Wendys

3/30/2009 Tony Gauvin, UMFK, 2009
WENDYS 2007
http://www.wendys.com/
Strategic Management Case Study Tony Gauvin
OVERVIEW
3/30/2009
Company Overview
A Brief history of Wendys Existing Mission and Vision Existing Objectives and Strategies Current Issues
Strategy Formulation
SWOT Matrix Space Matrix IE Matrix Grand Strategy Matrix Matrix Analysis QSPM Matrix
Tony Gauvin, UMFK, 2009
New Mission and Vision External Assessment

Industry analysis Opportunities and threats
EFE Matrix CPM Matrix
Strategic Plan for the Future

Objectives Strategies
Implementation Issues
EPS/EBIT
Internal Assessment
Strengths and weaknesses Financial Condition IFE Matrix
Evaluation
Wendys 2008 Update

2
KEY FACTS 2007

3/30/2009
5,936 Stores in the US

1274 company owned y All 50 states and DC (Maine has 4!)
y
709 International Stores in 20 countries

y
376 in Canada

140 company owned
3rd largest hamburger fast food chain Square ground beef hamburgers (never frozen) and Frosties # 1 brand for taste and quality (especially the French Fries )

KEY DATES
3/30/2009

1969: Dave Thomas opens the first Wendy's restaurant in downtown Columbus, Ohio 1972: Wendy's franchising begins. 1975: First international restaurant opens in Canada. 1976: Wendy's International, Inc. goes public 1977: Company begins national television advertising. 1978: The 1,000th Wendy's opens in Springfield, Tennessee. 1979: Salad bars are added to Wendy's restaurants. 1981: Thomas makes his first appearance as Wendy's advertising spokesperson. 1984: Famous and award-winning "Where's the Beef?" ad campaign is run. 1986: James W. Near becomes president and COO and launches a major reorganization. 1989: Thomas begins another stint as advertising spokesperson; the Super Value Menu debuts. 1995: Wendy's International acquires Tim Horton's, a Canadian coffee and baked goods chain. 1997: The 5,000th Wendy's restaurant opens in Columbus, Ohio. 2002: Dave Thomas dies; Wendy's International acquires a 45 percent stake in Caf Express. 2002: Wendys Acquires Baja Fresh 2004: 35th Anniversary of Wendy's 2006 : Wendys Spins off Tim Horton and Sells Baja Fresh
EXISTING VISION STATEMENT

3/30/2009
Our vision is to be the quality leader in everything we do.
COMPANY PERSPECTIVES:
3/30/2009
Our guiding mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships.
Our organization has a strategic vision focused on these core values: Quality: Freshly-made products and superior service are our passion; consistent excellence is our goal. Integrity: We keep our promises. All actions are guided by absolute honesty, fairness and respect for every individual. Leadership: We lead by example and encourage leadership qualities at all levels. Everyone has a role to play. People Focus: We believe our people are key to our success. We value all members of our diverse family for their individual contributions and their team achievements. Customer Satisfaction: Satisfying internal and external customers is the focus of everything we do. Continuous Improvement: Continuous improvement is how we think; innovative change provides competitive opportunities. Community Involvement: Giving back is our heritage. We actively participate and invest in the communities where we do business. Commitment to Stakeholders: We serve all stakeholders and, through balancing our responsibilities to all, we maximize value to each of them.
WENDYS REVITALIZATION PAN
3/30/2009
WENDYS COMMITMENT TO QUALITY
3/30/2009
2007 KEY ISSUES

3/30/2009
Largest institutional shareholder, Pelz, attempting to force sale of Wendys to Trairc, also owned by Pelz. Pelz also owns Arbys Under shareholder pressure, sold Tim Hortons, the number one brand in coffee and doughnuts business even while it was attempting to penetrate the breakfast fast food market. Continue with revitalization plan and commitment to quality?

