The news came yesterday as the Dublin-based company announced earnings for the fourth quarter and full year.Wendy’s is beginning the third year of its Image Activation program to raze, rebuild or remodel nearly half of its 600 company-owned stores by the end of 2015.
So far, the Dublin-based fast-food restaurant has rebuilt 58 company-owned stores since 2011, and it plans to rebuild or remodel another 100 company stores and 100 franchised stores this year.
The first year, the rebuilt stores “drove average sales increases of 25 percent, and those results continue to hold today,” Emil Brolick, the company’s chairman and CEO, told securities analysts during a conference call.
Sales results from last year’s remodeled stores “are very consistent to the results of our 2011 prototypes,” Brolick said.
This year, Wendy’s is accelerating its rebuilding program by involving franchisees in the process. Late last year, the company rolled out a $10 million incentive program to encourage franchisees to invest $750,000 to raze and rebuild their stores, or make lesser investments of $550,000 or $375,000 to remodel their stores.
So far, franchisees that own more than 100 stores have raised their hands for one of the three tiers in the rebuilding program. “We are excited about the positive response from our franchisees to the Image Activation incentive program,” Steve Hare, Wendy’s chief financial officer, told analysts.
“The trick is creating an economically viable remodeling program,” said Dennis Lombardi, executive vice president of foodservice strategies at WD Partners in Columbus.
All the money from Wendy’s incentive program is committed. So the company’s remaining franchisees likely will wait to hear whether it was a good idea from those who have taken the investment plunge, Lombardi said.
The franchisees also will be watching to see the sales differentials between the rebuilt stores and the remodeled locations. The first two remodeled stores are expected to open in March, Brolick said.
Wendy’s also plans to build 25 company-owned stores this year, and expects 40 franchisee- owned stores to open in 2013.
Wendy’s said yesterday that its net income rose more than six times in the fourth quarter, mostly because of lower interest expense, higher investment income and lower taxes. Sales at stores open at least a year fell 0.2 percent during the recent quarter but increased 1.6 percent in 2012 from year-ago periods.
“Our 2012 North America same-store sales growth of 1.6 percent and record-high average annual restaurant sales of $1.48 million are evidence that our growth initiatives are beginning to work, and we are optimistic about our product pipeline and marketing plans for 2013,” Brolick said.
Wendy’s net income rose to $26.4 million, or 7 cents a share, in the quarter ended on Dec. 31. That compared with net income of $4 million, or 1 cent a share, in the year-ago quarter.
Revenue rose 2.4 percent to $629.9 million during the fourth quarter from $615 million a year ago.
Wendy’s shares rose 3.6 percent to $5.70 on the New York Stock Exchange yesterday.
