see to see the company’s stock price increase in the near future.

Contact the writer:
timothy.harding@scranton.edu

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