NEW VISION STATEMENT

3/30/2009
Our vision is to become the number one fast food restaurant in the world.
10
MISSION STATEMENT
3/30/2009
Wendys believes the most important issue in the restaurant business is to take care of our customers. (1) As a global company, our goal is to provide our customers with the most enjoyable dining experience possible and be the quality leader in everything we do. (3, 7) Wendys has a long tradition of meeting ever-changing consumer tastes and items. As we look ahead, we will build on this tradition by bringing even greater variety, higher quality, more nutritious foods along with fresher menu choices into our restaurants. (2) Wendys strives to continuously produce quality foods through food science technology and research. (4) Our company is committed to expanding and growing profits in order to sustain recognition while protecting the environment. (5, 8) Our philosophy is to provide for the needs of all our customers while creating a safe workplace for all employees. (6,9)
1. 2. 3. 4. 5. 6. 7. 8. 9.
Customer Products or services Markets Technology Concern for survival, profitability, growth Philosophy Self-concept Concern for public image Concern for employees
11
EXTERNAL ASSESSMENT
12
3/30/2009
GLOBAL INDUSTRY GROWTH
13
3/30/2009
US INDUSTRY GROWTH
14
3/30/2009
GLOBAL INDUSTRY VOLUME
15
3/30/2009
US INDUSTRY VOLUME
16
3/30/2009
GLOBAL SEGMENTATION BY TYPE
17
3/30/2009
US SEGMENTATION BY TYPE
18
3/30/2009
GLOBAL SEGMENTATION BY LOCATION
19
3/30/2009
COMPETITIVE LANDSCAPE (US & GLOBAL)

3/30/2009
20
Trademarks are property of respective brands
EXTERNAL AUDIT - OPPORTUNITIES

3/30/2009
1. Burger King is closing more than 180 stores in 2006. 2. 53 percent of household income is spent eating outside of the home. 3. The Canadian dollar is getting a stronger exchange rate resulting in higher EPS from 0.11 in 2004 to 0.15 in 2005 4. Quick Service Restaurants sales have increased by 5 percent in 2006 according to the National Restaurant Association. 5. Burger King's market share dropped from 15.03% in 2000 to 10.95% in 2006. 6. The US Department of Agriculture states that consumption of eating out has risen 3.6 percent from 1990 to 2005 7. The breakfast food industry is a $77.6 billion industry. 8. McDonalds suffered an $8.5 million lawsuit and a decrease in sales due to not informing customers of transfats in their cooking oils.
21
EXTERNAL AUDIT - THREATS

3/30/2009
1. 2. 3. 4. 5.
Where's the beef? A 12 percent increase in beef costs over 2005 reduced Wendy's EPS by 0.07 cents McDonald's new management team is returning them to a sales growth trend. 60 percent of McDonalds are open 24 hours, worldwide. McDonald's menu is expanding to offer more upscale coffee, and better quality chicken sandwiches Natural disasters are causing vegetables to be in short supply for restaurant industry. When hurricanes Katrina and Rita hit the southeast USA in August and September Wendys lost approximately $25 million in sales. Burger King has invested $12 million in their United Kingdom restaurants. Wendys has restaurants in only 20 international countries compared to McDonalds and Burger King who have restaurants in 120 and 65 international countries respectively. Burger King plans to implement a dollar menu for breakfast items.
6. 7.
8.
22
COMPETITIVE PROFILE MATRIX

