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Morning Briefing for pub, restaurant and food wervice operators

Thu 11th Aug 2022 - Update: Wendy’s potential in the UK remains “vast”; first six franchisees approved
Wendy’s potential in the UK remains “vast”, bullish on the UK despite pressure on consumers, first six franchisees approved: Todd Penegor, chief executive of Wendy’s, the third-largest quick service restaurant chain in the US, has said that the brand’s potential in the UK remains “vast”. The company recently opened its eighth restaurant site here, and 22nd in total including dark kitchens, since it returned to these shores last June. Penegor said: “Sales in our company-operated UK restaurants held steady quarter-over-quarter despite macroeconomic headwinds that continue to weigh on the overall market. Even in the face of these industry-wide pressures, our development plans are on track, and the long-term opportunity in the region remains vast. We now have six traditional franchisees approved in the region who we expect will begin opening restaurants in early 2023. You look at our widespread growth across the globe, you look at the momentum that we have, bringing on franchisees to build alongside of us in the UK, the opportunity to then move over into Ireland, we’re also looking at Spain as our next market to get into.” On trading, Gunther Plosch, chief financial officer at Wendy’s, said: “The UK consumer is clearly under a decent amount of pressure, right. There is very, very high inflation and that is definitely having an impact on the footfall that is happening in the UK. Having said all of that, we remain very bullish on the UK market. We expect to have about 35 restaurants by the end of the year, ten on the company side, so that development schedule is in place. And the remaining are going to be Reef units.” Penegor said: “We are continuing to be in start-up mode in that market and opening new restaurants and having pre-opening costs. And you think about our overall margin construct, there was about a 50-point headwind on UK as we ramp up into that market. But we are absolutely confident that the Average Unit Volumes (AUV) overall that we are seeing in both the Reef units and in the traditional units are in a good spot for the economic environment that we compete in with a lot of optimism and a lot of opportunity to grow into the future.” The company has rowed back on its plans on how many Reef sites it will open in the US, but anticipates it will open approximately 100 to 150 Wendy’s delivery kitchen locations by the end of 2025, with the majority operating internationally in Canada and the UK, where sales volumes have “continued to meet our expectations”. The brand said that its global digital sales accelerated versus the first quarter, with global digital sales mix holding strong at approximately 10%. It said: “Our international digital sales mix was approximately 15% as we continue to achieve outstanding results across many of our markets, including Canada, which is seeing strong digital usage at breakfast, and our UK restaurants, which reached digital mix of over 70%.” On the Reef kitchens, Plosch said: “From a performance point of view, a couple of data points in the UK and in Canada. The AUVs are tracking between $0.5m and $1m, so very consistent with the performance ranges that we have previously communicated. In the US, we are not yet performing. We are around $0.5m and less. It’s one of the reasons why there is this shift on strategy to go multi-brand in a vessel which we are simply not comfortable with. And so, as a result of that, we are working with Reef to make this work. As Todd said, we are trying to reposition these vessels into better trade areas. If we’re on a single brand on the vessel, we can achieve similar AUV trends as we are seeing in the UK and in Canada.”

Next edition of Propel Turnover & Profits Blue Book shows sector losses outstripping profits more than four times over, Premium subscribers to receive videos from Women’s Conference on Friday: The damage done to the industry by the pandemic is highlighted in the latest edition of the Propel Turnover & Profits Blue Book with losses outstripping profits in the sector more than four times over. The Blue Book, which is updated monthly, shows 328 companies making a combined loss of £5.7bn compared with 268 companies in profit – making a combined £1.3bn. Premium subscribers will receive the latest edition of the Blue Book, which is produced in association with Mapal Group, on Friday, 19 August. The 596 UK pub, restaurant, cafe and hotel operators featured have a collective turnover of £30.1bn. The Blue Book provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers are also to receive access to all the videos from Propel’s Women’s Entrepreneur and Leaders Conference, featuring the sector’s finest female leaders and entrepreneurs. A total of nine videos will be available at 9am on Friday (12 August). Premium subscribers also receive the New Openings Database, produced in association with StarStock, and the Multi-Site Operators Database, produced in association with Virgate, which are also updated each month. Premium subscribers also now have access to the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email to upgrade your subscription. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews and also have access to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

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