3/30/2009
Wendys
Critical Success Factors Market Share Advertising Global Expansion Product Variety Product Quality Company Image Price Competition Management Experience Customer Service Philanthropy Customer Loyalty Financial Position
TOTAL
McDonalds
Rating 4 3 4 3 3 3 3 3 2 4 3 3 Weighted Score 0.60 0.39 0.48 0.30 0.24 0.21 0.12 0.18 0.14 0.20 0.24 0.15 3.25
Burger King
Rating 2 3 2 3 2 2 3 2 2 1 2 2 Weighted Score 0.30 0.39 0.24 0.30 0.16 0.14 0.12 0.12 0.14 0.05 0.16 0.10 2.22
Weight 0.15 0.13 0.12 0.10 0.08 0.07 0.04 0.06 0.07 0.05 0.08 0.05 1.00
Rating 2 2 1 4 1 2 3 2 3 2 2 3
Weighted Score 0.30 0.26 0.12 0.40 0.08 0.14 0.12 0.12 0.21 0.10 0.16 0.15 2.16
23
EFE MATRIX
Key External Factors Opportunities Burger King is closing more than 180 stores in 2006. 53 percent of household income is spent eating outside of the home. The Canadian dollar is getting a stronger exchange rate resulting in higher EPS from 2004 to 2005 Quick Service Restaurants sales have increased by 5 percent in 2006 according to the National Restaurant Association. Burger King's market share dropped from 15.03% in 2000 to 10.95% in 2006. The US Department of Agriculture states that consumption of eating out has risen 3.6 percent from 1990 to 2005 The breakfast food industry is a $77.6 billion industry. McDonalds suffered an $8.5 million lawsuit and a decrease in sales due to not informing customers of trans-fats in their cooking oils. Threats Where's the beef? A 12 percent increase in beef costs over 2005 reduced Wendy's EPS by 0.07 cents McDonald's new management team is returning them to a sales growth trend. 60 percent of McDonalds are open 24 hours, worldwide. McDonald's menu is expanding to offer more upscale coffee, and better quality chicken sandwiches Natural disasters are causing vegetables to be in short supply for restaurant industry. When hurricanes Katrina and Rita hit the south-east in August and September Wendys lost approximately $25 million in sales. Burger King has invested $12 million in their restaurants. Wendys has restaurants in only 20 international countries compared to McDonalds and Burger King who have restaurants in 120 and 65 international countries respectively. 0.07 Burger King plans to implement a dollar menu for breakfast items. TOTAL 0.10 1.00 4 3 0.28 0.30 2.60 0.04 0.05 0.06 0.07 3 1 3 1 0.12 0.05 0.18 0.07 Weight 0.04 0.1 0.08 0.04 0.03 0.02 0.11 0.05 Rating 2 3 3 3 2 2 3 4 Weighted Score
3/30/2009
0.08 0.3 0.24 0.12 0.06 0.04 0.33 0.20
0.09 0.05
2 1
0.18 0.05
24
INTERNAL ASSESSMENT
25
3/30/2009
STOCK PERFORMANCE
3/30/2009
http://moneycentral.msn.com/investor/charts/chartdl.aspx?iax=1&Symbol=WEN
26
INCOME STATEMENT
27
3/30/2009
BALANCE SHEET
28
3/30/2009
SELECTED FINANCIAL RATIOS

3/30/2009 Growth Rates % Sales (Qtr vs. year ago qtr) Net Income (YTD vs. YTD) Net Income (Qtr vs. year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.) Price Ratios Current P/E Ratio P/E Ratio 5-Year High P/E Ratio 5-Year Low Price/Sales Ratio Price/Book Value Price/Cash Flow Ratio Profit Margins Gross Margin Pre-Tax Margin Net Profit Margin 5Yr Gross Margin (5-Year Avg.) 5Yr Pretax Margin (5-Year Avg.) 5Yr Net Profit Margin (5-Year Avg.) Wendys -0.10 133.80 41.40 3.53 -5.90 13.90 23.9 126.3 15.4 0.83 2.52 10.10 20.7 5.1 3.5 20.7 5.5 3.6 Industry 7.50 -9.10 42.50 8.89 13.16 26.63 24.8 30.4 13.0 2.10 3.02 5.40 31.0 12.1 8.1 30.5 12.3 8.5 SP-500 8.30 16.00 6.60 13.34 20.14 10.00 21.9 25.9 7.4 2.38 3.39 10.60 33.8 17.5 12.4 33.5 16.8 11.7
29
SELECTED FINANCIAL RATIOS

3/30/2009 Financial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio Book Value/Share Investment Returns % Return On Equity Return On Assets Return On Capital Return On Equity (5-Year Avg.) Return On Assets (5-Year Avg.) Return On Capital (5-Year Avg.) Management Efficiency Income/Employee Revenue/Employee Receivable Turnover Inventory Turnover Asset Turnover NA NA 31.2 59.0 1.3 3,150 48,925 29.9 34.5 0.7 37,696 343,930 9.5 5.6 0.6 0.71 1.1 1.0 5.0 2.2 9.20 9.5 4.5 5.5 5.6 3.1 3.7 0.69 0.4 0.4 13.9 1.7 3.58 15.1 4.0 5.4 11.1 3.1 4.3 1.19 0.9 0.7 43.3 4.0 16.25 20.8 5.8 7.7 14.5 5.1 6.8
Adapted from www.moneycentral.msn.com
30
TREND ANALYSIS
3/30/2009
Date 12/07 12/06 01/06 01/05 12/03
Avg. P/E 34.90 93.80 29.40 19.20 14.50
Price/Sales 0.96 1.56 1.25 0.86 0.92
Price/Book 2.83 3.13 1.50 1.22 1.18
Net Profit Margin (%) 3.5 1.5 3.5 4.2 5.2
Date 12/07 12/06 01/06 01/05 12/03
Book Value/ Share $9.20 $10.57 $17.47 $15.26 $15.33
Debt/Equity 0.71 0.64 0.26 0.42 0.42
ROE (%) 10.8 3.7 4.1 6.2 6.6
ROA (%) 4.8 1.8 2.5 3.3 3.7
Interest Coverage 3.5 1.1 4.1 5.1 5.3
31
NET WORTH ANALYSIS

3/30/2009
Net Worth Analysis (February 2007 in millions)

1. Stockholders Equity + Goodwill = 1,011 + 85 2. Net income x 5 = $94 x 5= 3. Share price = $23/EPS 1.00 =$23 x Net Income $94= 4. Number of Shares Outstanding x Share Price = 87 x $23 = Method Average $1,096 $ 470 $ 2,162 $ 2,001 $1,432
32
INTERNAL AUDIT -STRENGTHS

3/30/2009
1. First to introduce non-trans-fat French fries. 2. Improved goodwill from $19 million to $36 million. 3. Owns and operates 2 bakeries as apart of their vertical integration strategy. 4. Maintains industry-leading customer satisfaction scores. 5. World's #3 fast food chain controlling 14% of the fast-food market share. 6. 417 new restaurants in the US & Canada. 7. With healthier food selections such as salads, Wendys same-store sales rose 4.7%. 8. 1st to offer the 99 cent value menu. 9. Wendys Frescata product line increased sales by 3.2%. 10. The acquisition of Tim Hortons restaurants increased Wendys revenue 31%.
33
INTERNAL AUDIT - WEAKNESS

3/30/2009
1. Failed marketing strategy led to sales dip in 2005. 2. Last to accommodate changing customer preferences by introducing new products. 3. "The Chili Finger" incident drops sales by 2.5% in 2005. 4. Last food-chain to offer a breakfast menu. 5. Wendy's current strategy only focuses on US & Canada. 6. Tim Horton's 50/50 joint venture causes 50% drop in income from Tim Horton's. 7. Since the passing of Dave Thomas in 2002, Wendy's lost their opinion leader who helped to create "TOMA."
34
IFE MATRIX
Key Internal Factors Strengths First to introduce non-trans-fat French fries. Improved goodwill from $19 million to $36 million. Owns and operates 2 bakeries as apart of their vertical integration strategy. Maintained industry-leading customer satisfaction scores. World's #3 fast food chain controlling 14 percent of the fast-food market share. 417 new restaurants in the & . With healthier food selections such as salads, Wendys same-store sales rose 4.7 percent. 1st to offer the 99 cent value menu. Wendys Frescata product line increased sales by 3.2%. The acquisition of Tim Hortons restaurants increased Wendys revenue by 31 percent. Weaknesses Failed marketing strategy led to sales dip in 2005. Last to accommodate changing customer preferences by introducing new products. "The Chili Finger" incident drops sales by 2.5 percent in 2005. Last food-chain to offer a breakfast menu. Wendy's current strategy only focuses on US & . Tim Horton's 50/50 joint venture causes 50 percent drop in income from Tim Horton's. Since the passing of Dave Thomas in 2002, Wendy's lost their opinion leader who helped to create "TOMA." TOTAL 0.08 0.07 0.09 0.05 0.02 0.01 0.1 0.05 0.02 0.03 0.08 0.05 0.1 0.04 0.06 0.07 0.08 1.00 4 3 4 4 3 3 4 4 3 4 1 2 1 2 1 2 1 0.32 0.21 0.36 0.20 0.06 0.03 0.40 0.20 0.06 0.12 0.08 0.10 0.10 0.08 0.06 0.14 0.08 2.60 Weight Rating Weighted Score
35
STRATEGIC FORMULATION
36
3/30/2009
SWOT MATRIX
3/30/2009
SO Strategies
Expand research and development function, strategic insights, and operations innovation by 25 percent (S1, O4). Open 200 new Wendys franchises stores in the US and Canada to gain market share in the fast food industry (S6, O5). Display on all food packaging and in all restaurants that we use non-trans fat oils to cook our foods (S1, O8).
WO Strategies
Introduce a full menu and a 99 cent super value menu for breakfast in all restaurants in order to capitalize on $77 billion breakfast industry (W4,O7). Wendy Thomas will become the new opinion leader for Wendys and create TOMA and help generate sales in the breakfast industry (W7, O7). Wendys will take advantage of the fact that 53 percent of household income is spent eating outside the home to increase sales of their foods (W1, O2). Launch a direct marketing campaign for Wendys new breakfast menu (W1, O8).
37
SWOT MATRIX
3/30/2009
ST Strategies
Continue to focus on providing customers healthier food options and not just expanding the menu (S7, T4). Implement a full breakfast menu and a 99 cents breakfast menu in all their restaurants (S8, T8). By implementing longer operating hours such as 24 hour restaurants, Wendys will improve customer convenience and satisfaction (S4, T3).
WT Strategies
Expand the research and development function, strategic insights, and operations innovation (W1, W2, T2). Backward integrate: Acquire a farm that main crop is vegetables specifically lettuce, onion, and tomato Expand global operations by 40 percent over next three years (W5, T7).
38
Conservative
FS 6 5 4
Aggressive
SPACE MATRIX
CA -6 -5 -4 -3 -2 -1
3 2 1 IS
3/30/2009
1 -1 -2 -3
-4 -5 -6 Defensive ES Competitive
Competitive Advantage (CA) Market Share Product Quality Customer Loyalty Technological know-how Control over Suppliers and Distributors Competitive Advantage (CA) Average
-2 -2 -2 -3 -2
Industry Strength (IS) Growth Potential Financial Stability Ease of Entry into Market Resource Utilization Profit Potential
5 5 3 5 5 4.6
-2.2 Industry Strength (IS) Average
Financial Strength (FS) Return on Assets (ROA) Leverage Net Income Income/Employee Inventory Turnover Financial Strength (FS) Average
4 3 3 3 6 3.8
Environmental Stability (ES) Rate of Inflation Technological Changes Price Elasticity of Demand Competitive Pressure Barriers to Entry into Market Environmental Stability (ES) Average
-2 -1 -2 -6 -3 -2.8
x-axis: -2.2 + 4.6 = 2.4 y-axis: 3.8 + -2.8 = 1.0
39
GRAND STRATEGY MATRIX

3/30/2009
Rapid Market Growth Quadrant II Quadrant I
Weak Competitive Position
Strong Competitive Position
Quadrant III Slow Market Growth
Quadrant IV
40
BCG MATRIX
3/30/2009
Two Possible Divisional Analysis Vectors

y y
Geographic

No difference in Growth rates or Market share by location All stores whether they are owned by the company or by franchisees compete in the same market
Store ownership

y
No value in producing a BCG matrix
Wendys is somewhere between a Question Mark and a Star
41
IE MATRIX
Hold and Maintain Strong 3-4 IFE Scores Average 2-2.99
3/30/2009
Weak 1-1.99
I
High 3-4 EFE Scores
II
III
IV
Medium 2-2.99
VI
VII
Low 1-1.99
VIII
IX
42
MATRIX ANALYSIS
7-Apr-08 Alternative Strategies Forward Integration Backward Integration Horizontal Integration Market Penetration Market Development Product Development Concentric Diversification Conglomerate Diversification Horizontal Diversification Joint Venture Retrenchment Divestiture Liquidation x x IE SPACE x x x x x x x x x x x x x GRAND COUNT 1 1 2008, Tony Gauvin, UMFK 1 2 1 2 2 2 2 1
43
POSSIBLE STRATEGIES
7-Apr-08
Promote a healthier menu for Breakfast, Meals and late night snacks
y
2008, Tony Gauvin, UMFK
Market penetration, product development & related diversification
Expand the research and development functions, strategic insights and operation innovation
y
Product development & diversification
44
QSPM
Strategic Alternatives Key Internal Factors Strengths First to introduce non-trans-fat French fries. Improved goodwill from $19 million to $36 million. Owns and operates 2 bakeries as apart of their vertical integration strategy. Maintained industry-leading customer satisfaction scores. World's #3 fast food chain controlling 14 percent of the fast-food market share. 417 new restaurants in the & . With healthier food selections such as salads, Wendys same-store sales rose 4.7 percent. 1st to offer the 99 cent value menu. Wendys Frescata product line increased sales by 3.2 percent. The acquisition of Tim Hortons restaurants increased Wendys revenue by 31 percent. Weaknesses Failed marketing strategy led to sales dip in 2005. Last to accommodate changing customer preferences by introducing new products. "The Chili Finger" incident drops sales by 2.5 percent in 2005. Last food-chain to offer a breakfast menu. Wendy's current strategy only focuses on US & . Tim Horton's 50/50 joint venture causes 50 percent drop in income from Tim Horton's. Since the passing of Dave Thomas in 2002, Wendy's lost their opinion leader who helped to create "TOMA." SUBTOTAL Weight Promote a healthier menu. AS 4.00 ------2.00 ------4.00 2.00 4.00 ------3.00 ---2.00 ---------TAS 0.32 ------0.10 ------0.40 0.10 0.32 ------0.15 ---0.08 ---------1.15
Expand the research and development function, strategic insights, and operations innovation.
3/30/2009
0.08 0.07 0.09 0.05 0.02 0.01 0.1 0.05 0.02 0.03 0.08 0.05 0.1 0.04 0.06 0.07 0.08 1.00
AS 2.00 ------4.00 ------3.00 3.00 2.00 ------4.00 ---3.00 ----------
TAS 0.16 ------0.20 ------0.30 0.15 0.16 ------0.20 ---0.12 ---------1.13
45
QSPM
3/30/2009
Key External Factors Weight Promote a healthier menu. Expand the research and development function, strategic insights, and operations innovation. AS TAS Opportunities Burger King is closing more than 180 stores in 2006. 53 percent of household income is spent eating outside of the home. The Canadian dollar is getting a stronger exchange rate resulting in higher EPS from 2004 to 2005 Quick Service Restaurants sales have increased by 5 percent in 2006 according to the National Restaurant Association. Burger King's market share dropped from 15.03% in 2000 to 10.95% in 2006. The US Department of Agriculture states that consumption of eating out has risen 3.6 percent from 1990 to 2005 The breakfast food industry is a $77.6 billion. McDonalds suffered an $8.5 million lawsuit and a decrease in sales due to not informing customers of trans-fats in their cooking oils. Threats Where's the beef? A 12 percent increase in beef costs over 2005 reduced Wendy's EPS by 0.07 cents McDonald's new management team is returning them to a sales growth trend. 60 percent of McDonalds are open 24 hours, worldwide. McDonald's menu is expanding to offer more upscale coffee, and better quality chicken sandwiches 0.07 Natural disasters are causing vegetables to be in short supply for restaurant industry. When hurricanes Katrina and Rita hit the southeast in August and September Wendys lost approximately $25 million in sales. Burger King has invested $12 million in their restaurants. Wendys has restaurants in only 20 international countries compared to McDonalds and Burger King who have restaurants in 120 and 65 international countries respectively. Burger King plans to implement a dollar menu for breakfast items. SUBTOTAL SUM TOTAL ATTRACTIVENESS SCORE AS 0.04 0.1 0.08 0.04 0.03 0.02 0.11 0.05 TAS
---2.00 ---------------3.00 3.00 ---2.00 2.00
---0.20 ---------------0.15 0.24 ---0.10 0.14
---3.00 ---------------4.00 2.00 ---3.00 4.00
---0.30 ---------------0.20 0.16 ---0.15 0.28
0.04 0.05 0.06
0.09 0.05 0.07 0.10
------4.00 ----
------0.36 ---1.13 2.28
------3.00 ----
------0.27 ---1.27 2.40
46
FUTURE PLANS
NEW
47
3/30/2009
OBJECTIVES
3/30/2009
Objectives listed in 2006 Revitalization plan and Commitment to Quality still apply for the next three years
Increase Market Share y Grow franchise ownership y Quality control through backwards integration and process managemenat y Expand meal and food offerings
y
48
RECOMMENDATIONS
3/30/2009
Promote a healthier menu and these changes will increase Wendy's sales. $10,000,000 Expand the research and development function, strategic insights, and operations innovation by 25 percent. $15,000,000 Introduce a full menu and a $.99 menu for breakfast in all restaurants in order to capitalize on the $77.6 billion breakfast industry. $5,000,000 Acquire a farm that's main crop is vegetables, which will allow Wendys to offer vegetarian items, eliminate the cost and reduce the risk of vegetable shortage. $20,000,000
Total Cost = $50,000,000
49
IMPLEMENTATION
50
3/30/2009
EPS/EBIT ANALYSIS

$ Amount Needed: 50M Stock Price: $23 Tax Rate: 35% Interest Rate: 7% # Shares Outstanding: 87M # Shares Needed: 1,173,913
Common Stock Financing Recession Normal Boom 50,000,000 200,000,000 500,000,000 0 0 0 50,000,000 200,000,000 500,000,000 17,500,000 70,000,000 175,000,000 32,500,000 130,000,000 325,000,000 89,173,913 89,173,913 89,173,913 0.36 1.46 3.64 70 Percent Stock - 30 Percent Debt Recession Normal Boom 50,000,000 200,000,000 500,000,000 1,050,000 1,050,000 1,050,000 48,950,000 198,950,000 498,950,000 17,132,500 69,632,500 174,632,500 31,817,500 129,317,500 324,317,500 88,521,739 88,521,739 88,521,739 0.36 1.46 3.66 Debt Financing Normal 200,000,000 3,500,000 196,500,000 68,775,000 127,725,000 87,000,000 1.47
EBIT Interest EBT Taxes EAT # Shares EPS
Recession 50,000,000 3,500,000 46,500,000 16,275,000 30,225,000 87,000,000 0.35
Boom 500,000,000 3,500,000 496,500,000 173,775,000 322,725,000 87,000,000 3.71
EBIT Interest EBT Taxes EAT # Shares EPS
70 Percent Debt - 30 Percent Stock Recession Normal Boom 50,000,000 200,000,000 500,000,000 2,450,000 2,450,000 2,450,000 47,550,000 197,550,000 497,550,000 16,642,500 69,142,500 174,142,500 30,907,500 128,407,500 323,407,500 87,652,174 87,652,174 87,652,174 0.35 1.46 3.69
51
OTHERS ISSUES
3/30/2009
Labor Turnover
Management training y Quality training
y
What about the Internet??

y
Can we use it?
Cultural issues with International Stores Where to locate

Where the others fats food restaurants exist y Near high traffic locations
y
Public relations
52
EVALUATION
53
3/30/2009
EVALUATION MATRIX
3/30/2009
Kaplan and Nortons Balanced Score Card

y y y y y
Continuous improvement Financial Customer Operations Employees Financial
Annual Reports
y
Independent Analysis
Market share y Brand awareness
y
54
http://www.qualitysolutions.com/images/balance.jpg
Area of Objectives Customers 1 2 Satisfaction Brand Identity
Measure or Target
Time Expectation
Primary Responsibility
Customer Survey results Industry Reports
Yearly Yearly
Marketing Department Marketing Department
Employees 1 2 Quality training Employee Satisfaction # TQM session Survey Yearly Yearly COO Human resources
Operations/Processes 1 2 Productivity Quality Sales/man-hour increase 5% # Defective/stale products reduced 1% Quarterly Quarterly COO COO
Business Ethics/Natural Environment 1 Waste reduction # of recyclable containers # of ethics training sessions Quarterly Yearly COO Human resources
2 Ethics Training Financial 1 Sales and expenses reports 2 Ratio analysis
2% sales increase 1% expense reduction better than Industry Avg,
Quarterly Yearly
CFO CFO
2008 UPDATE

30-Mar-2009
Stock prices continue to fall through 2007 and 2008

y
2009, Tony Gauvin, UMFK
Income and revenues are down

McDonalds and Burger King revenues are up
Began rollout of breakfast menu with lukewarm results Maintainsed 3RD Place in Market share Pelzs Triarc buys out Wendys for $2.34 billion in stock swap in April of 2008
y y
Combine with Arbys to form Wendys Arbys Group

http://www.wendysarbys.com/
Maintained as separate Brands
56
INFORMATION SOURCES
3/30/2009

International Directory of Company Histories, Vol. 47. St. James Press, 2002. Graphics from www.wendys.com Wendys International, Inc Form 10-K Sec filing for 2007 Wendys International- 2007 Case Notes by Forest David of Francais Marion University Datamonitor y Global Fast Food Industry Profile 2008 y US Fast Food Industry Profile 2008 y Wendys International, Inc. Company Profile 2008 Value Line Investment Surveys y Restaurant Industry 2009 y Wendys Arbys 2009

Analyst reports
TheStreet.com y CL King & Associates
y
57

Wendys

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Wendys

Încărcat de

Drepturi de autor:

Formate disponibile

3/30/2009 Tony Gauvin, UMFK, 2009

Strategic Management Case Study Tony Gauvin

Tony Gauvin, UMFK, 2009

New Mission and Vision External Assessment

Strategic Plan for the Future

Wendys 2008 Update

KEY FACTS 2007

5,936 Stores in the US

Tony Gauvin, UMFK, 2009

709 International Stores in 20 countries

140 company owned

Tony Gauvin, UMFK, 2009

EXISTING VISION STATEMENT

Our vision is to be the quality leader in everything we do.

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

WENDYS REVITALIZATION PAN

Tony Gauvin, UMFK, 2009

WENDYS COMMITMENT TO QUALITY

Tony Gauvin, UMFK, 2009

2007 KEY ISSUES

Tony Gauvin, UMFK, 2009

NEW VISION STATEMENT

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

GLOBAL INDUSTRY GROWTH

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

GLOBAL INDUSTRY VOLUME

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

GLOBAL SEGMENTATION BY TYPE

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

GLOBAL SEGMENTATION BY LOCATION

Tony Gauvin, UMFK, 2009

COMPETITIVE LANDSCAPE (US & GLOBAL)

Tony Gauvin, UMFK, 2009

EXTERNAL AUDIT - OPPORTUNITIES

Tony Gauvin, UMFK, 2009

EXTERNAL AUDIT - THREATS

Tony Gauvin, UMFK, 2009

COMPETITIVE PROFILE MATRIX

Tony Gauvin, UMFK, 2009

0.08 0.3 0.24 0.12 0.06 0.04 0.33 0.20

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

Tony Gauvin, UMFK, 2009

SELECTED FINANCIAL RATIOS

Tony Gauvin, UMFK, 2009

SELECTED FINANCIAL RATIOS

Adapted from www.moneycentral.msn.com

Tony Gauvin, UMFK, 2009

Date 12/07 12/06 01/06 01/05 12/03

Avg. P/E 34.90 93.80 29.40 19.20 14.50

Price/Sales 0.96 1.56 1.25 0.86 0.92

Price/Book 2.83 3.13 1.50 1.22 1.18

Net Profit Margin (%) 3.5 1.5 3.5 4.2 5.2

Tony Gauvin, UMFK, 2009

Cultural issues with International Stores Where to locate